                                                  LISA S. GOFF, PETITIONER v. COMMISSIONER                                  OF
                                                        INTERNAL REVENUE, RESPONDENT
                                                        Docket No. 2965–09L.                    Filed August 24, 2010.

                                                 R may proceed with collection of tax liability and civil pen-
                                               alties for filing frivolous tax returns.
                                                 1. Held: Submission of a ‘‘Bonded Promissory Note’’ of P’s
                                               husband was not payment of liabilities and penalties.
                                                 2. Held, further, P is subject to sanction under sec.
                                               6673(a)(1), I.R.C., for procedures instituted primarily for
                                               delay, etc.

                                           Lisa S. Goff, pro se.
                                           Richard W. Kennedy, for respondent.
                                         HALPERN, Judge: This case is before the Court to deter-
                                      mine whether respondent may proceed with the collection of
                                      petitioner’s unpaid Federal income tax for 1996 through 2006
                                      and unpaid civil penalties for filing frivolous income tax
                                      returns for 1997, 1999, 2000, 2003, and 2004 (collectively,
                                      petitioner’s liabilities or, simply, the liabilities). We review
                                      the determinations under section 6330(d)(1).
                                         All section references are to the Internal Revenue Code of
                                      1986, as amended and as applicable to this case, and all Rule
                                      references are to the Tax Court Rules of Practice and Proce-
                                      dure unless otherwise indicated.
                                         The case presents two questions:
                                         (1) Whether a ‘‘Bonded Promissory Note’’ in the face
                                      amount of $5 million (the note) that petitioner submitted to
                                      the Internal Revenue Service (IRS) constitutes payment of the
                                      liabilities; and
                                         (2) whether we should impose an additional penalty on
                                      petitioner pursuant to section 6673 for instituting this pro-
                                      ceeding primarily for delay or advancing a position that is
                                      frivolous or groundless.

                                                                                                                                    231




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                                      232                135 UNITED STATES TAX COURT REPORTS                                        (231)


                                                                         FINDINGS OF FACT 1

                                         When she filed the petition, petitioner resided in Utah.
                                         Respondent notified petitioner of his intent to collect peti-
                                      tioner’s liabilities by levy, and, in response thereto, petitioner
                                      requested a pre-levy hearing with Appeals under section
                                      6330.
                                         During that hearing, petitioner argued that she had paid
                                      the liabilities by means of the note, which she had sent to
                                      the IRS. Respondent’s Appeals Office (Appeals) team manager
                                      Sharon Patterson (Ms. Patterson) rejected petitioner’s claim
                                      that the liabilities had been paid, and the determinations,
                                      signed by Ms. Patterson, followed.
                                         Petitioner timely filed the petition, assigning error to the
                                      determinations primarily on the ground that ‘‘Payment for
                                      all liabilities alleged by IRS for LISA S GOFF, TIN * * * was
                                      tendered by Harvey Douglas Goff, Jr., hereinafter, ‘Under-
                                      signed’ on or about January 17, 2008.’’ Petitioner added:
                                      Contrary to IRS’ claim, Petitioner, at all relevant times prior to the * * *
                                      [section 6330] hearing and during the hearing itself, challenged the exist-
                                      ence of a tax liability in that, the Undersigned tendered sufficient payment
                                      for the alleged liability and IRS failed to post the funds to the proper
                                      account.

                                        Petitioner also assigned error on the ground that ‘‘The pro-
                                      posed levy, would trespass on a bona fide lien held by the
                                      Undersigned and thereby cause irreparable injury to the
                                      Undersigned.’’
                                        The ‘‘Undersigned’’ referred to is petitioner’s husband,
                                      Harvey D. Goff, Jr. (Mr. Goff). Both he and petitioner signed
                                      a document prepared by Mr. Goff, attached to the petition,
                                        1 At the conclusion of the trial, the Court set a schedule for opening and answering briefs and

                                      ordered the parties to file such briefs. The Court directed petitioner’s attention to Rule 151,
                                      which addresses briefs, and, in particular, to Rule 151(e), which addresses the form and content
                                      of briefs. We have accepted from petitioner what appears to be her opening brief, although it
                                      does not contain proposed findings of fact, as Rule 151(e)(3) requires, or otherwise conform to
                                      the requirements of that Rule. Petitioner filed no answering brief. Respondent filed an opening
                                      brief with proposed findings of fact and otherwise conforming to Rule 151(e). Apparently seeing
                                      no need to answer petitioner’s brief, respondent declined to file an answering brief. Pursuant
                                      to Rule 151(e)(3), each party, in its answering brief, must ‘‘set forth any objections, together with
                                      the reasons therefor, to any proposed findings of any other party’’. Petitioner did not file an an-
                                      swering brief and did not set forth objections to respondent’s proposed findings of fact. Accord-
                                      ingly, we must conclude that petitioner has conceded that respondent’s proposed findings of fact
                                      are correct except to the extent that those findings are clearly inconsistent with evidence in the
                                      record. See, e.g., Jonson v. Commissioner, 118 T.C. 106, 108 n.4 (2002), affd. 353 F.3d 1181 (10th
                                      Cir. 2003). Respondent, of course, is not similarly disadvantaged because petitioner’s opening
                                      brief contained no proposed findings of fact.




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                                      (231)                           GOFF v. COMMISSIONER                                         233


                                      which set forth petitioner’s assignments of error and the
                                      facts on which she relies. Among the facts on which she
                                      relies are the following:
                                        1. On or about March 20, 2007, the Undersigned deposits a bond with
                                      the Secretary of the Treasury upon which the Undersigned states his
                                      intention to draw against the proceeds of said bond in satisfaction of debts.
                                      The Undersigned, according to the terms of the bond order, grants the Sec-
                                      retary a thirty-day opportunity in which to return said bond to the Under-
                                      signed or, in the alternative accept the Undersigned’s bond and terms.
                                        2. Upon expiration of said 30-day opportunity, the Undersigned receives
                                      no communication from the Secretary, and said bond is not returned to the
                                      Undersigned. Accordingly, the Secretary accepts said bond pursuant to the
                                      terms of said bond.
                                        3. On or about September 7, 2007, the Undersigned deposits, with the
                                      Secretary of the Treasury, a Private Discharging and Indemnity Bond No.
                                      RA819570054US–HDG subordinate to the March 20, 2007 bond which is
                                      issued pursuant to the Undersigned’s full faith and credit. The stated pur-
                                      pose of said Private Discharging and Indemnity Bond is to indemnify,
                                      among others, the TIN assigned to Petitioner, the Petitioner, Internal Rev-
                                      enue Service and all subdivisions, agents and employees thereof. The
                                      terms of said Private Discharging and Indemnity Bond state that the
                                      Undersigned grants the Secretary the opportunity to return said bond
                                      within thirty days of receipt.
                                        4. Upon expiration of said 30-day opportunity, the Undersigned receives
                                      no communication from the Secretary, and said Private Discharging and
                                      Indemnity Bond is not returned. Accordingly, the Secretary accepts said
                                      Private Discharging and Indemnity Bond pursuant to the terms of said
                                      bond.
                                        5. At the Undersigned’s instruction, during December 2007, Petitioner
                                      requests a consolidating billing from IRS that includes all amounts which
                                      IRS alleges were owed by Petitioner.
                                        6. On or about January 11, 2008, Petitioner receives a letter identified
                                      as LTR 681C with reference #0774035504 alleging a total amount due of
                                      $36,354.16.
                                        7. On or about January 17, 2008, the Undersigned tenders payment for
                                      Petitioner’s account through Notary Public Kevin P. Mahoney in the form
                                      of Bonded Promissory Note No. HDG–1005–PN in the amount of
                                      $5,000,000.00 using Certified Mail No. 7001 1140 0002 9580 3371.
                                        8. Said promissory note is payable to Secretary of the United States
                                      Treasury * * *

                                         The note tendered in alleged payment of petitioner’s liabil-
                                      ities contains in part the following:




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                                      234                135 UNITED STATES TAX COURT REPORTS                                        (231)


                                                                    BONDED PROMISSORY NOTE
                                                  Registered via Utah Department of Commerce, Division of
                                                            Corporations and UCC File No. * * *
                                                      USPS CERTIFIED MAIL TRACKING NO. * * *
                                                                            — $5,000,000.00 —
                                                           Five Million and 00/100 United States Dollars
                                      To the Order of:             Henry M Paulson, Jr. d/b/a Secretary of the United
                                                                   States Treasury, P.S. Lane d/b/a Operations Mgr.,
                                                                   ACS Remote Ops. 1, Internal Revenue Service and
                                                                   Fiduciary Trustee
                                      In the Amount of:            Five Million and 00/100 United States Dollars
                                                                   ($5,000,000.00)
                                      For Credit to:               Internal Revenue Service Account * * * to the
                                                                   benefit of LISA STEPHENS GOFF A/K/A LISA
                                                                   GOFF * * * SS No. * * *
                                      Routing Through:             Private Discharging and Indemnity Bond No.
                                      (Securitization              RA819570054US–HDG to Secretary of the
                                      Bond)                        Treasury Henry M. Paulson, Jr. * * *
                                        This negotiable instrument, tendered lawfully by Harvey Douglas Goff
                                      Jr. (‘‘Maker’’) in good faith shall evidence as a debt to the Payee pursuant
                                      to the following terms:
                                      1. This Note shall be posted in full dollar for dollar pursuant to the above
                                      credit order and presented to the co-payee, Secretary of the Treasury
                                      Henry M. Paulson, Jr. by the Fiduciary(ies) in the attached preaddressed
                                      envelope by certified mail/RR (certificates completed and supplied) or elec-
                                      tronic transfer.
                                      2. Upon receipt of this instrument, Payee shall charge account * * * via
                                      Pass-Through Account H DOUGLAS GOFF * * * for the purpose of termi-
                                      nating any past, present, or future liabilities express or implied attached
                                      or attributed to Account No. * * * and/or Lisa Stephens Goff * * *
                                      3. Payee shall ledger this Note for a period of thirty (30) days com-
                                      mencing the start of business on 16 January 2008 until close of business
                                      14 February 2008 at an interest rate of seven percent (7%) per annum;
                                      4. Upon maturity, this Note shall be due and payable in full with interest
                                      and any associated fees. Payment shall be posted in accordance with gen-
                                      erally accepted accounting principles against Private Discharging and
                                      Indemnity Bond No. RA819570054US–HDG (Tracking Number RA 819 570
                                      054 US) held and secured by Henry M. Paulsen, Jr., Secretary of the
                                      United States Treasury.

                                           16 January 2008                                       /s/ Harvey Douglas Goff, Jr.
                                                Date                                                  Authorized Signature

                                        At the bottom of the note, the names and addresses of five
                                      individuals were listed, presumably to show the person who




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                                      (231)                           GOFF v. COMMISSIONER                                         235


                                      issued the note (Mr. Goff), the persons who were to receive
                                      the note as payment (Henry M. Paulson, Jr., Secretary of the
                                      Treasury, and Linda E. Stiff, Acting Commissioner of the
                                      IRS), and those considered to be fiduciaries (P.S. Lane, Oper-
                                      ations Manager, IRS, and Renee A. Mitchell, Director, Cam-
                                      pus Compliance Operations, IRS).
                                         Along with the note, petitioner sent processing instructions
                                      to the IRS on how the note was to be posted as payment of
                                      petitioner’s liabilities. The note and processing instructions
                                      purported to place a legal duty on the IRS to apply up to $5
                                      million toward the liabilities. The IRS ignored the note and
                                      processing instructions and did not on account thereof apply
                                      any amount in payment of petitioner’s liabilities.
                                         After filing the petition, petitioner attended a conference
                                      with respondent’s counsel, who warned her that her position
                                      was frivolous.
                                         Our notice setting this case for trial informed petitioner
                                      that, if the case could not be settled, then ‘‘the parties, before
                                      trial, must agree in writing to all facts and all documents
                                      about which there should be no disagreement.’’ Our accom-
                                      panying standing pretrial order required the parties to pre-
                                      pare and submit pretrial memoranda, setting forth basic
                                      information about the case.
                                         Petitioner both refused to enter into a stipulation of facts
                                      and failed to submit a pretrial memorandum.
                                         As discussed supra note 1, at the conclusion of the trial, we
                                      set a briefing schedule and directed the parties to submit
                                      briefs. When petitioner did not submit an opening brief on
                                      schedule, we extended the time for her to comply. In reply,
                                      we received documents from Mr. Goff, which we filed as peti-
                                      tioner’s opening brief. Those documents in no way comply
                                      with Rule 151(e), addressing the form and content of briefs.
                                      In part, one of those documents states as follows:
                                      Thank you for your offer for my DEBTOR, LISA S GOFF, to file an
                                      opening brief by close of business April 28, 2010. Said offer is cast as a
                                      court order and a copy of said order is enclosed.
                                      I accept your offer for value in behalf [sic] of myself and my debtor for
                                      sixty million four hundred thousand and 00/100 dollars ($60,400,000.00)
                                      and bill you and the court for my services in the matter.




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                                      236                135 UNITED STATES TAX COURT REPORTS                                       (231)


                                      A second document states:
                                      It comes to my attention that the UNITED STATES TAX COURT is a for-
                                      profit corporation and is listed with Dunn & Bradstreet as such. * * *

                                                             *    *   *   *   *  *     *
                                      Are you aware of and do you realize the liability you personally incur in
                                      acting as an agent for the incorporated UNITED STATES TAX COURT?

                                                                                  OPINION

                                      I. Review of the Determinations
                                         Section 6330(a) provides taxpayers with the opportunity to
                                      request an administrative review of the Commissioner’s deci-
                                      sion to take administrative action to collect by levy any tax
                                      owing. Appeals conducts that review, sec. 6330(b)(1), and, as
                                      stated, we review respondent’s determinations under section
                                      6330(d)(1). On the facts before us, we review those deter-
                                      minations de novo. See Boyd v. Commissioner, 117 T.C. 127,
                                      131 (2001); Landry v. Commissioner, 116 T.C. 60, 62 (2001).
                                         Respondent may proceed by levy to collect petitioner’s
                                      liabilities. Simply put, neither the note nor anything in
                                      connection with the note constitutes payment of petitioner’s
                                      liabilities. The United States Code provides that ‘‘coins and
                                      currency (including Federal reserve notes and circulating
                                      notes of Federal reserve banks and national banks) are legal
                                      tender for all debts, public charges, taxes, and dues.’’ 31
                                      U.S.C. sec. 5103 (2006). Section 6311 addresses alternative
                                      methods of payment and authorizes the Secretary to receive
                                      for taxes any commercially acceptable means that he deems
                                      appropriate as prescribed by regulations. Sec. 6311(a), (d). No
                                      regulation issued by the Secretary allows private bonds or
                                      notes such as the note to be considered payment by commer-
                                      cially acceptable means. Other types of payment are not
                                      acceptable; e.g., the Commissioner has refused to accept real
                                      property in payment for tax liabilities. Rev. Rul. 76–350,
                                      1976–2 C.B. 396. Similarly, the Commissioner is not obli-
                                      gated to accept an individual’s personal property in satisfac-
                                      tion of her tax liabilities. E.g., Calafut v. Commissioner, 277
                                      F. Supp. 266, 267 (M.D. Pa. 1967).
                                         At the conclusion of the trial, the Court asked petitioner to
                                      provide the Court with any argument as to why the note dis-
                                      charged her obligation to pay the liabilities. Petitioner




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                                      answered only that her husband had tendered the note and
                                      she had not been advised by anyone of any defect in the note,
                                      nor had anyone returned it. Petitioner’s brief adds nothing to
                                      that answer. Petitioner did not address at trial or on brief
                                      any other error that she had assigned to the determinations,
                                      including her claim that the proposed levy would trespass on
                                      a bona fide lien her husband held. We therefore consider that
                                      she has abandoned those assignments of error. See Mendes
                                      v. Commissioner, 121 T.C. 308, 312–313 (2003) (‘‘If an argu-
                                      ment is not pursued on brief, we may consider that it has
                                      been abandoned.’’). We see no reason not to sustain the
                                      determinations, and we shall sustain them.
                                      II. Section 6673(a)(1) Penalty
                                         Under section 6673(a)(1), this Court may require a tax-
                                      payer to pay a penalty not in excess of $25,000 if (1) the tax-
                                      payer has instituted or maintained a proceeding primarily for
                                      delay, or (2) the taxpayer’s position is ‘‘frivolous or ground-
                                      less’’. A taxpayer’s position is frivolous if it is contrary to
                                      established law and unsupported by a reasoned, colorable
                                      argument for change in the law. E.g., Nis Family Trust v.
                                      Commissioner, 115 T.C. 523, 544 (2000). There is no support
                                      for petitioner’s claim that the note discharged her obligation
                                      to pay the liabilities, and she has made no argument beyond
                                      her claim that the Government did not return the note or
                                      point out its defects. Moreover, she refused to enter into a
                                      stipulation of facts and disobeyed our order to submit a pre-
                                      trial memorandum. She did not comply with the briefing
                                      schedule we set. When, in response to our order extending
                                      her time to file a brief, we received documents from her hus-
                                      band, they contained a ridiculous demand for money and a
                                      nonsensical claim that the Court is a for-profit corporation.
                                      Petitioner’s principal position in this case is so weak as to be
                                      groundless, and her argument in support of that position is
                                      frivolous. Indeed, we can see no reason for this case other
                                      than delaying respondent’s collection of tax liabilities and
                                      penalties for the 11 years in issue. Respondent’s counsel
                                      warned petitioner that her position was frivolous. Petitioner
                                      has wasted both the Court’s and respondent’s limited
                                      resources and deserves a significant penalty. We shall, there-




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                                      238                135 UNITED STATES TAX COURT REPORTS                                       (231)


                                      fore, require petitioner to pay a penalty under section
                                      6673(a)(1) of $15,000.
                                                                     An appropriate order and decision will be
                                                                   entered.

                                                                               f




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