Julie Beiler Zook v. Commissioner, T.C. Memo. 2013-128, No. 9773-12L (5/20/2013) (filing of notice of tax lien upheld; sanctions of $2,000 imposed for frivolous arguments)
Tax Court wrote:JULIE BEILER ZOOK,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
UNITED STATES TAX COURT
Filed May 20, 2013
Julie Beiler Zook, pro se.
Kristina L. Rico, for respondent.
MEMORANDUM OPINION
RUWE, Judge: This matter is before the Court on respondent's motion for summary judgment (motion) pursuant to Rule 121.[1] Respondent contends that no genuine dispute exists as to any material fact and that the determination to maintain a notice of Federal tax lien filed under section 6323 should be sustained. In the motion respondent has also requested the Court to admonish or penalize petitioner under section 6673 for raising frivolous arguments.
BACKGROUND
At the time the petition was filed, petitioner resided in Pennsylvania.
Petitioner failed to file Federal income tax returns for the taxable years 2004, 2005, and 2006 (years at issue). Respondent prepared substitutes for returns (SFRs) for the years at issue pursuant to section 6020(b). On February 11, 2009, respondent mailed a notice of deficiency to petitioner's last known address.[2] Petitioner did not petition the Court with respect to the deficiencies. On June 29, 2009, respondent assessed the tax liabilities, additions to tax, and interest for the years at issue.
Respondent filed a notice of Federal tax lien regarding petitioner's unpaid tax liabilities for the years at issue. Respondent sent petitioner a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, dated February 1, 2011. Petitioner submitted a timely letter requesting a separate collection due process (CDP) hearing for each of the three taxable years in the notice of Federal tax lien. Petitioner's CDP hearing request did not request a collection alternative. By letter dated August 23, 2011, respondent acknowledged receipt of petitioner's CDP hearing request and scheduled a telephone hearing for September 27, 2011. On August 30, 2011, petitioner sent respondent a letter demanding that the CDP hearing be held in person in or near Intercourse, Pennsylvania. The settlement officer scheduled a face-to-face hearing for January 24, 2012, in Philadelphia, Pennsylvania. On that date petitioner's husband, Isaac Zook, called the settlement officer and informed him that petitioner could not attend the CDP hearing.
On February 27, 2012, a face-to-face CDP hearing was held. Petitioner attended the CDP hearing with her husband and two other family members. Petitioner acknowledged that she received the notice of deficiency. Petitioner did not request a collection alternative. Petitioner's husband argued that she did not receive proper notice from the Commissioner and that the assessments were not constitutional.[3]
Respondent issued petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, dated March 16, 2012, determining that all legal and procedural requirements in the filing of the notice of Federal tax lien had been followed and that the notice of Federal tax lien was appropriate. The notice of determination advised petitioner of the section 6673(a)(1) penalty for frivolous or groundless arguments. Petitioner timely filed a petition.
DISCUSSION
[Taxpayer was not entitled to challenge the assessment, and presented no collection alternatives, so no abuse of discretion]
Section 6673 Penalty
In the motion respondent has requested the Court to admonish or impose a penalty on petitioner under section 6673(a)(1). Section 6673(a)(1) authorizes the Court to impose a penalty not to exceed $25,000 if the taxpayer took frivolous positions in the proceeding or instituted the proceeding primarily for delay. A taxpayer's position is frivolous if it is "'contrary to established law and unsupported by a reasoned, colorable argument for change in the law.'" Williams v. Commissioner, 114 T.C. 136, 144 (2000) (quoting Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986)).
The notice of determination advised petitioner that this Court may impose the section 6673(a)(1) penalty against her if she raises frivolous or groundless arguments. Petitioner did not heed this advice and made the following arguments in her amended petition and in her opposition to motion for summary judgment: (1) she was not properly served with notice under section 6001;[5] (2) the SFRs constitute evidence of computer fraud and are a fraud on this Court; (3) the notice of deficiency is a nullity and constitutes evidence of mail fraud; (4) the notice of Federal tax lien is a nullity and constitutes evidence of mail fraud; (5) respondent is "exercising such powers through an officer other than the officer specified in law" and "in the absence of proof of jurisdiction"; and (6) "[p]etitioner received no 'income'", citing Eisner v. Macomber, 252 U.S. 189 (1920), Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918), and Merchants' Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921). The amended petition included many of the same arguments the Court deemed frivolous in Zook I ("The petition set forth various frivolous arguments".). As to the various arguments that petitioner has raised, "[w]e perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see also Holliday v. Commissioner, T.C. Memo. 2005-240, 2005 Tax Ct. Memo LEXIS 239, at *8. We find that petitioner advanced frivolous arguments primarily for the purpose of delay and require that she pay a penalty of $2,000 to the United States pursuant to section 6673(a)(1). We also warn petitioner that we will consider imposing a larger penalty if she returns to the Court and advances frivolous or groundless arguments in the future.
In reaching our decision, we have considered all arguments made by the parties, and to the extent not mentioned or addressed, they are irrelevant or without merit.
To reflect the foregoing,
An appropriate order and decision will be entered.
FOOTNOTES
[1] Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect at all relevant times.
[2] We note that petitioner acknowledged she received the notice of deficiency.
[3] In a prior proceeding petitioner's husband had made frivolous and groundless arguments and had been warned that a sec. 6673(a)(1) penalty might be imposed if he pursued similar arguments to this Court in the future. Zook v. Commissioner, T.C. Dkt. No. 17807-07 (Oct. 16, 2008) (Zook I) (order and decision).
[4] Respondent determined that petitioner had taxable income of $220,608 for 2004, $298,760 for 2005, and $275,542 for 2006.
[5] Sec. 6001 requires that taxpayers "shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe." Sec. 6001 does not require the Secretary to serve notice upon a taxpayer.
END OF FOOTNOTES
