                        T.C. Memo. 2014-62



                  UNITED STATES TAX COURT



           RUSSELL STREIFFERT, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 24162-10L.                       Filed April 8, 2014.



       In docket No. 3613-04L, P and his wife challenged a notice of
determination by the IRS Appeals Office sustaining a proposed levy
to collect their joint federal-income-tax liability for 1998. The Tax
Court dismissed the case because the petition did not contain any
arguments with legal basis. The Court ordered P and his wife to pay a
penalty of $5,000 under I.R.C. sec. 6673. The U.S. Court of Appeals
dismissed the untimely notice of appeal that P and his wife filed and
imposed a $3,500 sanction against them under Fed. R. App. P. 38. In
docket No. 3853-05L, P challenged a notice of determination by the
IRS Appeals Office sustaining a proposed levy to collect his federal
income-tax liabilities for the tax years 1996, 1997, 1999, 2000, and
2001, and a $500 frivolous-return penalty assessed against him for the
tax year 1997. The notice of determination included the
determination that P’s return for 1997 was frivolous. The Tax Court
dismissed the case because the arguments in the petition were
frivolous and groundless. The Court ordered P to pay a penalty of
$10,000 under I.R.C. sec. 6673. P now files a petition challenging a
                                   -2-

[*2] notice of determination by the IRS Appeals Office sustaining (1)
a proposed levy to collect his federal income-tax liability for the tax
year 2002 and (2) a notice of federal tax lien to collect (a) his federal
income-tax liabilities for the tax years 1996, 1997, 1998, 1999, 2000,
2001, 2002 and (b) the $500 frivolous-return penalty assessed against
him for the tax year 1997.

      Held: P’s argument that the IRS failed to personally interview
him to ascertain his income-tax liabilities is without merit.

       Held, further, P cannot challenge the merits of his income-tax
and frivolous-return-penalty liabilities anyway. Under I.R.C. sec.
6330(c)(2)(B), a taxpayer may not challenge the existence or amounts
of liabilities in a proceeding before the IRS Appeals Office if the
taxpayer had a prior opportunity to raise the challenge. With respect
to P’s income-tax liabilities for 1996, 1997, 1998, 1999, 2000, and
2001, if P received notices of deficiency, then his right to file a
petition in the Tax Court for redetermination of the deficiencies
constituted his prior opportunity to challenge the existence or
amounts of the income-tax liabilities. If he did not receive notices of
deficiency, then he could have presented his challenges to the
existence or amounts of the income-tax liabilities to the IRS Appeals
Office at his prior two proceedings at that Office. (The first
proceeding involved the 1998 year; the second proceeding involved
the years 1996, 1997, 1999, 2000, and 2001.) Even if the IRS
Appeals Office had refused to consider his challenges, he could have
asserted the challenges directly in the Tax Court cases by which he
sought review of the Appeals Office’s determinations. With respect
to his 2002 income-tax liability, we consider P to have received a
notice of deficiency. With respect to the $500 frivolous-return
penalty assessed against P for the tax year 1997, P had a prior
opportunity to challenge the existence and amount of the penalty in
the second proceeding at the IRS Appeals Office.

       Held, further, P maintained this proceeding to delay collection
of his liabilities. His position is meritless. We impose an I.R.C. sec.
6673 penalty of $15,000.
                                          -3-

[*3] Russell Streiffert, pro se.

      Gordon P. Sanz and Randall G. Durfee, for respondent.



                            MEMORANDUM OPINION


      MORRISON, Judge: This case is an appeal, pursuant to section 6330(d)(1),

by which the petitioner, Mr. Russell Streiffert, seeks this Court’s review of a

determination by the IRS Appeals Office sustaining:

      (1)    the filing of a notice of federal tax lien to collect Mr. Streiffert’s

             income-tax liabilities for 1996, 1997, 1998, 1999, 2000, 2001, and

             2002,

      (2)    the filing of a notice of federal tax lien to collect Mr. Streiffert’s $500

             frivolous-return penalty for 1997, and

      (3)    a proposed levy to collect Mr. Streiffert’s income-tax liability for

             2002.

The respondent (whom we refer to as the IRS) has moved for summary judgment

and for the Court to impose a penalty under section 6673. We will grant the

motion.
                                          -4-

[*4] Except as otherwise noted, all citations of sections refer to the Internal

Revenue Code of 1986, as amended (26 U.S.C.) and in effect at all relevant times.

                                     Background

      The following facts are based on the assertions in the IRS’s motion papers

that are supported in accordance with Tax Court Rule of Practice and Procedure

121 and as to which Mr. Streiffert did not raise any genuine dispute as to any

material fact. At the time he filed his petition, Mr. Streiffert resided in Texas.

      Mr. Streiffert has been involved in three cases before the U.S. Tax Court,

including the present case. All three cases are described below.

1.    The first case: Russell and Sharon Streiffert v. Commissioner, Tax Court
      docket No. 3613-04L

      On January 29, 2004, after a collection-review hearing, the IRS Appeals

Office issued a notice determining to proceed with a proposed levy to collect the

joint federal income tax liability of Mr. Streiffert and his wife, Ms. Sharon

Streiffert, for the tax year 1998. Order at 1-2, docket No. 3613-04L, May 13,

2004. The Appeals Office’s notice of determination stated that the Streifferts had

“only raised frivolous issues, which we [the Appeals Office] could not address

during a Collection Due Process Hearing [i.e., a collection-review hearing].”

Entry No. 3, Ex. A at 2, docket No. 3613-04L, Mar. 22, 2004. The notice stated
                                          -5-

[*5] that the requirements of all applicable law and administrative procedure had

been followed, although it did not specifically state whether a notice of deficiency

had been issued for 1998. The notice did not state that the Streifferts had had a

prior opportunity to dispute their underlying tax liability or that they were barred

from contesting their underlying tax liability at the collection-review hearing. The

Streifferts filed a petition with the Tax Court challenging the notice of

determination. Order at 2, docket No. 3613-04L, May 13, 2004. That case was

assigned docket No. 3613-04L.

      The Court dismissed the Streifferts’ case for failure to state a claim upon

which relief could be granted. Id. at 4. It observed that the Streifferts’ petition

and other filings contained “a hodgepodge of rhetoric, unsupported assertions, and

legalistic gibberish without any actual legal basis.” Id. at 4. It ordered the

Streifferts to pay a penalty of $5,000 under section 6673. Id. at 5. The Court

warned the Streifferts that it would consider imposing larger penalties if they

advanced similar arguments in future litigation. Id. at 4.

      The Streifferts filed an untimely notice of appeal which the U.S. Court of

Appeals for the Fifth Circuit dismissed. Streiffert v. IRS, 140 Fed. Appx. 527, 529

(5th Cir. 2005). It imposed a $3,500 sanction on the Streifferts under Federal Rule
                                         -6-

[*6] of Appellate Procedure 38, observing that the Streifferts’ arguments “have at

all times been frivolous and without merit”. Id. at 529.

2.    The second case: Russell Streiffert v. Commissioner, Tax Court docket No.
      3853-05L

      On January 27, 2005, after a collection-review hearing, the IRS Appeals

Office issued a notice determining to proceed with a proposed levy to collect (1)

Mr. Streiffert’s federal income tax liabilities for the tax years 1996, 1997, 1999,

2000, and 2001 and (2) a $500 frivolous-return penalty that the IRS had assessed

against Mr. Streiffert for tax year 1997. Order at 1, docket No. 3853-05L, Aug. 9,

2005; Entry No. 5, Ex. B (2d) at 3, docket No. 3853-05L, May 3, 2005. The

notice of determination stated that Mr. Streiffert was precluded from challenging

the underlying income-tax liabilities at the collection-review hearing because he

had previously received a statutory notice of deficiency for 1996, 1997, 1999,

2000, and 2001. Entry No. 5, Ex. B (2d) at 3, docket No. 3853-05L, May 3, 2005.

The notice of determination also stated that Mr. Streiffert was liable for the $500

frivolous-return penalty because, the notice concluded, the Form 1040, U.S.

Individual Income Tax Return, he had submitted to the IRS for tax year 1997 was

frivolous. Id. at 5.
                                          -7-

[*7] On February 28, 2005, Mr. Streiffert filed a petition with the Tax Court

challenging the Appeals Office’s notice of determination. Order at 1, docket No.

3853-05L, Aug. 9, 2005. Because the petition contained nothing but frivolous and

groundless arguments, the Court dismissed the case for failure to state a claim

upon which relief could be granted. Id. at 2-3. The Court ordered Mr. Streiffert to

pay a penalty under section 6673 of $10,000. Id. at 4. The Court observed that

Mr. Streiffert had raised frivolous and groundless arguments in the Streifferts’

prior case at docket No. 3613-04L. Id. at 3.

3.    The third (and present) case: Russell Streiffert v. Commissioner, Tax Court
      docket No. 24162-10L

      On September 30, 2010, after a collection-review hearing, the IRS Appeals

Office determined to sustain the following collection actions:

      (1)    the filing of a notice of federal tax lien to collect Mr. Streiffert’s

             income-tax liabilities for 1996, 1997, 1998, 1999, 2000, 2001, and

             2002;

      (2)    the filing of a notice of federal tax lien to collect Mr. Streiffert’s $500

             frivolous-return penalty for 1997; and

      (3)    a proposed levy to collect Mr. Streiffert’s income-tax liability for

             2002.
                                         -8-

[*8] The notice of determination reflected that the hearing with Mr. Streiffert had

been conducted by correspondence.

      The notice stated that at the hearing Mr. Streiffert had challenged the

assessments of income-tax liability for 1996, 1997, 1998, 2000, 2001, and 2002 on

the grounds that the IRS had not conducted an examination interview. The notice

stated that the challenge was unmeritorious: “The guidelines set forth under the

Code of Federal Regulations under 601.105 are not mandatory. These procedural

rules are directory. The failure of the service to conduct a face to face

examination does not make the assessments invalid.” The notice stated that the

IRS had issued statutory notices of deficiency regarding 1996, 1997, 1998, 1999,

2000, 2001, and 2002. The notice stated that Mr. Streiffert was unable to dispute

his underlying liabilities because he had had a prior opportunity to do so:

      The taxpayer has had ample opportunities to present evidence of his
      tax liability.

      The taxpayer is no stranger to tax court. The taxpayer has previously
      petitioned tax court under IRC 6330 collection due process for
      proposed levy action. Tax court case under docket number 3613-04
      addressed 1040 liability for tax year 1998. Tax court case under
      docket number 3853-05 addressed 1040 liabilities for tax year(s)
      1996, 1997, 1999, 2000, 2001 and civil penalty assessment under
      Internal Revenue Code (IRC) 6702(a) for tax year 1997. The tax
      court cases mentioned above were dismissed for lack of jurisdiction.
      The taxpayer is unable to raise the liability due to prior opportunity.
                                         -9-

[*9] The notice determined that Mr. Streiffert was liable for the $500 frivolous-

return penalty because, the notice concluded, he had submitted a frivolous Form

1040 for the tax year 1997.

      On or about October 29, 2010, Mr. Streiffert filed a 366-line petition with

the Tax Court challenging the Appeals Office’s notice of determination. The IRS

moved to strike the petition, except for lines 216 through 227, on the grounds that

the material raised frivolous arguments. On June 17, 2011, the Court struck the

petition except for lines 216 through 227 and a three-paragraph introduction at the

beginning of the petition.

      On December 19, 2011, the IRS filed a motion for summary judgment and

for the Court to impose a penalty under section 6673. In the motion the IRS

contends that during the prior two Tax Court cases (and the related collection-

review hearings) Mr. Streiffert had had prior opportunities to challenge (1) the

income-tax liabilities for the years 1996 through 2001 and (2) the frivolous-return

penalty for the year 1997. The IRS contends that during his last collection-review

hearing, Mr. Streiffert did not deny receiving a notice of deficiency for 2002. Mr.

Streiffert responds that the notices of deficiency, and the assessments of the

income-tax liabilities and the frivolous-return penalty, are invalid because the IRS

did not conduct an examination interview regarding his income-tax liabilities for
                                          -10-

[*10] those years. He contends that the source of his right to an examination

interview is found in section 601.105(b)(2)(i), Statement of Procedural Rules. He

also contends that he did not receive any notices of deficiency.

4.     Summary of the three cases

       The following table reflects the types of liabilities and tax periods involved

in the three cases.

                                  Tax Court litigation:
                      IRS collection activity against Mr. Streiffert
     Key:
     04L = docket No. 3613-04L (wife is co-party)
     05L = docket No. 3853-05L
     10L = docket No. 24162-10L
                                             Type of collection activity
      Annual tax period and
        type of liability                   Levy                       Lien

         1996 income tax                    05L                        10L
         1997 income tax                    05L                        10L
     1997 sec. 6702 penalty                 05L                        10L
         1998 income tax                     04L                       10L
                                      (involving joint
                                          liability)
         1999 income tax                    05L                        10L
         2000 income tax                    05L                        10L
         2001 income tax                    05L                        10L
         2002 income tax                    10L                        10L
                                         -11-

[*11]                                 Discussion

I.      Summary judgment

        Summary judgment may be granted where there is no genuine dispute as to

any material fact and a decision may be rendered as a matter of law. Tax Ct. R.

Pract. & Proc. 121(a) and (b). The party moving for summary judgment (here, the

IRS) bears the burden of showing that there is no genuine dispute as to any

material fact, and factual inferences will be drawn in the manner most favorable to

the party opposing summary judgment (here, Mr. Streiffert). Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982). However, Tax Court Rule of Practice

and Procedure 121(d) provides:

        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. * * *

        When a taxpayer fails to pay any federal tax liability within 10 days of

notice and demand for payment, the IRS may collect the unpaid tax by levy on the

taxpayer’s property pursuant to section 6331. Before the IRS may proceed with a

levy, the taxpayer is entitled to administrative review pursuant to section 6330.

Administrative review takes the form of a hearing before the IRS Appeals Office.
                                         -12-

[*12] Sec. 6330(b). The pertinent procedures for this collection-review hearing

are set forth in section 6330(c). First, the Appeals Office must obtain verification

from the Treasury Department that the requirements of any applicable law or

administrative procedure have been met. Sec. 6330(c)(1). Second, the taxpayer

may “raise at the hearing any relevant issue relating to the unpaid tax or the

proposed levy”, including challenges to the appropriateness of the collection

action and offers of collection alternatives. Sec. 6330(c)(2)(A). Section

6330(c)(2)(B) provides that the taxpayer may contest the existence and amount of

the underlying tax liability, but only if the taxpayer did not receive a notice of

deficiency and “did not otherwise have an opportunity to dispute such tax

liability.” See Baltic v. Commissioner, 129 T.C. 178, 180-181 (2007); Oyer v.

Commissioner, T.C. Memo. 2003-178, slip op. at 15-17, aff’d, 97 Fed. Appx. 68

(8th Cir. 2004). A similar collection-review hearing is also afforded to a taxpayer

upon the IRS’s filing of a notice of federal tax lien. Sec. 6320(b)(1).

      After the Appeals Office has issued its determination, the taxpayer may

appeal the determination to the Tax Court, pursuant to section 6330(d)(1), as Mr.

Streiffert has done. In such an appeal, we review de novo any determination of the

Appeals Office as to the underlying liability that is properly at issue. See Murphy

v. Commissioner, 125 T.C. 301, 308 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006);
                                         -13-

[*13] Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,

114 T.C. 176, 181-182 (2000). As to other matters, we review the determination

of the Appeals Office for abuse of discretion--that is, we decide whether the

determination was arbitrary, capricious, or without sound basis in fact or law.

Murphy v. Commissioner, 125 T.C. at 308; Sego v. Commissioner, 114 T.C. at

610; Goza v. Commissioner, 114 T.C. at 182.

      As reflected in his response to the motion for summary judgment, Mr.

Streiffert’s attack on the determination of the Appeals Office is that the IRS’s

examination of his income-tax liabilities failed to include a personal interview

with him. The IRS interprets Mr. Streiffert’s lack-of-interview argument to be an

attempt to contest his underlying tax liabilities. It contends that Mr. Streiffert was

not entitled to contest his underlying tax liabilities at the collection-review hearing

because he had prior opportunities to do so. These views are reflected in the

following passage from the IRS’s motion:

      Petitioner did have a prior opportunity to contest the underlying tax
      liability and participated meaningfully in a previous administrative
      proceeding and previous judicial proceeding. Petitioner was
      previously before this Court in Docket Nos. 3613-04L and 3853-05L.
      Docket No. 3613-04L involved the year 1998 and Docket No. 3853-
      05L involved the years 1996, 1997, 1999, 2000, and 2001. Docket
      No. 3853-05L also involved the civil penalty pursuant to I.R.C. §
      6702 for the year 1997.
                                            -14-

         [*14] During his collection due process hearing, petitioner did not
         dispute receipt of the notice of deficiency for the year 2002.
         Furthermore, in his petition, petitioner does not dispute receipt of the
         notice of deficiency for the year 2002. Petitioner’s main argument
         appears to be that he was denied an in office examination pursuant to
         Title 26 CFR 601.105(b)(2).

         Petitioner is thereby precluded from challenging the existence or
         amount of his underlying tax liability for the years 1996, 1997, 1998,
         1999, 2000, 2001, and 2002, as well as the civil penalty assessed
         pursuant to I.R.C. § 6702 for the year 1997 before this Court.
         Accordingly, the validity of the underlying tax liabilities for 1996,
         1997, 1998, 1999, 2000, 2001, and 2002 * * * [is] not properly at
         issue before the Court and respondent is entitled to judgment as a
         matter of law that petitioner is liable for the underlying liabilities for
         said years and for the civil penalty for the year 1997. [Citations
         omitted.]

         As we explain below, we hold that Mr. Streiffert’s lack-of-interview

argument is without merit and that it is barred by section 6330(c)(2)(B).

         Unlike regulations, the Statement of Procedural Rules is not mandatory.

Luhring v. Glotzbach, 304 F.2d 560, 563-565 (4th Cir. 1962); Montgomery v.

Commissioner, 65 T.C. 511, 522 (1975). The Statement of Procedural Rules

cannot confer any rights on taxpayers. See Luhring, 304 F.2d at 563-565;

Montgomery v. Commissioner, 65 T.C. at 522. Therefore, Mr. Streiffert’s

argument that he was unlawfully denied an examination interview is without

merit.
                                         -15-

[*15] Furthermore, Mr. Streiffert’s lack-of-interview argument is a challenge to

the existence of income-tax liabilities for the 1996, 1997, 1998, 1999, 2000, and

2001 tax years. The IRS was authorized to send him notices of deficiency

determining deficiencies of income tax. See sec. 6212(a). If he received notices

of deficiency for these years, he could have disputed these income-tax liabilities

by filing a Tax Court petition seeking redetermination of the deficiencies. See sec.

6213(a). If he did not receive notices of deficiency, he could have challenged the

income-tax liabilities at the collection-review hearings (i.e., the two hearings that

culminated in notices of determination dated January 29, 2004, and January 27,

2005, respectively), or, if wrongfully denied an opportunity to contest the income-

tax liabilities by the Appeals Office, he could have challenged his liabilities in his

cases before the Tax Court appealing from the notices of determination (i.e., in

docket No. 3613-04L and docket No. 3853-05L, respectively).1 He is therefore

barred from challenging his income-tax liabilities for 1996, 1997, 1998, 1999,

2000, and 2001 in this case. See sec. 6330(c)(2)(B); Sego v. Commissioner, 114

      1
        Sec. 6330(c)(2)(B) provides that if the taxpayer did not receive a notice of
deficiency, the taxpayer can challenge the existence or amount of the underlying
liability at the collection-review proceeding with the IRS Appeals Office. If the
IRS Appeals Office refuses to hear the challenge, the taxpayer can appeal the
Appeals Office’s determination to the Tax Court. See, e.g., Arroyo v.
Commissioner, T.C. Memo. 2013-112, slip op. at 4 (deciding underlying tax
liability).
                                         -16-

[*16] T.C. at 611 (taxpayer who received a notice of deficiency had an earlier

opportunity to dispute the liability); Bell v. Commissioner, 126 T.C. 356, 358-359

(2006) (taxpayer did not receive the notice of deficiency; at an administrative

proceeding to consider a proposed levy to collect the deficiency the IRS Appeals

Office wrongfully refused to let the taxpayer contest his underlying tax liability;

the taxpayer did not appeal the Appeals Office’s determination to the Tax Court; it

was held that the taxpayer’s right to appeal was an opportunity to challenge the

underlying liability).

      As to the year 2002, Mr. Streiffert has failed to demonstrate that there is a

genuine dispute that he received a notice of deficiency. See Tax Ct. R. Pract. &

Proc. 121(b). The motion for summary judgment alleged that Mr. Streiffert did

not deny having received a notice of deficiency. In his response to the motion for

summary judgment, Mr. Streiffert denies receiving a notice of deficiency. This

unsworn denial is insufficient. It was not made in an affidavit or a declaration.

See id. And it is not supported by any other acceptable materials. See id. For

purposes of summary judgment, we therefore consider Mr. Streiffert to have

received the notice of deficiency. See Tax Ct. R. Pract. & Proc. 121(d). Mr.

Streiffert was therefore not entitled, in the collection-review hearing, to challenge
                                         -17-

[*17] his income-tax liability for 2002. See sec. 6330(c)(2)(B); Sego v.

Commissioner, 114 T.C. at 611.

      Mr. Streiffert is also barred from challenging his liability for the frivolous-

return penalty for 1997. He had an opportunity to challenge his liability for the

penalty during the collection-review hearing at issue in Streiffert v. Commissioner,

T.C. dkt. No. 3853-05L (Aug. 9, 2005). The notice the Appeals Office issued after

the hearing reflected that the Appeals Office had determined that Mr. Streiffert

had filed a frivolous Form 1040 and is therefore liable for the frivolous-return

penalty.

II.   Section-6673 penalty

      Section 6673(a)(1) authorizes the Tax Court to impose a penalty not in

excess of $25,000 whenever it appears that proceedings have been instituted or

maintained by the taxpayer primarily for delay or that the taxpayer’s position in a

proceeding is frivolous or groundless.

      A section-6673 penalty is justified. The arguments Mr. Streiffert advances

in this dispute are meritless. His petition was designed to delay collection of tax

rather than resolve a real dispute. We hold that Mr. Streiffert is liable for a penalty

of $15,000.
                                   -18-

[*18] To reflect the foregoing,


                                          An appropriate order and decision

                                  will be entered.
