                    T.C. Summary Opinion 2008-59



                      UNITED STATES TAX COURT



             RICHARD KEITH MCFARLAND, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15358-06S.               Filed May 22, 2008.



     Richard K. McFarland, pro se.

     Elizabeth R. Proctor, for respondent.



     LARO, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1 Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and



     1
       Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code, and Rule
references are to the Tax Court Rules of Practice and Procedure.
Some dollar amounts have been rounded.
                                 -2-

this opinion shall not be treated as precedent for any other

case.

     This case was commenced in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination).    The issue for decision is

whether respondent may proceed with collection of petitioner’s

2001 income tax liability.    We hold that he may.   We also decide

on our own motion whether petitioner is liable for a penalty

pursuant to section 6673.    We hold that he is and impose a

penalty of $3,500.

                             Background

     Some of the facts have been deemed stipulated pursuant to

Rule 91(f).2   The stipulation of facts, with accompanying

exhibits, is incorporated herein by this reference.    When he

petitioned this Court, petitioner resided in Michigan.




     2
       In a meeting on Oct. 9, 2007, petitioner informed
respondent that petitioner objected to all of the facts stated in
respondent’s proposed stipulation of facts. On Oct. 12, 2007,
respondent filed a motion to show cause why proposed facts in
evidence should not be accepted as established pursuant to Rule
91(f) to which was attached respondent’s proposed stipulation of
facts. In an order dated Oct. 18, 2007, the Court granted
respondent’s motion and ordered petitioner to file a response
showing why the matters set forth in respondent’s motion should
not be deemed admitted. Petitioner failed to comply with the
Court’s order. In an order dated Oct. 31, 2007, the Court made
absolute its order to show cause and deemed established the facts
and evidence set forth in respondent’s proposed stipulation of
facts and accompanying exhibits.
                                  -3-

     Petitioner mailed to respondent a 2001 Form 1040, U.S.

Individual Income Tax Return.    Petitioner did not enter on the

form any financial information for the taxable year but entered

zeros on every line regarding income and reported his total

income for 2001 as zero.    Petitioner’s 2001 filing status was

marked as single, but he did not claim the standard deduction on

the basis of his filing status.    Petitioner claimed a personal

exemption for himself.

     Petitioner attached two typewritten pages to his Form 1040,

which contain frivolous tax-protester arguments.3    On April 16,

2004, respondent sent a letter to petitioner informing petitioner

that petitioner’s return appeared to be frivolous and that if he

failed to respond within 30 days, a notice of deficiency would be

issued.

     On September 20, 2004, respondent issued a notice of

deficiency to petitioner with respect to his 2001 taxable year.

Respondent computed petitioner’s 2001 income using third-party

information returns.     The adjustments to petitioner’s income

included:




     3
       The attached pages appear to be a generic tax protester
document that contains blanks in which to enter the name of the
person completing the document, the taxable year to which the
document relates, and the amount (if any) of taxes withheld.
                                 -4-

     Standard deduction                                ($4,550)
     Exemptions                                         (2,900)
     Wages--W2--Employee Management Concepts            25,913
     Wages--W2--Elite Leasing Group LLC
      Unemployment compensation - Michigan               8,274
     Empl Sec Comm                                       1,800
       Total                                            28,537

The notice of deficiency also determined additions to tax under

section 6651(a)(1) of $1,040.75, and under section 6654 of

$166.37.   The notice of deficiency indicated that the last date

on which petitioner could petition this Court was December 20,

2004.   On December 13, 2004, petitioner contacted respondent and

stated that he received the notice of deficiency.   Petitioner

failed to petition this Court.

     On February 25, 2006, respondent issued to petitioner a

final notice of intent to levy and of the right to a hearing.     On

March 23, 2006, petitioner timely filed with respondent a

“Request for a Collection Due Process Hearing” to which several

documents were attached, including a document entitled “Request

For A Collection Due Process Hearing As Provided For In Code

Sections 6320 & 6330” and “page 73 of Senator Roth’s book ‘The

Power to Destroy’”.   In the hearing requests, petitioner made

numerous frivolous or irrelevant information requests typical of

tax-protesters and demanded that respondent provide at the

hearing such information as “the official job description(s) of

those IRS employees who imposed the ‘frivolous’ penalty.”
                                -5-

     On May 10, 2006, respondent’s Office of Appeals (Appeals)

mailed to petitioner a letter notifying him, in part, that

Appeals had received petitioner’s request for a collection due

process hearing and had scheduled a telephone conference call for

petitioner on June 19, 2006.   That letter notified petitioner

that he would be allowed a face-to-face conference if any

relevant, nonfrivolous issue was raised in writing or via

telephone.   The letter also warned petitioner that this Court is

empowered to impose sanctions of up to $25,000 on petitioner for

instituting or maintaining an action primarily for delay or for

taking a position that is frivolous or groundless.   On June 19,

2006, Appeals called petitioner and made the following notes

pursuant to the call:

     Called taxpayer at 10:00am CST and introduced myself along
     with giving him my ID number. I explained to him that I am
     conducting a hearing that he requested * * * I informed him
     that the IRS has followed all applicable law and
     administrative procedures. I informed him that we are to
     discuss the levy issues for tax years 2001 and 2004. He
     stated that he requested a face-to-face. He start [sic]
     reading the IRS Supreme Court Ruling about filing taxes
     under penalty under [sic] perjury. He asked me if I knew
     what a “PRA” meant. I asked him to state only relevant
     issues relating to the tax liability * * * He began to read
     some more quotes and IRC’s. I stated that if he did not
     have any relevant issues such as collection alternatives or
     challenges to the existence or amount of the underlying
     liability, the call will be terminated. The taxpayer stated
     that he had relevant issues and began to read more quotes
     and IRC’s. I then terminated the call.

     On July 7, 2006, respondent mailed the notice of

determination to petitioner.   The notice of determination stated
                                -6-

that Appeals had verified or received verification that all

applicable laws and administrative procedures had been followed

and had balanced the proposed collection action with the concern

that such action be no more intrusive than necessary.

     On August 2, 2006, petitioner petitioned this Court

requesting the following relief:4

     No satutory notice and demand for payment was sent persuant
     to IRC section (6331)(A) via Form 17 A. No collection due
     process hearing was held pesuant to IRC section
     (6230)(A)(3)(B) No valid assessmant by the IRS exhists
     persuant to IRC section (6201)(A)(1) The IRS violated IRC
     section (6020)(B) via the return that they created and did
     not sine or swear to under penalty of perjury. I also
     believe that the form 1040 in this case has no valid office
     of management and budget control number. Also the 1040
     regulation is found at: 5 (CFR)(1320.9) wich states that it
     is a preposal. Relief sought, have the record exponged

     Petitioner’s case was set for trial on November 26, 2007.

During the trial petitioner asserted that he believed he was a

tax-protester, stating:   “I’m a member of the We the People

Foundation lawsuit against the United States Government before

the Supreme Court right now.”   The Court warned petitioner that

protesting tax through frivolous arguments could subject

petitioner to monetary penalties.




     4
       We note the various misspelled words and grammatical
errors but do not point them out repeatedly.
                                  -7-

                              Discussion

1.   Section 6330 Levy

     Section 6330 provides for notice and opportunity for a

hearing before the Commissioner may levy upon the property of any

person.     At the hearing the person may raise any relevant issue

relating to the unpaid tax or proposed levy, including challenges

to the appropriateness of the collection action and offers of

collection alternatives.     The person may challenge the existence

or amount of the underlying tax liability for any period only if

the person did not receive a notice of deficiency or did not

otherwise have an opportunity to dispute the liability.     Sec.

6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000).

Once Appeals issues a notice of determination, the person may

seek judicial review in this Court.     Sec. 6330(d)(1).   Unless the

validity of the underlying tax liability is properly at issue, we

review the determination for abuse of discretion.     Sego v.

Commissioner, supra at 609-610.

     The validity of the underlying tax liability is not properly

at issue.     Petitioner concedes that during 2001 he received

$25,913 from Employee Management Concepts, $8,274 from Elite

Leasing Group LLC, and $1,800 from Michigan Employment Security

Commission.     Petitioner also concedes that he submitted to

respondent a 2001 Form 1040 reporting that he had no income for

2001.     Respondent has shown good cause not to suspend the levy,
                                  -8-

inasmuch as petitioner raised only frivolous arguments during his

appeal and has never proposed any collection alternatives.    See

Burke v. Commissioner, 124 T.C. 189, 195-197 (2005).    We conclude

that Appeals did not abuse its discretion as to the matter at

hand, and we sustain the determinations of Appeals that the

proposed levy is appropriate.

2.   Section 6673(a)(1) Penalty

     The Court now considers sua sponte whether to impose a

penalty against petitioner pursuant to section 6673(a)(1).    That

section provides that the Court may require a taxpayer to pay to

the United States a penalty not in excess of $25,000 whenever,

among other reasons, it appears either that the taxpayer

instituted or maintained the proceeding primarily for delay or

that the taxpayer’s position in the proceeding is frivolous or

groundless.

     Petitioner was warned repeatedly that his frivolous and

groundless positions in this proceeding could subject him to

penalties pursuant to section 6673; he has chosen to disregard

these warnings.   We conclude that petitioner’s positions in this

proceeding are frivolous and groundless.    On the record before

us, we are convinced that petitioner has instituted and

maintained this proceeding primarily for delay and has advanced

frivolous and groundless arguments.     See Hodgson v. Commissioner,

T.C. Memo. 2003-122 (and the cases cited therein).    In the light
                                -9-

of the foregoing, we believe sanctions are necessary to deter

petitioner and other similarly situated taxpayers from comparable

dilatory conduct.   Pursuant to section 6673(a)(1), we impose

against petitioner a penalty of $3,500.

     We have considered all of petitioner’s contentions and

allegations that are not discussed herein, and we find them to be

without merit and/or irrelevant.   To reflect the foregoing,



                                           An appropriate order and

                                      decision will be entered.
