And on and on.....SCOTT GRUNSTED, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12954-09L. Filed May 11, 2011
Scott Grunsted, pro se.
[ . . .]
This collection review matter is before the Court on respondent’s motion for summary judgment under Rule 121. The first issue for decision is whether petitioner is liable for the five frivolous return penalties assessed for the 2002, 2003 and 2004 tax years (the years at issue). We find that he is liable. The second issue for decision is whether respondent’s determination to proceed with the proposed collection action is an abuse of discretion. We hold it is not.
Petitioner resided in Hayden, Idaho at the time he filed the collection review petition. Petitioner is a husband, a father and a college graduate. Petitioner filed late purported income tax returns on Form 1040EZ for each of the years at issue. His purported returns showed zero income. Petitioner attached letters to the purported returns supporting his zero income filings by claiming that private sector payments for labor are not taxable. He attached a Form 4852, Substitute for W-2, Wage and Tax Statement, to each purported tax return. Petitioner reported that his employer, Agency Software, Inc., had withheld Federal income tax, State tax, local tax, Social Security tax and Medicare tax. Petitioner sought refunds for all Federal taxes withheld and also requested refunds for Social Security and Medicare taxes in his letters.
Respondent notified petitioner in a letter that the purported returns for 2002 and 2003 would not be accepted because they lacked sufficient information and were based on frivolous positions. Petitioner resubmitted substantially identical purported tax returns for those two years, again showing zero income and again seeking a refund of certain amounts withheld from his wages. Respondent assessed frivolous return penalties against petitioner for the three years at issue. Respondent assessed a penalty for each of the five purported returns filed in those years, in the amounts of $500 and $500 for 2002, $500 and $5,000 for 2003 and $5,000 for 2004.
Petitioner failed to pay the penalties. Respondent issued a Final Notice of Intent to Levy and Notice of Your Right to a Hearing with respect to the five frivolous return penalties. Respondent also filed two notices of Federal tax lien with the relevant county recorder. One lien dealt with the two penalties for 2002 and the one penalty for 2004. The other lien dealt with the two penalties for 2003.
[ . . . ]
Petitioner responded to the levy and lien notices, asserting that no lawful assessments had been made and threatening criminal complaints and civil action. Petitioner argued that the penalties were invalid assessments because no district director exists. Per petitioner, the Secretary is required under regulations to appoint a district director for assessment purposes, and no tax may be assessed without a district director.
[ . . . ]
Respondent’s Appeals Office again asked petitioner to provide tax returns and other information and notified petitioner that his arguments were frivolous. After sending yet another letter with substantially similar arguments, petitioner had a telephone CDP hearing. Petitioner raised substantially similar arguments at his hearing, and he failed to provide the requested documents or propose collection alternatives.
You get the idea.....[ . . ] patently erroneous assertions, including that the Federal Government could tax only income “federally connected” and not the payments petitioner received from the private sector. [ . . ]
His "victory" is that the Court did not impose a penalty under section 6673. He got off with a warning.