                         T.C. Memo. 2003-45




                       UNITED STATES TAX COURT



                 TOMMY RAY SMITH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8564-02L.               Filed February 25, 2003.



     Tommy Ray Smith, pro se.

     Rollin G. Thorley, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    This case is before the Court on respon-

dent’s motion for summary judgment and to impose a penalty under

section 66731 (respondent’s motion).   We shall grant respondent’s


     1
      All section references are to the Internal Revenue Code in
effect at all relevant times. All Rule references are to the Tax
Court Rules of Practice and Procedure.
                              - 2 -

motion.

                          Background

     The record establishes and/or the parties do not dispute the

following.

     Petitioner resided in Las Vegas, Nevada, at the time he

filed the petition in this case.

     On December 28, 1998, petitioner filed a Federal income tax

(tax) return for his taxable year 1997 (1997 return).    In his

1997 return, petitioner reported total income of $0, total tax of

$0, and claimed a refund of $2,939.89 of tax withheld.    Peti-

tioner attached a two-page document to his 1997 return (peti-

tioner’s attachment to his 1997 return).   That document, as

completed by petitioner, stated in pertinent part:

     I, Tommy R. Smith am submitting this as part of my 1997
     income tax return, even though I know that no section
     of the Internal Revenue Code:

          1) Establishes an income tax “liability” as, for
     example, Code Sections 4401, 5005, and 5703 do with
     respe to wagering, alcohol, and tobacco taxes;

           2) Provides that income taxes “have to be paid on
     the basis of a return”-as, for example, Code Sections
     437 4401(c), 5061(a) and 5703(b) do with respect to
     other taxes * * * this return is not being filed volun-
     tarily but is being filed out of fear that if I did not
     file this return I could also be (illegally) prosecuted
     for failing to file an income tax return for the year
     1997.

          3) In addition to the above, I am filing even
     though the “Privacy Act Notice” as contained in a 1040
     booklet clearly informs me that I am not required to
     file. It does so in at least two places.
          a) In one place, it states that I need only file a
                               - 3 -

     return for “any tax” I may be “liable” for. Since no
     Code Section makes me “liable” for income taxes, this
     provision notifies me that I do not have to file an
     income tax return.
          b) In another place, it directs me to Code Section
     6001. This section provides, in relevant part, that
     “Whenever in the judgment of the Secretary it is neces-
     sary, he may require any person by notice served on suc
     person; or by regulations, to make such returns, render
     such statements, or keep such records, as the Secretary
     deems sufficient to show whether or not such person is
     liable for tax under this title.” Since the Secretary
     of the Treasury did not “serve” me with any such “no-
     tice” and since no legislative regulation exists re-
     quiring anyon to file an income tax return, I am again
     informed by the “Privacy Act Notice” that I am not
     required to file an income tax return.

        *       *       *        *       *       *       *

          7) It should also be noted that I had “zero”
     income according to the Supreme Court’s definition of
     income * * * since in Merchant’s Loan & Trust C. V.
     Smietanka, 225 U.S. 509, (at pages 518 & 519) that
     court held that “The word (income) must be given the
     same meaning in all of the Income Tax Acts of Congress
     that was given to it in the Corporation Excise Tax Act
     of 1909.” Therefore since I had no earnings in 1997,
     tha would have been taxable as “income” under the
     Corporation Excise Tax Act of 1909, I can only swear to
     having “zero” income in 1997. Obviously, since I know
     the legal definition of “income”, if I were to swear to
     having received any other amount of “income,” I would
     be committing perjury * * *. Therefore, not wishing to
     commit perjury * * *, I can only swear to having “zero”
     income fo 1997. [Reproduced literally.]

     On June 14, 1999, respondent paid petitioner the $2,939.89

refund that he claimed in his 1997 return plus interest thereon.

     On August 4, 2000, respondent issued to petitioner a notice

of deficiency (notice) with respect to his taxable year 1997,

which he received.   In that notice, respondent determined a

deficiency in, and an accuracy-related penalty under section
                               - 4 -

6662(a) on, petitioner’s tax for his taxable year 1997 in the

respective amounts of $2,194 and $438.80.

     Petitioner did not file a petition in the Court with respect

to the notice relating to his taxable year 1997.   Instead, on

October 6, 2000, in response to the notice, petitioner sent a

letter (petitioner’s October 6, 2000 letter) to the Internal

Revenue Service.   That letter stated in pertinent part:

     RE:   Deficiency Notice dated 08-04-00
           Registered Mail # Z 096 931 664

     According to your “Deficiency Notice” of above date
     (cover sheet [page 1 of notice with respect to peti-
     tioner’s taxable year 1997] attached), there is an
     alleged deficiency with respect to my 1997 income tax
     return of $0.00, if I wanted to “contest this defi-
     ciency before making payment”, I must “file a petition
     with the United States Tax Court”. Before I file, pay,
     or do anything with respect to your “Notice”, I must
     first establish whether or not it was sent out pursuant
     to law and whether or not it has the “force and effect
     of law”, since, if it does not, than it can not legally
     apply to me on any basis.

          1) For one thing, Section 6212 states that “If the
     Secretary determines that there is a deficiency in
     respect of any tax... he is authorized to send notice
     of such deficiency etc., etc., etc.,” However, the
     “Notice” I recieved was not sent out by the Secretary,
     but rather by Ms. Power, who is identified as being the
     Director of the Service Center in Ogden, UT, and I have
     no way of knowing whether she has been delegated by the
     Secretary to send out such notices on the Secretary’s
     behalf. So before I do anything at all with respect to
     your “Notice”, I would have to see a Delegation Order
     from the Secretary of the Treasury delegating to Ms.
     Power the authority to send out Deficiency Notices.

          2) I would also like you to send me (or identify
     for me) the legislative regulations that you claim
     implement Code Section 6212 and 6213. According to two
     Code Sections in the Privacy Act and Paperwork Reduc-
                               - 5 -

     tion Act notice (as contained in the 1040 booklet) to
     which my attention was specifically directed - Section
     6001 States that I must “comply with such rules and
     regulations as the Secretary may from time to time
     prescribe etc. etc.,...; while Section 6011 states that
     “when required by regulations prescribed by the Secre-
     tary etc., etc...”, however, I can not find any legis-
     lative regulation “prescribed by the Secretary” that
     requires me to petition Tax Court in responce to a
     Deficiency Notice. Therefore, I am asking that you
     supply me with the legislative regulations that you
     claim implement Code Section 6212 and 6213, since I can
     not find any such regulations on my own. * * * [Repro-
     duced literally.]

     On January 8, 2001, respondent assessed petitioner’s tax, as

well as any penalties and interest as provided by law, for his

taxable year 1997.   (We shall refer to those assessed amounts, as

well as interest as provided by law accrued after January 8,

2001, as petitioner’s unpaid liability for 1997.)

     On January 8, 2001, respondent issued to petitioner a notice

of balance due with respect to petitioner’s unpaid liability for

1997.

     On July 30, 2001, respondent issued to petitioner a final

notice of intent to levy and notice of your right to a hearing

(notice of intent to levy) with respect to his taxable year 1997.

On or about August 29, 2001, in response to the notice of intent

to levy, petitioner filed Form 12153, Request for a Collection

Due Process Hearing (Form 12153), and requested a hearing with

respondent’s Appeals Office (Appeals Office).   Petitioner at-

tached a document to his Form 12153.   That document stated in

pertinent part:
                               - 6 -

          1) I want the appeals officer to have with him a
    copy of the Notice and Demand that was supposed to have
    been sent.
          2) If he dose not have the actual “notice and
    demand”, then I demand that he at least have
    a blank copy of the document.
          3) Please have the Form 4340 signed by an assess-
    ment officer certifying that an assessment has been
    made. In lieu of a signed 4340, don’t show me an
    unsigned IRS printout (containing coded entries I don’t
    understand) which claims an assessment was made.
          4) I want the appeals officer to also have the
    1040 return from which my claimed 1997 assessment was
    made.
          5) I would like to see the Treasury Decision or
    Treasury Regulation which identifies the document sent
    to me as being the stutory “notice and demand” is, in
    fact, that document.
          6) I claim there is no Statute requiring me to pay
    the income taxes at issue. Please have that Statute
    for me to see.
         7) Also show me the law that authorizes the IRS to
    claim that I owe more in income taxes than the “zero” I
    reported on my 1997 income tax return.
          8) Show me the law that says a Form 1040 is to be
    used.
          9) And finally I expect you to have at the hearing
    “verification from the Secretary that the requirements
    of any applicable law or administrative procedure have
    been met. [Reproduced literally.]

     On March 13, 2002, respondent’s Appeals officer held an

Appeals Office hearing with petitioner with respect to the notice

of intent to levy.   At the Appeals Office hearing, the Appeals

officer gave petitioner Form 4340, Certificate of Assessments,

Payments, and Other Specified Matters (Form 4340), with respect

to petitioner’s taxable year 1997.

     On April 4, 2002, the Appeals Office issued to petitioner a

notice of determination concerning collection action(s) under
                              - 7 -

section 6320 and/or 6330 (notice of determination).   An attach-

ment to the notice of determination stated in pertinent part:

     Verification of Legal and Procedural Requirements

     The Secretary has provided sufficient verification that
     all legal and procedural requirements have been met.
     Computer transcripts have been reviewed by Appeals,
     verifying the assessment.

     The assessment was made, and notice and demand was
     issued on 01/08/2001 by regular mail to the taxpayer’s
     last known address, as required under IRC 6303. The
     notices required under IRC 6331(d) and IRC 6330 were
     combined in Letter 1058, dated 07/30/2001, which was
     mailed certified to the taxpayer’s last known address.
     The taxpayer responded with Form 12153, Request for a
     Collection Due Process Hearing, which was timely re-
     ceived on 08/29/2001. The taxpayer is entitled to
     judicial review. This is a levy issue only.

     A certified transcript was requested and reviewed and a
     copy was provided to the taxpayer at the hearing. An
     in-person collection due process hearing was held on
     03/13/2002. In attendance were the taxpayer, a tax-
     payer witness, Settlement Officer Donna Fisher, and
     Appeals Officer Tony Aguiar. The hearing was audio
     recorded by the taxpayer and Settlement Officer Donna
     Fisher.

     Settlement Officer Donna Fisher has had no prior in-
     volvement with respect to this tax liability.

     Issues Raised by the Taxpayer

     The taxpayer disagrees with the assessment. He filed a
     zero income, zero tax due return, attached his W-2 Form
     showing taxable wages of $19,826.40, and received a
     full refund. The Service completed an audit, and the
     taxpayer was issued a statutory notice of deficiency,
     dated 08/04/2000. He received the statutory notice of
     deficiency and responded to it with a letter dated
     10/06/2000 with one and a half pages of non-filer
     arguments. As such, under the collection due process
     procedures, he may not raise as an issue the existence
     or amount of the underlying assessment.
                               - 8 -

     The taxpayer stated he did not receive the letter of
     notice and demand. The certified transcript shows it
     was issued to him on 01/08/2001, at which time his last
     known address was 4104 E. Harmon as indicated by com-
     puter transcripts. The taxpayer also stated his ad-
     dress at that time was 4104 E. Harmon. This was the
     same address as it was when he received and responded
     to both the statutory notice of deficiency dated
     08/04/2000, and the Letter 1058 dated 07/30/2001.
     Today he still lives at 4104 E. Harmon. Therefore, it
     is presumed he did receive the letter of notice and
     demand.

     The taxpayer raised no non-frivolous arguments.

     I raised the issue of collection alternatives with the
     taxpayer. He was not interested. He said he would pay
     the tax due if it could be proven to him that it was
     owed, but since he does not believe wages are income,
     this discussion was fruitless. In addition, since the
     taxpayer has not filed any returns since 1997, he is
     not in filing compliance, and therefore, is not now
     eligible for an offer in compromise or an installment
     agreement.

     Balancing the Need for Efficient Collection with Tax-
     payer Concerns

     The requirements of all applicable laws and administra-
     tive procedures have been met. The taxpayer received
     all his required notices. The assessment is valid.
     Given the taxpayer’s continued lack of compliance with
     the tax laws, a levy or levies on his property or
     rights to property would not be considered more intru-
     sive than necessary when balancing the government’s
     need for efficient collection with his concerns.

                            Discussion

     The Court may grant summary judgment where there is no

genuine issue of 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), affd. 17 F.3d 965 (7th Cir. 1994).

     In petitioner’s response to respondent’s motion (peti-
                                 - 9 -

tioner’s response), petitioner contends that the following are

genuine issues of material fact:      “Verification from the Secre-

tary was not obtained by appeals officer” and “No statutory

notice and demand was sent”.2    The record in this case estab-

lishes that the Appeals officer obtained verification from the

Secretary that the requirements of any applicable law or adminis-

trative procedure were met.     The record further establishes that

respondent sent to petitioner a notice of balance due with

respect to petitioner’s unpaid liability for 1997, which, as

discussed below, constitutes a notice and demand for payment

under section 6303(a), Craig v. Commissioner, 119 T.C. 252, 262-

263 (2002).   We conclude that there are no genuine issues of

material fact regarding the questions raised in respondent’s

motion.

     With respect to petitioner’s taxable year 1997, petitioner

received a notice of deficiency, but he did not file a petition

with respect to that notice.    In the petition, petitioner admits


     2
      Petitioner also contends that the following are genuine
issues of material fact:

     No statute establishes a liability for the income tax
     or requires the payment of the income tax

          *     *       *         *        *       *       *

     Petitioner is not now, and has never been involved in
     any occupation requiring taxes be paid by stamp. * * *

The foregoing assertions do not raise genuine issues of material
fact. Those assertions raise frivolous legal arguments.
                              - 10 -

that he received the notice of deficiency and alleges that he

“would have petitioned Tax Court if the agent who sent the notice

could prove that she had the authority to do so.”   On the instant

record, we find that petitioner may not challenge the existence

or the amount of petitioner’s unpaid liability for 1997.   See

sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610-611

(2000); Goza v. Commissioner, 114 T.C. 176, 182-183 (2000).

     Where, as is the case here, the validity of the underlying

tax liability is not properly placed at issue, the Court will

review the determination of the Commissioner of Internal Revenue

for abuse of discretion.   Sego v. Commissioner, supra at 610;

Goza v. Commissioner, supra at 181-182.

     As was true of petitioner’s attachment to his 1997 return,

petitioner’s October 6, 2000 letter, and petitioner’s attachment

to Form 12153, petitioner’s response contains contentions,

arguments, and requests that the Court finds to be frivolous

and/or groundless.   To illustrate, petitioner argues that he “has

not received proper Notice and Demand” under section 6303(a).

That is because, according to petitioner, respondent must use

Form 17 in issuing such notice and demand.

     We reject petitioner’s argument that respondent did not

issue the notice and demand required by section 6303(a).   Form

4340 with respect to petitioner’s taxable year 1997 shows that

respondent sent petitioner a notice of balance due on January 8,
                              - 11 -

2001, the same day on which respondent assessed petitioner’s tax,

as well as any penalties and interest as provided by law, for his

taxable year 1997.   A notice of balance due constitutes the

notice and demand for payment under section 6303(a).   Craig v.

Commissioner, supra.   Respondent is not required to use Form 17

as the notice and demand for payment.   E.g., Keene v. Commis-

sioner, T.C. Memo. 2002-277; Tapio v. Commissioner, T.C. Memo.

2002-141.

     As a further illustration of the frivolous and/or groundless

nature of petitioner’s position in this case, petitioner contends

in petitioner’s response that the Appeals officer failed to

obtain verification that the requirements of any applicable law

or administrative procedure have been met, as required by section

6330(c)(1).   In this regard, petitioner contends that the Appeals

officer improperly relied on Form 4340 to meet the verification

requirement of section 6330(c)(1).

     As indicated above, the record establishes that the Appeals

officer obtained verification from the Secretary that the re-

quirements of any applicable law or administrative procedure were

met, and we reject petitioner’s contention to the contrary.    As

for the Appeals officer’s reliance on Form 4340, at the Appeals

Office hearing, the Appeals officer relied on, and gave peti-

tioner, Form 4340 with respect to petitioner’s taxable year 1997.

Section 6330(c)(1) does not require the Appeals officer to rely
                                  - 12 -

on a particular document to satisfy the verification requirement

imposed by that section.3      Craig v. Commissioner, supra at 261-

262.       Form 4340 is a valid verification that the requirements of

any applicable law or administrative procedure have been met.

Id. at 262.       Petitioner has not shown any irregularity in respon-

dent’s assessment procedure that would raise a question about the

validity of the assessment or the information contained in Form

4340 with respect to petitioner’s taxable year 1997.       We hold

that the assessment with respect to petitioner’s taxable year

1997 was valid and that the Appeals officer satisfied the verifi-

cation requirement of section 6330(c)(1).       See id.4

       Based upon our examination of the entire record before us,

we find that respondent did not abuse respondent’s discretion in


       3
      Nor does sec. 6330(c)(1) require the Appeals officer to
provide petitioner with a copy of the verification upon which the
Appeals officer relied. Craig v. Commissioner, 119 T.C. 252, 262
(2002).
       4
      We shall not specifically address any additional matters,
such as the following, which petitioner asserts in petitioner’s
response, all of which, as indicated above, the Court finds to be
frivolous and/or groundless:

            This Court has repeatedly ignored taxpayers’
       requests that this Court identify the IR Code Section
       that establishes a liability for the income tax, by
       simply stating that this argument is “frivolous”,
       instead of citing the alleged Code Section itself, if
       it exists. * * * Also, there is no entry under the
       “liability” heading in the index of the Internal Reve-
       nue Code for “income tax”. * * * This Court has repeat-
       edly refused to produce proper, legal delegations of
       authority from the Secretary to various employees of
       the IRS * * *
                              - 13 -

determining to proceed with the collection action as determined

in the notice of determination with respect to petitioner’s

taxable year 1997.

     In respondent’s motion, respondent requests that the Court

require petitioner to pay a penalty to the United States pursuant

to section 6673(a)(1).   Section 6673(a)(1) authorizes the Court

to require a taxpayer to pay to the United States a penalty in an

amount not to exceed $25,000 whenever it appears to the Court,

inter alia, that a proceeding before it was instituted or main-

tained primarily for delay, sec. 6673(a)(1)(A), or that the

taxpayer’s position in such a proceeding is frivolous or ground-

less, sec. 6673(a)(1)(B).

     In Pierson v. Commissioner, 115 T.C. 576, 581 (2000), we

issued an unequivocal warning to taxpayers concerning the imposi-

tion of a penalty under section 6673(a) on those taxpayers who

abuse the protections afforded by sections 6320 and 6330 by

instituting or maintaining actions under those sections primarily

for delay or by taking frivolous or groundless positions in such

actions.

     In the instant case, petitioner advances, we believe primar-

ily for delay, frivolous and/or groundless contentions, argu-

ments, and requests, thereby causing the Court to waste its

limited resources.   We shall impose a penalty on petitioner

pursuant to section 6673(a)(1) in the amount of $500.
                             - 14 -

     We have considered all of petitioner’s contentions, argu-

ments, and requests that are not discussed herein, and we find

them to be without merit and/or irrelevant.

     On the record before us, we shall grant respondent’s motion.

     To reflect the foregoing,

                                      An appropriate order granting

                                 respondent’s motion and decision

                                 will be entered for respondent.
