                        T.C. Memo. 2011-41



                      UNITED STATES TAX COURT



         W. JAMES KUBON AND VALLY KUBON, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18866-09L.            Filed February 14, 2011.


     W. James Kubon and Vally Kubon, pro sese.

     John D. Feldhammer, for respondent.



                        MEMORANDUM OPINION


     HAINES, Judge:   This case is before the Court on

respondent’s motion for summary judgment filed pursuant to Rule

121 and respondent’s motion for sanctions pursuant to section

6673.1

     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
                                                   (continued...)
                                - 2 -

     The parties’ controversy poses the following issues for our

consideration:    (1) Whether petitioners received a notice of

deficiency for 2004; (2) whether respondent’s determinations for

2004 were an abuse of discretion; and (3) whether petitioners are

liable for the penalty under section 6673.

                              Background

     At the time of the filing of the petition, petitioners

resided in San Jose, California.

     On their 2004 tax return petitioners reported zero income

and requested a full refund of all taxes withheld for 2004.      On

January 18, 2008, respondent sent petitioners a notice of

deficiency for 2004 to 560 Hobie Lane, San Jose, California

95127-3531 (560 Hobie Lane).2    Petitioners used this address on

their petition and on all subsequent motions and responses filed

with the Court.    Petitioners failed to petition the Court to

redetermine the deficiency.

     In his notice of deficiency respondent determined

petitioners’ taxable income and tax liability for 2004 to be

$122,532 and $32,196, respectively.     In the absence of adequate

records the examiner determined those amounts by reference to any


     1
      (...continued)
references are to the Tax Court Rules of Practice and Procedure.
     2
      Respondent actually issued two notices of deficiency, one
copy addressed to James and Vally Kubon and the other addressed
only to Vally Kubon. For purposes of this opinion, we refer to
the notices as a single notice of deficiency.
                               - 3 -

relevant Forms W-2, Wage and Tax Statement, bank deposits, cash

payments, and personal and other nondeductible expenditures.

     On June 25, 2008, respondent issued petitioners a Notice of

Intent to Levy and Notice of Your Right to a Hearing (notice of

levy).   On July 8, 2008, respondent issued petitioners a Notice

of Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320 (notice of lien).   In response, petitioners timely mailed

respondent two Forms 12153, Request for a Collection Due Process

or Equivalent Hearing, one in response to the notice of levy and

the other in response to the notice of lien.   Petitioners

attached a page of arguments to each response, which:   (1)

Disputed the validity of the notice; (2) questioned whether the

Internal Revenue Service (IRS) followed all proper procedures as

required by law; (3) claimed that petitioners are not liable for

the assessed tax because they never had a chance to challenge the

assessment; and (4) raised collection alternatives if the

liability was determined to be proper.   Further, petitioners

argued that it was not their intention to discuss any issues

determined to be frivolous, stating:   “[I]f you have considered

issues that * * * [we’ve] raised in the past to be frivolous, * *

* [we] hereby abandon them.”

     On April 22, 2009, respondent sent petitioners a request to

complete Form 433-A, Collection Information Statement for Wage

Earners and Self-Employed Individuals, to assist in considering
                               - 4 -

collection alternatives.   Petitioners did not complete and return

Form 433-A.

     Petitioners were next sent an appointment letter for a

telephone hearing scheduled for June 2, 2009.    On June 3, 2009,

the day after the hearing was scheduled to take place,

petitioners faxed respondent a letter stating that they would not

participate in a telephone hearing and demanding a face-to-face

hearing.   On June 4, 2009, a letter was sent to petitioners

outlining the IRS’ policies for a face-to-face hearing and

explaining why petitioners did not qualify.   Petitioners were

given the opportunity to provide the information necessary to

qualify for a face-to-face hearing; however, they were informed

that if no such documentation was received by June 29, 2009, a

determination would be made based on the information available.

Petitioners did not provide any additional information.

Accordingly, on July 10, 2009, respondent issued petitioners a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 with regard to 2004.

     On October 14, 2009, respondent moved to remand the case to

respondent’s Appeals Office for further consideration because it

was unclear how respondent determined that the notice of

deficiency had been mailed to petitioners.    On October 19, 2009,

respondent’s motion for remand was granted, and the case was

remanded to Appeals for further consideration.
                               - 5 -

     On remand, Appeals used the U.S. Postal Service track and

confirm service to verify that the notice of deficiency was

mailed to petitioners on January 18, 2008, and delivered to

petitioners’ home on January 22, 2008.    On December 7, 2009,

Appeals offered petitioners a supplemental face-to-face hearing

and scheduled the hearing for January 14, 2010.    On January 12,

2010, petitioners sent respondent a letter stating that a hearing

was not necessary because the IRS had failed to provide proof

that the notice of deficiency was properly created.

     As a result of petitioners’ failure to accept respondent’s

invitation for a face-to-face hearing, on February 3, 2010,

respondent issued petitioners a Supplemental Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (supplemental notice of determination) that verified

that the proper procedures had been followed in issuing the

notice of deficiency.   The supplemental notice of determination

stated:

     Internal transcripts show a legal assessment was made,
     notice and demand given, and that there was a subsequent
     failure and/or refusal to pay. Both the filing of the
     Notice of Federal Tax Lien and the issuance of the Notice of
     Intent to Levy were legally and procedurally correct. Thus
     the actions of compliance balance the need for efficient
     collection action with your concern that any collection
     action be no more intrusive than necessary.

     On July 29, 2010, respondent filed a motion for summary

judgment and a motion to permit levy.    Respondent’s motion for

summary judgment seeks summary adjudication in respondent’s favor
                               - 6 -

for all of the legal issues in controversy.    Respondent’s motion

to permit levy seeks removal of the suspension of the levy under

section 6330(e), alleging that the underlying tax liability is

not at issue and good cause exists for the removal.   Along with

respondent’s motion for summary judgment and motion to permit

levy, respondent filed a declaration of Settlement Officer

Raymundo Jacquez, Jr. (Mr. Jacquez), which states that he

reviewed petitioners’ TXMOD-A transcript and INOLE-S transcript

for 2004, each dated November 19, 2009, as part of his

verification that all legal and administrative requirements for

the levy had been met and that petitioners have not filed

anything with the IRS with an address other than 560 Hobie Lane

since 1990.

     On October 18, 2010, the Court filed respondent’s supplement

to respondent’s motion for summary judgment.   This supplement

adds a copy of the certified mail list to respondent’s motion for

summary judgment, stating that the notice of deficiency was sent

by certified mail to petitioners at 560 Hobie Lane on January 18,

2008.   Finally, on October 18, 2010, respondent filed a motion

for sanctions requesting that the Court impose a penalty pursuant

to section 6673 because petitioners instituted these proceedings

solely for the purpose of delay and advanced only frivolous

arguments.
                               - 7 -

     On September 7, 2010, the Court filed petitioners’ objection

to respondent’s motion to permit levy.    On October 13, 2010, the

Court filed petitioners’ motion to remand.    Finally, on October

18, 2010, the Court filed petitioners’ objection to respondent’s

motion for summary judgment.

                            Discussion

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.     Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).     The Court may grant

summary judgment when there is no genuine issue of material fact

and a decision may be rendered as matter of law.    Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   We conclude that there are no genuine issues of

material fact regarding the questions raised in respondent’s

motion for summary judgment and a decision may be rendered as a

matter of law.

     Section 6331(a) provides that if any person liable to pay

any tax neglects or refuses to do so within 10 days after notice

and demand, the Secretary can collect such tax by levy upon

property belonging to such person.     Pursuant to section 6331(d),

the Secretary is required to give the taxpayer notice of his

intent to levy and within that notice must describe the
                               - 8 -

administrative review available to the taxpayer before proceeding

with the levy.   See also sec. 6330(a).

     Section 6330(b) describes the administrative review process,

providing that a taxpayer can request a hearing with the Appeals

Office with regard to a levy notice.   At the section 6330 hearing

the taxpayer may raise certain matters set forth in section

6330(c)(2), including appropriate spousal defenses, challenges to

the appropriateness of collection actions, and offers of

collection alternatives.   Further, a taxpayer may dispute the

underlying tax liability for any tax period if the taxpayer did

not receive a notice of deficiency for such tax liability or did

not otherwise have an opportunity to dispute such tax liability.

Sec. 6330(c)(2)(B).

     Pursuant to section 6330(d)(1), within 30 days of the

issuance of the notice of determination, the taxpayer may appeal

that determination to this Court.   Although section 6330 does not

prescribe the standard of review that the Court is to apply in

reviewing the Commissioner’s administrative determinations, we

have stated that, where the validity of the underlying tax

liability is properly at issue, the Court will review the matter

de novo.   Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).   Where the validity

of the underlying tax liability is not properly at issue,

however, the Court will review the Commissioner’s administrative
                                - 9 -

determination for abuse of discretion.      Sego v. Commissioner,

supra at 610; Goza v. Commissioner, supra at 182.

Challenge to Validity of Notice of Deficiency

     Petitioners present a challenge to the validity of the

notice of deficiency.   On remand, Mr. Jacquez used the U.S.

Postal Service track and confirm service to verify that the

notice of deficiency was mailed to petitioners at their home at

560 Hobie Lane on January 18, 2008, and was delivered on January

22, 2008.    Petitioners’ INOLE-S transcript for 2004, dated

November 19, 2009, shows that petitioners have not filed anything

with the IRS with an address other than 560 Hobie Lane since the

year 1990.    Further, petitioners used the 560 Hobie Lane address

on their petition and all subsequent motions and responses filed

with the Court.   Finally, respondent’s supplement to his motion

for summary judgment provides a certified mail list confirming

that the notice of deficiency was sent by certified mail to

petitioners at 560 Hobie Lane on January 18, 2008.      Accordingly,

we conclude that petitioners received a notice of deficiency at

their last known address for 2004.      See sec. 6212(a) and (b).

     Because petitioners received a notice of deficiency for

2004, and did not file a petition for redetermination within 90

days, petitioners are precluded from challenging their underlying

tax liability for 2004 in this collection action and the validity
                                - 10 -

of the underlying liability is not properly at issue.3    See sec.

6330(c)(2)(B).

Verification of Assessment Procedure

     Federal tax assessments are formally recorded on a record of

assessment.   Sec. 6203.   “The summary record, through supporting

records, shall provide identification of the taxpayer, the

character of the liability assessed, the taxable period, if

applicable, and the amount of the assessment.”    Sec. 301.6203-1,

Proced. & Admin. Regs.     Section 6330(c)(1) does not require the

Commissioner to rely on a particular document to satisfy the

verification requirement.     Roberts v. Commissioner, 118 T.C. 365,

371 n.10 (2002), affd. 329 F.3d 1224 (11th Cir. 2003); Kaeckell

v. Commissioner, T.C. Memo. 2002-114.

     We conclude that Mr. Jacquez obtained verification from the

Secretary that the requirements of all applicable laws and

administrative procedures were met as required by section


     3
      Even if petitioners were entitled to challenge their
underlying tax liability, their only argument is that their wages
do not constitute taxable income. Their arguments are
indistinguishable from those that have been uniformly rejected,
and no further discussion of them is warranted. See United
States v. Connor, 898 F.2d 942, 943 (3d Cir. 1990); Coleman v.
Commissioner, 791 F.2d 68, 70 (7th Cir. 1986); Sauers v.
Commissioner, 771 F.2d 64, 66 (3d Cir. 1985), affg. T.C. Memo.
1984-367; Connor v. Commissioner, 770 F.2d 17, 20 (2d Cir. 1985);
Biermann v. Commissioner, 769 F.2d 707, 708 (11th Cir. 1985);
Waters v. Commissioner, 764 F.2d 1389, 1389 (11th Cir. 1985);
Perkins v. Commissioner, 746 F.2d 1187, 1188 (6th Cir. 1984),
affg. T.C. Memo. 1983-474; Knighten v. Commissioner, 702 F.2d 59,
60 (5th Cir. 1983); Funk v. Commissioner, 687 F.2d 264, 265 (8th
Cir. 1982), affg. T.C. Memo. 1981-506.
                                - 11 -

6330(c)(1).     Mr. Jacquez obtained and reviewed a TXMOD-A

transcript of account for petitioners’ 2004 taxable year before

the scheduled hearing.     In this regard, the TXMOD-A transcript of

account on which Mr. Jacquez relied contained all of the

information prescribed in section 301.6203-1, Proced. & Admin.

Regs.     See Hack v. Commissioner, T.C. Memo. 2002-243 (“The use of

computer-generated transcripts of account is a valid verification

that the requirements of any applicable law or administrative

procedure have been met.”); Schroeder v. Commissioner, T.C. Memo.

2002-190 (provides a description of such transcripts); Hauck v.

Commissioner, T.C. Memo 2002-184 (“We have repeatedly held that

the Commissioner may rely on transcripts of account to satisfy

the verification requirement of section 6330(c)(1).”), affd. 64

Fed. Appx. 492 (6th Cir. 2003).

        Petitioners have not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessments or the information contained in the

transcript of account relied on by Mr. Jacquez.     See Davis v.

Commissioner, 115 T.C. 35, 41 (2000); Mann v. Commissioner, T.C.

Memo. 2002-48.     Accordingly, we conclude that there is no

question that the Appeals officer satisfied the verification

requirement of section 6330(c)(1).

        Petitioners make no other arguments against the validity of

the notice of determination.     In particular, petitioners fail to
                               - 12 -

make a valid challenge to the appropriateness of respondent’s

intended collection action, raise a spousal defense, or offer

alternative means of collection.    We conclude that respondent did

not abuse his discretion.

Section 6673 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 that the

taxpayer’s position in the proceeding is frivolous or groundless.

Sec. 6673(a)(1)(B).    The section 6673 penalty applies to

proceedings filed under section 6330(d).    See Pierson v.

Commissioner, 115 T.C. 576, 581 (2000).

     It is within our discretion whether to impose the section

6673 penalty.    We have often imposed the penalty in cases where,

for example, taxpayers have presented arguments in administrative

and judicial proceedings despite being warned those arguments

were frivolous.   See Burke v. Commissioner, 124 T.C. 189, 197

(2005); Rodriguez v. Commissioner, T.C. Memo. 2009-92; Ioane v.

Commissioner, T.C. Memo. 2009-68 ($10,000 penalty imposed where

taxpayer was warned months before trial that his frivolous

arguments, lack of candor, and failure to cooperate in the

stipulation process could result in imposition of the section

6673 penalty).    But see Lizalek v. Commissioner, T.C. Memo. 2009-

122 (declining to impose the section 6673 penalty where the
                               - 13 -

taxpayer raised frivolous arguments for the first time in Federal

court).

     In their August 15, 2008, Forms 12153, petitioners argued

that it is not their intention to discuss any issues determined

to be frivolous, stating:   “[I]f you have considered issues that

* * * [we’ve] raised in the past to be frivolous, * * * [we]

hereby abandon them.”   Nonetheless, petitioners’ dealings with

Appeals were characterized by a lack of cooperation and continued

frivolous and groundless assertions.    Petitioners have

consistently refused to participate in collection due process

hearings.   In fact, in their letter dated January 12, 2010,

petitioners declined Appeals’ invitation to a face-to-face

hearing, stating without any support that a hearing was not

necessary because the IRS had failed to provide proof that the

notice of deficiency was properly created.    Further, in 2005

petitioner W. James Kubon was penalized $10,000 pursuant to

section 6673 for making nearly identical arguments.    Kubon v.

Commissioner, T.C. Memo. 2005-71.   Accordingly, petitioners were

aware that by continuing to pursue these arguments, they

subjected themselves to the possibility of a penalty pursuant to

section 6673.

      Petitioners’ continuous insistence on presenting patently

frivolous arguments wastes both respondent’s and this Court’s

valuable time and resources.   Under the circumstances, we shall
                             - 14 -

grant respondent’s motion and impose a penalty pursuant to

section 6673(a)(1) of $20,000.

     We have considered all of petitioners’ contentions,

arguments, and requests that are not discussed herein, and we

conclude that they are without merit or irrelevant.

     To reflect the foregoing,


                                        An appropriate order and

                                   decision will be entered.
