MEMORANDUM OPINION
JACOBS,
Unless otherwise indicated, all section references are to the Internal Revenue Code.
At the time he filed his petition, petitioner resided in Georgia.
Petitioner is an adherent of the principles espoused by Robert Clarkson (Clarkson), 12009 Tax Ct. Memo LEXIS 168">*169 founder of the Patriot Network, a national organization that advocates tax avoidance activities as well as the frustration and delay of collection efforts by the Internal Revenue Service (IRS). Petitioner is no stranger to this Court. He has appeared before us on two prior occasions, losing both times.
During 2001 petitioner received a distribution from the Employees' Retirement System of Georgia pension plan of which $ 34,631 was reported to respondent by the payor as taxable income. He reported $ 17 as taxable interest.
During 2002 petitioner received a distribution from the Employees' Retirement System of Georgia pension plan of which $ 35,688 was reported to respondent by the payor as the taxable amount. He also reported $ 17 as taxable interest.
Petitioner submitted undated Federal income tax returns for 2001 and 2002 reporting as taxable income for each year only the $ 17 of interest and reporting no tax liability. Form 2555-EZ, Foreign Earned Income Exclusion, and Form 1099-R, Distributions From Pensions,Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., reflecting petitioner's pension income, were attached to each return. For each year petitioner claimed he qualified 2009 Tax Ct. Memo LEXIS 168">*170 for the foreign earned income exclusion, stating he resided in the "American Republic of Georgia" and, as a retired Georgia State employee, his employer was the "American Republic of Georgia." Neither return was signed.
Using information from third-party payors, the IRS computed petitioner's 2001 tax to be $ 4,119 and his 2002 tax to be $ 3,913. A notice of deficiency for year 2001 was mailed to petitioner on January 14, 2004. That notice, in addition to the aforementioned $ 4,119 deficiency in income tax, included additions to tax under
On April 7, 2004, petitioner filed a petition at docket No. 6025-04 contesting respondent's determinations with respect to year 2001. On December 29, 2004, petitioner filed a petition at docket No. 24893-04 contesting respondent's determinations with respect to year 2002. Pursuant to an Order dated January 3, 2005, on February 22, 2005, 2009 Tax Ct. Memo LEXIS 168">*171 petitioner filed an amended petition with respect to year 2002. By Order dated November 1, 2005, the cases in docket Nos. 6025-04 and 24893-04 were consolidated for trial, briefing, and opinion.
A trial with respect to docket Nos. 6025-04 and 24893-04 was held in Atlanta, Georgia, on August 28, 2006. As stated supra p. 2, a bench opinion was rendered on August 30, 2006, and decisions were entered in accordance therewith on September 26, 2006.
On a date not specified in the record, respondent assessed a frivolous income tax return penalty pursuant to
On October 23, 2006, respondent mailed petitionera Final Notice of Intent to Levy and Notice of Your Right to a Hearing regarding the
By letter dated July 25, 2007, respondent informed petitioner that his request for a hearing had been received and that his 2009 Tax Ct. Memo LEXIS 168">*172 case had been assigned to a settlement officer in respondent's Appeals Office in Atlanta. The letter stated that the issues petitioner raised "are those that Courts have determined are frivolous or Appeals does not consider." The letter advised petitioner that because the only issues he raised were frivolous, he was not entitled to a face-to-face hearing. Instead, petitioner was offered a telephone hearing to be held on August 15, 2007. Petitioner was advised that he would be allowed a face-to-face conference with respect to any nonfrivolous issue; however, before doing so respondent had to be informed of the nonfrivolous issue in writing or by telephone call to respondent's Appeals settlement officer by August 8, 2007.
By letter dated August 8, 2007, petitioner stated he did not want a telephone hearing, and he again asked for a face-to-face meeting. Petitioner denied raising frivolous issues. Petitioner appeared unexpectedly in person at respondent's Appeals Office in Atlanta along with Clarkson and one or two other witnesses. Respondent's Appeals settlement officer refused to see them.
Respondent issued a Notice of Determination Concerning Collection Action(s) Under
Petitioner timely contested respondent's levy determination by filing a petition in this Court. A trial was held on February 3, 2009. At trial petitioner was given the opportunity to explain why the
A.
Pursuant to
B.
The
This case involves a review of respondent's determination to proceed with collection of petitioner's frivolous return penalties for 2001 and 2002 via levy.
A taxpayer is precluded from contesting the existence or amount of the underlying liability if he/she received a notice of deficiency for the tax year in question or otherwise had an opportunity to dispute the underlying tax liability.
Because 2009 Tax Ct. Memo LEXIS 168">*177 no notice of deficiency was sent with respect to the
D.
With regard to the first element of the
With regard to the second element of the
Finally, with regard to the third element of the
E.
Petitioner contends that he was entitled to a face-to-face hearing and that because he was denied one, respondent abused his discretion in determining to proceed with the collection of the frivolous income tax return penalties for years 2001 and 2002 by levy. We disagree.
Petitioner's arguments disputing the
F.
Respondent's Appeals settlement officer verified that the requirements of all applicable law and administrative procedures were met and that the proposed levy action appropriately balanced the need for efficient collection of taxes with the petitioner's concerns that the levy be no more intrusive than necessary.
We hold that 2009 Tax Ct. Memo LEXIS 168">*180 respondent did not abuse his discretion in determining to proceed with the collection by levy of the frivolous income tax return penalties owed by petitioner for years 2001 and 2002.
To reflect the foregoing,
1. Clarkson had previously been found to have engaged in activities that interfere with the enforcement of internal revenue laws including, but not limited to, instructing others to purposely frustrate and delay collection efforts and was permanently enjoined from participating in those and other activities. See
2. SEC. 6702. FRIVOLOUS INCOME TAX RETURN. (a) Civil Penalty. -- If -- (1) any individual files what purports to be a return of the tax imposed by subtitle A but which -- (A) does not contain information on which the substantial correctness of the self-assessment may be judged, or (B) contains information that on its face indicates that the self-assessment is substantially incorrect; and (2) the conduct referred to in paragraph (1) is due to-- (A) a position which is frivolous, or (B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws,
3.
4. As amended by the Pension Protection Act of 2006, Pub. L. 109-280, sec. 855, 120 Stat. 1019, effective for determinations made after Oct. 16, 2006.