Opinion
CV-S-02-1296-ECR-RJJ
June 2, 2003
ORDER
The Government moves the court (#6) for summary judgment. Plaintiff (#8) has opposed the motion, and the Government has filed a reply (#9).
Plaintiff's opposition to the motion is based essentially on two issues, as to which plaintiff argues genuine issues of material fact remain:
(1) That the Notice of Determination states that Plaintiff offered no collection alternatives when in fact plaintiff did offer a collection alternative, i.e. that plaintiff offered to pay the civil penalty assessed in full if the Appeals Officer would identify the statute of 26 U.S.C. which made plaintiff liable. The Notice of Determination states that the Appeals Officer tried to raise collection alternatives with plaintiff; that plaintiff offered to write a check to fully pay his liability if it could be proven that he owed taxes; however, as plaintiff believes wages are not taxable income further discussion was fruitless and the hearing was terminated.
The fact that plaintiff made such offer is not disputed. There is no genuine issue of material fact. One of the issues which can be raised at the collection due process hearing is "offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise." 26 U.S.C. § 6330(c)(2)(A)(iii).
The officers were under no obligation at the hearing to identify the statute which made plaintiff liable. The offer was not one which called for a response or acceptance by the officers. Needless to say, however, the relevant issue concerning collection alternatives was a topic considered at the hearing. Plaintiff's proposed alternative was not acceptable. The officers did rot have to prove plaintiff was liable for the civil penalties in question.
The offer was not an appropriate collection alternative. (2) Plaintiff's other principal claim is that the Appeals Officer failed to obtain verification from the Secretary of the Treasury that the requirements of any applicable law or administrative procedure have been met. 26 U.S.C. § 6330(c) requires that the appeals officer shall at the hearing obtain verification from, the Secretary that the requirements of any applicable law or administrative procedure have been met. The IRS interprets this requirement to be met by reliance by the Appeals Officer on IRS records which demonstrate the applicable law and administrative procedures have been followed rather than by requiring a written certificate to have been received from the Secretary himself certifying to these facts. In light of the delegation of duties from the Secretary on down within the Department of Treasury, this appears to be a reasonable reading of this requirement. Attachments to the Notice of Determination recite that the "Secretary has provided sufficient verification that all legal and procedural. requirements have been met. Appeals has reviewed computer transcripts verifying "the assessment." The Secretary through delegation of duties and authority acts through the subordinate officers and employees of the Treasury Department who may rely on its official records. We conclude that the IRS has made a sufficient showing that this requirement has been met.
In his opposition to the motion for summary judgment, plaintiff also raises the following additional issues:
(a) That the United States Tax Court is not a court of law and, therefore, its decisions have no legal effect. This contention is without merit. This court may and does appropriately rely on decisions of the Tax Court.
(b) That plaintiff is not liable for income taxes on his earnings. This contention is patently without merit. 26 U.S.C. § 61(a) defines gross income as all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
Certainly plaintiff's earnings fall within that definition. Plaintiff endeavors to draw a distinction between "income" and "gross income". There is a distinction between the two terms but it does not aid plaintiff's contention. If gross income is taxable then income or net income are taxable. Net income in merely gross income minus allowable exclusions and deductions. "Gross income" necessarily includes "income". Plaintiff's wages are taxabable.
(c) Plaintiff next claims the Appeals Officers failed to produce any assessment or notice and demand for the civil penalties assessed. These requirements do not apply to the assessment of civil penalties (which occurred here) for filing a frivolous tax return. The IRS is not required to give a taxpayer notice before assessing a civil penalty for filing a frivolous tax return pursuant to 26 U.S.C. § 6702. Colton v. Gibbs, 902 F.2d 1462, 1464 (9th Cir. 1990), 26 U.S.C. § 6703(b). Plaintiff's tax returns in issue clearly fit the definition of frivolous tax returns as defined by 26 U.S.C. § 6702(a)(1). In any event, plaintiff received notice of the civil penalty assessed. Plaintiff has attached to his complain; a copy of the notice of intent to levy and of plaintiff's right a collection due process hearing which he received and responded to by requesting the hearing.
(d) Plaintiff claims violation of his rights because audio recording of the hearing was not permitted. Neither the applicable statutes, nor the regulations require IRS Appeals Officers to permit audio recording of such a hearing.
(e) Plaintiff alleges he was deprived of his right to an impartial decision maker. 26 U.S.C. § 6330(b)(3) defines an "impartial officer" who is to conduct the hearing, as an officer or employee who has had no prior involvement with respect to the unpaid tax. The Appeals Officers who conducted the hearing here met that requirement. There is no showing that the final decision maker, the Appeals Team Manager, was not an impartial decision maker. The fact she was an employee c)f the IRS does not lead to the conclusion she was not impartial.
(f) Plaintiff claims his due process; rights were damaged by reason of the Government's failure to disclose evidence at the hearing. The statute, 26 U.S.C. § 6330, which provides for the collection due process hearing does not require production of evidence. Rather, the issues are whether the laws and regulations have been followed, relevant issues concerning the unpaid tax and proposed levy including appropriate spousal defenses, challenges to the appropriateness of the collection actions, offers of collection alternatives, challenges to existence or amount the underlying tax liability if the person did not receive any statutory notice of deficiency for such tax liability, or did not have an opportunity to dispute such tax liability.
Due process as applicable here only requires notice of the hearing, the hearing with an opportunity to be heard, and to present evidence, and an impartial decision maker. These requirements of due process were met here.
IT IS, THEREFORE, HEREBY ORDERED that the Government's motion for summary judgment (#6) is GRANTED . The Clerk shall enter judgment accordingly.