                        T.C. Memo. 2007-266



                      UNITED STATES TAX COURT



                M. KENNETH CREAMER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17116-06L.             Filed September 5, 2007.



     M. Kenneth Creamer, pro se.

     Jennifer S. McGinty, for respondent.



                        MEMORANDUM OPINION


     MARVEL, Judge:   This matter is before the Court on

respondent’s motion for summary judgment and to impose a penalty

under section 6673(a)(1).1



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

                              Background

     This is an appeal from respondent’s determination upholding

the proposed use of a levy to collect petitioner’s unpaid Federal

income tax liabilities for 1991 through 1998 and 2002.

Petitioner resided in Endicott, New York, when the petition in

this case was filed.

     Petitioner failed to file Federal income tax returns for

1991 through 1998 and 2002.    Under section 6020(b), respondent

prepared a substitute for return for each of the above years.

On September 14, 2004, respondent mailed petitioner a statutory

notice of deficiency for 2002, and on September 24, 2001,

respondent mailed petitioner a statutory notice of deficiency for

1991 through 1998.   In the notices of deficiency, respondent

determined petitioner was liable for income tax deficiencies and

additions to tax for 1991 through 1998 and 2002.

     Petitioner failed to petition this Court in response to the

above-mentioned notices of deficiency.     On February 4, 2002,

respondent assessed the tax liabilities, additions to tax, and

interest for 1991 and 1992; on April 15, 2002, respondent

assessed the tax liabilities, additions to tax, and interest for

1993 through 1998; and on February 7, 2005, respondent assessed

the tax liabilities, additions to tax, and interest for 2002.

Respondent sent petitioner Notice and Demand with respect to each

of the assessed and unpaid liabilities.
                               - 3 -

     On April 26, 2006, respondent issued to petitioner a Final

Notice of Intent To Levy and Notice of Your Right to a Hearing

for 1991 through 1997 and 2002, and on May 11, 2006, respondent

issued to petitioner a Final Notice of Intent to Levy and Notice

of Your Right to a Hearing for 1998.   Respondent also issued to

petitioner a Notice of Federal Tax Lien Filing and Your Right to

a Hearing Under IRC 6320.   Petitioner timely requested a hearing

under section 6330 regarding the proposed levy.   Petitioner did

not timely request a hearing under section 6320 in response to

respondent’s notice of lien filing.    Respondent, however, offered

petitioner an equivalent hearing under section 301.6320-1(i),

Proced. & Admin. Regs.,2 with regard to the notice of tax lien

filing.

     On June 27, 2006, Appeals Settlement Officer Michael Smith

(Settlement Officer Smith) mailed petitioner a letter

acknowledging receipt of petitioner’s request for a hearing under

section 6330.   In the letter, Settlement Officer Smith scheduled

a telephone conference with petitioner to discuss petitioner’s


     2
      A taxpayer who makes an untimely request for a sec. 6320
hearing is not entitled to a sec. 6320 hearing but may
nevertheless request an “equivalent hearing” with Appeals. Sec.
301.6320-1(i)(1), Proced. & Admin. Regs. The equivalent hearing
generally follows Appeals’ procedures for a sec. 6320 hearing,
and Appeals will consider the same issues it would have
considered at a sec. 6320 hearing on the same matter. Sec.
301.6320-1(i)(1) and (2), Q&A-I1, Proced. & Admin. Regs. Rather
than issue a notice of determination after an equivalent hearing,
however, Appeals will issue a decision letter. Sec. 301.6320-
1(i)(1), Proced. & Admin. Regs.
                               - 4 -

basis for requesting the hearing.   Settlement Officer Smith also

told petitioner that his arguments were frivolous3 and warned him

of the penalty under section 6673 for instituting or maintaining

proceedings primarily for delay or for taking positions that are

frivolous and/or groundless.   Settlement Officer Smith further

informed petitioner that petitioner could not challenge the

underlying tax liability at the section 6330 hearing because he

received statutory notices of deficiency for the years in

dispute.

     By letter dated July 10, 2006, petitioner requested that the

section 6330 hearing occur by written correspondence, and he

assured Settlement Officer Smith that he would provide all

relevant information by July 25, 2006.   Petitioner attached to

his request a Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals, but did not provide

any information regarding his wages or employer.

     Petitioner failed to submit the requested information to

Settlement Officer Smith by July 25, 2006.   On July 31, 2006, the

Appeals Office issued to petitioner a Notice of Determination




     3
      For example, in a rebuttal affidavit in response to the
statutory notices of deficiency, petitioner alleged that the law
does not require him to file Federal income tax returns and that
he is not a taxpayer under the law. In his request for a sec.
6330 hearing, petitioner also argued that his wage income is not
taxable.
                               - 5 -

Concerning Collection Action(s) Under Section 6320 and/or 6330

sustaining respondent’s proposed collection actions.4

     By letter dated July 25, 2006, petitioner sent Settlement

Officer Smith a package of documents5 which included, among other

things, statements of various frivolous arguments asserted by

petitioner6 and copies of Federal income tax returns for 1991

through 1998 and 2002 that showed zero income and zero tax

liability.

     On August 30, 2006, the petition in this case was filed.

The petition alleges:   (1) Respondent did not provide evidence

that petitioner was engaged in “employment” or a “trade or

business” as defined by the Internal Revenue Code; (2) respondent

failed to execute a valid substitute return under section

6020(b); (3) respondent does not have authority to execute a

substitute for return; and (4) petitioner filed tax returns for

each year at issue showing no tax liability.




     4
      Respondent also issued petitioner a Decision Letter
Concerning Equivalent Hearing Under Section 6320 and/or 6330
ruling that respondent’s notice of lien may remain on file.
     5
      The record is unclear as to when respondent received
petitioner’s documents.
     6
      Petitioner asserted that his wages were not taxable income
because he was not engaged in “employment” or a “trade or
business” as defined in the Internal Revenue Code. Petitioner
also challenged respondent’s authority to levy upon his property
and to prepare substitutes for returns.
                               - 6 -

     On April 20, 2007, we issued petitioner a notice setting his

case for trial during the Court’s September 24, 2007, Buffalo,

New York, trial session.   On May 14, 2007, respondent filed his

motion for summary judgment and to impose a penalty under section

6673(a)(1).   On June 13, 2007, petitioner filed his response.

                            Discussion

I.   Summary Judgment

     Summary judgment is a procedure designed to expedite

litigation and avoid unnecessary, time-consuming, and expensive

trials.   Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681

(1988).   Summary judgment may be granted with respect to all or

any part of the legal issues presented “if the pleadings, answers

to interrogatories, depositions, admissions, and any 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(a) and

(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90

T.C. 753, 754 (1988).   The moving party bears the burden of

establishing that there is no genuine issue of material fact, and

factual inferences will be drawn in a manner most favorable to

the party opposing summary judgment.     Dahlstrom v. Commissioner,

85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340,

344 (1982).   The nonmoving party, however, cannot rest upon the
                                - 7 -

allegations or denials in his pleadings but must “set forth

specific facts showing that there is a genuine issue for trial.”

Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821.

II.   Section 6330

      Section 6330 provides that no levy may be made on any

property or right to property of any person unless the Secretary

has notified such person in writing of the right to a hearing

before the levy is made.    If the person makes a request for a

hearing, a hearing shall be held before an impartial officer or

employee of the Internal Revenue Service Office of Appeals.    Sec.

6330(b)(1).   At the hearing, a taxpayer may contest the existence

and amount of the underlying tax liability if the taxpayer did

not receive a notice of deficiency for the tax in question or did

not otherwise have an earlier opportunity to dispute the tax

liability.    Sec. 6330(c)(2)(B); see also Sego v. Commissioner,

114 T.C. 604, 609 (2000).

      Following a hearing, the Appeals Office must make a

determination whether the proposed levy action may proceed.    The

Appeals Office is required to take into consideration the

verification presented by the Secretary that the requirements of

applicable law and administrative procedures have been met, the

relevant issues raised by the taxpayer, and whether the proposed

collection action appropriately balances the need for efficient
                                 - 8 -

collection of taxes with a taxpayer’s concerns regarding the

intrusiveness of the proposed collection action.     Sec.

6330(c)(3).

     The taxpayer may petition the Tax Court for a review of the

Appeals Office’s determination.    Sec. 6330(d).   Where the

underlying tax liability is properly at issue, the Court reviews

any determination regarding the underlying tax liability de novo.

Sego v. Commissioner, supra at 610.      The Court reviews any other

administrative determination regarding the proposed levy action

for abuse of discretion.   Id.

     Petitioner asserts in his response to respondent’s motion

for summary judgment that respondent does not have the authority

under section 6331(a) to levy on petitioner’s property because

respondent’s authority to levy extends only to certain

taxpayers.7   Petitioner’s argument is without merit.    In Sims v.

United States, 359 U.S. 108, 111-112 (1959), the Supreme Court

rejected a similar argument and held that section 6331 authorizes

the Commissioner to levy on property and rights to property of

all taxpayers.




     7
      Specifically, petitioner asserts respondent’s levy
authority extends exclusively to “any officer, employee, or
elected official, of the United States, the District of Columbia,
or any agency or instrumentality of the United States or the
District of Columbia”.
                                - 9 -

     Petitioner’s only remaining arguments constitute challenges

to the existence of his underlying tax liabilities.8    However,

petitioner received statutory notices of deficiency for 1991

through 1998 and 2002.   Petitioner admits receiving a statutory

notice of deficiency for 1991 through 1998, and he does not

dispute receiving a statutory notice of deficiency for 2002.

Consequently, petitioner is prohibited by section 6330(c)(2)(B)

from disputing the existence of the underlying tax liabilities

for those years.

     On this record, we conclude that there is no genuine issue

of material fact requiring a trial in this case, and we hold that

respondent is entitled to the entry of a decision sustaining the

proposed levy as a matter of law.

III. Section 6673(a)(1) Penalty

     Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty, not to exceed

$25,000, if it appears that the taxpayer instituted or maintained

a proceeding primarily for delay or that the taxpayer’s position

is frivolous or groundless.   Section 6673(a)(1) applies to

proceedings under section 6330.     Pierson v. Commissioner, 115

T.C. 576, 581 (2000).    In proceedings under section 6330, we have


     8
      In addition to the arguments raised in his petition, see
supra p. 5, petitioner also asserts in his response to
respondent’s motion for summary judgment that he does not have a
deficiency in tax as defined under the Internal Revenue Code and
that his wages are not subject to Federal income tax.
                              - 10 -

imposed the penalty on taxpayers who have raised frivolous and

groundless arguments with respect to the legality of the Federal

tax laws.   See, e.g., Roberts v. Commissioner, 118 T.C. 365, 372-

373 (2002), affd. 329 F.3d 1224 (11th Cir. 2003); Call v.

Commissioner, T.C. Memo. 2005-289, affd. without published

opinion 99 AFTR 2d 2007-2526, 2007-1 USTC par. 50,492 (9th Cir.

2007).

     The record clearly establishes that the only arguments made

by petitioner during the section 6330 proceeding and before this

Court were frivolous and/or groundless.   Respondent warned

petitioner of the section 6673 penalty for instituting or

maintaining proceedings primarily for delay or for taking

positions that are frivolous and/or groundless.   Despite

respondent’s warning, petitioner continued to assert frivolous

and groundless arguments during the section 6330 proceeding and

before this Court.   Petitioner’s conduct deserves appropriate

sanction.   Accordingly, we shall require petitioner to pay to the

United States a penalty under section 6673(a)(1) of $2,000.9




     9
      Petitioner was criminally prosecuted and was convicted of
tax evasion in the U.S. District Court for the Northern District
of New York. Petitioner was sentenced to 5 years in jail, fined
$10,000, and ordered to pay all back taxes.
                             - 11 -

     We have considered other arguments raised by petitioner, and

to the extent not specifically discussed herein, we reject them

as meritless.

     To reflect the foregoing,


                                        An appropriate order and

                                   decision will be entered.
