                               T.C. Memo. 2012-182



                         UNITED STATES TAX COURT



                  ERIK STEPHEN CLARK, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 6118-11L.                          Filed July 2, 2012.



      Erik Stephen Clark, pro se.

      Nancy M. Gilmore, for respondent.



                           MEMORANDUM OPINION


      GOEKE, Judge: This case is before the Court on respondent’s motion for

summary judgment and to impose sanctions. The case presents the question of

whether respondent abused his discretion in sustaining a notice of lien filing. The
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amounts petitioner owes arise from unpaid income tax for 2007 and penalties for

2006 and 2008. We shall grant respondent’s motion for summary judgment but

deny the imposition of sanctions sought by respondent.

                                     Background

      The following facts are not in dispute.

      Petitioner resided in Maryland at the time he filed the petition.

      Petitioner timely filed a 2006 income tax return on which he reported wages

earned of $59,062. On March 1, 2009, petitioner filed a self-prepared amended

return for tax year 2006 on which he changed his wages to zero and included a

Form 4852, Substitute for Form W-2, Wages and Tax Statement, or Form 1099-R,

Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc., reporting zero wages. On the amended return petitioner

stated that he made the changes because--

      my company issued me an erroneous W-2 and listed my payments as
      “wages” as defined in the IRC Sect. 3401(a) and 3121(a), for fear of
      retaliation from the IRS. I am a private-sector citizen (non-federal
      employee), employed by a private-sector company (non-federal entity)
      as defined in 3401(c)(d). I am not employed in a “trade or business”,
      nor am I an “officer of a corporation”.

      Petitioner timely filed a 2007 tax return which, by all accounts, properly

stated the amount of his income and tax due. Petitioner was unable to pay the tax
                                         -3-

shown on the return when due, however, and had entered into a payment plan with

the Internal Revenue Service.

      Petitioner filed his 2008 return on June 18, 2009, also reporting wages of zero

and attaching a Form 4852. Petitioner’s reason for doing so was similar to the

explanation on his amended 2006 return.

      On July 9, 2009, respondent mailed a letter to petitioner which explained the

$5,000 civil penalty for filing a frivolous tax return pursuant to section 6702.1 The

letter gave petitioner a chance to avoid the civil penalty by amending his position

regarding the Forms 4852 filed for 2006 and 2008. Petitioner did not take

advantage of this opportunity. Additionally, petitioner stopped payment of 2007 tax

owed as a result of “bad-faith measures taken by respondent in regard to [his] 2006

and 2008 returns.” According to petitioner, these bad-faith measures included

“Committing what amounts to witness tampering by attempting to ‘persuade’

petitioner to change * * * [his] sworn testimony” as such “testimony” appeared on

his 2006 amended return and 2008 return.

      Respondent assessed a $5,000 civil penalty against petitioner for each of tax

years 2006 and 2008 on September 28, 2009, and January 4, 2010, respectively.

      1
       All section references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                         -4-

On September 14, 2010, respondent issued to petitioner a Notice of Federal Tax

Lien Filing and Notice of Your Right to a Hearing informing petitioner that

respondent had filed a notice of Federal tax lien (NFTL) with the Circuit Court of

Baltimore County, Maryland, as a result of petitioner’s unpaid tax liability for 2007

and unpaid civil penalties for 2006 and 2008.2

      Petitioner timely filed a collection due process (CDP) hearing request denying

owing any penalties or “having any tax liabilities”. Petitioner raised the following

issues in his request--

      1.) Proof of tax liability different from my sworn testimony has not
      been provided (IRC 6703(a)).

      2.) A specific description of how my return meets the criteria of IRC
      6702(a), 1(A) or 1(B) has not been provided.

      3.) A specific description of the alleged frivolous “position” and
      “impeding desire” has not been provided.

      On January 28, 2011, the settlement officer (SO) conducted a CDP hearing

with petitioner by telephone. The SO had previously reviewed petitioner’s account

transcripts for 2006, 2007, and 2008 to determine whether assessment procedures

      2
        Forms 4340, Certificate of Assessments, Payments, and Other Specified
Matters, for 2006 and 2008 showed no remaining tax liabilities except for the
unpaid $5,000 civil penalties. The 2006 Form 4340 shows the 2006 liability was
satisfied through withholding and other payment credits. The 2008 Form 4340
shows no assessments made for 2008 against petitioner and a payment credit of over
$9,000 resulting from withholding.
                                          -5-

were followed and whether all administrative and statutory requirements were met.

During the CDP hearing petitioner agreed that he was liable for the 2007 unpaid tax

and did not present evidence disputing his liability when offered the chance.3 The

SO asked petitioner whether he wanted to discuss collection alternatives, but

petitioner declined. Petitioner continued to make arguments based on his belief that

he had no tax liabilities for 2006 and 2008 because he had no wages. Petitioner also

stated that he had not received a notice of deficiency for the civil penalties, and the

SO explained that a notice of deficiency is not issued for civil penalties. Petitioner

finally stated that he wished to present his case to the Tax Court.

      On February 15, 2011, the SO issued a notice of determination upholding the

filing of the NFTL as an appropriate collection action. Petitioner timely filed a

petition contesting the notice of determination. Respondent filed the motion at issue

and petitioner objected to the granting of the motion. A hearing on respondent’s

motion was held in Baltimore, Maryland.




      3
        The SO also gave petitioner 14 days to file an amended 2007 tax return, but
petitioner failed to do so.
                                         -6-

                                      Discussion

I. Summary Judgment

      Summary judgment is designed to expedite litigation and to avoid

unnecessary and expensive trials. Shiosaki v. Commissioner, 61 T.C. 861, 862

(1974). A motion for summary judgment may be granted where the pleadings and

other materials 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); Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994). The

burden is on the moving party to demonstrate that no genuine issue as to any

material fact remains and that he is entitled to judgment as a matter of law. FPL

Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001).

      In all summary judgment cases, the evidence is viewed in the light most

favorable to the nonmoving party. Bond v. Commissioner, 100 T.C. 32, 36 (1993).

However, the nonmoving party is required “to go beyond the pleadings and by * * *

[his] own affidavits, or by the ‘depositions, answers to interrogatories, and

admissions on file,’ designate ‘specific facts showing that there is a genuine issue

for trial.’” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed. R. Civ.

P. 56(e)); see also Rule 121(d); Rauenhorst v. Commissioner, 119 T.C. 157, 175
                                          -7-

(2002); FPL Grp., Inc. & Subs. v. Commissioner, 115 T.C. 554, 559-560

(2000).

      Petitioner filed a response to respondent’s motion for summary judgment

arguing that the motion should not be granted because genuine issues of material

fact remain to be adjudicated. In support of his argument, petitioner claims that: (1)

respondent “has not submitted statements of fact supported by credible evidence

that petitioner has even adopted a ‘position’, on * * * [his tax] returns much less that

the alleged position was ‘frivolous’”; (2) “The entirety of respondents [sic]

arguments contained in respondents [sic] motion, are based on subjective intent, i.e.

respondents [sic] subjective evaluation of petitioner’s intent in filing my returns”

and that petitioner’s amended 2006 return and 2008 return are the only documents

relevant to determining whether petitioner should be liable for the section 6702 civil

penalty for filing a frivolous tax return; (3) respondent’s allegation that petitioner

received “wages” assumes facts not in evidence and is an unsupported conclusion of

law; (4) respondent did not submit into evidence relevant summary record(s) of

assessment in compliance with section 301.6203-1, Proced. & Admin. Regs., in

support of his assessments against petitioner, and respondent’s position therefore
                                         -8-

assumes facts not in evidence and makes unsupported conclusions of law;4 (5)

“Respondent’s allegation that petitioner is a ‘taxpayer’ assumes facts not in

evidence, and is an unsupported conclusion of law”; (6) petitioner was not given an

opportunity to support his claim during the CDP hearing; and (7) respondent’s

allegation that petitioner’s position is frivolous is an unsupported conclusion of law.




      4
        In an order dated February 29, 2012, we noted that in lien and levy cases
under secs. 6320 and 6330 we have encouraged the Commissioner to include Forms
4340 for relevant tax years when making a motion for summary judgment. Barnes
v. Commissioner, T.C. Memo. 2010-30. In addition, the Chief Counsel of the
Internal Revenue Service has recognized the importance of submitting Forms 4340
to the Court when filing motions for summary judgment and has instructed his
attorneys that “A certified copy of an updated Form 4340 transcript should also be
submitted with all summary judgment motions.” Chief Counsel Notice CC-2009-
010 (Feb. 13, 2009) (emphasis added) (Chief Counsel Notice CC-2009-010 was
revoked by Chief Counsel Notice CC-2012-010 on May 10, 2012, after our order
was issued). As respondent had not already submitted any Forms 4340 in this case,
we ordered respondent to submit Forms 4340 for the relevant tax years.

       We ordered petitioner to respond to the Forms 4340 provided by respondent,
which he did. Petitioner in his response argues that “A Form 4340 alone, without
the signed summary record of assessment named in * * * [sec. 301.6203-1, Proced.
& Admin. Regs.] which it purports to support, is legally insufficient, and does not
constitute credible evidence that a lawful assessment has been made.” However, we
have previously held that “A taxpayer receiving a copy of Form 4340 has been
provided with all the documentation to which he or she is entitled under * * *
section 301.6203-1, Proced. & Admin. Regs.” Wright v. Commissioner, T.C.
Memo. 2005-291 (citing Roberts v. Commissioner, 118 T.C. 365, 370 n.7 (2002),
aff’d, 329 F.3d 1224 (11th Cir. 2003)). Petitioner also claims that the Form 4340
supplied is “suspect”, but we disagree.
                                          -9-

       After consideration of petitioner’s argument that genuine issues of material

fact remain to be adjudicated, we disagree. We find that summary judgment is

appropriate in this case.

II. Underlying Tax Liabilities and Review of the SO’s Determination

       A. Underlying Liabilities

       In a CDP hearing a taxpayer may challenge the existence or amount of the

underlying tax liability for any tax period if he did not receive a notice of deficiency

for such liability or otherwise have an opportunity to dispute such tax liability. Sec.

6330(c)(2)(B).5 However, we do not have authority to consider section 6330(c)(2)

issues that were not raised during the CDP hearing. Giamelli v. Commissioner, 129

T.C. 107, 115 (2007); Akonji v. Commissioner, T.C. Memo. 2012-56.

       During the CDP hearing, petitioner agreed that he was liable for the 2007

unpaid tax and did not present evidence disputing his liability when offered the

chance. The SO offered petitioner an additional 14 days to amend his 2007 tax

return, which he failed to do. As a result, we may not consider the underlying 2007

liability.



       5
       Although the CDP hearing in this case was a lien hearing under sec. 6320,
sec. 6320(c) provides that “For purposes of this section, subsections (c), (d) (other
than paragraph (2)(B) thereof), (e), and (g) of section 6330 shall apply.”
                                          - 10 -

      Petitioner attempted to raise the underlying liabilities for the 2006 and 2008

civil penalties, but the SO refused to consider petitioner’s arguments because the

SO determined those arguments were based on frivolous positions taken by

petitioner. A taxpayer may not raise in a hearing pursuant to section 6330(b) an

issue that meets either of the requirements of section 6702(b)(2)(A)(i) or (ii), i.e., is

based on a position which the Secretary has identified as frivolous under section

6702(c) or reflects a desire to delay or impede the administration of Federal tax

laws. Sec. 6330(c)(4)(B); Thornberry v. Commissioner, 136 T.C. 356, 362 (2011).

Considering petitioner’s arguments previously discussed, we find that the positions

he sought to discuss with the SO were frivolous positions identified by the Secretary

in Notice 2007-30, 2007-1 C.B. 883.6 See sec. 6702(b)(2)(A) (specifically granting

the Secretary the power to identify frivolous positions for purposes of section

6702(c)); see also Alexander v. Commissioner, T.C. Memo. 2012-75 (determining


      6
        Arguments listed as frivolous in Notice 2007-30 include: (1) the argument
that “Only certain types of taxpayers are subject to income and employment taxes,
such as employees of the Federal government, corporations, nonresident aliens, or
residents of the District of Columbia or the Federal territories”; (2) arguments that
compensation received for the performance of personal services is not taxable; and
(3) arguments that “Verification * * * that the requirements of any applicable law or
administrative procedure have been met may only be based on one or more
particular forms or documents (which must be in a certain format), such as a
summary record of assessment”. Petitioner has advanced such arguments both
before and after the CDP hearing.
                                        - 11 -

whether positions were frivolous by looking to Notice 2007-30). As a result,

petitioner was precluded from raising these issues in the CDP hearing. Because

petitioner raised only frivolous and meritless issues regarding his underlying

liabilities for the civil penalties under section 6702 for 2006 and 2008, both the SO

and this Court are precluded by section 6330(c)(4)(B) from considering petitioner’s

arguments.

      B. Abuse of Discretion

      Where a taxpayer’s underlying tax liability is not in dispute, the Court

reviews the Commissioner’s determination for abuse of discretion. See Sego v.

Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176,

182 (2000). To establish an abuse of discretion, the taxpayer must prove that the

decision of the Commissioner was arbitrary, capricious, or without sound basis in

fact or in law. Giamelli v. Commissioner, 129 T.C. at 111 (citing Sego v.

Commissioner, 114 T.C. at 610, and Woodral v. Commissioner, 112 T.C. 19, 23

(1999)); Tinnerman v. Commissioner, T.C. Memo. 2010-150. In reviewing for

abuse of discretion, we generally consider only the arguments, issues, and other

matters that were raised at the hearing or otherwise brought to the attention of the

Appeals Office. Pough v. Commissioner, 135 T.C. 344, 350 (2010); Giamelli v.
                                         - 12 -

Commissioner, 129 T.C. at 115; Tinnerman v. Commissioner, T.C. Memo.

2010-150.

      Petitioner has not alleged any legitimate basis for us to determine that the

SO’s decision sustaining the NFTL was arbitrary, capricious, or without sound basis

in fact or in law. In addition, petitioner declined to discuss collection alternatives

with the SO when the SO raised the subject during the CDP hearing. Considering

the facts, we find that the SO did not abuse her discretion in sustaining the NFTL,

and we therefore uphold it.

III. Section 6673 Sanctions

      Respondent requests that the Court impose sanctions against petitioner

pursuant to section 6673(a)(1). Section 6673(a)(1) authorizes the Court to require a

taxpayer to pay a penalty to the United States in an amount not to exceed $25,000

whenever it appears to the Court 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 has taken a multitude of frivolous and groundless positions

characteristic of tax protesters. While petitioner is an intelligent person, his

arguments that the wages paid to him by his employer are not income are misguided
                                        - 13 -

and lack any merit. However, considering the facts of this case,7 we decline to

impose sanctions against petitioner, although we strongly warn petitioner that

making such arguments before this Court in the future will likely result in the

imposition of sanctions against him.

      To reflect the foregoing,


                                                       An appropriate order and

                                                 decision will be entered.




      7
      We note that this is the first time petitioner has made such frivolous
arguments before us.
