                        T.C. Memo. 2002-291



                     UNITED STATES TAX COURT



               JOSEPH T. TORNICHIO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13629-01L.            Filed November 26, 2002.


     Joseph T. Tornichio, pro se.

     Katherine Lee Kosar, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     THORNTON, Judge:   Pursuant to section 6330(d), petitioner

seeks review of respondent’s determination to proceed with

collection of his 1995 through 1997 tax liabilities.1




     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended.
                                - 2 -

                          FINDINGS OF FACT

     The parties have stipulated some of the facts, which we

incorporate herein by this reference.    When petitioner filed his

petition, he resided in Akron, Ohio.

A.   Petitioner’s Forms 1040

     On or about April 12, 1996, February 22, 1997, and April 13,

1998, petitioner submitted to respondent Forms 1040, U.S.

Individual Income Tax Return, for taxable years 1995, 1996, and

1997, respectively.    On each Form 1040, petitioner listed his

occupation as salesman.

     To the extent he made any entries in the income portions of

these Forms 1040, petitioner entered zeros; in particular, he

entered zeros on line 7 for wages, salaries, tips, etc.; on line

22 for total income; and on line 31 for adjusted gross income.

Petitioner left blank line 38, taxable income, and entered zeros

for total taxes due.    For each year, petitioner claimed refunds

equal to the amount of Federal income tax that he reported

withheld from wages--$1,675 for 1995, $559.82 for 1996, and

$232.12 for 1997.

     Petitioner attached to these several Forms 1040

substantially identical two-page statements alleging, among other

things, that the Internal Revenue Code does not establish an

income tax liability or require income taxes to be paid “on the

basis of a return”; that requirements to file tax returns violate
                               - 3 -

his Fifth Amendment rights; and that his wages do not constitute

“income” within the meaning of the Internal Revenue Code, on the

basis of his interpretation of the “Corporation Excise Tax Act

(of 1909)” and on a theory that only corporate-derived income

constitutes taxable income.

B.   Notices of Deficiency and Petitioner’s Responses

      On October 10, 1997, and February 6, 1998, respondent

(acting through Jimmy L. Smith, Director of the Internal Revenue

Service (IRS) Service Center in Cincinnati, Ohio) issued

petitioner notices of deficiency for 1995 and 1996, respectively;

and on May 28, 1999, respondent (acting through R. Wayne Hicks,

Director of the IRS Service Center in Cincinnati, Ohio) issued

petitioner a notice of deficiency for 1997.   In these notices,

respondent determined deficiencies in, and additions to,

petitioner’s Federal income taxes as follows:

                                         Additions to Tax
      Year      Deficiency     Sec. 6651(a)(1)     Sec. 6654(a)

      1995        $8,826          $1,788.00          $324.00
      1996        11,990           2,857.55           605.09
      1997        20,465           5,058.25         1,081.10

      The deficiencies were based on respondent’s determination

that petitioner failed to report wage income as reported to

respondent by Nationwide Communications, Inc., on Forms W-2, Wage

and Tax Statement.
                                  - 4 -

      Although the notices of deficiency explained petitioner’s

right to petition the Tax Court to contest the deficiency

determinations, petitioner chose not to do so.    Rather, in

various letters to respondent in 1997 through 1999, petitioner

acknowledged receipt of the notices of deficiency and disputed

respondent’s authority to issue them.

C.   Respondent’s Final Notice and Petitioner’s Response

      After sending petitioner a number of notices of intent to

levy, on October 17, 2000, respondent sent petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing in

respect of the assessments of petitioner’s deficiencies and

additions to tax, plus interest, for tax years 1995, 1996, and

1997.     By letter dated November 3, 2000, petitioner requested an

administrative hearing.

D.   The Appeals Office Hearing

      On November 1, 2001, petitioner attended an administrative

hearing in Akron, Ohio, before respondent’s Appeals officer.

According to a purported transcript of the hearing attached to

petitioner’s petition, petitioner declined to discuss meaningful

collection alternatives at the hearing.2    Rather, petitioner


      2
       Petitioner’s purported transcript of the Appeals Office
hearing reveals that the only “collection alternative” he was
willing to discuss was patently spurious:

      Now, I’m proposing an alternative for payment and that
      is let the record show that I’m providing the Internal
                                                    (continued...)
                               - 5 -

attempted to challenge his underlying tax liability and demanded

proof of his tax assessments, copies of Form 4340 (Certificate of

Assessments, Payments, and Other Specified Matters), copies of

his tax returns for the years at issue, and verification that all

applicable laws and administrative procedures had been followed

in the assessment and collection process.

E.   Respondent’s Notice of Determination

      On November 1, 2001, respondent sent petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330.   In the notice of determination, the Appeals Office

concluded that the proposed collection action should be

sustained.

F.   The Petition

      On December 4, 2001, petitioner filed his petition with this

Court seeking review of respondent’s notice of determination.

The petition includes allegations that:     (1) The Appeals officer

failed to properly verify that the requirements of any applicable

law or administrative procedure were met as required under

section 6330(c)(1); (2) petitioner did not receive the requisite

statutory notice and demand for payment or valid notice of

deficiency; and (3) petitioner was denied the opportunity to



      2
       (...continued)
      Revenue Code with that section marked liability for
      tax. If you could show me the statute that requires me
      to pay the tax, I am prepared to make arrangements to
      pay that which you say that I owe.
                               - 6 -

raise “relevant issues”.   In support of this last-mentioned

allegation, the petition cross-references portions of

petitioner’s purported transcript of the Appeals Office hearing

in which petitioner sought unsuccessfully to engage the Appeals

officer in a colloquy as to whether the Internal Revenue Code

establishes any liability to pay income taxes.

      After the hearing but before trial, respondent provided

petitioner with computer transcripts of his account for the 3 tax

years at issue and a copy of Monaghan v. Commissioner, T.C. Memo.

2002-16, in which this Court imposed penalties under section

6673(a)(1) for the taxpayer’s taking frivolous positions.

G.   Petitioner’s Refund Actions

      Pursuant to section 6702, respondent assessed a $500

frivolous return penalty against petitioner for each of the years

at issue, as well as for other years.     After respondent had

collected these penalties for 1994 and 1995, petitioner filed an

action in U.S. District Court for the Northern District of Ohio

seeking a refund of these amounts.     In this action, petitioner

relied “essentially on the same arguments he asserted in the

attachments to his tax returns.”     Tornichio v. United States, 81

AFTR 2d 98-1377, at 98-1379, 98-1 USTC par. 50,299, at 83,681

(N.D. Ohio 1998).3   The District Court dismissed petitioner’s


      3
       In a separate action, petitioner sought to have the U.S.
District Court for the Northern District of Ohio review the
                                                   (continued...)
                                - 7 -

arguments as “frivolous”, observing, among other things, that

section 1 of the Internal Revenue Code imposes tax liability on

taxpayers and that “income” encompasses wages.4   Id.   The

District Court imposed sanctions on petitioner pursuant to rule

11 of the Federal Rules of Civil Procedure.

     Describing petitioner as “an Ohio tax protestor”, the U.S.

Court of Appeals for the Sixth Circuit affirmed the District

Court’s judgment and concluded that “assertion of Tornichio’s

arguments in this appeal also warrants a Fed. R. App. P. [Federal

Rules of Appellate Procedure] 38 award” of $1,000 in favor of the

United States.    Tornichio v. United States, 83 AFTR 2d 99-1531,

at 99-1531 to 99-1532 (6th Cir. 1999).

     In a separate action in the District Court, petitioner

sought refund of income taxes withheld from his wages for 1994


     3
      (...continued)
legitimacy of an Appeals Office hearing involving respondent’s
attempted collection of frivolous return penalties assessed
against petitioner for 1996, 1997, and 1998. The District Court
dismissed the action for lack of jurisdiction. Tornichio v.
United States, 89 AFTR 2d 2002-1506, 2002-1 USTC par. 50,411
(N.D. Ohio 2002).
     4
         The District Court explained:

     Plaintiff argues the Code does not impose a tax
     “liability”. The plain language of the Code belies
     this, stating the tax is “imposed”. See 26 U.S.C. § 1.
     He attempts to distinguish between “imposing” a tax and
     creating a “liability” for tax. The Court fails to see
     a difference. Individuals have an affirmative duty to
     pay taxes. * * * [Tornichio v. United States, 81 AFTR
     2d 98-1377, at 98-1379, 98-1 USTC par. 50,299, at
     83,681 (N.D. Ohio 1998).]
                                - 8 -

through 1996, arguing that the term “income” in section 61

encompasses only corporate income.      Affirming an unpublished

District Court order dismissing the action, the Court of Appeals

stated that petitioner’s legal assertions were “patently

spurious”.   Tornichio v. United States, 83 AFTR 2d 99-1516, at

99-1517, 99-1 USTC par. 50,394, at 87,962 (6th Cir. 1999).     The

Court of Appeals assessed $1,000 in damages in favor of the

United States pursuant to rule 38 of the Federal Rules of

Appellate Procedure.

                               OPINION

A.   Statutory Framework

     If any person neglects or refuses to make payment of any

Federal tax liability within 10 days of notice and demand, the

Secretary is authorized to collect the tax by levy on the

person’s property.   Sec. 6331(a).   At least 30 days before taking

such action, however, the Secretary generally must provide the

person with a final notice of intent to levy that describes,

among other things, the administrative appeals available to the

person.   Sec. 6331(d).   Upon request, the person is entitled to

an administrative hearing before the Appeals Office of the IRS.

Sec. 6330(b)(1).   If dissatisfied with the Appeals Office

determination, the person may seek judicial review in the Tax

Court or a District Court, as appropriate.     Sec. 6330(d).
                                - 9 -

Generally, the proposed levy actions are suspended for the

pendency of the hearing and any judicial appeals therein.     Sec.

6330(e)(1).

B.   Petitioner’s Contentions

     1.   Underlying Tax Liability

     Petitioner contends that he was improperly precluded at his

Appeals Office hearing from challenging his underlying tax

liability for the 3 tax years at issue.    He bases this claim on

the Appeals officer’s refusal to engage in a colloquy with him

regarding his frivolous protestations about the existence of any

legal requirement to pay income taxes, and on his allegation that

the notices of deficiency for the years at issue were invalid

because they were not issued by the Secretary, and because he was

not given a copy of the order delegating authority from the

Secretary to the Director of the Service Center who issued them.

     A taxpayer may contest the existence or amount of the

underlying tax liability at an Appeals Office hearing only if the

taxpayer did not receive any statutory notice of deficiency for

the tax liability or did not otherwise have an opportunity to

dispute the tax liability.    Sec. 6330(c)(2)(B); see Sego v.

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114

T.C. 176, 180-181 (2000).    Petitioner received notices of

deficiency for the 3 tax years at issue.    Petitioner did not

seek redetermination of the deficiencies in this Court.    He did,
                                - 10 -

however, before the Appeals Office hearing, unsuccessfully seek a

refund of his 1995 and 1996 withheld income taxes in Federal

court.   See Tornichio v. United States, 83 AFTR 2d 99-1516, 99-1

USTC par. 50,394 (6th Cir. 1999).    Petitioner was not entitled to

raise challenges to his underlying tax liability at the Appeals

Office hearing.

     Even if petitioner were permitted to challenge his

underlying tax liability, however, the arguments he has advanced

are without merit.   In the previously cited refund actions

involving, in part, petitioner’s tax liabilities for 2 of the 3

years at issue here, the courts unequivocally rejected

petitioner’s “tax protest” arguments as “patently spurious”.     Id.

at 99-1517, 99-1 USTC at 87,962; see Tornichio v. United States,

81 AFTR 2d 98-1377, 98-1 USTC par. 50,299 (N.D. Ohio 1998).     The

same may be said of petitioner’s arguments regarding the validity

of the notices of deficiency.

     The Secretary or his delegate may issue notices of

deficiency.   Secs. 6212(a), 7701(a)(11)(B) and (12)(A)(i).   The

Secretary’s authority to issue notices of deficiency has been

delegated to the Director of the Service Center who issued the

notices.   See Nestor v. Commissioner, 118 T.C. 162, 165 (2002);

Stamos v. Commissioner, 95 T.C. 624, 630-631 (1990), affd.

without published opinion 956 F.2d 1168 (9th Cir. 1992); secs.

301.6212-1(a), 301.7701-9(b), Proced. & Admin. Regs.
                                  - 11 -

     2.   Verification Requirements

     Petitioner contends that the Appeals officer failed to

obtain verification from the Secretary that the requirements of

all applicable laws and administrative procedures had been met

under section 6330(c)(1).      This contention is without merit.

     Federal tax assessments are formally recorded on a record of

assessment.     Sec. 6203.   “The summary record, through supporting

records, shall provide identification of the taxpayer, the

character of the liability assessed, the taxable period, if

applicable, and the amount of the assessment.”      Sec. 301.6203-1,

Proced. & Admin. Regs.       Section 6330(c)(1) does not require the

Commissioner to rely on a particular document to satisfy the

verification requirement.       Roberts v. Commissioner, 118 T.C. 365,

371 n.10 (2002); Kaeckell v. Commissioner, T.C. Memo. 2002-114;

Weishan v. Commissioner, T.C. Memo. 2002-88; Kuglin v.

Commissioner, T.C. Memo. 2002-51.       Moreover, section 6330(c)(1)

does not require the Appeals officer to provide the taxpayer with

a copy of the verification at the hearing.      Sec. 301.6330-

1(e)(1), Proced. & Admin. Regs.; see also Nestor v. Commissioner,

supra at 166.

     According to petitioner’s purported transcript of the

Appeals Office hearing, the Appeals officer reviewed, among other

things, transcripts of petitioner’s account for the years at

issue in determining that the taxes were properly assessed.        Some
                              - 12 -

5 months before trial, respondent sent petitioner “Plain English”

computer transcripts of his account.    In addition, as part of the

pretrial stipulation process, respondent provided petitioner with

copies of so-called TXMODA transcripts of account.5       These various

transcripts of petitioner’s account, which are part of the record

in this case, contain all the information prescribed in section

301.6203-1, Proced. & Admin. Regs.     See Schroeder v.

Commissioner, T.C. Memo. 2002-190; Kaeckell v. Commissioner,

supra; Weishan v. Commissioner, supra.6

     Petitioner has shown no irregularity in the assessment

procedure that would raise a question about the validity of the

assessments or the information contained in the transcripts of

account.   See Nestor v. Commissioner, supra at 167; Davis v.

Commissioner, 115 T.C. 35, 41 (2000).     Accordingly, we hold that

respondent satisfied the verification requirement of section

6330(c)(1).




     5
       A TXMODA transcript contains current account information
obtained from the Commissioner’s master file. “TXMODA” is the
command code that is entered into the Commissioner’s integrated
data retrieval system (IDRS) to obtain the transcript. IDRS is
essentially the interface between the Commissioner’s employees
and the Commissioner’s various computer systems. See Kaeckell v.
Commissioner, T.C. Memo. 2002-114, n.2.
     6
       The record does not reveal the particular type of
transcript relied upon by the Appeals officer, but we regard this
matter as irrelevant. See Keene v. Commissioner, T.C. Memo.
2002-277, n.10.
                              - 13 -

     3.   Notice and Demand

     Petitioner contends that he did not receive a notice and

demand for payment for any of the 3 tax years at issue as

required by section 6303(a), which provides in pertinent part:

           SEC. 6303(a). General Rule.-–Where it is not
     otherwise provided by this title, the Secretary shall,
     as soon as practicable, and within 60 days, after the
     making of an assessment of a tax pursuant to section
     6203, give notice to each person liable for the unpaid
     tax, stating the amount and demanding payment thereof.
     * * *

     “The form on which a notice of assessment and demand for

payment is made is irrelevant as long as it provides the taxpayer

with all the information required under 26 U.S.C. § 6303(a).”

Elias v. Connett, 908 F.2d 521, 525 (9th Cir. 1990).

     The TXMODA transcripts in the record show that for each year

at issue, respondent sent petitioner both an initial notice and

demand and, subsequently, a final notice and demand.   In

addition, petitioner received numerous notices of intent to levy,

as well as notices of deficiency.   These numerous notices

sufficed to meet the section 6303(a) requirements.   See Hughes v.

United States, 953 F.2d 531, 536 (9th Cir. 1992); Standifird v.

Commissioner, T.C. Memo. 2002-245; Weishan v. Commissioner,

supra.

     For the foregoing reasons, we sustain respondent’s

determination as to the proposed levy as a permissible exercise

of discretion.
                              - 14 -

C.   Section 6673 Penalty

     Section 6673(a)(1) authorizes the Tax Court to require a

taxpayer to pay to the United States 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 such proceedings is frivolous or

groundless.   The purpose of this penalty provision is to deter

and penalize frivolous claims and positions.   Bagby v.

Commissioner, 102 T.C. 596, 614 (1994).

     This Court has repeatedly indicated its willingness to

impose such penalties in collection review cases, see, e.g.,

Pierson v. Commissioner, 115 T.C. 576 (2000), and has in fact

imposed such penalties in numerous cases, see Keene v.

Commissioner, T.C. Memo. 2002-277 (imposing a $5,000 penalty),

and cases cited therein at n.14.

     Petitioner is a frequent litigator of groundless protests to

the validity of the Internal Revenue Code.   Federal courts have

unequivocally rejected his protester arguments and sanctioned him

for raising them.   See, e.g., Tornichio v. United States, 83 AFTR

2d 99-1516, 99-1 USTC par. 50,394 (6th Cir. 1999); Tornichio v.

United States, 83 AFTR 2d 99-1531 (6th Cir. 1999); Tornichio v.

United States, 81 AFTR 2d 98-1377, 98-1 USTC par. 50,299 (N.D.

Ohio 1998).
                                - 15 -

     Despite these judicial rebuffs and sanctions, petitioner has

instituted the instant action (involving in part the same tax

years that were at issue in the cases cited above), raising many

of these same types of frivolous arguments, as well as others.

We are convinced that he has instituted this action primarily for

delay; his positions in this proceeding are frivolous and

groundless.

     Some 5 months before trial, respondent provided petitioner

with a copy of Monaghan v. Commissioner, T.C. Memo. 2002-16, in

which this Court imposed penalties under section 6673(a)(1).

Shortly before trial, this Court explicitly warned petitioner

that his continued reliance on frivolous arguments would expose

him to sanctions of up to $25,000 under section 6673.      Petitioner

has been undeterred by these warnings and by the sanctions

previously imposed by the courts.    Accordingly, in furtherance of

the purpose of section 6673(a) to deter such proceedings

instituted primarily for delay, we believe a more significant

sanction is appropriate here.    Pursuant to section 6673, we

require petitioner to pay to the United States a penalty of

$12,500.

     All other arguments raised by petitioner and not expressly

discussed herein are without merit.      To reflect the foregoing,


                                                 Decision will be

                                            entered for respondent.
