                         T.C. Memo. 2006-141



                       UNITED STATES TAX COURT



           AARON T. AND LINDA K. BALL, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17212-04L.             Filed July 5, 2006.


     Aaron T. and Linda K. Ball, pro sese.

     Wesley J. Wong, for respondent.



                         MEMORANDUM OPINION

     VASQUEZ, Judge:    This case was commenced in response to a

Notice of Determination Concerning Collection Action(s) Under

Section 63201 and/or 6330.   The issues for decision are:    (1)

Whether respondent may proceed with collection of petitioners’


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 2 -

1997 income tax liability; and (2) whether petitioners are liable

for a penalty pursuant to section 6673.

                             Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the petition

was filed, petitioners resided in Las Vegas, Nevada.

     In 1997, petitioner Aaron Ball was employed as a tile

installer by Carrara Marble Co. of America.    His employer issued

a Form W-2, Wage and Tax Statement, reporting wages of $54,438.27

and Federal income tax withheld of $7,701.17.    A copy of this

Form W-2 was attached to petitioners’ 1997 tax return.

     In 1997, petitioner Linda Ball was employed as a registered

nurse.    She was issued a Form W-2 from CHC Payroll Agent, Inc.,

Sunrise Mt. View 2270, reporting wages of $23,287.96 and Federal

income tax withheld of $3,503.67.    She was also issued a Form W-2

from CHC Payroll Agent, Inc., Sunrise Hsp & M/C 1541, reporting

wages of $17,926.18 and Federal income tax withheld of $3,349.53.

Copies of these forms were also attached to petitioners’ 1997 tax

return.

     Petitioners do not dispute that they received this income in

1997, yet they filed a Form 1040, U.S. Individual Income Tax

Return, listing zero as the amount of taxable income, tax due,

and total tax.    Petitioners requested a refund of $14,554.37,
                               - 3 -

which was the total amount of Federal income tax withheld.

Petitioners also attached a typewritten statement to the Form

1040 reciting contentions and arguments that this Court has found

to be frivolous and/or groundless.

     Respondent determined a deficiency and an accuracy-related

penalty in petitioners’ 1997 Federal income tax and issued a

notice of deficiency to petitioners on July 21, 2000.

Petitioners received the notice of deficiency but did not file a

petition for redetermination of a deficiency with this Court for

taxable year 1997.

     Respondent issued to each petitioner a Letter 1058, Final

Notice of Intent to Levy and Notice of Your Right to a Hearing,

on October 9, 2003, for taxable year 1997.   Petitioners sent

respondent a letter dated November 5, 2003, requesting a section

6330 hearing.   Throughout their correspondence with respondent,

petitioners continued to make contentions and arguments that this

Court has found to be frivolous and/or groundless.

     In letters dated July 6 and July 22, 2004, respondent’s

settlement officer attempted to schedule an administrative

hearing with petitioners.   Respondent informed petitioners that a

face-to-face hearing would not be available if the only items

raised by petitioners are arguments or contentions that courts

have determined to be frivolous and/or groundless.
                                - 4 -

       On July 26, 2004, petitioners sent a letter to the

settlement officer requesting a face-to-face conference in Las

Vegas, Nevada.    In that letter, petitioners continued to assert

frivolous and/or groundless arguments for why they are not liable

for income taxes.    Respondent did not allow petitioners a face-

to-face meeting.

       On August 6, 2004, respondent issued petitioners a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330, in which the settlement officer sustained the

proposed levy to collect petitioners’ unpaid 1997 tax liability.

Petitioners filed a petition for lien and levy action on

September 13, 2004.    Petitioners alleged that they were not

provided with a hearing under section 6330.

       At trial, petitioners continued to make frivolous and/or

groundless arguments that they are not liable for Federal income

tax.    Respondent sought sanctions under section 6673.

                             Discussion

I.   Determination To Proceed With Collection

       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
                                - 5 -

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 an Appeals hearing with

regard to a levy notice.    At the Appeals hearing, the taxpayer

may raise certain matters set forth in section 6330(c)(2), which

provides:

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

                   *    *    *    *     *   *    *
            (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.
                                - 6 -

     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 if we have jurisdiction over the

underlying tax liability.    Van Es v. Commissioner, 115 T.C. 324,

328 (2000).

     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

(2000).   Where the validity of the underlying tax liability is

not properly at issue, however, the Court will review the

Commissioner’s administrative determination for abuse of

discretion.    Sego v. Commissioner, supra; Goza v. Commissioner,

supra.

     Petitioners received the notice of deficiency for the 1997

tax year.    Accordingly, they cannot challenge their underlying

liability.    See sec. 6330(c)(2)(B); Sego v. Commissioner, supra

at 610-611; Goza v. Commissioner, supra at 182-183.    Therefore,

we review respondent’s determination for an abuse of discretion.

See Sego v. Commissioner, supra at 610.
                                - 7 -

     Petitioners state in their petition that they were denied

their right to a face-to-face hearing as provided in section

6330.    We have held that it would be unproductive and thus

unnecessary to remand a case for a face-to-face hearing if

petitioners merely want to advance frivolous arguments.    See

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

Commissioner, T.C. Memo. 2005-183; Balice v. Commissioner, T.C.

Memo. 2005-161.

     In numerous letters to respondent, in their petition, and at

trial, petitioners argued that they had no income and were not

liable for income taxes.    Petitioners also argued that they

received no valid notice of deficiency because the notice that

they received was not signed by the Secretary of the Treasury.

These arguments are characteristic of tax-protester rhetoric that

has been universally rejected by this and other courts.2   Michael

v. Commissioner, T.C. Memo. 2003-26; Knelman v. Commissioner,

T.C. Memo. 2000-268, affd. 33 Fed. Appx. 346 (9th Cir. 2002).

Because petitioners insisted upon making only these frivolous

arguments, we decline to remand this case to respondent so that

petitioners may have a face-to-face hearing.3

     2
        Petitioners made these arguments in filings and at trial
even though the underlying tax liability was not properly an
issue in this case.
     3
        Respondent offered petitioners a face-to-face hearing if
petitioners raised any meaningful issue regarding the proposed
                                                   (continued...)
                               - 8 -

      Petitioners have failed to raise a spousal defense, make a

valid challenge to the appropriateness of respondent’s intended

collection action, or offer alternative means of collection.

These issues are now deemed conceded.   See Rule 331(b)(4).

Accordingly, we sustain respondent’s determination to proceed

with collection.

II.   Section 6673 Penalty

      Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous positions in proceedings

or instituted the proceedings primarily for delay.   In Pierson v.

Commissioner, 115 T.C. 576, 581 (2000), we issued an unequivocal

warning to taxpayers concerning the imposition of a penalty

pursuant to 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 and/or groundless positions in such actions.

A position maintained by the taxpayer is “frivolous” where it is

“contrary to established law and unsupported by a reasoned,

colorable argument for change in the law.”   Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); see also Hansen v.

Commissioner, 820 F.2d 1464, 1470 (9th Cir. 1987) (section 6673

      3
      (...continued)
levy. Petitioners, however, continued to make only frivolous
and/or groundless tax-protester arguments.
                                 - 9 -

penalty upheld because taxpayer should have known claim was

frivolous).

     Furthermore, we have warned these petitioners of the

possible consequences of advancing frivolous arguments in this

Court.   In a previous appearance before this Court, petitioners

made similar frivolous tax-protester arguments.       They were warned

that if they brought the arguments to this Court again, a penalty

would be imposed.4

     In the petition and at trial, petitioners raised frivolous

arguments and contentions that we have previously rejected and

which we conclude were interposed primarily for delay.       This has

caused the Court to waste limited resources.       Accordingly, we

shall impose a penalty of $5,000 pursuant to section 6673.

     To reflect the foregoing,

                                         An appropriate order and

                                 decision will be entered.




     4
        Petitioners were previously before this court making the
same frivolous arguments regarding their 1998 income tax
liability. Ball v. Commissioner, docket No. 1066-04L.
