                                 T.C. Memo. 2016-175



                           UNITED STATES TAX COURT



                  JAMES WILLIAM HARRIS, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 5054-15L.                            Filed September 19, 2016.



      James William Harris, pro se.

      Robert Francis Saal and Carroll De Groff Lansdell, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION


      JACOBS, Judge: Petitioner failed to file Federal income tax returns for tax

years 2007 and 2009. In response, the Internal Revenue Service (IRS) prepared a

substitute for return for each year.1 Petitioner failed to pay the tax determined and


      1
          Sec. 6020(b)(1) provides that “[i]f any person fails to make any return
                                                                         (continued...)
                                          -2-

[*2] assessed by the IRS. The dispute between the parties concerns the IRS’

issuance of a notice of Federal tax lien and a notice of intent to levy with respect

to the collection of petitioner’s underlying tax liabilities for tax years 2007 and

2009.2 The issue to be decided is whether the IRS’ determination to proceed with

these collection activities was proper.

      Unless otherwise indicated, all section references are to the Internal

Revenue Code, as amended, in effect at all relevant times.

                               FINDINGS OF FACT

      At the time petitioner filed his petition, he resided in New Jersey. The IRS

mailed petitioner a notice of deficiency for tax year 2007 on July 6, 2010, and a

notice of deficiency for tax year 2009 on December 12, 2011. Each notice was

mailed to petitioner’s last known address. At trial respondent’s counsel

produced two Substitute USPS Forms 3877, which established proof of mailing,

by certified mail, of the notices of deficiency with respect to tax years 2007 and


      1
       (...continued)
required by any internal revenue law or regulation made thereunder at the time
prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return,
the Secretary shall make such return from his own knowledge and from such
information as he can obtain through testimony or otherwise.”
      2
        The IRS also sought to collect an income tax liability via a proposed levy
arising from petitioner’s 1996 tax year, but at trial respondent’s counsel conceded
that year.
                                          -3-

[*3] 2009. Respondent has therefore established that the notices of deficiency

were properly mailed. Petitioner did not file a petition in this Court to contest the

notices of deficiency.

      The IRS assessed the amounts of tax which it determined petitioner owed.

Because petitioner failed to pay the determined tax liabilities, the IRS mailed him,

on February 5, 2014, Letter 1058(DO), Final Notice--Notice of Intent to Levy and

Notice of Your Right to a Hearing, regarding the 2007 and 2009 tax years.3 On

February 18, 2014, the IRS mailed petitioner Letter 3172(DO), Notice of Federal

Tax Lien Filing and Your Right to a Hearing Under I.R.C. 6320, for 2007 and

2009. On or about March 3, 2014, petitioner submitted Form 12153, Request for a

Collection Due Process or Equivalent Hearing, to the IRS Office of Appeals. On

the Form 12153 petitioner asserted that he had not received the notices of

deficiency with respect to tax years 2007 and 2009 and that his “[r]equest for

Determination Documentation sent to IRS pursuant to 26 USC 6103 in 2000 was

never answered. Hence, liability was never demonstrated to me, and estopped by

‘acquiescence’ prevails.”

      The case was assigned to Settlement Officer Sharron Dillon who, after

confirming that she had had no prior involvement with petitioner, sent him a letter

      3
          Letter 1058(DO) also referenced petitioner’s 1996 tax year.
                                        -4-

[*4] on May 28, 2014, notifying him that his arguments were considered frivolous.

Petitioner was offered an opportunity to amend his appeal request by presenting

valid reasons for the appeal. On June 12, 2014, petitioner submitted an amended

Form 12153 to the IRS Office of Appeals on which he challenged both the notice

of Federal tax lien and the notice of intent to levy, again asserting he had never

received the notices of deficiency, and requested a face-to-face section 6330

hearing.

      Because petitioner did not respond with a “legitimate reason for the appeal”,

Settlement Officer Dillon disregarded his request for a hearing and closed his case

as frivolous in August 2014. Petitioner thereafter telephoned Settlement Officer

Dillon’s manager and complained that his case had been prematurely closed;

petitioner’s case was reopened in October 2014. A section 6330 hearing was

scheduled, and after scheduling changes were made, a face-to-face hearing

between petitioner and Settlement Officer Dillon was held on December 12, 2014.

The hearing lasted four hours.

      At the section 6330 hearing petitioner disputed the legitimacy of the Federal

income tax. Petitioner asserted that the IRS (1) failed to prove that he had an

obligation to file Federal tax returns and pay Federal income tax or establish that
                                        -5-

[*5] the tax was legally assessed; (2) was not authorized to prepare substitutes for

returns; and (3) failed to properly send him notices of deficiency.

      Settlement Officer Dillon rejected petitioner’s assertions, informing him that

his arguments were frivolous. She showed him computer transcripts stating that

notices of deficiency regarding tax years 2007 and 2009 were mailed to his last

known address. She asked him whether he still lived at the address to which the

notices of deficiency were mailed; he confirmed that he did. Settlement Officer

Dillon also showed petitioner copies of the notices of deficiency although he

disputed that she had. After advising petitioner of her duties as a settlement

officer and the purposes of the section 6330 hearing, Settlement Officer Dillon

advised him that she had confirmed that (1) there was a balance due regarding his

account; (2) he was not involved in a bankruptcy proceeding; (3) he had no

pending offers-in-compromise; and (4) there were no pending lawsuits between

him and the IRS.

      Petitioner declined to discuss collection alternatives. Instead, he resumed

challenging the authority of the IRS to collect taxes. Petitioner cited the writings

of Irwin Schiff, a well-known tax protester, and suggested that Settlement Officer

Dillon visit a Web site which supposedly offers a $300,000 reward to anyone who

can prove that there is a law mandating that Americans pay taxes. Petitioner
                                          -6-

[*6] communicated with Settlement Officer Dillon several times after his hearing.

He did not discuss collection alternatives; rather, he continued to dispute the

legality of the IRS’ collection activities.

      Respondent issued a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 of the Internal Revenue Code (notice

of determination) on January 16, 2015, in which the lien and the proposed levy

action were sustained. In the notice of determination, signed by an Appeals team

manager, petitioner’s challenges to his underlying tax liabilities were reviewed

and reasons were stated for rejecting them. The notice of determination included

Settlement Officer Dillon’s verification that the lien and the proposed levy action

balanced the need for efficient collection of taxes with petitioner’s legitimate

concern that the IRS’ collection actions be no more intrusive than necessary. The

notice of determination also stated that Settlement Officer Dillon verified that the

requirements of applicable law or administrative procedure were met. See sec.

6330(c)(3).

                                       OPINION

      Section 6320(a) provides that written notice of the filing of a notice of

Federal tax lien must be furnished by the Secretary to the taxpayer whose property

is subject to the lien. Section 6320(b) provides that a taxpayer may thereafter
                                         -7-

[*7] request a hearing regarding the filing of the notice of tax lien, and section

6320(c) provides that the hearing must be conducted pursuant to the rules of

section 6330 (which generally governs levies).

      Section 6330(a) provides that no levy may be made on any property or right

to property of any person unless the Secretary has notified that person in writing of

the right to a hearing before the levy is made (section 6330 hearing). Section

6330(b)(3) provides that if a person requests a section 6330 hearing, the hearing is

to be held before an impartial officer or employee of the IRS. The taxpayer is

entitled to only one section 6330 hearing with respect to the taxable period to

which the unpaid tax relates. Sec. 6330(b)(2). During the hearing the taxpayer

may raise any relevant issue, including appropriate spousal defenses, challenges to

the appropriateness of the collection action, and collection alternatives, including

offers-in-compromise. Sec. 6330(c)(2)(A).

      A taxpayer is precluded from contesting the existence or amount of the

underlying tax liability at the section 6330 hearing if the taxpayer received a

notice of deficiency for the tax in question or otherwise had an opportunity to

dispute the underlying tax liability. Sec. 6330(c)(2)(B); see also Sego v.
                                         -8-

[*8] Commissioner, 114 T.C. 604, 609 (2000).4 In such a case, we review the

Commissioner’s determination for abuse of discretion. Sego v. Commissioner,

114 T.C. at 610; Goza v. Commissioner, 114 T.C. 176, 182 (2000). An abuse of

discretion is defined as any action that is unreasonable, arbitrary or capricious,

clearly unlawful, or lacking sound basis in fact or law. Thor Power Tool Co. v.

Commissioner, 439 U.S. 522, 532-533 (1979); Woodral v. Commissioner, 112

T.C. 19, 23 (1999). If the taxpayer did not receive a notice of deficiency or did not

have an opportunity to dispute the underlying tax liability, we review the liability

de novo where the tax liability is properly placed in issue. Davis v.

Commissioner, 115 T.C. 35, 39 (2000).

      In the matter before us, the administrative record, compiled by Settlement

Officer Dillon, contains copies of the notices of deficiency and the Substitute

USPS Forms 3877 showing that the notices of deficiency for tax years 2007 and

2009 were mailed to petitioner at the address where he resided at the time of

mailing and where he continues to reside. In the absence of evidence to the

contrary, the presumptions of regularity and of delivery justify the conclusion that


      4
       We have interpreted the phrase “underlying tax liability” to include any
amounts a taxpayer owes pursuant to tax laws that are subject to the
Commissioner’s collection activities. Katz v. Commissioner, 115 T.C. 329, 338-
339 (2000).
                                        -9-

[*9] the notices of deficiency were sent to petitioner but he effectively refused

delivery. Sego v. Commissioner, 114 T.C. at 611; Coleman v. Commissioner, 94

T.C. 82, 90-91 (1990). Petitioner’s unsupported assertion that he never received

the notices does not overcome the presumptions of regularity and of delivery

referred to in Sego. On the basis of the record before us, we conclude that

petitioner received the notices of deficiency for tax years 2007 and 2009.

Therefore, he is precluded from contesting the existence or amount of the

underlying tax liabilities for 2007 and 2009.

      Petitioner failed to properly contest the underlying tax liabilities. Petitioner

argues that he has no Federal income tax liability because he is not a taxpayer. He

posits that “[o]nly ‘federal persons’ and ‘U.S. citizens’ (meaning residents of D.C.)

or those domiciled in D.C. are liable for the income tax.” Moreover, petitioner

states: “I CANNOT sign Form 1040 without committing a felony because: I am

not a federal ‘U.S. citizen’ domiciled in the District of Columbia; I will NOT

commit a felony (perjury impersonating a federal person) by declaring that I am a

U.S. citizen when I’m not.” Petitioner’s arguments are traditional tax-protester

arguments; we decline petitioner’s invitation to accompany him on his voyage

beyond the boundaries of legitimate tax administration. As has been said on

numerous occasions by numerous courts: “We perceive no need to refute these
                                        - 10 -

[*10] arguments with somber reasoning and copious citation of precedent; to do so

might suggest that these arguments have some colorable merit.” Crain v.

Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see Rapp v. Commissioner,

774 F.2d 932, 936 (9th Cir. 1985); May v. Commissioner, 752 F.2d 1301, 1305-

1306 (8th Cir. 1985); Schiff v. Commissioner, 751 F.2d 116, 117 (2d Cir. 1984),

aff’g T.C. Memo. 1984-223; Wnuck v. Commissioner, 136 T.C. 498 (2011); Laue

v. Commissioner, T.C. Memo. 2012-105. Petitioner does himself a disservice by

accepting the promulgations of Irwin Schiff, who was convicted and incarcerated

for conspiracy, aiding in the filing of false income tax returns, and failing to pay

income tax. United States v. Schiff, 544 F. App’x 729 (9th Cir. 2013); see also

Waltner v. Commissioner, T.C. Memo. 2014-35 (thoroughly documenting the

fallacies of Mr. Schiff’s views).

      Petitioner failed to propose any collection alternative. Consequently, all

that remains is for us to review the actions of the IRS Office of Appeals to

determine whether any acts of Settlement Officer Dillon constituted an abuse of

discretion. In deciding whether a settlement officer abused her/his discretion in

sustaining a collection action, we consider whether she/he: (1) properly verified

that the requirements of any applicable law or administrative procedure have been

met; (2) considered any relevant issues the taxpayer raised; and (3) determined
                                        - 11 -

[*11] whether “any proposed collection action balances the need for the efficient

collection of taxes with the legitimate concern of the person that any collection

action be no more intrusive than necessary.” See sec. 6330(c)(3). We find that

Settlement Officer Dillon properly reviewed petitioner’s administrative file and

verified that all legal and administrative requirements were met, including that the

taxes for tax years 2007 and 2009 were assessed; notice and demand for the

unpaid tax was made; and the notice of Federal tax lien and the notice of proposed

levy were issued to petitioner. Petitioner raised no relevant issues at the section

6330 hearing, and Settlement Officer Dillon testified at trial that she had

confirmed that the lien and the proposed levy collection action each balanced the

need for efficient collection of taxes with petitioner’s concerns that the collection

actions be no more intrusive than necessary.

      To conclude, we find no abuse of discretion in Settlement Officer Dillon’s

determinations that the IRS’ lien against petitioner be sustained and that the IRS’

proposed levy action against petitioner can proceed.

      We have considered all of petitioner’s arguments, and to the extent not

discussed herein, we find them to be without merit and/or irrelevant.
                                  - 12 -

[*12] To reflect the foregoing,


                                           An appropriate decision will be

                                  entered.
