Frivolous Arguments In Collection Due Process Cases

This is the second in a three part series of frivolous tax arguments.

Under Internal Revenue Code Sections 6320 (pertaining to liens) and 6330 (pertaining to levies), the IRS must provide taxpayers notice and an opportunity for an administrative appeals hearing upon the filing of a notice of federal tax lien and prior to levy. Taxpayers have the right to seek judicial review of the IRS’s determination in these proceedings. Internal Revenue Code Section 6330(d). These reviews can extend to the merits of the underlying tax liability, if the taxpayer has not previously received the opportunity for review of the merits, e.g., did not receive a notice of deficiency. IRC Section 6330(c)(2)(B). A face-to-face administrative hearing concerning a taxpayer’s underlying liability will not be granted if the hearing request raises solely frivolous arguments. The Tax Court will impose sanctions pursuant to Section 6673 against taxpayers who seek judicial relief based upon frivolous or groundless positions.

Discussed below are some of the more common frivolous tax arguments raised in collection due process cases.

A. Invalidity of the Assessment

Contention: A tax assessment is invalid because the taxpayer did not get a copy of the Form 23C, the Form 23C was not personally signed by the Secretary of the Treasury, or Form 23C is not a valid record of assessment
Contention: A tax assessment is invalid because the assessment was made from a substitute for return prepared pursuant to section 6020(b), which is not a valid return

B. Invalidity of the Statutory Notice of Deficiency

Contention: A statutory notice of deficiency is invalid because it was not signed by the Secretary of the Treasury or by someone with delegated authority
Contention: A statutory notice of deficiency is invalid because the taxpayer did not file an income tax return

C. Invalidity of Notice of Federal Tax Lien

Contention: A notice of federal tax lien is invalid because it is unsigned or not signed by the Secretary of the Treasury, or because it was filed by someone without delegated authority
Contention: The form or content of a notice of federal tax lien is controlled by or subject to a state or local law, and a notice of federal tax lien that does not comply in form or content with a state or local law is invalid

D. Invalidity of Collection Due Process Notice

Contention: A collection due process notice (Letter 1058, LT-11 or Letter 3172) is invalid because it is not signed by the Secretary or his delegate
Contention: A collection due process notice is invalid because no certificate of assessment is attached

E. Verification Given as Required by I.R.C. § 6330(c)(1)65

Contention: Verification requires the production of certain documents

F. Invalidity of Statutory Notice and Demand

Contention: No notice and demand, as required by I.R.C. § 6303, was ever received by taxpayer
Contention: A notice and demand is invalid because it is not signed, it is not on the correct form (such as Form 17), or because no certificate of assessment is attached

G. Tax Court Authority

Contention: The Tax Court does not have the authority to decide legal issues

H. Challenges to the Authority of IRS Employees

Contention: Revenue Officers are not authorized to seize property in satisfaction of unpaid taxes
Contention: IRS employees lack credentials. For example, they have no pocket commission or the wrong color identification badge

I. Use of Unauthorized Representatives

Contention: Taxpayers are entitled to be represented at hearings, such as collection due process hearings, and in court, by persons without valid powers of attorney
J. No Authorization Under I.R.C. § 7401 to Bring Action

Contention: The Secretary has not authorized an action for the collection of taxes and penalties or the Attorney General has not directed an action be commenced for the collection of taxes and penalties