                         T.C. Memo. 2003-69



                       UNITED STATES TAX COURT



      MICHAEL D. KEOWN AND ROSANN C. KEOWN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16173-02L.              Filed March 13, 2003.



     Michael D. Keown and Rosann C. Keown, pro sese.

     Wendy S. Harris, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    This case is before the Court on

respondent’s motion for summary judgment and to impose a penalty
                                - 2 -

under section 66731 (respondent’s motion).2   We shall grant

respondent’s motion.

                            Background

     The record establishes and/or the parties do not dispute the

following.

     Petitioners resided in Henderson, Nevada, at the time they

filed the petition in this case.

     On August 17, 2000, petitioners filed jointly a Federal

income tax (tax) return for their taxable year 1999 (1999 joint

return).   In their 1999 joint return, petitioners reported total

income of $123,867 and tax due of $18,410.    Although petitioners

attached to their 1999 joint return Form 1040-V, Payment Voucher,

reflecting a payment of $18,410, they did not remit any such

payment with that return.

     On September 11, 2000, respondent assessed petitioners’ tax,

as well as any penalties and interest as provided by law, for

their taxable year 1999.    (We shall refer to any such unpaid

assessed amounts, as well as interest as provided by law accrued

after September 11, 2000, as petitioners’ unpaid liability for

1999.)



     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
      Although the Court ordered petitioners to file a response
to respondent’s motion, petitioners failed to do so.
                               - 3 -

     On September 11, 2000, respondent issued to petitioners a

notice of balance due with respect to petitioners’ unpaid liabil-

ity for 1999.

     On or about September 20, October 25, and November 29, 2000,

and January 28 and March 27, 2001, petitioners sent respondent

payments totaling $2,457 with respect to petitioners’ unpaid

liability for 1999.   Petitioners did not make any payments after

March 27, 2001, with respect to that unpaid liability.

     On November 8, 2001, respondent issued to petitioners a

final notice of intent to levy and notice of your right to a

hearing (notice of intent to levy) with respect to their taxable

year 1999.   On December 4, 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).

Petitioners attached, inter alia, a document to their Form 12153

(petitioners’ attachment to Form 12153) that contained state-

ments, contentions, arguments, and requests that the Court finds

to be frivolous and/or groundless.3

     On August 28, 2002, a settlement officer with respondent’s


     3
      Petitioners’ attachment to Form 12153 contained statements,
contentions, arguments, and requests that are similar to the
statements, contentions, arguments, and requests contained in the
attachment to Form 12153 filed with the Internal Revenue Service
by certain other taxpayers with cases in the Court. See, e.g.,
Copeland v. Commissioner, T.C. Memo. 2003-46; Smith v. Commis-
sioner, T.C. Memo. 2003-45.
                               - 4 -

Appeals Office (settlement officer) held an Appeals Office

hearing with petitioner Michael D. Keown (Mr. Keown)4 with re-

spect to the notice of intent to levy.    At the Appeals Office

hearing, the settlement officer gave Mr. Keown Form 4340, Certif-

icate of Assessments, Payments, and Other Specified Matters, with

respect to petitioners’ taxable year 1999.

     On September 12, 2002, the Appeals Office issued a notice of

determination concerning collection action(s) under section 6320

and/or 6330 (notice of determination) to Mr. Keown and a separate

notice of determination to Ms. Keown.    (We shall refer collec-

tively to those two notices as petitioners’ notices of determina-

tion).   An attachment to each such notice of determination stated

in pertinent part:

     What is the Issue?

     The taxpayers requested a hearing under the provisions
     of IRC 6330 to contest the intent to levy notice,
     Letter LT-11.

     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.

     An assessment was made and the taxpayers were issued
     notice and demand letters by regular mail, to the
     taxpayers’ last known address, as required under IRC
     6303. They neglected or refused to pay. The notices
     required under IRC 6331(d) and IRC 6330 were combined

     4
      Petitioner Rosann C. Keown (Ms. Keown) did not appear at
the Appeals Office hearing held on Aug. 28, 2002.
                         - 5 -

in Letter LT-11, dated 11/08/2001, which was mailed
certified to the taxpayers’ last known address. The
taxpayers responded with Form 12153, Request for a
Collection Due Process Hearing, which was received
12/05/2001. The taxpayers’ appeal was timely. The
taxpayers are entitled to judicial review. Appropri-
ately, TC520/77 was input, staying collection. This is
a levy issue only. No Notice of Federal Tax Lien has
been filed.

The taxpayer appeared in person for his Collection Due
Process hearing, his spouse chose to work instead of
coming to the hearing. Settlement Officer Mike Freitag
conducted the hearing and 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 and was
again reminded that no recording of Appeals hearings
was allowed.

Settlement Officer Mike Freitag has had no prior in-
volvement with respect to these tax liabilities.

Issues Raised by the Taxpayer

The taxpayer and his wife timely filed their joint
income tax return for 1999, showing taxable earnings,
attaching their W-2 forms and showing tax due on the
return. At the hearing the taxpayer was asked to point
out any irregularities in the making of the assessment.
He stated he couldn’t point out any irregularities and
thought that the return was correct at the time of
filing, but continued with his non-filer arguments.

When the taxpayers were mailed Letter LT-11, Final
Notice-Notice of Intent to Levy and Notice of Your
Right to a Hearing, the taxpayers responded with Form
12153, attaching several page [sic] of non-filer argu-
ments.

At the hearing Appeals provided the following docu-
ments:

     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 forms 2866 to which the forms
                           - 6 -

            4340, Certificate of Assessment, are annexed
            for the period in dispute;
       c)   A copy of Section 6673 of the I.R.C., showing
            that the Tax Court can impose sanctions of up
            to $25,000 when a taxpayer institutes litiga-
            tion before it primarily for delay or based
            on a frivolous position;
       d)   A copy of the case Davis v. Comm., T.C. Memo
            [sic] 2001-87, in which it shows that the
            court imposed sanctions of $4,000 against the
            taxpayer for raising frivolous arguments in a
            CDP case;
       e)   A copy of the case Perry v. Comm., T.C. Memo
            [sic] 2002-165, in which the court imposed
            sanctions of $2,500 against the taxpayer for
            raising frivolous arguments in a CDP case;

   *        *       *       *       *       *       *

Upon receipt of the first court opinion, he stated the
courts were a separate issue and when Appeals tried to
explain that the court could impose sanctions, he
stated that would be like “squeezing the turnip.”

The taxpayer was asked if he were [sic] 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 an
offer to be considered, or for an installment agree-
ment. According to IRS computer records, the taxpayers
have not filed returns for 2000-2001. The taxpayer
claims the returns have been filed showing zero income.
He was asked if he had wages and he said yes, but
stated he did not believe that wages were taxable
income and he was unwilling to discuss collection
alternatives. Collection issues could not be discussed
with Rosann Keown as she did not attend the hearing.

The taxpayer raised no non-filer issues. The informa-
tion previously submitted by the taxpayers was re-
viewed, and Rosann Keown raised no non-filer issues.

Balancing the Need for Efficient Collection with Tax-
payer Concerns

The requirements of all applicable laws and administra-
tive procedures have been met. The taxpayers received
their required notices. At the hearing, Appeals raised
                               - 7 -

     collection alternatives with Michael Keown, 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. Lacking the taxpayers’ cooperation, the proposed
     collection action balances the need for efficient
     collection with the taxpayer’s [sic] concern that any
     collection action be no more intrusive than necessary.

                            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.   Rule 121(b); Sundstrand Corp. v. Commissioner,

98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).    We

conclude that there is no genuine issue of material fact regard-

ing the questions raised in respondent’s motion.

     A taxpayer may raise challenges to the existence or the

amount of the taxpayer’s underlying tax liability if the taxpayer

did not receive a notice of deficiency or did not otherwise have

an opportunity to dispute the tax liability.   Sec. 6330(c)(2)(B).

Where the validity of the underlying tax liability is properly

placed at issue, the Court will review the matter on a de novo

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

Commissioner, 114 T.C. 176, 181-182 (2000).    Although petitioners

did not receive a notice of deficiency with respect to their

taxable year 1999, the contentions that petitioners raised at

their Appeals Office hearing and in their petition with respect

to petitioners’ unpaid liability for 1999 are that they “had no

statutory income to report”, that wages are not income, and that
                                - 8 -

no section makes them liable for tax.    The Court finds those

contentions to be frivolous and groundless.

     We now turn to the remaining issues that petitioners raised

at their Appeals Office hearing and in the petition with respect

to petitioners’ notices of determination, which we shall

review for abuse of discretion.    Sego v. Commissioner, supra;

Goza v. Commissioner, supra.    We find all those remaining issues

to be frivolous and/or groundless.

     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 petitioners’ notices of determination with respect to peti-

tioners’ taxable year 1999.

     In respondent’s motion, respondent requests that the Court

require petitioners to pay a penalty to the United States pursu-

ant 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 ground-

less, sec. 6673(a)(1)(B).

     In Pierson v. Commissioner, 115 T.C. 576, 581 (2000), we

issued an unequivocal warning to taxpayers concerning the imposi-
                                 - 9 -

tion 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 primar-

ily for delay, frivolous and/or groundless contentions, argu-

ments, and requests, 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 $3,200.

     We have considered all of petitioners’ contentions, argu-

ments, and requests that are not discussed herein, and we find

them to be without merit and/or irrelevant.5

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

     To reflect the foregoing,

                                         An appropriate order granting

                                 respondent’s motion and decision

                                 will be entered for respondent.



     5
      We note that petitioners allege in the petition that, “by
not allowing Petitioner to make an adequate record of the CDP
hearing”, respondent violated sec. 7521(a)(1). We shall not
address petitioners’ allegation. That is because, assuming
arguendo that sec. 7521(a)(1) were applicable in the case of an
Appeals Office hearing under sec. 6330(b)(1), the record does not
establish that petitioners complied with the requirement of sec.
7521(a)(1) that they present respondent with their request to
make an audio recording of their Appeals Office hearing in
advance of that hearing.
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