                        T.C. Memo. 2010-50



                     UNITED STATES TAX COURT



                 SCOTT RAY HOLMES, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21956-07L.             Filed March 18, 2010.



     Scott Ray Holmes, pro se.

     Ann L. Darnold, for respondent.



                        MEMORANDUM OPINION


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

seeks review of respondent’s determination sustaining a proposed

levy with respect to his 2002 Federal income tax liability.1



     1
      Unless otherwise indicated, 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 -

                              Background

     Petitioner previously litigated his 2002 Federal income tax

deficiency, as well as additions to tax under sections 6651(a)(1)

and (2) and 6654(a).     In Holmes v. Commissioner, T.C. Memo. 2006-

80 (Holmes I), this Court sustained the deficiency and additions

to tax under sections 6651(a)(1) and 6654(a) and imposed a $2,000

penalty under section 6673.2

     Respondent assessed petitioner’s 2002 liability in

accordance with this Court’s decision in Holmes I.       Respondent

subsequently sent petitioner Letter 1058, Final Notice of Intent

to Levy and Notice of Your Right to a Hearing, with respect to

his outstanding 2002 tax liability.       In response petitioner

submitted Form 12153, Request for a Collection Due Process or

Equivalent Hearing, in which he asserted frivolous arguments.

         Respondent’s Appeals Office (Appeals) responded by letter,

scheduling a telephone conference.       The letter further advised

petitioner:

     Before you decide whether to petition a notice of
     determination, you should know that the Tax Court
     is empowered to impose monetary sanctions up to
     $25,000 for instituting or maintaining an action
     before it primarily for delay or for taking a
     position that is frivolous or groundless [Pierson
     v. Commissioner, 115 T.C. 576 (2000); Forbes v.
     Commissioner, T.C. Memo 2006-10 ($20,000 penalty


     2
      With respect to the addition to tax under sec. 6651(a)(2),
we held that respondent failed to carry his burden of production
under sec. 7491(c). Figures have been rounded to the nearest
dollar.
                            - 3 -

     imposed); Aston v. Commissioner, T.C. Memo 2003-
     128 ($25,000 penalty imposed)].

      Petitioner responded by letter, requesting a correspondence

hearing.   Respondent granted the request by letter, reiterating

the warning about the possibility of sanctions if petitioner

continued to assert frivolous positions.   Petitioner submitted

another letter to respondent, repeating the frivolous grounds

stated in the hearing request and making additional frivolous

arguments contesting his underlying liability.   By notice of

determination Appeals sustained the proposed levy.

     In his petition seeking judicial review of the final

determination, petitioner challenges his underlying liability on

frivolous grounds similar to those he relied upon throughout the

administrative process.

                            Discussion

     Section 6330 requires the Secretary to furnish a person

notice and opportunity for a hearing before making a levy on the

person’s property.   At the hearing, the person may raise any

relevant issue relating to the unpaid tax or proposed levy,

including spousal defenses, challenges to the appropriateness of

the collection action, and offers of collection alternatives.

The person may challenge the existence or amount of the

underlying tax liability for any period only if the person did

not receive a notice of deficiency or did not otherwise have an

opportunity to dispute the liability.    Sec. 6330(c)(2)(B); Sego

v. Commissioner, 114 T.C. 604, 609 (2000).
                                - 4 -

     Petitioner not only received a notice of deficiency for 2002

but also litigated the matter before this Court in Holmes I.

Consequently, in this collection proceeding he is precluded from

disputing his underlying liability not only by section

6330(c)(2)(B) but also by principles of res judicata.    See

Sparkman v. Commissioner, T.C. Memo. 2009-308.

     The record demonstrates that Appeals verified that all

applicable laws and administrative procedures were followed.

Petitioner has failed to raise a spousal defense, make a valid

challenge to the appropriateness of respondent’s intended

collection action, or offer a viable alternative means of

collection.   These issues are now deemed conceded.   See Rule

331(b)(4).    Respondent did not abuse his discretion in sustaining

the proposed levy.

     Respondent has moved to impose a penalty under section

6673(a)(1), which authorizes this 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.   In Holmes I, we found that petitioner was liable for

a $2,000 penalty under section 6673 because he “took frivolous

positions before and during trial despite ample warnings before

trial from respondent.”    Holmes v. Commissioner, supra.
                                 - 5 -

Notwithstanding the sanctions imposed in Holmes I, issued more

than a year before petitioner filed his petition in this case,

and notwithstanding respondent’s ample warnings in this

proceeding about the possibility of additional sanctions under

section 6673, petitioner has persisted in his misguided course of

conduct.3   In furtherance of the purpose of section 6673(a)(1) to

deter such conduct, we believe a more significant sanction is now

appropriate.   Pursuant to section 6673(a)(1), we shall require

petitioner to pay to the United States a penalty of $10,000.

     To reflect the foregoing,


                                              An order and decision

                                         will be entered for

                                         respondent.




     3
      The current case is the third to date in which petitioner
has pursued frivolous and groundless positions. Recently, in
Holmes v. Commissioner, T.C. Memo. 2010-42, we imposed a $10,000
penalty under sec. 6673(a)(1) because petitioner asserted
frivolous positions with respect to his 2003 tax year.
