Opinion
13488-21L
03-03-2023
HOWARD R. EDGE & LISA M. EDGE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Mark V. Holmes, Judge
This collection-due-process case is on the March 6, 2023 Dallas, Texas trial calendar. On January 5, 2023, respondent moved for summary judgment. We ordered petitioners to respond. They did so in a letter dated February 14, 2023. This letter included a copy of our pretrial order and our order giving them a deadline to respond to the Commissioner's summary-judgment motion. On these orders the Edges had repeatedly stamped the phrases "I DO NOT ACCEPT THIS OFFER TO CONTRACT and I DO NOT CONSENT TO THESE PROCEEDINGS." At the bottom of several pages is another stamped phrase-"Without Prejudice UCC 1-308"-followed by their signatures and what appear to be their fingerprints. They attached at the end of their response what they labeled "APPENDIX A." This appendix informs us that "after the confiscation of the people's gold in 1933 and after the 'corporate government' forced the currency of the private corporation, the FEDERAL RESERVE on America" the government somehow "lays down its sovereignty and takes on that of a private citizen."
We are unpersuaded, and we will grant respondent's motion. This isn't the Edges' first trip to Tax Court on board such fantastical and time-wasting arguments so we'll also add a penalty under IRC section 6673.
Background
Mr. Edge did not file returns for tax years 1999, 2001, and 2007. Mrs. Edge did not file returns for tax years 2001, 2007, and 2008. The IRS, using the power given it by IRC section 6020(b) prepared substitutes for returns for these tax years. The IRS then assessed the resulting tax. It tried to collect by sending the Edges three notices of federal tax lien filing in November 2019. The Edges timely exercised their right to a collection-due-process (CDP) hearing under section 6320. With the advent of the pandemic, the actual hearing didn't take place until late 2020.
The Edges did not contest the specific amount of tax they owed, nor did they propose a specific alternative to enforced collection. They instead made a large number of tax-protester arguments in a 17-page letter they sent in. These included an assertion that the Code had no "enabling enforcement clause[]," that signatures on the notice of lien were forged, that there is no statute that makes people other than withholding agents liable for the payment of tax, and that as U.S. Citizens who are non-withholding agents only foreign-earned income is taxable.
This is odd, since there are two returns, one for tax year 1999 and one for tax year 2007 that look normal. Markings on them suggest they were faxed to the IRS at the start of 2020. Both are undated. The IRS did not process them, and the Edges do not rely on them to contest the calculation of their tax liability. There are no returns of any sort for tax years 2001 and 2008 anywhere in the record.
The appeals officer who ran their hearing made sure that the required procedures for assessment had been followed. In one of their conversations she explained how assessment and collection worked and what the Appeals Office does and does not do. It did not stop the Edges from moving forward with the arguments that they made.
In the inevitable notices of determination sustaining the lien, the appeals officer concluded:
• the Edges hadn't asked for any alternatives to enforced collection, and wouldn't be eligible anyway because they weren't in compliance with their obligation to file returns for at least tax years 2015 through 2019;
• that they had also not disputed their liabilities directly but made only various frivolous arguments; and that therefore
• she would not recommend the withdraw of the liens against their property.
The Edges appealed by filing a petition with our Court. They again changed tack and unfurled arguments that
• that the CDP hearing "did not provide the legal due process required by law, as Petitioner was not allowed to materially participate in a meaningful way in the hearing;"
• "Petitioner is not the person liable for the tax;" and reiterated that
• "The Liens filed under IRC § 6321 contained forged signatures."
The Edges also made several allegations about improper levies, but this case is only about liens. We need not discuss these additional irrelevant arguments.
Because the Edges haven't challenged their underlying liabilities, our standard of review is abuse of discretion. Estate of Duncan v. Commissioner, 890 F.3d 192, 197 (5th Cir. 2018). We find abuse of discretion when the appeals agent acts "'arbitrarily, capriciously, or without sound basis in fact or law.'" Id. (quoting Vinatieri v. Commissioner, 133 T.C. 392, 400 (2009)). We confine our review to the reasons actually given by the appeals officer in the notices of determination. See, e.g., Antioco v. Commissioner, 105 T.C.M. (CCH) 1234, 1240 (2013); Jones v. Commissioner, 104 T.C.M. (CCH) 364, 369 (2012); Salahuddin v. Commissioner, 103 T.C.M. (CCH) 1764, 1768 (2012); Steere Tank Lines, Inc. v. Interstate Commerce Comm'n., 687 F.2d 104,105-06 (5th Cir. 1982).
Discussion
The Commissioner argues in his motion that the appeals officer got everything right. He points to the record, which does show that she verified the IRS had met the legal and procedural requirements for imposing the lien, adequately discussed the issues that the Edges had raised, and did not abuse her discretion in balancing the need for efficient tax collection against any legitimate concerns that the taxpayer raised that collection be no more intrusive than necessary.
We've looked at the record independently and find no error of any sort in what the appeals officer did or concluded. The new frivolous arguments that the Edges raise: that under the Uniform Commercial Code they can avoid summary judgment against them by not accepting "THIS OFFER TO CONTRACT;" their challenge to the government's status as, well, the government and not a private corporation; and their refusal to consent to proceedings that they themselves brought are all equally frivolous. See, e.g., United States v. Herrington, No. 1511579, 2016 U.S. Dist. LEXIS 122072, at *8 (E.D. Mich. Sept. 9, 2016) (UCC 1-308 assertion "frivolous"); Young v. IRS, 596 F.Supp. 141, 147 (N.D. Ind. 1984) ("the IRS is a validly created governmental agency and not a 'private corporation'"); Texas Learning Tech. Grp. v. Commissioner, 958 F.2d 122, 125 (5th Cir. 1992) (finding that the power to tax is an element of a political subdivision, not of a private corporation); Turner v. Commissioner, 88 T.C.M (CCH) 412, 414 (2004) (affirming that the payment of "Federal income taxes is not voluntary."); and United States v. Sasscer, No. Y-97-3026, 2000 U.S. Dist. LEXIS 13898, at *5 (D.C. Md. Aug. 24, 2000) ("The federal income tax is not voluntary, and a person may not elect to opt out of the federal tax laws by a unilateral act of revocation and recission").
The Edges lived in Texas when they filed their petition, so appellate venue presumptively lies in the Fifth Circuit. See § 7482(b)(1)(A). Though we cite to several of the arguments made, we acknowledge that in the Fifth Circuit, "[w]e perceive no need to refute these arguments with somber reasoning and copious citation or precedent; to do so might suggest that these arguments have some colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
These are also arguments that they did not raise in their pleadings, so we reject them for that reason as well. Lunsford v. Commissioner, 117 T.C. 183, 187 (2001) (need not consider arguments not raised in pleadings or trial memorandum).
We conclude by noting that in 2008 the Edges were in our Court and raised similarly frivolous arguments. The administrative record suggests that they are teachers; they seem to have made a solidly middle-class income.
They need to stop doing this.
We sanctioned them $1000 under section 6673(a) the last time that they made took "frivolous or groundless" positions. Taking into consideration their income, their experience, and their status as section 6673 recidivists, we will exercise our discretion and double the sanction this time.
It is therefore
ORDERED that respondent's first amended motion for summary judgment, filed January 5, 2023, is granted. It is also
ORDERED and DECIDED that respondent may proceed with the collection of petitioner Howard Edge's federal income tax liability for the tax years 1999 and 2007, as described in the Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, dated March 1, 2021. It is also
ORDERED and DECIDED that respondent may proceed with the collection of petitioner Lisa Edge's federal income tax liability for the tax year 2001, as described in the Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, dated March 1, 2021. It is also
ORDERED and DECIDED that respondent may proceed with the collection of petitioner Howard Edge's federal income tax liability for the tax year 2001, as described in the Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, dated March 1, 2021. It is also
ORDERED and DECIDED that respondent may proceed with the collection of petitioner Lisa Edge's federal income tax liability for the tax years 2007 and 2008, as described in the Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, dated March 1, 2021.
It is also
DECIDED that petitioners are liable for a $2,000 section 6673(a) penalty.