T.C. Memo. 2003-197
UNITED STATES TAX COURT
ALBERT HORTON AND RAMONA OSBORNE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13145-02L. Filed July 9, 2003.
Albert Horton and Ramona Osborne, pro sese.
Rollin G. Thorley, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: This case is before the Court on respon-
dent’s motion for summary judgment and to impose a penalty under
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section 66731 (respondent’s motion).2 We shall grant respon-
dent’s motion.
Background
The record establishes and/or the parties do not dispute the
following.
Petitioners resided in Las Vegas, Nevada, at the time they
filed the petition in this case.
On or about April 13, 1998, petitioners jointly filed a
Federal income tax (tax) return for their taxable year 1997 (1997
joint return). In their 1997 joint return, petitioners reported
total income of $81,895, total tax of $11,677, and tax due of
$3,478. When petitioners filed their 1997 joint return, they did
not pay the tax due shown in that return.
On or about April 13, 1999, petitioners jointly filed a tax
return for their taxable year 1998 (1998 joint return). In their
1998 joint return, petitioners reported total income of $78,585,
total tax of $10,426, and tax due of $2,651. When petitioners
filed their 1998 joint return, they did not pay the tax due shown
in that return.
On May 18, 1998, respondent assessed petitioners’ tax, as
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.
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well as an addition to tax and interest as provided by law, for
their taxable year 1997.3 (We shall refer to any such unpaid
assessed amounts, as well as interest as provided by law accrued
after May 18, 1998, as petitioners’ unpaid liability for 1997.)
On May 31, 1999, respondent assessed petitioners’ tax, as
well as additions to tax and interest as provided by law, for
their taxable year 1998. (We shall refer to those assessed
amounts, as well as interest as provided by law accrued after May
31, 1999, as petitioners’ unpaid liability for 1998.)
On May 18, 1998, and May 31, 1999, respectively, respondent
issued to petitioners notices of balance due with respect to
petitioners’ unpaid liability for 1997 and petitioners’ unpaid
liability for 1998.
On or about July 17, 2000, petitioners jointly filed an
amended tax return for each of their taxable years 1997 (amended
1997 joint return) and 1998 (amended 1998 joint return).
In their amended 1997 joint return, petitioners reported
total income of $0 and total tax of $0 and claimed a refund of
$8,199 of tax withheld. In Part II, Explanation of Changes to
Income, Deductions, and Credits, of their amended 1997 joint
return, petitioners’ explanation for amending that return (peti-
tioners’ explanation for their amended 1997 joint return) con-
3
On Sept. 15, 1999, respondent applied a payment of $150 to
petitioners’ account with respect to their taxable year 1997.
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tained statements, contentions, and arguments that the Court
finds to be frivolous and/or groundless.4
In their amended 1998 joint return, petitioners reported
total income of $0 and total tax of $0 and claimed a refund of
$7,852 of tax withheld. In Part II, Explanation of Changes to
Income, Deductions, and Credits, of their amended 1998 joint
return, petitioners’ explanation for amending that return
(petitioners’ explanation for their amended 1998 joint return)
contained statements, contentions, and arguments that the Court
finds to be frivolous and/or groundless.5
The Internal Revenue Service (IRS) determined that petition-
ers’ amended 1997 joint return and amended 1998 joint return were
frivolous and denied the refund claimed in each such amended
return.
On June 26, 2001, respondent issued to petitioners a notice
of Federal tax lien filing and your right to a hearing (notice of
4
Petitioners’ explanation for amending their 1997 joint
return contained statements, contentions, and arguments that are
similar to the types of statements, contentions, and arguments
contained in the documents that certain other taxpayers with
cases in the Court attached to their tax returns. See, e.g.,
Copeland v. Commissioner, T.C. Memo. 2003-46; Smith v. Commiss-
ioner, T.C. Memo. 2003-45.
5
Petitioners’ explanation for amending their 1998 joint
return contained statements, contentions, and arguments that are
similar to the types of statements, contentions, and arguments
contained in the documents that certain other taxpayers with
cases in the Court attached to their tax returns. See, e.g.,
Copeland v. Commissioner, supra; Smith v. Commissioner, supra.
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tax lien) with respect to petitioners’ unpaid liabilities for
1997 and 1998. On or about July 9, 2001, in response to the
notice of tax lien, 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 did not notify the Appeals Office in that form that
they intended to make an audio recording of their Appeals Office
hearing. Petitioners attached 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.6
On or about May 3, 2002, a settlement officer with the
Appeals Office (settlement officer) contacted petitioners by
telephone and informed them that, pursuant to a directive issued
on May 2, 2002, audio and stenographic recordings of Appeals
Office hearings would no longer be permitted.7
6
Petitioners’ attachment to Form 12153 contained statements,
contentions, arguments, and requests that are similar to the
statements, contentions, arguments, and requests contained in the
attachments to Forms 12153 filed with the Internal Revenue
Service by certain other taxpayers with cases in the Court. See,
e.g., Copeland v. Commissioner, supra; Smith v. Commissioner,
supra.
7
From 1989 until May 2, 2002, IRS Appeals had permitted
audio recordings of hearings before it. See Notice 89-51, 1989-1
C.B. 691; Litigation Guideline Memorandum GL-17. On May 2, 2002,
IRS Appeals, in an unpublished internal memorandum to all IRS
Appeals Area Directors, ended the audio recording of conferences
or hearings before it that it had previously allowed, and the
(continued...)
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On May 6, 2002, the settlement officer held an Appeals
Office hearing with petitioners with respect to the notice of tax
lien relating to petitioners’ taxable years 1997 and 1998.
Petitioners secretly made an audio recording of part of their
Appeals Office hearing. When the settlement officer discovered
that petitioners were secretly recording their Appeals Office
hearing, she asked them to stop recording the hearing and indi-
cated that if they did not, the hearing would be terminated.
Thereafter, the hearing was terminated. Prior to the Appeals
Office hearing, the settlement officer gave petitioners Form
4340, Certificate of Assessments, Payments, and Other Specified
Matters, with respect to each of their taxable years 1997 and
1998.
On July 16, 2002, the Appeals Office issued a notice of
determination concerning collection action(s) under section 6320
and/or 6330 (notice of determination) to petitioner Albert Horton
and a separate notice of determination to petitioner Ramona
Osborne. (We shall refer collectively to those two notices as
petitioners’ notices of determination). An attachment to each
such notice of determination stated in pertinent part:
7
(...continued)
settlement officer assigned to conduct a hearing regarding the
notice of tax lien with respect to petitioners’ unpaid
liabilities for 1997 and 1998 promptly notified petitioners about
that change.
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Verification of Legal and Procedural Requirements
The Secretary has provided sufficient verification that
the requirements of any applicable law or administra-
tive procedure have been met.
Certified transcripts, Forms 4340, were requested and
reviewed in addition to the tax return files for 1997
and 1998. * * *
* * * * * * *
The notice and demand letters were issued by regular
mail on May 18, 1998 for 1997 and on May 31, 1999 for
1998 to the taxpayer’s last known address as required
under IRC §6303. Letter 3172, meeting the notice
condition imposed by IRC §6320, was dated June 26,
2001 and sent to the taxpayer’s last known address by
certified mail. The taxpayers responded timely with a
Request for a Collection Due Process Hearing, Form
12153, received on July 13, 2001.
* * * * * * *
Issues Raised by the Taxpayer
* * * * * * *
Forms 2866, Certificate of Official Record, and Forms
4340, Certificate of Assessments, Payments, and Other
Specified Matters, were provided by mail to the taxpay-
ers in my hearing letter dated April 9, 2002. * * *
On May 6, 2002 when the taxpayers appeared for the
hearing, Mr. Horton, brought into the hearing a hand
held tape recorder. He was advised that the audio
recording would not be allowed per our prior telephone
conversation * * *. Mr. Horton, however, did record
our initial conversation and when this was discovered
he was asked to stop recording or the hearing would be
terminated. The taxpayers chose to terminate the
hearing and Mrs. Horton stated that they wished for
this brief meeting to be their due process hearing.
The hearing was concluded. Based on this, no issues
were raised by the taxpayers other than the lack of
opportunity to audio record the hearing and no collec-
tion alternatives were discussed at this meeting.
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The taxpayers have made only one payment on these taxes
since they were assessed. That payment was for $150.00
dated September 15, 1999. The taxpayers have made no
further attempt to resolve this liability. When con-
tacted by the Automated Collection Site (ACS) they
refused to cooperate or discuss collection alterna-
tives. This prompted the filing of the NFTL by ACS who
was assigned this case.
The records of the Service indicate that the taxpayers
continue this pattern of filing zero income, zero tax
due returns. * * *
The taxpayers raised no other non-frivolous 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 courts have previ-
ously addressed the taxpayers’ arguments, and Appeals
does not have the authority for reconsideration of the
matters.
* * * * * * *
The taxpayers received their required notices and the
filing of the NFTL was done in accordance with legal
and procedural guidelines and is not subject to with-
drawal or release. The taxpayers have made no attempt
to resolve these liabilities since they were assessed.
The filing of the NFTL was appropriate to protect the
Government’s interest. The taxpayers chose to conclude
the due process hearing prior to any discussion of the
facts of the case or of collection alternatives.
Lacking the taxpayer’s cooperation and based on their
history of non-compliance, the proposed collection
action balances the need for efficient collection of
taxes with the taxpayer’s legitimate concern that any
collection action be no more intrusive than necessary.
[Reproduced literally.]
On August 14, 2002, petitioners filed a petition with the
Court for review of petitioners’ notices of determination with
respect to petitioners’ unpaid liabilities for 1997 and 1998.
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Although not altogether clear, petitioners may be alleging in
their petition that the Appeals Office’s refusal to allow them to
continue making an audio recording of their Appeals Office
hearing held on May 6, 2002, was improper under section
7521(a)(1). Except for that possible argument under section
7521(a)(1), the petition contains statements, contentions,
arguments, and requests that the Court finds to be frivolous
and/or groundless.8
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 are no genuine issues of material fact
regarding 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
8
The frivolous and/or groundless statements, contentions,
arguments, and requests in petitioners’ petition are very similar
to the frivolous and/or groundless statements, contentions,
arguments, and requests in petitions filed by certain other
taxpayers with cases in the Court. See, e.g., Copeland v.
Commissioner, T.C. Memo. 2003-46; Smith v. Commissioner, T.C.
Memo. 2003-45.
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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 years 1997 and 1998, the Court finds the contentions and
arguments which petitioners advanced in their petition and which
challenge the existence or the amount of petitioners’ unpaid
liabilities for 1997 and 1998 to be frivolous and/or 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. As was true of petitioners’ attach-
ment to Form 12153, petitioners’ explanation for their amended
1997 joint return, and petitioners’ explanation for their amended
1998 joint return, petitioners’ petition, except for a possible
argument under section 7521(a)(1), contains statements, conten-
tions, arguments, and requests that the Court finds to be frivo-
lous and/or groundless.
We turn to petitioners’ possible argument under section
7521(a)(1) that the refusal by the Appeals Office to permit
petitioners to continue to make an audio recording of the Appeals
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Office hearing held on May 6, 2002, was improper.9 Throughout
the period commencing with petitioners’ filing their 1997 joint
return with respondent and ending with their filing the petition
with the Court, petitioners have made statements and requests and
advanced contentions and arguments that the Court has found to be
frivolous and/or groundless. Consequently, even though we
recently held in Keene v. Commissioner, 121 T.C. __ (2003), that
section 7521(a)(1) requires the Appeals Office to allow a tax-
payer to make an audio recording of an Appeals Office hearing
held pursuant to section 6330(b), we conclude that (1) it is not
necessary and will not be productive to remand this case to the
Appeals Office for another hearing under section 6320(b) in order
to allow petitioners to make such an audio recording, see
Lunsford v. Commissioner, 117 T.C. 183, 189 (2001), and (2) it is
not necessary or appropriate to reject respondent’s determination
to proceed with the collection action as determined in petition-
ers’ notices of determination with respect to petitioners’ unpaid
liabilities for 1997 and 1998, see id.10
Based upon our examination of the entire record before us,
we find that respondent did not abuse respondent’s discretion in
9
We note that 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.
10
See Kemper v. Commissioner, T.C. Memo. 2003-195.
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determining to proceed with the collection action as determined
in petitioners’ notices of determination with respect to peti-
tioners’ unpaid liabilities for 1997 and 1998.
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-
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 $4,400.
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On the record before us, we shall grant respondent’s motion.
To reflect the foregoing,
An order granting respondent’s
motion and decision will be entered
for respondent.