Unpublished Disposition, 925 F.2d 1470 (9th Cir. 1991)

MEMORANDUM^** 

Barbara Masters appeals pro se the tax court's order granting the Commissioner of Internal Revenue's (CIR) motion to dismiss for failure to state a claim and imposing damages against Masters pursuant to 26 U.S.C. § 6673. The tax court found Masters failed to allege any specific assignments of error in the CIR's calculation of her tax deficiency, as required under Tax Court Rule 34(b) (4) and (5). We have jurisdiction pursuant to 26 U.S.C. § 7482(a). We review de novo, Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988), and affirm the tax court's decision, as well as its imposition of damages. In addition, we award sanctions of $1500 against Masters pursuant to Fed. R. App. P. 38 and 28 U.S.C. § 1912 for bringing a frivolous appeal.

* Merits

In the tax court, Masters had the burden of demonstrating the CIR's deficiency determination was incorrect. Hokanson v. Commissioner, 730 F.2d 1245, 1249 (9th Cir. 1984). Pursuant to Rule 34(b) (4) and (5) of the Tax Court Rules of Practice and Procedure, Masters was required to give clear and concise assignments of each error allegedly committed by the CIR in its determination of her deficiency, and clear and concise statements of the facts upon which she based her assignments of error. 26 U.S.C. § 7453 Tax Ct.R. 34(b) (4) and (5).

Masters failed to allege any specific errors the CIR made in computing the amount of her tax deficiency. Instead, Masters argued that wages are not taxable income, that she is exempt from a direct unapportioned tax because she is a citizen and resident of California, that she is exempt from tax because she is not a "U.S. individual living abroad," that the CIR's failure to provide her with a full administrative hearing prior to issuing the notice of deficiency violated due process, and that the Commissioner did not have authority to send the deficiency notices. Finally, Masters argues on appeal that because she is appearing pro se, her petition should be construed liberally. These arguments all lack merit.

Section 1 of the Internal Revenue Code ("Code") imposes an income tax on the income of every individual who is a citizen or resident of the United States. 26 U.S.C. § 1. Wages are taxable income. Wilcox, 848 F.2d at 1008.

Failing to provide a taxpayer with an administrative fact finding hearing prior to issuing a notice of deficiency does not violate due process. Id. Section 554(a) (1) of the APA provides that the Administrative Procedure Act ("APA") does not apply to matters "subject to a subsequent trial of the law and the facts de novo in a court." 5 U.S.C. § 554(a) (1). Thus, because the tax court reviews de novo the CIR's determination of a deficiency, the APA is not applicable. See id.; Clapp v. Commissioner, 875 F.2d 1396, 1403 (9th Cir. 1989). Further, "no particular form is required for a valid notice of deficiency, ... and the Commissioner need not explain how the deficiencies were determined." Scar v. Commissioner, 814 F.2d 1363, 1367 (9th Cir. 1987) (citation omitted).

Finally, while pro se pleadings are viewed liberally, a pro se petitioner must nevertheless comply with court rules. See Swimmer v. IRS, 811 F.2d 1343, 1345 (9th Cir. 1987). Thus, Masters's arguments are meritless and fail to meet the requirements of Tax Court Rule 34(b) (4) and (5). Accordingly, the tax court did not err in granting the CIR's motion to dismiss for failure to state a claim pursuant to Tax Court Rule 34(b) (4) and (5).

II

Tax Court Sanctions

"The [t]ax [c]ourt may impose a penalty [, not to exceed $5,000,] on a taxpayer ... for bringing an action which is frivolous and groundless." Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1985) (per curiam) (citing 26 U.S.C. § 6673). We review the tax court's imposition of damages pursuant to section 6673 of the Code for abuse of discretion. Id.

Here, the tax court found that Masters's claims were frivolous and filed primarily for delay and awarded the CIR $5,000 in damages pursuant to section 6673 of the Code. Because we agree that Masters's contentions are frivolous, especially in light of the repeated claims she has brought in the past, we find that the tax court did not abuse its discretion by imposing damages.

III

Appellate Sanctions

The CIR requests sanctions against Masters for bringing this appeal. This court has discretion to impose damages against litigants, even pro se, as a sanction for bringing a frivolous appeal. Fed. R. App. P. 38; 28 U.S.C. § 1912; Wilcox, 848 F.2d at 1008-09 ($1,500 sanction imposed on pro se litigant for bringing a frivolous appeal). An appeal is frivolous if the results are obvious or the arguments of error are wholly without merit. Wilcox, 848 F.2d at 1009 (citation omitted). Masters's claims are wholly without merit. Further, Masters has repeatedly brought frivolous arguments before this court and the tax court. See, e.g., Masters v. Commissioner, 919 F.2d 145 (9th Cir. 1990) (Table) (Unpublished Disposition). Accordingly, we impose $1,500 damages as a sanction.

AFFIRMED.