                         T.C. Memo. 2008-95



                       UNITED STATES TAX COURT



                 LEO P. CONNOLLY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11165-07L.             Filed April 14, 2008.



     Leo P. Connolly, pro se.

     Andrea D. Haddad, for respondent.



                         MEMORANDUM OPINION


     HALPERN, Judge:    This case is before the Court to review a

determination made by respondent’s Appeals Office (Appeals) that

respondent may proceed to collect by levy amounts assessed but

unpaid with respect to petitioner’s 2001, 2002, and 2003 Federal

income tax liabilities (the years in issue and the unpaid

assessments, respectively).   Petitioner has moved to dismiss for
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lack of jurisdiction (the motion to dismiss).     Respondent

objects.    Respondent has moved for summary judgment and to impose

a penalty under section 6673(a)(1) (the summary judgment/penalty

motion).1   Petitioner objects.    We shall deny the motion to

dismiss and grant the summary judgment/penalty motion.

                             Background

     The following undisputed facts are established by the

pleadings, the summary judgment/penalty motion, the declaration

and four exhibits attached to that motion, the motion to dismiss,

and respondent’s response thereto.

     Respondent determined deficiencies in petitioner’s Federal

income taxes for the years in issue and, on April 26, 2005,

mailed to petitioner statutory notices of deficiency (statutory

notices) with respect to those years.     Petitioner did not

petition the Tax Court in response to any of the statutory

notices.    On October 10, 2005, respondent assessed $6,889.40,

$15,814.27, and $6,393.33 with respect to the tax liabilities

(including additions to tax, and applicable interest) for the

years in issue, respectively.     On July 20, 2006, respondent

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

of Your Right to a Hearing, advising him that respondent intended



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and applicable to
this case, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                 - 3 -

to levy to collect the unpaid assessments and informing him of

his right to a hearing before Appeals.    On August 21, 2006,

respondent timely received from petitioner an Internal Revenue

Service (IRS) Form 12153, Request for a Collection Due Process

Hearing (the hearing request).    In the hearing request,

petitioner set forth the following reasons for disagreeing with

respondent’s proposed levy:   He has not engaged in any trade or

business having to do with tobacco or distilled spirits for the

years in question.   The only types of taxes that can be collected

by distraint are those on cotton and distilled spirits, and he

was not involved in cotton or distilled spirits for the years in

question.   Sections 6201 and 6331 deal with excise taxes and not

income taxes.   The IRS has not promulgated any implementing

regulations for sections 6201 and 6331.    Therefore, no statutory

authority exists to assess or to levy on his property.

     On or about November 29, 2006, an Appeals employee,

Settlement Officer Maria Russo (Ms. Russo), was assigned to

conduct petitioner’s Appeals hearing.    On March 5, 2007, Ms.

Russo sent petitioner a letter (the March 5 letter or, simply,

the letter) informing him that Appeals had received the hearing

request and that she had “scheduled a telephone conference call

for you on Monday, April 2, 2007 at 9 a.m.”    The letter states

that petitioner raised items in the hearing request that the

courts have determined are frivolous or groundless, and Appeals
                                 - 4 -

does not provide a face-to-face conference if the only items the

taxpayer wants to discuss are such items.     It advises him that,

if he is interested in having a face-to-face conference, he must

be prepared to discuss issues relevant to paying his tax

liability, such as collection alternatives; e.g., an offer-in-

compromise or an installment agreement.     It cautions him that, if

he wishes to have a face-to-face conference, he must write Ms.

Russo within 14 days describing the specific legitimate issues he

will discuss.   It continues:   “If you do not qualify for a face-

to-face hearing, you will have a telephone hearing/conference or

discuss with us by correspondence any relevant challenges to the

filing of the * * * proposed levy.”      It warns petitioner that, if

he wishes Ms. Russo to consider collection alternatives, he must

file all Federal tax returns required to be filed (there was no

record of his 2005 return), and he must submit a complete Form

433A, Collection Information Statement for Individuals.     It

further warns him that, in the event he takes his case to Tax

Court, the Court is empowered to impose monetary sanctions

against him for instituting or maintaining an action before it

primarily for delay or for taking a position that is frivolous or

groundless.

     Additional telephone and written communications between Ms.

Russo and petitioner followed.    On March 20, 2007, Ms. Russo

received a letter from petitioner in which he claims that he is
                               - 5 -

not aware of any revenue taxable activity that he is engaged in

that makes him liable for an excise tax measured by his income.

He attaches an affidavit stating that he is “of competent age and

mind”, is “a private-sector, non-federally-connected individual”,

has “not refused or neglected to render any federal-tax-related

list of return within the time required upon being notified or

required to do so”, is “not, and never have been, required to

deliver a monthly or other return of objects subject to tax”, and

is “not, and never have been, engaged in the administration or

enforcement of any internal revenue laws.”

     By April 2, 2007, Ms. Russo had received no collection

information from petitioner.   Nevertheless, on that date, at 9

a.m., Ms. Russo telephoned petitioner.   Petitioner asked for a

face-to-face hearing.   Ms. Russo explained that, on the basis of

the issues he had raised, he did not qualify for one.   Petitioner

did not propose any collection alternatives.   Ms. Russo told

petitioner that she would consider anything he wanted to send

her; if he qualified, she would schedule a face-to-face

conference; and, if he did not qualify for a face-to-face

conference, she would make her determination on the material

before her.

     On April 9, 2007, Ms. Russo received a letter from

petitioner providing no collection information, protesting the

lack of a fair hearing, and listing various attached documents,
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including excerpts from court cases and regulations.

      On April 24, 2007, Appeals Team Manager Matthew N.

McLaughlin, adopting Ms. Russo’s recommendation, issued

petitioner a Notice of Determination Concerning Collection

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

determination), determining the proposed levy regarding

petitioner’s tax liability for the years in issue to be

appropriate.    The notice of determination summarizes Ms. Russo’s

recommendation as follows:

      Based on the information in the case file, the Notice
      of Intent to Levy was appropriate at the time it was
      issued. Despite several requests to do so, the
      taxpayer failed to submit any financial information and
      a repayment proposal. Collection action would be
      appropriate to collect this debt. The action is now
      necessary to provide for the efficient collection of
      the taxes despite the potential intrusiveness of
      enforced collection.

      In response to the notice of determination, petitioner

petitioned the Court for review, and the petition was filed on

May 21, 2007.

                              Discussion

I.   Motion To Dismiss

      Section 6331(a) authorizes the Secretary to levy against

property and property rights where a taxpayer liable for taxes

fails to pay those taxes within 10 days after notice and demand

for payment is made.     Section 6331(d) requires the Secretary to

send the taxpayer written notice of the Secretary’s intent to
                               - 7 -

levy, and section 6330(a) requires the Secretary to send the

taxpayer written notice of his right to a hearing (a section 6330

hearing) at least 30 days before any levy is begun.   If a section

6330 hearing is requested, it is to be conducted by Appeals.

Sec. 6330(b)(1).   The matters to be considered are specified in

section 6330(c).   At the conclusion of the section 6330 hearing,

Appeals must determine whether and how to proceed with

collection, taking into account, among other things, collection

alternatives proposed by the taxpayer and whether any proposed

collection action balances the need for the efficient collection

of taxes with the legitimate concern of the taxpayer that the

collection action be no more intrusive than necessary.   See sec.

6330(c)(3).   We have jurisdiction to review Appeals’s

determination.   Sec. 6330(d)(1).

     As we understand petitioner’s argument in support of the

motion to dismiss, it is that the Secretary’s authority to levy

under section 6331(a) without a court order does not extend to

his property because he is not a government worker.   Petitioner

is wrong.   Section 6331(a) empowers the IRS to levy upon the

property of all taxpayers.   James v. United States, 970 F.2d 750,

755 n.9 (10th Cir. 1992) (citing Sims v. United States, 359 U.S.

108, 112-113 (1959), for the following:   “all taxpayers are

subject to levy for deficiencies under section 6331; section 6331

specifically names government employees and agents in response to
                                 - 8 -

earlier Supreme Court case [Smith v. Jackson, 246 U.S. 388

(1918)] which held that ‘federal disbursing officer might not, in

the absence of express congressional authorization, set off an

indebtedness of a federal employee to the Government against the

employee’s salary’”).     In the James case, the Court of Appeals

for the Tenth Circuit considered the taxpayer’s argument (similar

to petitioner’s argument here) to be frivolous.     James v. United

States, supra.    We reach the same conclusion with respect to

petitioner’s argument.2    See also Craig v. United States, 30 F.3d

139 (Table), text at 1994 WL 408250 (9th Cir. 1994); Creamer v.

Commissioner, T.C. Memo. 2007-266.

      Appeals issued the notice of determination pursuant to

section 6330.    In response thereto, petitioner timely petitioned

the Court.    We have jurisdiction to review the petition pursuant

to section 6330(d)(1).    The motion to dismiss is not well

founded, and, as stated, we shall deny it.

II.   Summary Judgment/Penalty Motion

      A.   Summary Judgment

      Petitioner assigns error to respondent’s failure to grant

him a face-to-face hearing.    In support of his assignment, he

avers that he was not informed that he would receive only a


      2
        A taxpayer's position is frivolous if it is contrary to
established law and unsupported by a reasoned, colorable argument
for a change in the law. E.g., Takaba v. Commissioner, 119 T.C.
285, 294 (2002).
                                - 9 -

hearing by telephone and that none of his submissions were

frivolous.   Respondent asks for summary judgment in his favor on

the ground that Ms. Russo did not abuse her discretion in

rejecting petitioner’s request for a face-to-face hearing since

he raised only frivolous arguments.

     Summary judgment may be granted “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(b).    The

moving party has the burden of proving that there is no genuine

issue of material fact, and factual inferences will be read in a

manner most favorable to the party opposing summary judgment.

E.g., Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).

     Petitioner does not deny he received the March 5 letter.

The March 5 letter schedules a telephone conference for April 2,

2007, and clearly informs petitioner that he would not receive a

face-to-face conference if the only items he wished to discuss

were frivolous or groundless.   Nor does petitioner deny he did

have a telephone conference with Ms. Russo on April 2, 2007.

Petitioner also does not contradict respondent’s claim that,

during that telephone conference, petitioner proposed no

collection alternatives.   By the hearing request, and by his

communications with Ms. Russo, petitioner raised no substantive
                                - 10 -

issues.    He made only frivolous legal arguments against the

Federal income tax that we need not “refute * * * 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) (per

curiam).     Ms. Russo clearly told petitioner that he would get no

face-to-face conference if he wished to discuss only frivolous

issues.

     The only question is whether Ms. Russo erred in denying

petitioner a face-to-face conference.     Although a hearing may

consist of a face-to-face conference, a proper section 6330

hearing may also occur by telephone or by correspondence under

certain circumstances.     See Katz v. Commissioner, 115 T.C. 329,

337-338 (2000); sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin.

Regs.     Petitioner was offered and received a telephone

conference.     Moreover, petitioner was offered a face-to-face

conference if he would identify legitimate, relevant, and

nonfrivolous issues he intended to discuss.     Petitioner did not

do so.     Under those circumstances, we conclude that Ms. Russo did

not err in denying him a face-to-face conference.     See Lunsford

v. Commissioner,     117 T.C. 183, 189 (2001) (“[T]here may be

cases, where taxpayers were not given a proper opportunity for an

Appeals hearing, where it will be appropriate for this Court to

require that an Appeals hearing be held.     However, we do not
                               - 11 -

believe that this should be done where, as in this case, the only

arguments that petitioners presented to this Court were based on

legal propositions which we have previously rejected.”).   Summary

adjudication in respondent’s favor is appropriate.

     B.    Penalty

     Respondent urges us to impose a section 6673 penalty upon

petitioner.    In pertinent part, 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 that a proceeding before it was instituted or maintained

primarily for delay, sec. 6673(a)(1)(A), or that the taxpayer's

position in such a proceeding is frivolous or groundless, sec.

6673(a)(1)(B).

     We have already determined that petitioner’s argument in

support of the motion to dismiss is frivolous.   The hearing

request and the history of petitioner’s communications with Ms.

Russo during the course of her consideration of his case are

replete with frivolous legal arguments.   Moreover, the March 5

letter warns petitioner that his arguments are frivolous, thereby

exposing him to the Court’s imposition of a section 6673(a)

penalty.    We can see no reason for the petition but to delay the

collection of the unpaid assessments.   Petitioner has not only

wasted his time, but he has also wasted the time of respondent’s

employees, officers, and counsel, not to mention the waste of the
                             - 12 -

Court’s time in disposing of this case.   “The purpose of section

6673 is to compel taxpayers to think and to conform their conduct

to settled principles before they file returns and litigate.”

Takaba v. Commissioner, 119 T.C. 285, 295 (2002).   We shall

exercise our authority under section 6673(a)(1) and require

petitioner to pay to the United States a penalty of $2,500.


                                          An appropriate order and

                                   decision will be entered.
