                          T.C. Memo. 2006-219



                        UNITED STATES TAX COURT



      HUGH D. SUMMERS AND TERESA E. SUMMERS, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13874-05L.             Filed October 18, 2006.



     Hugh D. Summers and Teresa E. Summers, pro sese.

     Kathleen K. Raup, for respondent.



                          MEMORANDUM OPINION

     WELLS, Judge:   The instant matter is before the Court on

respondent’s and petitioners’ motions for summary judgment

pursuant to Rule 121.    The issue we must decide is whether

respondent’s Appeals Office abused its discretion in determining

to proceed with the collection of petitioners’ 1989 tax
                                - 2 -

liability.    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.

                             Background

     At the time of filing the petition, petitioners resided in

Paoli, Pennsylania.

     Petitioner Hugh D. Summers’s Criminal Case and Amended 1989
Tax Return

     During 1992, petitioner Hugh D. Summers (Mr. Summers)

pleaded guilty to conspiring to defraud the Internal Revenue

Service (IRS) by concealing and diverting income in violation of

18 U.S.C. section 371 (2000).    Mr. Summers acknowledged that he

received unreported taxable income of $963,000 between 1982 and

1990.   Mr. Summers was sentenced to 4 years’ probation and agreed

to file an amended tax return for 1989.   See United States v.

Hugh D. Summers, No. 93-CR-35 (E.D. Pa.).

     Petitioners’ Previous Tax Court Case

     On May 24, 1993, petitioners filed an amended tax return for

1989, reporting an increase in their tax liability in the amount

of $69,289.    On November 8, 1993, respondent assessed petitioners

the $69,289 shown on petitioners’ 1989 amended tax return.

     On June 1, 1995, respondent sent petitioners a notice of

deficiency regarding negligence penalties for petitioners’ 1989

taxable year.    Petitioners timely filed a petition with this
                               - 3 -

Court challenging the notice of deficiency.   On September 26,

1997, pursuant to an agreement between the parties, we entered a

decision holding that petitioners were liable for a penalty in

the amount of $13,858 pursuant to section 6662(a) for 1989 and

that petitioners owed an unpaid prior assessment of $69,289 for

1989.   See Summers v. Commissioner, docket No. 17005-95.   On

November 24, 1997, respondent assessed petitioners the section

6662(a) penalty in the amount of $13,858 for petitioners’ 1989

taxable year.

     Litigation Involving Petitioners and Commonwealth Land Title
Insurance Company

     During July 1997, respondent filed a Notice of Federal Tax

Lien (NFTL) against petitioners in Berks and Montgomery Counties,

Pennsylvania, relating to petitioners’ unpaid tax liabilities for

1982 through 1990.   Petitioners’ surname, however, was misspelled

as “Hugh D. & Teresa E. Summer” on the NFTL filed in Montgomery

County, Pennsylvania.

     On July 31, 1997, Mr. Summers sold two properties to

Leemilt’s Petroleum, Inc.:   (1) 270 W. Greenwich Street, Reading,

Berks County, Pennsylvania (the Berks County Property); and (2)

Buckert Road and Keim Street, Lower Pottsgrove Township,

Montgomery County, Pennsylvania (the Montgomery County Property).

Commonwealth Land Title Insurance Company (Commonwealth) insured

the title on both properties for the purchaser, Leemilt’s

Petroleum, Inc., and settlement on both properties was on
                                 - 4 -

July 31, 1997.   At the settlement of the Berks and Montgomery

County properties, Commonwealth did not satisfy the tax liens and

gave Mr. Summers the proceeds from the sales in the amounts of

$107,399.25 and $139,592.47, respectively.    Respondent refused to

discharge the tax liens on the Berks and Montgomery County

properties following the sale.

     On February 10, 1998, respondent received a check in the

amount of $107,399.25 from Commonwealth, discharged the tax lien

on the Berks County Property, and applied the $107,399.25 to

petitioners’ 1983, 1984, 1987, and 1990 tax liabilities.1

     On April 30, 1998, Commonwealth filed a declaratory judgment

complaint in the Court of Common Pleas for Montgomery County,

Pennsylvania, against respondent and Mr. Summers seeking judgment

that respondent’s NFTL did not attach to the Berks and Montgomery

County properties, formerly owned by Mr. Summers, because

petitioners’ surname was misspelled.     The case was removed to the

U.S. District Court for the Eastern District of Pennsylvania and

entitled Commonwealth Land Title Ins. Co. v. United States and

Hugh D. Summers, No. 98-CV-2817 (E.D. Pa.).




     1
      Respondent applied the $107,399.25 as follows:

          Tax year                         Amount applied
            1983                             $33,366.78
            1984                             $19,873.48
            1987                             $31,192.19
            1990                             $22,966.80
                                - 5 -

     On November 19, 1999, Commonwealth dismissed with prejudice

its claim against respondent and gave respondent a check in the

amount of $15,000 to discharge the tax lien on the Montgomery

County property.    Respondent applied the payment to petitioners’

1985 tax liabilities.

     Mr. Summers’s Bankruptcy Litigation

     On October 9, 1998, Mr. Summers filed a chapter 7 bankruptcy

petition in the U. S. Bankruptcy Court for the Eastern District

of Pennsylvania (the bankruptcy court), In re Hugh D. Summers,

No. 98-33068F.    During November 1999, respondent filed a

complaint with the bankruptcy court asserting that Mr. Summers’s

tax liabilities, including those for 1989, and interest thereon

were not dischargeable pursuant to 11 U.S.C. section

523(a)(1)(C).    Respondent conceded that the penalties and

interest on the penalties were dischargeable.

     On January 11, 2001, the bankruptcy court held that Mr.

Summers’s tax liabilities were nondischargeable because he

wilfully attempted to evade payment of his taxes.    See United

States v. Summers, 266 Bankr. 292 (Bankr. E.D. Pa. 2001).

     Actions Against Mr. Summers To Reduce Federal Tax Claims To
Judgment

     On April 3, 2002, respondent filed a complaint against Mr.

Summers in the United States District Court for the Eastern

District of Pennsylvania (the District Court) seeking to reduce

to judgment the tax assessments against Mr. Summers, including
                                - 6 -

those for 1989.    United States v. Summers, No. 2002-CV-1812 (E.D.

Pa.).    During June 2002, Mr. Summers filed an answer and cross-

complaint challenging the tax assessments and the amounts of his

tax liabilities, including those for 1989.2   On August 9, 2002,

respondent filed a motion for summary judgment.    During September

2002, Mr. Summers filed a reply to respondent’s motion and a

motion to dismiss for lack of subject matter jurisdiction.

On October 7, 2002, respondent filed a motion to dismiss

Mr. Summers’s counterclaims.

     On March 27, 2003, the District Court issued a memorandum

opinion and entered an order granting respondent’s motions for

summary judgment and to dismiss Mr. Summers’s counterclaims and

gave respondent 30 days to present a full and final accounting of

Mr. Summers’s tax liabilities, including 1989.    See United States

v. Summers, 254 F. Supp. 2d 589 (E.D. Pa. 2003).

     On April 22, 2003, Mr. Summers filed a memorandum and

declaration in response to the District Court’s March 27, 2003,

order.    On May 30, 2003, Mr. Summers filed a memorandum in

response in which he claimed that respondent had received, or

should have received, $246,991.72 from Commonwealth and $26,000


     2
      Mr. Summers’s answer and cross-complaint contained, inter
alia, several frivolous tax protester type arguments including:
He is not a taxpayer within the meaning of the Internal Revenue
Code; there is no “1040 tax” listed in the index of the Internal
Revenue Code; and that the United States and its agents
fraudulently misled him to believe that compliance with the
Internal Revenue Code was mandatory.
                              - 7 -

from petitioners, which was not properly credited to petitioners’

account.

     On June 24, 2003, respondent filed a declaration asserting

that all credits had been properly applied and that petitioners’

tax liabilities for 1985, 1986, 1988, and 1989, including accrued

interest as of April 27, 2003, amounted to $647,749.86.3   On

December 17, 2003, the District Court entered judgment in favor

of respondent and against Mr. Summers, ordering Mr. Summers to

pay respondent $647,749.86 for unpaid Federal income taxes for

years 1985, 1986, 1988, and 1989 plus interest accruing thereon

at the rate provided by section 6621 from April 27, 2003, until

paid.

     Actions Against Mrs. Summers To Reduce Federal Tax Claims To
Judgment

     On December 11, 2002, respondent filed a complaint against

petitioner Teresa E. Summers (Mrs. Summers) in the U.S. District

Court for the Eastern District of Pennsylvania (District Court)

seeking to reduce to judgment the income tax assessments made

against her for 1985, 1986, 1988, and 1989, United States v.

Teresa E. Summers, No. 2002-CV-9008 (E.D. Pa.).   On February 10,

2003, Mrs. Summers filed an answer and cross-complaint




     3
      Respondent’s declaration showed Mr. Summers’s unpaid tax
liabilities and total accrued interest for 1989 to be $95,284.76
and $108,586.31, respectively.
                               - 8 -

challenging the assessments and tax liabilities, including those

for 1989.4

     On June 6, 2003, respondent filed a motion for summary

judgment and to dismiss counterclaims.   On July 10, 2003, Mrs.

Summers filed a response to respondent’s motion in which she

asserted that respondent had not properly credited petitioners’

account for the payment from Commonwealth.

     On September 11, 2003, the District Court granted

respondent’s motion for summary judgment on the issue of Mrs.

Summers’s tax liabilities, dismissed Mrs. Summers’s

counterclaims, and gave respondent 30 days to present a full and

final accounting of Mrs. Summers’s tax liabilities, including

those for 1989.   On October 2, 2003, respondent filed a

memorandum in response to the District Court’s September 10,

2003, order stating Mrs. Summers’s tax liabilities for 1985,

1986, 1988, and 1989, including accrued interest as of September

30, 2003, and $13,858 negligence penalty amounted to $749,760.85.

On October 31, 2003, Mrs. Summers filed a response, contending


     4
      Mrs. Summers’s answer and cross-complaint contained, inter
alia, several frivolous tax protester type arguments including:
She is not a taxpayer within the meaning of the Internal Revenue
Code; the income Mr. Summers received and pleaded guilty to tax
evasion for was not income within the meaning of the Internal
Revenue Code; there is no “1040 tax” listed in the index of the
Internal Revenue Code; there is no legislative regulation that
requires her to file a tax return for “1040" or “income taxes”
and that the United States and its agents fraudulently misled her
to believe that compliance with the Internal Revenue Code was
mandatory.
                                - 9 -

that respondent did not properly credit the payments from

Commonwealth to her account.

       On December 17, 2003, the District Court entered judgment in

favor of respondent and against Mrs. Summers, ordering Mrs.

Summers to pay $735,902.85 for unpaid Federal income taxes for

1985, 1986, 1988, and 1989, plus interest accruing thereon at the

rate provided by section 6621 from September 30, 2003, until paid

and a $13,858 negligence penalty assessed on November 24, 1997.

       Petitioners’ Appeal to the Third Circuit Court of Appeals

       Petitioners appealed the respective judgments against them

to the United States Court of Appeals for the Third Circuit

(Court of Appeals for the Third Circuit).    Petitioners’ appeals

were consolidated at United States v. Teresa E. Summers, No. 04-

1375, and United States v. Summers, No. 04-1379.    On January 4,

2005, the Third Circuit Court of Appeals affirmed the District

Court judgments against petitioners.

       Petitioners’ Section 6330 Action Relating to Taxable Year
1989

       Petitioners failed to pay their income tax liability for

1989.    On April 15, 2002, respondent sent petitioners’ attorney,

who was authorized to receive such notices, a Final Notice of

Intent to Levy and Notice of Your Right to a Hearing.    On May 10,

2002, petitioners, through their attorney, submitted a Form

12153, Request for a Collection Due Process Hearing.    Attached to
                              - 10 -

the Form 12153 was a 37-page letter consisting of nothing but

frivolous tax protester boilerplate.

     Because petitioners’ cases were still pending in District

Court, respondent did not immediately schedule a section 6330

hearing.   On March 14, 2005, approximately 2 months after the

Third Circuit Court of Appeals affirmed the District Court’s

judgments in favor of respondent, respondent’s Appeals Office

sent petitioners a letter advising them that the Appeals Office

would schedule an appointment.   In a letter dated March 23, 2005,

Mr. Summers advised respondent’s Appeals Office that his appeal

process would not be complete until there was a final

determination by the District Court and requested that

respondent’s Appeals Office hold the matter in abeyance until

such a determination had been made.

     On April 8, 2005, respondent’s Settlement Officer Edith M.

Dermody (Ms. Dermody), wrote petitioners and advised them that

the arguments raised in their section 6330 hearing request were

frivolous, that respondent would not schedule a face-to-face

conference if petitioners wished to discuss only frivolous

arguments, and that a telephone conference was scheduled for

April 28, 2005.   On April 21, 2005, Mr. Summers sent Ms. Dermody

a letter requesting a copy of their Form 12153,5 requesting a


     5
      In his Apr. 21, 2005, letter, Mr. Summers stated that he
did not recall making a request for a sec. 6330 hearing and that
                                                   (continued...)
                               - 11 -

face-to-face hearing and acknowledging that alternative

collection methods needed to be explored at this meeting, and

stating that he was not available for the telephone conference on

April 28.

     On April 28, 2005, Ms. Dermody sent petitioners a letter to

which she attached a copy of the Form 12153, and in which she

advised petitioners that if they wanted a face-to-face hearing

they must contact her within 15 days and describe the legitimate

issues they wished to raise.   Ms. Dermody also advised

petitioners that they must complete a Form 433-A, Collection

Information Statement for Wage Earners and Self Employed

Individuals, and return it along with their 2003 and 2004 tax

returns by May 13, 2005.

     On May 13, 2005, Mr. Summers sent Ms. Dermody a letter in

which he raised the following issues:   (1) That Ms. Dermody was a

settlement officer, not an independent Appeals officer, and that

it was improper for her to hold the hearing; (2) that respondent

violated the “CDP statutes” by not holding a section 6330 hearing

for more than 3 years from the date of the request; and (3) that

petitioners did not have any tax liability for 1989 because the

IRS improperly credited the payments from Commonwealth, and that,



     5
      (...continued)
his former attorney, Jerry Arthur Jewett, who had since been
disbarred, may have made the request without sending petitioners
a copy.
                              - 12 -

even if respondent did not receive the funds from Commonwealth,

the 1989 tax liability has been “constructively paid.”    Mr.

Summers further stated that he would not provide the Form 433-A

and petitioners’ 2003 and 2004 tax returns until the above issues

were addressed.

     On June 21, 2005, respondent’s Appeals Office sent

petitioners a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 sustaining the proposed

levy because petitioners did not provide the Form 433-A, did not

provide 2003 and 2004 tax returns, and did not raise legitimate

collection alternatives.   Petitioners timely petitioned this

Court seeking review of respondent’s determination to proceed

with the collection of petitioners’ 1989 tax liabilities.    On

February 28, 2006, respondent filed a motion for summary

judgment, and on March 1, 2006, petitioners filed a motion for

summary judgment.   Petitioners filed an objection to respondent’s

motion for summary judgment on April 3, 2006, and respondent

filed a response to petitioners’ motion for summary judgment on

March 24, 2006.

                            Discussion

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials and may be granted where

there is no genuine issue of material fact and a decision may be
                               - 13 -

rendered as a matter of law.   Rule 121(a) and (b); Fla. Peach

Corp. v. Commissioner, 90 T.C. 678, 681 (1988).     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

that show that a genuine question of material fact exists and may

not rely merely on allegations or denials in the pleadings.

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.   The Appeals officer must verify at

the hearing that the applicable laws and administrative

procedures have been followed.   Sec. 6330(c)(1).   At the hearing,

the person may raise any relevant issues 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).   The person may

challenge the existence or amount of the underlying tax, however,

only if he or she did not receive any statutory notice of
                              - 14 -

deficiency for the tax liability 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 in issue, the Court will review the matter de novo.

Where the validity of the underlying tax is not properly in

issue, however, the Court will review the Commissioner’s

administrative determination for abuse of discretion.     Sego v.

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

T.C. 176, 181-182 (2000).   A person may challenge a self-assessed

liability reported on his return where he or she has not had the

opportunity to dispute the liability.     Montgomery v.

Commissioner, 122 T.C. 1, 9 (2004).     An opportunity to dispute

such a liability includes a suit by respondent to reduce a tax

assessment to judgment.   See MacElvain v. Commissioner, T.C.

Memo. 2000-320.

     The record in the instant case clearly indicates that

petitioners had ample opportunity to dispute the liability

reported on their amended tax return for 1989 and the $13,858

section 6662 penalty for that year.    Petitioners litigated the

issue of whether respondent failed to apply the payment from

Commonwealth to taxable year 1989 in District Court and on appeal

to the Third Circuit Court of Appeals.    The Third Circuit Court

of Appeals affirmed the District Court’s judgments against

petitioners reducing the assessments, including the assessment
                               - 15 -

for 1989, to judgment.    Furthermore, the doctrines of collateral

estoppel and res judicata bar petitioners from relitigating this

same issue, which was litigated in District Court and the Third

Circuit Court of Appeals.    See Commissioner v. Sunnen, 333 U.S.

591 (1948); FMC Corp. and Subs v. Commissioner, T.C. Memo. 2001-

298.    Accordingly, we hold that petitioners’ underlying tax

liability for 1989 is not properly before us.    We therefore

review respondent’s determination to proceed with the proposed

levy for an abuse of discretion.

       Petitioners contend that respondent’s Appeals officer,

abused her discretion by failing to schedule a face-to-face

conference with petitioners.    We disagree.   An in person hearing

is not automatically guaranteed by section 6330.    Hearings at the

appeals level have historically been informal.     Davis v.

Commissioner, 115 T.C. 35, 41 (2000).    Hearings may be held in

person, but they may also be conducted by telephone or by

correspondence.    Katz v. Commissioner, 115 T.C. 329, 337-338

(2000); Dorra v. Commissioner, T.C. Memo. 2004-16.     This Court

has held that it is not an abuse of discretion if an Appeals

officer determines that a face-to-face hearing would not be

productive based on a taxpayer’s frivolous or groundless

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

Kemper v. Commissioner, T.C. Memo. 2003-195.     We have also held

that it is not an abuse of discretion to proceed with collection
                               - 16 -

where the taxpayer is not in compliance with the tax laws.

Collier v. Commissioner, T.C. Memo. 2004-171; Rodriguez v.

Commissioner, T.C. Memo. 2003-153.

     The record in the instant case demonstrates that a face-to-

face conference would not have been productive.   On May 10, 2002,

petitioners, through their attorney who was authorized to

represent them, submitted a request for a section 6330 hearing

accompanied by a 37-page letter replete with tax protester

boilerplate.    On April 28, 2005, Ms. Dermody sent petitioners a

letter wherein she provided a copy of their request for a section

6330 hearing and advising petitioners that, if they wanted a

face-to-face hearing they must contact her within 15 days and

describe the legitimate issues they wished to raise.   Ms. Dermody

also advised petitioners that they must complete a Form 433-A,

and return it along with their 2003 and 2004 tax returns by

May 13, 2005.

     On May 13, 2005, Mr. Summers sent Ms. Dermody a letter in

which he raised the following issues:   (1) That Ms. Dermody was a

settlement officer, not an independent Appeals officer, and that

it was improper for her to hold the hearing; (2) that respondent

violated the “CDP statutes” by not holding a section 6330 hearing

for more than 3 years from the date of the request; and (3) that

petitioners did not have any tax liability for 1989 because the
                              - 17 -

IRS improperly credited the payments from Commonwealth, and that,

even if respondent did not receive the funds from Commonwealth,

the 1989 tax liability has been “constructively paid.”       Mr.

Summers further stated that he would not provide Form 433-A and

petitioners’ 2003 and 2004 tax returns until respondent’s Appeals

officer dealt with the above issues.

     Petitioners’ first contention is frivolous.    Ms. Dermody was

an impartial employee of respondent’s Appeals Office and had no

prior involvment with petitioners.     Petitioners’ second

contention is equally without merit.     Section 6330 does not

prescribe a time for scheduling a hearing.     Once respondent has

referred a case to the Department of Justice for defense or

prosecution, only the Attorney General or his delegate has the

authority to compromise the case.    See sec. 7122(a); United

States v. LaSalle Natl. Bank, 437 U.S. 298, 312 (1978).

Moreover, Mr. Summers advised respondent that he wished to defer

the section 6330 hearing until the judgment of the District Court

became final.   Accordingly, respondent acted within his

discretion by waiting to schedule a section 6330 hearing until

after petitioners’ appeal to the Third Circuit Court of Appeals

was resolved.   We have already discussed petitioners’ third

contention; they are precluded from challenging the issue of the

proper crediting of the Commonwealth payments.     Finally,
                              - 18 -

petitioners have a duty to comply with the tax laws and may not

withhold the information reasonably requested by respondent or

fail to file tax returns.

     On the basis of the foregoing, we conclude that it would not

have been productive for respondent to schedule a face-to-face

hearing.   Accordingly, we hold that it was not an abuse of

discretion for respondent to determine to proceed with the

proposed levy to collect petitioners’ 1989 tax liability, and no

genuine issue of material fact exists requiring trial.   We shall

therefore grant respondent’s motion for summary judgment and deny

petitioners’ motion for summary judgment.   We have considered all

of petitioners’ arguments, and, to the extent that we have not

addressed them in this opinion, we conclude they are without

merit or unnecessary to reach.

     Section 6673(a)(1) authorizes the Tax Court to require a

taxpayer to pay to the United States a penalty not in excess of

$25,000 whenever it appears that 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.   Although we do not impose a penalty on petitioners

in this case, we take this opportunity to admonish petitioners

that the Court will consider imposing such a penalty should they
                             - 19 -

return to the Court in the future in an attempt to delay

collection or advance frivolous or groundless arguments.

     To reflect the foregoing,


                                        An appropriate order and

                                   decision will be entered for

                                   respondent.
