Persistence Pays Off - 10K FrivPen Awarded

[The Observer]

ALVIN SHELDON KANOFSKY,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Release Date: JULY 31, 2014

UNITED STATES TAX COURT

Filed July 31, 2014

Alvin Sheldon Kanofsky, pro se.

Alex Shlivko, for respondent.

MEMORANDUM OPINION

DAWSON, Judge: This collection review case is before the Court on respondent's motion for summary judgment filed on February 6, 2014, pursuant to [*2] Rule 121. 1 Petitioner timely filed an objection to the motion. Petitioner had previously petitioned the Court to review a determination of the Internal Revenue Service (IRS) Office of Appeals (Appeals) sustaining the filing of a notice of Federal tax lien to collect petitioner's unpaid Federal income tax liabilities for 1996, 1997, 1998, and 2000 (years in issue). We must decide two issues: (1) whether Appeals abused its discretion in sustaining the filing of the notice of Federal tax lien; and (2) whether petitioner should be required to pay the United States a penalty pursuant to section 6673(a)(1). Both issues were raised in respondent's answer to the petition and the motion for summary judgment.

BACKGROUND

Petitioner has been a physics professor at Lehigh University since 1967. He resided in Pennsylvania when he filed his petition.

Petitioner's underlying income tax liabilities were assessed in accordance with the Court's decision entered in the deficiency case at docket No. 12547-04, for 1996, 1997, 1998, 1999, and 2000. 2 See Kanofsky v. Commissioner, T.C. [*3] Memo. 2006-79 (Kanofsky I),aff'd, 271 Fed. Appx. 146 (3d Cir. 2008). The facts surrounding the underlying deficiency litigation are summarized in the subsequent levy case, Kanofsky v. Commissioner, T.C. Memo. 2010-46 (Kanofsky II), aff'd, 424 Fed. Appx. 189 (3d Cir. 2011), as follows:

A. Overview

For each subject year, petitioner filed a Federal
income tax return on which he reported on a Schedule
C, Profit or Loss From Business, expense deductions
which offset any tax liability for the year. Respondent
issued to petitioner a notice of deficiency 3 which:
(i) Disallowed most of petitioner's claimed Schedule
C expense deductions; and (ii) determined a negligence
penalty for 1997 under section 6662(a).

[*4] B. Court's Decision and Subsequent Appeals

On July 16, 2004, petitioner petitioned the Court
to redetermine the disallowed trade or business expense
deductions and the negligence penalty. In Kanofsky
I [T.C. Memo. 2006-79], we found mostly for respondent,
and in doing so, disallowed a portion of petitioner's
claimed trade or business expenses and found petitioner
liable for the negligence penalty. We entered our
decision on November 17, 2006, and on December 20,
2006, denied a motion by petitioner to vacate or
revise the decision.

Petitioner appealed our decision to the U.S. Court
of Appeals for the Third Circuit without filing a
bond under section 7485 to stay assessment and collection.
The Court of Appeals affirmed our decision on April
1, 2008. Kanofsky v. Commissioner, 271 Fed. Appx.
146 (3d Cir. 2008). On May 16, 2008, petitioner again
sought relief from the Court of Appeals by filing
a "Petition for Rehearing on Decision of April 1,
2008 Affirming U.S. Tax Court Decision". On June
4, 2008, the Court of Appeals denied the petition
for rehearing.

Petitioner subsequently filed a petition for writ
of certiorari with the Supreme Court of the United
States to review the Court of Appeals' judgment.
Certiorari was denied on December 8, 2008, Kanofsky
v. Commissioner, 129 S. Ct. 741 (2008), and petitioner's
petition for rehearing with the Supreme Court was
denied on February 23, 2009, Kanofsky v. Commissioner,
129 S. Ct. 1406 (2009).

During petitioner's various appeals respondent pursued collection against him. On December 22, 2007, respondent issued to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (for 1996, 1997, 1998, 1999, and 2000). Petitioner requested a collection due process (CDP) hearing by filing Form 12153, Request for a Collection Due Process or Equivalent Hearing, but did [*5] not propose any collection alternatives or provide requested documents. On September 8, 2008, Appeals issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the proposed levy. Petitioner filed a petition in docket No. 24784-81. This Court sustained the levy in Kanofsky II, and on appeal the Court of Appeals for the Third Circuit affirmed our decision in Kanofsky v. Commissioner, 424 Fed. Appx. 189. In doing so, the Court of Appeals held that petitioner's obstruction of justice, corruption, fraud, and whistleblower activity arguments were irrelevant to the levy to collect petitioner's unpaid Federal income tax. Id. at 191-192.

On June 7, 2011, petitioner filed a petition for rehearing en banc and before an original panel, which the Court of Appeals summarily denied on June 20, 2011. On March 14, 2012, petitioner filed a petition for writ of certiorari with the Supreme Court, which was denied on April 16, 2012.

The Current Collection Case

On November 13, 2012, respondent issued to petitioner a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under 6320 (lien notice) for the years in issue, with respect to petitioner's Federal income tax liabilities as follows:

[*6] Year Unpaid balance of assessment
_____________________________________________________________________

1996 $ 17,706.70
1997 7,342.75
1998 12,502.26
2000 4,255.51

The lien notice provided petitioner with an opportunity to request a CDP hearing with Appeals. On December 20, 2012, he timely submitted Form 12153, requesting a hearing. In his request, petitioner checked the box identifying the notice of Federal tax lien as the basis for his hearing request and stated: "AMOUNT DUE IS FAR IN EXCESS OF ANY AMOUNT OWED NO EXPENSES OR DEDUCTIONS FOR NUMEROUS BUSINESS EXPENSES ALLOWED STILL IN LITIGATION." Petitioner did not propose any collection alternatives.

Petitioner's request was assigned to Settlement Officer Dawn Attivissimo (SO), who had no prior involvement with respect to the years in issue. On February 5, 2013, the SO sent petitioner a letter that: (1) scheduled a CDP telephone hearing for March 5, 2013; (2) requested that he submit copies of his unfiled 2008, 2009, 2010, and 2011 income tax returns and a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals if he wanted the SO to consider collection alternatives; and (3) advised [*7] him that he could not dispute the underlying tax liabilities as part of the CDP hearing because the deficiency for the years in issue were the result of a decision entered by the U.S. Tax Court.

Petitioner did not call the SO on March 5, 2013, regarding the hearing scheduled in the February 5, 2013, letter. Petitioner sent the SO a facsimile that included the first page of the February 5 letter, upon which he wrote: "This is in litigation. Regards, Alvin Kanofsky." By letter dated March 8, 2013, the SO gave petitioner an additional 14 days to respond and provide the requested information. Although petitioner timely responded to the SO by facsimile and discussed his current and pending litigation, he did not provide the requested information necessary for the SO to consider a collection alternative.

On April 10, 2013, Appeals issued to petitioner a Notice of Determination Concerning Collection Action Under Section 6320 and/or 6330 (notice of determination), sustaining the notice of Federal tax lien for the years in issue. The SO stated in her summary and recommendation that all legal and procedural requirements in filing the notice of Federal tax lien had been followed and that the notice was appropriate. Appeals determined that collection alternatives could not be considered because petitioner had not filed his required income tax returns for later years or provided the requested financial information. [*8] On May 9, 2013, petitioner timely filed his petition in this case for review of the determination sustaining the filing of the notice of Federal tax lien. He asserted in his petition various grounds to challenge his underlying income tax liabilities for 1996, 1997, 1998 and 2000, most of which he had previously raised in his deficiency (Kanofsky I) and levy (Kanofsky II) cases regarding the same liabilities. In Paragraph 5, "Points of Disagreement with IRS Determination", of his petition petitioner stated in part:

1. Am presently appealing whether I am in business
or not.

2. Am presently appealing whether previous Lien is
correct.

3. The deficiency is based on my having no expenses
at all.

4. I have had major expenses for building repairs,
mortgages, taxes, interest, etc., all of which have
not been recognized by the IRS.

* * * * * * *

8. I am a major whisteblower in several instances.
For example, I was the first and major whisteblower
on the University of Medicine and Dentistry of New
Jersey (UMDNJ) case. My older brother was in charge
of the billing system and was brutally discharged
just before UMDNJ double and triple billed Medicaid
and Medicare. The case went on for many years in
federal court. My brother died within a week of being
fired.

9. Governor Christie, finally, several years later
as U.S. Attorney for N.J. successfully prosecuted
UMDNJ for widespread Fraud and Corruption, but only
after a newspaper expose.

[*9] 10. None of the amounts withdrawn from my
deceased brother's TIAA-CREF accounts is personal
income.

11. I am continually subjected to fraud and corruption,
extortion, and bribery.

12. I am continually subjected to retaliation for
Whistle blowing.

13. I have substantial business good-will which is
diminished by the IRS actions.

Petitioner further stated in Paragraph 6, "Facts on Points of Disagreement", of his petition:

1. The Tax Court, the IRS and the Justice Department
have successfully blocked any of my evidence and
testimony on my business Activity.

2. The Tax Court, the IRS, and the Justice Department
have successfully blocked any of my evidence and
testimony on the rampant fraud and corruption, which
serves as an affirmative defense. They apparently
do not recognize fraud and corruption or an affirmative
defense.

3. Given, the recent spate of fraud and corruption
trials, both Federal and State, and the many revelations
involving fraud and corruption both locally, statewide,
nationwide, and world wide, it would seem appropriate
to finally recognize the business environment in
which the petitioner operates.

4. The Petitioner seeks reward and compensation for
his whistle blowing activity, and retaliation for
it. Also, he seeks compensation for retaliation of
his claims of fraud and corruption.

[*10] Respondent then filed his motion for summary judgment on February 6, 2014, to which petitioner has objected.

DISCUSSION

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We may grant summary judgment only if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 121(b); Naftel v. Commissioner, 85 T.C. 527, 528-529 (1985). Respondent, as the moving party, bears the burden of showing that the case is ripe for summary adjudication. FPL Grp., Inc. v. Commissioner, 115 T.C. 554, 559 (2000). In deciding whether to grant summary judgment, the factual materials and the inferences drawn from them must be considered in the light most favorable to the nonmoving party. Id. Whether facts are material depends upon the context in which they are raised and the legal issues presented. Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986).

When the moving party has carried its burden, however, the party opposing the summary judgment motion must do more than simply show that "there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith [*11] Radio Corp., 475 U.S. 574, 586 (1986). Specifically, Rule 121(d) imposes the following duty on the nonmoving party:

When a motion for summary judgment is made and supported
as provided in this Rule, an adverse party may not
rest upon the mere allegations or denials of such
party's pleading, but such party's response, by affidavits
or declarations or as otherwise provided in this
Rule, must set forth specific facts showing that
there is a genuine dispute for trial. * * * [Emphasis
added.]

See Ramdas v. Commissioner, T.C. Memo. 2013-104, at *18. Where the record viewed as a whole cannot lead a reasonable trier of fact to find for the nonmoving party, there is no "'genuine issue for trial'". Matsushita Elec. Indus. Co., 475 U.S. at 587 (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). On this record, we conclude that there is no genuine dispute as to any material fact in this case and that a decision may be rendered as a matter of law.

In his motion for summary judgment, respondent contends that: (1) pursuant to section 6330(c)(2)(B), petitioner's receipt of the notice of deficiency for 1996, 1997, 1998, and 2000 and his subsequent challenges of the same income tax liabilities in this Court preclude him from challenging them once again in this case; (2) the SO did not abuse her discretion in sustaining the filing of the notice of Federal tax lien in an attempt to collect the same tax liabilities; and (3) this Court should impose a section 6673(a)(1) penalty against petitioner for instituting [*12] this proceeding primarily for delay and/or for asserting frivolous or groundless positions. Petitioner's objections to the motion for summary judgment are mainly that: (1) this Court and the Internal Revenue Service have erroneously "blocked" his subpoenas for witnesses and submission of evidence; (2) his "Fraud and Corruption" arguments as well as his "whistleblower claims" are legitimate and not frivolous or instituted for delay; and (3) he "is working with groups who are trying to reform the tax system" and that "this case is certainly one of the main cases in the country being cited for reform of the tax codes."

Collection Procedures

Section 6321 imposes a lien in favor of the United States upon all property and rights to property of a person liable for taxes when there is a failure to pay the taxes after demand for payment. See Iannone v. Commissioner, 122 T.C. 287, 293 (2004). The lien generally arises at the time assessment is made. Sec. 6322. Section 6323 authorizes the Commissioner to file a notice of Federal tax lien. Pursuant to section 6320(a), the Commissioner must provide the taxpayer with notice of the lien filing and an opportunity for an administrative review of the propriety of the filing. See Katz v. Commissioner, 115 T.C. 329, 333 (2000).

Generally, the hearing is to be conducted in accordance with the procedures set forth in section 6330(c), (d), (e), and (g). Sec. 6320(c). A taxpayer may raise [*13] at the hearing any relevant issue relating to the unpaid tax, including offers of collection alternatives. Sec. 6330(c)(2)(A)(iii). A taxpayer may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive a statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability. Sec. 6330(c)(2)(B). Section 6330(c)(4)(A) provides, in pertinent part, that an issue may not be raised at the hearing if the issue was raised and considered in a previous administrative or judicial proceeding and the person seeking to raise the issue participated meaningfully in such hearing or proceeding. See also sec. 301.6320-1(e)(1), Proced. & Admin. Regs.

Scope of Review

The Commissioner must send a notice of deficiency to the taxpayer before the Commissioner may assess, collect, or reduce to judgment most income tax liabilities. United States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984); Crain v. Commissioner, T.C. Memo. 2012-97. Petitioner received a notice of deficiency for the years in issue in docket No. 12547-04, contested the deficiency in a trial in this Court, and lost. Therefore, he is precluded from challenging the same underlying tax liabilities again in this lien case. In view of respondent's allegations in his answer and his arguments in the motion for summary judgment, [*14] res judicata (claim preclusion) also bars us from reconsidering petitioner's underlying income tax liabilities for the same years. See Commissioner v. Sunnen, 333 U.S. 591, 597 (1948) (stating that a final judgment on the merits of a cause of action, absent fraud or some other factor invalidating the judgment, binds the parties to the lawsuit "'not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.'" (quoting Cromwell v. Cnty. of Sac, 94 U.S. 351, 352 (1876))); Koprowski v. Commissioner, 138 T.C. 54, 59-62 (2012).

Where the underlying liability is not properly in issue, we review an Appeals determination for abuse of discretion. See Lunsford v. Commissioner, 117 T.C. 183, 185 (2001); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Appeals abuses its discretion if its determination was arbitrary, capricious, or without sound basis in fact or law. See, e.g., Giamelli v. Commissioner, 129 T.C. 107, 111 (2007). In reviewing the SO's determination, the Court will consider only those section 6330(c)(2) issues that the taxpayer raised at the hearing. Id. at 113.

Petitioner raised no relevant issues other than the underlying income tax deficiency and offered no collection alternatives. The record shows that the SO [*15] (1) properly verified that the requirements of all applicable laws and administrative procedures were met in processing petitioner's case, (2) considered the issues petitioner presented, and (3) determined that the proposed collection action balanced the need for the efficient collection of taxes with petitioner's concerns that the collection action be no more intrusive than necessary. See sec. 6330(c)(3). In sum, we hold that Appeals did not abuse its discretion in sustaining the filing of the notice of Federal tax lien. We conclude that respondent is entitled to judgment as a matter of law and may proceed with his collection action. Therefore, we will grant respondent's motion for summary judgment.

We have considered petitioner's arguments and, to the extent not discussed above, conclude that they are irrelevant, moot, or without merit.

Section 6673(a)(1) Penalty

In his answer filed in this proceeding and his motion for summary judgment, respondent requests the Court to impose a penalty on petitioner under section 6673(a)(1). That section authorizes this Court to require the taxpayer to pay to the United States a penalty not in excess of $ 25,000 whenever it appears that: (1) the taxpayer has instituted or maintained proceedings primarily for delay; (2) the taxpayer's position is frivolous or groundless; or (3) the taxpayer unreasonably failed to pursue available administrative remedies. A taxpayer's position is [*16] frivolous or groundless 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)); see also Wnuck v. Commissioner, 136 T.C. 498, 513-514 (2011). The purpose of section 6673 is to compel taxpayers to think and to conform their conduct to settled tax principles; it was designed to deter frivolity and waste of judicial resources. See Coleman v. Commissioner, 791 F.2d 68; Grasselli v. Commissioner, T.C. Memo. 1994-581.

Petitioner is no stranger to this Court. He was warned in prior proceedings that his conduct could subject him to a penalty if he continued to repeat the arguments he made in earlier cases before this Court and the Court of Appeals for the Third Circuit in his deficiency and levy cases for the tax years 1996, 1997, 1998 and 2000. He has also litigated in this Court in docket No. 3774-11 his case involving income tax deficiency for 2006 and 2007. 4 In each case, petitioner has [*17] continued to raise arguments of fraud, corruption, and whistleblowing activities nearly identical to those raised in this lien case. During the March 19, 2012, trial in docket No. 3774-11, the Court cautioned petitioner in plain words against making those arguments, as follows:

Now, to the extent that you start off on side trips
that I don't think are relevant, I'm going to warn
you. But if it turns out that you persist in making
arguments -- now, you know the government has been
yelping about the fact that you're taking positions
they view as frivolous and groundless. And to some
degree, if those positions are the same positions
you asserted in your previous two visits to the Tax
Court [Kanofsky I and II], I may well agree with
them.

If I do, you've run the risk that you might be penalized
because there is a penalty under the Internal Revenue
Code that I can impose in my discretion if I conclude
that various arguments and positions are being asserted
that are frivolous, groundless, have been rejected
over and over again. So you just need to be forewarned.

The Court rendered a bench opinion in that case on March 21, 2012, and entered its decision in accordance with that opinion. 5 Petitioner appealed, and on [*18] April 5, 2013, the U.S. Court of Appeals for the Third Circuit affirmed in Kanofsky v. Commissioner, 520 Fed. Appx. 95 (3d Cir. 2013). The Court of Appeals specifically held that neither the Tax Court nor the IRS improperly obstructed petitioner's presentation of evidence and agreed with the Tax Court that his allegations of fraud and corruption and his assertion of "whistleblower" status were irrelevant to the merits of his case. The Court of Appeals stated:

Kanofsky alleged similar facts below; they permeated
his filings from his original petition to his post-trial
Rule 162 motion. He did not explain to the Tax Court,
and does not explain now, how events as disparate
as the Sandusky prosecution or alleged corruption
related to the Barnes Foundation have any bearing
on his tax liability. As we have explained to him
before, "arguments based on obstruction of justice,
corruption and fraud committed by public figures
in Pennsylvania and New Jersey," as well as his alleged
"extensive whisteblower activity" are "not relevant
* * * and do not advance his cause." Kanofsky v.
Commissioner, 424 Fed. Appx. 189, 191-92 (3d Cir.
2011) (per curiam).

Id. at 98 n.4.

In the collection case before us, petitioner has returned a fourth time to this Court, once again raising his arguments about fraud, corruption, and whistleblowing activities. He admits that he has been admonished by us and the Court of Appeals for the Third Circuit, to which an appeal in this case would lie. [*19] It is clear that petitioner has violated section 6673(a)(1). He has repeatedly asserted irrelevant and meritless arguments. He designed his petition to delay the collection of the income tax he owes. The Court of Appeals, this Court, and respondent's counsel have repeatedly warned petitioner of the potential implications of continuing to delay payment of his tax liabilities and of asserting irrelevant and groundless arguments. This Court has unequivocally warned taxpayers that abusing the procedural protections afforded by sections 6320 and 6330 by pursuing frivolous lien or levy actions for purposes of delaying the tax payment process will result in penalties under section 6673 when that section is applicable. Pierson v. Commissioner, 115 T.C. 576, 581 (2000).

Petitioner did not heed the advice and warning he was given. He has persisted in challenging his underlying income tax liabilities for the years in issue. He received a notice of deficiency with respect to those liabilities and challenged them in his deficiency case. His allegations of fraud and corruption and his appeals to "whistleblower" status were irrelevant in the deficiency and levy cases and have no bearing in this case. Petitioner has abused the judicial process and delayed collection of his unpaid tax liabilities. Petitioner is a well-educated individual who admits that he understood cautions and warnings given by this Court, yet he continues to reiterate the same irrelevant and groundless arguments. [*20] He has wasted the time and resources of both respondent and this Court. Accordingly, in exercising our discretion, we conclude that a penalty under section 6673(a)(1) is appropriate and justified in this case, and we shall require petitioner to pay to the United States a penalty of $ 10,000 under section 6673(a)(1). See, e.g., Streiffert v. Commissioner, T.C. Memo. 2014-62; Hill v. Commissioner, T.C. Memo. 2013-265; Golub v. Commissioner, T.C. Memo. 2013-196. We also warn petitioner again that we will consider imposing additional penalties if he returns and continues to raise irrelevant, frivolous, and groundless arguments or institutes or maintains further proceedings in this Court to delay the payment of Federal income tax lawfully assessed against him.

To reflect the foregoing,

An appropriate order and decision will be entered.

Penalty
Year Deficiency sec. 6662(a)
_____________________________________________________________________

1996 $ 14,506 ---
1997 15,437 $ 3,087.40
1998 10,078 ---
1999 716 ---
2000 2,970 ---

/3/

In the notice of deficiency dated April 19, 2004, respondent determined deficiencies in petitioner's Federal income tax and an accuracy-related penalty as follows:


Additions to tax under I.R.C.
________________________________________

Sec. Sec. Sec.
Year Deficiency 6651(a)(1) 6651(a)(2) 6654(a)
_____________________________________________________________________


2006 $ 26,033.00 $ 5,857.42 $ 4,816.10* $ 0
2007 45,433.00 10,222.42 5,679.12* 2,067.76
_____________________________________________________________________

*The amount of any addition to tax under sec. 6651(a)(2) shall be
determined pursuant to sec. 6651(a)(2), (b), and (c).

/5/

The decision in docket No. 3774-11 states in part:

FOOTNOTES:

/1/ All Rule references are to the Tax Court Rules of Practice and Procedure. All section references are to the Internal Revenue Code as amended and in effect at all relevant times.

/2/ We note that although petitioner's deficiency case involved his 1996, 1997, 1998, 1999, and 2000 tax years, this collection case involves only petitioner's 1996, 1997, 1998, and 2000 tax years.

/3/ In the notice of deficiency dated April 19, 2004, respondent determined deficiencies in petitioner's Federal income tax and an accuracy-related penalty as follows:

/4/ In addition to docket No. 3774-11 regarding the underlying deficiency for 2006 and 2007, petitioner filed two additional petitions concerning the lien and levy collection actions for those years. The petitions in those cases are similar to the petition filed in the instant case. In docket No. 21821-13L (involving the levy for 2006 and 2007), petitioner requests Washington, D.C., as the place of trial. That case is calendared for the September 29, 2014, trial session. In docket No. 22008-13L (involving the lien for 2006 and 2007), petitioner has requested Baltimore, Maryland, as the place of trial.

[Judge Roy Bean]

... (3) he "is working with groups who are trying to reform the tax system" ...

And how's that workin' out for ya, Alvin?

I'd love to know which gurus he's been "working with."

[LPC]

I don't think that this guy is a tax protester. I think he's just a crank.

He doesn't seem to have any theory about why the income tax is unconstitutional or inapplicable. He just thinks he's entitled to deductions that were denied, and something about whistleblowers and corruption that even the courts can't make any sense of.

[The Observer]

I don't think that this guy is a tax protester. I think he's just a crank.

And I am in 99% agreement with you on that. It's the mention of him working with "other groups" that has me wondering if he will flip over into the Koolade barrel.

[grixit]

Unusual to see a physicist do this. Perhaps he spent too much time meditating on the Grand Unified Field Theorem and it broke his brain.

[notorial dissent]

He strikes me like a number of highly intelligent over educated people I've known who think they know everything, or at least more than anyone else, and categorically refuse to listen to anyone or anything else once they have made up their minds about something. It comes under the heading of they are super smart, and therefore don't have to listen to anyone else, and doesn't have to have any real reason for their belief other than that they believe it to be. The likelihood of him changing is about the same as the sun going nova in the next ten minutes.

[Pottapaug1938]

He strikes me like a number of highly intelligent over educated people I've known who think they know everything, or at least more than anyone else, and categorically refuse to listen to anyone or anything else once they have made up their minds about something. It comes under the heading of they are super smart, and therefore don't have to listen to anyone else, and doesn't have to have any real reason for their belief other than that they believe it to be. The likelihood of him changing is about the same as the sun going nova in the next ten minutes.

My term for this kind of person is "mentally musclebound".

[Fmotlgroupie]

I don't think that this guy is a tax protester. I think he's just a crank.

He doesn't seem to have any theory about why the income tax is unconstitutional or inapplicable. He just thinks he's entitled to deductions that were denied, and something about whistleblowers and corruption that even the courts can't make any sense of.

I thought that this was a TP version of the whole split-person theory: the (imaginary)"person" ("taxpayer") is in the business of selling a "flesh and blood man"'s services, and any expenses involved in maintaining a function "flesh and blood man" (food, shelter, Xbox etc) is a business expense, like the cost of a truck driver maintaining his truck. I forget who was pushing that nonsense, but I'll have a look if I can dig it up.

Edit: I think it's Fiscal Arbitrators I'm thinking of.

Does anybody know if the amounts shown in the judgement ($7-17,000) is a reasonable % of a professor's tax liability? If it's not most of his tax obligation I'm probably wrong.

[LPC]

I thought that this was a TP version of the whole split-person theory: the (imaginary)"person" ("taxpayer") is in the business of selling a "flesh and blood man"'s services, and any expenses involved in maintaining a function "flesh and blood man" (food, shelter, Xbox etc) is a business expense, like the cost of a truck driver maintaining his truck.

I don't find any evidence of that in the "Kanofsky I" decision, T.C. Memo 2006-79. The court never suggested that he was trying to deduct living expenses. And some of the expenses "(e.g., insurance, taxes, mortgage interest)" were allowed by the IRS as Schedule A deductions "with respect to investment properties." For two of the years, the IRS also allowed some expenses as "employee business expenses." The court's decision is based entirely on the finding that there was insufficient evidence of a "trade or business" for which other kinds of expenses are deductible.

The Tax Court summarized his evidence as follows:

Petitioner testified at trial and reiterates on brief that he has been engaged in various business activities for the past 25 years, and that, as petitioner puts it on brief, during the 1996-2000 period, he was actively “developing ideas for companies, creating companies, and expanding on earlier research projects and ideas, developing patents, and protecting the company interests with law suits [sic], etc. as well as using his building for business purposes and improving the building.”

The Tax Court found that his documentary evidence was either insufficient or inadmissable, and had this to say about his testimony:

Nor does petitioner’s trial testimony support his position. Other than stating that he has “engaged in business activity for the past 25 years” and has been “consulting and developing companies over many years”, and that he “started back in 1980 with a company, ASK Enterprises and * * * tried to develop the company over the years”, his testimony generally describes the manner in which he was thwarted by third parties from pursuing any business activities.

In other words, the guy is crank.

And in two of the five years he had *zero* business income.

So his "business" was "developing ideas" that nobody wanted, and suing people he thinks have wronged him. (Although I have to admit that there are no recent cases on PACER. There's a 1996 case against "University of Medicine and Dentistry of New Jersey, et al.," which was appealed to the Third Circuit and the Supreme Court, but I'm not sure what it was about. And it looks like Kanofsky's lawyers had to sue him for their fees.)

[LPC]

There's a 1996 case against "University of Medicine and Dentistry of New Jersey, et al.," which was appealed to the Third Circuit and the Supreme Court, but I'm not sure what it was about.

I stumbled upon a copy of the Third Circuit opinion while looking for something else. It was an employment discrimination suit that Kanofsky brought on behalf of his deceased brother, so it was personal and not "business."

There's also some weird litigation involving a vacant property in Philadelphia. Apparently, Kanofsky's father lived there until his death in 1997. After 12 years, the City gave notice that the property was vacant and in violation of City ordinances. City employees then "cleaned out materials such as books, papers, and miscellaneous items (other than furniture)" and billed Kanofsky (and his brother) for the costs. Litigation ensues.

I've found some other stuff, and I don't think you pursue as much litigation as Kanofsky has pursued without a certain kind of mindset or personality.

[.]

Very cranky. 10K of pure nonsense cranky.

Doesn't sound like he even survives the old "profitable 3 of 5 years" test to avoid being classified as a hobbyist, never mind some of the 8 or 9 point tests of whether you are engaged in whatever activity for profit.

Perhaps claiming that he was working for the CIA would have worked better.

[notorial dissent]

I have a feeling the good doctor is like a number of physicist types I've known who while quite good, in fact excellent at their jobs, also fancied themselves to be business and inventors and puttered in their garages or basements over the years, and like them I have a feeling that Kanofsky was probably about as organized and as good a record keeper, and what he thought were business expenses weren't or weren't of the caliber to be accepted by the IRS. It sounds like he was more in the realm of a garage tinkerer with delusions of grandeur.

[jcolvin2]

He's back ... for another 20K!

http://www.ustaxcourt.gov/InOpTodays/Ka ... CM.WPD.pdf

T.C. Memo. 2015-34
UNITED STATES TAX COURT
ALVIN SHELDON KANOFSKY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21821-13L. Filed February 26, 2015.
Alvin Sheldon Kanofsky, pro se.
Shari A. Salu, for respondent.

MEMORANDUM OPINION

LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to section 6330(d)(1) of the determination by the Internal
Revenue Service (IRS or respondent) to uphold a notice of intent to levy.1 The [*2] IRS has moved for summary judgment under Rule 121, contending that there
are no disputed issues of material fact and that its determination to sustain the
collection action was proper as a matter of law. We agree and accordingly will
grant the motion. Having concluded that petitioner’s position in this case is frivolous
and that he instituted these proceedings primarily for delay, we will also impose
upon him under section 6673 a penalty of $20,000.

Background

The following facts are derived from the parties’ pleadings and motion papers,
including attached affidavits and exhibits. Petitioner resided in Pennsylvania
when he filed his petition.

On November 15, 2010, the IRS timely issued notices of deficiency for
2006 and 2007 and petitioner timely petitioned this Court. Following a trial, the
Court issued a bench opinion sustaining in full the deficiencies and additions to
tax determined by the IRS. Kanofsky v. Commissioner, docket No. 3774-11 (Mar.
21, 2012). A decision consistent with that opinion was issued on April 30, 2012.
The Court of Appeals for the Third Circuit affirmed that decision, Kanofsky v.
Commissioner, 520 Fed. Appx. 95, 96 (3d Cir. 2013), and the Supreme Court [*3] denied certiorari and petitioner’s subsequent petition for rehearing, Kanofsky
v. Commissioner, 134 S. Ct. 802 (2013), 134 S. Ct. 1367 (2014).
Petitioner did not post a bond to stay assessment and collection. See sec.
7485(a). In an effort to collect the assessed tax, on March 20, 2013, the IRS sent
him a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, and
he timely requested a CDP hearing. In his request, he did not indicate any desire
for a collection alternative and stated as his reason for disagreeing with the levy:
“Still in litigation, working on reducing amounts.”

On July 16, 2013, a settlement officer (SO) from the IRS Appeals office
sent petitioner a letter scheduling a telephone CDP hearing for August 14, 2013.
This letter explained that if petitioner desired a collection alternative, he would
need to supply a completed Form 433-A, Collection Information Statement for
Wage Earners and Self Employed Individuals, together with supporting financial
data. The letter also noted that petitioner would need to bring himself into compliance
with his Federal tax obligations by filing signed returns for 2009-2012.
Petitioner submitted no documentation to the SO during the next month and
did not call in for the scheduled CDP hearing. The SO telephoned him shortly
after the appointed time on August 14, 2013, but he did not answer the call. He
did not contact the SO, by telephone or otherwise, to reschedule the hearing or to [*4] request additional time to supply documents. The SO accordingly closed the
case and, on August 20, 2013, the IRS issued a Notice of Determination
Concerning Collection Action(s) under Section 6320 and/or 6330 sustaining the
levy.

Petitioner timely sought review in this Court and, on July 29, 2014, the IRS
filed a motion for summary judgment. Petitioner responded to this motion on
September 3, 2014, contending (among other things) that the SO abused her discretion
“because the case was still under consideration in the higher courts, as well
as Petitioner being continually under pressure from the community, and continually
subjected to fraud and corruption.” He contends that “there are numerous disputed
issues of fact,” including “the blockage of the tax exempt status of Jewish
Non-Profit Groups and the Republican PAC Support Groups,” and he asserts that
the “flare up of the ISIS groups in the Middle East and the Israeli-Gaza and
Ukranian-Russian conflicts may have a bearing on the prosecution of this case.”
He asserts that he should be immune from any penalty for taking frivolous positions
because he “has continued to be subjected to fraudulent and corrupt actions
by the community in a concerted effort to block his business activities” and
because he “is one of the major whistleblowers in the country.”

[*5] Discussion

A. Summary Judgment and Standard of Review

The purpose of summary judgment is to expedite litigation and avoid unnecessary
and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90 T.C.
678, 681 (1988). The Court may grant summary judgment when there is no genuine
dispute as to any material fact and a decision may be rendered as a matter of
law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d
965 (7th Cir. 1994). Where the moving party properly makes and supports a motion
for summary judgment, “an adverse party may not rest upon the mere allegations
or denials of such party’s pleading,” but must set forth specific facts, by affidavit
or otherwise, showing that there is a genuine dispute for trial. Rule 121(d).
Petitioner’s response to the motion for summary judgment alleges no colorable
dispute as to any material fact, and we conclude that this case may be adjudicated
summarily.

Section 6330(d)(1) does not prescribe the standard of review that this Court
should apply in reviewing an IRS administrative determination in a CDP case.
The general parameters for such review are marked out by our precedents. Where
the validity of the underlying tax liability is at issue, the Court reviews the IRS’
determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

[*6] Where the underlying liability is not properly at issue, the Court reviews the
IRS’ determination for abuse of discretion. Id. at 182. Abuse of discretion exists
when a determination is arbitrary, capricious, or without sound basis in fact or law.
See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st
Cir. 2006).

A taxpayer may contest at a CDP hearing the existence or amount of his
underlying tax liability only if he did not receive a notice of deficiency for the tax
year in question or otherwise have a prior opportunity to dispute it. See sec.
6330(c)(2)(B). Petitioner not only received notices of deficiency for 2006 and
2007; he litigated his liabilities for those years, unsuccessfully, all the way to the
Supreme Court. Our decision in that case is now final. See sec. 7481(a)(2). Because
petitioner had a prior opportunity to dispute and did dispute his underlying
tax liabilities for 2006 and 2007, he was barred from contesting those liabilities in
the CDP hearing and is likewise barred from contesting those liabilities here. We
therefore review the SO’s decision for abuse of discretion only.

B. Abuse of Discretion

We consider whether, in the course of making his determination, the SO:
(1) properly verified that the requirements of any applicable law or administrative
procedure were met; (2) considered any relevant issues petitioner raised; and (3) [*7] determined whether “any proposed collection action balances the need for the
efficient collection of taxes with the legitimate concern of the person that any
collection action be no more intrusive than necessary.” Sec. 6330(c)(3). It is clear
from our review of the record that the SO conducted a thorough review of the
transcripts of petitioner’s account and verified that the requirements of applicable
law and administrative procedure were followed. The SO properly balanced the
need for efficient collection of taxes with petitioner’s legitimate concern that the
collection action be no more intrusive than necessary.

Petitioner did not raise any valid challenge to the appropriateness of the
proposed collection action. Indeed, he declined to submit any documents and
refused to participate in the CDP hearing that the IRS offered him. A settlement
officer does not abuse her discretion when she declines to consider collection
alternatives under these circumstances. See, e.g., Lance v. Commissioner, T.C.
Memo. 2009-129; Shanley v. Commissioner, T.C. Memo. 2009-17 (finding no
abuse of discretion when IRS issued notice of determination upon the taxpayer’s
failure to provide requested documentation within 14 days).

C. Section 6673(a)(1) Penalty

In his motion for summary judgment, respondent asks the Court to impose a
penalty on petitioner under section 6673(a)(1). That section authorizes this Court [*8] to require the taxpayer to pay to the United States a penalty not in excess of
$25,000 if it appears that the taxpayer has instituted or maintained proceedings
primarily for delay or the taxpayer’s position is frivolous or groundless. The
purpose of section 6673 is to compel taxpayers to conform their conduct to settled
tax principles and to deter the waste of judicial resources. See Coleman v. Commissioner,
791 F.2d 68, 71 (7th Cir. 1986); Salzer v. Commissioner, T.C. Memo. 2014-188.

Petitioner is no stranger to this Court. He has been warned in prior proceedings
that his conduct would subject him to penalty if he continued to repeat the
same litany about fraud, corruption, and whistleblowing that he recites in this case
and has recited almost verbatim previously. During the trial of his 2006 and 2007
tax liabilities, the collection of which is at issue here, the Court explicitly warned
petitioner that his assertion of frivolous positions risked the imposition of a significant
penalty. The Court of Appeals for the Third Circuit has previously
warned petitioner that his “arguments based on obstruction of justice, corruption
and fraud committed by public figures in Pennsylvania and New Jersey,” as well
as his alleged “extensive whisteblower activity,” are “not relevant * * * and do not
advance his cause.” Kanofsky v. Commissioner, 424 Fed. Appx. 189, 191-192 (3d
Cir. 2011) (per curiam), aff’g T.C. Memo. 2010-46.

[*9] In Kanofsky v. Commissioner, T.C. Memo. 2014-153, which involved respondent’s
efforts to collect petitioner’s assessed tax liabilities for 1996-2000, we
reviewed his extensive record of litigation in this Court and concluded as follows:
Petitioner has abused the judicial process and delayed collection of
his unpaid tax liabilities. Petitioner is a well-educated individual who
admits that he understood cautions and warnings given by this Court,
yet he continues to reiterate the same irrelevant and groundless
arguments. He has wasted the time and resources of both respondent
and this Court. Id. at *19-*20. We concluded that a penalty under section 6673(a)(1) was amply
justified and required petitioner to pay a penalty of $10,000. We “warn[ed]
petitioner again that we will consider imposing additional penalties if he returns
and continues to raise irrelevant, frivolous, and groundless arguments or institutes
or maintains further proceedings in this Court to delay the payment of Federal
income tax lawfully assessed against him.” Id. at *20.

That warning was issued on July 31, 2014. In responding to the instant motion
for summary judgment on September 3, 2014, petitioner nevertheless repeated
the same tiresome series of groundless and irrelevant arguments. We find once
again that petitioner’s arguments are frivolous and that he has instituted this case
for the sole purpose of delaying the collection of his Federal tax liabilities. True [*10] to our word, we will accordingly require that he pay to the United States a
penalty under section 6673(a), this time in the amount of $20,000.

To reflect the foregoing,
An appropriate order and decision
will be entered.



1 All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.

[Pottapaug1938]

Wanna go for the max, Perfesser?

[.]

How to turn 40K, give or take into 70K. Pure genius.

Bet he hasn't yet paid a dime of it. But, good to see the TC actually hitting a recidivist jerk with promised additional sanctions when they say they're gonna do so. Instead of the often-usual "By golly, if you pull this crap again, we're gonna whack you" and then just firing off another useless warning.

He's probably uncollectible to both the IRS and the court. But, isn't there some rule about requiring approval to file anything when you owe unpaid sanctions to a court? Or would they have to designate him as some version of vexatious to restrain his junk filings?

[jcolvin2]

Going for the whole enchilada - another 20k!

T.C. Memo. 2015-70

UNITED STATES TAX COURT

ALVIN SHELDON KANOFSKY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22008-13L. Filed April 8, 2015.
Alvin Sheldon Kanofsky, pro se.
Bradley C. Plovan, for respondent.
MEMORANDUM OPINION

RUWE, Judge: Petitioner seeks review pursuant to sections 6320(b) and
(c) and 6330(d)(1) of the determination o 1 f the Internal Revenue Service to uphold [*2] the filing of a notice of Federal tax lien for unpaid income tax for 2006 and
2007. Respondent has moved for summary judgment (motion) under Rule 121.
Petitioner objects. The matter is ripe for summary judgment.

At the time the petition was filed, petitioner resided in Pennsylvania.
The unpaid tax for 2006 and 2007 was the subject of a recently decided case
involving a proposed levy. Kanofsky v. Commissioner, T.C. Memo. 2015-34. In
that case this Court upheld the determination to proceed with the levy. The Court
rejected petitioner’s position in that case and imposed a $20,000 section
6673(a)(1) penalty because petitioner’s position was frivolous and his case had
been instituted for the sole purpose of delay.

In the instant case petitioner raises the same frivolous arguments.2 We
perceive no need to once again refute those arguments with somber reasoning and
copious citation of precedent; to do so might suggest that those arguments have
some merit. Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984).

[*3] For the reasons stated in Kanofsky v. Commissioner, T.C. Memo. 2015-34,
we uphold respondent’s determination regarding the lien and will require that
petitioner pay a penalty under section 6673(a) in the amount of $20,000.

To reflect the foregoing,
An appropriate order and
decision will be entered.

1Unless otherwise indicated, all section references are to the Internal
Revenue Code as amended, and all Rule references are to the Tax Court Rules of
Practice and Procedure.

2 See also Kanofsky v. Commissioner, 424 Fed. Appx. 189 (3d Cir. 2011)
(per curiam), aff’g T.C. Memo. 2010-46; Kanofsky v. Commissioner, T.C. Memo.
2014-153. To the extent petitioner’s response (and attachments thereto) to
respondent’s motion might be construed as raising any other arguments, we find
them to be equally frivolous or irrelevant.

[Pottapaug1938]

Is this "another" 20K; or is this court merely repeating that the Learner Perfesser is on the hook for the 20K imposed upon him in his last waltz with the Tax Court?

[grixit]

looks like another 20,000 to me. My ghast is well and truly flabbered.

[notorial dissent]

A new trend mayhaps???

[grixit]

The 20 Thousand Club-- the made guys of the SovHood.

The 40 Thousand Club-- Sov4Lyfe, yo!