                                T.C. Memo. 2013-196



                         UNITED STATES TAX COURT



                    J. DAVID GOLUB, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 8431-12L.                         Filed August 27, 2013.



      J. David Golub, pro se.

      Shawna A. Early, 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 sustain a levy to collect petitioner’s
                                          -2-

[*2] unpaid Federal income tax liability for the taxable year 2008.1 The IRS has

moved for summary judgment under Rule 121, contending that there are no

disputed issues of material fact and that its action in sustaining the levy was proper

as a matter of law. We agree and accordingly we will grant the motion.

                                     Background

      A brief review of petitioner’s prior litigation in this Court is necessary to an

understanding of the present controversy. In Golub v. Commissioner, T.C. Memo.

1999-288, 78 T.C.M. (CCH) 367 (1999) (Golub I), petitioner challenged an

income tax deficiency determined by the IRS for his 1991 taxable year. The

principal issue arose from a dispute between petitioner and his brokerage house,

which eventually liquidated his account by selling the securities in it. Petitioner

failed to report on his 1991 tax return the capital gain realized on the sale of these

securities, contending that his brokerage house had engaged in a “tortious

conversion” of his account and that it, rather than he, was taxable on gains realized

when the stock was sold. Golub I, 78 T.C.M. at 373. We determined that

petitioner in effect was attempting to relitigate in this Court securities law claims

that were subject to an arbitration proceeding in which he had refused to

      1
        All statutory references are to the Internal Revenue Code (Code) in effect at
the relevant times, and all Rule references are to the Tax Court Rules of Practice
and Procedure. All dollar amounts are rounded to the nearest dollar.
                                         -3-

[*3] participate. See id. at 373, 378. We concluded that petitioner “received

substantial amounts of income in 1991,” that he “failed to pay tax on those

amounts,” and that “[h]is defense to that failure is frivolous and wholly without

merit.” Id. at 378. We accordingly sustained the deficiencies determined by the

IRS, including additions to tax and penalties, and required petitioner to pay a

$10,000 penalty under section 6673(a) for maintaining a frivolous position in this

Court. Ibid.

      The IRS subsequently filed a notice of Federal tax lien in an effort to collect

petitioner’s $267,542 tax liability for 1991. Petitioner challenged the tax lien in a

CDP hearing, contending (among other things) that our judgment sustaining the

IRS determination of a deficiency for 1991 was unconstitutional and should be

vacated; that he had no income tax liability for 1991; and that the IRS had

improperly offset his income tax refund for 2004 against his allegedly nonexistent

liability for 1991. The IRS Appeals Office sustained the tax lien, and we upheld

that determination. Golub v. Commissioner, Docket No. 6191-06L (order and

decision dated October 21, 2008) (Golub II). We concluded that the IRS had

followed all appropriate procedures in filing the notice of tax lien, and we

specifically rejected petitioner’s argument that the IRS had “improperly offset his

income tax refund for tax year 2004 against his outstanding tax liability for tax
                                         -4-

[*4] year 1991.” As we explained, section 6402 of the Code explicitly authorizes

the IRS “to credit an overpayment to offset an outstanding income tax liability.”

Golub II, at 7.

      We turn now to the current controversy, which concerns petitioner’s 2008

tax year. In April 2009, petitioner timely filed Form 4868, Application for

Automatic Extension of Time To File U.S. Individual Income Tax Return,

requesting an extension of time to file his return for 2008. On this Form 4868,

petitioner reported $67,027 as an estimate of his total tax liability for 2008 and

$42,027 as the total tax payments he had made for 2008. He enclosed a check for

$25,000 to cover the difference.

      Petitioner filed his 2008 Form 1040, U.S. Individual Income Tax Return, in

October 2009 and reported tax due of $42,690. He reported total payments on line

71 of $67,317, including a $317 withholding tax credit, the $25,000 payment he

had submitted with his Form 4868, and $42,000 on line 63 as “2008 estimated tax

payments and amount applied from 2007 return.” He accordingly claimed an

overpayment of $24,627 and asked that this amount be applied to his 2009

estimated tax.

      Petitioner’s math did not tally with the IRS transcript of his account. The

transcript showed that he had made zero estimated tax payments for 2008; the only
                                         -5-

[*5] credits recorded against his 2008 income tax liability were the $317 with-

holding tax credit and the $25,000 remitted with his Form 4868. Thus, when the

IRS processed his 2008 return and assessed the $42,690 self-reported income tax

liability, it computed a balance due of $17,373 ($42,690 - ($25,000 + $317)),

excluding interest and penalties.

      By May 28, 2011, petitioner’s outstanding income tax liability for 2008,

including interest and penalties, was $22,798. In order to collect this unpaid

balance, the IRS issued petitioner a Final Notice of Intent to Levy and Notice of

Your Right to a Hearing, and petitioner timely requested a CDP hearing.

Although petitioner’s position at the hearing was not entirely clear, he appeared to

argue (once again) that the Tax Court decision sustaining deficiencies and

penalties for 1991 was unconstitutional and should be vacated; that the IRS’

application to his 1991 tax liability of overpayments and credits from other tax

years was thus erroneous; and that these overpayments and credits should have

been applied instead to his tax liability for 2008. Petitioner failed to provide any

evidence at the hearing that he had made quarterly estimated tax payments for

2008 or that the IRS had misapplied any overpayments or credits. On March 2,

2012, the Appeals Office accordingly issued a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330 sustaining the
                                        -6-

[*6] proposed levy. Petitioner timely sought judicial review under section

6330(d)(1).

                                    Discussion

A. Summary Judgment

      The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681(1988). We 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.

Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d,

17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judgment, we

construe factual materials and inferences drawn from them in the light most

favorable to the nonmoving party. Sundstrand, 98 T.C. at 520. However, the non-

moving party “may not rest upon mere allegations or denials” but instead “must set

forth specific facts showing there is a genuine dispute.” Rule 121(d); see

Sundstrand, 98 T.C. at 520.

B. Standard of Review

      Section 6330(d)(1) does not prescribe the standard of review that this Court

shall 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
                                          -7-

[*7] validity of the underlying tax liability is at issue, the Court will review the

Commissioner’s determination de novo. Goza v. Commissioner, 114 T.C. 176,

181-182 (2000). Where there is no dispute concerning the underlying tax liability,

the Court reviews the IRS decision for abuse of discretion. Id. at 182.

      There is some lack of uniformity in our precedents as to whether a de novo

standard of review applies where (as appears to be true here) the controversy

concerns the proper application, to the tax liability at issue in the CDP hearing, of

a credit, overpayment, or remittance.2 Because we would sustain respondent’s

determination in this case under either standard of review, we have no need to

decide which one applies.




      2
       See Freije v. Commissioner, 125 T.C. 14, 23, 26-27 (2005); Comfort Plus
Health Care, Inc. v. Commissioner, 2005-2 U.S. Tax Cas. para. 50,494 at 89,175-
89,176 (D. Minn. 2005) (applying abuse of discretion standard where taxpayer in
CDP case challenged IRS’ failure to credit overpayments). Compare Landry v.
Commissioner, 116 T.C. 60, 62 (2001) (applying de novo standard where taxpayer
challenged application of overpayment credits, reasoning that “the validity of the
underlying tax liability, i.e., the amount unpaid after application of credits to
which petitioner is entitled, [was] properly at issue”), with Kovacevich v.
Commissioner, T.C. Memo. 2009-160, 98 T.C.M. (CCH) 1, 4 & n.10 (applying
abuse of discretion standard where taxpayer challenged application of tax
payments, reasoning that “questions about whether a particular check was properly
credited to a particular taxpayer’s account for a particular tax year are not
challenges to his underlying tax liability”), and Orian v. Commissioner, T.C.
Memo. 2010-234, 100 T.C.M. (CCH) 356, 359 (same).
                                          -8-

[*8] C. Petitioner’s 2008 Tax Liability

      We operate at a disadvantage in assessing petitioner’s arguments because

the summary judgment papers he filed, some 90 pages in toto, are devoted almost

exclusively to rehashing arguments about his 1991 tax liability and the legitimacy

of this Court’s (long since final) decision sustaining the IRS determinations of

deficiencies and penalties for that year. To discern from petitioner’s papers

anything relevant to the actual controversy before us is to search for needles in a

haystack. However, his position appears grounded on an assertion that the IRS

improperly failed to credit his 2008 account with $42,000 in payments comprising

“2008 estimated tax payments and amount applied from 2007 return,” as claimed

on his 2008 Form 1040, line 63. Petitioner submitted no evidence, to the IRS or

this Court, that he made any quarterly estimated tax payments toward his 2008 tax

liability. Thus, he appears to be contending that his 2007 return showed an

overpayment of $42,000 or some other amount; that he directed the IRS to apply

this overpayment toward his 2008 estimated tax; and that the IRS improperly

applied this overpayment instead to his (still unsatisfied) tax liability for 1991.

      If this is petitioner’s argument, it misses the mark. Although taxpayers

generally have the right to designate the application of voluntary tax payments,

see Rev. Proc. 2002-26, 2001-1 C.B. 746, this right does not extend to overpay-
                                         -9-

[*9] ments reported on a tax return. Section 6402(a) explicitly allows the IRS to

set off any refund due a taxpayer against existing underpayments of tax for prior

years. It provides: “In the case of any overpayment, the Secretary * * * may

credit the amount of such overpayment, including any interest allowed thereon,

against any liability in respect of an internal revenue tax on the part of the person

who made the overpayment * * * .” The regulations provide that a taxpayer may

instruct the IRS to apply an overpayment against his estimated tax for the

immediately succeeding tax year. See sec. 301.6402-3(a)(5), Proced. & Admin.

Regs. However, the regulations mirror the statute: They authorize the IRS to

override such an instruction and apply the overpayment against “any outstanding

liability for any tax.” Sec. 301.6402-3(a)(6)(i), Proced. & Admin. Regs.; see N.

States Power Co. v. United States, 73 F.3d 764, 767 (8th Cir. 1996) (“[Section

6402] ‘plainly gives the IRS the discretion to apply overpayments to any tax

liability.’” (quoting United States v. Ryan (In re Ryan), 64 F.3d 1516, 1523 (11th

Cir. 1995))); Kalb v. United States, 505 F.2d 506, 509 (2d Cir. 1974) (“[Section

6402] clearly gives the IRS the discretion to apply a refund to ‘any liability’ of the

taxpayer.”); Weber v. Commissioner, 138 T.C. 348, 360-362 (2012).

      Because the statute specifically permitted the IRS to apply petitioner’s 2007

overpayment to his unsatisfied 1991 tax liability rather than to his 2008 estimated
                                        -10-

[*10] tax, petitioner’s argument reduces to the contention that he has no 1991 tax

liability because our decision sustaining the 1991 deficiencies and penalties was

unconstitutional. This argument is frivolous. We accordingly grant summary

judgment for respondent.

D. Sanctions

      This Court now considers sua sponte whether to impose sanctions on

petitioner under section 6673(a)(1), which authorizes the imposition of a penalty

not in excess of $25,000 when a taxpayer has instituted or maintained proceedings

primarily for delay or has taken a frivolous or groundless position in the Court.

Petitioner has been amply notified about the risk of sanctions. During the

administrative stage of this CDP case, the IRS warned petitioner on three separate

occasions that he was advancing frivolous arguments. The Court made petitioner

aware of section 6673 in Golub I by imposing a $10,000 penalty against him for

advancing frivolous arguments in that case. See Golub I, 78 T.C.M. at 378. And

as we noted there, two U.S. District Courts and the Court of Appeals for the

Second Circuit had previously imposed sanctions against petitioner, prohibiting

him from using their resources to advance frivolous attacks against his former

brokerage house and other securities defendants. Ibid.
                                         -11-

[*11] Petitioner’s filings in this summary judgment proceeding consist mainly of

incoherent verbiage that he has cut and pasted from previous filings in this and

other courts. The only colorable legal argument we can discern from this pile of

paper is the contention that the IRS erred by applying a 2007 overpayment to his

1991 liability rather than to his 2008 estimated tax. But the statute specifically

allows the IRS to do this, as we informed petitioner in one of his previous cases.

See Golub II, at 7 (rejecting petitioner’s argument that the IRS had “improperly

offset his income tax refund for tax year 2004 against his outstanding tax liability

for tax year 1991” and citing section 6402(a)). At the end of the day, petitioner’s

position is that he has no tax liability for 1991 because the IRS and the judicial

system have conspired to deprive him of his constitutional rights. That is a

frivolous position that has been rejected repeatedly, and sanctions are once again

appropriate.

      We take petitioner at his word when he avers that he “will never cease”

litigating his 1991 tax liability. He should understand, however, that this

persistence will come at an ever-increasing price. We therefore impose a penalty

in the amount of $15,000 under section 6673(a)(1).
                                        -12-

[*12] We have considered all contentions and arguments that are not discussed

herein, and we find them to be frivolous, without merit, or irrelevant. We have

also considered petitioner’s cross-motion for summary judgment. We find it

wholly without merit and entirely frivolous; we therefore will deny it.


                                               An appropriate order and decision

                                       will be entered.
