Opinion
Civil Action No. 3:03-0491.
March 31, 2004
ORDER
For reasons appearing to the Court, the Court VACATES the order designating Magistrate Judge Maurice G. Taylor, Jr. to submit proposed findings of fact and recommendation. This Court will now proceed to review the case.
The Court DIRECTS the Clerk to send a copy of this Order to Magistrate Judge Taylor, counsel of record, and any unrepresented parties.
MEMORANDUM ORDER
On the 1999 federal individual income tax return filed by plaintiff, Rocky Brunty, lines for computing tax had zeros with the exception of lines indicating federal income tax withheld, total payments and refund amount, the latter reflecting that Brunty was entitled to a refund of $2,304.15. A form W-2 attached to the return showed that Brunty had received $56,770.00 in wages in 1999. Not surprisingly, perhaps, the Internal Revenue Service ("IRS") responded with a letter to Brunty advising him that he had submitted what was considered a frivolous return and that he could either file a correct return or be assessed a $500.00 penalty as authorized by the provisions of 26 U.S.C. § 6702. When plaintiff failed to respond, the IRS assessed the $500.00 civil penalty. Section 6702 provides for imposition of a civil penalty of $500.00 when an individual files "what purports to be a return" if the return "contains information that on its face indicates that the self-assessment is substantially incorrect" or it fails to contain "information on which the substantial correctness of the self-assessment may be judged" and the deficiency is due to "a position which is frivolous." On July 16, 2001, after plaintiff had failed to respond to its letter, the IRS assessed a $500.00 civil penalty. Thereafter, on May 14, 2002, the IRS sent plaintiff a "final" notice of its intent to levy and a notice of his right to a hearing, advising him that the IRS intended to "levy under Internal Revenue Code (IRC) 6331" but that he had the right to a hearing with regard to the proposed levy in accordance with the provisions of 26 U.S.C. § 6330. Plaintiff timely filed a request for a "collection due process hearing," forwarding with the request a letter in which he made certain demands, including a demand for production of the document evidencing a supervisor's approval of the assessment, "the delegation of authority from the Secretary authorizing such persons who imposed the `frivolous' penalty the authority to do so," the Treasury Regulation "that authorizes IRS employees to impose the penalty" and "the specific Code section that makes me `liable' for the underlying tax at issue." The hearing was conducted on April 3, 2003, by James M. Payton, an Appeals Settlement Officer with the West Virginia Appeals Office of the IRS. On May 5, 2003, the IRS denied plaintiff's appeal in a "Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330," stating in summary fashion that it had determined that "the proposed Levy issued by the IRS Service Center was appropriate." In an attachment to the determination the "background" issues raised and basis for the decision were set forth. On May 30, 2003, plaintiff initiated proceedings in this Court, asking the Court to "declare" the decision of the IRS invalid on the basis that he "was not provided with the information and documentation to which he was entitled, by law, to have." The matter is presently pending before the Court on defendant's motion to dismiss or, in the alternative, motion for summary judgment and plaintiff's response thereto.
Plaintiff filed a verified "Motion" asking the Court to declare the "Determination" invalid and a verified "Memorandum of Law" with attachments in support of his motion.
Rule 56(c) of the Federal Rules of Civil Procedure provides for entry of judgment in favor of a moving party "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." It is the moving party who "bears the initial burden of pointing to the absence of a genuine issue of material fact," Temkin v. Frederick County Commissioners, 945 F.2d 716, 718 (4th Cir. 1991); however, the "burden then shifts to the non-moving party to come forward with facts sufficient to create a triable issue of fact." Id. at 718-19. While the Court must construe the facts "in the light most favorable to the party opposing the motion," United States v. Diebolt, Incorporated, 369 U.S. 654, 655 (1962), that party "`cannot create a genuine issue of fact through mere speculation or the building of one inference upon another,'" Harleysville Mutual Insurance Company v. Packer, 60 F.3d 1116, 1120 (4th Cir. 1995), and "[t]he mere existence of a scintilla of evidence in support of [a] plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). "At bottom, the district court must determine whether the party opposing the motion for summary judgment has presented genuinely disputed facts which remain to be tried. If not, the district court may resolve the legal questions between the parties as a matter of law and enter judgment accordingly." Thompson Everett, Inc. v. National Cable Advertising, L.P., 57 F.3d 1317, 1323 (4th Cir. 1995). Concluding that there are not such "genuinely disputed facts" in the record before the Court and that plaintiff's contentions with respect to governing law are, as has been determined by the courts on numerous occasions, without merit, the Court will grant the pending motion for summary judgment and enter judgment in favor of defendant.
Plaintiff has set forth a multitude of claims with respect to the due process hearing and the resulting determination that the proposed levy was appropriate. These claims will be addressed by the Court seriatim. Citing the provisions of § 6330(c)(1), which requires the appeals officer to "obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met," plaintiff initially complains that the appeals officer failed to "provide plaintiff with `verification from the Secretary' as the law specifically required him to do." As the Court recognized inRennie v. Internal Revenue Service, 216 F. Supp.2d 1078, 1080 (E.D. Ca. 2002), however, "[n]othing in either the statute or the regulation [§ 301.6330-1(e)] requires that the verification be sent to or provided to the taxpayer," the statute requiring only that the appeals officer "obtain verification from the Secretary" concerning compliance with applicable laws and administrative procedures. Beyond that, there is in this case no viable claim calling into question defendant's compliance with either applicable law or administrative procedures.
Nothing in the record casts doubt on the determination that the "return" filed by plaintiff was frivolous.
See also, Tornichio v. United States, 263 F. Supp.2d 1090, 1096 (N.D. Ohio 2002).
Plaintiff next complains that he was not permitted to raise relevant issues at the hearing, citing the refusal of the hearing officer to reveal the "identity and authority of IRS employees who allegedly imposed the frivolous penalty at issue." Claims asserting a right to the identity and authority of individuals determining penalties have, however, been uniformly found to lack merit in the context of due process hearings. Herip v. United States, No. 1:02CV0540, 2002 WL 31002855 at *6 (N.D. Ohio 2002). Similarly, the fact that "the appeals officer refused to identify any regulations that would have required plaintiff to pay the penalty at issue" provides no basis for questioning the validity of the proceeding. As the Court pointed out in Hoffman v. United States, 209 F. Supp.2d 1089, 1094 (W.D. Wash. 2002), "§ 6702(a) provides the statutory authority for assessing the penalty" and a contention that "no Treasury Department regulation requires that plaintiff pay the penalties" is "frivolous and without merit."
See also, Rennie v. Internal Revenue Service, supra at 1082,83; Tornichio v. United States, supra at 1096-97.
Though contending that he "had every right to raise the issue of the `existence' of the `underlying tax liability' (which gave rise to the penalty at issue)," plaintiff cites no authority for such a right, and courts considering this issue in the context of penalties imposed under § 6702 for filing frivolous returns have recognized that "underlying tax liability is not an issue."Hoffman v. United States, supra at 1094.
See also, Cole v. United States, No. 1:02-CV-137, 2002 WL 31495841 at *6 (W.D. Mich. 2002).
Finally, plaintiff contends that he did not receive a "notice and demand with respect to the penalty at issue." As defendant points out in its memorandum, however, such deficiency procedures do not apply when penalties are assessed under § 6702. Moreover, plaintiff did receive the notice of intent to levy and of his right to hearing which set forth the amount owed, including statutory additions, and advised him, among other things, that if he failed to "pay this amount" the IRS "may take your property." Additionally, "[t]he IRS sent Brunty Letter 3176, informing him that the return he had submitted was a frivolous document with no legal basis, and that he could either file a correct return or be assessed a $500.00 penalty under 26 U.S.C. § 6702." This actual notice and demand clearly satisfy any "notice and demand" requirements. Plaintiff was clearly advised of the penalty, a demand for payment was made and a hearing provided for the purpose of contesting the penalty. The fact that he chose to raise a multitude of irrelevant issues rather than address the merits of the penalty and the "frivolousness" of his tax return provides no basis for attacking the validity of the due process hearing or the propriety of a levy based on the § 6702 penalty.
See, Colton v. Gibbs, 902 F.2d 1462, 1464 (9th Cir. 1990); Loze v. United States, No. Civ. A 02-0721, 2003 WL 1547283 at *5 (E.D. La. 2003). See also, 26 U.S.C. § 6703.
See, Loze v. United States, supra at *5.
In accordance with the foregoing, defendant's motion for summary judgment will be granted, plaintiff's "complaint" and this action will be dismissed, and it is so ORDERED.
The Clerk is directed to mail a certified copy of this Memorandum Order to plaintiff and counsel of record.
JUDGMENT ORDER
In accordance with the accompanying Memorandum Order, the Court GRANTS defendant's motion for summary judgment and DISMISSES this action with prejudice.The Clerk is directed to mail a certified copy of this Judgment Order to plaintiff and all counsel of record.