                          T.C. Memo. 2005-82



                        UNITED STATES TAX COURT



            WILLIAM B. AND DIANE S. MEYER, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



       Docket No. 13514-03L.            Filed April 11, 2005.


       William B. and Diane S. Meyer, pro sese.

       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, filed 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.
                                -2-

                             Background

     Petitioners are husband and wife.    At the time of the filing

of the petition, petitioners resided in Las Vegas, Nevada.

     On April 15, 1997, petitioners filed a 1996 Form 1040, U.S.

Individual Income Tax Return (tax return), reporting zero gross

income for the 1996 tax year.   With the tax return, petitioners

submitted 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) regulations requiring the

filing of a tax return apply only to foreign earned income; (5)

laws requiring taxpayers to provide information to the Federal

Government violate taxpayers’ Fifth Amendment rights; (6) courts

have held that a Form 1040 with zeros inserted in the spaces

provided qualifies as a tax return; (7) petitioners had zero

income according to the Supreme Court’s definition of income; (8)

petitioners’ 1996 tax return does not constitute a “frivolous”

return for purposes of section 6702; and (9) 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 $845,902, a deficiency of $312,721,
                                  -3-

and a section 6662 accuracy-related penalty of $62,544.20.

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.

     In a letter dated April 25, 2003, Appeals Officer Jerry L.

Johnson notified petitioners that (1) the section 6330 hearing

had been scheduled for May 9, 2003, (2) petitioners would not be

permitted to record the hearing, and (3) petitioners could choose

a hearing by correspondence in lieu of a personal appearance

before Appeals Officer Johnson.    In response, petitioners

requested a hearing by correspondence and submitted a joint

affidavit containing a record of petitioners’ contacts with

respondent and making various contentions.1


     1
      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.” In a
letter dated May 10, 2003, petitioners described the contentions
contained in their affidavit as follows:

     You will find no frivolous arguments in the packet we
     sent you. Some of the issues we raised are as follows:

                                                     (continued...)
                                -4-

     Before May 9, 2003, Appeals Officer Johnson provided

petitioners with a Form 4340, Certificate of Assessments,

Payments, and Other Specified Matters.     The Form 4340 certified a

deficiency of $312,721 and a section 6662 accuracy-related

penalty of $62,544.20.   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 subsequently issued a “notice of

balance due” and a “statutory notice of intent to levy”.

Respondent’s Supervisory Investigative Analyst Lee Hansen signed

the Form 4340 on March 19, 2003.

     Appeals Officer Johnson issued a letter dated May 9, 2003,

as part of petitioners’ section 6330 hearing by correspondence.

The letter stated that (1) the underlying tax liability could not

be challenged because petitioners had received a statutory notice

of deficiency and had had an opportunity to dispute the

underlying tax liability; (2) issues included the appropriateness

of collection actions, offers of collection alternatives, and


     1
      (...continued)
     •    We have received no assessment certificate to date
          which includes our individual assessment.
     •    We have received no Notice and Demand.
     •    IRS computer records show some other party is
          using our Social Security number, so that NONE of
          the entries on our records can be relied upon as
          correct.
     •    There are numerous errors in our Individual Master
          File.
                                -5-

appropriate spousal defenses; (3) Appeals Officer Johnson had

determined that the requirements of applicable law and

administrative procedure had been met; (4) this Court has held

that many arguments raised by petitioners are “tax protestor”

arguments that need not be considered by Appeals officers in

section 6330 hearings and that may result in sanctions pursuant

to section 6673; and (5) petitioners would be allowed 10 days to

raise any procedural issues with Appeals Officer Johnson.

     On July 16, 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.   Petitioners timely filed 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

improperly certified, and (3) respondent did not issue a notice

and demand in compliance with section 6303.    Respondent filed a

motion for summary judgment on April 9, 2004.

                            Discussion

     The purpose of summary judgment is to expedite litigation

and avoid the expense of unnecessary trials.    Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).   A motion for summary

judgment may be granted where there is no dispute as to a
                                  -6-

material fact and a decision may be rendered as a matter of law.

See Rule 121(a) and (b).2     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, 119 T.C. 252, 260

(2002); Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985);

Jacklin v. Commissioner, 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, 91 T.C. 322, 325

(1988); Casanova Co. v. Commissioner, 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.3    Section 6330(c)(1) provides that the


     2
      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. * * *
     3
      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
                                                   (continued...)
                                  -7-

Appeals Officer must verify at the hearing that applicable laws

and administrative procedures have been followed.4       The Appeals

Officer may rely on a Form 4340 for purposes of complying with

section 6330(c)(1).    Nestor v. Commissioner, 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




     3
      (...continued)
          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.
     4
      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.
                                 -8-

tax liability.   Sec. 6330(c)(2)(B);5 Sego v. Commissioner, 114

T.C. 604, 610 (2000).

     In the instant case, 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,

114 T.C. 176, 181-182 (2000); Sego v. Commissioner, supra at 610.

     The record establishes that the Appeals Office properly

verified that all applicable laws and administrative procedures

were followed.   Appeals Officer Johnson 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,6 and respondent properly relied on the Form 4340

during the administrative process.     See Nestor v. Commissioner,

supra.   Petitioners did not discuss collection alternatives.


     5
      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.
     6
      We address respondent’s refusal to allow the recording of
sec. 6330 hearings below.
                                -9-

     Petitioners’ contentions are frivolous and groundless and

will not be refuted with copious citation and extended

discussion.7   See Williams v. Commissioner, 114 T.C. 136, 138-139

(2000) (citing Crain v. Commissioner, 737 F.2d 1417, 1417 (5th

Cir. 1984)).   Consequently, although respondent improperly

refused to allow any recording of 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 to reject respondent’s determination, see

Lunsford v. Commissioner, 117 T.C. 183, 189 (2001); Kemper v.

Commissioner, 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




     7
      Petitioners’ contentions are substantially similar to
contentions raised by the taxpayer in Hiland v. Commissioner,
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
that case, we held that the contentions raised by the taxpayer
were frivolous and/or groundless, and we imposed a penalty
pursuant to sec. 6673.
                                 -10-

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.8    As noted above,

respondent’s letter dated May 9, 2003, informed petitioners that

they risked a monetary penalty by making such arguments, but they

continued to waste the limited resources of the Federal tax

system.   Consequently, pursuant to section 6673(a)(1), we shall




     8
      Petitioners have made the same frivolous and groundless
contentions in a separate proceeding before this Court, docket
No. 6901-03L, with respect to their 1997 tax year.
                                 -11-

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.
