DocketNumber： Docket No. 23061-12L
Judges： LAUBER
Filed Date： 12/23/2013
Status： Non-Precedential
Modified Date： 11/20/2020
An appropriate order and decision will be entered.
LAUBER,
Petitioner earned wages and other compensation from various business activities during 2005-10. He worked for several businesses and ran his own window washing company, but his primary source of income was from his employment at Borgata Hotel Casino & Spa in Atlantic City, New Jersey. His income from Borgata began in 2005, grew in 2006, and averaged about $50,000 in tax years 2007-10, when it became his main source of income. For all six tax *293 years at issue, petitioner and the IRS received third-party information returns—i.e., Forms W-2, Wage and Tax Statement, and Forms 1099-MISC, Miscellaneous Income—reporting the wages and nonemployee compensation that petitioner received. The Forms W-2 showed a small amount of Federal income tax withholding for two of the years at issue and no Federal income tax withholding for the other years. The Forms W-2 reflected withholding of some employment tax for each year.
Petitioner did not file Federal income tax returns for any of the years at issue. After commencing an examination in September 2010, respondent learned through the summons process that petitioner had 2013 Tax Ct. Memo LEXIS 300">*302 asserted to at least one employer that he was "tax exempt." This appeared to explain why petitioner's employers had withheld very little tax from his paychecks.
On April 7, 2011, an IRS revenue agent (RA) had a face-to-face meeting with petitioner at respondent's May's Landing, N.J., office. At the meeting petitioner hand delivered purported "tax returns" for 2005-10, each prepared on Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents. On each of these documents petitioner listed his occupation as "non-federal worker"; reported his income from wages as zero; sought refund of all taxes (including employment taxes) withheld during each year; and attached *294 allegedly "corrected" Forms 1099-MISC. On these forms petitioner covered the wages reported by his employers with correction fluid and replaced those amounts with zero.
On April 11, 2011, the RA sent petitioner copies of relevant Code provisions and judicial opinions addressing frivolous tax returns. On May 13, 2011, the RA forwarded petitioner's purported "tax returns" for 2005-10 to the IRS Frivolous Return Program (FRP) in Ogden, Utah. On August 10, 2011, an FRP staff member mailed petitioner a letter warning 2013 Tax Ct. Memo LEXIS 300">*303 him of the potential consequences of taking frivolous return positions. The letter clearly outlined respondent's conclusion that petitioner had taken frivolous positions on his 2005-10 "returns" and warned petitioner that the IRS would assess a $5,000 penalty for each year for which he filed a frivolous return. The letter alerted petitioner to his statutory right to withdraw his "returns" and file nonfrivolous returns within 30 days. If he did so, petitioner would avoid the $5,000 penalty imposed by
*295 On September 14, 2011, petitioner replied by reiterating his position that he is exempt from taxation because, as a private sector worker, he is not an "employee" under
On November 21, 2011, respondent assessed a $5,000 frivolous return 2013 Tax Ct. Memo LEXIS 300">*304 penalty under
By letter dated June 29, 2012, petitioner sent the SO more copies of the "returns" he had submitted previously. He reiterated his contentions that he is exempt from tax and that the IRS cannot rely upon Forms W-2 and Forms 1099- *296 MISC to establish the wages and nonemployee income that he received. Petitioner alternatively argued that he is not a "person" within the meaning of
During the CDP hearing on July 5, 2013, petitioner did not supply any new information or seek a collection alternative. Respondent described the substance of the call in the notice of determination: "After 45 minutes of going around in circles with the taxpayer asking to define words * * * , the Settlement Officer told the taxpayer that after a review of the information * * * a determination letter will be issued." On August 9, 2012, the IRS issued a notice of determination sustaining the proposed levy. Petitioner timely sought review in this Court.
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials.
The
However, de novo review of frivolous return penalties is not automatic. To receive de novo review, the taxpayer at the CDP hearing must make a meaningful challenge to the penalty itself—e.g., by plausibly contending that his return contains sufficient "information on which the substantial correctness of the self-assessment may be judged,"
*299 The record before us clearly shows that petitioner made no meaningful challenge to the frivolous return penalties at his CDP hearing. The only discernible argument he advanced at the hearing was that his wages are exempt from tax because he is a non-Federal worker, an argument identified as frivolous by the Secretary in
Because petitioner's underlying liability is not at issue, the only question we consider is whether respondent properly sustained a levy to collect this liability. We review the record to determine whether the Appeals officer (1) verified that the requirements of applicable law and administrative procedure have been met; (2) considered whether 2013 Tax Ct. Memo LEXIS 300">*309 the issues petitioner raised have merit; and (3) considered 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."
Petitioner at the CDP hearing raised no colorable issues about the penalties or the levy, and he offered no collection alternative. Rather, his assertions at both the administrative and litigation stages of this case have consisted entirely of frivolous arguments. A sampling of his arguments includes the assertions that he has no "wages" because he is not an employee of the Federal Government; that Forms 1099-MISC and W-2 may not be used for private sector workers; the IRS may not rely on information returns received from third parties; and that the IRS lacks authority to levy on the property of private sector workers.2013 Tax Ct. Memo LEXIS 300">*310
It is clear from our review of the record that the Appeals officer verified that the requirements of any applicable law and administrative procedure were followed; that petitioner's claims lack merit; and that in sustaining the levy the Appeals officer properly balanced "the need for the efficient collection of taxes with the legitimate concern of * * * [petitioner] that any collection action be no *301 more intrusive than necessary."
This Court now considers sua sponte whether to impose sanctions on petitioner under
*302 The positions petitioner maintains are unquestionably frivolous, and this Court would therefore be justified in imposing additional sanctions. However, because this appears to be petitioner's first foray into this Court, we instead offer a word of caution. Petitioner is admonished to refrain from advancing frivolous arguments in any future filings he may make in this Court, because the Court next time is unlikely to show leniency. Failure to heed this warning may lead to the imposition 2013 Tax Ct. Memo LEXIS 300">*312 of a substantial monetary penalty under
1. All statutory references are to the Internal Revenue Code (Code) in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Respondent has conceded an erroneous assessment of $2,529 in tax and penalty for 2004 and duplicate assessments of frivolous return penalties for 2005-10. All of those assessments are in the process of being abated.
3. Among the many frivolous arguments petitioner advances is the assertion that he is entitled to a refund of all Federal tax withheld for the years at issue. This Court is a court of limited jurisdiction; in our review of this CDP case, we cannot consider a claim for refund.