T.C. Mem o. 2 01 4- 72

UNITED STAT ES TAX COURT

LEONARD L. BEST AND EV ELYN R. BEST, Peti ti on ers v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 26 66 2- 10 L. Fi le d Ap ril 28 , 20 14
.
W e rev ie w R's d eci si on to pro ceedwith c ol le ct io n o f Ps ' unpa id in co m e ta x. Held : Ap pe al s o ffi cer d idno t ab us e h er d is cret io n i n re lying on trans cri pt s t o v eri fy

th atPs' u np ai d t ax ha d b eenpro pe rly ass es se d. Held , furth er, d oc um en ts pro vi de d t o P s s at is fie d R 's o bl ig at io n to pro vi de th em

with re co rd s o f as se ss m en t fo r th e unp ai d t ax . Held , furth er, I.R.C. s ec. 6 67 3( a)(1 ) sa nc ti on im po se d. Held , furth er, Ps ' co un se l i s o rd eredto sh ow caus e why he sh ou ldno t b e m ad e to pay R's ex ces si ve co st s p ur su an t t o I.R .C. se c. 66 73 (a)( 2) or b e sa nc ti on edpu rs ua ntto Ru le 33 (b ), Tax C ou rt Rul es of Prac ti ce an d P ro cedur e.- 2 -

[* 2] Don al d W. MacPh ers on , forpe ti ti on ers . Ch ris J. Sh el do n andBran do n A. Kei m , forres po nd en t.

MEMORANDUM OPINION HALPERN, Ju dg e: Thi s ca se is be fo re u s t o re vi ew a d et erm in at io n b y res po nd en t's App eal s Off ic e (d et erm in at io n andApp eal s, re sp ect iv el y) to pro ceed with c ol le ct io n b y

lev y of p et it io ne rs ' unpa idFed eral in co m e ta x, ad di ti on s t o t ax , an d i nt eres t (wi th ou t d is ti nc ti on , tax ) fo r 19 93 an d 1 99 4. We revi ew th e de te rm in at io n p ur su an t t o s ect io n 6 33 0( d) (1 ). Res po nd en t h as als o m ov edto im po se a sanc ti on onpe ti ti on ers pu rs ua ntto sec ti on 66 73 (a)( 1) . W e wil l s us ta in th e d et erm in at io n, an d we wi ll im po se a sa nc ti on . On o urownm ot io n, we wi ll
or de r pe ti ti on ers ' co un se l t o s ho w cau se why he sh ou ldno t b e m ad e to pay res po nd en t's ex ces si ve co st s p ur su an t t o s ect io n 6 67 3( a)(2 ) orbe san ct io ne d pu rs ua ntto Ru le 33 (b ). Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o the Int ern al Rev enue Co de of 1 98 6, as am en de d andineffe ctat a ll rel ev an t t im es , andall Ru le refe ren ces are t o the Tax C ou rt Rul es of P ract ic e an d P ro cedur e.- 3 -

[* 3] Bac kg ro un d In tro du ct io n The parti es ha ve subm itte d thi s ca se forde ci si on witho uta tr ia l p ur su an t t o Ru le 12 2. Th e p art ie s ag ree tha t the cas e m ay be de ci de d o n the ba si s o f th e pl ead in gs an d the st ip ul at io n o f fac ts fil edby the parti es . Fact s s ti pu late d b y th e pa rti es are s o fo un d. Pet it io ne rs are h us ba ndan d wi fe. The y res id edinAriz on a atth e ti m e th ey fil edth e p et it io n. Pri orPro ceed in g Pet it io ne rs ' unpa idtax at i ss ue inth is cas e was th e subjec t o f a p rio r cas e in th is Co urt b ro ug htby the m inres po ns e to a st atut ory no ti ce o f de fic ie nc y . That
cas e, Bes t v . Comm is si on er, d oc ke t No . 22 24 1- 07 , was s et tl edby agree m en t o f th e pa rti es . W e su st ai ne d s ub st an ti al po rti on s o f th e d efi ci en ci es intax th at
res po nd en t d et erm in edalo ng with a dd it io ns to tax forbo th fai lu re t o t im el y fil e a return andfai lu re t o t im el y pay tax an d fo r fai lu re t o p ay est im at edtax . W e en te redde ci si on indo ck etNo. 2 22 41 -0 7 o n J anua ry 2, 2 00 9. Pe ti ti on ers were rep res en te d i n tha t ca se by the ir p res en t co un se l, Do na ldW . MacP he rs on .- 4 -

[* 4] Not ic e o f In te ntTo Lev y an d S ect io n 6 33 0 Hea rin g On the ba si s o f our de ci si on indo ck etNo. 2 22 41 -0 7, re sp on de ntass es se d th e res ul ti ng tax onMarc h 1 6, 2 00 9. Pe ti ti on ers di d n otonde m an d p ay th e as se ss edtax , and , onDecem be r 23 , 20 09 , res po nd en t i ss ue d t o p et it io ne rs a Fi na l Not ic e o f In te ntTo Lev y an d No ti ce o f You r Ri gh t To a Heari ng . In re sp on se th eret o, p et it io ne rs ti m el y reque st eda se ct io n 6 33 0 h eari ng (he ari ng ). By let te r fro m th ei r co un se l, Mr . MacP he rs on , att ach edto th ei r he ari ng reque st , pet it io ne rs se t fo rth th e fo ll owi ng reas on s fo r a h eari ng : a. Taxpa y er wi sh es to pu rs ue co ll ect io n a lt ern at iv es , in cl ud in g, in te r al ia , Offer i n C om

pr om is e (d oubtas t o l iabi li ty, do ub t as to co ll ect ib il ity [,] an d i nt eres t o f effe ct iv e ta x a dm in is tra ti ve [s ic ]) and/o r In st al lm en t Ag reem en t. b. Co ll ect io n a ct io ns su chas l ev y wil l caus e tr em en do us hard sh ip on Taxp ay er. c. Pen al ty abat em en t i s re qu es te d. Res po ns ib il ity

forth e h eari ng with Ap pe al s d ev ol ve d t o S ettl em en t Offi cer Irm a Hern an de z. Inpre pa rat io n fo r co nduc ti ng th e h eari ng sh e v eri fie d tha t s he ha d h adno pri or

in vo lv em en t wi th pe ti ti on ers ineit he r App eal s o r an y othe r In te rn al Rev enue Serv ic e (IR S) fu nc ti on forth e type o f ta x andtax y ears as so ci at edwith thi s ca se . She rev ie wedvario us co m pu te r tr an sc rip ts of pe ti ti on ers ' acco un ts fortax ab le y ears 19 93 an d 1 99 4. Onth e b as is of h er re vi ew,- 5 -

[* 5] Ms . Hern an de z co nc lu de d tha t p ro pe r as se ss m en ts were m ad e, th atno ti ce an d de m an d fo r pa y

m en t was m ai le d t o p et it io ne rs ' las t kno wn ad dr es s wi th in60 day s of th e as se ss m en ts , andth atth ere was a ba lanc e due foreach y ear wh enth e le vy no ti ce was is su ed
. Co m m un ic at io n b etweenMs . Hern an de z an d M r. Mac Ph ers on th enbe ga n. On Au gu st12 , 20 10 , he r eque st edfro m he r co pi es of tran sc rip ts of a cco un t fo r pe ti ti on ers ' 19 93 an d 1 99 4 t ax y ears . On th atsame dat e, sh e p ro vi de d t o h im two do cu m en ts , each en ti tl ed"Acco un t Tran sc rip t" (acc ou nttrans cri pt s) , on e pe rta in in g t o 1 99 3 andth e o th er p ert ai ni ng to 19 94 . Am on g o th er thi ng s, ea ch
acco un t tran sc rip t i de nt ifi es pe ti ti on ers by nam e an d S oc ia l Se curit y nu m be r, id en ti fie s the y ear andtype o f ta x (F orm 10 40 A) rep orte d, an d s ho ws the am ou nt s an d d at es of a ss es sm en ts . On Se pt em

be r 2, 2 01 0, M r. Mac Ph ers on co m m un ic at edth e fo ll owi ng to Ms . Hern an de z: "Cl ie nt s ar e d oubt in g l iabi li ty/co nt es ti ng ti m el y & p ro pe r as se ss m en t & de le ga te d aut ho rit y of a ss es sm en t o ffi cer." He reque st ed : "P le as e pr ov id e a 's umm ary reco rdof a ss es sm en t,' Fo rm 23 C an d aFo rm

43 40 , pl us a co py of th e actua l d oc um en t s ig ne d b y th e o ffi cer d el eg at edauth or ity to ass es s i n th is cas e, hi s n am e, an d the de le ga ti on ord er s ho win g h is au th or iz at io n t o a ss es s i n th is cas e."- 6 -

[* 6] On Se pt em

be r 3, 2 01 0, M s. Hern an de z te le ph on edMr. Ma cPh ers on to
co nduc t the he ari ng . Ms. Herna nd ez re ferr edto th e rea so ns forth e h eari ng set fo rth inpe ti ti on ers ' he ari ng reque st . Mr. Mac Ph ers onres po nd edth athi s cl ie nt s ha d c hang edth ei r m in ds an d wer e withdrawi ng th ei r reque stfora co ll ect io n al te rn at iv e. He as ke d abo uthi s re qu es t o f th e p rev io us day forth e Fo rm

23 C, Ass es sm en t Ce rti fic at e--S umm ary Rec or d o f Ass es sm en ts , andothe r do cu m en ts . Ms . Hern an de z res po nd edth atsh e wou ldno t p ro vi de pe ti ti on ers with the do cu m en ts reque st ed . She ex pl ai ne d tha t the re was no requi rem en t i n the Int ern al Rev enue Co de or the reg ul at io ns th atApp eal s p ro vi de th e ta xp ay er wi th an y do cu m en ts du rin g the he ari ng pro ces s. Sh e st at edth at , as am at te r of pra ct ic e, pe ti ti on ers ha d b eenfurni sh edth e acc ou nttrans cri pt s, wh ic h " id en ti fy th e ta xp ay ers , th e ch arac te r of th e li ab il ity

ass es se d, the tax ab le pe rio d andth e am ou nt of th e as se ss m en t" . Mr. Mac Ph ers on st at edth atth e as se ss m en ts were n ei th er ti m el y no r pr op er. He co nc ed edth atpe ti ti on ers ha d s ti pu late d ade ci si on en te red by the Tax C ou rt andwere n otdi sp ut in g the ir u nd erl y in g l iabi li ti es . He st at edth at he was d is pu ti ng th e p os td eci si on pro cedur al st ep s. Alt ho ug h h e cl ai m edth atth e as se ss m en ts were n otm ad e p ro pe rly, he g av e n o s pe ci fic s. Ms . Hern an de z in fo rm edMr. Ma cPh ers onth atApp eal s wo ul d i ss ue a de te rm in at io n s us ta in in g the le vy.- 7 -

[* 7] The de te rm in at io n fo ll owe d, s ig ne d b y App eal s Tea m

Man ag er Will ia m O'Neil l b utin co rp or at in g an a tt ach m en t s umm ari zi ng Ms . Hern an de z's de te rm in at io ns an d c on cl us io ns . In re sp on se , pet it io ne rs ti m el y fil edth e p et it io n. By th e p et it io n, p et it io ne rs pra y th at , "fo r la ckof p ro pe r as se ss m en t" , we de te rm in e th atth ey

ha ve no tax li ab il it ie s fo r th e y ears inis su e. Alt ern at iv el y , th ey pra y th atwe or de r res po nd en t t o p ro vi de th em "wi th a Fo rm

23 C o r RAC 00 6, o r, al te rn at iv el y , a Fo rm 43 40 ." So m et im e aft er the y

fil edth e p et it io n, re sp on de ntpro vi de d t o p et it io ne rs Cert ifi cat es of Off

ic ia l Re co rd s at te st in g tha t the an ne xe d F orm s 4 34 0, Ce rti fic at e of Ass es sm en ts , Paym en ts , andOth er Sp eci fie d M at te rs , were tru e Fo rm s 4 34 0 fo r pe ti ti on ers ' 19 93 an d 1 99 4 t ax y ears . Dis cu ss io n I. Rev ie w of Det erm in at io n A. Ass ig nm en ts of Err or Ru le 33 1( b) ad dr es se s the co nt en t o f th e p et it io n i n ali enan d l ev y act io n. It requi res am on g o th er thi ng s cl ear andco nc is e as si gn m en ts of e rro r an d c le ar an d
co nc is e le tt eredst at em en ts of the fact s o n wh ic h the pe ti ti on er b as es each
as si gn m en t o f erro r. Ru le 33 1( b) (4 ) an d (5 ). The p et it io n, s ig ne d b y pe ti ti on ers '
co un se l, Mr . MacP he rs on , run ni ng 15 pa ge s an d c on ta in in g 9 4 num be red- 8 -

[* 8] parag rap hs , con ta in s m uc h e xt ran eo us m at te r (e.g ., par a. 71 : "RESP ONDENT'S recal ci tra nc e cau se s t axpa y ers to be m os t s us pi ci ou s; 'th e b es t di si nf ect an t i s s un li gh t.'" ; p ara. 7 2: "As the co urts ha ve st at ed , 'Whi le th e go ve rnm en t ex pe ct s tha t i ts cit iz en s wal k s qu are c orne rs , th e sa m e can be ex pe ct ed of th e g ov ern m en t.'" ). W e d is cern pe ti ti on ers ' as si gn m en ts of e rro r fro m th ei r id en ti fic at io n o n b rie f of

"Qu es ti on s Pr es en te d" : I. W HETHER TREASURY REGUL ATION 30 1.6 20 3- 1 IS INVALID AND ADENIAL O F DUE PROCESS FOR I TS FAILURE TO REQUIRE THAT UPON REQUEST T HE SECRETARY PROVIDE PETITIONERS WITH T HE ASSESSM ENT SOURCE DOCUMENT, FORM 23 C OR RACS 00 6, INC LUDING TH E NAME AND SIGNATURE OF THE ASSESSM ENT OFFICER AND THE DATE OF ASSESSM ENT. II. W HETHER FORM 4 34 0 IS SATISFACTORY AS PR OOF OF ASSESSM ENT. III. W HETHER PETITIONE RS ARE ENTITLED T O THE DELEGA TION ORDER WHICH AUTHORIZED TH E ASSESSM ENT OFFICER TO MAKE THE ASSESSM ENT. IV. W HETHER PETITIONE RS WERE D ENIED DUEPROCESS OF LAW BY THE APPEALS OFFICER' S REFUSAL TO: (A) VERIFY THE ASSESSMENT BY MEANS OTHER THAN TRANSCRI PTS; (B) PR OVIDE PETITIONERS W ITH THE FORM S 4 34 0, 2 3C , AND RACS 00 6; AND (C) PROVIDE PETITIONER[S] W ITH THE D ELEGAT ION ORDER WHICH GAVE TH E ASSESSMENT OFFIC ER AUTHORITY TO ASSESS.- 9 -

[* 9] V. W HETHER TH E APPEALS OFFICER ABUSED HER

DISCR ETION BY REFUSING TO: (A) VERIFY THE ASSESSM ENT BY MEANS OTHE R THAN TRANSCRIPTS; (B) PR OVIDE PETITIONERS W ITH THE FORMS 4 34 0, 2 3C , AND RACS 0 06 ; AND (C) PR OVIDE PETITIONERS W ITH THE DE LEGATION ORDER W HICH GAVE THE ASSESSM ENT OFFICER AUTHORITY TO A SSESS. W e d is cern fro m

th os e que st io ns two gro un ds un de rlyin g p et it io ne rs '
as si gn m en ts of e rro r. One, the y arg ue th atco ll ect io n c an no t p ro ceedbe cau se Ms
. Hern an de z ab us edhe r di sc ret io n i n re lying ontrans cri pt s t o v eri fy th atth ei r unpa idtax ha d b eenpro pe rly ass es se d. Two, the y arg ue th atco ll ect io n c an no t pr oc eedbe cau se ne ithe r th e acc ou nttrans cri pt s n orth e Fo rm s 4 34 0 m eet
res po nd en t's du ty im

po se d b y sec ti on 62 03 to furni sh th em with c op ie s o f th e Co m m is si on er's reco rd s o f as se ss m en t fo r th e unp ai d t ax inis su e. Befo re ad dr es si ng pe ti ti on ers ' gr ou nd s, we wi ll su m m ari ze the law i nv ol ve d. B. Law Inv ol ve d 1. Ass es sm en t o f Tax Fed eral tax es m ay

be co ll ect edby adm in is tra ti ve m ean s fo ll owi ng as se ss m en t. See Bu ll v. Un it edSta te s, 2 95 U.S. 24 7, 2 60 (19 35 ) ("Th e as se ss m en t is gi ve n the for ce o f a jud gm en t, an d i f th e am ou ntass es se d i s n otpa idwhen du e, adm in is tra ti ve off

ic ia ls m ay

sei ze the de bt or 's p ro pe rty to s at is fy th e d eb t." );- 10 -

[* 10 ] Mi ch ael I. Sal tz m an& Les li e Bo ok , IRS Pra ct ic e an d P ro cedur e, pa ra. 10 .01 [1 ], at 1 0- 3 (r ev . 2ded . 20 02 ). Sect io n 6 20 3 p ro vi de s tha t an ass es sm en t o f ta x (wh ic h i nc lu de s i nt eres t, ad di ti on s t o t ax , andass es sabl e p en al ti es ) "s ha ll be m ad e b y reco rd in g the li ab il ity of th e ta xp ay er i n the off

ic e o f th e Sec ret ary inacco rd an ce wi th rul es or reg ul at io ns pre sc rib edby the Secr et ary. " The sec ti on furth er p ro vi de s tha t wh en reque st edby a tax pa y er, "the Secr et ary sh al l fu rn is h the tax pa y er a co py of th e reco rdof the ass es sm en t." Sect io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., i m pl em en ts sec ti on62 03 an d sp eci fie s tha t an ass es sm en t i s m ad e "b y anass es sm en t o ffi cer s ig ni ng th e su m m ary reco rdof a ss es sm en t" , whi ch , "th ro ug h s up po rti ng reco rd s" , m us t in cl ud e th e "i de nt ifi cat io n o f th e ta xp ay er, the ch arac te r of th e li ab il ity

ass es se d, th e ta xabl e p eri od , if ap pl ic ab le , andth e am ou ntof the ass es sm en t." Und er the reg ul at io n, i f th e ta xp ay er re qu es ts a co py of th e rec or d o f th e as se ss m en t, the IRS wil l g iv e th e ta xp ay er "aco py of th e p ert in en t p art s o f th e as se ss m en t wh ic h s et fo rth th e n am e o f th e ta xp ay er, the da te of a ss es sm en t, the ch arac te r of th e li ab il ity as se ss ed , th e ta xabl e p eri od , if ap pl ic ab le , andth e am ount s as se ss ed ." Id . The da te of the ass es sm en t i s the date th e su m m ary reco rdof a ss es sm en t i s s ig ne d. Id
.- 11 -

[* 11 ] 2. Co ll ect io n b y Levy Sect io n 6 33 1( a) au th or iz es th e Sec ret ary to lev y ag ai ns t p ro pe rty and pr op erty rig ht s o f a t ax pa y er l iabl e fo r ta xe s wh o fa il s t o p ay th os e ta xe s wi th in10 da y s af te r no ti ce an d d em an d fo r pa y m en t i s m ad e. Sect io n 6 33 1( d) requi res th e Secr et ary to sen d the tax pa y er wri tt enno ti ce o f th e Sec ret ary's in te ntto lev y , and
se ct io n 6 33 0( a) re qu ire s the Secr et ary to sen d the tax pa y er wri tt enno ti ce o f hi s rig htto a se ct io n 6 33 0 h eari ng at l eas t 3 0 d ay s b efo re an y lev y is be gu n. 3. Sect io n 6 33 0 Hea rin g If the tax pa y er m ak es a reque stfora he ari ng , th e h eari ng is to be he ld be fo re anim

pa rti al off

ic er o r em

pl oyee of App eal s. Sec . 63 30 (b )(1 ), (3 ). At th e he ari ng , th e ta xp ay er m ay rai se an y rel ev an t i ss ue rel at in g t o the unpa idtax or the pr op os edlev y , in cl ud in g c ha ll en ge s t o the ap pr op ria te ne ss of the co ll ect io n a ct io n an d c ol le ct io n a lt ern at iv es . Sec. 6 33 0( c)(2 )(A). The tax pa y er m ay co nt es t the
ex is te nc e o r am ou ntof the un de rlyin g t ax li ab il ity at the he ari ng if the tax pa y er di d n otrece iv e a s ta tu to ry no ti ce o f de fic ie nc y

for th e li ab il ity

inqu es ti on or d id
no t o th erwi se ha ve anop po rtu ni ty to d is pu te th atli ab il ity . Sec. 6 33 0( c)(2 )(B) ; s ee al so Seg o v . Commis si on er, 1 14 T.C. 60 4, 6 09 (20 00 ). The Ap pe al s o ffi cer m us t atth e h eari ng ob ta inve rif ic at io n fr om

th e Sec ret ary th atth e requi rem en ts of a ny ap pl ic ab le law o r adm in is tra ti ve pro cedur e h av e b eenm et . Sec. 6 33 0( c)(1 ).- 12 -

[* 12 ] Fo ll owi ng th e h eari ng , th e App eal s o ffi cer m us t d et erm in e whe th er the pr op os edlev y

act io n m ay

pro ceed . The Ap pe al s o ffi cer i s re qu ire d t o t ak e in to
co ns id erat io n: (1) ve rif

ic at io n tha t the requi rem en ts of app li cab le law an d adm in is tra ti ve pro cedur e h av e b eenm et ; (2 ) rel ev an t i ss ue s ra is edby the tax pa y er; an d (3 ) whe th er the pro po se d c ol le ct io n a ct io n " ba lanc es th e n eedforth e eff ic ie nt
co ll ect io n o f ta xe s wi th th e le gi ti m at e co nc ernof the * * * [t axpa y er] th atany co ll ect io n a ct io n b e n o m or e in tru si ve th anne ces sary ." Sec . 63 30 (c)( 3)
.

4. Rev ie w of Det erm in at io n Whe re the un de rlyin g t ax li ab il ity is pro pe rly at is su e, we rev ie w th e de te rm in at io n d e n ov o. E.g., Is le y v. Co m mis si on er, 1 41 T.C. __ , __ (sl ip op . at 19 ) (No v. 6 , 20 13 ). Whe re the un de rlyin g t ax li ab il ity is no t atis su e, we rev ie w th e adm in is tra ti ve de te rm in at io n fo r ab us e o f di sc ret io n. Id . Whe n fa cedwith qu es ti on s o f law, as we ar e h ere, the st an da rdof r ev ie w m ak es no di ffer en ce. Whe th er ch arac te riz edas arev ie w forab us e o f di sc ret io n o r as a co ns id erat io n " de
no vo " (o f a que st io n o f law), we m us t re ject e rro ne ou s v ie ws o f th e la w. Ken dr ic ks v. Co m

m is si on er, 1 24 T.C. 69 , 75 (20 05 ).- 13 -

[* 13 ] C. Abu se of Di sc ret io n As s ta te d, p et it io ne rs ' fir stgro un d fo r cl ai m in g tha t co ll ect io n c an no t pr oc eedis th ei r cl ai m

th atMs . Hern an de z ab us edhe r di sc ret io n i n re lying on co m pu te r tr an sc rip ts to ve rif

y th atth ei r unpa idtax ha d p ro pe rly been ass es se d. Sect io n 6 33 0( c)(1 ) requi res th atth e App eal s o ffi cer c on du ct in g the he ari ng ob ta inve rif

ic at io n fr om

th e Sec ret ary th atth e requi rem en ts of a ny app li cab le law
oradm in is tra ti ve pro cedur e h av e b eenm et . Sect io n 6 33 0( c)(1 ) do es no t m an da te th atth e App eal s o ffi cer r el y ona pa rti cu lar do cu m en t t o s at is fy th e v eri fic at io n requi rem en t. See , e.g., Cra ig v. Co m m is si on er, 1 19 T.C. 25 2, 2 62 (20 02 ); S hi rle y v. Co m m is si on er, T.C. Mem o. 2 01 4- 10 , at * 24 . Nor d oe s s ect io n 6 33 0( c)(1 ) requi re the App eal s o ffi cer t o g iv e th e ta xp ay er a co py of th e v eri fic at io n tha t s he ob ta in ed
. Nest orv. Co m m is si on er, 1 18 T.C. 16 2, 1 66 -1 67 (20 02 ). "AnApp eal s 1 of fic er m ay us e co m pu te r tr an sc rip ts of a cco un t fo r a t ax pa y er t o v eri fy th at requi rem en ts of app li cab le law an d a dm in is tra ti ve pro cedur e h av e b eenm et ." Sh erwo odv. Co m

m is si on er, T.C. Mem o. 2 00 5- 26 8, 2 00 5 WL 31 08 16 5, at*6
.
In de ed , sec . 63 30 (c)( 1) do es no t re qu ire th atth e App eal s o ffi cer p ro vi de 1 th e ta xp ay er wi th othe r un de rlyin g d oc um en ta ti on m ai nt ai ne d b y th e Co m m is si on er wi thres pe ctto th e ta xp ay er's acco un t, i nc lu di ng de le ga ti on s o f au th or ity . Davi s v . Comm is si on er, T.C. Mem o. 2 00 7- 16 0, 2 00 7 WL 17 72 03 6, at *4 . Ms. Herna nd ez d idno t ab us e h er d is cret io n i n re fu si ng to pro vi de pe ti ti on ers with s uc h d oc um en ts .- 14 -

[* 14 ] The parti es ha ve st ip ul at edth e d oc um en ts th atMs . Hern an de z rev ie wed be fo re Ap pe al s d et erm in edto pro ceedwith c ol le ct io n. Th os e d oc um en ts in cl ud e co m pu te r tr an sc rip ts th atid en ti fy pe ti ti on ers an d s ho w (1) th e ta x fo rm s i nv ol ve d (Fo rm 10 40 A, in co m e ta x) , (2) th e ta xabl e y ears ad dr es se d (1 99 3 and19 94 ), (3 ) th e d at es th attax was a ss es se d, an d (4 ) th e am ou nt s as se ss ed . She pro vi de d the
acco un t tran sc rip ts (whi chsh ow tha t i nf orm at io n) to Mr. Ma cPh ers on , pet it io ne rs '
co un se l. No th in g i n e vi de nc e in di cat es an y irr eg ul ari ty in the ass es sm en t pr oc edur e th atwou ldrai se a qu es ti on th atth e as se ss m en ts were n otva li dl y m ad e inacco rd an ce wi th th e requi rem en ts of s ect io n 3 01 .62 03 -1 , Pro ced . & Adm in
. Reg s. Ms . Hern an de z d idno t ab us e h er d is cret io n i n re lying onco m pu te r tra ns cri pt s t o v eri fy

th atpe ti ti on ers ' unpa id19 93 an d 1 99 4 t ax ha d p ro pe rly been
as se ss ed
. D. Ass es sm en ts an d Ev id en ce Th ereo f Pet it io ne rs als o arg ue th atco ll ect io n c an no t p ro ceedbe cau se res po nd en t h as fai le d t o fu rn is h the m

reco rd s o f th e as se ss m en ts of the ir 1 99 3 and19 94 tax . Befo re p ro ceed in g t o c on si de r th atis su e, we no te th atitis anop enqu es ti on whe th er s ect io n 6 20 3 (r equi rin g the Co m m is si on er t o fu rn is h tho se reco rd s o n reque stby the tax pa y er) i s an ap pl ic ab le law wi th whi ch , pu rs uantto sec ti on- 15 -

[* 15 ] 63 30 (c)( 1) , th e App eal s o ffi cer m us t v eri fy co m pl ianc e. See Nes to r v. Co m m is si on er, 1 18 T.C. at 1 75 (Hal pe rn , J., co nc urrin g) . In an y ev en t, Ms
. Hern an de z p ro vi de d t o p et it io ne rs th e acc ou nttrans cri pt s, an d re sp on de nt 's
co un se l p ro vi de d t o the m th e Fo rm s 4 34 0. Bo thset s o f do cu m en ts sh ow pe ti ti on ers ' na m es , th e d at es of the ass es sm en ts , th e ch arac te r of th e li ab il it ie s as se ss ed , th e ta xabl e p eri od s, an d the am ou nt s as se ss ed . Thatin fo rm at io n co ns ti tu te s al l o f "the pe rti ne ntparts of the ass es sm en t" , whi ch , pu rs ua ntto sec ti on 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s., o n the ir r eque st , res po nd en t m us t fu rn is h t o th em . The que st io n i s wh ethe r th atin fo rm at io n c on st itut es th e requi si te "rec or d o f th e as se ss m en t" de sc rib edinsec ti on 62 03
. The ass es sm en t o f Fed eral tax is do ne by an as se ss m en t o ffi cer s ig ni ng th e su m m ary reco rdof a ss es sm en t. See sec . 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s. The sum m ary reco rdof a ss es sm en t m ay be m ad e ei th er o n an IR S Fo rm 23 C o r (m or e rec en tl y ) on it s co m pu te r-g en erat edequi va le nt , th e Rev enue Acco un ti ng Co nt ro l Syste m

(RACS) Rep ort 0 06 . See, e.g ., March v. IR S, 33 5 F .3d11 86 , 11 88 (10 th Cir . 20 03 ); R ob ert s v . Comm is si on er, 1 18 T.C. 36 5 (2 00 2) , aff'd , 32 9 F.3 d 1 22 4 (1 1t h C ir. 2 00 3) . W e ag ree wi th th e Co m m is si on er's st at em en t i n R ev . Ru l. 2 00 7- 21 , 20 07 -1 C.B. 8 65 , 86 6, tha t " [t]he RACS re po rt, l ik e th e Fo rm 23 C,- 16 -

[* 16 ] pro vi de s, wh enco up le d wi th 'supp orti ng reco rd s,' the in fo rm at io n s etforth inTreas ury

Reg ul at io n § 30 1.6 20 3- 1." The qu es ti on th enbe co m es on e o f wha t the Co m m is si on er m

us t fu rn is h t o a ta xp ay er re qu es ti ng pu rs ua ntto sec ti on 62 03 "the reco rdof the ass es sm en t" . Mus t he witho utex cep ti on furni sh th e RACS rep ort o r th e Fo rm 23 C (wi th or wi th ou t pe rti ne ntsupp orti ng reco rd s) ? The an swe r is no ; the Co m m is si on er n eedno t furn is h the tax pa y er an y

parti cu lar fo rm

or d oc um en t. As we st at edinBat tl e v . Co m m is si on er, T.C. Mem o. 2 00 9- 17 1, 2 00 9 WL 21 51 78 6, at*5 : "[ The Co m m is si on er] m ay

ch oo se am on g d oc um en ts so lo ng as the form us edid en ti fie s th e ta xp ay er, s ta te s the ch arac te r of th e li ab il it ie s as se ss ed , th e ta x p eri odgi vi ng ris e to th e as se ss m en t, the am ou ntof the ass es sm en t, an d the da te of a ss es sm en t." The Co urt o f App eal s fo r th e Nin th Cir cu itag rees :

W e rejectth e * * * [ta xp ay ers '] co nt en ti on th atsec ti on 62 03 en ti tl es th em

to a co py of th e su m

m ary reco rdof a ss es sm en t o n F orm 23 C upo n re qu es t. The reg ul at io ns pro m ul ga te d u nd er thi s s ect io n st at e th at"[i ]f the tax pa y er re qu es ts a co py of th e rec or d o f as se ss m en t, h e sh al l b e fu rn is he d aco py of th e p ert in en t p art s o f th e as se ss m en t wh ic h s etforth th e n am e o f th e ta xp ay er, the da te of as se ss m en t, the ch arac te r of th e li ab il ity

ass es se d, the tax ab le pe rio d, if app li cab le , andth e am ou nt s as se ss ed ." Id . This rep res en ts a pe rm is si bl e in te rp ret at io n o f se ct io n 6 20 3, an d we are the refo re bo un d t o g iv e itde fere nc e. * * *- 17 -

[* 17 ] Koff

v. Un it edState s, 3 F.3d12 97 , 12 98 (9t h C ir. 1 99 3) ; s ee al so , e.g., Goo dm anv. Un it edSta te s, 1 85 Fed . App x. 7 25 , 72 8 (1 0th C ir. 2 00 6) ; Gen try v. Uni te d S tate s, 9 62 F.2d55 5, 5 57 (6t h C ir. 1 99 2) ; Ev an s- Hok e v . Pau ls on , 50 3 F
. Supp . 2d83 , 87 (D.D.C. 20 07 ). Num ero us co urts ha ve he ldth atth e Co m m is si on er m eet s h is ob li ga ti on to furn is h areque st in g t ax pa y er the reco rdof the ass es sm en t i f he furni sh es hi m a Fo rm 43 40 th atrep orts th e in fo rm at io n d es cri be d i n s ect io n 3 01 .62 03 -1 , Pro ced
. & Admin . Reg s. (v iz , "th e n am e o f th e ta xp ay er, the date of a ss es sm en t, the ch arac te r of

th e li ab il ity

ass es se d, the tax ab le pe rio d, i f ap pl ic ab le , andth e am ount s as se ss ed "). We hav e sa id : "A t ax pa y er re cei vi ng a co py of Fo rm 43 40 ha s b eenpro vi de d wi th all th e d oc um en ta ti on to whi chhe or s he is en ti tl edun de r se ct io n 6 20 3 [a ndsec ti on 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s.]." Tuck er v . Co m m is si on er, T.C. Mem o. 2 01 2- 30 , 20 12 W L 28 03 57 , at * 3, af f'd , 50 6 F ed
. App x. 1 66 , 16 8 (3 d C ir. 2 01 2) ; s ee al so , e.g., Ro be rts v. Co m m is si on er, 3 29 F.3d at12 28 ; Ko ff, 3 F.3dat 1 29 8. Res po nd en t fu rn is he d p et it io ne rs Fo rm s 4 34 0 c on ta in in g a ll of the pe rti ne nt in fo rm at io n. Whil e th os e fo rm s wer e fu rn is he d b y res po nd en t o nl y

aft er Ms
. Hern an de z co nc lu de d p et it io ne rs ' he ari ng an d Ap pe al s m ad e it s d et erm in at io n, the fo rm s co nt ai n m

uc h the same inf

orm at io n a s i s co nt ai ne d i n the acco un t- 18 -

[* 18 ] trans cri pt s, wh ic h wer e fu rn is he d t o the m by Ms. Hern an de z dur in g the he ari ng . If th ei r rec ei ptof the acco un t tran sc rip ts do es no t fu lfi ll res po nd en t's ob li ga ti on to furni sh th em th e p ert in en t re co rd s o f as se ss m en t, the n the ir r ecei ptof th e Fo rm s 4 34 0 c ert ai nl y do es . In Nes to r v. C omm is si on er, 1 18 T.C. at 1 67 , we de te rm in edth atno pu rp os e wou ldbe serve d b y rem an di ng a cas e to App eal s i n or de r to ha ve th e App eal s o ffi cer p ro vi de th e ta xp ay er wi th a se co ndco py of th e ta xp ay er's Fo rm s 4 34 0 wh enth e App eal s o ffi cer h adno t p ro vi de d the tax pa y er with aco py durin g h is sec ti on 63 30 he ari ng bu t the Co m mis si on er p ro vi de d h im
on e aft er the he ari ng an d b efo re tria l o f th e cas e. The s am e lo gi c ap pl ie s h ere. Pet it io ne rs fin d faul t wi thth e Fo rm s 4 34 0 b ecau se th ey are ac co m

pa ni edby cert ifi cat io ns as t o a ccu racy tha t co nt ai n wh atap pe ar t o b e st am pe d s ig na tu res of th e IRS off

ic ia l m ak in g the cert ifi cat io ns . W e d o n otsee th atas apro bl em . Firs t, whi le sec ti on 30 1.6 20 3- 1, Pr oc ed . & Adm in . Reg s., d oe s re qu ire th atan as se ss m en t o ffi cer s ig n the su m m ary reco rdof a ss es sm en t, i t p ro vi de s o nl y th ata reque st in g t ax pay er b e fu rn is he d aco py of th e p ert in en t p art s o f th e as se ss m en t, witho utim

po si ng any

si gn atur e requi rem en t. See Nick laus v. Co m m is si on er, 1 17 T.C. 11 7, 1 21 (20 01 ) ("S ect io n 3 01 .62 03 -1 , Pro ced . & Adm in . Reg s., d oe s n ot requi re tha t o ne of r es po nd en t's ass es sm en t o ffi cers si gn an d d at e Fo rm 43 40 in
or de r to ha ve a va li d a ss es sm en t o f a t ax pa y er's li ab il ity ."). InHov in d v
.- 19 -

[* 19 ] Co m

m is si on er, T.C. Mem o. 2 00 6- 14 3, 2 00 6 WL 18 67 34 0, at*5 (ci ti ng Nick laus an d Nes to r), aff 'd, 2 28 Fed . App x. 9 66 (11 th Cir . 20 07 ), we st at ed : "Fo rm s 4 34 0 are n otrequi redto be si gn ed ." Pet it io ne rs ha ve pro vi de d n o au th or ity co nt rad ic ti ng th atst at em en t. Mo reo ve r: " Gen eral ly, inth e ab se nc e o f a st atut e o th erwi se pro vi di ng , a si gn atur e m ay be affi xe d b y

writ in g b y

hand , by pr in ti ng , by st am

pi ng , or b y

vario us othe r m ean s." 80 C.J.S., Si gn atur es , sec . 15 (2 01 0) (em

ph as is ad de d) ; cf

. Harp er v . Comm is si on er, 9 9 T.C. 5 33 , 54 8 (1 99 2) ("A n ot ic e o f de fic ie nc y

is no t i nv al idbe cau se itbe ars a st am pe d s ig na tu re.")
. Res po nd en t h as sat is fie d h is ob li ga ti on un de r se ct io n 6 20 3 t o fu rn is h pe ti ti on ers with the reco rd s o f th e as se ss m en ts of the ir unp ai d t ax . E. Co nc lu si on Pet it io ne rs ha ve fai le d t o s ho w erro r in th e d et erm in at io n. Re sp on de ntm ay pr oc eedwith c ol le ct io n o f th ei r unpa id19 93 an d 1 99 4 t ax . II. Sect io n 6 67 3 P en al ty Und er s ect io n 6 67 3( a)(1 ), th is Co urt m ay requi re a t ax pa y er t o p ay a pe na lty no t i n e xc es s o f $2 5,0 00 if (1 ) th e ta xp ay er h as in st itut edor m ai nt ai ne d a pr oc eed in g p rimaril y

forde lay , or (2 ) th e ta xp ay er's po si ti on is "fri vo lo us or gr ou nd le ss ". A tax pay er's po si ti on is fri vo lo us if i t i s co nt rary to es tabl is he d l aw- 20 -

[* 20 ] an d uns up po rte d b y a reas on ed , col or ab le arg um en t fo r ch an ge inth e la w. E.g., Gof f v. C omm is si on er, 1 35 T.C. 23 1, 2 37 (20 10 ). Res po nd en t h as m ov edforus to im po se th e p en al ty on the gro un ds th at pe ti ti on ers in st itut edth es e p ro ceed in gs pri m ari ly for the pu rp os e o f de lay in g co ll ect io n andth atth ei r po si ti onis fri vo lo us or g ro un dl es s. Pet it io ne rs ob ject, rel y in g i n p artonde cl arat io ns of t he m se lv es an d o f Mr. M acPh ers on . Peti ti on ers ' pr in ci pa l d efen se to im

po si ti on of ape na lty

is th atth ey

rel ie d o n c ou ns el : "Pe ti ti on ers , who are h ig h s ch oo l educ at edan d l ackan y so ph is ti cat io n, i n g oo d fai th rel ie d o n the ir c om

pe te nt , qu al ifi ed , andin de pe nd en t co un se l; th is alo ne is
su ffi ci en t t o d em on strat e g oo d c au se , th us ne ga ti ng im po si ti on of the san ct io n so ug ht ." As ev id en cedby ourdi sc us si on supr a, pe ti ti on ers ' arg um en ts th at(1) Ms
. Hern an de z ab us edhe r di sc ret io n i n re lying onco m pu te r tr an sc rip ts to ve rif

y th at th ei r unpa idtax ha d b eenpro pe rly ass es se d and(2) co ll ect io n c an no t p ro ceed be cau se res po nd en t h as fai le d t o fu rn is h the m reco rd s o f th e as se ss m en ts of the ir 19 93 an d 1 99 4 t ax lac k m eri t an d are co nt rary to es tabl is he d l aw. The d efi ci en ci es inpe ti ti on ers ' arg um en ts are wel l kno wn. In de ed , th e Co m m is si on er h as tak en pa in s t o d es cri be fortax pa y ers th e requi rem en ts of s ect io n 6 20 3, the pro cedur es im pl em en ti ng th atsec ti on , andth e p ro cedur es foran swe rin g atax pa y er's reque st- 21 -

[* 21 ] fora co py of th e rec or d o f th e as se ss m en t. See Rev . Rul . 20 07 -2 1, s up ra. Arg um en ts ve ry

m uc h l ik e th e o ne s p et it io ne rs he re m ak e are de sc rib edinNot ic e 20 10 -3 3, 2 01 0- 17 I.R.B. 6 09 , li st in g p os it io ns id en ti fie d a s fr iv ol ou s fo r pu rp os es of ap pl ic at io n o f th e se ct io n 6 70 2 fr iv ol ou s t ax subm is si on s p en al ty. Res po nd en t's
co un se l b ro ug htth e rev enue rul in g andth e n ot ic e to th e at te nt io n o f Mr. Mac Ph ers on inFeb ru ary 20 12 , th ree m on th s b efo re the parti es joi nt ly m ov edfor le av e to subm itth is cas e fo r de ci si onwitho uta tr ia l. Pet it io ne rs co ul d h av e p ul le d th e p lu g the n andve ry

li ke ly avo id edan y

san ct io n. We con cl ud e (an d fi nd ) th at pe ti ti on ers ' po si ti on s i n thi s p ro ceed in g are fri vo lo us . See s ec. 6 67 3( a)(1 )(B)
. Mo reo ve r, th e rec or d b efo re u s co nt ai ns no th in g t o s up po rt p et it io ne rs '
as si gn m en ts of e rro r, whi chlea ds us to furth er co nc lu de (an d fi nd ) th atpe ti ti on ers ' po si ti on s ar e g ro un dl es s. See id . Fin al ly, th e la ckof m eri t t o p et it io ne rs ' arg um en ts lea ds us to co nc lu de th atth ey in it ia te d andha ve m ai nt ai ne d the se pr oc eed in gs pri m ari ly for d el ay , andwe so fin d. Se e se c. 66 73 (a)( 1) (A). Pet it io ne rs can no t es cap e a s ect io n 6 67 3( a)(1 ) pe na lty onth e b as is of the ir rel ianc e o n c ou ns el . By

th ei r de cl arat io ns , pet it io ne rs each st at e th e fo ll owi ng : 2. I ha ve no acco un ti ng or t ax tra in in g, an d I h av e n o a cco un ti ng or ta x e xp eri en ce. * * * * * * *- 22 -

[* 22 ] 6. It h as ne ve r be enm y id ea t o ra is e b efo re the IRS o r be fo re the Tax Co urt the is su es pre se nt ly on re vi ew by the co urt; i.e., the is su es of ev id en ce o f pr op er as se ss m en t an d e vi de nc e o f pr op er d el eg at io n * * * [o rd er]. * * * * * * * 7. I ha ve rel ie d t ot al ly on the tax advi ce o f MACP HERSON co nc ern in g my

Co ll ect io n Du e Pro ces s Hea rin g * * * reque st , pe ti ti on to th e TaxCo urt, an d Tax Co urt l it ig at io n. A tax pa y er's go od -fai th rel ianc e o n the advi ce o f co un se l i s n ota de fen se to th e im po si ti on of ape na lty

un de r se ct io n 6 67 3( a)(1 )(B) , no r ne edwe ex cu se a ta xp ay er's fai lu re t o re vi ew pl ead in gs an d o th er d oc um en ts fil edonhi s b eh al f. Gil le sp ie v. Co m

m is si on er, T.C. Mem o. 2 00 7- 20 2, af f'd , 29 2 F ed . App x. 5 17 (7t h Ci r. 20 08 ). The p ur

po se of s ect io n 6 67 3 i s t o c om pe l t ax pa y ers to th in k andto
co nf orm th ei r co nduc t t o s et tl edpri nc ip le s b efo re the y fil e returns an d l it ig at e. Tak ab a v . Comm is si on er, 1 19 T.C. 28 5, 2 95 (20 02 ); s ee al so Co le m anv. Co m m is si on er, 7 91 F.2d68 , 71 (7t h C ir. 1 98 6)
. W e co nc lu de th atpe ti ti on ers sh ou ldpay a se ct io n 6 67 3( a)(1 ) pe na lty of $5 ,00 0 t o the Uni te d S ta te s i n thi s ca se . III. Sect io n 6 67 3( a)(2 ); Rul e 3 3( b) Sect io n 6 67 3( a)(2 )(A) em po wers us to im

po se ona ta xp ay er's co un se l wh o
m ul ti pl ie s the pro ceed in gs inan y cas e unr eas on ab ly andve xa ti ou sl y th e ex ces si ve- 23 -

[* 23 ] co st s re as on ab ly inc urredonacco un t o f su chco nduc t. We m ay su a sp on te im po se su chco st s. See Edward s v . Comm is si on er, T.C. Mem o. 2 00 2- 16 9, af f'd , 11 9 F ed . App x. 2 93 (D.C. Cir . 20 05 ); Lea chv. Co m m is si on er, T.C. Mem o. 1 99 3- 21 5. Ru le 33 (b ) se ts st an da rd s i n c on ne ct io n wi th co un se l's si gn atur e o n a pl ead in g andpro vi de s tha t upo n o urownm ot io n we m ay san ct io n c ou ns el for fai lu re t o m eetth os e st an da rd s. Alt ho ug h we h av e fo un d p et it io ne rs de se rv in g o f
a se ct io n 6 67 3( a)(1 ) pe na lty , we bel ie ve th atMr. Ma cPh ers on 's c on du ctm ay be de se rv in g o f a s an ct io n fo r un reas on ab ly andun ne ces saril y bri ng in g and pr ol on gi ng th es e p ro ceed in gs . Ind eed , inhi s d ecl arat io n i n s up po rt o f pe ti ti on ers '
res po ns e to res po nd en t's m ot io n t o i m po se a sa nc ti on onpe ti ti on ers , he ackno wled ge s tha t, fo ll owi ng th e ear li er d efi ci en cy pro ceed in g i n thi s ca se , pe ti ti on ers "h ada m ajorco ll ect io n p ro bl em an d * * * I de ci de d t o try th e as se ss m en t i ss ue be li ev in g the re i s s om e ch an ce o f la ckof p ro pe r as se ss m en t whi chwil l re su ltinvo id in g the ass es sm en t an d c au si ng th e cl ie nt s t o b e fre e o f th e de btas ares ul t o f th e st atut e o f li m it at io ns ". He co nc ed es , ho wev er: "I co nc lu de d
m an y y ears ag o tha t the '23 C is su e' was a 'de adlet te r' in so far as ob ta in in g the 23 C." Si nc e Mr. M acPh ers on ha s n otbe enacco rd edth e o pp ortu ni ty to d efen d ag ai ns t the san ct io ns we m ay im po se up onhi m , we wil l ac co rdhi m th at op po rtu ni ty by

ord eri ng hi m

to sh ow caus e why we sh ou ldno t i m po se onhi m- 24 -

[* 24 ] ex ces si ve co st s p ur su an t t o s ect io n 6 67 3( a)(2 ) orsan ct io n h im pu rs uantto Ru le 33 (b ). W e wil l al so ord er re sp on de ntto expr es s h is po si ti on onth e is su es an d t o p ro vi de us with h is co m pu ta ti on s o f th e ex ces s co st s, ex pe ns es , and at to rn ey 's fe es reas on ab ly inc urredonacco un t o f Mr. M acPh ers on 's c on du ct . IV. Co nc lu si on To re fle ctth e fo reg oi ng , App ro pr ia te ord ers wil l b e is su ed , an d d eci si on wil l b e en te redforres po nd en t.