The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge
This matter is before the Court on cross motions for summary judgment. IRS's Motion for Summary Affirmance (d/e 11) (IRS's Motion); Plaintiff's Motion for Summary Judgment (d/e 16). The Internal Revenue Service (IRS) seeks affirmance of the Appeals Office's decision upholding the IRS's assessment of a $500.00 frivolous return penalty against Plaintiff Grahame Priest for filing a frivolous tax return. In its Motion, the IRS further asks the Court to dismiss Priest's remaining substantive claims for lack of subject matter jurisdiction. Plaintiff Priest asks the Court to invalidate the Appeals Office's Notice of Determination finding the imposition of the civil penalty proper. Plaintiff has filed the instant Complaint (d/e 1) seeking judicial review of the Notice of Determination issued by the Appeals Office. He argues that this Court should invalidate the Notice of Determination because the Appeals Office failed to provide him with the requisite Collection Due Process (CDP) hearing authorized under 26 U.S.C. §§ 6320 and 6330. Plaintiff further requests in his Complaint an order canceling all levy and lien and actions against him, a tax refund of $36,000.00 for the 2000 tax year, and an award of litigation costs. For the reasons set forth below, the IRS's Motion for Summary Affirmance concerning the Notice of Determination is ALLOWED, and Plaintiff Priest's Motion for Summary Judgment is DENIED. Plaintiff's remaining substantive claims are dismissed for lack of subject matter jurisdiction. Plaintiff's request for litigation costs is DENIED. All pending motions are denied as moot. This case is closed.
In October 2001, Plaintiff Grahame and his wife, Leonny Priest, filed their 2000 federal income tax return, reporting a gross income of $258,264.00 and a total tax liability of $75,635.00. Sometime in February 2002, they amended their 2000 tax return by filing an Amended Federal Income Tax Return on Form 1040X. See IRS's Motion, Ex. 2, 1040X Amended Tax Return. In this Amended Return, Priest attempted to reduce his tax liability by putting all "zeros" on lines 1 through 10 of the 1040X form, the lines provided for "Income and Deductions," and explained his reason for doing so as follows: "Due to ignorance, we reported sources of income as being 'income' itself when in fact, we had no statutory income to report. Income overstated on original return." Id. The Amended Return recited that Priest had paid $36,000.00 of the total tax liability in the original return. In his Amended Return, Priest accordingly sought a refund of $36,000.00. By letters dated May 2, 9, and 23, 2003, the IRS informed Priest that the Amended Return he had filed was frivolous and lacked any legal basis.*fn1 The letters also informed Priest of the potential consequences of filing a frivolous tax return; the letters stated that if Priest failed to correct his Amended Return within 30 days from the date of the letters, he would be subject to a civil penalty for filing a frivolous tax return under 26 U.S.C. § 6702. IRS's Motion, Ex. 3, IRS letter dated 5/2/03; IRS's Motion, Ex. 4, IRS letter dated 5/9/03; IRS's Motion, Ex. 5, IRS letter dated 5/23/03.
According to the IRS, in a letter dated June 2, 2003, Priest responded to the IRS's letters by again making frivolous and absurd arguments. IRS's Motion, Ex. 6, Priest's letter dated 6/2/03. Priest neither corrected nor withdrew the 2000 Amended Tax Return. The IRS, therefore, assessed a $500.00 civil penalty against Priest pursuant to § 6702. On October 13, 2004, in accordance with procedures set forth in § 6330, the IRS sent Priest, by certified mail, a "Final Notice of Intent to Levy and Notice of Your Right to a Hearing" for Priest's unpaid frivolous return penalty. IRS's Motion, Ex. 8, Notice of Intent to Levy dated 10/13/04. On October 15, 2004, the IRS sent Priest, by certified mail, a "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320" for Priest's unpaid frivolous return penalty. IRS's Motion, Ex. 9, Notice of Federal Tax Lien Filing dated 10/15/04.
Priest responded to such Notices by a letter dated November 8, 2004. In this three-page letter, Priest stated in part that "the IRS has no legal authority to seize (levy) our 'paycheck, bank account, auto or other property if (the IRS) does not receive payment in full' as it threatens to do in your letter." IRS's Motion, Ex. 10, Priest's letter dated 11/8/04. Also in the letter, Priest raised the following questions:
1. Is the paying of Federal income tax voluntary?
2. If not, which section of the Internal Revenue Code (with the full force and effect of Congress) makes the payment of Federal income taxes mandatory?
3. Which section of the Internal Revenue Code establishes an income tax 'liability', as for example, Code Sections 4401, 5005, and 5703 do with respect to wagering, alcohol, and tobacco taxes?
4. Which legislative regulations are claimed to implement Code Sections 6212 and 6213, since I have not been able to locate them?
5. What is the "text of any written determination and any background file documents relating to the determination" that our "zero" return was not correct as provided in 26 USC 6110?
6. Since Sections 6001 and 6011 (as referred to in the Privacy Act Notice that is contained in the 1040 booklet) only direct us to comply with Treasury regulations, which Treasury regulation imposes upon us a legal obligation to treat seriously the "changes/adjustments" you have proposed to our tax return?
7. What statute(s) and implementing regulations(s) allowed you to "change/adjust/figure" our tax return?
8. Where is the Delegation Order from the Secretary of the Treasury authorizing you to act on his behalf?
On November 19, 2004, Priest subsequently requested a CDP hearing pursuant to §§ 6320 and 6330. Priest listed the following ten reasons why he did not agree with the IRS's assessment of the penalty fee: (1) failure of IRS to establish a tax liability or requirement to pay, (2) failure of IRS to follow procedures, (3) illegal changes to tax return by IRS, (4) failure of IRS to fulfill its mission, (5) threats by the IRS to steal Priest's property without Court authority, (6) no delegation authority from Secretary of the Treasury, (7) the tax system is based on ...