                          T.C. Memo. 2004-15



                      UNITED STATES TAX COURT



             ROBERT HAROLD HATHAWAY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 136-02L.               Filed January 23, 2004.


     Robert Harold Hathaway, pro se.

     Monica J. Miller, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     JACOBS, Judge:   This case arises from petitioner’s request

for our review of respondent’s determination that the filing of a

Federal tax lien with respect to the collection of petitioner’s

unpaid taxes for 1996 and 1997 was appropriate.   The issue to be

resolved is whether that determination by respondent constitutes

an abuse of discretion.    Respondent raised the issue of whether
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petitioner should be required to pay a penalty to the United

States pursuant to section 6673 for instituting and/or

maintaining this proceeding, and if so the amount thereof.1

                           FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits submitted therewith are

incorporated herein by this reference.

     At the time the petition was filed, petitioner resided in

Ocala, Florida.    He is a doctor of veterinary medicine.

     Petitioner timely filed income tax returns for 1996 and

1997.    On the 1996 tax return, the amount of tax due (exclusive

of the estimated tax penalty) was shown as $17,112.      There were

no withholding credits or estimated tax payments.      Nor was there

a payment submitted with the return.

     The tax shown as due (exclusive of the estimated tax

penalty) on the 1997 return was $13,734.      Other than one

estimated tax payment of $1,100, petitioner made no payments with

respect to his 1997 tax liability.

     On February 13, 2001, petitioner filed amended income tax

returns on Forms 1040X, Amended Individual Income Tax Return, for

1996 and 1997.    These returns, as well as amended returns for

1998 and 1999, were submitted “as a part” of petitioner’s 2000

income tax return.    The amended returns reported that petitioner


     1
        All section references are to the Internal Revenue Code.
                               - 3 -

had no gross or taxable income (and consequently no tax

liability) for the applicable periods.   Attached to the amended

returns was a three-page document in which petitioner stated that

although no section of the Internal Revenue Code establishes an

income tax liability, in order to avoid criminal prosecution for

failure to file a tax return, he was filing a tax return for 2000

and amended tax returns (with zeros reported for amounts on all

lines) for 1996-99 and reassessing his 1996-99 income as zero.

Petitioner requested a refund of all taxes paid for 1996-99 as

well as for 2000.   The amended returns were not accepted by the

Internal Revenue Service (IRS), and by letter dated January 31,

2002, respondent informed petitioner that his request for a tax

refund was disallowed.

     Petitioner received notice that Revenue Officer Charles Gear

had filed a notice of Federal tax lien with the Clerk of the

Circuit Court, Marion County, Florida.   Subsequently, petitioner

submitted to respondent a Form 12153, Request for a Collection

Due Process Hearing, dated June 11, 2001, challenging the

appropriateness of the filing of the Federal tax lien.

     By letter dated September 17, 2001, Appeals Officer Charles

R. Kelly informed petitioner that he was scheduling a telephone

hearing with petitioner for October 4, 2001, at 9:30 a.m.

Appeals Officer Kelly enclosed Forms 4340, Certificate of

Assessments, Payments, and Other Specific Matters, for 1996 and
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1997 with his letter.   In his letter, Appeals Officer Kelly

stated that the tax petitioner reported when he filed his tax

return is the tax owed and that the amended tax returns are not

valid.

     A telephone hearing was held as scheduled.    During that

hearing petitioner advanced tax-protester arguments regarding his

tax obligation and respondent’s filing of the Federal tax lien.

Petitioner did not raise any relevant issues relating to the

existence or amount of his unpaid taxes.    Nor did petitioner make

any offers of collection alternatives.

     On November 2, 2001, a Notice of Determination Concerning

Collection Action Under Section 6320 (Lien) of the Internal

Revenue Code was sent to petitioner.     In that notice, respondent

determined that the filing of a Federal tax lien was an

appropriate collection action.    Petitioner then filed a petition

with this Court under section 6330(d) disputing respondent’s

determination.   See sec. 6320(c).

                              OPINION

     Section 6321 imposes a lien in favor of the United States

upon all property and rights to property belonging to a person

liable for unpaid taxes after demand for payment.    Within 5

business days after the day of filing the notice of lien, the

Secretary must notify in writing the person against whom the lien

is filed (the taxpayer) that a tax lien was filed and inform the
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taxpayer of his right to a hearing before an impartial Appeals

officer.   Sec. 6320.   Pursuant to section 6320(c) the hearing

is to be conducted pursuant to the rules provided in subsections

(c), (d) (other than paragraph (2)(B) thereof), and (e) of

section 6330.   If the Commissioner issues a determination letter

adverse to the position of the taxpayer, the taxpayer may seek

judicial review of the determination.    Sec. 6330(d).

     This Court has established the following standards of review

in considering whether a taxpayer is entitled to relief from the

Commissioner’s determination:

     where the validity of the underlying tax liability is
     properly at issue, the Court will review the matter on
     a de novo basis. However, where the validity of the
     underlying tax liability is not properly at issue, the
     Court will review the Commissioner’s administrative
     determination for abuse of discretion.

Sego v. Commissioner, 114 T.C. 604, 610 (2000).

     Petitioner essentially makes three arguments regarding his

unpaid tax liability and respondent’s collection actions (i.e.,

the filing of the tax lien).    First, he posits that he

incorrectly reported income for 1996 and 1997 because he had no

“statutory income” to report.    Second, petitioner claims that

unless and until respondent can produce a “statutory notice and

demand” and a signed assessment document, no valid section 6330

hearing can be conducted.    And finally, petitioner maintains that
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he should be allowed to challenge the existence of the underlying

liabilities that he reported on tax returns he filed.

     With regard to his tax liability (i.e., the unpaid tax)

petitioner (in his trial memorandum) argues:

          1.   There is no Legislative Regulation (LAW) that
     requires me to pay a Federal Tax on my earnings, other
     than through apportionment when I buy products
     containing a Federal Sales Tax.

          2.   The 1040 IRS Personal Income Tax form is
     fraudulent.

          3.   In April 1996 and 1997 respectively, I filled
     out and signed 1040 U.S. Individual Income Tax Returns.
     I signed and filed the above returns under extreme
     duress. I was afraid that if I did not, I would go to
     jail. I would lose my practice plus all of my
     possessions.

          4.   Since that time I discovered that the 1040
     form as provided by the IRS is fraudulent. The word
     “INCOME” has been defined by the Supreme Court in no
     less than 12 separate cases to mean “CORPORATE
     PROFITS.” Yet the IRS fools the public into believing
     that their earnings are INCOME and are therefore
     taxable. I also discovered that there is no
     Legislative Regulation requiring me to pay Federal
     Taxes except through apportionment, Federal Sales
     Taxes.

          5.   I reassessed my 1996 through 2000 taxes to
     zero INCOME for those years using 1040X forms. Since I
     am not incorporated, I have no corporate profits.
     Therefore, I have no INCOME.

     With regard to the filing of the Federal tax lien,

petitioner (in a letter attached to his Request for a Collection

Due Process Hearing) argues:

          I also received a Notice of Federal Tax Lien
     rubber stamped by Candace R. Donaldson for Charles
     Gear. This lien was also filed with the Clerk of
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     Circuit Court, Marion County, Ocala, FL 34478. Only
     the Secretary of the Treasury has the authority to file
     a Notice of Federal Tax Lien. The only exception to
     that would be if you have a Delegation of Authority
     signed by the Secretary of the Treasury authorizing
     you, Revenue Agent Charles Gear, ID#59-05257, to file a
     Notice of Federal Tax Lien. (See TITLE 26, Subtitle F,
     CHAPTER 64, Subchapter D. Sec. 6331(a) “Levy and
     distraint” and Subchapter C, Sec 6323(a) “Validity and
     priority against certain persons.”)

          If you do not possess a Delegation of Authority
     signed by the Secretary of the Treasury authorizing
     you, Revenue Agent Charles Gear, ID #59-05257, to file
     a Notice of Federal Tax Lien against me, I highly
     recommend that you send a release order to the Clerk of
     Circuit Court, Marion County, Ocala, FL 34478. If not,
     and this Notice of Federal Tax Lien causes me harm in
     anyway, shape or form, I will sue you personally and
     the IRS. I will also file a grievance against you with
     the Director of the Internal Revenue Service. (See
     TITLE 26, Subtitle F, CHAPTER 75, Subchapter A. Part I,
     Sec. 7214(a)(1),(a)(2),(a)(7) and (a)(9) “Offenses by
     officers and employees of the United States.”)

     Respondent maintains that in a section 6330 proceeding a

taxpayer can challenge only those liabilities asserted by the

Commissioner that differ in amount from the taxpayer’s self-

determination.    Thus, according to respondent, petitioner is

precluded from contesting the tax he reported on his 1996 and

1997 returns.    This argument is similar to that which the

Commissioner advanced, and we rejected, in Montgomery v.

Commissioner, 122 T.C. ___ (2004).

     Section 6330(c)(2) provides that a taxpayer may raise any

“relevant” issue at the collection hearing; it does not say that

the taxpayer may raise “any” issue.     Petitioner raised only

groundless and frivolous issues, not relevant issues.
                                 - 8 -

     Petitioner’s challenge to the existence of his tax liability

is meritless.   During the years at issue, petitioner earned a

significant amount of income as a doctor of veterinary medicine.

He filed tax returns for 1996 and 1997 that reported Schedule C

self-employment income of $59,077 for 1996 and $53,289 for 1997.

The tax assessments generating the filing of the Federal tax lien

are based on the tax shown on returns petitioner filed under

penalties of perjury.   See sec. 6201(a)(1).

     Despite respondent’s claim that petitioner could not

challenge his underlying tax liabilities for 1996 and 1997 as

reported on petitioner’s tax returns for those years, petitioner,

in fact, questioned the validity of those liabilities during his

telephone hearing.   Petitioner advanced frivolous arguments

during this telephone hearing.    Petitioner continued to advance

his groundless arguments in his petition, his trial memorandum,

and his trial testimony.    Despite petitioner’s assertions to the

contrary, there is no genuine issue as to the existence of his

1996 and 1997 unpaid tax.   And because petitioner challenged only

the existence of a law requiring him to pay a Federal tax on his

earnings and did not challenge the correctness of the amounts of

income which he reported on his 1996 and 1997 tax returns, there

is no genuine issue as to the amounts of petitioner’s underlying

tax liability for 1996 and/or 1997.
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     Appeals Officer Kelly verified that the assessments in

question were properly made.   He was not required to give

petitioner a copy of the verification that the requirements of

any applicable law or administrative procedure have been met.

See Nestor v. Commissioner, 118 T.C. 162, 166 (2002).

     Appeals Officer Kelly provided petitioner with Forms 4340

for 1996 and 1997.   In this regard, see Lunsford v. Commissioner,

117 T.C. 183 (2001), and Davis v. Commissioner, 115 T.C. 35

(2000), wherein we held that a Form 4340 may be used to verify

that a valid assessment was made.

     Petitioner implies that Revenue Officer Gear did not have

authority to file a notice of Federal tax lien with the Clerk of

the Circuit Court, Marion County, Florida.   This assertion is not

valid.   In this regard, see Everman v. Commissioner, T.C. Memo.

2003-137, wherein we noted that the Commissioner has authority to

file a notice of Federal tax lien and that authority has been

delegated to a host of IRS personnel, including various managers

responsible for collection matters and GS-9 and above revenue

officers pursuant to Delegation Order No. 196 (Rev. 4; Oct. 4,

2000).

     Simply stated, during the section 6330 hearing petitioner

had an opportunity to raise all relevant issues relating to the

existence and/or amount of his unpaid tax liabilities for 1996

and 1997.   He also had an opportunity to challenge the
                              - 10 -

appropriateness of respondent’s tax lien.    Petitioner failed to

take advantage of the opportunity.     Rather, he chose to espouse

groundless and frivolous arguments.    Consequently, there is no

basis for us to conclude that it was an abuse of discretion for

respondent to determine that the filing of a Federal tax lien in

the instant situation was appropriate.

     We now turn to whether, pursuant to section 6673, we should

require petitioner to pay a penalty to the United States, and if

so the amount thereof.   Section 6673 provides, in part, that

whenever it appears to the Tax Court that proceedings before it

have been instituted or maintained by the taxpayer primarily for

delay or the taxpayer’s position in such proceeding is frivolous

or groundless, the Tax Court, in its decision, may require the

taxpayer to pay the United States a penalty not in excess of

$25,000.   Petitioner’s position in this case is frivolous as well

as groundless.   Although petitioner was informed that his

position has been rejected consistently by the courts, he

nonetheless continued to advance it.

      We have no doubt that petitioner, an educated individual,

maintained this proceeding primarily to delay the day the IRS

could collect taxes he owes for 1996 and 1997.    Petitioner has

wasted the time of respondent’s agents and counsel as well as the

time of this Court.   We therefore impose a penalty of $10,000 on

petitioner under section 6673.
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To reflect the foregoing,


                                 Decision will be entered for

                            respondent.
