Kiley v. Comm'r
This text of 2002 T.C. Memo. 315 (Kiley v. Comm'r) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
*334 Respondent's motion for summary judgment and to impose penalty granted.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This matter is before the Court on respondent's Motion For Summary Judgment And To Impose A Penalty Under
Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials.
As explained in detail below, there is no genuine issue as to any material fact, and a decision may be rendered as a matter of law. Accordingly, we shall grant respondent's motion for summary judgment.
Background
The record establishes and/or*336 the parties do not dispute the following:
On or about April 15, 1996, Christopher Kiley (petitioner) and his wife Sabrena S. Legere 2 filed with respondent a joint Federal income tax return, Form 1040PC, for the taxable year 1995. Petitioner listed his occupation as "waiter", and his wife listed her occupation as "cashier".
On their return, petitioner and his wife reported adjusted gross income in the amount of $ 41,874, consisting of wages and tips in the amount of $ 39,590 and taxable pensions/annuities in the amount of $ 2,284. 3 After reduction for the standard deduction and personal exemptions, petitioner and his wife reported taxable income in the amount of $ 25,324 and a tax liability in the amount of $ 4,143. After reduction for Federal income tax withheld ($ 2,871), petitioner and his wife reported the amount owed*337 as $ 1,312, consisting of tax in the amount of $ 1,272 and an "estimated tax penalty" (i.e., addition to tax under section 6654(a)) in the amount of $ 40.
Petitioner and his wife did not enclose payment with their return of the amount reported as owed on their return.
On May 20, 1996, respondent assessed the tax liability reported by petitioner and his wife on their 1995 return (i.e., $ 4,143), together with the "estimated tax penalty" reported therein. On that date, respondent also assessed (1) an addition to tax under section 6651(a)(2) for failure to pay and (2) statutory interest.
Petitioner and his wife satisfied their outstanding liability for tax, additions to tax, and statutory interest through a series of installment*338 payments, which was completed in July 1997.
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*334 Respondent's motion for summary judgment and to impose penalty granted.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This matter is before the Court on respondent's Motion For Summary Judgment And To Impose A Penalty Under
Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials.
As explained in detail below, there is no genuine issue as to any material fact, and a decision may be rendered as a matter of law. Accordingly, we shall grant respondent's motion for summary judgment.
Background
The record establishes and/or*336 the parties do not dispute the following:
On or about April 15, 1996, Christopher Kiley (petitioner) and his wife Sabrena S. Legere 2 filed with respondent a joint Federal income tax return, Form 1040PC, for the taxable year 1995. Petitioner listed his occupation as "waiter", and his wife listed her occupation as "cashier".
On their return, petitioner and his wife reported adjusted gross income in the amount of $ 41,874, consisting of wages and tips in the amount of $ 39,590 and taxable pensions/annuities in the amount of $ 2,284. 3 After reduction for the standard deduction and personal exemptions, petitioner and his wife reported taxable income in the amount of $ 25,324 and a tax liability in the amount of $ 4,143. After reduction for Federal income tax withheld ($ 2,871), petitioner and his wife reported the amount owed*337 as $ 1,312, consisting of tax in the amount of $ 1,272 and an "estimated tax penalty" (i.e., addition to tax under section 6654(a)) in the amount of $ 40.
Petitioner and his wife did not enclose payment with their return of the amount reported as owed on their return.
On May 20, 1996, respondent assessed the tax liability reported by petitioner and his wife on their 1995 return (i.e., $ 4,143), together with the "estimated tax penalty" reported therein. On that date, respondent also assessed (1) an addition to tax under section 6651(a)(2) for failure to pay and (2) statutory interest.
Petitioner and his wife satisfied their outstanding liability for tax, additions to tax, and statutory interest through a series of installment*338 payments, which was completed in July 1997.
By notice dated September 10, 1997, respondent determined a deficiency in the Federal income tax of petitioner and his wife for 1995 in the amount of $ 226. 4 No petition for redetermination was filed with the Court. See sec. 6213(a). Accordingly, on February 9, 1998, respondent assessed the deficiency, together with (1) an addition to tax under section 6652(b) for failure to report tip income and (2) statutory interest. On that same day, respondent sent petitioner and his wife a statutory notice of balance due, informing them that they had a liability for 1995 and requesting that they pay that liability. Petitioner and his wife failed to pay the amount owing.
On October 15, 1999, respondent received from petitioner a Form 1040X, Amended U.S. Individual Income Tax Return, for 1995. 5 On line 1*339 of the Form 1040X, petitioner reduced adjusted gross income from $ 41,874, the amount reported on his original return, to "0". Similarly, on line 10 of the Form 1040X, petitioner reduced his tax liability from $ 4,143, the amount reported on his original return, to "0", and on line 23, he asked that $ 4,143 be refunded to him. By way of explanation, petitioner wrote as follows in Part II of the Form 1040X:
LINE #1: Due to ignorance, we reported as "income" sources of income as being "income" itself, when in fact, we had no statutory income tax to report.
LINE #10: Apart from #1 above, we also had no statutory liability with respect to income taxes, and pursuant to Code sec. 31(a)(1), we have a Constitutional right to have the wage tax imposed in sec. 3402(a)(1) refunded since it represents an unapportioned, direct tax on wages and*340 thus would be unconstitutional if we could not have them refunded. Because of the misleading caption on sec. 3402(a)(1), we did not realize that what was deducted from our pay was not income tax, but a direct tax on our wages.
Petitioner attached to the Form 1040X a two-page typewritten statement that stated, in part, as follows:
I, Christopher Kiley, am submitting this as part of my amended 1995 income tax return, even though I know that no section of the Internal Revenue Code:
1) Establishes an income tax "liability" * * *;
2) Provides that income taxes "have to be paid on the basis of a return" * * *.
3) In addition to the above, I am filing even though the "Privacy Act Notice" as contained in a 1040 booklet clearly informs me that I am not required to file. It does so in at least two places.
a) In one place, it states that I need only file a return for "any tax" I may be "liable" for. Since no Code Section makes me "liable" for income taxes, this provision notifies me that I do not have*341 to file an income tax return.
* * * * * * *
5) Please note, that my 1995 return also constitutes a claim for refund pursuant to Code Section 6402.
6) It should also be noted that I had "zero" incomeaccording to the Supreme Court's definition of income (See Note #1) * * * .
7) I am also putting the IRS on notice that my 1995 tax return and claim for refund does not constitute a "frivolous" return pursuant to Code Section 6702. * * *
8) Moreover, since no assessment for 1995 income taxes * * * has ever been made against me, the IRS has no legal basis to hold the $ 4143 of my money it is now holding for 1995 income taxes.
10) In addition, don't notify me that the IRS is "changing" my return, since there is not [sic] statute that allows the IRS to do that. * * *
*NOTE #1: The word "income" is not defined in the Internal Revenue*342 Code. * * * But, as stated above, it can only be a derivitive [sic] of corporate activity. * * *
By letter dated November 10, 1999, respondent's Chief of the Examination Branch in the Ogden, Utah Service Center advised petitioner and his wife that the Form 1040X was a frivolous document and that "The position you have taken has no basis in law".
By letter dated January 7, 2000, petitioner replied to the foregoing letter, stating in part as follows:
Your letter of 11/10/99 (attached) identifies you as being Chief, Examination Branch. However, IRS Manual * * * defines the duties of the "examination branch," in part, as follows:
"The Examination Branch administers an international examination program involving the selection and examination of all types of Federal tax returns filed with the Assistant Commissioner (International) . . ."
Since I am not involved in international commerce, and since I never filed tax returns with the Assistant Commissioner (International), and since I am not living abroad, nor engaged in making an offer and compromise, nor*343 am I an IRS informant claiming a reward -I can find no provision in paragraph 1132.74 that would authorize you to contact me on any basis. This, of course, means that I do not even have to comment further on your ludicrous, unauthorized and extortionary letter, but I will do so anyway -- because I can not allow the fraud and deceit it contains to go un-addressed.
If I am wrong in my assumption that no provision of the Internal Revenue Code makes me "liable" for income taxes * * *, then please identify any such section for me. I note that your new "Mission Statement" says that the IRS is supposed to help taxpayers "understand and meet (their) tax responsibilities and by applying the tax law with integrity and fairness to all." Well you can start off by showing me the "tax law" that makes me "liable" for income taxes, since I cannot find it on my own. * * *
Constitutionally yours,
*344 nsChristopher Kiley
Law Abiding Citizen
By letter dated February 4, 2000, respondent formally denied the claim for refund made by petitioner in his Form 1040X.
On April 17, 1999, petitioner and his wife submitted to respondent a joint Form 1040, U.S. Individual Income Tax Return, for the taxable year 1997. On the Form 1040, petitioner listed his occupation as "cashier"; petitioner's wife did not list her occupation.
Petitioner and his wife entered zeros on every line of the income portion of the Form 1040, specifically including line 7 for wages and tips, line 22 for total income, lines 33 and 34 for adjusted gross income, and line 39 for taxable income. Petitioner and his wife also entered zeros on line 40 for tax and on line 56 for total tax. Petitioner and his wife then claimed a refund in the amount of $ 731.22, which was equal to the amount of Federal income tax that had been withheld from petitioner's wages, as discussed in the following paragraph.
Petitioner and his wife attached to their Form 1040 a Form W-2, Wage and Tax Statement, disclosing the payment*345 of wages to petitioner during 1997. The Form W-2 was from Palace Station Hotel and Casino in Las Vegas, Nevada; it disclosed the payment of wages to petitioner in the amount of $ 19,989.32 and the withholding of Federal income tax in the amount of $ 731.22.
Petitioner and his wife also attached to their Form 1040 a two-page typewritten statement that began, as follows:
I, Christopher Kiley, am submitting this as a part of my 1997 income tax return, even though I know that no section of the Internal Revenue Code:
The rest of the statement was essentially the same as the statement attached to petitioner's Form 1040X for 1995. See supra A.
By letter dated May 21, 1999, respondent' s Chief of the Examination Branch in the Ogden, Utah Service Center advised petitioner and his wife that "the information you sent", i.e., their Form 1040 for 1997 (as well as their Form 1040 for 1998, see infra C), "is frivolous and your position has no basis in law."
By letter dated June 19, 1999, petitioner replied to the foregoing letter. Although petitioner's letter was much lengthier than his previously described letter dated January 7, 2000 (see supra A), the tenor of the*346 two letters was the same.
By notice dated February 25, 2000, respondent determined a deficiency in the Federal income tax of petitioner and his wife for 1997 in the amount of $ 2,951, together with an accuracy-related penalty under section 6662(a) and (b)(1) in the amount of $ 247.16. 6 No petition for redetermination was filed with the Court. See sec. 6213(a). Accordingly, on August 7, 2000, respondent assessed the deficiency, together with the accuracy-related penalty and statutory interest. On that same day, respondent sent petitioner and his wife a statutory notice of balance due, informing them that they had a liability for 1997 and requesting that they pay that liability. Petitioner and his wife failed to pay the amount owing.
On April 15, 1999, petitioner and his wife submitted to respondent a joint Form 1040, U.S. Individual Income Tax Return, for the taxable year 1998. On the Form 1040, petitioner listed his occupation as "cashier", and petitioner's wife listed her occupation as "unemployed".
Petitioner and his wife entered zeros on every line of the income portion of the Form 1040, specifically including line 7 for wages and tips, line 22 for total income, lines 33 and 34 for adjusted gross income, and line 39 for taxable income. Petitioner and his wife also entered zeros on line 40 for tax and on line 56 for total tax. Petitioner and his wife then claimed a refund in the amount of $ 1,178.72, which was equal to the amount of Federal income tax that had been withheld from petitioner's wages, as discussed in the following paragraph.
Petitioner and his wife attached to their Form 1040 a Form W-2, Wage and Tax Statement, disclosing the payment of wages to petitioner during 1998. The Form W-2 was from Palace Station Hotel and Casino in Las Vegas, Nevada; it disclosed the payment of wages to petitioner in the amount of $ 18,823.15 and the withholding of Federal income*348 tax in the amount of $ 1,178.72.
Petitioner and his wife also attached to their Form 1040 a two-page typewritten statement that began, as follows:
I, Christopher Kiley, am submitting this as a part of my 1998 income tax return, even though I know that no section of the Internal Revenue Code:
The rest of the statement was essentially the same as the statement attached to petitioner's Form 1040X for 1995 and Form 1040 for 1997. See supra A and B.
As previously stated (see supra B), by letter dated May 21, 1999, respondent' s Chief of the Examination Branch in the Ogden, Utah Service Center advised petitioner and his wife that "the information you sent"; i.e., their Form 1040 for 1998, "is frivolous and your position has no basis in law." Also as previously stated (see supra B), by letter dated June 19, 1999, petitioner replied to the foregoing letter. Although petitioner's letter was much lengthier than his previously described letter dated January 7, 2000 (see supra A), the tenor of the two letters was the same.
By notice dated February 25, 2000, respondent determined a deficiency in the Federal income tax of petitioner and his wife for 1998 in the amount*349 of $ 16,174, together with an accuracy-related penalty under section 6662(a) and (b)(1) in the amount of $ 3,830.06. 7 No petition for redetermination was filed with the Court. See sec. 6213(a). Accordingly, on August 7, 2000, respondent assessed the deficiency, together with the accuracy- related penalty and statutory interest. On that same day, respondent sent petitioner and his wife a statutory notice of balance due, informing them that they had a liability for 1998 and requesting that they pay that liability. Petitioner and his wife failed to pay the amount owing.
On November 16, 2000, respondent mailed to petitioner and his wife a Final Notice -- Notice of Intent to Levy and Notice of Your Right to a Hearing in respect of their outstanding tax liabilities for 1997 and 1998 (but not 1995). Thereafter, on December 12, 2000, respondent received from petitioner a Form 12153, Request for a Collection Due Process Hearing. Petitioner attached to the Form 12153 a 2-page typewritten statement and a copy of various Treasury regulations.
On April 28, 2001, respondent mailed to petitioner and his wife a Final Notice -- Notice of Intent to Levy and Notice of Your Right to a Hearing (the final notice) in respect of their outstanding tax liabilities for 1995, 1997, and 1998. The final notice stated that the total amount then due from petitioner and his wife was as follows:
| Year | Amount Due |
| 1995 | $ 511.71 |
| 1997 | 2,020.53 |
| 1998 | 22,451.65 |
| Total | 24,983.89 |
No later than May 27, 2001, respondent received from petitioner*351 another Form 12153, Request for a Collection Due Process Hearing. Petitioner attached to this Form 12153 the same 2-page typewritten statement and exhibit that he attached to his previously filed Form 12153. 8
The following passage from the statement attached to petitioner's Form 12153 reflects its tenor:
It is clear that before any appeals officer can recommend the seizure of any property pursuant to Code
By letter dated October 23, 2001, an Appeals officer in respondent's Appeals Office in Albuquerque, New Mexico, scheduled an administrative hearing for petitioner on December 17, 2001, in Las Vegas, Nevada, the location closest to petitioner's residence in Pahrump, Nevada, in respect of the 3 taxable years in issue. The penultimate paragraph of the Appeals officer's letter stated as follows:
IF YOU FAIL TO APPEAR FOR THE HEARING: This will be your only opportunity for a face-to-face hearing. If you*353 cannot appear for the Hearing, I have scheduled a telephone Hearing for you on January 15, 2002 at 9:00 A.M. (MST). Please call me on the scheduled date and at the scheduled time if you cannot attend the face-to-face hearing. If I do not hear from you by the date scheduled for the telephone hearing, your hearing will consist of a review of your administrative file and all correspondence provided by you.
The Appeals officer included with his October 23, 2001, letter Form 4340, Certificate of Assessments, Payments and Other Specified Matters, for each of the 3 taxable years in issue.
Petitioner did not attend the December 17, 2001, administrative hearing in Las Vegas, Nevada, nor did petitioner participate in a telephone conference on January 15, 2002.
On February 14, 2002, respondent's Appeals Office issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 with regard to his tax liabilities for 1995, 1997, and 1998. In the notice, the Appeals Office concluded that respondent's determination to proceed with collection by way of levy*354 should be sustained.
On March 25, 2002, petitioner filed with the Court a Petition for Lien or Levy Action seeking review of respondent's notice of determination. 9 Thereafter, on June 19, 2002, an Amended Petition for Lien or Levy Action was filed.
In the amended petition, petitioner challenges "the appropriateness of (the) collection action" and "the existence of the underlying liability". Petitioner also alleges: (1) The Appeals officer failed to obtain verification from the Secretary that the requirements of applicable law or administrative procedure were met as required under
As stated, respondent filed a Motion For Summary Judgment And To Impose A Penalty Under
Petitioner filed an Objection to respondent's motion, disagreeing with the imposition of any penalty under
*356 Discussion
In the amended petition, petitioner challenges "the existence of the underlying tax liability". Respondent contends that petitioner is barred under
When a motion for summary judgment is made and supported as provided in this Rule, an adverse party may not rest upon the mere allegations or denials of such party's pleading, but such party's response, by affidavits or as otherwise provided in this Rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party*359 does not so respond, then a decision, if appropriate, may be entered against such party.
In the amended petition, petitioner does not indicate on what basis he challenges "the existence of the underlying liability". His failure to do so is contrary to
Petitioner also challenges "the appropriateness of*360 (the) collection action". Again, however, he fails to allege any facts in support of this assignment of error. See
We likewise reject petitioner's argument that the Appeals officer failed to obtain verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required by
Federal tax assessments are formally recorded on a record of assessment.
*362 Petitioner has not alleged any irregularity in the assessment procedure that would raise a legitimate question about the validity of the assessments or the information contained in the Forms 4340. See
Petitioner also contends that he never received a notice and demand for payment of his tax liabilities for 1997 and 1998. The requirement that the Secretary issue a notice and demand for payment is set forth in
In particular, the Forms 4340 show that respondent sent petitioner*363 notices of balance due on the same dates that respondent made assessments against petitioner for the taxes and accuracy-related penalties determined in the notices of deficiency. A notice of balance due constitutes a notice and demand for payment within the meaning of
Finally, petitioner has failed to raise a spousal defense. Such potential issue is now deemed conceded.
We turn now to that part of respondent's motion that moves for the imposition of a penalty on petitioner under
As relevant herein,
*365 We are convinced that petitioner instituted the present proceeding primarily for delay. In this regard, it is clear that petitioner regards this proceeding as nothing but a vehicle to protest the tax laws of this country and to espouse his own misguided views, which we regard as frivolous and groundless. E.g.,
Under the circumstances, we shall grant that part of respondent's motion that moves for the imposition of a penalty in that we shall impose a penalty on petitioner pursuant to
We have considered all of petitioner's arguments that are not discussed herein, and we find them to be without merit and/or irrelevant.
In order to give effect to the foregoing,
An appropriate order granting respondent's motion and decision for respondent will be entered.
Footnotes
1. Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Ms. Legere did not file with the Court a petition for lien or levy action. See infra G. Accordingly, she is not a party to the present proceeding.↩
3. Petitioner and his wife attached to their return three Forms W-2, Wage and Tax Statement, showing the payment of wages and allocated tips, and one Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, etc., showing the payment of a taxable distribution.↩
4. The deficiency in income tax appears to have been based principally (if not exclusively) on respondent's determination that petitioner underreported tip income for 1995.↩
5. Although the Form 1040X listed both the names of petitioner and his wife, it was signed only by petitioner.↩
6. The deficiency in income tax was based on respondent's determination that petitioner and his wife received, but failed to report: (1) Wages in the amount of $ 19,989 from Palace Station Hotel and Casino; (2) wages in the amount of $ 16,419 from Lucky Stores; (3) wages in the amount of $ 759 from UFCE Local 711; (4) gambling winnings in the amount of $ 1,429 from Palace Station Hotel and Casino; and (5) a capital gain in the amount of $ 1,250 from Chicago Trust.
We note that respondent has credited petitioner and his wife for the amount withheld from wages insofar as their ultimate tax liability is concerned. However, we note further that the determination of a statutory deficiency does not take such amount into account. See sec. 6211(b)(1).↩
7. The deficiency in income tax was based on respondent's determination that petitioner and his wife received but failed to report: (1) Wages in the amount of $ 14,466 from Lucky Stores, and (2) a capital gain in the amount of $ 83,550. In determining the deficiency, it would appear that respondent failed to consider the Form W-2 issued by Palace Station Hotel and Casino reporting the payment of wages to petitioner in the amount of $ 18,823.15, as discussed in the text. If this were the case, the deficiency in income tax and the accuracy-related penalty were understated.
We note that respondent has credited petitioner and his wife for the amount withheld from wages insofar as their ultimate tax liability is concerned. However, we note further that the determination of a statutory deficiency does not take such amount into account. See sec. 6211(b)(1).↩
8. As indicated in the text, neither Form 12153 was executed by petitioner's wife, nor did either purport to be filed on her behalf.↩
9. At the time that the petition was filed, petitioner resided in Pahrump, Nevada.↩
10. Even if petitioner were permitted to challenge his underlying tax liabilities, it is clear that the arguments he has advanced (see supra Background, A through D) are frivolous and groundless. E.g.,
Keene v. Comm'r, T.C. Memo. 2002-277↩ .11. To the extent that petitioner may be arguing that the Appeals officer failed to provide him with a copy of the verification, we note that
sec. 6330(c)(1) does not require that the Appeals officer provide the taxpayer with a copy of the verification at the administrative hearing.Nestor v. Comm'r, 118 T.C. 162, 166↩ (2002) ; sec. 301.6330-1(e)(1), Proced. & Admin Regs. In any event, both the Appeals officer and respondent's counsel provided petitioner with Forms 4340 for the 3 taxable years in issue.12. E.g.,
Craig v. Comm'r, 119 T.C. 252, 2002 U.S. Tax Ct. LEXIS 53, 119 T.C. (2002) (imposing a penalty in the amount of $ 2,500);Roberts v. Comm'r, 118 T.C. 365 (2002) (imposing a penalty in the amount of $ 10,000);Rennie v. Comm'r, T.C. Memo. 2002- 296 (imposing a penalty in the amount of $ 1,500);Tornichio v. Comm'r, T.C. Memo. 2002-291 (imposing a penalty in the amount of $ 12,500);Keene v. Comm'r, T.C. Memo. 2002-277↩ (imposing a penalty in the amount of $ 5,000), and numerous other cases cited therein at n.14.
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