Carrillo v. Comm'r

T.C. Memo. 2005-290

UNITED STATES TAX COURT

CREVENNE C. AND BARBARA A. CARRILLO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 2593-04L. Filed December 20, 2005.

Ps filed a petition for judicial review pursuant
to secs. 6320 and 6330, I.R.C., in response to
determinations by R that lien and levy actions were
appropriate.

Held: Because Ps have advanced groundless
complaints in dispute of the notices of lien and levy,
R’s determination to proceed with collection action is
sustained.

Held, further, a penalty under sec. 6673, I.R.C.,
is due from Ps and is awarded to the United States in
the amount of $5,000.

Crevenne C. and Barbara A. Carrillo, pro sese.

Rollin G. Thorley, for respondent.
 - 2 -

MEMORANDUM FINDINGS OF FACT AND OPINION

WHERRY, Judge: This case arises from a petition for

judicial review filed in response to Notices of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330.1

The issues for decision are: (1) Whether respondent may proceed

with collection action as so determined, and (2) whether the

Court, sua sponte, should impose a penalty under section 6673.

FINDINGS OF FACT

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

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference.

Petitioners on or about April 15, 1998, filed a joint Form

1040, U.S. Individual Income Tax Return, for the 1997 taxable

year. They reported adjusted gross income of $57,383.79, total

tax of $5,126, withholding of $5,457.23, and a refund amount of

$331.23. They similarly on or about April 15, 1999, filed a

joint return for 1998 reporting substantial adjusted gross

income, total tax of $5,899, withholding of $8,161.58, and a

refund amount of $2,262.58. The Internal Revenue Service (IRS)

assessed the reported tax for 1997 and 1998 on June 1, 1998, and

May 31, 1999, respectively.

1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
 - 3 -

Petitioners thereafter filed a series of refund claims

and/or amended returns with respect to their 1997 and 1998

returns. In these documents petitioners attempted to change

their reporting position to reflect zero for all pertinent items

of income and deduction and to request refunds for the balance of

tax withheld and not previously refunded. The IRS issued denials

of these claims and advised petitioners therein of their right to

contest disallowance by an administrative appeal or by

instituting suit in the U.S. District Court or U.S. Court of

Federal Claims within 2 years.

Respondent assessed additional tax and interest with respect

to 1997 and 1998 on August 14 and December 11, 2000,

respectively.2 Notices of balance due for 1997 were issued on

August 14, 2000, September 18, 2000, December 4, 2000, January 8,

2001, and May 27, 2002. Notices of balance due for 1998 were

issued on December 11, 2000, January 15, 2001, and May 27, 2002.

On their returns for 1999 and 2000, petitioners reported

zero for all items of income and deduction and requested refunds

for the full amount claimed thereon as Federal income tax

withheld. They attached to each of these returns written

statements espousing their assertions that no law required them

2
The record contains little information as to the
circumstances surrounding these assessments. Petitioners,
however, have not separately challenged them apart from their
generalized objections to liability for any income taxes.
 - 4 -

to file a return or to pay income taxes. Respondent issued to

petitioners notices of deficiency for 1999 and 2000 on May 18,

2001, and April 12, 2002, respectively. Petitioners responded to

each notice with a letter acknowledging their receipt of the

notice and their right to file a petition with the Tax Court but

stating, inter alia: “Before I file, pay, or do anything with

respect to your ‘Notice,’ I must first establish whether or not

it was sent pursuant to law, whether or not it has the ‘force and

effect of law,’ and whether you had any authority to send me the

notice”.

Petitioners at no time petitioned this Court for

redetermination of the deficiencies and penalties reflected in

the notices. Respondent assessed the tax, penalty, and interest

amounts due for 1999 on November 26, 2001, and sent a notices of

balance due on that date and on December 31, 2001. Likewise,

tax, penalty, and interest for 2000 were assessed on October 21,

2002, and a notice of balance due was sent on that date.

Respondent issued to petitioners a Final Notice of Intent to

Levy and Notice of Your Right to a Hearing dated December 17,

2002, with regard to the 1997, 1998, and 1999 years, and a Notice

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

6320 dated December 24, 2002, with regard to the 1997 through

2000 taxable years. The latter notice reflected a total amount

due for the 4 years in issue of $20,266.07.
 - 5 -

Petitioners timely submitted a Form 12153, Request for a

Collection Due Process Hearing, with respect to the two notices.

They included with their Form 12153 an attachment in which they

disputed the validity of, and requested that the Appeals officer

have at the hearing copies of, documents pertaining to, among

other things, the underlying tax liability, the assessment, the

notice and demand for payment, and the verification from the

Secretary that the requirements of any applicable law or

procedure had been met. They concluded the attachment with the

following: “This is also to remind you that I will be tape

recording the CDP hearing. I will also have a court reporter,

and Irwin Schiff,[3] who has my power of attorney and who will be

assisting me.”

Respondent on February 11, 2003, issued to petitioners a

further Final Notice of Intent To Levy and Notice of Your Right

to a Hearing, pertaining to their 2000 tax year.4 Petitioners

again submitted a timely Form 12153 with an attachment

3
Irwin Schiff and his activities in protest of the tax laws
are well known to this Court. See, e.g., Schiff v. Commissioner,
T.C. Memo. 1992-183 (and cases cited therein).
4
Respondent also on Feb. 11, 2003, apparently in
inadvertence issued to petitioners’ bank a notice of levy with
respect to 1997, 1998, and 1999. However, the Appeals officer
handling petitioners’ case testified that the levy was released
on account of the pending collection hearing request.
Accordingly, this activity has no bearing on our review of the
specific collection actions that are the subject of the instant
proceeding and will not be further addressed, despite the
emphasis given thereto by petitioners at trial and on brief.
 - 6 -

substantially identical to that provided with their previous Form

12153. On May 8, 2003, an initial letter was sent to petitioners

advising that their case had been received by the Las Vegas,

Nevada, Appeals Office for consideration and briefly explaining

the Appeals process. Petitioners responded to this letter the

following day with a 45-page typewritten statement entitled

“CONSTRUCTIVE LEGAL NOTICE” and purporting to “reserve all of our

constitutional rights” and to set forth petitioners’ arguments

against collection action.

By a letter dated July 30, 2003, Anthony J. Aguiar, the

Appeals officer to whom petitioners’ case had been assigned

scheduled a hearing for September 11, 2003, in Las Vegas, and

asked that petitioners contact him within 10 days to indicate

whether the date and time were convenient. Petitioners, in turn,

sent two letters to the Appeals officer with respect to the

scheduled hearing. In the first, dated August 8, 2003,

petitioners focused on the contention that they had received no

taxable income in the “constitutional sense”. The letter also

advised that petitioners would be recording the hearing and would

have a court reporter with them as a witness. The second lengthy

communication, received by the IRS on September 10, 2003,

essentially reiterated the points pressed earlier in the

attachments to petitioners’ Forms 12153.
 - 7 -

On September 11, 2003, the Appeals officer attempted to hold

the scheduled conference with Mr. Carrillo, but Mr. Carrillo

refused to proceed when he was not permitted to record the

hearing. Thereafter, on January 21, 2004, respondent issued a

separate but identical Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 to each

petitioner sustaining the proposed lien and levy actions. An

attachment to the notice addressed the various issues raised by

petitioners, indicated that petitioners were not entitled to

raise their underlying liabilities on account of failure to seek

prior available recourse in the District Court (for 1997 and

1998) or Tax Court (for 1999 and 2000), and pointed out that

petitioners had raised no issue as to collection alternatives.

Petitioners’ petition disputing the notices of determination

was filed on February 10, 2004, and reflected an address in Las

Vegas, Nevada. In general, petitioners ask that the Court

declare the notices of determination “null and void”.

Petitioners’ complaints with respect to the administrative

proceedings include the following: No legitimate hearing under

section 6330 ever took place; petitioners were not permitted to

record a hearing; petitioners were denied the opportunity to

raise issues they deemed “relevant” (e.g., the “existence” of the

underlying tax liability); and requested documentation had not

been produced (e.g., record of the assessments, statutory notice
 - 8 -

and demand for payment, any “valid notice of deficiency”,

authorization under section 7401 from the Secretary for the

instant collection actions, and verification from the Secretary

that all applicable requirements were met). Petitioners pray

that this Court declare invalid and “Nullify completely” the

January 21, 2004, determination, and “not remand” the case to the

IRS for a new hearing; order the Government to cease enforcement

activity and release the filed notice of lien; and order the

Government to reimburse petitioners for all costs incurred in

submitting the instant petition.5

After the pleadings were closed in this case, petitioners

reiterated their request that this Court declare invalid the

determination at issue by means of a document and multiple

attachments filed on April 5, 2004, as a motion to dismiss for

lack of jurisdiction. Petitioners supplemented this motion with

additional materials on April 19, 2004, and respondent filed a

notice of objection on April 29, 2004. The Court denied

petitioners’ motion on May 13, 2004.

Petitioners thereafter served a request for admissions on

respondent and filed a copy with the Court on June 1, 2004. The

30 paragraphs generally asked respondent to admit to a broad

5
The Court notes that to the extent that the petition seeks
reasonable administrative and/or litigation costs pursuant to
sec. 7430, any such claim is premature and will not be further
addressed. See Rule 231.
 - 9 -

spectrum of alleged failures to comply with statutory

requirements. Respondent filed a response denying the

allegations in all material respects.

By notice issued on July 2, 2004, the instant case was set

for trial at the session beginning on December 6, 2004, in Las

Vegas, Nevada. Respondent then filed a motion for summary

judgment and to impose a section 6673 penalty on July 22, 2004.

Petitioners filed an objection to respondent’s motion on

August 17, 2004, wherein they principally complained about

respondent’s various characterizations of positions taken by

petitioners as “frivolous”, “groundless”, or “merit less” [sic].

They also took issue with respondent’s assertion that failure to

allow recording of the hearing was “harmless error”. The Court

on September 15, 2004, issued an order denying the motion for

summary judgment, ruling as set forth below:

As respondent correctly notes in the motion for
summary judgment, the issues raised by petitioners
during the administrative process have been repeatedly
rejected by this and other courts. Moreover,
maintenance of these arguments has served as grounds
for imposition of penalties under section 6673.
However, the case in its current posture does present a
procedural shortcoming.

On July 8, 2003, this Court issued Keene v.
Commissioner, 121 T.C. 8, 19 (2003), in which it was
held that taxpayers are entitled, pursuant to section
7521(a)(1), to audio record section 6330 hearings. The
taxpayer in that case had refused to proceed when
denied the opportunity to record, and we remanded the
case to allow a recorded Appeals hearing. Id. In
contrast, we have distinguished, and declined to
remand, cases where the administrative proceedings took
 - 10 -

place prior to our opinion in Keene v. Commissioner,
supra; where the taxpayer had participated in an
Appeals Office hearing, albeit unrecorded; and where
all issues raised by the taxpayer could be properly
decided from the existing record. E.g., id. at 19, 20;
Frey v. Commissioner, T.C. Memo. 2004-87; Durrenberger
v. Commissioner, T.C. Memo. 2004-44; Brashear v.
Commissioner, T.C. Memo. 2003-196; Kemper v.
Commissioner, T.C. Memo. 2003-195.

The circumstances of the instant case are closely
analogous to those in Keene v. Commissioner, supra, and
diverge from those where it was determined that remand
was not necessary and would not be productive.
Critically, the letter scheduling the hearing was sent
on July 30, 2003, the aborted hearing was held on
September 11, 2003, and the notices of determination
were issued on January 21, 2004. Although these dates
are nearly a month, approximately 2 months, and more 6
months, respectively, after the opinion in Keene v.
Commissioner, supra, petitioners were not afforded an
opportunity for a recorded conference. Further,
because the requested face-to-face hearing was not
held, there still exists a possibility that petitioners
might have raised one or more nonfrivolous issues if
the meeting had proceeded.

In this situation, the Court will not accept
respondent’s invitation to characterize the failure to
allow recording as harmless error. Hence, the Court
will deny respondent’s motion for summary judgment at
this time. As in Keene v. Commissioner, supra at 19,
however, we admonish petitioners that if they persist
in making frivolous and groundless tax protester
arguments in any further proceedings with respect to
this case, rather than raising relevant issues, as
specified in section 6330(c)(2), the Court will
consider granting a future motion for summary judgment.
In such an instance, the Court would also be in a
position to impose a penalty under section 6673(a)(1).
* * *

Petitioners followed this denial with a motion for summary

judgment of their own, filed on September 28, 2004. They alleged

that they were not given notice of the denial of their refund
 - 11 -

claims. After respondent filed a response, the Court denied

petitioners’ motion on November 15, 2004, as their claims were

both factually and legally insufficient to support any relief in

this proceeding. We also cautioned petitioners to take heed of

our earlier warning with regard to section 6673.

This case was called from the calendar of the trial session

of the Court in Las Vegas, Nevada, on December 6, 2004, and a

trial was held the following day. At the outset, the Court

explained to Mr. Carrillo, who appeared on behalf of himself and

his wife, as follows:

THE COURT: * * * And if you review my order
which was issued in this case, Mr. Carrillo, and that
order is dated September 15, 2004, denying the
government’s motion for summary judgment, I have
already held as a matter of law that the government did
fail to provide you with the right to record a hearing,
which you were entitled to.

So you can consider that issue established, and I
believe that Mr. Thorley acknowledged that the Court as
a whole had concluded that, and the government has now
acquiesced in that error.

The issue that you need to keep and be aware of is
that in another case issued the same day as Keene, the
Kemper case, the Court found that where the taxpayers
are making only frivolous arguments for delay, which
have been routinely rejected by our court and all
higher courts, that there is no need to remand the case
for a hearing if that is the only case that the
taxpayer is making, unless the taxpayer is making an
argument that is permitted under * * * [6330], there is
no need to remand it.

We can decide the case on the evidence before us,
and this is your trial. It is being recorded
verbatim., word-for-word, and you can get a copy of it.
And so if you have any other issues that you have not
 - 12 -

raised yet, or if other issues that you have not raised
yet, but for which you believe are legitimate--although
read my order, and I told you what I think on the ones
that I have seen to date--then you should raise them
here.

Mr. Carrillo, however, proceeded to rehash matters relied upon in

petitioners’ earlier papers and filings and failed to identify

any specific colorable issues for remand. The only potentially

novel issue cited was that of a February 11, 2003, notice of levy

issued to petitioners’ bank, as to which see supra note 4.

The parties subsequently filed posttrial briefs.

Petitioners recapitulated the positions taken throughout these

proceedings and at trial, including focusing once again on lack

of a recorded hearing.

OPINION

I. Collection Actions

A. General Rules

Section 6321 imposes a lien in favor of the United States

upon all property and rights to property of a taxpayer liable for

tax where there exists a failure to pay the tax liability after

demand for payment. The lien generally arises at the time

assessment is made. Sec. 6322. Section 6323, however, provides

that such lien shall not be valid against any purchaser, holder

of a security interest, mechanic’s lienor, or judgment lien

creditor until the Secretary files a notice of lien with the

appropriate public officials. Section 6320 then sets forth
 - 13 -

procedures applicable to afford protections for taxpayers in lien

situations.

Section 6320(a)(1) establishes the requirement that the

Secretary notify in writing the person described in section 6321

of the filing of a notice of lien under section 6323. This

notice required by section 6320 must be sent not more than 5

business days after the notice of tax lien is filed and must

advise the taxpayer of the opportunity for administrative review

of the matter in the form of a hearing before the IRS Office of

Appeals. Sec. 6320(a)(2) and (3). Section 6320(b) and (c)

grants a taxpayer who so requests the right to a fair hearing

before an impartial Appeals officer, generally to be conducted in

accordance with the procedures described in section 6330(c), (d),

and (e).

Likewise, section 6331(a) authorizes the Commissioner to

levy upon all property and rights to property of a taxpayer where

there exists a failure to pay any tax liability within 10 days

after notice and demand for payment. Sections 6331(d) and 6330

then specify germane protective procedures. Section 6331(d)

generally requires that a person be provided with at least 30

days’ prior written notice of the Commissioner’s intent to levy

before collection may proceed. Section 6331(d) also indicates

that this notification should include a statement of available

administrative appeals. Section 6330(a) expands in several
 - 14 -

respects upon the premise of section 6331(d), forbidding

collection by levy until the taxpayer has been furnished notice

of the opportunity for administrative review of the matter in the

form of a hearing before the IRS Office of Appeals. Section

6330(b) grants a taxpayer who so requests the right to a fair

hearing before an impartial Appeals officer.

Section 6330(c) addresses the matters to be considered at

the hearing:

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

(1) Requirement of investigation.--The
appeals officer shall at the hearing obtain
verification from the Secretary that the
requirements of any applicable law or
administrative procedure have been met.

(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
 - 15 -

did not receive any statutory notice of
deficiency for such tax liability or did not
otherwise have an opportunity to dispute such
tax liability.

Once the Appeals officer has issued a determination

regarding the disputed collection action, section 6330(d) allows

the taxpayer to seek judicial review in the Tax Court or a

District Court, depending upon the type of tax at issue. In

considering whether taxpayers are entitled to any relief from the

Commissioner’s determination, this Court has established the

following standard of review:

where the validity of the underlying tax liability is
properly at issue, the Court will review the matter on
a de novo basis. However, where the validity of the
underlying tax liability is not properly at issue, the
Court will review the Commissioner’s administrative
determination for abuse of discretion. [Sego v.
Commissioner, 114 T.C. 604, 610 (2000).]

B. Analysis

1. Appeals Hearing

Hearings conducted under sections 6320 and 6330 are informal

proceedings, not formal adjudications. Katz v. Commissioner, 115

T.C. 329, 337 (2000); Davis v. Commissioner, 115 T.C. 35, 41

(2000). There exists no right to subpoena witnesses or documents

in connection with these hearings. Roberts v. Commissioner, 118

T.C. 365, 372 (2002), affd. 329 F.3d 1224 (11th Cir. 2003);

Nestor v. Commissioner, 118 T.C. 162, 166-167 (2002); Davis v.

Commissioner, supra at 41-42. Taxpayers are entitled to be

offered a face-to-face hearing at the Appeals Office nearest
 - 16 -

their residence. Where the taxpayer declines to participate in a

proffered face-to-face hearing, hearings may also be conducted by

telephone or correspondence. Katz v. Commissioner, supra at 337-

338; Dorra v. Commissioner, T.C. Memo. 2004-16; sec. 301.6330-

1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs. Furthermore, once

a taxpayer has been given a reasonable opportunity for a hearing

but has failed to avail himself or herself of that opportunity,

we have approved the making of a determination to proceed with

collection based on the Appeals officer’s review of the case

file. See, e.g., Taylor v. Commissioner, T.C. Memo. 2004-25,

affd. 130 Fed. Appx. 934 (9th Cir. 2005); Leineweber v.

Commissioner, T.C. Memo. 2004-17; Armstrong v. Commissioner, T.C.

Memo. 2002-224; Gougler v. Commissioner, T.C. Memo. 2002-185;

Mann v. Commissioner, T.C. Memo. 2002-48. Thus, a face-to-face

meeting is not invariably required.

Regulations promulgated under sections 6320 and 6330

likewise incorporate many of the foregoing concepts, as follows:

Q-D6. How are CDP hearings conducted?

A-D6. * * * CDP hearings * * * are informal in
nature and do not require the Appeals officer or
employee and the taxpayer, or the taxpayer’s
representative, to hold a face-to-face meeting. A CDP
hearing may, but is not required to, consist of a face-
to-face meeting, one or more written or oral
communications between an Appeals officer or employee
and the taxpayer or the taxpayer’s representative, or
some combination thereof. * * *

Q-D7. If a taxpayer wants a face-to-face CDP
hearing, where will it be held?
 - 17 -

A-D7. The taxpayer must be offered an opportunity
for a hearing at the Appeals office closest to
taxpayer’s residence or, in the case of a business
taxpayer, the taxpayer’s principal place of business.
If that is not satisfactory to the taxpayer, the
taxpayer will be given an opportunity for a hearing by
correspondence or by telephone. If that is not
satisfactory to the taxpayer, the Appeals officer or
employee will review the taxpayer’s request for a CDP
hearing, the case file, any other written
communications from the taxpayer (including written
communications, if any, submitted in connection with
the CDP hearing), and any notes of any oral
communications with the taxpayer or the taxpayer’s
representative. Under such circumstances, review of
those documents will constitute the CDP hearing for the
purposes of section 6330(b). [Sec. 301.6330-1(d)(2),
Q&A-D6 and D7, Proced. & Admin. Regs.; see also sec.
301.6320-1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs.
(substantially identical language except for final
reference to “section 6320(b)”).]

This Court has cited the above regulatory provisions, and

corresponding promulgations under section 6320, with approval.

See, e.g., Taylor v. Commissioner, supra; Leineweber v.

Commissioner, supra; Dorra v. Commissioner, supra; Gougler v.

Commissioner, supra.

With respect to the instant matter, the record reflects that

petitioners were provided with an opportunity for a face-to-face

hearing on September 11, 2003. The hearing did not proceed when

petitioners were not permitted to record the meeting. As

explained in our previous order in this case, in Keene v.

Commissioner, 121 T.C. 8, 19 (2003), this Court held that

taxpayers are entitled, pursuant to section 7521(a)(1), to audio

record section 6330 hearings. The taxpayer in that case had
 - 18 -

refused to proceed when denied the opportunity to record, and we

remanded the case to allow a recorded Appeals hearing. Id.

In contrast, again as noted in the Court’s September 15,

2004, order, we have distinguished, and declined to remand, cases

where the taxpayer had participated in an Appeals Office hearing,

albeit unrecorded, and where all issues raised by the taxpayer

could be properly decided from the existing record. E.g., id. at

19-20; Frey v. Commissioner, T.C. Memo. 2004-87; Durrenberger v.

Commissioner, T.C. Memo. 2004-44; Brashear v. Commissioner, T.C.

Memo. 2003-196; Kemper v. Commissioner, T.C. Memo. 2003-195.

Stated otherwise, cases will not be remanded to Appeals, nor

determinations otherwise invalidated, merely on account of the

lack of a recording when to do so is not necessary and would not

be productive. See, e.g., Frey v. Commissioner, supra;

Durrenberger v. Commissioner, supra; Brashear v. Commissioner,

supra; Kemper v. Commissioner, supra; see also Lunsford v.

Commissioner, 117 T.C. 183, 189 (2001). A principal scenario

falling short of the necessary or productive standard exists

where the taxpayers rely on frivolous or groundless arguments

consistently rejected by this and other courts. See, e.g., Frey

v. Commissioner, supra; Brashear v. Commissioner, supra; Kemper

v. Commissioner, supra.

Because no hearing had been conducted at all in petitioners’

case, we declined to grant respondent’s motion for summary
 - 19 -

judgment. The record as it then existed did not foreclose the

possibility that petitioners might have raised valid arguments

had a hearing been held. Accordingly, we provided petitioners an

opportunity before the Court at the trial session in Las Vegas to

identify any legitimate issues they wished to raise that could

warrant further consideration of the merits of their case by the

Appeals Office or this Court. Petitioners, however, merely

continued to focus on the denial of a recorded hearing and

offered no substantive issues of merit.

Hence, despite repeated warnings and opportunities, the only

contentions other than the recorded hearing advanced by

petitioners are, as will be further discussed below, of a nature

previously rejected by this and other courts. The record

therefore does not indicate that any purpose would be served by

remand or additional proceedings. The Court concludes that all

pertinent issues relating to the propriety of the collection

determination can be decided through review of the materials

before it.

2. Review of Underlying Liabilities

As regards 1997 and 1998, petitioners, in asserting that

they are not bound to pay Federal income taxes, are essentially

seeking to challenge even the underlying liabilities they

reported on their original returns. No notice of deficiency was

issued to petitioners for either 1997 or 1998, but petitioners
 - 20 -

filed amended returns and/or refund claims advancing the position

they are now espousing. These requests were denied, and

petitioners were advised of their opportunity to contest the

denials in the U.S. District Court or U.S. Court of Federal

Claims. Petitioners did not file suit.

This Court has ruled that taxpayers are not precluded by

section 6330(c)(2)(B) from challenging self-reported liabilities

when they have not otherwise been provided with a chance to do

so. Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). However,

we have also recently concluded that a taxpayer whose amended

returns and concomitant claims for refund were disallowed, and

who was notified of the opportunity to institute a refund suit in

the U.S. District Court or U.S. Court of Federal Claims, received

an opportunity to dispute the self-reported liability within the

meaning of section 6330(c)(2)(B). Farley v. Commissioner, T.C.

Memo. 2004-168.

Alternatively, and to the extent that the various

assessments against petitioners might fall outside the foregoing

precedent, we have in other circumstances involving amended

returns and the advancement of only frivolous arguments, without

explicitly addressing whether disallowance of refund claims could

constitute the requisite opportunity for dispute, simply

characterized the taxpayer’s challenge as meritless, with the

following observation: “Section 6330(c)(2) provides that a
 - 21 -

taxpayer may raise any ‘relevant’ issue at the collection

hearing; it does not say that the taxpayer may raise ‘any’ issue.

Petitioner raised only groundless and frivolous issues, not

relevant issues.” Hathaway v. Commissioner, T.C. Memo. 2004-15.

Petitioners have challenged the “existence” of their

underlying tax liabilities only through generalized contentions

that no statute imposes or requires them to pay income taxes.

They have at no time alleged that they did not in fact receive

the funds on which the tax liabilities for 1997 and 1998 are

based. Thus, even if petitioners were permitted to challenge

their underlying liabilities in this proceeding, they have raised

no genuine, relevant issue as to the amount of such liabilities

for 1997 or 1998.

With respect to 1999 and 2000, petitioners were issued

statutory notices of deficiency and did not file petitions

challenging those notices in this Court. Furthermore,

communications from petitioners expressly reference the notices

of deficiency, making clear that these documents were received.

To the extent that petitioners have argued that they should

nonetheless be entitled to challenge their underlying liabilities

on grounds that the notices were invalid, due to a lack of a

delegation of authority from the Secretary to the individual in

Ogden, Utah, signing the notices, this contention is without

merit.
 - 22 -

The Secretary or his delegate may issue notices of

deficiency. Secs. 6212(a), 7701(a)(11)(B) and (12)(A)(i). The

Secretary’s authority in this matter was previously delegated to

District Directors and Directors of Service Centers, has since

been redelegated consistent with the restructuring of the IRS,

and may in turn be redelegated to officers or employees under the

supervision of persons so authorized. Secs. 301.6212-1(a),

301.7701-9(b) and (c), Proced. & Admin. Regs.; Deleg. Order No.

193 (Rev. 6, Nov. 8, 2000); see also Nestor v. Commissioner, 118

T.C. at 165.

Accordingly, because petitioners received valid notices of

deficiency and did not timely petition for redetermination, they

are precluded under section 6330(c)(2)(B) from disputing their

underlying 1999 and 2000 liabilities in this proceeding. Their

remaining contentions generally challenging the “existence” of

any statute imposing or requiring them to pay income tax warrant

no further comment. See Crain v. Commissioner, 737 F.2d 1417,

1417 (5th Cir. 1984) (“We perceive no need to refute these

arguments with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit.”).

C. Review for Abuse of Discretion

Petitioners have also made various arguments relating to

aspects of the assessment and collection procedures that we
 - 23 -

review for abuse of discretion. Action constitutes an abuse of

discretion under this standard where arbitrary, capricious, or

without sound basis in fact or law. Woodral v. Commissioner, 112

T.C. 19, 23 (1999).

As a threshold matter, we point out that petitioners’

demands and allegations regarding the authority of the

individuals issuing the notices of tax lien, tax lien filing, and

intent to levy are meritless for reasons substantially identical

to those just discussed in connection with the notices of

deficiency. The Secretary or his delegate (including the

Commissioner) may issue these collection notices, and authority

to so issue notices regarding liens and to levy upon property has

in turn been delegated to a host of pertinent collection and

compliance personnel. Secs. 6320(a), 6330(a), 7701(a)(11)(B) and

12(A)(i), 7803(a)(2); secs. 301.6320-1(a)(1), 301.6330-1(a)(1),

Proced. & Admin. Regs.; Deleg. Order No. 191 (Rev. 3, June 11,

2001); Deleg. Order No. 196 (Rev. 4, Oct. 4, 2000); see also

Craig v. Commissioner, 119 T.C. 252, 263 (2002); Everman v.

Commissioner, T.C. Memo. 2003-137. Additionally, we note that

there exists no statutory requirement that such collection

notices be signed. Everman v. Commissioner, supra.

Petitioners have claimed that no valid assessments support

the proposed collection and have asserted that they should have

been provided with copies of Form 23C, Summary Record of
 - 24 -

Assessment, with copies of the tax returns from which the

assessments emanated, and with verification from the Secretary

that the requirements of any applicable law or administrative

procedure were met.

Federal tax assessments are formally recorded on a record of

assessment in accordance with section 6203. The Commissioner is

not required to use Form 23C in making an assessment. Roberts v.

Commissioner, 118 T.C. at 369-371. Furthermore, section

6330(c)(1) mandates neither that the Appeals officer rely on a

particular document in satisfying the verification requirement

nor that the Appeals officer actually give the taxpayer a copy of

the verification upon which he or she relied. Craig v.

Commissioner, supra at 262; Nestor v. Commissioner, supra at 166.

A Form 4340, Certificate of Assessments, Payments and Other

Specified Matters, for instance, constitutes presumptive evidence

that a tax has been validly assessed pursuant to section 6203.

Davis v. Commissioner, 115 T.C. at 40 (and cases cited thereat).

Consequently, absent a showing by the taxpayer of some

irregularity in the assessment procedure that would raise a

question about the validity of the assessments, a Form 4340

reflecting that tax liabilities were assessed and remain unpaid

is sufficient to support collection action under section 6330.

Id. at 40-41. We have specifically held that it is not an abuse

of discretion for an Appeals officer to rely on Form 4340, Nestor
 - 25 -

v. Commissioner, supra at 166; Davis v. Commissioner, supra at

41, or a computer transcript of account, Schroeder v.

Commissioner, T.C. Memo. 2002-190; Mann v. Commissioner, T.C.

Memo. 2002-48, to comply with section 6330(c)(1).

Here, the record contains Forms 4340 for 1997, 1998, 1999,

and 2000, indicating that assessments were made for each of these

years and that taxes remain unpaid. Petitioners have cited no

particular irregularities in the assessment procedure.

In addition to the specific dictates of sections 6320 and

6330, the Secretary, upon request, is directed to furnish to the

taxpayer a copy of pertinent parts of the record of assessment

setting forth the taxpayer’s name, the date of assessment, the

character of the liability assessed, the taxable period, if

applicable, and the amounts assessed. Sec. 6203; sec. 301.6203-

1, Proced. & Admin. Regs. A taxpayer receiving a copy of Form

4340 has been provided with all the documentation to which he or

she is entitled under section 6203 and section 301.6203-1,

Proced. & Admin. Regs. Roberts v. Commissioner, supra at 370

n.7. This Court likewise has upheld collection actions where

taxpayers were provided with literal transcripts of account (so-

called MFTRAX). See, e.g., Frank v. Commissioner, T.C. Memo.

2003-88; Swann v. Commissioner, T.C. Memo. 2003-70.

The notices of determination recite: “Appeals has reviewed

the certified computer transcripts and verified the assessments.
 - 26 -

Copies of the certified transcripts have been mailed to you.”

Furthermore, arguments similar to petitioner’s statements

concerning copies of the tax returns from which assessments were

made have been summarily rejected. See, e.g., Bethea v.

Commissioner, T.C. Memo. 2003-278; Fink v. Commissioner, T.C.

Memo. 2003-61. The Court concludes that petitioners’ complaints

regarding the assessments and verification are meritless.

Petitioners have denied receiving the notice and demand for

payment that section 6303(a) establishes should be given within

60 days of the making of an assessment. However, a notice of

balance due constitutes a notice and demand for payment within

the meaning of section 6303(a). Craig v. Commissioner, supra at

262-263. The Forms 4340 indicate that petitioners were sent such

notices of balance due for each of the tax years involved.

Petitioners have also attempted to raise section 7401 as a

defense. Section 7401 directs that no civil action for, inter

alia, collection or recovery of taxes shall be commenced unless

authorized or sanctioned by the Secretary. This section has no

bearing on the instant proceeding in that the filing of a notice

of Federal tax lien under section 6323 and the levying upon

property under section 6331 are administrative actions that do

not necessitate the institution of a civil suit. United States

v. Rodgers, 461 U.S. 677, 682-683 (1983); Yazzie v. Commissioner,

T.C. Memo. 2004-233, affd. __ Fed. Appx. __ (9th Cir. 2005).
 - 27 -

Thus, with respect to those issues enumerated in section

6330(c)(2)(A) and subject to review in collection proceedings for

abuse of discretion, petitioners have not raised any spousal

defenses, valid challenges to the appropriateness of the

collection action, or collection alternatives. As this Court has

noted in earlier cases, Rule 331(b)(4) states that a petition for

review of a collection action shall contain clear and concise

assignments of each and every error alleged to have been

committed in the notice of determination and that any issue not

raised in the assignments of error shall be deemed conceded. See

Lunsford v. Commissioner, 117 T.C. at 185-186; Goza v.

Commissioner, 114 T.C. 176, 183 (2000). For completeness, we

have addressed various points advanced by petitioners during the

administrative process and this litigation, but the items listed

in section 6330(c)(2)(A) were not pursued during any proceedings.

Accordingly, the Court concludes that respondent’s determination

to proceed with collection of petitioners’ tax liabilities was

not an abuse of discretion.

II. Section 6673 Penalty

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

taxpayer to pay a penalty not in excess of $25,000 when it

appears to the Court that, inter alia, proceedings have been

instituted or maintained by the taxpayer primarily for delay or

that the taxpayer’s position in such proceeding is frivolous or
 - 28 -

groundless. In Pierson v. Commissioner, 115 T.C. 576, 581

(2000), we warned that taxpayers abusing the protections afforded

by sections 6320 and 6330 through the bringing of dilatory or

frivolous lien or levy actions will face sanctions under section

6673. We have since repeatedly disposed of cases premised on

arguments akin to those raised herein summarily and with

imposition of the section 6673 penalty. See, e.g., Craig v.

Commissioner, 119 T.C. at 264-265 (and cases cited thereat).

With respect to the instant matter, and despite petitioners’

denials in their objection to respondent’s motion for summary

judgment, we are convinced that petitioners instituted this

proceeding primarily for delay. Throughout the administrative

and litigation process, petitioners advanced contentions and

demands previously and consistently rejected by this and other

courts. They submitted lengthy communications quoting, citing,

using out of context, and otherwise misapplying portions of the

Internal Revenue Code, regulations, Supreme Court decisions, and

other authorities. While their procedural stance concerning

recording was correct, they ignored the Court’s explicit warning

that any further proceedings would be justified only in the face

of relevant and nonfrivolous issues.

Moreover, petitioners were, on multiple occasions, expressly

alerted to the potential use of sanctions in their case. Yet

Mr. Carrillo appeared at the trial session in Las Vegas without
 - 29 -

any legitimate evidence or argument in support of their position.

He instead continued to espouse those positions that had been

explicitly addressed and rejected in this Court’s order of

September 15, 2004, or in other cases previously decided by the

Court. The Court sua sponte concludes that a penalty of $5,000

should be awarded to the United States in this case.

To reflect the foregoing,

An appropriate decision

will be entered.