Opinion
4812-22L
10-23-2024
Brian Dean Swanson, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Alina I. Marshall Judge
This collection due process (CDP) case is before the Court on the parties' Cross-Motions for Summary Judgment under Rule 121.
Unless otherwise indicated, Rule references are to the Tax Court Rules of Practice and Procedure, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (Code), in effect at all relevant times, and monetary amounts are rounded to the nearest dollar.
Petitioner seeks review pursuant to section 6330(d) of the determination by the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) to uphold a notice of intent to levy. The notice relates to petitioner's liability for a section 6702(a) frivolous return penalty imposed for a submission he made to the IRS for tax year 2016. Respondent contends that there are no material facts in dispute, petitioner is liable for the penalty because he filed a frivolous return as a matter of law, and Appeals did not abuse its discretion in determining to sustain the proposed levy. Petitioner contends that he is entitled to relief because he withdrew any frivolous argument. In the alternative, petitioner contends that the IRS invalidly assessed the penalty based on supervisory approval that was procedurally defective under section 6751(b).
The notice also relates to petitioner's liability for a section 6702(a) frivolous return penalty imposed for a submission he made to the IRS for tax year 2017. Respondent abated that penalty, however, and filed a Motion to Dismiss on Ground of Mootness as to 2017. Petitioner did not object to the Motion to Dismiss, and on May 10, 2023, the Court ordered the Motion to Dismiss granted in that so much of this case as it relates to the 2017 tax year was dismissed as moot.
For the reasons set forth below, we will grant respondent's Motion for Summary Judgment and deny petitioners' Motion for Summary Judgment.
Background
The following facts are derived from the parties' pleadings and their Motion papers, including the declarations and exhibits attached thereto. See Rule 121(c). They are stated solely for purposes of deciding the Cross-Motions and not as findings of fact in this case. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994).
In 2016, petitioner was paid at least $74,848 by the McDuffie County Board of Education (MCDOE) for his work as a teacher in the State of Georgia. Petitioner timely filed a Form 1040, U.S. Individual Income Tax Return, for 2016. On the return, petitioner reported a pension and federal income tax withholding of $26,282 and $10,621, respectively, and claimed a refund due of $10,621. Petitioner did not report his teaching wages on the return, instead reporting his wage amount as zero. Petitioner attached to the return a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., on which he also reported that he had zero wages from MCDOE and that he had federal tax withheld by them of $7,195. Petitioner stated on the Form 4852 that "I deteremined [sic] that the compenstaion [sic] I received for my laobr [sic] was not 'Wages' paid to an 'Employee' as defined in 3121(A) and 3401(a), but the amounts withheld are correct."
On November 30, 2017, the IRS issued petitioner a Letter 3176C regarding a proposed section 6702(a) frivolous return penalty related to the 2016 return. In the letter, the IRS explained that it had determined the information petitioner filed as a purported tax return was frivolous and without basis in the law. It also cited petitioner to I.R.S. Publication 2105, Why Do I Have to Pay Taxes?, and I.R.S. Notice 2010-33, 2010-17 I.R.B. 609, Frivolous Positions, for information on positions identified by the IRS as frivolous. The IRS further informed petitioner in the letter that he would need to send a corrected return within 30 days of the date of the letter to avoid the penalty and that if he did not timely file a corrected return or if he submitted additional documents asserting a frivolous position the IRS would assess the penalty. It also notified petitioner that it would not respond to any future correspondence asserting any frivolous position. In a letter dated December 11, 2017, petitioner responded to the Letter 3176C. Petitioner stated in his letter that "I had no intention to file a frivolous return. I disclaim and abandon that position(s). I withdraw whichever frivolous position(s) that the IRS has identified, though I am unaware of taking any such position." He also stated that he would refile his 2016 return but would need more information from the IRS to do so. Petitioner did not file a corrected return.
On February 12, 2018, respondent obtained supervisory approval for the assertion of a $5,000 frivolous return penalty against petitioner under section 6702(a) for the 2016 tax year by obtaining Group Manager Danika L. Draper's signature on Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties. Under "remarks," the Form 8278 states "arg 44." On April 8, 2019, respondent assessed the penalty and issued a CP15 notice.
Petitioner pursued his contention that his teaching wages for 2016 were not income subject to tax by filing a tax refund suit in the U.S. District Court for the Southern District of Georgia. See Swanson v. United States, Case 1:19-CV-00013, U.S. District Court, Southern District of Georgia. On May 3, 2019, the District Court issued an order of dismissal in the case, in which it held that petitioner's arguments as to why his wages were not taxable income were frivolous. Swanson v. United States, 2019 WL 7880022 (S.D. Ga. 2019). Petitioner appealed to the U.S. Court of Appeals for the Eleventh Circuit.
We take judicial notice of the docket in this case, which reflects that petitioner filed his complaint on January 28, 2019. See Fed. R. Evid. 201(a); Petzoldt v. Commissioner, 92 T.C. 661, 674 (1989) ("[R]ecords of a particular court in one proceeding commonly are the subject of judicial notice by the same and other courts in other proceedings.").
Absent stipulation to the contrary, appeal of this case would also presumably lie with the Eleventh Circuit. See § 7482(b)(1)(G).
The IRS issued petitioner a notice of deficiency for 2016 dated May 22, 2019, due to his failure to report his teaching wages on the 2016 return. On August 19, 2019, petitioner filed a petition challenging that notice at Docket No. 15178-19. In that petition, petitioner made a series of arguments as to why his teaching wages were not taxable akin to those that were identified as frivolous by the District Court.
On October 22, 2019, the IRS issued a notice of intent to levy and notice of your right to a hearing with respect to the frivolous return penalty for the 2016 tax year. On November 18, 2019, petitioner filed a Form 12153, Request for a Collection Due Process or Equivalent Hearing. Petitioner did not request any collection alternatives on the form. As the reason for his dispute, petitioner stated that he was not liable for the penalty and that his return was "based on a good-faith reliance on an IRS determination that . . . [it was] filed correctly and . . . [is] not frivolous."
On January 7, 2020, the Court of Appeals issued a decision affirming the District Court's dismissal of petitioner's refund suit. Swanson v. United States, 799 Fed.Appx. 668 (11th Cir. 2020). In so doing, the Court of Appeals similarly identified petitioner's position that his 2016 teaching wages were not taxable as "frivolous under [its] precedent." See id. at 670 (citing Stubbs v. Commissioner, 797 F.2d 936, 938 (11th Cir. 1986); Motes v. United States, 785 F.2d 928, 928 (11th Cir. 1986); Biermann v. Commissioner, 769 F.2d 707, 708 (11th Cir. 1985); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981), aff'g T.C. Memo. 1981-122). It also imposed an $8,000 sanction against petitioner. Id. at 672.
In a letter dated April 16, 2020, that petitioner sent to respondent with respect to Docket No. 15178-19, petitioner admitted that he was paid $74,848 in 2016 for his work as a teacher but continued to assert that his wages were not taxable based on the types of arguments that had now been identified by both the District Court and the Court of Appeals as frivolous. On July 6, 2020, the Court entered the decision in Docket No. 15178-19. The decision reflected the parties' agreement that petitioner was liable for a deficiency of $17,612 for 2016 but that no section 6662(a) accuracy- related penalty was due.
In a Letter 4837 dated October 6, 2021, Appeals Officer Charles Duff (AO Duff) set forth the framework for petitioner's CDP hearing with respect to the frivolous return penalty. On November 12, 2021, petitioner faxed seven pages of prior correspondence concerning the matter to AO Duff, including the Letter 3176C and petitioner's December 11, 2017, letter in response. On November 16, 2021, AO Duff wrote again to petitioner. In that letter, AO Duff referred to petitioner's conference as having been held on November 10, 2021, and confirmed his receipt of the November 12, 2021, fax. AO Duff also informed petitioner in the letter that petitioner's response to the Letter 3176C was insufficient, in that the Letter 3176C had specifically directed petitioner to file a corrected return for the 2016 tax year, and that as a result, he had determined to sustain the proposed levy.
On January 14, 2022, Appeals issued a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (NOD) sustaining the proposed levy with respect to the frivolous return penalty. In an attachment to the NOD, Appeals concluded that the assertion of the penalty was appropriate, in that petitioner did not file a corrected 2016 tax return reporting his wages, petitioner's position that wages are not taxable is a known frivolous position per I.R.S. Notice 2010-33, and managerial approval for the penalty was properly obtained. It also concluded that all legal and procedural requirements were met, that petitioner neither offered any collection alternatives nor raised any issue other than his challenge to his liability, and that the proposed collection action balanced the needs of efficient collection with the legitimate concern that the action be no more intrusive than necessary.
On February 15, 2022, petitioner timely filed the Petition in this case while residing in the State of Georgia. See §§ 6330(d)(1); 7502. On March 9, 2023, respondent filed a Motion for Summary Judgment. On March 13, 2023, petitioner filed an Objection to respondent's Motion as well as his own Motion for Summary Judgment. On March 18, 2023, petitioner filed an amendment to his Objection, and on March 29, 2023, respondent filed his response to petitioner's Motion.
Discussion
I. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly and unnecessary trials. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We shall grant a motion for summary judgment only when there is no genuine dispute of material fact and a decision may be rendered as a matter of law. Rule 121(b); Elec. Arts, Inc. & Subs. v. Commissioner, 118 T.C. 226, 238 (2002); see also Take v. Commissioner, 82 T.C. 630, 633 (1984) (explaining that this rule applies to each motion where both parties move for summary judgment), aff'd, 804 F.2d 553 (9th Cir. 1986). In considering the parties' Cross-Motions, we construe the facts and draw all inferences in the light most favorable to each nonmoving party to decide whether summary judgment is appropriate. Sundstrand Corp., 98 T.C. at 520. However, the nonmoving party may not rest upon the mere allegations or denials in their pleadings but instead must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); Sundstrand, 98 T.C. at 520. Finding that no genuine disputes of material fact exist, we conclude that summary adjudication is appropriate.
II. CDP Principles and Standard of Review
Before the IRS may proceed with a levy on a taxpayer's property, the taxpayer is entitled to administrative and judicial review pursuant to section 6330. Administrative review is carried out by way of a hearing before Appeals under section 6330(b) and (c). The pertinent procedures for the agency-level CDP hearing are set forth in section 6330(c) and can be stated as four issues: First, the Appeals Officer must "obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." § 6330(c)(1). Second, the taxpayer may "raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy," including challenges to the appropriateness of the collection action and offers of collection alternatives. § 6330(c)(2)(A). Third, the taxpayer may contest the existence and amount of the underlying tax liability, but only if he "did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." § 6330(c)(2)(B). Fourth, the Appeals Officer must consider "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." § 6330(c)(3)(C).
If Appeals issues a notice of determination to proceed with the proposed levy and the taxpayer petitions that determination to the Court, we have jurisdiction to review it pursuant to section 6330(d)(1). Murphy v. Commissioner, 125 T.C. 301, 308 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); see also Walker v. Commissioner, T.C. Memo. 2022-63, *5 ("This Court has jurisdiction to review the Commissioner's determination to proceed with a collection action, including review of the Commissioner's determinations to collect a section 6702(a) frivolous return penalty."). Where the underlying tax liability is properly at issue, the Court will review that issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court will review Appeal's determinations respecting any nonliability issues for abuse of discretion. Id. An abuse of discretion occurs if Appeals exercises its discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
III. The Frivolous Return Penalty
Respondent concedes, and we agree, that petitioner is entitled to challenge his liability for the section 6702(a) frivolous return penalty in this case. A taxpayer may challenge his underlying tax liability in a CDP proceeding only if he did not receive a notice of deficiency for the liability or otherwise have an opportunity to dispute the liability. § 6330(c)(2)(B). A frivolous return penalty imposed under section 6702(a) is an "assessable penalty" not subject to deficiency procedures. See § 6703(b). Petitioner thus did not (and could not) receive a statutory notice of deficiency with respect to the frivolous return penalty, and he did not otherwise have a prior opportunity to dispute it. See Jaxtheimer v. Commissioner, T.C. Memo. 2019-164, at *11, aff'd, 854 Fed.Appx. 263 (10th Cir. 2021). He was therefore entitled to contest his liability during his CDP proceeding, which he did, and may contest Appeal's determination with respect to his liability before the Court. See Callahan v. Commissioner, 130 T.C. 44, 50 (2008).
A taxpayer is liable for a frivolous return penalty under section 6702(a) if three requirements are met. First, the taxpayer must file a document that "purports to be a return of a tax imposed by . . . [the Code]." § 6702(a)(1). Second, the purported return must be a document that either omits "information on which the substantial correctness of the self-assessment may be judged" or "contains information that on its face indicates that the self-assessment is substantially incorrect." Id. And third, the defect must be "based on a position which the Secretary has identified as frivolous" or "reflects a desire to delay or impede the administration of Federal tax laws." § 6702(a)(2). At the direction of Congress, the Secretary has prescribed a list of positions which the Secretary has identified as frivolous for purposes of section 6702(a)(2). § 6702(c); I.R.S. Notice 2010-33, 2010-17 I.R.B. 609. The list includes arguments that wages and other compensation received for the performance of personal services are not taxable income and that the taxpayer may file a return reporting zero income and zero tax liability even if the taxpayer received income during the period for which the return is filed. I.R.S. Notice 2010-33, 2010-17 I.R.B. at 609-10 (Positions (1)(e) and (4)). If a purported return reflects a position that the IRS has identified as frivolous, the taxpayer's good-faith belief in the correctness of his position cannot serve as a defense to the penalty. Whitaker v. Commissioner, T.C. Memo. 2017-192, at *10.
The term "Secretary" means the Secretary of the Treasury or his delegate (i.e., the IRS). See § 7701(a)(11)(B), (12)(A)(i).
Respondent bears the burden of proving that petitioner is liable for the frivolous return penalty. § 6703(a). Respondent contends that all three requirements for the penalty have been satisfied and that petitioner filed a frivolous return as a matter of law. Petitioner contends that he is not liable for the penalty because he responded to the Letter 3176C in writing with his December 11, 2017, letter withdrawing any frivolous argument. We agree with respondent that petitioner's 2016 return satisfies the requirements specified in section 6702(a) for a frivolous return and that petitioner is liable for the penalty.
Petitioner submitted a Form 1040 for 2016 on which he reported a pension and federal income tax withholding of $26,282 and $10,621, respectively, and claimed a refund due of $10,621. Petitioner did not report his teaching wages on the return but instead reported his wage amount as zero. Petitioner also attached to the return a Form 4852 on which he reported that he had zero wages from MCDOE, because he had determined that the compensation he received for his labor was not in fact wages, but that MCDOE had correctly withheld federal income tax of $7,195.
If a taxpayer submits a Form 1040 in an effort to obtain a refund, the document necessarily "purports to be a return." Whitaker, T.C. Memo. 2017-192, at *10. By claiming a refund due for 2016, the Form 1040 petitioner submitted therefore satisfies the first requirement. By reporting none of his teaching wages as taxable income and attempting to "correct" a Form W-2 to do so, while simultaneously reporting thousands of dollars of corresponding income tax withholding, the return also satisfies the second requirement, in that it "contains information that on its face indicates that the self-assessment is substantially incorrect." See Clarkson v. Commissioner, T.C. Memo. 2022-92, at *10; Walker, T.C. Memo. 2022-63, at *9; Jaxtheimer, T.C. Memo. 2019-164, at *14; Whitaker, T.C. Memo. 2017-192, at *12- 13. Finally, such reporting is based on at least two positions that the Secretary has identified as frivolous-that a taxpayer may file a return reporting zero income and zero tax liability even if the taxpayer received income during the period for which the return is filed and that wages and other compensation received for the performance of personal services are not taxable income-such that the third requirement is also satisfied. See I.R.S. Notice 2010-33, 2010-17 IRB at 609-10.
In his Motion for Summary Judgment, petitioner contends that he should nevertheless be held not liable for the penalty due to his December 11, 2017, letter. Per petitioner, "since the frivolous penalty was withdrawn in writing as required by congressional directive in I.R.C. § 6702(b)(3) and the administrative policy set forth in the Internal Revenue Manual, the 2016 penalty does not apply and is invalid." Petitioner's position is unfounded, and we reject it.
It is unclear to us whether petitioner may also be arguing in his Motion for Summary Judgment that he should not be held liable for the frivolous return penalty with respect to 2016 because the frivolous return penalty with respect to 2017 was abated. We address this possible argument only in so much as we note that each tax year stands on its own and the Commissioner is not bound in any given year to allow the same treatment permitted for a different year. See Pekar v Commissioner, 113 T.C. 158, 166 (1999). We would further note that we deem abandoned any issue raised by petitioner in the Petition with respect to his liability for the frivolous return penalty that he did not otherwise pursue in his Motion for Summary Judgment or in his Objection, as amended, to respondent's Motion. See, e.g., Serna v. Commissioner, T.C. Memo. 2022-66, at *9 n.7; Elkins v. Commissioner, T.C. Memo. 2020-110, at *22 n.15; Pitts v. Commissioner, T.C. Memo. 2010-101, 2010 WL 1838282, at *7.
Section 6702(b)(3) provides that "[i]f the Secretary provides a person with notice that a submission is a specified frivolous submission and such person withdraws such submission within 30 days after such notice, the penalty imposed under . . . [section 6702(b)] shall not apply with respect to such submission." As to petitioner's reliance on section 6702(b)(3), in Kestin v. Commissioner, 153 T.C. 14, 21- 22 (2019), we made clear that:
(1) section 6702(b) imposes a penalty when a frivolous position is asserted in "specified frivolous submissions," which are defined in section 6702(b)(2)(B) as CDP hearing requests and applications under
section 6159 (relating to written installment payment agreements), section 7122 (relating to compromises), and section 7811 (relating to taxpayer assistance orders); and (2) section 6702(b)(3) provides a circumstance, i.e., allowing a taxpayer to withdraw his "specified frivolous submission," which results in the section 6702(b) penalty not applying with respect to that submission.Crumedy v. Commissioner, T.C. Memo. 2024-19, at *11. The penalty against petitioner was not assessed under section 6702(b), but rather under section 6702(a) for having filed a frivolous tax return for 2016. Petitioner never made a "specified frivolous submission" as that term is defined in section 6702(b)(2)(B). Thus, the withdrawal mechanism of section 6702(b)(3) has no application here. See id.; see also Branch v. IRS, 846 F.2d 36, 37 (8th Cir. 1988) ("Branch suggests section 6702 is inapplicable because he attempted to withdraw his . . . returns shortly after filing. The legislative history of section 6702, however, indicates the penalty provision is intended to deter the filing in the first instance of frivolous returns. See S. Rep. No. 494, 97th Cong., 2d Sess. 277, reprinted in 1982 U.S. Code Cong. & Admin. News 781, 1023-24.").
Petitioner's reliance on the Internal Revenue Manual (IRM) is also to no avail. It is true, as petitioner points out, that IRM 5.20.10.4.3(a) (May 20, 2014) states that if the IRS determines that a taxpayer has submitted a tax return subject to a section 6702(a) penalty but the taxpayer timely responds to a Letter 3176C by filing a valid return withdrawing the frivolous argument "or withdraw[ing] the frivolous argument without filing a valid return," the section 6702 penalty will not be assessed. But, as petitioner fails to acknowledge, the IRM also states that the required response to remedy a frivolous return-be it a corrected return, a statement withdrawing the frivolous position, or otherwise-is to be "determined on a case by case basis." IRM 25.25.10.6 (Sept. 15, 2017). Despite what petitioner would lead us to believe, the IRM does not unequivocally provide for the withdrawal of a frivolous return. And even if it did, it is a well-settled principle that the IRM does not have the force of law, is not binding on the IRS, and confers no rights on taxpayers. See Thompson v. Commissioner, 140 T.C. 173, 190 n.16 (2013); see also First Alabama Bank, N.A. v. United States, 981 F.2d 1226, 1230 n.5 (11th Cir. 1993) ("The IRS operating procedures contained in the IRM do not delineate substantive rights of individuals but instead simply establish intra-agency operating procedures. As such, they are a species of rule that is not judicially enforceable against the agency."). Thus, neither the IRM nor section 6702(b)(3) offers petitioner the solace he seeks from the reporting of his teaching wages as zero on his Form 1040.
Even if we were to assume that the Code and/or IRM did confer upon petitioner the right to withdrawal the frivolous positions reflected his 2016 return without submitting a corrected return, we note that it is unclear to us that he did so. Petitioner did state in his December 11, 2017, letter, that "I had no intention to file a frivolous return. I disclaim and abandon that position(s). I withdraw whichever frivolous position(s) that the IRS has identified . . ." But, in his multiple lawsuits that followed with respect to his 2016 tax year, petitioner continued to assert that his teaching wages were not taxable income, casting serious doubt on that statement. We do not need to explore the contours of what constitutes an adequate withdrawal, however, given our conclusion that the withdrawal mechanism has no application here.
In the alternative, petitioner contends that, even if his December 11, 2017, letter does not avoid the frivolous return penalty, the IRS invalidly assessed the penalty based on supervisory approval that was procedurally defective under section 6751(b). Section 6751(b)(1) generally requires that penalties cannot be assessed unless "the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination." Respondent also bears the burden of showing compliance with section 6751(b)(1). See § 7491(c).
Although certain penalties are excepted from the approval requirement of section 6751(b)(1), see § 6751(b)(2), respondent makes no suggestion that such an exception should apply in this case. Cf., e.g., Kestin, 153 T.C. at 29, n.7.
On February 12, 2018, prior to its assessment, respondent obtained supervisory approval for the assertion of the frivolous return penalty against petitioner by procuring Group Manager Draper's signature on Form 8278. Petitioner contends that:
Petitioner's 2016 Form 8278 (in the record) shows that he was assessed a penalty for including "arg 44" (Argument 44) from I.R.S. Notice 2010-33 on the face of his return. Argument 44 reads:
(44) A taxpayer's income is not taxable if the taxpayer assigns or attributes the income to a religious organization (a "corporation sole" or ministerial trust) claimed to be tax-exempt under section 501(c)(3), or similar arguments described as frivolous in Rev. Rul. 2004-27, 2004-1 C.B. 625.
This argument does not appear on the face of Petitioner's return and therefore, the penalty assessed by Petitioner's 2016 Form 8278 is invalid.
Petitioner also contends that "it must be established which frivolous position from Notice 2010-33 is on the face of Petitioner's return and whether Respondent properly executed a Form 8278 to assess a penalty on the specified position" and that "this factual matter would justify a trial". We disagree.
In the first instance, section 6751(b) is captioned "Approval of Assessment," not "Explanation of Assessment." Pickens Decorative Stone, LLC v. Commissioner, T.C. Memo. 2022-22, at *7. As we have said before: "The written supervisory approval requirement . . . requires just that: written supervisory approval." Raifman v. Commissioner, T.C. Memo. 2018-101, at *61. As such, a "group manager's signature on the Civil Penalty Approval Form is sufficient to satisfy the statutory requirements." Belair Woods, LLC v. Commissioner, 154 T.C. 1, 17 (2020); see also Kestin, 153 T.C. at 28-30 (holding that the approval must be obtained before a section 6702(a) penalty is assessed but need not be obtained before the Commissioner sends the taxpayer a Letter 3176C). The Form 8278 in the record is thus sufficient to evince respondent's compliance with section 6751(b). See Kestin, 153 T.C. at 28-30; Varela v. Commissioner, T.C. Memo. 2024-92, at *5-6; Clarkson, T.C. Memo. 2022-92, at *11-12; Jaxtheimer, T.C. Memo. 2019-164, at *6.
Furthermore, in a supplemental declaration submitted in support of respondent's Motion for Summary Judgment, Group Manager Draper explained that her reference to "arg 44" on the Form 8278 is with respect to "a 'wages are not income' position with a Substitute for Form W-2 filed with a tax return" identified in "an internal IRS listing of frivolous positions that are commonly associated with frivolous returns." See IRM 25.25.10-1 (Sept. 30, 2016). The Court has previously held this particular position to have been identified as frivolous in I.R.S. Notice 2010-33. See, e.g., Varela, T.C. Memo. 2024-92, at *5-6; Walker, T.C. Memo. 2022-63, at *9; Jaxtheimer, T.C. Memo. 2019-164, at *16. And, the Court has repeatedly characterized it as frivolous itself, see, e.g., Jaxtheimer, T.C. Memo. 2019-164, at *16 (and cases cited therein), just as we have done in Section III, supra.
IRM 25.25.10-1 (Sept. 30, 2016) provides a non-exclusive list of recognized frivolous arguments including:
(44.) Zero Wages on a Substitute Form: Taxpayer generally attaches either a substitute Form W-2, Form 1099, or Form 4852 that shows "$0" wages or no wage information. A statement may be included indicating the taxpayer is rebutting information submitted to the IRS by the payer. Entries are usually for Federal Income Tax Withheld, Social Security Tax Withheld, and/or Medicare Tax Withheld. An explanation on the Form 4852 may cite "statutory language behind IRC 3401 and IRC 3121", or may include some reference to the company refusing to issue a corrected Form W-2 for fear of IRS retaliation.We note the Court has previously concluded that argument code 44 as used on other Forms 8278 for frivolous return penalties referred to exactly that argument. See Varela, T.C. Memo. 2024-92, at *5-6 (citing IRM 25.25.10-1(44) (Dec. 15, 2022)); Jaxtheimer, T.C. Memo. 2019-164, at *13 (citing IRM 4.10.12.1.1(1)(44) (Sept. 5, 2014)).
The Court has regularly decided section 6751(b) questions on summary judgment on the basis of IRS records and declarations from relevant officers. See, e.g., Sand Inv. Co. v. Commissioner, 157 T.C. 136 (2021); Thompson v. Commissioner, T.C. Memo. 2022-80; Clarkson, T.C. Memo. 2022-92. And, to put it plainly, petitioner's unsupported assertions regarding Group Manager Draper's use of "arg 44" on the Form 8278 simply fail to demonstrate either that the form is procedurally defective under section 6751(b) or that a trial is necessary on the point. See Rule 121(c), (d); Varela, T.C. Memo. 2024-92. Instead, the record before us shows that the supervisory approval requirement of section 6751(b) has been satisfied.
IV. Other Issues
In the Petition, petitioner alleged an abuse of discretion by Appeals in determining to sustain the proposed levy. In this regard, he contended that Appeals erred by placing the IRS's interest in efficient collection over petitioner's right to collection in the least intrusive manner. See § 6330(c)(3)(C). Petitioner, however, did not allege that respondent abused his discretion as to any nonliability issue in his Objection to respondent's Motion for Summary Judgment, his amendment to his Objection, or his own Motion for Summary Judgment. We therefore deem any such argument abandoned. See, e.g., Serna, T.C. Memo. 2022-66, at *9 n.7; Elkins, T.C. Memo. 2020-110, at *22 n.15; Pitts v. Commissioner, 2010 WL 1838282, at *7. In light of this, and the record before us, we hold that Appeals did not abuse its discretion in determining to sustain the proposed levy.
Petitioner did not make any allegation in the Petition that Appeals failed to obtain verification that the requirements of any applicable law or administrative procedure had been met or that he had offered collection alternatives or other nonliability issues which Appeals failed to properly consider. See § 6330(c)(1)-(3); see also Rule 331(b)(4) (providing that a petition commencing a collection action shall contain "[c]lear and concise assignments of each and every error which the petitioner alleges to have been committed in the notice of determination" and that "[a]ny issue not raised in the assignments of error shall be deemed to be conceded.").
V. Conclusion
Petitioner is liable for the section 6702(a) frivolous return penalty determined by respondent with respect to the submission petitioner made to the IRS for tax year 2016, and there has been no abuse of discretion by Appeals. We will therefore sustain the determination to uphold the proposed levy in full.
We have considered all arguments made and facts presented in reaching our decision, and, to the extent not discussed above, we conclude that they are moot, irrelevant, or without merit.
Upon due consideration, and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed March 9, 2023, is granted. It is further
ORDERED that petitioners' Motion for Summary Judgment, filed March 13, 2023, is denied. It is further
ORDERED AND DECIDED that the determination in the Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 of the Internal Revenue Code, dated January 14, 2022, is sustained in full.