                        T.C. Memo. 2009-163



                      UNITED STATES TAX COURT



                   ERNEST ENAX, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 29667-07L.              Filed July 2, 2009.



     Ernest Enax, pro se.

     Laura A. Price, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This matter is before us on respondent’s

motion for summary judgment, filed pursuant to Rule 121, and to

impose a penalty under section 6673.1   Petitioner timely filed a



     1
      All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code.
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petition pursuant to sections 6320(c) and 6330(d), appealing

respondent’s determination to uphold the validity of a notice of

Federal tax lien filed with respect to petitioner’s 2001, 2003,

and 2004 unpaid Federal income tax liabilities.   In Enax v.

Commissioner, T.C. Memo. 2008-116, the Court sustained

respondent’s determination to proceed with a levy to collect the

unpaid tax liabilities for the years at issue and imposed a

penalty under section 6673 on petitioner of $2,500.

                           Background

     Petitioner resided in Florida when the petition was filed.

A.   Deficiencies Assessed for 2001, 2003, and 2004

     Petitioner entered zeros on every line of the Forms 1040,

U.S. Individual Income Tax Return, he filed for 2001, 2003, and

2004 and attached documents espousing tax-protester arguments to

each form.

     Although respondent accepted the Form 1040 petitioner filed

for 2004 as a valid tax return, respondent did not treat the

Forms 1040 submitted for 2001 and 2003 as valid tax returns.

Instead, using third-party payor information, respondent prepared

substitutes for returns for 2001 and 2003.   Respondent mailed to

petitioner separate notices of deficiency for 2001, 2003, and

2004, respectively, on July 7, 2004, May 9, 2005, and April 14,

2006.
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     Petitioner did not file a petition with the Tax Court to

contest the deficiencies determined in any of the notices of

deficiency, and the deficiencies for 2001, 2003, and 2004 were

assessed on March 28 and November 21, 2005, and August 28, 2006,

respectively.   Respondent also assessed penalties against

petitioner under section 6702 for 1997, 2003, and 2004.

B.   Notice of Intent To Levy

     On March 27, 2007, respondent mailed to petitioner a notice

of intent to levy to collect petitioner’s outstanding Federal

income tax liabilities for 2001, 2003, and 2004 and outstanding

penalties for 1997, 2003, and 2004.     Respondent also mailed to

petitioner a notice explaining petitioner’s right to request an

Appeals Office hearing regarding the levy (the levy hearing).

     Petitioner timely requested the levy hearing and mailed to

respondent’s Appeals Office numerous tax-protester arguments and

a partially completed Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals.

     Petitioner could not raise the underlying deficiencies

because he received notices of deficiency, but he was given the

opportunity to contest the section 6702 penalties for 1997, 2003,

and 2004.   In his communications with the settlement officer,

petitioner raised only tax-protester arguments.     As a result, the

settlement officer did not hold a face-to-face hearing with
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petitioner, and petitioner’s levy hearing was conducted from May

29 to June 25, 2007, by correspondence and telephone.

     On July 17, 2007, respondent’s Appeals Office mailed to

petitioner a notice of determination sustaining respondent’s

proposed levy action (levy determination).   On August 6, 2007,

petitioner timely filed a petition in this Court in docket No.

17374-07L contesting the levy determination.2

C.   Notice of Lien Filing

     On May 29, 2007, respondent mailed petitioner a Notice of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320, regarding petitioner’s income tax years 2001, 2003, and

2004.    The notice of Federal tax lien was filed on May 30, 2007.

Respondent received from petitioner a signed Form 12153, Request

for a Collection Due Process Hearing, on June 18, 2007.

     Petitioner’s lien case was assigned to the same settlement

officer who was conducting his levy hearing.    On November 6,

2007, the settlement officer mailed petitioner a letter



     2
      Petitioner also filed a petition in docket No. 22087-06L
contesting income tax liabilities for tax years 1993 and 1994 and
trust fund recovery penalties for periods within those tax years.
The case was dismissed for lack of jurisdiction because
respondent had not sent petitioner any notice of determination
authorized by sec. 6330 with respect to income tax liabilities
and trust fund recovery penalties assessed against petitioner for
1993 and 1994, nor had respondent made any other determination
with respect to the tax liabilities that would confer
jurisdiction on this Court. As of Dec. 31, 2007, petitioner
remained liable for 21 assessments of taxes and penalties for all
open years totaling $232,959.68.
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scheduling a collection due process (CDP) hearing for November

21, 2007, and advising petitioner to contact him no later than

November 19, 2007, in regard to petitioner’s preference for a

conditional face-to-face, telephone, or correspondence hearing.

The settlement officer informed petitioner that

          The liability issue (how much you owe or if you
     owe) is not open in regard to this hearing. You
     previously had a Collection Due Process hearing in
     regard to these periods and a Notice of Intent to Levy.
     The [levy] hearing date was June 27, 2007. You were
     issued a Notice of Determination as a result of this
     hearing and you have since filed a petition with the
     U.S. Tax Court. Since you were given the right to
     appeal the assessments in the past, the liability issue
     is not open for this current * * * [lien] hearing * * *
     [pursuant to section] 6330(c)(2)(B).

The settlement officer agreed to conduct a face-to-face hearing

to discuss payment of the tax liability, including an installment

agreement or an offer-in-compromise, provided petitioner

submitted:   (1) A completed Form 433-A, to be used to determine a

viable collection alternative; and (2) original signed income tax

returns for 2005 and 2006 to satisfy the requirement that

petitioner be current in filing his returns.

     The letter included a narrative addressing the details and

issues from the prior levy hearing, encouraged petitioner to

cooperate by submitting the requested documents and information,

and advised petitioner not to raise the same frivolous issues

during the lien hearing.   The settlement officer enclosed copies

of the transcripts of petitioner’s 2001, 2003, and 2004 accounts
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and a copy of section 6323(j), setting forth the circumstances in

which the Commissioner may withdraw a notice of Federal tax lien.

The settlement officer also directed petitioner’s attention to

“The Truth About Frivolous Tax Arguments” on the IRS Web site.

     In response to the settlement officer’s November 6, 2007,

letter, petitioner sent the settlement officer a letter dated

November 14, 2007 (petitioner’s letter).    In petitioner’s letter,

petitioner complained that the settlement officer had already

given (during the levy hearing) his “frivolous determination * *

* disregarding the law”.    Petitioner also requested “authentic

assessments signed by a person and not a computer printout” and

evidence of the settlement officer’s authority to conduct the

lien hearing.

     In response to petitioner’s letter, the settlement officer

telephoned petitioner on November 16, 2007, but petitioner asked

him to communicate in writing.    By letter dated November 16,

2007, the settlement officer informed petitioner that the

transcripts of petitioner’s accounts were legally sufficient for

purposes of the lien hearing and that he had previously given

petitioner a copy of the delegation order giving him authority to

conduct the lien hearing.    The settlement officer offered to

conduct the lien hearing by telephone at 10 a.m. on November 21,

2007.   The settlement officer informed petitioner that if

petitioner did not call at the appointed date and time or provide
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the requested documentation, he would make a determination on the

basis of the administrative file.

     Petitioner did not call the settlement officer at the

appointed time on November 21, 2007.   The only correspondence the

settlement officer received was petitioner’s letter.    Because

petitioner did not offer any collection alternatives, the

settlement officer made the determination to uphold the filing of

the Federal tax lien for tax years 2001, 2003, and 2004.    On

December 4, 2007, the Appeals Office mailed to petitioner the

notice of determination upholding the filing of the notice of tax

lien.

D.   Tax Court Pleadings

     On December 26, 2007, petitioner filed a petition virtually

identical to the one filed in the levy case, arguing that he did

not receive a hearing and espousing tax-protester arguments.      On

February 4, 2008, petitioner filed an amendment to petition

asserting tax-protester arguments substantially identical to

those in the amendment to petition filed in the levy case.

     Petitioner asserts that he complied with all of requirements

for a face-to-face hearing.   He asks that his case be remanded to

Appeals for a face-to-face hearing.

E.   Tax Court Decision in the Levy Case

     On April 28, 2008, the Court filed its Memorandum Opinion in

Enax v. Commissioner, T.C. Memo. 2008-116, sustaining
                                 - 8 -

respondent’s determination to proceed with the levy to collect

tax liabilities for the years at issue.     The Court observed that

petitioner (1) had made only tax-protester arguments during the

levy hearing, (2) was not current on his tax obligations for 2005

and 2006 at the time of the levy hearing, (3) had a history of

not filing tax returns and of making tax-protester arguments, and

(4) had outstanding assessed Federal income taxes and penalties

in excess of $237,000.     The Court held that petitioner was not

entitled to a face-to-face levy hearing pursuant to section

301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs., granted

respondent’s motion for summary judgment, and sustained

respondent’s proposed levy to collect petitioner’s outstanding

1997, 2001, 2003, and 2004 Federal income taxes and penalties.

The Court also imposed a penalty of $2,500 under section 6673

because petitioner made only tax-protester arguments during both

the levy hearing and the levy proceedings in the Tax Court.

     Petitioner did not appeal the decision entered in docket No.

17374-07L on September 15, 2008, and it is final.

F.   Order to Show Cause

     Rule 91(a) requires the parties to stipulate “all facts, all

documents and papers or contents or aspects thereof, and all

evidence which fairly should not be in dispute.”     Petitioner

refused to do so.   Pursuant to Rule 91(f), respondent filed a

motion for an order to show cause (OSC) why the facts and
                              - 9 -

evidence set forth in respondent’s proposed stipulation of facts

should not be deemed established for purposes of this case.     On

October 7, 2008, the Court issued an OSC directing petitioner to

file a response in compliance with the provisions of Rule

91(f)(2), showing why the matters set forth in respondent’s

motion papers should not be deemed admitted.   Because petitioner

did not file a response to the OSC, the OSC was made absolute on

November 12, 2008, and the facts and evidence set forth in

respondent’s proposed stipulation of facts were deemed

established for the purposes of this case.

G.   Motion for Summary Judgment and To Impose Sanctions

     On December 3, 2008, respondent filed the motion for summary

judgment and to impose sanctions under section 6673(a).    On

January 8, 2009, petitioner filed a response to respondent’s

motion, making additional tax-protester arguments.

                           Discussion

A.   Summary Judgment

     Summary judgment is used to expedite litigation and avoid

unnecessary and expensive trials.   A decision will be rendered on

a motion for summary judgment if the pleadings, answers to

interrogatories, depositions, admissions, and other acceptable

materials, together with the affidavits, if any, show that there

is no genuine issue as to any material fact and that a decision

may be rendered as a matter of law.   Rule 121(b).   Because the
                              - 10 -

effect of granting a motion for summary judgment is to decide the

case against a party without allowing that party an opportunity

for a trial, summary judgment should be “cautiously invoked” and

granted only after a careful consideration of the case.

Associated Press v. United States, 326 U.S. 1, 6 (1945); Kroh v.

Commissioner, 98 T.C. 383, 390 (1992).

     Respondent, as the moving party, has the burden of

showing the absence of a genuine issue as to any material fact.

For purposes of summary judgment, the party opposing the motion

is to be afforded the benefit of all reasonable doubt, and the

material submitted by both sides must be viewed in the light most

favorable to the opposing party; that is, all doubts as to the

existence of an issue of material fact must be resolved against

the movants.   E.g., Adickes v. S.H. Kress & Co., 398 U.S. 144,

157(1970); Kroh v. Commissioner, supra at 390.

B.   Federal Tax Lien:   Section 6320 Procedures

     If a taxpayer is liable for Federal taxes and fails to pay

the taxes after demand, section 6321 creates a lien in favor of

the United States on all property and rights to property

belonging to the taxpayer.   The Federal tax lien arises by

operation of law when the IRS assesses the amount of unpaid tax

and continues until the liability is satisfied or becomes

unenforceable by reason of lapse of time.   Sec. 6322.
                              - 11 -

     In order to preserve priority of the lien and to put other

creditors on notice, a notice of Federal tax lien must be filed.

See sec. 6323.   If a notice of Federal tax lien is filed, the

Secretary must furnish the taxpayer with written notice of the

filing not more than 5 business days after the day the notice of

Federal tax lien is filed.   Sec. 6320(a)(1) and (2).   The notice

must inform the taxpayer of the amount of the unpaid tax and the

right to request (within the 30-day period beginning on the sixth

day after the filing of the lien) an administrative review in the

form of a hearing.   Sec. 6320(a)(3).

     The hearing generally must be conducted in accordance with

the procedures set forth in section 6330(c), (d), and (e).    Sec.

6320(c).   The taxpayer may raise any relevant issue at the

hearing, including challenges to “the appropriateness of

collection actions” and may make “offers of collection

alternatives, which may include the posting of a bond, the

substitution of other assets, an installment agreement, or an

offer-in-compromise.”   Sec. 6330(c)(2)(A).   At the hearing, the

taxpayer may challenge the existence and amount of the underlying

tax liability if he or she did not receive a notice of deficiency

or did not otherwise have an opportunity to dispute the tax

liability.   Sec. 6330(c)(2)(B).

     During the hearing the Appeals officer must consider issues

properly raised by the taxpayer, verify that the requirements of
                               - 12 -

applicable law and administrative procedures have been met, and

consider whether any proposed collection action balances the need

for the efficient collection of taxes with the taxpayer’s

legitimate concern that any collection action be no more

intrusive than necessary.   Sec. 6330(c)(3)(C).

     Where the validity of the underlying tax liability is at

issue in a collection review proceeding, the Court will review

the matter de novo.    Davis v. Commissioner, 115 T.C. 35, 39

(2000).   However, where the underlying liability is not at issue,

we review the Appeals officer’s determinations regarding the

collection action for abuse of discretion.    Goza v. Commissioner,

114 T.C. 176 (2000).   An abuse of discretion occurs if the

Appeals Office exercises its discretion “arbitrarily,

capriciously, or without sound basis in fact or law.”    Woodral v.

Commissioner, 112 T.C. 19, 23 (1999).

     Petitioner was not entitled to dispute the underlying

liabilities during the lien hearing because he received statutory

notices of deficiency regarding the tax liabilities for the years

at issue--2001, 2003, and 2004.

     Petitioner argues that he was entitled to a face-to-face

lien hearing to discuss collection alternatives.   We disagree.

Section 301.6320-1(d)(2), Q&A-D8, Proced. & Admin. Regs.,

provides:

     A face-to-face CDP conference concerning a collection
     alternative, such as an installment agreement or an
                               - 13 -

     offer to compromise liability, will not be granted
     unless other taxpayers would be eligible for the
     alternative in similar circumstances. For example,
     because the IRS does not consider offers to compromise
     from taxpayers who have not filed required returns * *
     * as set forth in Form 656, “Offer in Compromise,” no
     face-to-face conference will be granted to a taxpayer
     who wishes to make an offer to compromise but has not
     fulfilled those obligations. * * * In all cases, a
     taxpayer will be given an opportunity to demonstrate
     eligibility for a collection alternative and to become
     eligible for a collection alternative, in order to
     obtain a face-to-face conference. * * *

The settlement officer agreed to conduct a face-to-face hearing

to discuss payment of the tax liability, including an installment

agreement or an offer in compromise, provided petitioner

submitted:   (1) A completed Form 433-A, to be used to determine a

viable collection alternative; and (2) original signed income tax

returns for 2005 and 2006 to satisfy the requirement that

petitioner be current in filing his tax returns.   The settlement

officer gave petitioner an opportunity to demonstrate he was

eligible for a collection alternative by submitting the Form 433-

A and an opportunity to become eligible for a collection

alternative by submitting tax returns for 2005 and 2006.

Petitioner did not provide the requested Form 433-A or his 2005

and 2006 income tax returns.   Consequently, the settlement

officer was not required to hold a face-to-face hearing to

discuss collection alternatives.

     Petitioner failed to avail himself of the opportunity to

submit an offer-in-compromise or propose an installment
                               - 14 -

agreement.   The determination of the Appeals Office sustaining

the filing of the notice of Federal tax lien was not arbitrary,

capricious, or without sound basis in fact or law.   We sustain

the determination.

C.   Section 6673 Penalty

      Petitioner was repeatedly warned that section 6673 provides

for a penalty, not in excess of $25,000, whenever it appears to

the Tax Court that proceedings before it have been instituted or

maintained primarily for delay or the taxpayer’s position is

frivolous or groundless.    Indeed, in Enax v. Commissioner, T.C.

Memo. 2008-116, the Court imposed a $2,500 penalty on petitioner

for making frivolous arguments challenging the levy to collect

the tax liabilities at issue in this lien case.   That sanction

did not deter petitioner, and he later raised additional

frivolous tax-protester arguments in this case in his response to

the motion at hand filed with the Court.   Petitioner’s history of

making frivolous and groundless claims for the obvious purpose of

delay justifies a penalty.   We will impose a penalty of $5,000.

Where a taxpayer pursues proceedings in this Court, as petitioner

does, merely as a continuation of his refusal to acknowledge and

satisfy his tax obligations, his pro se status does not excuse

his actions.
                        - 15 -

To reflect the foregoing,


                                  An appropriate order and

                             decision will be entered.
