Although respondent does not ask the Court to impose a penalty on petitioners under section 6673(a)(1), the Court will sua sponte determine whether to impose such a penalty. Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court, inter alia, that a proceeding before it was instituted or maintained primarily for delay, sec. 6673(a)(1)(A), or that the taxpayers' position in such a proceeding is frivolous or groundless, sec. 6673(a)(1)(B).

In Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576, 581 (2000), we issued an unequivocal warning to taxpayers concerning the imposition of a penalty under section 6673(a)(1) on those taxpayers who abuse the protections afforded by sections 6320 and 6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions. The Court's May 29, 2003 Order reminded petitioners about section 6673(a)(1). Before the trial in this case began, the Court again reminded petitioners about section 6673(a)(1) and indicated that if petitioners advanced frivolous and/or groundless arguments at trial, the Court would impose a penalty on them under that section. During the trial, upon questioning by the Court, Mr. Frey indicated that petitioners continue to adhere to the statements, contentions, arguments, requests, and questions set forth in petitioners' attachment to petitioners' 1996 Form 1040 and petitioners attachment to petitioners' 1997 Form 1040A.

On the record before us, we find that petitioners have advanced, we believe primarily for delay, frivolous and/or groundless statements, contentions, arguments, requests, and questions with respect to their taxable years 1996, 1997, and 1999, thereby causing the Court to waste its limited resources in addressing such matters. As a result of petitioners' position and actions in the instant case with respect to those taxable years, we shall impose a penalty on them pursuant to section 6673(a)(1) in the amount of $4,000.

We have considered all of petitioners' statements, contentions, arguments, requests, and questions that are not discussed herein, and we find them to be without merit and/or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.

¹ All section references are to the Internal Revenue Code in effect at all relevant times.

² With respect to petitioners' taxable year 1996, the transcripts of account that a representative of respondent prepared relating to that year reflected that respondent issued a notice of deficiency to petitioners with respect to their taxable year 1996. With respect to petitioners' taxable year 1997, the transcripts of account that a representative of respondent prepared relating to that year did not reflect that respondent issued a notice of deficiency to petitioners with respect to their taxable year 1997. However, the revenue agent who testified on behalf of respondent at the trial in this case indicated that transcripts of account do not necessarily reflect such information. Indeed, although the record in the instant case contains a copy of the notice of deficiency that respondent issued with respect to petitioners' taxable year 1999, the transcripts of account that a representative of respondent prepared relating to that year did not reflect that respondent issued such a notice to petitioners. The notice of determination with respect to petitioners' taxable years 1996, 1997, and 1999, as well as the settlement officer's history sheet or case activity records relating to those years, reflected that respondent issued respective notices of deficiency with respect to those years. In this connection, it is noteworthy that, in petitioners' attachment to petitioners' 1996 Form 12153 and petitioners' attachment to petitioners' 1997 and 1999 Form 12153, as well as in various letters described above that petitioners sent to the IRS with respect to their taxable years 1996, 1997, and 1999, petitioners did not complain that they did not receive notices of deficiency with respect to 1996, 1997, and 1999. Instead, they argued in those documents that they did not receive valid notices of deficiency for any of those years because the notices of deficiency that they received were not signed by the Commissioner of Internal Revenue (Commissioner) or a properly authorized delegate of the Commissioner. Finally, we note that we did not find credible Mr. Frey's testimony that he did not receive notices of deficiency with respect to 1996, 1997, and 1999. Such testimony is inconsistent with other testimony of Mr. Frey that he may have received such notices and is contrary to other evidence in the record.

³ We also find petitioners' attachment to their 1996 Form 1040 and petitioners' attachment to their 1997 Form 1040A to be frivolous and/or groundless.

⁴ See Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195.

⁵ Petitioners did not argue at their Appeals Office hearing that the U.S. Bankruptcy Court discharged petitioners' unpaid liability for 1999.

⁶ We have recently observed: "The majority of courts, including this Court, have held that, generally, a return that contains only zeros is not a valid return." Cabirac v. Commissioner [Dec. 55,124], 120 T.C. 163, 169 (2003).

                                    Unpaid    Additional           

                                  Amount from    Penalty               

                                    Prior        and         Amount 

  Form Number        Tax Period    Notices     Interest     You Owe  

  1040............   
12/31/1989
   $11,373.42    $13,944.62 $25,318.04

  1040............   
12/31/1990
     7,542.93     9,628.18   17,171.11

  1040............   
12/31/1991
     525.47      730.83       1,256.30

  1040............   
12/31/1995
   8,266.10    2,155.31      10,421.41

  1040............   
12/31/1996
   5,875.85    1,739.85       7,615.70

  1040............   
12/31/1997
   7,742.80    2,389.62      10,132.42

  1040............   
12/31/1998
   11,649.53    2,042.94     13,692.47

  CIVPEN..........   
12/31/1999
      500.00       46.01        546.01

On or about September 24, 2001 , in response to the notice of intent to levy, petitioners filed Form 12153, Request for a Collection Due Process Hearing (Form 12153), and requested a hearing with respondent's Appeals Office (Appeals Office) with respect to petitioners' taxable year 1991, petitioners' unpaid liabilities for 1995, 1996, 1997, and 1998, and the frivolous return penalty under section 6702 with respect to petitioners' taxable year 1999. In that form, petitioners stated that they intended to make an audio recording of their Appeals Office hearing. Petitioners attached a document to their Form 12153 (petitioners' attachment to Form 12153) that contained statements, contentions, arguments, and requests that the Court finds to be frivolous and/or groundless.⁵

In response to petitioners' Form 12153, a settlement officer with the Appeals Office (settlement officer) sent a letter dated July 23, 2002 , which stated in pertinent part:

I have scheduled the hearing you requested on this case for the date and time shown above [August 29, 2002]. ***

*******

I have requested certified transcripts showing the assessments, and plan to have copies for you at the hearing. *** Further, no audio or stenographic recordings are allowed on Appeals cases effective as of May 2, 2002 and forward. Therefore you [sic] request to tape record and/or bring a court reporter *** is denied.

On August 29, 2002 , a settlement officer held an Appeals Office hearing with petitioner George R. Kemper (Mr. Kemper) with respect to the notice of intent to levy.⁶ At the Appeals Office hearing, the settlement officer gave Mr. Kemper Form 4340, Certificate of Assessments, Payments, and Other Specified Matters (Form 4340), with respect to each of petitioners' taxable years 1995, 1996, 1997, and 1998.

On September 26, 2002 , the Appeals Office issued a notice of determination concerning collection action(s) under section 6320 and/or 6330 (notice of determination) to Mr. Kemper and a separate notice of determination to Ms. Kemper. (We shall refer collectively to those two notices as petitioners' notices of determination.) An attachment to each such notice of determination stated in pertinent part:

Verification of Legal and Procedural Requirements

The Secretary has provided sufficient verification that all legal and procedural requirements have been met. Appeals has reviewed computer transcripts verifying the assessment.

Assessments were made and the taxpayer was issued notice and demand letters by regular mail, to the taxpayer's last known address, as required under IRC 6303. He neglected or refused to pay. The notices required under IRC 6331(d) and IRC 6330 were combined in Letter 1058, dated 08/27/2001 , which was mailed certified to the taxpayer's last known address. The taxpayer responded with Form 12153, Request for a Collection Due Process Hearing, which was received and date stamped 09/28/2001 .

The taxpayer appeared in person for his Collection Due Process hearing, his spouse chose not to come to the hearing. Settlement Officer Mike Freitag conducted the hearing. Settlement Officer Donna Fisher was also in attendance.

At the hearing the taxpayer was asked if he had any recording devices. He said he did not have one. He was again reminded that no recording of Appeals' hearings is allowed.

*******

Issues Raised by the Taxpayer

*******

The IRS *** sent statutory notices of deficiency dated May 21, 1999 to the taxpayers at their last known address asserting a deficiency for the taxable years 1995, 1996, and 1997. The taxpayers received the notices of deficiency in time to petition the Tax Court for a redetermination of the deficiencies. They did not file a timely petition to Tax Court, but responded to the notices with a letter dated 08/18/1999 with their same non-filer arguments. The tax was properly assessed.

The IRS *** sent statutory notices of deficiency dated 04/07/2000 to the taxpayers at their last known address asserting a deficiency for the taxable year 1998. The taxpayers received the notices of deficiency in time to petition the Tax Court for a redetermination of the deficiencies. They did not file a timely petition to Tax Court ***

After being shown one of the notices of deficiencies, he stated he did receive them. Appeals then stated that as he received those notices and failed to petition the tax court, he could not argue the liability at the hearing.

*******

They filed bankruptcy on 01/31/2002 , and the bankruptcy was closed 06/12/2002 . *** Income tax liabilities for 1989, 1990, and 1991 are dischargeable per the Bankruptcy Code rules.

When the taxpayers were mailed Letter 1058, Final Notice-Notice of Intent to Levy and Notice of Your Right to a Hearing, the taxpayers responded with Form 12153, attaching several pages of non-filer arguments.

At the hearing the taxpayer was explained the Appeals process and he stated that he had been through several hearings before and that they were a waste of time.

At the hearing Appeals provided the following documents:

a) A copy of the memorandum of 5/2/02 stating audio and stenographic recordings of Appeals cases will no longer be allowed;

b) Copies of the form 2866 to which the forms 4340, Certificate of Assessment, are annexed for the period in dispute;

c) A copy of the pamphlet "Why do I have to Pay Taxes";

d) A copy of "The Truth About Frivolous Tax Arguments";

e) A list of I.R.C. code sections defining income, who must file, etc.;

When Appeals tried to explain that the court could impose sanctions, he stated, "that no court case was like his." When Appeals again explained that sanctions could indeed be imposed for the same types of arguments the taxpayer was raising, he didn't say anything.

The taxpayer was asked if he were interested in collection alternatives such as an offer in compromise, or an installment agreement, and was reminded that all returns due to date must be appropriately filed for the offer to be considered, or for an installment agreement, but he is not in filing compliance and was unwilling to discuss collection alternatives. When asked if all returns had been filed, he replied that he filed what he felt were appropriate returns.

The taxpayer raised no non-frivolous issues. The information previously submitted by the taxpayers was reviewed, and in that material Karen Kemper raised no non-filer issues.

Balancing the Need for Efficient Collection with Taxpayer Concerns

The requirements of all applicable laws and administrative procedures have been met. The taxpayers received their required notices. At the hearing, Appeals raised collection alternatives with George Kemper, but he was not interested. Given the taxpayers' continued non-compliance, the government should be allowed to proceed with its proposed enforcement action, its intent to levy on tax periods 1995, 1996, 1997 and 1998. Lacking the taxpayers' cooperation, the proposed collection action balances the need for efficient collection with the taxpayer's concern that any collection action be no more intrusive than necessary. [Reproduced literally]

On October 29, 2002 , petitioners filed a petition with the Court for review of petitioners' notices of determination only insofar as those notices relate to petitioners' unpaid liabilities for 1995, 1996, 1997, and 1998. Except for an argument under section 7521(a)(1), the petition contains statements, contentions, arguments, and questions that the Court finds to be frivolous and/or groundless.⁷ With respect to section 7521(a)(1), petitioners allege in the petition that the Appeals Office refused to allow them to make an audio recording of the Appeals Office hearing held on August 29, 2002 , and that that refusal was improper under that section.

Discussion

The Court may grant summary judgment where there is no genuine issue of material fact and a decision may be rendered as a matter of law.⁸ Rule 121(b); Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994). We conclude that there are no genuine issues of material fact regarding the questions raised in respondent's motion.

Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review the determination of the Commissioner of Internal Revenue for abuse of discretion. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181-182 (2000).

As was true of petitioners' respective attachments to their 1995 joint return, their 1996 joint return, and their 1997 joint return, petitioners' attachment to Form 12153, and petitioners' petition except for an argument under section 7521(a)(1), petitioners' response to respondent's motion (petitioners' response) contains statements, contentions, and arguments that the Court finds to be frivolous and/or groundless.⁹

We turn to petitioners' argument under section 7521(a)(1) that the refusal by the Appeals Office to permit petitioners to make an audio recording of the Appeals Office hearing held on August 29, 2002 , was improper. Throughout the period commencing with petitioners' filing their 1995 joint return with respondent and ending with their filing petitioners' response with the Court, petitioners have made statements and requests and advanced contentions, arguments, and questions that the Court has found to be frivolous and/or groundless. Consequently, even though we held in Keene v. Commissioner [Dec. 55,213], 121 T.C. --(2003), that section 7521(a)(1) requires the Appeals Office to allow a taxpayer to make an audio recording of an Appeals Office hearing held pursuant to section 6330(b), we conclude that (1) it is not necessary and will not be productive to remand this case to the Appeals Office for another hearing under section 6330(b) in order to allow petitioners to make such an audio recording, see Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 189 (2001), and (2) it is not necessary or appropriate to reject respondent's determination to proceed with the collection action as determined in the notices of determination with respect to petitioners' unpaid liabilities for taxable years 1995, 1996, 1997, and 1998, see id.

Based upon our examination of the entire record before us, we find that respondent did not abuse respondent's discretion in determining to proceed with the collection action as determined in the notices of determination with respect to petitioners' unpaid liabilities for taxable years 1995, 1996, 1997, and 1998.

In respondent's motion, respondent requests that the Court require petitioners to pay a penalty to the United States pursuant to section 6673(a)(1). Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court, inter alia, that a proceeding before it was instituted or maintained primarily for delay, sec. 6673(a)(1)(A), or that the taxpayer's position in such a proceeding is frivolous or groundless, sec. 6673(a)(1)(B).

In Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576, 581 (2000), we issued an unequivocal warning to taxpayers concerning the imposition of a penalty under section 6673(a) on those taxpayers who abuse the protections afforded by sections 6320 and 6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions.

In the instant case, petitioners advance, we believe primarily for delay, frivolous and/or groundless contentions, arguments, requests, and questions, thereby causing the Court to waste its limited resources. We shall impose a penalty on petitioners pursuant to section 6673(a)(1) in the amount of $8,500.

On the record before us, we shall grant respondent's motion.

To reflect the foregoing,

An order granting respondent's motion and decision will be entered for respondent.

¹ All section references are to the Internal Revenue Code in effect at all relevant times. All Rule references are to the Tax Court Rules of Practice and Procedure.

² Petitioners' attachment to their 1995 joint return is very similar to the documents that certain other taxpayers with cases in the Court attached to their tax returns. See, e.g., Copeland v. Commissioner [Dec. 55,052(M)], T.C. Memo. 2003-46; Smith v. Commissioner [Dec. 55,051(M)], T.C. Memo. 2003-45.

³ Petitioners' attachment to their 1996 joint return is very similar to the documents that certain other taxpayers with cases in the Court attached to their tax returns. See, e.g., Copeland v. Commissioner, supra; Smith v. Commissioner, supra.

⁴ Petitioners' attachment to their 1997 joint return is very similar to the documents that certain other taxpayers with cases in the Court attached to their tax returns. See, e.g., Copeland v. Commissioner, supra; Smith v. Commissioner, supra.

⁵ Petitioners' attachment to Form 12153 contained statements, contentions, arguments, and requests that are very similar to the statements, contentions, arguments, and requests contained in the attachments to Forms 12153 filed with the Internal Revenue Service by certain other taxpayers with cases in the Court. See, e.g., Flathers v. Commissioner [Dec. 55,067(M)], T.C. Memo. 2003-60.

⁶ Petitioner Karen S. Kemper (Ms. Kemper) did not appear at the Appeals Office hearing held on Aug. 29, 2002.

⁷ The frivolous and/or groundless statements, contentions, arguments, and questions in petitioners' petition are very similar to the frivolous and/or groundless statements, contentions, arguments, and questions in petitions filed by certain other taxpayers with cases in the Court. See, e.g., Keown v. Commissioner [Dec. 55,077(M)], T.C. Memo. 2003-69.

⁸ The only matters raised in petitioners' petition and the only questions raised in respondent's motion relate to petitioners' unpaid liabilities for 1995, 1996, 1997, and 1998 over which we have jurisdiction. Neither the petition nor respondent's motion relates to the frivolous return penalty under sec. 6702 regarding petitioners' taxable year 1999 over which we do not have jurisdiction, Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 328-329 (2000), or to petitioners' taxable years 1989, 1990, and 1991. Consequently, our discussion hereinafter is limited to petitioners' unpaid liabilities for 1995, 1996, 1997, and 1998.

⁹ The frivolous and/or groundless statements, contentions, and arguments in petitioners' response are similar to the types of frivolous and/or groundless statements, contentions, and arguments in responses by certain other taxpayers with cases in the Court to motions for summary judgment and to impose a penalty under sec. 6673 filed by the Commissioner of Internal Revenue in such other cases. See, e.g., Smith v. Commissioner [Dec. 55,051(M)], T.C. Memo. 2003-45.

Although not altogether clear, petitioners' response may also be raising the argument under sec. 7521(a) advanced in the petition that respondent's refusal to allow petitioners to make an audio recording of the Appeals Office hearing held on Aug. 29, 2002, was improper.

[2004-2 USTC ¶50,297]George E. Boyd, Plaintiff v. United States of America , Defendant.

U.S. District Court, Dist. N.M. ; CIV 03-250 JB/RHS, May 3, 2004 .

[ Code Secs. 6330 and 7521]

Internal Revenue Service: Collection Due Process: Hearing procedure: Audio recording, right to make. --

The district court rejected a taxpayer's argument that, under Code Sec. 7521, he had a right to make an audio recording of his Collection Due Process (CDP) hearing. This ruling rejected the rationale of the Tax Court in C.D. Keene, Dec. 55,213 (2003). The court found the dissent in Keene to be more persuasive with its strict interpretation of the Code. In addition, the taxpayer's refusal to participate in the CDP hearing when the IRS refused to allow an audio recording was a valid waiver of his rights to hearing. Finally, there were no errors in procedure that would necessitate the case being remanded to the IRS, especially when the taxpayer conceded he would only be arguing the same frivolous arguments he had raised in his written request for the CDP hearing.

George E. Boyd, pro se. David Iglesias, United States Attorney, Christopher R. Egan, Department of Justice, for defendant.

MEMORANDUM OPINION AND ORDER

BROWNING, District Judge: THIS MATTER comes before the Court on: (i) the Plaintiff's Motion for Summary Judgment, filed January 5, 2004 (Doc. 10); (ii) United States' Motion for Summary Judgment, filed January 16, 2004 (Doc. 15); and (iii) Plaintiff's Motion to Strike United States' 'Supplement To' Its Motion for Summary Judgment, or Alternatively to Allow Plaintiff to File a Surreply, filed February 27, 2004 (Doc. 21). The primary issues are: (i) whether IRS Appeals improperly prohibited Plaintiff George E. Boyd from making an audio recording of his collection due process hearing; and (ii) if so, whether that error was harmless. Because the Court finds that Boyd was not entitled to make an audio recording of his hearing and that he waived his right to an in-person hearing, the Court will grant the United States ' motion and enter summary judgment against Boyd. The Court will deny Boyd's motions.

FACTUAL AND PROCEDURAL BACKGROUND

This case involves Boyd's appeal from the United States ' administrative Collection Due Process ("CDP") decision.

IRS Form 4340 certified transcripts confirm that, on February 21, 2000, the United States, through the Internal Revenue Service's Albuquerque Office, assessed George Boyd with a $500 penalty under 26 U.S.C. §6682 for filing false withholding information. See IRS Form 4340 Certificate of Assessments, Payments, and Other Specified Matters (Account Status Date: April 30, 2003). On the same date, the IRS issued Boyd a Notice of Balance Due. See id. Boyd refused to pay this penalty voluntarily, so the IRS issued him a Notice of Intent to Levy on May 31, 2002. See id. Boyd received this notice on June 5, 2002 and responded to it by requesting a due process hearing on June 27, 2002. See IRS Appeals Notice of Determination (January 30, 2003); IRS Form 4340 Certificate of Assessments, Payments, and Other Specified Matters; Request for Collection Due Process Hearing & Letter (received July 5, 2002). In his hearing request, Boyd argues that he was not properly assessed or noticed. See Request for Collection Due Process Hearing & Letter.

Section 6330 requires the IRS to hold a hearing before issuing a Determination Notice. IRS Appeals received Boyd's hearing request and scheduled a hearing with him for January 9, 2003. See Hearing Scheduling Letter from Joella Apodaca, IRS Appeals Settlement Officer, to George Boyd (dated Dec. 10, 2002). The IRS Appeals held one hearing to review Boyd's withholding penalty and income tax assessments. In a letter scheduling this hearing, IRS Appeals informed Boyd that he could bring a witness to the hearing, but he would not allowed to make an audio recording of the hearing. See id. Despite this recording prohibition, Boyd appeared at the hearing and demanded that he be allowed to record it. See IRS Appeals Notice of Determination. When IRS Appeals declined, Boyd refused to participate in the hearing. See id. Boyd contends that the IRS refused to conduct any hearing because he insisted on his right to make an audio recording of it. See Declaration of George Boyd ¶2, at 1 (executed December 31, 2003). The entire encounter lasted a total of 30-45 seconds before the IRS terminated the meeting. See id.

IRS Appeals reviewed transcripts to confirm that the IRS had complied with all collection and assessment procedures, see IRS Appeals Notice of Determination, and determined against Boyd after reviewing his arguments from his CDP requests, see Request for Collection Due Process Hearing & Letter, and other, previous letters, see, e.g., Letter from Boyd to the IRS (received August 6, 2000). On January 30, 2003, the IRS issued a Notice of Determination under 26 U.S.C. §6330 regarding tax penalty made against Boyd under 26 U.S.C. §6682 (false withholding information). See Boyd Decl. ¶1, at 1.

Boyd appealed the income tax portion of this case to the Tax Court, and the Tax Court reviewed the same IRS Appeals hearing that is at issue in this case. Like in this case, Boyd argued that his CDP hearing should be remanded because IRS Appeals prohibited recording. The Tax Court held that "it is not necessary, and would not be productive, to remand this case to the Appeals Office." Boyd v. Commissioner, Transcript of Oral Findings of Fact and Opinion at 13 (T.C., December 3, 2003). In his early letters, Boyd argued that the Internal Revenue Code does not tax the wages of United States citizens. See, e.g., Protest Letter from George Boyd to Deborah S. Decker, IRS Service Center Director; Charles O. Rossotti, IRS Commissioner; and Lawrence H. Summers, Treasury Secretary (August 3, 2002).

Boyd now appeals this IRS Appeals determination and asks the Court to remand his CDP action back to the IRS Appeals for a recorded hearing. The United States filed its Answer to Boyd's Complaint in mid-May 2003, specifically denying some of the administrative hearing errors alleged in the complaint, but admitting that no hearing ever occurred. Although this matter is for review of an administrative decision, there is no copy, certified or otherwise, of the administrative record --if any exists --for the Court's review.

In the Initial Pre-Trial Report, both parties agreed discovery was unnecessary. The Court set January 2, 2004 as the deadline for pretrial motions. Pursuant to rule 56(c) of the Federal Rules of Civil Procedure, Boyd moves the Court to grant judgment in his favor, vacating the United States ' administrative decision. The United States opposes Boyd's motion for summary judgment and has filed its own motion for summary judgment.

LEGAL ANALYSIS

I. THE COURT HAS JURISDICTION OVER THE MATTER.

Pursuant to statute, the Court has jurisdiction to review the administrative decision relating to a CDP hearing. The Complaint alleges jurisdiction pursuant to 28 U.S.C. §1331 (federal question), 26 U.S.C. §6330(d)(1) (collection due process appeal), and 5 U.S.C. §§701-706 (review of administrative decisions). The United States admits in its Answer the existence of this Court's jurisdiction. See Answer ¶1, at 1, filed May 19, 2003 (Doc. 3). Because this action pertains to federal law, a federal question exists. See 28 U.S.C. §1331. Further, the Court has jurisdiction pursuant to 26 U.S.C. §6330(d)(1). This statute, part of the IRS Restructuring Act of 1998, states a person may appeal a determination from a CDP hearing to the district court if the Tax Court does not have jurisdiction over the underlying tax liability. The Tax Court only has jurisdiction specifically granted to it and does not have jurisdiction over penalties under 26 U.S.C. §6682.

Finally, this is a review of an administrative decisions under the Administrative Procedures Act ("APA"). 5 U.S.C. §704 states "agency action made reviewable by statute ... is subject to judicial review." 26 U.S.C. §6330(d)(1) makes the agency's action reviewable in this case. Accordingly, this Court has jurisdiction over this matter.


II. THE STANDARD OF REVIEW IS THE APA'S ARBITRARY AND CAPRICIOUS STANDARD.

Although 26 U.S.C. §6330(d)(1) provides that courts may review decisions from CDP hearings, it sets forth no standards for that review. In part II of its opinion in United States v. Bean, 537 U.S. 71 (2002), the Supreme Court of the United States held that, in the absence of a statutorily defined standard for reviewing administrative agency decisions, the APA provides the applicable standard. See id. at 77. Because there is no statutorily defined standard for reviewing CDP decisions, the APA is applicable to this case.

5 U.S.C. §706 states a "reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]" The Court concludes that the IRS' acts do not fit within any of these categories.

III. BOYD WAS NOT ENTITLED TO RECORD HIS CDP HEARING AND WAIVED HIS RIGHT TO A HEARING IN PERSON.

A. BOYD WAS NOT ENTITLED TO MAKE AN AUDIO RECORDING OF HIS CDP HEARING.

Boyd first argues that IRS Appeals violated 26 U.S.C. §7521(a) by not allowing him to record his Appeals hearing. Section 7521 generally allows taxpayers to make audio recordings of IRS collection interviews. Some district courts have held that §7521 does not, however, apply to CDP hearings. See Kemper v. United States, No.:CV-S-02-1411-RLH (PAL), 2003 WL 21770857, at *4 (D. Nev. June 5, 2003) (holding that §7521(a) does not apply to CDP hearings); Muhammad v. United States [ 2003-2 USTC ¶50,647], No. 0:02-2677-17BD, 2003 U.S. Dist. LEXIS 7508, at *7 (D. S.C. Apr. 9, 2003) (finding that contention that taxpayer has right to record hearing is "without merit").

The United States District Court for the District of Nevada held in Kemper v. United States that CDP hearings are different from the collection interviews to which §7521 applies. See Kemper v. United States , 2003 WL 21770857, at *4. The court explained that collection interviews are held "to determine or collect a tax," but CDP hearings are held "to insure that 'the requirements of any applicable law or administrative procedure has been met.'" Id. (quoting 26 U.S.C. §6330(c)(1)). Thus, the court held that §7521 does not apply to CDP hearings.

The IRS did not conduct a hearing because Boyd insisted on his right to make an audio recording of the CDP hearing, relying on 26 U.S.C. §7521. The United States Tax Court has recently held that §7521 applies to CDP hearings and that the IRS may not deny the right to make audio recordings of CDP hearings. See Keene v. Commissioner [ CCH Dec. 55,213], 121 T.C. 8, *19 (July 8, 2003). This Court finds Judge Chiechi's dissenting opinion in Keene more persuasive than the majority opinion.

Judge Chiechi found, like the United States District Court for the District of Nevada in Kemper v. United States, that CDP hearings are distinguishable from the collection interviews to which §7521 applies. See Keene v. Commissioner [ CCH Dec. 55,213], 121 T.C. at *31-38. Judge Chiechi engaged in a thorough and detailed analysis of statutory construction as applied to §7521 and §6330, and this Court referenced that analysis in detail on the record at the hearing on this motion. There is no need to repeat it here. The Court will adopt Judge Chiechi's analysis and conclusion:

It is a cardinal rule of statutory construction that, when Congress made section 6330(b) ... part of the Code in 1998, it is presumed to have been aware that it used the phrase "in-person intervew" [ sic] in section 7521. If Congress had intended for the hearing before Appeals under section 6330(b) ... to constitute an "in-person interview" under section 7521, it would have used that phrase in section 6330(b) ..., or at least referred to section 7521. It did neither.

Keene v. Commissioner [ CCH Dec. 55,213], 121 T.C. at *37-38.

Beyond the statutory construction analysis that Judge Chiechi engaged in, concluding that §6330 does not require the IRS to allow audio recordings, the Court also believes that there are good reasons to allow the IRS to prohibit such recordings at CDP hearings. Requiring the IRS to permit audio recordings of CDP hearings would be administratively burdensome for the IRS. See Transcript of Hearing at 24:4-17. As Judge Chiechi pointed out, the CDP hearings under §6330 are intended to be informal hearings, in contrast to the formal §7521 in-person interviews. See id. at *32. As the IRS explained, §7521's requirement that the IRS permit audio recordings of in-person interviews arose out of a fear that the IRS might abuse its authority in interrogating a taxpayer whose attendance is compelled in the in-person interviews, which are initiated by the IRS. See Transcript of Hearing at 24:18-25:14. Thus, the administrative burden caused by allowing recordings of in-person interviews is warranted. In contrast, a taxpayer initiates a CDP hearing, his attendance is not compelled and the purpose of the hearing is not for the IRS to interrogate the taxpayer, but for the taxpayer to present the IRS with arguments. In this circumstance, the additional administrative burden of allowing recordings is not so warranted. The Court believes, therefore, if Congress chose to draft §6330 so that the IRS may choose to prohibit audio recordings, it is not the Court's province to override that language and force the IRS to allow audio recordings of CDP hearings under §6330.

The Court, therefore, concludes that Boyd was not entitled to make an audio recording of his hearing based on §7521.

B. BOYD WAIVED HIS RIGHT TO A HEARING.

26 U.S.C. §6330 requires the IRS to afford a hearing before issuing a Notice of Determination. While the IRS agrees that no hearing took place, it contends that Boyd waived his right to a hearing in person because he refused to participate in the hearing without recording it, which the IRS properly prohibited. See Muhammad v. United States [ 2003-2 USTC ¶50,647], No. 0:02-2677-17BD, 2003 U.S. Dist. LEXIS 7508, at *7 (D. S.C. Apr. 9, 2003) (holding that "Plaintiff waived any right he may have had to an in-person hearing when he refused to go forward."); Henry v. Bronstein [ 2002-2 USTC ¶50,781], No. 02-2790, 2002 U.S. Dist. LEXIS 21623, at *3 (D. Md. Sept. 12, 2002) ("Refusal to comply with the rules for the hearing is tantamount to a waiver of his request for that hearing."). The Court has already found that Boyd was not entitled, based on §7521, to make an audio recording of his CDP hearing. That he insisted on doing so and, as a result, the IRS did not conduct a hearing, results in a finding that Boyd waived his right to the hearing.

Further, even though Boyd did not have the opportunity to participate in person in a CDP hearing, the transcript of the Tax Court proceedings as well as the IRS' representations to this Court at the hearing on this motion verify that the IRS Appeals Officer reviewed all of Boyd's written arguments and materials. See Boyd v. Commissioner, Transcript of Oral Findings of Fact and Opinion at 12-13; see also Transcript of Hearing at 15:1-15 (April 14, 2004). ¹ Thus, the Court believes that, even though Boyd waived his right to a CDP hearing in person, the Appeals Officer was aware of Boyd's arguments in making his ruling.

C. THE IRS' REFUSAL TO PERMIT BOYD TO MAKE AN AUDIO RECORDING OF HIS CDP HEARING WAS HARMLESS.

Even if the Court were to find that the IRS should have allowed Boyd to make an audio recording of his hearing, the IRS' refusal to allow the audio recording and lack of hearing constitute harmless error. Boyd's request of this Court is that the Court reverse and vacate the administrative decision and remand this action for a hearing to be conducted. The IRS contends that the IRS transcripts and Boyd's assertions that the wages of United States citizens are not taxable show that the remand would be fruitless. The IRS contends that Boyd's assertions are frivolous.

The Tax Court recognized in Keene v. Commissioner that a recording refusal can be harmless error not worthy of remand. In that case, Keene requested a CDP hearing and informed IRS Appeals that he intended to record the hearing. See id. at *6-*7. IRS Appeals then scheduled a hearing but informed Keene that he could not record the hearing. Keene showed up to the hearing with a tape recorder, and IRS Appeals reiterated that Keene could not record. See id. at *7. Keene then refused to participate in the hearing, and the IRS issued a determination against him. See id. at *10-11. Keene appealed this determination to the Tax Court on one ground: the IRS illegally denied his right to record. See id. at * 11. Keene argued that §7521 granted him a right to record CDP hearings, and the Tax Court agreed. See id. at *22. It remanded the case back to IRS Appeals for a recorded hearing, See id. But the Tax Court also held that its decision does not apply to cases where, despite the recording prohibition, the taxpayer raises only frivolous arguments during the appeals process. See id. at 23-24. In such a case, the recording refusal is, according to the Tax Court, harmless error, and the court can decide the frivolous issues without remand. See id.

The Tax Court confirmed this harmless error distinction a day later in Brashear v. Commissioner [ CCH Dec. 55,215(M)], No. 12147-02L, 2003 Tax Ct. Memo LEXIS 199, at *8-*11 (July 9, 2003). In that case, the Brashears made frivolous arguments during the Appeals process even though IRS Appeals prohibited them from recording their appeals hearing. See id. at *4, *9. They argued only that there was no authority for the IRS to assess and collect income taxes, so IRS Appeals issued a determination against them. See id. at *4-*5. The Brashears then appealed this determination and argued that IRS Appeals improperly prohibited them from recording their CDP hearing, but the court decided not to remand. See id. at * 8-*9. The court acknowledged that Keene recognized taxpayers' right to record CDP hearings, but it held that the Brashears' frivolous arguments demonstrated that remand would not be "productive." Id. Thus, the IRS' recording refusal was harmless error not worthy of remand.

A Northern District of Texas court recently agreed with Brashear in McDonald v. United States [ 2004-1 USTC ¶50,117], No. 3:02-CV-1510R, 2003 WL 22992202, at *2 (N.D. Tex. Nov. 25, 2003). In that case, McDonald argued against a frivolous return penalty assessed against him because he argued that no statute imposes income tax liability. The court rejected this argument as frivolous. McDonald then argued that his CDP action should be remanded for a recorded hearing because IRS Appeals did not allow him to audio record his hearing. The court held that IRS Appeals' recording refusal did "not warrant remand." Id. at *2.

The United States argues that, like in McDonald and Brashear, Boyd's frivolous arguments demonstrate that remand for a recorded hearing would be fruitless. The United States contends that Boyd may argue that the IRS did not notice him with the proper form, but courts have recognized that the IRS may send notice and demand on any form as long as it includes the information that 26 U.S.C. §6303 requires. See, e.g., Jones v. Commissioner [ 2003-2 USTC ¶50,584], No. 02-60964, 2003 WL 21555540 (5th Cir. July 25, 2003) (holding that Notice of Balance Due satisfies notice and demand requirements); Elias v. Connnett [ 90-2 USTC ¶50,397], 908 F.2d 521, 525 (9th Cir. 1990); Hoffman v. United States [ 2002-2 USTC ¶50,499], 209 F.Supp.2d 1089, 1094 (W.D. Wash. 2002). Courts have also denied arguments that the Internal Revenue Code does not tax the wages of United States citizens and similar arguments as frivolous. See, e.g., Lonsdale v. United States [ 90-2 USTC ¶50,581], 919 F.2d 1440, 1448 (10th Cir. 1990). The United States contends that Boyd's frivolous arguments demonstrate that remand would lead only to more of the same frivolous arguments that the courts have already rejected.

The United States makes the implicit argument that the sole issues that a taxpayer can raise or discuss in a CDP hearing are those mentioned in the initial request for the hearing. The Court does not see support for that contention. Moreover, the statute states "a person may raise at the hearing any relevant issue relating to the unpaid tax or proposed levy." 26 U.S.C. §6330(c)(2). There is nothing in §6330 that requires the taxpayer to specify any issues in the request for a hearing or that indicates that a party is limited only to those issues stated in the hearing request.

Boyd represents that he intended to raise other issues. At the hearing on this motion, however, the Court invited Boyd to clarify what other issues he intends to raise that would require a remand and hearing. Boyd did not point to any new arguments, instead reiterating the same arguments he has previously made in the letters written to the IRS, which the Appeals Officer in this case reviewed prior to entering a decision. See Transcript of Hearing at 11:7-13:25. ² The Court, therefore, agrees with the IRS and the decisions in McDonald and Brashear that a remand in this case would not serve any useful purpose.



IV. BOYD'S ARGUMENTS DO NOT OVERCOME THE PRESUMPTION THAT THE ASSESSMENTS SHOWN ON THE IRS FORM 4340 CERTIFIED TRANSCRIPTS ARE VALID.

Boyd also challenges his liability for a withholding information penalty, but IRS Form 4340 certified transcripts confirm his liability, see IRS Form 4340 Certificate of Assessments, Payments, and Other Specified Matters, and Boyd has produced no evidence that rebuts the presumption that those transcripts are correct. The Tenth Circuit held in Guthrie v. Sawyer [ 92-2 USTC ¶50,391], 970 F.2d 733 (10th Cir. 1992), that Form 4340s establish "presumptive proof of a valid assessment." id. at 737 (internal quotation marks and citations omitted). If the taxpayer does not rebut this presumption, the Tenth Circuit held that "a district court may properly rely on the forms to conclude that valid assessments were made," Id. at 737-38.

In this case, Form 4340 shows that the IRS assessed and noticed Boyd on February 21, 2000, and Boyd has produced no evidence rebutting the presumed correctness of this assessment. The IRS, after filing its motion for summary judgment, supplemented the record with withholding records that further support the validity of the withholding penalty assessed against Boyd. ³ The Court, therefore, finds that Boyd has not presented evidence or created a genuine issue of material fact whether the IRS' assessments are valid.

V. THE IRS SATISFIED ALL STATUTORY NOTICE AND ASSESSMENT REQUIREMENTS.

Boyd also argues that the IRS Appeals did not properly confirm IRS Compliance with statutory procedural requirements, but the Notice of Determination states that Appeals reviewed computer-generated transcripts and presented Boyd with a copy of those transcripts. Courts have held that the IRS may use such transcripts to confirm procedural requirements. See, e.g., Hoffman v. United States [ 2002-2 USTC ¶50,499], 209 F.Supp.2d 1089, 1094 (W.D. Wash. 2002); Standifird v. Commissioner [ CCH Dec. 54,889(M)], T.C. Memo. 2002-245, 2002 WL 31151194 (T.C. September 26, 2002). These transcripts confirm that the IRS complied with statutory collection procedures by assessing Boyd and sending him a notice of balance due on February 21, 2000. See Form 4340 Certificate of Assessments, Payments, and Other Specified Matters. Then, on May 31, 2003, the IRS issued Boyd a Notice of Intent to Levy. See id. Boyd received this notice on June 5, 2002, and responded to it by requesting a CDP hearing on June 27, 2002. See Request for Collection Due Process Hearing & Letter. The Court finds that the IRS satisfied all statutory notice and assessment requirements.

VI. THE COURT WILL DENY BOYD'S MOTION TO STRIKE.

Boyd, in his motion to strike, asks the Court to strike the United States ' Supplement to Brief Supporting United States' Motion for Summary Judgment, filed January 29, 2004 (Doc. 17). Boyd argues that the Supplement violates the local rules and that, if the Court does not strike the Supplement it should allow Boyd an opportunity to respond to the materials in the Supplement with a surreply.

The IRS, in its initial briefing, indicated that it would file a Supplement with withholding documents that would further support the IRS' assessments. Boyd was, thus, put on notice from the beginning that the IRS intended to file this Supplement. The Court does not believe that the Supplement is improperly before the Court and, more importantly, because the Court held a hearing on these motions two and a half months after the IRS filed the Supplement, Boyd has had a full opportunity to respond to any new issues raised in the Supplement. The Court will, therefore, deny Boyd's motion to strike.

IT IS ORDERED that the United States ' Motion for Summary Judgment is granted and the Court will enter summary judgment against the Plaintiff, George E. Boyd. The Court will deny the Plaintiff's Motion for Summary Judgment and the Plaintiff's Motion to Strike United States' 'Supplement To' Its Motion for Summary Judgment, or Alternatively to Allow Plaintiff to File a Surreply.

¹ The Court's citations to the transcript of the hearing refer to the Court Reporter's original, unedited version. Any finalized transcript may contain slightly different page and/or line numbers.

² At the hearing, Boyd did suggest that, given the opportunity for a hearing, he would argue that this process has caused him a hardship. Specifically, he asserted that it has been a hardship for his wife to watch him go through this disagreement with the IRS during a time when she developed rheumatoid arthritis. See Transcript of Hearing at 13:12-17 ( "[F]or example, my wife about this time that I was getting all these unanswered and threatening letters developed rheumatoid arthritis and she has been miserable for some time all because I have chosen to ask some questions and become a target for those who are seeking to raise much revenue as they possibly can.").

³ It is true that, had Boyd participated in a CDP hearing, he would have had an additional opportunity to rebut this presumption. Boyd has made clear, however, that his argument at the CDP hearing would not have been to rebut the presumption on the correctness of the assessment, but to argue that wages of United States citizens are not taxable. See Transcript of Hearing at 11:7-13:25.

[2005-1 USTC ¶50,195]George E. Boyd, Plaintiff-Appellant v. United States of America , Defendant-Appellee. George E. Boyd, Petitioner-Appellant v. Commissioner of Internal Revenue, Respondent-Appellee.

U.S. Court of Appeals, 10th Circuit; 04-2124, 04-9001, February 2, 2005 .

Affirming DC N.M., 2004-2 USTC ¶50,297, and an unreported Tax Court order.

[ Code Secs. 6330, 6673, 6682 and 7521]

Collection Due Process: Hearing procedure: Audio recordings: Penalties. --

A determination by a district court that a taxpayer was not entitled to make an audio recording of his Collection Due Process hearing was, at most, harmless error, and the Appeals court was unwilling to remand the case for another hearing in light of the frivolous arguments raised by the taxpayer. The district court did not err in declining to set aside the administrative decision and in conducting a trial de novo instead of confining itself to the existing administrative record. The penalty for delay under Code Sec. 6673 imposed by the Tax Court and the penalty for filing a false withholding statement under Code Sec. 6682 imposed by the district court were upheld.

Before: Ebel, Baldock and Kelly, Circuit Judges.

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

ORDER AND JUDGMENT ^*

KELLY, JR., Circuit Judge: After examining the briefs and appellate records, this panel has determined unanimously that oral argument would not materially assist the determination of these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are therefore ordered submitted without oral argument.

Petitioner-appellant George E. Boyd, proceeding pro se, has filed these two related appeals, challenging procedures of the Internal Revenue Service in levying on his property to collect unpaid income tax liabilities. We affirm the judgment of the tax court in No. 04-9001 and the judgment of the district court in No. 04-2124, see Boyd v. United States [ 2004-2 USTC ¶50,297], 322 F.Supp.2d 1229 (D. N.M. 2004).

Appeal No. 04-9001

In 1998 and 2000, the IRS issued notices of deficiency to Mr. Boyd for tax years 1996, 1997, and 1998. In response to the notices, Mr. Boyd made the groundless argument that he, as a United States citizen and resident, was not required to pay taxes on the income derived from sources within the United States . The IRS assessed the tax, penalties, and interest for the relevant years, then sent Mr. Boyd notices of balance due: $26,190 for 1996, $17,252 for 1997, and $29,763 for 1998. ¹ In May 2002, the IRS mailed to Mr. Boyd final notices of intent to levy and of the right to a collection due process hearing under 26 U.S.C. §6330. ²

Mr. Boyd requested a hearing, stating his intention to make an audio recording of the proceeding. He also attached a twelve-page statement, which argued against the legality of the assessed taxes and requested additional documentation. The IRS Appeals Office notified Mr. Boyd that it had scheduled a January 9, 2003, hearing and informed him of its policy prohibiting any recording. When Mr. Boyd arrived at the appointed time, the appeals officer gave him copies of transcripts of his accounts for the relevant tax years. Because Mr. Boyd insisted on recording the proceeding, however, the appeals officer refused to conduct a face-to-face hearing.

After a review of the record, an appeals officer issued a notice of determination sustaining the proposed levy. Mr. Boyd appealed to the tax court, asserting that the appeals officer did not properly determine whether legal and procedural requirements had been met. He specifically argued that the requested collection due process hearing should have been held, and that he should have been allowed to record it. The tax court entered summary judgment in favor of the Commissioner and, under 26 U.S.C. §6673, imposed a penalty of $2,500 for instituting a proceeding primarily for purposes of delay. On appeal, Mr. Boyd argues that the tax court: (1) should have set aside the notice of determination for lack of a §6330 hearing; (2) considered materials outside of the administrative record; and (3) improperly imposed the penalty.

Exercising jurisdiction under 26 U.S.C. §7482(a)(1), we review the legal determinations of the tax court de novo, Estate of True v. Comm'r [ 2004-2 USTC ¶60,495], 390 F.3d 1210, 1217 (10th Cir. 2004), its factual findings for clear error, id., and its imposition of sanctions for abuse of discretion, Fox v. Comm'r [ 92-2 USTC ¶50,375], 969 F.2d 951, 953 (10th Cir. 1992). Under tax court rules,

[s]ummary judgment may be granted with respect to ... the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law."

Keene v. Comm'r [ CCH Dec. 55,213], 121 T.C. 8, 14 (U.S. Tax Ct. 2003) (quoting T.C. Rule 121(b)). After a careful review of the record, we conclude that none of Mr. Boyd's arguments have merit.

We agree with the tax court that, even assuming that Mr. Boyd was entitled to record his collection due process hearing, it was "not necessary, and would not be productive, to remand this case to the Appeals Office in order to afford [him] another administrative hearing." R., doc. 17 at 13. ³ "The 'rule of prejudicial error' (otherwise the doctrine of harmless error), as applied to an administrative action, provides that the reviewing court shall disregard procedural errors unless the complaining party was prejudiced thereby." Keene [ CCH Dec. 55,213], 121 T.C. at 21 (Halpern, J., concurring). Mr. Boyd has failed to present any reasoned explanation of why, after a recorded hearing, the Appeals Office would reach a different result.

Next, we reject Mr. Boyd's claim that the tax court improperly reviewed material not contained in the administrative record. Although the Commissioner submitted forms prepared after the notice of determination, this procedure does not constitute error. These forms merely summarized and confirmed the contents of computer records examined by the appeals officer. As such, they were admissible in the tax court's summary judgment proceedings.

Finally, we turn to the tax court's imposition of a $2500 fine against Mr. Boyd. The tax court is authorized to impose a penalty not to exceed $25,000 on a taxpayer when it appears that he instituted a proceeding primarily for delay. 26 U.S.C. §6673(a)(1)(A). From our review of the briefs and the record, we discern no legal error in the administrative or tax court proceedings below and we perceive no merit in Mr. Boyd's arguments. The tax court did not abuse its discretion in sanctioning Mr. Boyd.

No. 04-2124

This matter raises the same issues and arises from the same facts as No. 04-9001, though it specifically concerns the Notice of Intention to Levy to collect a $500 penalty from Mr. Boyd for an allegedly false withholding statement. See 26 U.S.C. §6682 (providing for civil penalties for false statements made in connection with the withholding of income taxes). The district court, rather than the tax court, had jurisdiction over this aspect of Mr. Boyd's case. "It is well settled that [the tax court] lacks jurisdiction to redetermine such penalties." Weber v. Comm'r [ CCH Dec. 55,588], 122 T.C. 258, 264 (U.S. Tax Ct. 2004) (citing §6682(c)). And §6330(d)(1)(B) provides that a taxpayer may appeal a determination from a collection due process hearing to the district court if the tax court does not have jurisdiction over the underlying liability.

In the district court, Mr. Boyd again argued that the administrative decision should be set aside for the denial of his request for an audio recording of the collection due process hearing and the subsequent lack of a face-to-face proceeding. The district court granted summary judgment against Mr. Boyd and in favor of respondent for several reasons. It held that: (1) Mr. Boyd was not entitled to make an audio recording of the collection-due process hearing, so that his insistence on recording amounted to a waiver of any right to a hearing, Boyd [ 2004-2 USTC ¶50,297], 322 F.Supp.2d at 1232-33; (2) the appeals officer's review of written materials submitted by Mr. Boyd demonstrated an awareness of his arguments, id. at 1233; (3) in any event, the refusal to permit an audio recording was at most harmless error, id. at 1233-35; (4) Mr. Boyd's arguments did not overcome the presumption that the assessments were valid, id. at 1235-36; and (5) the IRS satisfied all statutory notice and assessment requirements, id. at 1236.

On appeal, Mr. Boyd asserts that the district court erred in declining to set aside the administrative decision and in improperly conducting a trial de novo instead of confining itself to the existing administrative record. Our review of the record on appeal and consideration of the parties' briefs reveals that Mr. Boyd has asserted no creditable arguments. Under the circumstances of this case, the district court correctly entered summary judgment.

Conclusion

We affirm the judgment of the tax court in No. 04-9001 and the judgment of the district court in No. 04-2124. The mandates shall issue forthwith.

^* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

¹ The notice of balance also includes a $500 penalty for 1997, assessed under 26 U.S.C. §6682 for allegedly filing false withholding information. Mr. Boyd's appeal concerning that penalty is the subject of Appeal No. 04-2124.

² Section 6330 provides that "[n]o levy may be made ... unless the Secretary has notified such person in writing of their right to a hearing." Id. at (a)(1). If a taxpayer requests a hearing, then the Internal Revenue Service Office of Appeals must hold one. Id. at (b)(1). At the hearing, the appeals office should "obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." Id. at (c)(1). Hearing issues relating to the unpaid tax or proposed levy include "appropriate spousal defenses ... challenges to the appropriateness of collection actions; and ... offers of collection alternatives." Id. at (c)(2)(A). The taxpayer may only "challenge[] ... the existence or amount of the underlying tax liability for any tax period if [he] did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." Id. at (c)(2)(B).

³ The United States Tax Court has held that a taxpayer is entitled to make an audio recording of his §6330 hearing with the Appeals Office. Keene [ CCH Dec. 55,213], 121 T.C. at 16.

[Dec. 55,984(M)] Thomasita Taylor v. Commissioner.

Dkt. No. 14954-03L , TC Memo. 2005-74, April 6, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9. --CCH.]

[Code Sec. 6330]
Collection Due Process: Hearing procedures: Frivolous arguments. --

The IRS's determination to proceed with a levy action against an individual was sustained. The individual had refused to participate in her Collection Due Process hearing after the Appeals officer refused to allow her to record the hearing. Since the individual's request to record her hearing was made after the Tax Court's decision in Keene v Commr., 121 T.C. 8, Dec. 55,213 (2003), she had been denied the hearing required by Code Sec. 6330 and was, therefore, given the opportunity to raise any issues or arguments regarding the notice of determination in a recorded Tax Court proceeding. However, since the individual raised only frivolous arguments at her trial, the Tax Court refused to remand the case to appeals for a new hearing because the propriety of the collection determination could be decided on the record. --CCH.

[Code Sec. 6673]
Collection Due Process: Hearing procedures: Frivolous arguments: Sanctions. --

A $2,500 penalty was imposed on an individual because the court determined that she instituted and maintained a court action primarily for delay. During the administrative process and the Tax Court proceedings, the taxpayer made arguments that have been consistently rejected by the courts. While her procedural stance regarding the recording of collection hearings was correct, the taxpayer ignored the court's warning that further proceedings would be justified only if she made relevant, nonfrivolous arguments. --CCH.

Thomasita Taylor, pro se; Ric D. Hulshoff, for respondent.

P filed a petition for judicial review pursuant to sec. 6330, I.R.C., in response to a determination by R that levy action was appropriate.

Held: Because P has advanced groundless complaints in dispute of the notice of intent to levy, R's determination to proceed with collection action is sustained.

Held, further, a penalty under sec. 6673, I.R.C., is due from P and is awarded to the United States in the amount of $2,500.

MEMORANDUM OPINION

WHERRY, Judge: This case is before the Court on respondent's motion for summary judgment pursuant to Rule 121.¹ , ² The instant proceeding arises from a petition for judicial review filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. The issues for decision are: (1) Whether respondent may proceed with collection action as so determined, and (2) whether the Court, sua sponte, should impose a penalty under section 6673.

Background

This case involves petitioner's 1993, 1994, 1995, and 1996 income tax liabilities. A notice of deficiency with respect to these years was issued to petitioner and sent by certified mail on September 9, 1999 , to 1836 West Mohave Street , Phoenix , Arizona 85007 . Petitioner did not file a petition with this Court in response to the notice of deficiency, and respondent assessed the taxes, additions to tax, and interest for all four years on February 21, 2000 . Notices of balance due were sent to petitioner on that date, as well as on March 27 and May 1, 2000 .

Thereafter, on October 3, 2002 , respondent issued to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, with regard to the 1993 through 1996 years. Respondent on November 7, 2002 , received from petitioner a Form 12153, Request for a Collection Due Process Hearing, setting forth her disagreement with the proposed collection action, as follows:

(1) There was a failure to determine a deficiency; (2) There was a failure to issue a Notice of Deficiency; (3) There was a failure to generate an assessment list; (4) There was a failure of the Commissioner to certify and transmit the assessment list; (5) There was a failure to record the assessment; (6) failure to provide record of assessment; and, (7) failure to send Notice of Assessment.

On December 3, 2002 , respondent sent to petitioner a letter acknowledging receipt of her Form 12153. Petitioner responded by submitting to respondent a document entitled "Declaration of Thomasita Taylor" stating, inter alia, that she "did not receive the Notices of Assessment" with respect to the 1993 through 1996 years. By a letter dated May 15, 2003 , the settlement officer to whom petitioner's case had been assigned scheduled a hearing for June 11, 2003 , in Phoenix , Arizona . Petitioner responded with a letter dated June 9, 2003 , asking that the hearing be rescheduled. A June 11, 2003 , letter from the settlement officer rescheduled the hearing for July 24, 2003 , and enclosed copies of Forms 4340, Certificate of Assessments, Payments and Other Specified Matters, for each of the years in issue.³

Prior to the hearing, by a letter dated July 15, 2003 , petitioner informed the settlement officer that in light of the recent opinion of this Court in Keene v. Commissioner [Dec. 55,213], 121 T.C. 8 (2003), she wished to record the hearing. The settlement officer sent petitioner a response on July 21, 2003 , advising that respondent's procedures barring recording had not changed and that petitioner would not be allowed to make an audio or stenographic recording of the hearing.

Petitioner appeared for the scheduled conference on July 24, 2003 , but the hearing did not proceed when petitioner was not permitted to record. The settlement officer informed petitioner that he would make his determination based on the information in her file. Thereafter, on July 31, 2003 , respondent issued the aforementioned Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 to petitioner sustaining the proposed levy action.

Petitioner's petition disputing the notices of determination was filed on September 5, 2003 , and reflected an address at 1836 West Mohave, Phoenix , Arizona 85007 . In the petition, the sole error assigned by petitioner was that the settlement officer refused to permit the collection hearing to be recorded. Petitioner then prayed that this Court issue an order requiring respondent to show cause why the determination should not be vacated; find the determination arbitrary, capricious, not supported by the evidence, and unreasonable; vacate the July 31, 2003 , determination; and award petitioner costs and fees incurred in the prosecution of this action.⁴

On September 20, 2004 , respondent filed a motion for summary judgment pursuant to Rule 121. Petitioner was directed to file any response to respondent's motion on or before September 30, 2004 . Having not heard from petitioner, the Court on October 4, 2004 , issued an order denying the motion for summary judgment, ruling as follows:

As respondent correctly notes in the motion for summary judgment, issues raised by petitioner during the administrative process, i.e., in her Form 12153, have been repeatedly rejected by this and other courts or are refuted by the documentary record. Moreover, the Court observes that maintenance of similar arguments has served as grounds for imposition of penalties under section 6673. However, the case in its current posture does present a procedural shortcoming.

On July 8, 2003 , this Court issued Keene v. Commissioner, supra at 19, in which it was held that taxpayers are entitled, pursuant to section 7521(a)(1), to audio record section 6330 hearings. The taxpayer in that case had refused to proceed when denied the opportunity to record, and we remanded the case to allow a recorded Appeals hearing. Id. In contrast, we have distinguished, and declined to remand, cases where the administrative proceedings took place prior to our opinion in Keene v. Commissioner, supra; where the taxpayer had participated in an Appeals Office hearing, albeit unrecorded; and where all issues raised by the taxpayer could be properly decided from the existing record. E.g., id. at 19, 20; Frey v. Commissioner [Dec. 55,601(M)], T.C. Memo. 2004-87; Durrenberger v. Commissioner [Dec. 55,552(M)], T.C. Memo. 2004-44; Brashear v. Commissioner [Dec. 55,215(M)], T.C. Memo. 2003-196; Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195.

The circumstances of the instant case are closely analogous to those in Keene v. Commissioner, supra, and diverge from those where it was determined that remand was not necessary and would not be productive. Critically, the final letter denying recording was sent on July 21, 2003 , the aborted hearing was held on July 24, 2003 , and the notice of determination was issued on July 31, 2003 . Although these dates are subsequent to the opinion in Keene v. Commissioner, supra, petitioner was not afforded an opportunity for a recorded conference. Further, because the requested face-toface hearing was not held, there still exists a possibility that petitioner might have raised one or more nonfrivolous issues if the meeting had proceeded.

In this situation, the Court will not accept respondent's invitation to characterize the failure to allow recording as harmless error. Hence, the Court will deny respondent's motion for summary judgment at this time. As in Keene v. Commissioner, supra at 19, however, we admonish petitioner that if she persists in making frivolous and groundless tax protester arguments in any further proceedings with respect to this case, rather than raising relevant issues, as specified in section 6330(c)(2), the Court may consider granting a future motion for summary judgment. In such an instance, the Court would also be in a position to impose a penalty under section 6673(a)(1).

The following day, October 5, 2004 , the Court received from petitioner her response to respondent's motion. Therein, petitioner principally reiterated her contentions that, on account of the refusal to permit recording of the collection hearing, the underlying notice of determination should be vacated and her case remanded. She asked that the Court deny respondent's motion for summary judgment. The response was filed for the record, and the case proceeded to trial.

The case was called from the calendar of the trial session of the Court in Phoenix , Arizona , on October 18, 2004 . Petitioner at that time submitted a pretrial memorandum that incorporated by reference the legal arguments stated in petitioner's earlier response to respondent's motion for summary judgment but offered no additional reasoning. At the calendar call, the Court explained to petitioner that she would be afforded an opportunity in a recorded proceeding before the Court to raise any issues or arguments that she wished to make concerning the notice of determination. The Court also warned petitioner, however, to take careful heed of the October 4, 2004 , order and to ensure that any such arguments were not frivolous in nature.

The case was thereafter heard on October 20, 2004 . Petitioner did not offer any evidence or testimony, and her comments were limited to vague assertions that the Forms 4340 should not be treated as conclusive proof, that she did not receive the notices of assessment, and that the case should be sent back for a recorded hearing. Counsel for respondent at this time orally moved to renew respondent's motion for summary judgment, and the Court took the motion under advisement.

Discussion

Rule 121(a) allows a party to move "for a summary adjudication in the moving party's favor upon all or any part of the legal issues in controversy." Rule 121(b) directs that a decision on such a motion shall be rendered "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law."

The moving party bears the burden of demonstrating that no genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law. Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994). Facts are viewed in the light most favorable to the nonmoving party. Id. However, where a motion for summary judgment has been properly made and supported by the moving party, the opposing party may not rest upon mere allegations or denials contained in that party's pleadings but must by affidavits or otherwise set forth specific facts showing that there is a genuine issue for trial. Rule 121(d).

I. Collection Actions

A. General Rules

Section 6331(a) authorizes the Commissioner to levy upon all property and rights to property of a taxpayer where there exists a failure to pay any tax liability within 10 days after notice and demand for payment. Sections 6331(d) and 6330 then set forth procedures generally applicable to afford protections for taxpayers in such levy situations. Section 6331(d) establishes the requirement that a person be provided with at least 30 days' prior written notice of the Commissioner's intent to levy before collection may proceed. Section 6331(d) also indicates that this notification should include a statement of available administrative appeals. Section 6330(a) expands in several respects upon the premise of section 6331(d), forbidding collection by levy until the taxpayer has received notice of the opportunity for administrative review of the matter in the form of a hearing before the Internal Revenue Service Office of Appeals. Section 6330(b) grants a taxpayer who so requests the right to a fair hearing before an impartial Appeals officer.

Section 6330(c) addresses the matters to be considered at the hearing:

SEC. 6330(c). Matters Considered at Hearing. --In the case of any hearing conducted under this section --

(1) Requirement of investigation. --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.

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) 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.

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

Once the Appeals officer has issued a determination regarding the disputed collection action, section 6330(d) allows the taxpayer to seek judicial review in the Tax Court or a District Court, depending upon the type of tax. In considering whether taxpayers are entitled to any relief from the Commissioner's determination, this Court has established the following standard of review:

where the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly at issue, the Court will review the Commissioner's administrative determination for abuse of discretion. [Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).]

B. Analysis

1. Appeals Hearing

Hearings conducted under section 6330 are informal proceedings, not formal adjudications. Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 337 (2000); Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 41 (2000). There exists no right to subpoena witnesses or documents in connection with section 6330 hearings. Roberts v. Commissioner [Dec. 54,733], 118 T.C. 365, 372 (2002), affd. [2003-1 USTC ¶50,359] 329 F.3d 1224 (11th Cir. 2003); Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166-167 (2002); Davis v. Commissioner, supra at 41-42. Taxpayers are entitled to be offered a face-to-face hearing at the Appeals Office nearest their residence. Where the taxpayer declines to participate in a proffered face-to-face hearing, hearings may also be conducted telephonically or by correspondence. Katz v. Commissioner, supra at 337-338; Dorra v. Commissioner [Dec. 55,517(M)], T.C. Memo. 2004-16; sec. 301.6330-1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs. Furthermore, once a taxpayer has been given a reasonable opportunity for a hearing but has failed to avail himself or herself of that opportunity, we have approved the making of a determination to proceed with collection based on the Appeals officer's review of the case file. See, e.g., Taylor v. Commissioner [Dec. 55,528(M)], T.C. Memo. 2004-25; Leineweber v. Commissioner [Dec. 55,518(M)], T.C. Memo. 2004-17; Armstrong v. Commissioner [Dec. 54,865(M)], T.C. Memo. 2002-224; Gougler v. Commissioner [Dec. 54,824(M)], T.C. Memo. 2002-185; Mann v. Commissioner [Dec. 54,658(M)], T.C. Memo. 2002-48. Thus, a face-to-face meeting is not invariably required.

Regulations promulgated under section 6330 likewise incorporate many of the foregoing concepts, as follows:

Q-D6. How are CDP hearings conducted?

A-D6. * * * CDP hearings * * * are informal in nature and do not require the Appeals officer or employee and the taxpayer, or the taxpayer's representative, to hold a face-to-face meeting. A CDP hearing may, but is not required to, consist of a faceto-face meeting, one or more written or oral communications between an Appeals officer or employee and the taxpayer or the taxpayer's representative, or some combination thereof. * * *

Q-D7. If a taxpayer wants a face-to-face CDP hearing, where will it be held?

A-D7. The taxpayer must be offered an opportunity for a hearing at the Appeals office closest to taxpayer's residence or, in the case of a business taxpayer, the taxpayer's principal place of business. If that is not satisfactory to the taxpayer, the taxpayer will be given an opportunity for a hearing by correspondence or by telephone. If that is not satisfactory to the taxpayer, the Appeals officer or employee will review the taxpayer's request for a CDP hearing, the case file, any other written communications from the taxpayer (including written communications, if any, submitted in connection with the CDP hearing), and any notes of any oral communications with the taxpayer or the taxpayer's representative. Under such circumstances, review of those documents will constitute the CDP hearing for the purposes of section 6330(b). [Sec. 301.6330-1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs.]

This Court has cited the above regulatory provisions with approval. See, e.g., Taylor v. Commissioner, supra; Leineweber v. Commissioner, supra; Dorra v. Commissioner, supra; Gougler v. Commissioner, supra.

With respect to the instant matter, the record reflects that petitioner was provided with an opportunity for a face-to-face hearing on July 24, 2003 . The hearing did not proceed when petitioner was not permitted to record the meeting. As explained in our previous order in this case, in Keene v. Commissioner [Dec. 55,213], 121 T.C. at 19, this Court held that taxpayers are entitled, pursuant to section 7521(a)(1), to audio record section 6330 hearings. The taxpayer in that case had refused to proceed when denied the opportunity to record, and we remanded the case to allow a recorded Appeals hearing. Id.

In contrast, again as noted in our October 4, 2004 , order, we have distinguished, and declined to remand, cases where the taxpayer had participated in an Appeals Office hearing, albeit unrecorded, and where all issues raised by the taxpayer could be properly decided from the existing record. E.g., id. at 19-20; Frey v. Commissioner [Dec. 55,601(M)], T.C. Memo. 2004-87; Durrenberger v. Commissioner [Dec. 55,552(M)], T.C. Memo. 2004-44; Brashear v. Commissioner [Dec. 55,215(M)], T.C. Memo. 2003-196; Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195. Stated otherwise, cases will not be remanded to Appeals, nor determinations otherwise invalidated, merely on account of the lack of a recording when to do so is not necessary and would not be productive. See, e.g., Frey v. Commissioner, supra; Durrenberger v. Commissioner, supra; Brashear v. Commissioner, supra; Kemper v. Commissioner, supra; see also Keene v. Commissioner, supra at 19-20; Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 189 (2001). A principal scenario falling short of the necessary or productive standard exists where the taxpayers rely on frivolous or groundless arguments consistently rejected by this and other courts. See, e.g., Frey v. Commissioner, supra; Brashear v. Commissioner, supra; Kemper v. Commissioner, supra.

Because no hearing had been conducted at all in petitioner's case, we declined to grant respondent's initial motion for summary judgment. The record as it then existed did not foreclose the possibility that petitioner might have raised valid arguments had a hearing been held. Accordingly, we provided petitioner an opportunity before the Court at the trial session in Phoenix to identify any legitimate issues she wished to raise that could warrant further consideration of the merits of her case by the Appeals Office or this Court. Petitioner, however, merely offered generalized remarks regarding Forms 4340 and then expressly affirmed that she had no issues to raise other than those set forth in her Form 12153 and quoted in the Court's October 4, 2004 , order.

Hence, despite repeated warnings and opportunities, the only contentions advanced by petitioner are, as will be further discussed below, of a nature previously rejected by this and other courts. The record therefore does not indicate that any purpose would be served by remand or additional proceedings. The Court concludes that all pertinent issues relating to the propriety of the collection determination can be decided through review of the materials before it on respondent's renewed motion for summary judgment.

2. Review of Underlying Liabilities

The evidentiary record establishes that a statutory notice determining deficiencies with respect to the 1993, 1994, 1995, and 1996 taxable years was issued to petitioner. Copies of the notice itself and a certified mail list clearly reflect that the notice was sent to petitioner's last known, and current, address. To the extent that petitioner made allegations to the contrary in her Form 12153, such contentions are refuted by the evidence and, in any event, were not pursued before the Court. Accordingly, because petitioner received a valid notice of deficiency and did not timely petition for redetermination, she is precluded under section 6330(c)(2)(B) from disputing her underlying tax liabilities in this proceeding.

3. Review for Abuse of Discretion

Petitioner has also made various arguments relating to aspects of the assessment and collection procedures that we review for abuse of discretion. Action constitutes an abuse of discretion under this standard where arbitrary, capricious, or without sound basis in fact or law. Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999).

Federal tax assessments are formally recorded on a record of assessment in accordance with section 6203. The Commissioner is not required to use Form 23C in making an assessment. Roberts v. Commissioner [Dec. 54,733], 118 T.C. at 369-371. Furthermore, section 6330(c)(1) mandates neither that the Appeals officer rely on a particular document in satisfying the verification requirement nor that the Appeals officer actually give the taxpayer a copy of the verification upon which he or she relied. Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 262 (2002); Nestor v. Commissioner [Dec. 54,655], 118 T.C. at 166.

A Form 4340, for instance, constitutes presumptive evidence that a tax has been validly assessed pursuant to section 6203. Davis v. Commissioner [Dec. 53,969], 115 T.C. at 40 (and cases cited thereat). Consequently, absent a showing by the taxpayer of some irregularity in the assessment procedure that would raise a question about the validity of the assessments, a Form 4340 reflecting that tax liabilities were assessed and remain unpaid is sufficient to support collection action under section 6330. Id. at 40-41. We have specifically held that it is not an abuse of discretion for an Appeals officer to rely on Form 4340, Nestor v. Commissioner, supra at 166; Davis v. Commissioner, supra at 41, or a computer transcript of account, Schroeder v. Commissioner [Dec. 54,829(M)], T.C. Memo. 2002-190; Mann v. Commissioner [Dec. 54,658(M)], T.C. Memo. 2002-48, to comply with section 6330(c)(1).

Here, the record contains a Form 4340 for each of the years at issue, indicating that assessments were made for the year and that taxes remain unpaid. Although petitioner generally asserted at trial that Forms 4340 are not conclusive proof, she failed to cite any specific irregularities with respect to the Forms 4340 introduced into evidence and pertinent to this proceeding that would cast doubt on the information recorded thereon.

In addition to the specific dictates of section 6330, the Secretary, upon request, is directed to furnish to the taxpayer a copy of pertinent parts of the record of assessment setting forth the taxpayer's name, the date of assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed. Sec. 6203; sec. 301.6203-1, Proced. & Admin. Regs. A taxpayer receiving a copy of Form 4340 has been provided with all the documentation to which he or she is entitled under section 6203 and section 301.6203-1, Proced. & Admin. Regs. Roberts v. Commissioner, supra at 370 n.7. This Court likewise has upheld collection action where taxpayers were provided with literal transcripts of account (so-called MFTRAX). See, e.g., Frank v. Commissioner [Dec. 55,096(M)], T.C. Memo. 2003-88; Swann v. Commissioner [Dec. 55,078(M)], T.C. Memo. 2003-70. The June 11, 2003 , letter to petitioner from the settlement officer enclosed copies of Forms 4340 for each year.

Petitioner has also denied receiving the "Notices of Assessment", presumably alluding to the notice and demand for payment that section 6303(a) establishes should be given within 60 days of the making of an assessment. However, a notice of balance due constitutes a notice and demand for payment within the meaning of section 6303(a). Craig v. Commissioner, supra at 262-263. The Forms 4340 indicate that petitioner was sent notices of balance due for the tax years involved, and petitioner has never denied receiving these notices. At trial, the Court explained to petitioner that no "magic words" were necessary; rather, "If the substance of the notice is that you owe money and for what year and how much, that may be sufficient to meet the statutory requirements." Petitioner at that point made no attempt to argue that she had failed to receive such a notice or notices.

Thus, with respect to those issues enumerated in section 6330(c)(2)(A) and subject to review in collection proceedings for abuse of discretion, petitioner has not raised any spousal defenses, valid challenges to the appropriateness of the collection action, or collection alternatives. As this Court has noted in earlier cases, Rule 331(b)(4) states that a petition for review of a collection action shall contain clear and concise assignments of each and every error alleged to have been committed in the notice of determination and that any issue not raised in the assignments of error shall be deemed conceded. See Lunsford v. Commissioner [Dec. 54,553], 117 T.C. at 185-186; Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 183 (2000). For completeness, we have addressed various points advanced by petitioner during the administrative process or before us in Phoenix , but no meritorious items were pursued even in those proceedings. Accordingly, the Court concludes that respondent's determination to proceed with collection of petitioner's tax liabilities was not an abuse of discretion.

II. Section 6673 Penalty

Section 6673(a)(1) authorizes the Court to require the taxpayer to pay a penalty not in excess of $25,000 when it appears to the Court that, inter alia, proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. In Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576, 581 (2000), the Court warned that taxpayers abusing the protections afforded by sections 6320 and 6330 through the bringing of dilatory or frivolous lien or levy actions will face sanctions under section 6673. The Court has since repeatedly disposed of cases premised on arguments akin to those raised herein summarily and with imposition of the section 6673 penalty. See, e.g., Craig v. Commissioner [Dec. 54,933], 119 T.C. at 264-265 (and cases cited thereat).

With respect to the instant matter, we are convinced that petitioner instituted and maintained this proceeding primarily for delay. Throughout the administrative process and even through the time of trial, petitioner advanced contentions and demands previously and consistently rejected by this and other courts. While her procedural stance concerning recording was correct, she ignored the Court's explicit warning that any further proceedings would be justified only in the face of relevant and nonfrivolous issues. Moreover, petitioner was expressly alerted to the potential use of sanctions in her case. Yet she appeared at the trial session in Phoenix without any legitimate evidence or argument in support of her position. She instead continued to espouse those positions that had been rejected in this Court's order of October 4, 2004 , or in other cases previously decided by the Court.

Hence, petitioner received fair warning but has persisted in frivolously disputing respondent's determination. The Court concludes that a penalty of $2,500 should be awarded to the United States in this case.

To reflect the foregoing,

An appropriate order granting respondent's motion and decision for respondent will be entered.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

² As will be explained more fully infra in text, respondent initially filed a written motion for summary judgment on Sept. 20, 2004, that was denied by order of the Court dated Oct. 4, 2004. At the close of proceedings in this case held on Oct. 20, 2004, at the trial session of the Court in Phoenix , Arizona , counsel for respondent moved to renew the motion for summary judgment. The Court took the oral motion for summary judgment under advisement at that time.

³ Although the June 11, 2003, letter contains a typographical error referring to the enclosures as "Certified Transcripts for 1994, 1995, 1996 and 1997", the actual enclosures sent were for the pertinent 1993 through 1996 years.

⁴ The Court notes that to the extent that the petition seeks reasonable administrative and/or litigation costs pursuant to sec. 7430, any such claim is premature and will not be further addressed. See Rule 231.

[Dec. 55,704(M)] Tim W. Holliday v. Commissioner.

Dkt. No. 13020-02L , TC Memo. 2004-172, July 22, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9.]

[Code Sec. 6330]
Liens and levies: Collection Due Process hearings: Issues raised at hearing: Appeals officer: Abuse of discretion: Form 4340. --

An IRS Appeals officer's refusal to consider a taxpayer's meritless arguments with respect to the underlying tax liabilities or to permit the taxpayer to make an audio or other recording of the Collection Due Process (CDP) hearing was harmless error. The Appeals officer properly obtained verification that applicable law and administrative procedures were met but was not required to provide such verification to the taxpayer at the hearing. Forms 4340, Certificates of Assessment, were presumptive proof that notice and demand was mailed to the taxpayer absent some showing that the forms were irregular. The Appeals officer was not required to provide the taxpayer with the basis on which the taxpayer was subject to tax or interest as such inquiries were meritless.

[Code Sec. 6330]
Jurisdiction: Tax Court: Liens and levies: Collection Due Process: Delegation of authority. --

The IRS was allowed to proceed with collection of a taxpayer's unpaid tax liability. Alleged defects in the hearing did not invalidate the notice of determination or deprive the Tax Court of jurisdiction. The taxpayer's claim that there was no delegation of authority pursuant to which the notice of determination could be issued was meritless.

[Code Sec. 6330]
Liens and levies: Collection Due Process hearings: Suspension of statute of limitations: Notice of determination. --

The IRS was allowed to proceed with collection of a taxpayer's unpaid tax liability. The taxpayer's contention that the 10-year limitations period on collection had expired for one of the tax years at issue was rejected. The limitations period was suspended when the taxpayer requested a CDP hearing within the 10-year limitations period.

Tim W. Holliday, pro se; Laurel M. Costen, for respondent.

MEMORANDUM OPINION

GALE, Judge: This case arises from a petition for review under section 6330(d)¹ of respondent's determination to proceed with a proposed levy to collect petitioner's 1992, 1993, 1994, 1995, 1996, 1997, and 1998 Federal income tax liabilities. The issue for decision is whether respondent may proceed with the proposed levy. We hold that he may.

Background

Petitioner was a resident of American Canyon , California , when his petition was filed.

Petitioner timely filed a 1992 individual Federal income tax return reporting tax due of $716. After correcting the return for computational and clerical errors, respondent assessed the tax due thereon of $1,061 on June 7, 1993 .

Petitioner did not timely file a Federal income tax return for 1993 or 1995. On October 6, 1997 , respondent prepared a substitute for return for each year, and on May 18, 1998 , respondent assessed tax of $2,903 for 1993 and $6,138 for 1995.² Petitioner filed 1993 and 1995 individual Federal income tax returns on September 21 and 18, 1998, respectively. Respondent subsequently abated the assessment for each year to reflect the tax reported on petitioner's returns after correcting for computational and clerical errors.

Petitioner filed a 1994 individual Federal income tax return on September 21, 1998 ; an assessment of $2,974 was made with respect to that return.

Petitioner did not timely file a Federal income tax return for 1996. On September 14, 1998 , respondent prepared a substitute for return, and 3 days later petitioner submitted a return that was filed as an amended return. The return petitioner submitted reported $5,805 of tax due, which respondent assessed.

Petitioner timely filed 1997 and 1998 individual Federal income tax returns, reporting tax due of $7,037 and $7,842, respectively, which respondent assessed.

On September 21, 2000 , petitioner filed amended returns for 1993, 1994, 1995, 1996, and 1997 reporting the tax due on each amended return as zero. Respondent treated these amended returns as claims for refund and denied them.

On April 9, 2001 , respondent issued a Letter 1058, Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing, to petitioner for the unpaid balances of the aforementioned assessments for the tax years 1992, 1993, 1994, 1995, 1996, 1997, and 1998. On May 1, 2001 , petitioner submitted to respondent a Form 12153, Request for a Collection Due Process Hearing. In his request, petitioner advised that he would have a stenographer present at the hearing.

By letter dated May 3, 2002 , the Appeals officer advised petitioner that neither stenographic nor audio recording of the hearing would be permitted. A hearing was held on May 22, 2002 , during which petitioner was not permitted to make an audio or stenographic recording. The Appeals officer also refused to consider petitioner's arguments related to the underlying tax liabilities covered by the levy notice.

On July 11, 2002 , a notice of determination concerning collection action(s) under section 6320 and/or 6330 was mailed to petitioner in which the Appeals officer recommended proceeding with the levy. On August 12, 2002 , petitioner timely petitioned this Court for review of the determination.

Discussion

Section 6331(a) provides that, if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by levy upon property belonging to the taxpayer. Section 6331(d) provides that the Secretary is obliged to provide the taxpayer with notice, including notice of the administrative appeals available to the taxpayer, before proceeding with collection by levy.

Section 6330 generally provides that the Secretary cannot proceed with the collection of taxes by way of a levy on a taxpayer's property until the taxpayer has been given notice of, and the opportunity for, an administrative review of the matter (in the form of an Appeals Office hearing) and, if dissatisfied, with judicial review of the administrative determination. See Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 37 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179-180 (2000). Section 6330(c)(2) specifies issues that the taxpayer may raise at the hearing. The taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy" including spousal defenses, challenges to the appropriateness of collection actions, and alternatives to collection. Sec. 6330(c)(2)(A). The taxpayer also may challenge the underlying tax liability if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B). Section 6330(c)(3) provides that the determination of the Appeals officer shall take into consideration, inter alia, the issues raised by the taxpayer. We review the determination de novo when the underlying tax liability is in dispute, Goza v. Commissioner, supra at 181-182, and under an abuse of discretion standard when it is not, Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner, supra at 182.

Two of the principal arguments petitioner raises are that he did not receive the hearing to which he was entitled under section 6330 because he was not permitted to record the hearing and that the Appeals officer refused to consider arguments pertaining to the underlying tax liabilities (because petitioner reported those liabilities as due on his returns). The hearing in this case was conducted, and the determination issued, before our Opinions in Keene v. Commissioner [Dec. 55,213], 121 T.C. 8 (2003), and Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1 (2004), in which we held, respectively, that a taxpayer in a section 6330 hearing is entitled to make an audio recording thereof, and to dispute the underlying tax liability even where the taxpayer reported the liability as due on his return.³ At trial, we afforded petitioner the opportunity to raise any issue he considered relevant to the proposed levy or the underlying tax liabilities.⁴ We consider those arguments below.

Petitioner argues that the notice of determination was invalid, and we therefore lack jurisdiction, because the hearing he received was defective in several respects. We disagree. The defects in the hearing alleged by petitioner do not invalidate the notice and deprive us of jurisdiction. See Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001).

Petitioner next argues that his hearing was invalid and collection may not proceed because the Appeals officer refused to provide him with verification, and did not verify at the hearing, that the requirements of any applicable law or administrative procedure were met, as required under section 6330(c)(1). Petitioner admitted in his petition and at trial that, at the hearing, the Appeals officer would not allow petitioner to see the Appeals officer's copies of the transcripts of account. On the basis of the foregoing, we are satisfied that the Appeals officer obtained verification at the hearing; he was not required to provide any such verification to petitioner. See Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166-167 (2002).

Petitioner next claims that he did not receive notice and demand for payment (as required by section 6303(a)) with respect to the liabilities for any of the taxable years in question, and that the Appeals officer did not consider his contentions in this regard. Petitioner's claim of nonreceipt is belied by the certified copies of Forms 4340, Certificate of Assessments, Payments and Other Specified Matters, in evidence for each year, which show that statutory notices of balance due were issued for each year. Absent some showing of irregularity in the Forms 4340, which petitioner has not made, those records serve as presumptive evidence that notice and demand pursuant to section 6303(a) was mailed to petitioner. See Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993); United States v. Chila [89-1 USTC ¶9299], 871 F.2d 1015, 1019 (11th Cir. 1989); Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 261-262 (2002). Respondent also relies on the notice of intent to levy issued in this case as satisfying section 6303(a). See Hughes v. United States [92-1 USTC ¶50,086], 953 F.2d 531, 536 (9th Cir. 1992); Standifird v. Commissioner [Dec. 54,889(M)], T.C. Memo. 2002-245, affd. [2003-2 USTC ¶50,652] 72 Fed. Appx. 729 (9th Cir. 2003). In light of the Appeals officer's review of the transcripts of account, we are satisfied that he obtained sufficient verification that the requirements of applicable laws and procedures had been met.

Petitioner also advanced a claim at trial that the period of limitations for collection of his 1992 liability had expired. The period for collection following assessment is 10 years. Sec. 6502(a). If a hearing is requested under section 6330(a)(3)(B), the running of the period of limitations for collection is suspended for the period during which the hearing, and appeals therein, are pending. Sec. 6330(e)(1); Boyd v. Commissioner [Dec. 54,495], 117 T.C. 127, 130-131 (2001). Further, the period for collection shall not expire before the 90th day after the day on which there is a final determination in the hearing. Sec. 6330(e)(1). Petitioner's 1992 liability was assessed on June 7, 1993 , and petitioner requested a hearing under section 6330(a)(3)(B) on May 1, 2001 ; i.e., within the 10-year period following the June 7, 1993 , assessment. Accordingly, the period of limitations for collection of petitioner's 1992 liability is suspended and has not expired.

Further, with respect to the underlying tax liabilities, petitioner contends that he asked the Appeals officer to tell him which Internal Revenue Code section makes him liable for tax and whether that section is within subtitle A. Petitioner further claims that he inquired as to what "legislative regulation" makes him liable for interest. In both instances, the Appeals officer apparently refused to consider these inquiries. These are frivolous issues that the Appeals officer might have responded to but was certainly not required to consider. Suffice it to say that petitioner reported wage income for each of the years in question and such income is taxable pursuant to sections 1(a)-(c), 61(a)(1), and 62. See also United States v. Romero [81-1 USTC ¶9276], 640 F.2d 1014, 1016 (9th Cir. 1981). As to petitioner's interest liability, section 6601 provides for the imposition of interest on unpaid tax liabilities, and section 6601(g) provides for the assessment and collection of that interest. See also sec. 301.6601-1, Proced. & Admin. Regs. In sum, the challenges to the existence or amount of the underlying tax liabilities that petitioner advanced either at his hearing or in the instant proceeding are meritless.

Finally, petitioner raised a frivolous argument to the effect that there had been no delegation of authority from the Secretary to issue the notice concerning his hearing under section 6330 or to conduct it, and accordingly his hearing was null and void for want of notice from, or its conduct by, the Secretary himself. For the purposes presented here, the Secretary has delegated the authority to issue a final notice of intent to levy to certain IRS employees. See Delegation Order 191 (Rev. 3), effective June 11, 2001 , Internal Revenue Manual, sec. 1.2.2.5.3; see also Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 263 (2002). The statute itself provides that the hearing is to be conducted by an officer or employee of the IRS Office of Appeals, not the Secretary. Sec. 6330(b)(1), (3).

Having considered all of petitioner's arguments and found them meritless, we conclude that the Appeals officer's failure to permit petitioner to make an audio or other recording of his hearing was harmless error. Similarly, since petitioner has raised only meritless arguments with respect to the underlying tax liabilities, the Appeals officer's refusal to consider arguments concerning the underlying tax liabilities was also harmless error. In these circumstances, we do not believe it is "either necessary or productive" to remand this case for a recorded hearing where an Appeals officer might consider petitioner's meritless arguments concerning his underlying tax liabilities. See Lunsford v. Commissioner [Dec. 54,552], 117 T.C. at 183, 189; see also Keene v. Commissioner [Dec. 55,213], 121 T.C. at 19-20; Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195. As petitioner has not raised a spousal defense, challenged the appropriateness of collection actions, or offered collection alternatives, and the arguments he has raised are meritless, we sustain respondent's determination to proceed with the levy at issue. To reflect the foregoing,

Decision will be entered for respondent.

¹ Unless otherwise noted, section references are to the Internal Revenue Code as amended.

² Respondent concedes that notices of deficiency for these years were not received by petitioner.

³ Certain portions of the underlying tax liabilities were attributable to adjustments respondent made pursuant to sec. 6213(b)(1). However, we do not consider whether, pursuant to sec. 6213(b)(2), petitioner previously had an "opportunity to dispute" these portions within the meaning of sec. 6330(c)(2)(B) because in this proceeding petitioner has, in any event, raised only meritless arguments with respect to his underlying tax liabilities.

⁴ In light of the fact that petitioner sought, but was denied, recordation of the hearing, we resolve all doubts in petitioner's favor, treating any issue or argument he raised at trial or in any written submission as having been raised at his hearing.

[Dec. 55,991(M)]  William B. and Diane S. Meyer v. Commissioner.

Dkt. No. 6901-03L , TC Memo. 2005-81, April 11, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9.]

[Code Sec. 6330]
Liens and levies: Collection Due Process hearing: Verification of tax liability: Form 4340. --

The IRS did not abuse its discretion in determining to proceed with collection of a couple's tax liabilities. The taxpayers were precluded from challenging the underlying tax liability because they had received deficiency determinations for both years at issue and failed to petition for a redetermination. The IRS Appeals officer properly relied on Form 4340 to verify the taxpayers' liability. Although the taxpayers' request to record the Collection Due Process hearing was improperly denied, remand for another hearing was unnecessary since the taxpayers asserted only frivolous tax protest arguments.

[Code Sec. 6673]
Penalties, civil: Institution of proceedings for delay: Tax protestors. --

Sanctions were imposed against taxpayers for instituting the Tax Court proceedings primarily for the purpose of delay. The taxpayers filed returns for two years claiming no income and stating their objections to the federal tax system. The IRS determined to proceed with collection of the taxpayers' liability after a Collection Due Process (CDP) hearing. Although the taxpayers were provided with documentation identifying the types of arguments they raised as frivolous and a copy of T.H. Pierson, [Dec. 54,152], 115 T.C. 576, at the CDP hearing, they chose to petition the Tax Court anyway.

William B. and Diane S. Meyer, pro sese; Ann M. Welhaf, Nancy C. Carver, and Warren P. Simonsen, for respondent.

MEMORANDUM OPINION

WELLS, Judge: This matter is before the Court on respondent's motion for summary judgment, pursuant to Rule 121. All section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

Background ¹

Petitioners are husband and wife. At the time of the filing of the petition, petitioners resided in Las Vegas , Nevada .

On or about May 12, 1998 , petitioners filed a 1997 Form 1040, U.S. Individual Income Tax Return (tax return), reporting zero gross income for the 1997 tax year. With the tax return, petitioners submitted a 1997 Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and a 1997 Form W-2, Wage and Tax Statement. The Form 1099-R reported a gross distribution from E.I. Dupont Pension Fund of $27,504, and the Form W-2 reported compensation from E.I. Dupont De Nemours and Co. of $342. Petitioners also submitted with the tax return a document making the following assertions: (1) The Internal Revenue Code does not establish an income tax liability; (2) the tax return is not being filed voluntarily but out of fear of illegal governmental prosecution; (3) the "Privacy Act Notice" contained in the Form 1040 booklet informed petitioners that they are not required to file a return; (4) laws requiring taxpayers to provide information to the Federal Government violate taxpayers' Fifth Amendment rights; (5) courts have held that a Form 1040 with zeros inserted in the spaces provided qualifies as a tax return; (6) petitioners had zero income according to the Supreme Court's definition of income; (7) petitioners' 1997 tax return does not constitute a "frivolous" return for purposes of section 6702; and (8) no statute allows the IRS to change petitioners' tax return.

On August 13, 1998 , respondent mailed a statutory notice of deficiency to petitioners. In the notice, respondent determined a corrected taxable income of $1,088,854, a deficiency of $408,247, a section 6651(a)(1) failure-to-file addition to tax of $40,824.70, and a section 6662 accuracy-related penalty of $81,649. Petitioners received the notice but did not file a petition with this Court for a redetermination of the deficiency pursuant to section 6213. Consequently, respondent issued a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing, informing petitioners of respondent's intent to levy and of petitioners' right to a hearing before respondent's Appeals Office pursuant to section 6330. In response, petitioners timely filed a Form 12153, Request for a Collection Due Process Hearing.

On March 19, 2003 , petitioners attended a section 6330 hearing with Appeals Officer Michael A. Freitag, who had no prior involvement with respect to petitioners' unpaid tax for 1997. Respondent had denied petitioners' request to record the hearing. Appeals Officer Freitag provided petitioners with a Form 2866, Certificate of Official Record, and a Form 4340, Certificate of Assessments, Payments, and Other Specified Matters. The Form 4340 certified a deficiency of $408,247, a section 6651(a)(1) failure-to-file addition to tax of $40,824.70, and a section 6662 accuracy-related penalty of $81,649. The Form 4340 certified that respondent assessed the foregoing amounts and issued a "statutory notice of balance due" on February 7, 2000 . The Form 4340 further certified that respondent issued a "notice of balance due" on May 21, 2001 and a "statutory notice of intent to levy" on June 25, 2001 . Respondent's Supervisory Investigative Analyst Lee Hansen signed the Form 4340 on February 7, 2003 . Appeals Officer Freitag also provided petitioners with the following documents:

(1) A memorandum issued by respondent on May 2, 2002 , stating that respondent will not permit audio and stenographic recordings of hearings before respondent's Appeals Office;

(2) a copy of Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576 (2000);

(3) respondent's publication entitled "Why I Have to Pay Taxes";

(4) respondent's publication entitled "The Truth About Frivolous Tax Arguments";

(5) a list of Internal Revenue Code sections; and

(6) a copy of a news release from the Justice Department asking the court to stop promoters of abusive tax schemes. Petitioners submitted a joint affidavit that contained a record of their contacts with respondent and made various contentions.² At the hearing, petitioners were provided an opportunity to but did not submit a viable collection alternative, such as an installment agreement or an offer in compromise.

On April 8, 2003 , respondent issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, determining that the proposed levy action was appropriate. Before issuing the notice of determination, Appeals Officer Freitag reviewed respondent's records for petitioners' 1997 tax year, including the Form 4340.

Petitioners timely filed in this Court a petition for lien or levy action, contending, inter alia, that (1) the Appeals Office did not consider petitioners' allegations of irregularities in the assessment procedure, (2) the Form 4340 relied upon by the Appeals Office is contradicted by respondent's records and was not prepared in accordance with Internal Revenue Manual instructions, (3) respondent did not issue a notice and demand in compliance with section 6303, and (4) respondent improperly denied petitioners' request to record the section 6330 hearing. Respondent filed a motion for summary judgment on April 1, 2004 .

Discussion

The purpose of summary judgment is to expedite litigation and avoid the expense of unnecessary trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689], 90 T.C. 678, 681 (1988) . A motion for summary judgment may be granted where there is no dispute as to a material fact and a decision may be rendered as a matter of law. See Rule 121(a) and (b).³ The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences are viewed in a light most favorable to the nonmoving party. Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 260 (2002); Dahlstrom v. Commissioner [Dec. 42,486], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278], 79 T.C. 340, 344 (1982). The party opposing summary judgment must set forth specific facts which show that a question of genuine material fact exists and may not rely merely on allegations or denials in the pleadings. See Grant Creek Water Works, Ltd. v. Commissioner [Dec. 44,996], 91 T.C. 322, 325 (1988); Casanova Co. v. Commissioner [Dec. 43,204], 87 T.C. 214, 217 (1986).

Section 6330 provides that no levy may be made on any property or right to property of a person unless the Secretary first notifies the person in writing of the right to a hearing before the Appeals Office.⁴ Section 6330(c)(1) provides that the Appeals officer must verify at the hearing that applicable laws and administrative procedures have been followed.⁵ The Appeals Officer may rely on a Form 4340 for purposes of complying with section 6330(c)(1). Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166 (2002). At the hearing, the person may raise any relevant issue relating to the unpaid tax or the proposed levy, including appropriate spousal defenses, challenges to the appropriateness of collection actions, and collection alternatives. Sec. 6330(c)(2)(A). However, the person may challenge the existence or amount of the underlying tax liability only if the person did not receive any statutory notice of deficiency for the tax liability or did not otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B);⁶ Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).

Petitioners received a statutory notice of deficiency. Consequently, section 6330(c)(2)(B) precluded petitioners from challenging the underlying tax liability at the section 6330 hearing. Accordingly, we review the administrative determination for abuse of discretion. See Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181-182 (2000); Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).

The record establishes that the Appeals Office properly verified that all applicable laws and administrative procedures were followed. Appeals Officer Freitag had no prior involvement with respect to the unpaid tax liabilities before the section 6330 hearing. The Form 4340 shows that proper assessments were made and that requisite notices had been sent to petitioners. Petitioners raised no viable claims of procedural irregularities,⁷ and respondent properly relied on the Form 4340 during the administrative process. See Nestor v. Commissioner, supra. Petitioners were given the opportunity to but did not discuss collection alternatives at the sec. 6330 hearing.

Petitioners' contentions are frivolous and groundless and will not be refuted with copious citation and extended discussion.⁸ See Williams v. Commissioner [Dec. 53,773], 114 T.C. 136, 138-139 (2000) (citing Crain v. Commissioner [84-2 USTC ¶9721], 737 F.2d 1417, 1417 (5^th Cir. 1984)). Consequently, although respondent improperly denied petitioners' request to record the section 6330 hearing, see sec. 7521(a)(1), we conclude that (1) it is unnecessary and would not be productive to remand the instant case to the Appeals Office for another section 6330 hearing in order to allow petitioners to make an audio recording and (2) it is unnecessary and inappropriate under the circumstances of the instant case to reject respondent's determination, see Keene v. Commissioner [Dec. 55,213], 121 T.C. 8, 19-20 (2003); Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 189 (2001); Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo 2003-195.

Section 6673(a)(1) authorizes this Court to require a taxpayer to pay a penalty not in excess of $25,000 whenever the taxpayer's position is frivolous or groundless or the taxpayer has instituted or pursued the proceeding primarily for delay.

SEC. 6673. SANCTIONS AND COSTS AWARDED BY COURTS.

(a) Tax Court Proceedings. --

(1) Procedures instituted primarily for delay, etc. --Whenever it appears to the Tax Court that --

(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay,

(B) the taxpayer's position in such proceeding is frivolous or groundless, or

(C) the taxpayer unreasonably failed to pursue available administrative remedies,

the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000.

The record demonstrates that petitioners' contentions are frivolous and groundless, and we are convinced that petitioners instituted and maintained the instant proceeding primarily, if not exclusively, for purposes of delay.⁹ Petitioners were provided with a copy of Pierson v. Commissioner [Dec. 54,152], 115 T.C. at 581, in which we stated:

we regard this case as fair warning to those taxpayers who, in the future, institute or maintain a lien or levy action primarily for delay or whose position in such a proceeding is frivolous or groundless. See White v. Commissioner [Dec. 36,334], 72 T.C. 1126, 1135-1136 (1979) (providing fair warning to taxpayers in deficiency actions who bring frivolous case merely for purposes of delay).

Consequently, pursuant to section 6673(a)(1), we shall require petitioners to pay to the United States a penalty of $15,000.

To reflect the foregoing,

An appropriate order and decision for respondent will be entered.

¹ Stipulations of fact signed by petitioners' former counsel on Feb. 13, 2004, were submitted by respondent as an exhibit to the instant motion for summary judgment. In their response to the motion, petitioners stated:

Due to the uncompleted process regarding the stipulations, and since there are inadvertent errors in the list that has been signed by both counsels, petitioners respectfully request permission to withdraw all stipulations attached to respondent's motion for summary judgment.

Because the foregoing stipulations of fact have not been filed with this Court pursuant to Rule 91, we do not consider petitioners' request for withdrawal and we do not consider the stipulations of fact contained in the exhibit.

² The foregoing contentions include the following: "To the best of my knowledge, I am not, nor have I ever been, statutorily liable or made liable for any tax pursuant to 26 USC."

³ Rule 121(b) provides:

A decision shall thereafter be rendered if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. * * *

⁴ SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.

(a) Requirement of Notice Before Levy. --

(1) In general. --No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. * * *

* * * * * * *

(b) Right to Fair Hearing. --

(1) In general. --If the person requests a hearing * * *, such hearing shall be held by the Internal Revenue Service Office of Appeals.

⁵ Sec. 6330(c)(1) provides:

(1) Requirement of investigation. --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.

⁶ Sec. 6330(c)(2)(B) provides:

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

⁷ Petitioners' request to record the sec. 6330 hearing is discussed below.

⁸ Petitioners' contentions are substantially similar to contentions raised by the taxpayer in Hiland v. Commissioner [Dec. 55,767(M)], T.C. Memo. 2004-225 ("Taxpayer's complaints with respect to the administrative proceedings included the following: No legitimate hearing under sec. 6330 ever took place; taxpayer was denied the opportunity to raise issues he deemed "relevant" (e.g., the "existence" of the underlying tax liability); and cited documentation had not been produced and/or addressed (e.g., record of the assessments, statutory notice and demand for payment, any "valid notice of deficiency", and verification from the Secretary that all applicable requirements were met))". In Hiland, we held that the contentions raised by the taxpayer were frivolous and/or groundless, and we imposed a penalty pursuant to sec. 6673.

⁹ Petitioners have made the same frivolous and groundless contentions in a separate proceeding before this Court, docket No. 13514-03L, with respect to their 1996 tax year.