Gardner v. Comm'r

FREDRIC A. GARDNER, PETITIONER v. COMMISSIONER OF
INTERNAL REVENUE, RESPONDENT
ELIZABETH A. GARDNER, PETITIONER v. COMMISSIONER
OF INTERNAL REVENUE, RESPONDENT

Docket Nos. 14877–13L, 2940–14L. 1 Filed August 26, 2015.

Ps, husband and wife, marketed and promoted a plan
involving the use of entities known as corporations sole. The
Internal Revenue Service (IRS) determined this plan to be an
abusive tax shelter. Agreeing with the IRS, the U.S. District
Court for the District of Arizona (District Court) found that Ps
(1) sold more than 300 of these plans and (2) engaged in con-
duct that violated the provisions of I.R.C. sec. 6700 in that
they made false/fraudulent statements as to the availability of
tax benefits that could be derived therefrom. The District
Court enjoined Ps from further promoting this plan and
ordered Ps to provide the IRS with a list identifying all pur-
chasers thereof. Subsequently, the IRS assessed a $47,000
penalty pursuant to I.R.C. sec. 6700 against each P for 2003
although the activities which the IRS determined to be in vio-
lation of I.R.C. sec. 6700 occurred in 2002, 2003, and 2004.
After Ps failed to pay the assessed penalties, the IRS com-
menced collection actions (lien and proposed levy actions). Ps
challenged the appropriateness of these collection actions
before different IRS settlement officers. Each settlement

1 These cases were consolidated for trial, briefing, and opinion by order

of the Court dated February 3, 2015.

161
162 145 UNITED STATES TAX COURT REPORTS (161)

officer refused to discuss the existence/amount of the under-
lying I.R.C. sec. 6700 penalty. Each IRS settlement officer
sustained the lien and proposed levy action. Thereafter, Ps
each sought judicial review of the settlement officer’s deter-
mination pursuant to I.R.C. sec. 6330(d)(1). Held: Pursuant to
R’s concession, Ps may contest in this Court the existence/
amount of the underlying I.R.C. sec. 6700 penalties. Held, fur-
ther, on the basis of the findings of the District Court, Ps are
collaterally estopped from disputing that they engaged in
activities in violation of the provisions of I.R.C. sec. 6700. R
established at trial that Ps sold the corporation sole plan to
no fewer than 47 individuals. Thus, R established that Ps
were liable for the underlying I.R.C. sec. 6700 penalties. Held,
further, the I.R.C. sec. 6700 penalty is imposed on the pro-
moter of the plan/arrangement and is based on the promoter’s
actions, not the purchaser’s actions. The I.R.C. sec. 6700 pen-
alty is applicable even if the purchaser does not rely on the
plan/arrangement or does not underreport his/her Federal
income tax. Held, further, I.R.C. sec. 6700 penalties are not
assessed for discrete taxable years but rather for conduct and
transactions that may occur over one or more taxable years.
R’s designation of 2003 as the tax period of imposition was for
cogent administrative reasons and did not prejudice Ps. Ps
were afforded in this Court a meaningful and full opportunity
to contest the amounts of the assessed I.R.C. sec. 6700 pen-
alties. Held, further, the IRS settlement officers did not abuse
their discretion in sustaining the IRS lien and proposed levy
actions.

Fredric A. Gardner and Elizabeth A. Gardner, pro sese.
Doreen Marie Susi, Derek S. Pratt, J. Rob Gordon, and
Rachael J. Zepeda, for respondent.
JACOBS, Judge: Fredric A. Gardner and Elizabeth A.
Gardner (petitioners or Gardners) are husband and wife.
They marketed and promoted a plan or arrangement
involving the use of trusts, limited liability companies
(LLCs), and entities known as corporations sole which the
Internal Revenue Service (IRS) determined to be an abusive
tax shelter. Agreeing with the IRS, the U.S. District Court
for the District of Arizona (District Court) determined that
the Gardners had engaged in conduct in violation of section
6700 by making statements as to the availability of tax bene-
fits that they knew or had reason to know were false or
fraudulent and enjoined them from promoting their plan in
the future. United States v. Gardner, No. CV05–3073–PCT–
(161) GARDNER v. COMMISSIONER 163

EHC, 2008 WL 906696 (D. Ariz. Mar. 21, 2008), aff ’d, 457
F. App’x 611 (9th Cir. 2011).
The District Court, among other matters, ordered the
Gardners to provide the IRS with a list identifying all per-
sons who had purchased their corporation sole plan. After
receiving the list, the IRS assessed a $47,000 penalty pursu-
ant to section 6700 against each petitioner. After the Gard-
ners failed to pay the assessed penalties, the IRS commenced
collection actions, specifically, filing a notice of lien and pro-
posing levies against the Gardners’ property. The Gardners
challenged the appropriateness of these actions separately
before different IRS settlement officers. Each settlement
officer sustained the IRS’ collection action. Thereafter, the
Gardners timely sought review of those determinations in
this Court pursuant to section 6330(d)(1).
The issues for decision are: (1) whether each petitioner is
liable for the assessed $47,000 section 6700 penalty and (2)
whether the IRS settlement officers abused their discretion
in sustaining the IRS’ lien against Mr. Gardner and in deter-
mining that the IRS’ proposed levy actions against both
Gardners could proceed.
All section references are to the Internal Revenue Code of
1986 (Code), as amended and in effect at all relevant times,
and all Rule references are to the Tax Court Rules of Prac-
tice and Procedure.

FINDINGS OF FACT

Some of the facts are stipulated and are so found. The
stipulation of facts and the accompanying exhibits are incor-
porated herein by this reference. 2 At the time they filed their
petitions, petitioners resided in Arizona.
I. Petitioners
Mr. Gardner attended Kent State University from 1966 to
1971 where he studied business and accounting and took at
least one tax course. Both during and after college Mr.
Gardner worked in finance. In 1997 Mr. Gardner became a
2 We also have relied on certain facts set forth in (1) District Judge Earl
H. Carroll’s order in United States v. Gardner, No. CV05–3073–PCT–EHC,
2008 WL 906696 (D. Ariz. Mar. 21, 2008), and (2) Gardner v. Commis-
sioner, T.C. Memo. 2013–67, appeal filed (9th Cir. Aug. 1, 2013).
164 145 UNITED STATES TAX COURT REPORTS (161)

certified estate planner and a financial planner. He holds
himself out as an accountant with special training in busi-
ness and charitable planning. Mrs. Gardner attended the
Paralegal Institute of Arizona; she refers to herself as a cer-
tified paralegal.
From 1976 through 1978 both petitioners attended Christ
for the Nations Bible College in Dallas, Texas, where each
received an associate’s degree in theology. After graduation
they moved to Arizona where they became ministers and
operated a Christian bookstore. After several years in oper-
ation the bookstore encountered financial and tax difficulties
which ultimately resulted in the IRS’ assessing tax liabilities
against each petitioner individually. The Gardners closed the
bookstore in 1992. That year was also the last year the Gard-
ners filed a Federal income tax return.
II. Bethel Aram Ministries and Corporation Sole Plan
In 1993 the Gardners formed Bethel Aram Ministries
(BAM), an unincorporated association, organized to be an
‘‘ecclesiastical church ministry’’. They did not file a Form
1023, Application for Recognition of Exemption Under Sec-
tion 501(c)(3) of the Internal Revenue Code. In 1999 peti-
tioners each signed a document entitled ‘‘vow of poverty’’
declaring his/her intent to ‘‘divest [himself/herself] from
earnings or wages from Bethel Aram Ministries’’. The vows
of poverty stated that BAM would provide for each’s needs as
a pastor of the church ministry. They then transferred all of
their assets, including title to their home, to BAM. On Sep-
tember 27, 2001, Mrs. Gardner filed articles of incorporation
with the State of Nevada for ‘‘THE OFFICE OF PRESIDING
HEAD PROPHETESS of Elizabeth A. Gardner after The
Order of the Lord Jesus Christ, the High Priest and King
after the Order of Melchizedek, and her Successors, a cor-
poration sole’’ of BAM.
Historically, a ‘‘corporation sole’’ is a succession of persons
holding an ecclesiastical or monarchical office. See Black’s
Law Dictionary 342 (7th ed. 1999); Bryan A. Garner, A Dic-
tionary of Modern Legal Usage 225 (2d ed. 1995). Corpora-
tions sole are authorized under the laws of some States to
enable religious leaders to hold property and conduct busi-
ness for the benefit of the religious entity, as opposed to the
(161) GARDNER v. COMMISSIONER 165

benefit of the officeholder himself. See Rev. Rul. 2004–41,
2004–1 C.B. 845. The purpose of a corporation sole is to
ensure continuity of ownership of property dedicated to the
benefit of a religious organization. Title to property that
vests in the officeholder as a corporation sole passes to the
successors of the office by operation of law instead of passing
to the officeholder’s heirs. Id.; see also Chambers v. Commis-
sioner, T.C. Memo. 2011–114.
Mrs. Gardner learned about corporations sole by speaking
with Catholic bishops and canon law lawyers as well as
through her own study. The Gardners claimed that the use
of their corporation sole plan could reduce an individual’s
Federal income tax liability. The Gardners told their cus-
tomers that they could assign their personal income to a cor-
poration sole, thus transforming income otherwise taxable
into nontaxable income of the corporation sole. The Gardners
advised customers who earned income through an inde-
pendent business to operate their ministries through a cor-
poration sole and to form an LLC to operate the business.
The customers were further advised (1) to create a trust for
the ministry which would serve as the ‘‘majority member’’ of
the LLC and (2) to hold individually a minority interest in
the LLC and individually serve as the LLC’s ‘‘managing
member’’. The Gardners claimed that the income assigned to
the trust would be tax free and that if the customer donated
50% of the income of the LLC allocated to him to his church,
the donation would give rise to a charitable deduction. The
Gardners asserted that the corporation sole plan gen-
erated the following benefits: (1) the corporation sole would
not have to file a tax return; (2) the corporation sole
was not subject to the scrutiny of any government agency,
including the IRS; (3) the corporation sole had complete
immunity from disclosure to the government; (4) the corpora-
tion sole was subject only to the ‘‘private government’’ of the
person who created it; (5) there would be no withholding or
self-employment taxes; (6) persons working for the corpora-
tion sole ceased to be classified as employees but rather
would be classified as ministers of the corporation sole; and
(7) the corporation sole could operate as any individual could.
The Gardners promoted their corporation sole plan by
holding seminars where they claimed ‘‘that God has provided
a way for you to be unencumbered in his church today and
166 145 UNITED STATES TAX COURT REPORTS (161)

not at odds with the government, whatsoever!’’, and ‘‘Still not
sure this is for real? See what the prominent ‘Blacks Law
Library’ has to say about ‘Corporation Sole’!’’ They also cre-
ated a Web site that promoted their corporation sole plan
and held an annual retreat for individuals who participated
in the corporation sole plan. Moreover, Mrs. Gardner distrib-
uted at least 500 copies of a book she wrote entitled ‘‘Cor-
poration Sole vs. 501(c)(3) Corporation’’ to interested individ-
uals.
In exchange for providing their corporation sole plan and
assistance in establishing corporations sole, the Gardners
asked for ‘‘donations’’ to BAM. The Gardners provided a
‘‘Donation Sheet’’ to interested individuals. Printed on BAM
letterhead, the Donation Sheet provided a list of BAM’s serv-
ices and the amounts to be donated, including discounts if
multiple services were requested:

DONATION SHEET
CORPORATION SOLE
PLEASE MAKE SEPARATE CHECKS OUT TO:

Name Amount For
1) BETHEL ARAM MINISTRIES $1200.00 CORPORATION SOLE
2) CAROL SPACKMAN $80.00 RESIDENT AGENT FEE
3) STATE OF NEVADA $85.00 FILING FEES
GOOD STANDING CERTIFICATE
CERTIFIED COPY OF ARTICLES
4) STATE OF NEVADA $200.00 FOR EXPEDITING DOCUMENTS
[If you are Expediting
your Documents]
5) Bethel Aram Ministries Total Amount CORP SOLE, RESIDENT AGENT,
[One check for all] FILING, and EXPEDITING FEES
Visa/MC is available

LLC
PLEASE MAKE SEPARATE CHECKS OUT TO:

1) BETHEL ARAM MINISTRIES $700.00 LLC
2) CAROL SPACKMAN $80.00 RESIDENT AGENT FEE
3) STATE OF NEVADA $85.00 FILING FEES
GOOD STANDING CERTIFICATE
CERTIFIED COPY OF ARTICLES
4) STATE OF NEVADA $200.00 FOR EXPEDITING DOCUMENTS
[If you are Expediting
your Documents]
(161) GARDNER v. COMMISSIONER 167

TRUST
PLEASE MAKE SEPARATE CHECKS OUT TO:

1) BETHEL ARAM MINISTRIES $1000.00 TRUST

Blessing Reduction...(2)Documents 10%
(3)Documents 20%

The Gardners’ promotion of their plan eventually drew the
attention of the IRS. In 2004 the matter was referred to IRS
Senior Program Analyst Kurt Kuxhausen, who focused on
abusive transactions. Mr. Kuxhausen initiated his investiga-
tion by mailing the Gardners an appointment letter and an
information document request (IDR). 3 In the IDR the IRS
requested anything related to the Gardners’ corporation sole
plan, including books, videos, recordings, bank statements,
canceled checks, and other information related to income
received from the sale of the corporation sole plan. Having
received no information from the Gardners, Mr. Kuxhausen
went to the Gardners’ home where he personally served them
with summonses to appear at a local IRS office to discuss the
corporation sole plan and provide the IRS with the previously
requested documents. While Mr. Kuxhausen was serving the
summonses, the Gardners gave him a tour of their home,
which also served as BAM’s church and office. Mrs. Gardner
gave Mr. Kuxhausen a copy of her book and a booklet enti-
tled ‘‘Her Touch’’.
The Gardners ignored the IRS summonses. The IRS then
issued a summons to BAM’s bank, requesting BAM’s account
information. The Gardners attempted to quash the bank
summons; their petition to do so was dismissed. Following
the dismissal of the Gardners’ petition to quash the bank
summons, the IRS received BAM’s bank records for 2002 and
2003 and for nine months of 2004. Relying on these records,
Mr. Kuxhausen determined that the Gardners had caused
approximately 300 corporations sole to be organized.
Mr. Kuxhausen reviewed BAM’s Web site as well as docu-
ments distributed by the Gardners to individuals interested
in the corporation sole plan and concluded that the Gardners
were promoting an abusive tax scheme. He recommended
3 The IRS initially sent these documents to the wrong address. A second

appointment letter and a second IDR were sent to petitioners’ correct ad-
dress.
168 145 UNITED STATES TAX COURT REPORTS (161)

that the Government seek a judicial decree enjoining the
Gardners from promoting their corporation sole plan.
Following this recommendation, the Government brought
an action in the U.S. District Court for the District of
Arizona against the Gardners. On March 24, 2008, the Dis-
trict Court granted the Government’s motion for summary
judgment, denied the Gardners’ motion for summary judg-
ment, and entered an order to permanently enjoin the Gard-
ners, individually and doing business as BAM or through any
other entity, from promoting their corporation sole plan.
Gardner, 2008 WL 906696. The District Court found: (1) that
the Gardners had organized more than 300 corporations sole
and 10 LLCs for individuals throughout the United States;
(2) the Gardners made material statements regarding the tax
benefits of creating corporations sole, LLCs, and trusts that
they knew or had reason to know were false or fraudulent,
see supra p. 165; and (3) the ‘‘donation sheet’’ was a price list
for the Gardners’ services.
The District Court found that the Gardners had the edu-
cational and business background to know that the state-
ments they had made in connection with the so-called tax
benefits of their plan were false. Gardner, 2008 WL 906696,
at *4. The District Court concluded that in making material
statements regarding both the tax and nontax benefits of
their corporation sole plan, which they knew or had reason
to know were false, the Gardners were ‘‘attempting to
wrench tax statutes out of context to encourage a willful
misreading of the law.’’ Id. at *5.
Finding that (1) the Gardners’ customers were harmed by
their reliance on the structure of the corporation sole plan,
(2) the United States was harmed as a result of the Gard-
ners’ clients’ failing to pay correct amounts of tax to the
Treasury, and (3) the public was harmed because the IRS
was forced to devote resources to identify and recover lost
revenue, the District Court enjoined the Gardners from:
(a) Organizing, promoting, marketing, or selling corporations sole or
any tax shelter, plan or arrangement, that advises, assists, or encour-
ages taxpayers to attempt to violate the internal revenue laws or unlaw-
fully evade the assessment or collection of their federal income tax liabil-
ities;
(b) Making false or fraudulent statements about the allowability of
any deduction or credit, the excludability of any income, or the securing
(161) GARDNER v. COMMISSIONER 169

of any tax benefit by the reason of participating in such tax shelters,
plans or arrangements;
(c) Encouraging, instructing, advising or assisting others to violate the
tax laws, including to evade the payment of taxes; and
(d) Engaging in conduct subject to penalty under 26 U.S.C. § 6700, i.e.,
by making or furnishing, in connection with the organization or sale of
a shelter, plan, or arrangement, a statement the defendants know or
have reason to know be false or fraudulent as to any material matter
under the federal tax laws.
[Id. at *6.]

After the District Court enjoined the Gardners from fur-
ther promotion of their corporation sole plan, the IRS, led by
Mr. Kuxhausen, opened an income tax examination for the
Gardners’ 2002, 2003, and 2004 tax years. As was noted
supra p. 164, petitioners ceased filing Federal income tax
returns after 1992. Relying on BAM’s bank records, Mr.
Kuxhausen conducted a bank deposits analysis and created
substitutes for returns under the authority granted the IRS
by section 6020(b). Thereafter the IRS mailed Mr. and Mrs.
Gardner separate notices of deficiency for 2002 and 2003 on
March 21, 2006, and the IRS mailed Mr. and Mrs. Gardner
separate notices of deficiency for 2004 on March 30, 2007.
The Gardners timely filed petitions in this Court seeking
redetermination of the IRS’ income tax determinations. In
Gardner v. Commissioner, T.C. Memo. 2013–67, we upheld
respondent’s determinations with respect to the Gardners’
income tax deficiencies, as well as certain additions to tax,
for years 2002, 2003, and 2004. The Gardners argued that
the money deposited into the BAM bank account did not con-
stitute taxable income to them because (1) the deposits were
gifts/donations to a legitimate church, (2) they had taken
vows of poverty, and (3) they acted as agents of BAM. We
rejected all of these arguments. We stated that the deposits
were not ‘‘donations’’ in that donations are transfers
resulting from a detached and disinterested generosity. We
held that the Gardners had received moneys from customers
in consideration for organizing corporations sole, LLCs, and
trusts. We also rejected the Gardners’ arguments that they
were agents of BAM and did not benefit from the income
because they took vows of poverty. In this regard, we found
that the Gardners had exercised dominion and control over
BAM’s bank account and held that all taxable deposits into
170 145 UNITED STATES TAX COURT REPORTS (161)

that account were includible in their gross income. Gardner
v. Commissioner, at *16-*17. 4
Concurrent with the income tax examination, Mr.
Kuxhausen opened a section 6700 penalty investigation. He
identified approximately 300 corporations sole organized by
the Gardners. He was able to identify 200 purchasers of the
corporation sole plan through examination of BAM’s bank
records. Mr. Kuxhausen gave these names to a ‘‘list keeper’’ 5
in the IRS’ abusive transactions program who took the list
to find tax returns for more than 100 of the listed individ-
uals. Mr. Kuxhausen and a technical analyst then conducted
a classification of tax returns for examination by reviewing
each of the returns for potential income and/or deduction
issues, such as deductions that could not be justified with the
income reported on a return. All returns having a discrep-
ancy were flagged for examination. Mr. Kuxhausen found
potential discrepancies with respect to income, deduction,
and/or credit issues on 47 of the returns of purchasers of the
Gardners’ corporation sole plan and classified them for exam-
ination.
After Mr. Kuxhausen completed his investigation, the
Gardners provided the IRS with the customer list, as
required by the District Court. The list contained the names
of 189 individuals and their church ministries that matched
those on Mr. Kuxhausen’s list. Mrs. Gardner informed Mr.
Kuxhausen that the Gardners had organized 57 corporations
sole for their customers in 2003.
The IRS entered the $47,000 section 6700 penalty assess-
ments against Mr. and Mrs. Gardner on September 19, 2011.
Each assessment was designated for year 2003. That year
was selected because the investigation commenced in 2003;
the year 2003 was used merely to track the investigation.
4 See Gunkle v. Commissioner, T.C. Memo. 2012–305, aff ’d, 753 F.3d 502
(5th Cir. 2014), and Cortes v. Commissioner, T.C. Memo. 2014–181, where
we held that other individuals who participated in the Gardners’ corpora-
tion sole plan understated their taxable incomes.
5 A list keeper is an IRS employee who takes information received by a

revenue agent and determines whether the taxpayer can be traced by way
of a Social Security number, employer identification number, or other tax
identification number. Once the individual is identified, the list keeper de-
termines whether that individual has filed tax returns. If returns have
been filed, the list keeper acquires copies which are then reviewed by a
technical analyst or a revenue agent.
(161) GARDNER v. COMMISSIONER 171

Also on September 19, 2011, respondent sent the Gardners
notice and demand letters. Mrs. Gardner acknowledged that
she had received the notice and demand letter addressed to
her on September 23, 2011. Mr. Gardner asserted he had
never received a notice and demand letter addressed to him.
Neither Mr. nor Mrs. Gardner paid the section 6700 penalty.
The IRS mailed Mr. Gardner a Final Notice—Notice of
Intent to Levy and Notice of Your Right to a Hearing on
August 27, 2012, at his last known address, via certified
mail. The notice was returned as undeliverable, presumably
because the Gardners had moved since the last time they
had filed an income tax return. The IRS ascertained the
Gardners’ correct address and thereafter sent Mr. Gardner,
via certified mail, a second levy notice, which Mr. Gardner
acknowledged receiving. The IRS mailed Mr. Gardner a
Notice of Federal Tax Lien Filing and Your Right to a
Hearing Under IRC 6320, via certified mail, on September
11, 2012, and filed a notice of lien against his property on the
same date. Mr. Gardner acknowledged receiving the lien
notice on September 13, 2012.
Mr. Gardner filed a Form 12153, Request for a Collection
Due Process or Equivalent Hearing, on September 10, 2012,
requesting a hearing (referred to as a section 6330 hearing),
see infra p. 174, as to both the lien and the IRS’ intent to
levy. Mr. Gardner objected to these collection actions
claiming: ‘‘Do not owe. Don’t know what is for.’’ Settlement
Officer Michael Freitag was assigned to Mr. Gardner’s case.
Before commencing work, he confirmed that he had no prior
involvement with Mr. Gardner. Settlement Officer Freitag
then scheduled a telephone conference for November 27,
2012. He informed Mr. Gardner that he could request collec-
tion alternatives but that in order to do so, Mr. Gardner had
to file income tax returns for 2003 through 2011 and submit
to the IRS a completed Form 433–A, Collection Information
Statement for Wage Earners and Self-Employed Individuals,
and Form 433–B, Collection Information Statement for
Businesses. Mr. and Mrs. Gardner both participated in the
section 6330 hearing on November 27. They declined to dis-
cuss collection alternatives but instead focused solely on the
underlying $47,000 penalty. Settlement Officer Freitag
declined to discuss the underlying liability, stating that Mr.
Gardner had had a prior opportunity to dispute it but he had
172 145 UNITED STATES TAX COURT REPORTS (161)

not done so and therefore was not permitted to raise the
issue at the section 6330 hearing.
The IRS mailed Mrs. Gardner a notice of intent to levy on
February 27, 2012, which Mrs. Gardner acknowledged
receiving on March 3, 2012. She mailed a Form 12153 to the
IRS on March 22, 2012. Her objection to the proposed collec-
tion activity was identical to that of her husband: ‘‘Do not
owe. Don’t know what is for.’’ 6 Settlement Officer Bernice
Mason was assigned Mrs. Gardner’s case. Before commencing
work, she confirmed that she had no prior involvement with
Mrs. Gardner. Settlement Officer Mason then scheduled a
telephone conference call for November 26, 2013. Settlement
Officer Mason informed Mrs. Gardner that she could request
collection alternatives but that in order to do so Mrs.
Gardner would need to (1) file income tax returns for 2006
through 2012, (2) provide proof that she had made estimated
tax payments for 2013, and (3) complete a Form 433–A. At
the section 6330 hearing before Settlement Officer Mason,
both Mr. and Mrs. Gardner were present. Mrs. Gardner
declined to discuss collection alternatives. Rather, Mrs.
Gardner wanted to discuss only the section 6700 penalty
assessment. Settlement Officer Mason concluded that Mrs.
Gardner had had a prior opportunity to litigate the under-
lying liability and refused to allow her to raise that issue.
The IRS issued a notice of determination to Mr. Gardner
on May 31, 2013, and to Mrs. Gardner on January 24, 2014.
The Gardners timely filed separate petitions with the Court,
and their cases were consolidated for trial, which was held
in Phoenix, Arizona, on February 3, 2015.

OPINION

I. Introduction
These cases involve a review of respondent’s determination
to proceed with collection of section 6700 penalties against
Mr. Gardner via lien and levy actions and Mrs. Gardner via
levy action. The relevant portion of the statute provides:

6 We note that Mrs. Gardner also marked that she wished to challenge

a filed notice of Federal tax lien although such a challenge is inapplicable
in her case.
(161) GARDNER v. COMMISSIONER 173

SEC. 6700. PROMOTING ABUSIVE TAX SHELTERS, ETC.
(a) IMPOSITION OF PENALTY.—Any person who—
(1)(A) organizes (or assists in the organization of )—
(i) a partnership or other entity,
(ii) any investment plan or arrangement, or
(iii) any other plan or arrangement, or
(B) participates (directly or indirectly) in the sale of any interest
in an entity or plan or arrangement referred to in subparagraph (A),
and
(2) makes or furnishes or causes another person to make or furnish
(in connection with such organization or sale)—
(A) a statement with respect to the allowability of any deduction
or credit, the excludability of any income, or the securing of any
other tax benefit by reason of holding an interest in the entity or
participating in the plan or arrangement which the person knows or
has reason to know is false or fraudulent as to any material matter,
or
(B) a gross valuation overstatement as to any material matter,
shall pay, with respect to each activity described in paragraph (1), a pen-
alty equal to the $1,000 or, if the person establishes that it is lesser, 100
percent of the gross income derived (or to be derived) by such person
from such activity. For purposes of the preceding sentence, activities
described in paragraph (1)(A) with respect to each entity or arrangement
shall be treated as a separate activity and participation in each sale
described in paragraph (1)(B) shall be so treated. * * *

The section 6700 penalty is governed by the procedural
rules of section 6703, which, in general, removes section 6700
penalty assessments from the deficiency jurisdiction of this
Court. 7 However, section 6330(d)(1) provides this Court with
jurisdiction to review an appeal from the Commissioner’s
determination to proceed with collection activity regardless of
the type of underlying tax involved. And we have held that
our jurisdiction includes reviewing the Commissioner’s lien
and levy activities regarding penalties governed by the proce-
dural rules of section 6703, including section 6700. Wil-
liams v. Commissioner, 131 T.C. 54, 58 n.4 (2008); Harry
v. Commissioner, T.C. Memo. 2009–206; see Callahan v.
7 Sec. 6703(b) provides that subch. B of ch. 63 of the Code (relating to

deficiency procedures) does not apply with respect to the assessment or col-
lection of the penalties provided by secs. 6700, 6701, and 6702. Sec. 6703(c)
provides that a taxpayer may challenge a penalty under secs. 6700 and
6701 by paying 15% of the assessed penalty, filing an administrative claim
for refund, and if that claim is not granted, filing a claim for refund in the
appropriate U.S. District Court.
174 145 UNITED STATES TAX COURT REPORTS (161)

Commissioner, 130 T.C. 44 (2008). Thus, we have jurisdiction
to review the notices of determination issued to petitioners.
II. Sections 6320 and 6330 and the Standard of Review
Section 6320(a) provides that written notice of the filing of
a notice of Federal tax lien must be furnished by the Sec-
retary to the taxpayer whose property is subject to the lien.
Section 6320(b) provides that a taxpayer may thereafter
request a hearing regarding the filing of the tax lien, and
section 6320(c) provides that the hearing must be conducted
pursuant to the rules of section 6330 (thus the hearing
regarding the filing of a notice of Federal tax lien is referred
to as a ‘‘section 6330 hearing’’).
Section 6330(a) provides that no levy may be made on any
property or right to property of any person unless the Sec-
retary has notified that person in writing of the right to a
hearing before the levy is made (the section 6330 hearing).
Section 6330(b)(3) provides that if a person requests a section
6330 hearing, that hearing shall be held before an impartial
officer or employee of the IRS. During the hearing the tax-
payer may raise any relevant issue, including appropriate
spousal defenses, challenges to the appropriateness of the
collection action, and collection alternatives, including offers-
in-compromise. Sec. 6330(c)(2)(A).
A taxpayer is precluded from contesting the existence or
amount of the underlying tax liability at the section 6330
hearing unless the taxpayer did not receive a notice of defi-
ciency for the tax in question or did not otherwise have an
opportunity to dispute the underlying tax liability. Sec.
6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604,
609 (2000). 8 In the instant cases, the underlying liabilities
are the section 6700 penalties imposed on petitioners.
The IRS concedes that (1) petitioners did not have a prior
opportunity to contest the section 6700 penalties; (2) peti-
tioners may challenge the existence and/or amounts of the
underlying liabilities (i.e., the section 6700 penalties), and (3)
the Court should use a de novo standard of review. 9 We
8 We have interpreted the phrase ‘‘underlying tax liability’’ to include

any amounts a taxpayer owes pursuant to tax laws that are subject to the
Commissioner’s collection activities. Katz v. Commissioner, 115 T.C. 329,
338–339 (2000).
9 The IRS also concedes that the record rule is inapplicable when a de
(161) GARDNER v. COMMISSIONER 175

accept these concessions, and on that basis we conclude we
have jurisdiction to consider the existence and amounts of
the section 6700 penalties assessed against petitioners.
III. Burden of Proof
To prevail, respondent must prove: (1) that petitioners are
liable for the section 6700 penalties and (2) the amounts of
the penalties.
Section 6703(a) provides that the IRS bears the burden of
proving that any person is liable for a penalty pursuant to
section 6700. 10 Respondent argues that he has met his bur-
den by (1) establishing by the defense of collateral estoppel
that the Gardners engaged in conduct which makes them
liable for the section 6700 penalties, and (2) presenting evi-
dence at trial which establishes that each petitioner engaged
in conduct making himself/herself liable for the section 6700
penalty no fewer than 47 times.
If respondent proves that violations of section 6700 have
occurred, a penalty of $1,000 applies to each violation unless
petitioners establish that the amount of gross income derived
from the prohibited activity was less. See sec. 6700(a) (flush
language). Petitioners bear the burden of proving that the
amount derived from each prohibited activity was less than
$1,000. See id.
IV. Application of the Section 6700 Penalty
A. Penalty Liability
In applying section 6700, courts have identified four ele-
ments the Government must establish: (1) organization of or
participation in the sale of certain investment plans or
arrangements; (2) statements regarding the allowability of
deductions or tax credits, the excludability of income, or the
securing of other tax benefits; (3) knowledge or reason to
know the statements are false; and (4) that the statements
pertain to a material matter. United States v. Stover, 650

novo review is conducted. See Jordan v. Commissioner, 134 T.C. 1, 8–9
(2010).
10 The Court of Appeals for the Ninth Circuit affirmed a decision in

which a District Court applied a preponderance of the evidence standard
in a sec. 6700 case. Bond v. United States, 872 F.2d 898 (9th Cir. 1989).
176 145 UNITED STATES TAX COURT REPORTS (161)

F.3d 1099, 1107 (8th Cir. 2011); United States v. Estate Pres.
Servs., 202 F.3d 1093, 1098 (9th Cir. 2000).
Section 6700 makes no mention of whether a participant
must rely on the promoter’s statements or underreport his/
her tax as a result of participation in the promotion. How-
ever, the legislative history of the section states that the
actions of the plan participants are not relevant to the
application of the section. ‘‘There need not be reliance by
the purchasing taxpayer or actual under-reporting of tax.
These elements have not been included because they would
substantially impair the effectiveness of this penalty. Thus,
a penalty can be imposed based upon the offering materials
of the arrangement without an audit of any purchaser of
interests.’’ S. Rept. No. 97–494 (Vol. 1), at 267 (1982), 1982
U.S.C.C.A.N. 781, 1015.
Respondent posits that he has established the Gardners’
liability through the judicial doctrine of collateral estoppel.
Respondent states in his brief that ‘‘[a]fter applying collateral
estoppel, the only issue for the Court to decide is if peti-
tioners’ false statements were made in connection with at
least 47 of the corporation sole arrangements.’’
Collateral estoppel 11 is an affirmative defense barring a
party from relitigating an issue determined against that
party in an earlier action, even if the second action differs
significantly from the first one. Black’s Law Dictionary
256. 12 The collateral estoppel doctrine is also known as issue
preclusion. Once an issue of fact or law is ‘‘actually and nec-
essarily determined by a court of competent jurisdiction, that
determination is conclusive in subsequent suits based on a
different cause of action involving a party to the prior litiga-
tion.’’ Montana v. United States, 440 U.S. 147, 153 (1979)
(citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5
(1979)). Thus, if an issue has been resolved by a court, the
11 Sec. 6330(c)(4) bars a person from raising in a collection hearing an
issue that was raised and considered at a previous hearing or in any other
administrative or judicial proceeding in which the person seeking to raise
the issue meaningfully participated, thus codifying the doctrines of collat-
eral estoppel and res judicata. See Katz v. Commissioner, 115 T.C. at 339;
McIntosh v. Commissioner, T.C. Memo. 2003–279.
12 Respondent alleged collateral estoppel as an affirmative defense in

both cases in his respective first amendments to answer, both filed Janu-
ary 23, 2015, by leave of the Court pursuant to Rule 41(a).
(161) GARDNER v. COMMISSIONER 177

issue will not be taken up again by a subsequent court. The
Commissioner may assert the doctrine of collateral estoppel
as an affirmative defense even though the Commissioner was
not a party to the prior proceeding. See Brotman v. Commis-
sioner, 105 T.C. 141, 148 (1995).
Collateral estoppel applies in a factual dispute if the fol-
lowing conditions are satisfied: (1) the issue in the second
suit is identical in all respects with the one decided in the
first action; (2) there is a final judgment rendered by a court
of competent jurisdiction; (3) the party against which collat-
eral estoppel is asserted is either a party to the prior judg-
ment or the privy of a party to the prior judgment; (4) the
parties actually litigated the issues and the resolution of
these issues was essential to the prior decision; and (5) the
controlling facts and applicable legal rules remain unchanged
from those in the prior litigation. Peck v. Commissioner, 90
T.C. 162, 166–167 (1988), aff ’d, 904 F.2d 525 (9th Cir. 1990).
We agree with respondent that all five Peck elements are
present in these cases. With respect to the first element, the
issues in both the District Court case and these cases are
identical. Section 7408(a) empowers a court to enjoin any
person from further engaging in ‘‘specified conduct’’. Specified
conduct is defined in section 7408(c) and includes any action
or failure to take action which is subject to penalty under
section 6700. Sec. 7408(c)(1). To enjoin the Gardners from
engaging in promoting and selling of an abusive tax shelter
plan or arrangement, the District Court necessarily deter-
mined that they engaged in conduct subject to the section
6700 penalty. As the District Court stated in its order:
Section 7408 * * * authorizes a court to enjoin persons who have
engaged in conduct subject to penalty under Code §6700 from engaging
in further such conduct or any other conduct subject to penalty under
the Code if the Court finds that injunctive relief is appropriate to pre-
vent recurrence of the conduct. * * * Based on the evidence presented
by the parties, the Court finds that the defendants are engaging in con-
duct in violation of Code §6700. [Gardner, 2008 WL 906696, at *5.]

With respect to the second element, the District Court’s
order, upheld on appeal by the Court of Appeals for the
Ninth Circuit, is a final judgment by a court of competent
jurisdiction. With respect to the third element, petitioners
and the Government were both parties to the prior case (and
the IRS may claim collateral estoppel even if a different
178 145 UNITED STATES TAX COURT REPORTS (161)

Government agency participated in the prior case). See supra
p. 177. With respect to the fourth element, the record makes
it clear that petitioners fully disputed and the parties fully
litigated all issues with respect to the injunction. With
respect to the fifth element, there has been no modification
to section 6700 or the regulations promulgated thereunder
since the prior litigation. The facts of these cases have not
changed since the end of the prior litigation. As respondent
points out in his brief: ‘‘The §6700 penalty naturally flows
from the injunction granted by the District Court. The Dis-
trict Court determined that the Gardners violated §6700.
Section 6700 provides that any person who violates §6700
‘shall pay’ a penalty.’’
Petitioners reply that collateral estoppel is inapplicable in
these cases. ‘‘It is clear there are no abusive transactions to
give rise to the penalty. Respondent did not prove the abu-
sive transaction. What the respondent is passing off as proof
is the District Court said that the Gardners engaged in con-
duct that violates IRC § 6700.’’ Petitioners then argue that
the corporation sole plan was not an abusive tax shelter.
However, petitioners’ position is precisely what the doctrine
of collateral estoppel was intended to avoid: relitigating
closed questions. Petitioners repeated in this Court the same
argument that they made in the District Court as well as the
same false statements made to their customers that led the
District Court to enjoin them. 13 We thus hold that the doc-
trine of collateral estoppel applies in the instant situation
and that the District Court’s determination is conclusive.
Consequently, respondent has met his burden of establishing
that the Gardners are liable for the section 6700 penalties.

13 For example, in their brief, petitioners admit that they advised their

customers to use the structure reviewed by the District Court, see supra
p. 168, in which LLCs and trusts are used to divert up to 95% of their
business income to a church, making it ‘‘tax free’’. Petitioners argue this
admission supports their position because ‘‘[t]he statements made of Mrs.
Gardner with respect to the benefits of a religious corporation sole are
clearly consistent with current law.’’ The District Court came to a different
conclusion: that the advice given by the Gardners constituted a false or
fraudulent statement under sec. 6700.
(161) GARDNER v. COMMISSIONER 179

B. Amount of Penalty
A taxpayer is liable for a $1,000 penalty for each violation
of section 6700 unless the taxpayer can establish that the
amount of gross income derived from the activity was less
than $1,000. Sec. 6700(a). The District Court did not address
the penalty amount for which the Gardners would be liable
although it did find that the Gardners had organized more
than 300 corporations sole for their customers.
To impose a $47,000 penalty against each petitioner,
respondent is obligated to establish that each petitioner com-
mitted 47 acts which made him/her liable for the section
6700 penalty. At trial Mr. Kuxhausen did just that. He
explained in detail how he and his colleagues examined
BAM’s bank accounts, customers’ canceled checks, and cus-
tomers’ tax returns and how he and his colleagues were able
to identify 47 corporations sole organized by petitioners and
correlate payments made by the customers. Mr. Kuxhausen
classified only 47 income tax returns because they had the
most potential for examination adjustments (i.e., most likely
to have issues with income, deductions, and/or credits).
The Gardners maintain that the IRS did not establish that
any of the individuals who purchased the corporation sole
plan used the plan to avoid Federal income tax. The Gard-
ners allege that the purchasers were legitimate ordained
bishops, pastors, elders, etc. who had purchased the plan for
the governance of their respective churches and/or ministries.
In this regard, four of the individuals that Mr. Kuxhausen
identified testified on petitioners’ behalf. Each individual
credibly testified that he did not use his respective corpora-
tion sole to avoid taxes, but rather each individual used his
corporation sole to administer his ministry in furtherance of
what are unquestionably good works. The IRS audited the
returns of all four individuals. None had any corporation-
sole-related adjustments made to his tax return. Indeed, one
witness received a tax refund after his audit.
The focus of section 6700, however, is not on the recipient;
it is on the promoter of the abusive tax shelter. As the legis-
lative history of the statute makes clear, a promoter is liable
for the section 6700 penalty even if the IRS does not audit
the return of the purchaser. Indeed, even if the purchaser
makes no use of the tax shelter and does not underreport
180 145 UNITED STATES TAX COURT REPORTS (161)

his/her tax, the promoter is still liable for the section 6700
penalty. 14 See S. Rept. No. 97–494 (Vol. 1), supra at 267,
1982 U.S.C.C.A.N. at 1015.
Section 6700(a)(2)(B) provides that if a tax shelter pro-
moter establishes that he/she derived less than $1,000 with
respect to each promotional action, the section 6700 penalty
shall be that lesser amount. The Gardners have not done so.
C. Conclusion

The District Court determined that the Gardners’ corpora-
tion sole plan violated section 6700, and we so hold. The IRS
established that the Gardners sold the corporation sole plan
to those 47 individuals, and we hold the Gardners sold the
corporation sole plan to at least 47 individuals.
V. Year at Issue
The notices of determination sent to the Gardners state
that the year involved is 2003. At trial we inquired how the
IRS selected 2003 when the Gardners sold their corporation
sole plan in 2002, 2003, and 2004. In his brief, respondent
replied that the IRS investigation commenced in 2003 and
for administrative reasons the IRS tracked the Gardners’ sec-
tion 6700 penalties in tax modules designated year 2003. 15
Respondent posits that section 6700 penalties are not
assessed for discrete taxable years but rather for conduct and
transactions that may occur over one or more taxable years.
Courts have examined the period for a section 6700 pen-
alty assessment before. In Planned Invs., Inc. v. United
States, 881 F.2d 340 (6th Cir. 1989), the Court of Appeals for
the Sixth Circuit was faced with a notice and demand
regarding a section 6700 penalty assessment which did not
specify the period involved. Subsection (a) of section 6671,
which governs the assessment of all penalties provided in
subchapter B of chapter 68, including those of section 6700,
14 In any case, petitioners’ witnesses acknowledged they received and re-
viewed the information contained in the corporation sole plan, information
that the District Court concluded was false.
15 Respondent states in his brief that the Form 8278, Assessment and

Abatement of Miscellaneous Civil Penalties, which revenue agents are re-
quired to complete when requesting an assessment of the sec. 6700 pen-
alty, requires that the revenue agent assign a year to which the penalty
applies. The form is not processed if a year is not provided.
(161) GARDNER v. COMMISSIONER 181

provides that such penalties shall be paid upon notice and
demand and shall be collected as taxes. Chapter 63 of the
Code, specifically sections 6201 through 6245, governs
assessment of taxes; consequently, that chapter of the Code
controls how the penalty is assessed. 16 Similarly, chapter 64,
which sets forth the rules for the collection of taxes, governs
the collection of the section 6700 penalty. Specifically, section
6303(a) of chapter 64 provides: ‘‘After the making of an
assessment of a tax pursuant to section 6203, [the IRS shall]
give notice to each person liable for the unpaid tax, stating
the amount and demanding [the] payment thereof.’’ The
Court of Appeals in Planned Invs., Inc., 881 F.2d at 344, con-
cluded: ‘‘Section 6303 does not prescribe any particular form
of notice. Treasury Regulations promulgated under the
authority of § 6303 merely parrot the statutory language that
the notice shall state the amount of the tax and demand pay-
ment thereof. 26 CFR § 301.6303–1(a).’’ The Court of Appeals
held:
Construing the plain language of the statutes and regulations outlined
above, it becomes evident that the form of notice of assessment of
a § 6700 penalty requires only a statement of the amount of the penalty
and a demand for payment. It is also clear that the notice sent to the
plaintiff in this case complied with these requirements as the notice
identified the amount assessed and demanded payment. [Id.]

The Court of Appeals’ analysis did not end there. Notice
must also meet the general ‘‘fairness’’ requirement of due
process. The Court of Appeals in Planned Invs., Inc. stated
that notices that contain technical defects are valid where
the taxpayer has not been prejudiced or misled by the error
and is afforded a meaningful opportunity to litigate his
claims. Id.; see also Sage v. United States, 908 F.2d 18, 23
(5th Cir. 1990) (full opportunity to contest the amount of a
section 6700 penalty constituted basic fairness).
The rationale of Planned Invs., Inc. was followed by several
other Courts of Appeals. See In re MDL–731 Tax Refund
Litig. of Organizers & Promoters of Inv. Plans Involving Book
16 The Court of Appeals noted that ch. 63 provides for two methods of

assessment: (1) subch. B’s special procedure for assessment of income, es-
tate, and gift taxes, and (2) subch. A’s general procedure for the assess-
ment of other taxes. However, subch. B is inapplicable pursuant to the pro-
visions of sec. 6703(b). See Planned Invs., Inc. v. United States, 881 F.2d
340, 343 (6th Cir. 1989).
182 145 UNITED STATES TAX COURT REPORTS (161)

Props. Leasing, 989 F.2d 1290, 1301 (2d Cir. 1993) (‘‘The
Internal Revenue Code thus does not obligate the IRS to
assess Section 6700 penalties only on income actually earned
during discrete taxable periods.’’); Sage, 908 F.2d 18 (finding
the Court of Appeals for the Sixth Circuit’s reasoning in
Planned Invs., Inc. persuasive); Gates v. United States, 874
F.2d 584, 588 (8th Cir. 1989) (‘‘Indeed, it does not appear
that section 6671 dictates any particular assessment period
for section 6700 penalties, which do not relate to any specific
tax.’’). We are cognizant that the Court of Appeals for the
Ninth Circuit, to which appeal in this matter would normally
lie, has taken a position that may appear contrary to this
precedent. In Bond v. United States, 872 F.2d 898, 901 (9th
Cir. 1989) (issued before Planned Invs., Inc. or the other
cases cited supra), the Court of Appeals for the Ninth Circuit
suggested that section 6700 penalties should be assessed on
an annualized basis. The court ruled that the section 6700
penalty was properly calculated as a percentage of the gross
income derived from the sales made during the year or years
involved.
The language of section 6700 on which the Court of
Appeals opined in Bond has been superseded by an amend-
ment to section 6700. In 1989 Congress added the flush lan-
guage to section 6700(a), to clarify that
activities described in paragraph (1)(A) [referring to organization of a
partnership or other entity, any investment plan or arrangement, or any
other plan or arrangement] with respect to each entity or arrangement
shall be treated as a separate activity and participation in each sale
described in paragraph (1)(B) [participation in the sale of any interest
in an entity or plan or arrangement referred to in section 6700(a)(1)(A)]
shall be so treated. [Omnibus Budget Reconciliation Act of 1989, Pub. L.
No. 101–239, sec. 7734(a)(1)–(3), 103 Stat. at 2403.]

We believe it proper to follow herein the analysis in
Planned Invs., Inc. and the other Courts of Appeals opinions
that have followed it. In these cases, the notices of deter-
mination identified the amounts assessed and made it clear
that payment was required. Although the tax year included
in the notice of determination was not relevant to petitioners’
cases, the IRS provided a cogent administrative reason why
a year was identified (i.e., administrative requirements) and
the Gardners were both knowledgeable as to all relevant
facts and arguments of the IRS and had a full opportunity
(161) GARDNER v. COMMISSIONER 183

to contest the $47,000 penalties at trial before us. In sum, we
find the notices of determination to proceed with lien and
levy actions that were provided to the Gardners with respect
to the section 6700 penalties were adequate. 17
VI. Other Matters
The remainder of these cases requires our review of the
actions of the IRS Appeals Office. When the Court conducts
a de novo review of the underlying liability, we review all
determinations not involving the underlying liability for
abuse of discretion. Craig v. Commissioner, 119 T.C. 252, 260
(2002). An action constitutes an abuse of discretion if it is
arbitrary, capricious, or without sound basis in fact or law.
Giamelli v. Commissioner, 129 T.C. 107, 111 (2007). The
Court of Appeals for the Ninth Circuit has specifically held
that for section 6330 cases the scope of review is limited to
the administrative record where the standard of review is
abuse of discretion. See Keller v. Commissioner, 568 F.3d
710, 718 (9th Cir. 2009), aff ’g T.C. Memo. 2006–166, and
aff ’g and vacating decisions in related cases.
In deciding whether the IRS settlement officers abused
their discretion in sustaining the collection actions, we con-
sider whether they: (1) properly verified that the require-
ments of any applicable law or administrative procedure
have been met; (2) considered any relevant issues the tax-
payer raised; and (3) determined whether ‘‘any proposed
collection action balances the need for the efficient collection
of taxes with the legitimate concerns of the person that any
collection action be no more intrusive than necessary.’’ See
sec. 6330(c)(3).
Mr. Gardner asserts that he did not receive notice and
demand for payment of his section 6700 penalty. However,
Settlement Officer Freitag reviewed the Form 4340, Certifi-
cate of Assessments, Payments, and Other Specified Matters,
included in Mr. Gardner’s administrative file. It states that
a statutory notice of balance due (i.e., notice and demand)
was mailed to Mr. Gardner on September 19, 2011. A settle-
17 We note that in the stipulation of facts, petitioners acknowledged they
organized at least 67 corporations sole during 2003. And at trial peti-
tioners stated they organized 57 corporations sole during 2003. In either
case, petitioners were well aware of the situation.
184 145 UNITED STATES TAX COURT REPORTS (161)

ment officer may rely on a Form 4340 to verify that a valid
assessment was made and that notice and demand was sent
to the taxpayer in accordance with section 6303. Nestor v.
Commissioner, 118 T.C. 162, 166 (2002). Absent a showing of
irregularity, a transcript with this information is sufficient to
establish that the procedural requirements of section 6330
have been met. Id. at 167. The Gardners raised no other
verification issues, and at trial the IRS settlement officers
each testified that they reviewed each petitioner’s adminis-
trative file and verified that the requirements of applicable
law and administrative procedure had been met. The settle-
ment officers also confirmed at trial that the lien and pro-
posed levy collection actions each balanced the need for effi-
cient collection of taxes with the Gardners’ concerns that the
collection actions be no more intrusive than necessary.
VII. Conclusion
After considering the merits of petitioners’ arguments, we
hold that petitioners are each liable for a $47,000 section
6700 penalty. Because we find no abuse of discretion in the
settlement officers’ determinations, we sustain the IRS’ lien
against Mr. Gardner and hold that the IRS’ proposed levy
actions against both Gardners may proceed.
We have considered all of petitioners’ arguments, and to
the extent not discussed herein, we find them to be without
merit and/or irrelevant.
To reflect the foregoing,
Decisions will be entered for respondent.

f