                         T.C. Memo. 2003-61



                       UNITED STATES TAX COURT



                  DANIEL A. FINK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7282-02L.              Filed March 4, 2003.



     Daniel A. Fink, pro se.

     Alan J. Tomsic, 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 Henderson, Nevada, at the time he

filed the petition in this case.

     On or about August 15, 1999, petitioner filed a Federal

income tax (tax) return for his taxable year 1998 (1998 return).

In his 1998 return, petitioner reported total income of $0, total

tax of $0, and claimed a refund of $5,946 of tax withheld.

Petitioner attached a two-page document to his 1998 return

(petitioner’s attachment to his 1998 return).   That document

stated in pertinent part:

     I, Daniel A. Fink, am submitting this as part of my
     1998 income tax return, even though I know that no
     section of the Internal Revenue Code:

     1) Establishes an income tax “liability” as, for exam-
     ple, Code Sections 4401, 5005, and 5703 do with respect
     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
     4374, 4401(c), 5061(a) and 5703(b) do with respect to
     other taxes; I am filing anyway because I know the
     government has prosecuted other [sic] for failing to
     file income tax returns by (erroneously) invoking Code
     Sections 7201 and 7203. Therefore, this return is not
     being filed voluntarily 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 1998.

     3) In addition to the above, I am filing even though
     the “Privacy Act Notice” as contained in a 1040 booklet
                              - 3 -

     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 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 necessary, he may
          require any person by notice served on such
          person; or by regulations, to make such re-
          turns, render such statements, or keep such
          records, as the Secretary deems sufficient to
          show whether or not such person is liable for
          the tax under this title.” Since the Secre-
          tary of the Treasury did not “serve” me with
          any such “notice” and since no legislative
          regulation exists requiring anyone 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.

        *       *       *       *       *       *         *

     6) 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,
     255 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 1998, that would
     have been taxable as “income” under the Corporation
     Excise Tax Act of 1909, I can only swear to having
     “zero” income in 1998. 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 for 1998.

     On February 18, 2000, respondent issued to petitioner a

notice of deficiency (notice) with respect to his taxable year
                                 - 4 -

1998, which he received.     In that notice, respondent determined a

deficiency in, an addition to tax under section 6651(a)(1) on,

and an accuracy-related penalty under section 6662(a) on, peti-

tioner’s tax for his taxable year 1998 in the respective amounts

of $8,836, $722.50, and $578.

     Petitioner did not file a petition in the Court with respect

to the notice relating to his taxable year 1998.      Instead, on

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

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

Revenue Service.    That letter stated in pertinent part:

     According to your “Deficiency Notice” of February 18,
     2000 (cover sheet attached), there is an alleged defi-
     ciency with respect to my 1998 income tax of $8,836,
     and if I wanted to “contest this deficiency 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 pursuant to law,
     whether or not it has the “force and effect of law,”
     and whether you had any authority to send me the Notice
     in the first place.

        *       *        *        *       *       *         *

     Let me further point out the IRS Code Sections 6001 and
     6011(as identified in the 1040 Privacy Act) notifies me
     that I need only “comply with regulations.” Nothing in
     the Privacy Act Notice or in the above statutes informs
     me that I have [to] “comply” with, or pay attention to,
     letters and/or alleged “determinations” sent to me by
     various and sundry employees of the IRS.

     Please note that 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 “no-
     tice” I received was not sent by the Secretary, but by
     Dennis L. Paiz who is identified as being Chief, Ser-
                               - 5 -

     vice Center Examination Branch in Ogden, Utah, and I
     have no way of knowing whether he has been delegated by
     the Secretary to send out of [sic] 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 Dennis L. Paiz the authority to send out
     Deficiency Notices.

     In addition, I would also like you to send me (or
     identify for me) the legislative regulations that you
     claim implement Code Sections 6212 and 6213. I have
     also attached an excerpt from the IRS Procedures Manual
     * * * which points out that the IRS is required to
     “make available to all taxpayers comprehensive, accu-
     rate, and timely information on the requirements of tax
     law and regulations.” So, pursuant to this provision
     from your Procedures Manual, I am asking that you
     identify (make available) for me the legislative regu-
     lations that you claim implement both Code Sections
     6212 and 6213 - since I have not been able to locate
     them.

     Without your furnishing me with these documents and
     information, I will be unable to “ascertain” * * *
     whether the individual who sent me the Deficiency
     Notice was authorized to do so, and whether I am le-
     gally required to take any notice of it. * * *

     On August 7, 2000, respondent assessed petitioner’s tax, as

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

taxable year 1998.   (We shall refer to those assessed amounts, as

well as interest as provided by law accrued after August 7, 2000,

as petitioner’s unpaid liability for 1998.)

     On August 7, 2000, respondent issued to petitioner a notice

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

1998.

     On August 6, 2001, respondent issued to petitioner a final

notice of intent to levy and notice of your right to a hearing
                              - 6 -

(notice of intent to levy) with respect to his taxable year 1998.

On or about August 22, 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).   A document that

petitioner attached to his Form 12153 (petitioner’s attachment to

Form 12153) stated in pertinent part:

     I am requesting for [sic] a Collection Due Process
     Hearing as provided for in Code sections 6320 and 6330.
     * * *   Thus, if any IRS employee attempts to deny me
     the “Due Process Hearing” guaranteed to me by law, or
     recommends that seizure action be taken without produc-
     ing the documentation required by Sections 6320 and
     6330 or without addressing the issues provided for in
     these Code Sections, I will seek damages * * * and seek
     that employee’s termination * * *.

        *       *       *       *       *        *       *

     It is clear before any Appeals officer can recommend
     the seizure of any property pursuant to Code Section
     6331 certain elements have to be present. For one
     thing, pursuant to the statute, that person has to be
     statutory [sic] “liable to pay” the taxes at issue, and
     only after he “neglects or refuses to pay the same
     within 10 days after notice and demand,” can his prop-
     erty be subject to seizure. Therefore, apart from the
     Appeals officer having to identify the statute that
     makes me “liable to pay” the taxes at issue, he needs
     to have a copy of the “notice and demand” which I
     “neglected” and “refused” to pay. In addition, I
     cannot be “liable” to pay an income tax, if the tax in
     question has never been assessed against me as required
     by Code Sections 6201 and 6203. So, I will need to see
     a copy of the record of my assessments. As provided by
     Code Section 6201(a)(1) and IRS Transaction Code 150,
     all assessments have to be based on filed returns, I
     will have to see a copy of the return upon which any
     claimed assessment is based. In lieu of producing
     these specific documents “verification from the Secre-
     tary of the Treasury that the requirements of any
                               - 7 -

     applicable law or administrative procedure have been
     met,” will be acceptable. But, the Appeals officer
     better have either the specific documents as identified
     above, or “verification from the Secretary.” If the
     Appeals officer can produce neither, then no Due Pro-
     cess Hearing should have been scheduled. * * *

     On February 5, 2002, respondent’s Appeals officer held an

Appeals Office hearing with petitioner with respect to the notice

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

Appeals officer provided petitioner with a literal transcript of

account with respect to petitioner’s taxable year 1998.   After

the Appeals Office hearing, respondent’s representative provided

petitioner with Form 4340, Certificate of Assessments, Payments,

and Other Specified Matters (Form 4340), with respect to peti-

tioner’s taxable year 1998.

     On March 19, 2002, the Appeals Office issued to petitioner a

notice of determination concerning collection action(s) under

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

ment to the notice of determination stated in pertinent part:

     What issue is being appealed?

     On August 30, 2001, the taxpayer submitted a timely
     request, under Section 6330 of the Internal Revenue
     Code (IRC), for a collection due process hearing. The
     request relates to a Notice of Intent to Levy dated
     August 6, 2001 that was issued for balances due on his
     1998 individual income tax liability * * *.

     Verification of Legal and Procedural Requirements

     The Secretary has provided sufficient verification that
     the requirements of applicable law and administrative
     requirements have been met. I have reviewed tran-
     scripts of the accounts, the taxpayer’s original 1998
                         - 8 -

Individual Income Tax Return, and the related defi-
ciency assessment file.

The statutory notice of deficiency was correctly sent
for the 1998 income tax assessment on February 18,
2000. The taxpayer received and responded to it with
frivolous arguments but did not petition the Tax Court.
The “notice and demand”, required by IRC 6303, was
properly sent to the taxpayers [sic] last known address
on August 7, 2000. The taxpayer has had an opportunity
for judicial review of the income tax assessment and is
now precluded, under IRC 6330(c)(2)(B) from raising
challenges “to the existence or amount of the underly-
ing tax liability”.

   *       *       *       *         *     *       *

The Settlement Officer assigned to this hearing has had
no previous involvement with the taxpayer. * * * The
notice required by IRC 6330 was correctly sent and
resulted in this hearing request.

Relevant Issues Raised by Taxpayer

The hearing was conducted with the taxpayer on February
5, 2001 [sic]. The taxpayer’s hearing request pre-
sented only frivolous arguments and no relevant argu-
ments were presented at the hearing. The taxpayer
denied receipt of a Statutory Notice of Deficiency for
his 1998 liability, but he received and responded to it
and referenced in his letter dated March 6, 2000. That
letter also presented frivolous arguments and stated,
in part: “Nothing in the Privacy Act Notice or in the
above statutes informs me that I have to ‘comply’ with,
or pay attention to, letters and/or alleged ‘determina-
tions’ sent to me by various and sundry employees of
the IRS.” Only arguments of this vein were presented
at the hearing.

   *       *       *       *         *     *       *

The taxpayer was specifically asked if he wished to
propose collection alternatives to levy on his assets
but he presented none. He was advised of his right to
judicial review of this determination. He was also
given a copy of Pierson v. Commissioner, 2000 U.S. Tax
Ct. LEXIS 93; 115 T.C. No.39 and was warned that the
courts have been imposing sanctions upon litigation of
                               - 9 -

     frivolous arguments.

     Balancing Efficient Collection with Intrusiveness

     It is determined that the Notice of Intent to Levy was
     properly issued. Given the taxpayer’s compliance
     history and continuing non-compliance, levy on assets
     of the taxpayer is an appropriate next action for the
     Internal Revenue Service to take. The taxpayer offers
     no collection alternative. Levy on assets of the
     taxpayer balances the taxpayer’s legitimate concern for
     the intrusiveness of the action with the need to effi-
     ciently administer the tax laws.

                            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).    We

conclude that there is no genuine issue of material fact regard-

ing the questions raised in respondent’s motion.

     With respect to petitioner’s taxable year 1998, petitioner

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

with respect to that notice.   In petitioner’s response to respon-

dent’s motion (petitioner’s response), petitioner contends that

he “only admitted to having received an “INVALID” Deficiency

Notice”.   That is because, according to petitioner, the employee

who signed the notice of deficiency “did not have any delegated

authority to send out the Deficiency Notice at issue”.   The Court

finds petitioner’s contention about the notice relating to his

taxable year 1998 to be frivolous and groundless.   On the instant
                                - 10 -

record, we find that petitioner may not challenge the existence

or the amount of petitioner’s unpaid liability for 1998.      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 1998 return,

petitioner’s March 6, 2000 letter, and petitioner’s attachment to

Form 12153, petitioner’s response contains contentions, argu-

ments, and requests that the Court finds to be frivolous and/or

groundless.     To illustrate, petitioner contends that respondent

failed to issue petitioner the “statutory Notice and Demand for

payment”.     We reject that contention.   Form 4340 with respect to

petitioner’s taxable year 1998 shows that respondent sent peti-

tioner a notice of balance due on August 7, 2000, 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

1998.     A notice of balance due constitutes the notice and demand

for payment under section 6303(a).       Craig v. Commissioner, 119

T.C. 252, 262-263 (2002).

        As a further illustration of the frivolous and/or groundless
                              - 11 -

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

in petitioner’s response that the Appeals officer failed to

obtain and to produce verification that the requirements of any

applicable law or administrative procedure have been met, as

required by section 6330(c)(1).   The record establishes that the

Appeals officer obtained verification from the Secretary that the

requirements of any applicable law or administrative procedure

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

Prior to the Appeals Office hearing, the Appeals officer reviewed

complete computer transcripts of petitioner’s account and pro-

vided petitioner with a literal transcript of account with

respect to petitioner’s taxable year 1998.    At the Appeals Office

hearing, the Appeals officer relied on transcripts of peti-

tioner’s account with respect to petitioner’s taxable year 1998.

After the Appeals office hearing, respondent’s representative

provided petitioner with Form 4340 with respect to petitioner’s

taxable year 1998.   See Nestor v. Commissioner, 118 T.C. 162, 167

(2002).

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

rely on a particular document to satisfy the verification re-

quirement imposed by that section.     Craig v. Commissioner, supra

at 261-262.   Nor does section 6330(c)(1) require the Appeals

officer to provide petitioner with a copy of the verification

upon which the Appeals officer relied.     Id. at 262.   Transcripts
                               - 12 -

of account constitute valid verification that the requirements of

any applicable law or administrative procedure have been met, see

Roberts v. Commissioner, 118 T.C. 365, 371-372 n.10 (2002), as

does Form 4340, Craig v. Commissioner, supra at 262.    Petitioner

has not shown any irregularity in respondent’s assessment proce-

dure that would raise a question about the validity of the

assessment or the information contained in the transcripts of

account or Form 4340 with respect to petitioner’s taxable year

1998.    We hold that the assessment with respect to petitioner’s

taxable year 1998 was valid and that the Appeals officer satis-

fied the verification requirement of section 6330(c)(1).   See

id.; Roberts v. Commissioner, supra.2

     Based upon our examination of the entire record before us,

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

determining to proceed with the collection action as determined

in the notice of determination with respect to petitioner’s

taxable year 1998.


     2
      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:

          d.   Since all valid assessments must emanate from
     a filed return, proof that such a “filed return” exists
     is another “relevant” issue that taxpayers can raise.
     If this issue is raised, then, obviously, it is incum-
     bent upon the appeals officer to produce the return
     from which the claimed assessment was made - if this
     “relevant” issue is raised by the taxpayer - especially
     if it was raised on his request for a CDP hearing.
                              - 13 -

     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.3

     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 $2,000.


     3
      The record in this case reflects that the Appeals officer
gave petitioner a copy of the Court’s opinion in Pierson v.
Commissioner, 115 T.C. 576 (2000), and warned petitioner that the
Court could impose penalties on petitioner for making frivolous
arguments to the Court.
                             - 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.
