Court Opinion

ID: 4334858
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:54:30.162357+00
Date Added: 2024-06-11T14:46:59.597065
License: Public Domain

GERALD L. AND JESSICA P. FREY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, RespondentFrey v. Comm'rNo. 2703-03L United States Tax CourtT.C. Memo 2004-87; 2004 Tax Ct. Memo LEXIS 89; 87 T.C.M. 1170; March 26, 2004, Filed 2004 Tax Ct. Memo LEXIS 89">*89  Decision will be entered for respondent.  Gerald L. and Jessica P. Frey, pro sese.Veena Luthra, for respondent.  Chiechi, Carolyn P.CHIECHIMEMORANDUM FINDINGS OF FACT AND OPINIONCHIECHI, Judge : Petitioners filed the petition in this case in response to a notice of determination concerning collection action(s) under section 6320 and/or 6330 (notice of determination).We must decide whether respondent abused respondent's discretion in determining to proceed with the collection action as determined in the notice of determination with respect to petitioners' taxable years 1996, 1997, and 1999. We hold that respondent did not abuse respondent's discretion.             FINDINGS OF FACTMany of the facts have been stipulated and are so found.Petitioners resided in Newport News, Virginia, at the time they filed the petition in this case.During 1996, petitioner Gerald L. Frey (Mr. Frey) received wages of $ 37,849.88 from Blackhawk Industries, Inc. (Blackhawk Industries), and petitioner Jessica P. Frey (Ms. Frey) received wages totaling $ 20,799.48 from Smithfield Apartments Corp. (Smithfield Apartments) and Bailey Enterprises, Inc. 2004 Tax Ct. Memo LEXIS 89">*90  (Bailey Enterprises). During 1997, Mr. Frey received wages of $ 45,961 from Blackhawk Industries, and Ms. Frey received wages totaling $ 21,998 from Smithfield Apartments and Bailey Enterprises. During 1999, Mr. Frey received wages totaling $ 35,630.92 from the Virginia Department of Transportation (Virginia Transportation Department), Employment Services, Inc. (ESI), and ECPI College of Technology (ECPI College) and unemployment compensation of $ 1,596.Although Mr. Frey received wages during the years at issue as well as unemployment compensation during 1999 and Ms. Frey received wages during 1996 and 1997, petitioners did not report such wages and unemployment compensation in any Federal income tax return (return) that they submitted to the Internal Revenue Service (IRS).On or about August 17, 1998, respondent prepared a substitute for return for petitioners' taxable year 1996.On October 30, 1998, respondent issued a notice of deficiency to petitioners with respect to their taxable year 1996. In that notice, respondent determined that for 1996 petitioners had a deficiency of $ 6,332, an addition to Federal income tax (tax) under section 6651(a)(1)1 of $ 729.22, an addition2004 Tax Ct. Memo LEXIS 89">*91  to tax under section 6651(a)(1) and (2)  of $ 421.33, and an addition to tax under section 6654 of $ 156. Petitioners did not file a petition in the Court with respect to the notice of deficiency relating to their taxable year 1996.On June 7, 1999, respondent assessed petitioners' tax of $ 6,332, as well as additions to tax under sections 6651(a)(1) and (2) and 6654 totaling $ 1,306.55 and interest as provided by law of $ 751.08, for their taxable year 1996. (We shall refer to those assessed amounts, as well as any interest as provided by law accrued after June 7, 1999, as petitioners' unpaid liability for 1996.)On June 7, 1999, respondent issued to petitioners a notice of balance due with respect to petitioners' unpaid liability for 1996.On November 22, 1999, respondent received from petitioners Form 1040, U.S. Individual Income Tax Return, for their taxable year 1996 (1996 Form 1040). The 1996 Form 1040 that petitioners2004 Tax Ct. Memo LEXIS 89">*92  submitted to the IRS did not contain petitioners' original signatures but contained copies of petitioners' signatures dated November 1, 1999. In their 1996 Form 1040, petitioners reported total income of $ 0, total tax of $ 0, and claimed a refund of $ 3,839.28 of tax withheld. Petitioners attached to their 1996 Form 1040 respective Forms W-2, Wage and Tax Statements (Forms W-2), issued by Blackhawk Industries, Smithfield Apartments, and Bailey Enterprises showing wages, tips, and other compensation totaling $ 58,649.36. Petitioners also attached to their 1996 Form 1040 a document (petitioners' attachment to their 1996 Form 1040), which stated in pertinent part:   I, Gerald L and Jessica P Frey, am submitting this as part of my   1996 income tax return, even though I know that no section of   the Internal Revenue Code:     1) Establishes an income tax "liability" as, for     example, Code Sections 4401, 5005, and 5703 due with     respect to wagering, alcohol, and tobacco taxes;     2) Provides that income taxes "have to be paid on the     basis of a return" -- as, for example, Code Sections2004 Tax Ct. Memo LEXIS 89">*93 4374, 4401(c), 5061(a) and 5703(b) do with respect to other     taxes; I am filing anyway because I know the government has     prosecuted others for failing to file income tax returns by     (erroneously) invoking Code Sections 7201 and 7203.     Therefore, this return is not being filed voluntarily but     is being filed out of fear that if I did not file this     return I could also be (illegally) prosecuted for failure     to file an income return for the year 1996.     3) In addition to the above, I am filing even though the     "Privacy Act Notice" as contained in a 1040 booklet     clearly informs me that I am not required to file. It does     so in at least two places.       a) In one place, it states that I need only file a        return for "any tax" I may be "liable"        for. Since no Code Section makes me "liable"        for income taxes, this provision notifies me that I do        not have to file an income tax return.    2004 Tax Ct. Memo LEXIS 89">*94      b) In another place, it directs me to        Code Section 6001. This section provides, in relevant part, that        "Whenever in the judgment of the Secretary it is        necessary, he may require any person by notice served        on such person; or by regulations, to make such        returns, render such statements, or keep such records,        as the Secretary deems sufficient to show whether or        not such person is liable for the tax under this        title." Since the Secretary of the Treasury did        not "serve" me with any such "notice"        and since no legislative regulation exists requiring        anyone to file an income tax return, I am again        informed by the "Privacy Act Notice" that I am        not required to file an income tax return.     4) With respect to the information I included in my return,     I wish to point out that the courts have ruled that: "A     (1040) form with 'zeros' inserted in2004 Tax Ct. Memo LEXIS 89">*95  the space provided . .     . qualified as a return." See      U.S. v. Long, 618 F 2d 74 (9th Cir. 1980),      U.S. v. Kimball, 896 F.2d 1218">896 F.2d 1218 (9th Cir. 1990)     U.S. v. Moore, 627 F.2d 830">627 F.2d 830 (7th Cir. 1980), and a Las     Vegas bankruptcy court held that "Zeroes entered on a     Form 1040 constitutes a return." Cross v. United States (In re Cross), 71 A.F.T.R.2d (RIA) 4822">71 A.F.T.R.2d (RIA) 4822, 91-2 U.S. Tax Cas. (CCH) P50318.     5) Please note that my 1996 return also constitutes a claim     for refund pursuant to Code Section 6402.     6) It should also be noted that I had "zero" income     according to the Supreme Court's definition of income (See     Note #1) * * * since I had no earnings in 1996, that would     have been taxable as "income" under the      Corporation Excise Tax Act of 1909, I can only swear to having     "zero" income in 1996. Obviously, since I know the     legal definition of "income", if I were to swear to     having received any other amount of "income," I     would be2004 Tax Ct. Memo LEXIS 89">*96  committing perjury under both 18 U.S.C. 1621 and     26 U.S.C. 7206. Therefore, not wishing to commit perjury under     either statute, I can only swear to have "zero"     income for 1996.     7) I am also putting the IRS on notice that my 1996 tax     return and claim for refund can not be considered     "frivolous" on any basis -- pursuant to      Code Section 6702. For one thing, there is no statute that     requires me to make a "self-assessment."     Therefore, how can I be charged with a penalty for not     doing something -- allegedly incorrectly -- that no     statute requires me do at all? * * *           *   *   *   *   *   *   *     11) Should the Service disagree with the figures and     amounts shown on my tax return and claim for refund, then I     demand an office or field audit to discuss these     differences * * *. In addition, if any     "determination" is made that changes in my return     are warranted, 2004 Tax Ct. Memo LEXIS 89">*97  I demand to be notified as to where and     when I may "inspect" the "text of any     written determination and any background file documents     relating to such a determination" as provided by 26 USC 6110            *   *   *   *   *   *   *   *Note #1: The word "income is not defined in   the Internal Revenue Code. U.S. v. Ballard, 535 F.2d 400">535 F.2d 400, 535 F.2d 400">404   . But, as stated above, it can only be a   derivative of corporate activity. The Supreme Court has held   this numerous times. * * * [Reproduced literally.]Respondent did not process and file petitioners' 1996 Form 1040 as a tax return. That was because respondent determined that that document was frivolous.On or about November 13, 2000, respondent prepared a substitute for return for petitioners' taxable year 1997.On a date not disclosed by the record, respondent issued a notice of deficiency to petitioners with respect to their taxable year 1997. Petitioners did not file a petition in the Court with respect to that notice.On June 5, 2001, respondent received from petitioners Form 1040A, U. 2004 Tax Ct. Memo LEXIS 89">*98  S. Individual Income Tax Return, for their taxable year 1997 (1997 Form 1040A). The 1997 Form 1040A that petitioners submitted to the IRS contained petitioners' original signatures dated May 30, 2001, and copies of petitioners' signatures dated November 1, 1999. In their 1997 Form 1040A, petitioners reported total income of $ 0, total tax of $ 0, and claimed a refund of $ 5,122.83 of tax withheld. Petitioners did not attach to their 1997 Form 1040A any Forms W-2. Petitioners attached to their 1997 Form 1040A a document (petitioners' attachment to their 1997 Form 1040A), which was identical to petitioners' attachment to their 1996 Form 1040 except that petitioners' attachment to their 1997 Form 1040A made references to their taxable year 1997 while petitioners' attachment to their 1996 Form 1040 made references to their taxable year 1996.Respondent did not process and file petitioners' 1997 Form 1040A as a tax return. That was because respondent determined that that document was frivolous.On August 13, 2001, respondent assessed petitioners' tax of $ 8,035, as well as additions to tax under sections 6651(a)(1) and (2) and 6654 totaling $ 1,509.43 and interest as provided by law of2004 Tax Ct. Memo LEXIS 89">*99  $ 1,117.83, for their taxable year 1997. (We shall refer to those assessed amounts, as well as any interest as provided by law accrued after August 13, 2001, as petitioners' unpaid liability for 1997.)On August 13, 2001, respondent issued to petitioners a notice of balance due with respect to petitioners' unpaid liability for 1997.On or about April 15, 2000, respondent received from petitioners Form 1040 for their taxable year 1999 (1999 Form 1040). In their 1999 Form 1040, petitioners reported total income of $ 0 and total tax of $ 0. Petitioners attached to their 1999 Form 1040 (1) respective Forms W-2 issued by the Virginia Transportation Department, ESI, and ECPI College showing wages, tips, and other compensation paid to Mr. Frey totaling $ 35,630.92 and (2) Form 1099- G, Statement for Recipients of Certain Government Payments, showing unemployment compensation paid to him of $ 1,596. Respondent processed and filed petitioners' 1999 Form 1040 as a tax return.On June 15, 2001, respondent issued a notice of deficiency to petitioners with respect to their taxable year 1999. In that notice, respondent determined that for 1999 petitioners had a deficiency of $ 3,356. Petitioners2004 Tax Ct. Memo LEXIS 89">*100  did not file a petition in the Court with respect to the notice of deficiency relating to their taxable year 1999.Instead, on September 1, 2001, in response to that notice, petitioners sent a letter to Gwen A. Krauss, Director, IRS Service Center. That letter stated in pertinent part:          Your Deficiency Notice dated 6/15/01   According to your "Deficiency Notice" of above date   (Attachment 1), there is an alleged deficiency with respect to   my 1999 income tax of $ 3,356.00, and if I wanted to "contest   this deficiency before making payment," I must "file a   petition with the United States Tax Court." Before I file,   pay, or do anything with respect to your "Notice," I   must first establish whether or not it was sent pursuant to law,   whether or not it has the "force and effect of law," and   whether you had any authority to send me the notice in the first   place.           *   *   *   *   *   *   *   Let me further point out that IR Code Sections 6001 and 6011 (as   identified in the 1040 Privacy Act) notify me that I need only2004 Tax Ct. Memo LEXIS 89">*101     "comply with regulations." Nothing in the Privacy Act    Notice or in the above statutes informs me that I have to   "comply" with, or pay attention to, letters and/or   alleged "determinations" sent to me by various and   sundry employees of the IRS.   Please note that Section 6212 states that "If the Secretary   determines that there is a deficiency in respect of any tax   . . . he is authorized to send notice of such deficiency, etc.,   etc., etc." However, the "Notice" I received was not   sent by the Secretary, but by Gwen A Krauss, who is identified   as being the Director of the IRS Service Center in Chamblee,   Georgia, and I have no way of knowing whether she has been   delegated by the Secretary to send out such notices on the   Secretary's behalf. So before I do anything at all with respect   to your "Notice," I would have to see a Delegation Order   from the Secretary of the Treasury delegating to Gwen A Krauss   the authority to send out Deficiency Notices.   In addition, I would also like you to send me (or identify for   me) the legislative regulations2004 Tax Ct. Memo LEXIS 89">*102  that you claim implement  Code Sections 6212 and 6213. I have also attached an excerpt   from the IRS Procedures Manual (MT 1218-196, and page P-6-40),   which points out that the IRS is required to "make available   to all taxpayers comprehensive, accurate, and timely information   on the requirements of tax law and regulations." So,   pursuant to this provision from your Procedures Manual, I am   asking that you identify (" make available") for me the   legislative regulations that you claim implement both   Code Sections 6212 and 6213, since I have not been able to locate   them.   Without your furnishing me with these documents and information,   I will be unable to "ascertain" (pursuant to the   Federal Crop decision) whether the individual who sent me   the Deficiency Notice was authorized to do so, and whether I am   legally required to take any notice of it. I am obviously   unwilling to "take the risk" referred to by the Supreme   Court in the above cited case. [Reproduced literally.]On February 4, 2002, respondent assessed petitioners' tax of $ 3,356, as well as2004 Tax Ct. Memo LEXIS 89">*103  interest as provided by law of $ 520.25, for their taxable year 1999. (We shall refer to those assessed amounts, as well as interest as provided by law accrued after February 4, 2002, as petitioners' unpaid liability for 1999.)On February 4, 2002, respondent issued to petitioners a notice of balance due with respect to petitioners' unpaid liability for 1999.On June 21, 2002, respondent issued to petitioners a final notice of intent to levy and notice of your right to a hearing (notice of intent to levy) with respect to their taxable year 1996 and a separate notice of intent to levy with respect to their taxable years 1997 and 1999.On or about July 20, 2002, in response to the notice of intent to levy with respect to their taxable year 1996, petitioners filed Form 12153, Request for a Collection Due Process Hearing (Form 12153), and requested a hearing with respondent's Appeals Office (Appeals Office). On the same date, in response to the notice of intent to levy with respect to their taxable years 1997 and 1999, petitioners filed Form 12153 and requested a hearing with the Appeals Office. Petitioners attached, inter alia, a document to their Form 12153 with respect to their taxable2004 Tax Ct. Memo LEXIS 89">*104  year 1996 (petitioners' attachment to their 1996 Form 12153) and a document to their Form 12153 with respect to their taxable years 1997 and 1999 (petitioners' attachment to their 1997 and 1999 Form 12153). Petitioners' attachment to their 1996 Form 12153 and petitioners' attachment to their 1997 and 1999 Form 12153 were identical and set forth, inter alia, the same types of statements, contentions, arguments, requests, and questions that petitioners set forth in petitioners' attachment to their 1996 Form 1040 and petitioners' attachment to their 1997 Form 1040A. In addition, petitioners' attachment to their 1996 Form 12153 and petitioners' attachment to their 1997 and 1999 Form 12153 stated in pertinent part:   1) * * * at my CDP hearing I demand that the appeals officer   have at the hearing the delegation order from the   Secretary of the Treasury delegating to the   Operations Manager, Automated Collection System the authority to   notify me to my right for a CDP hearing * * *.           *   *   *   *   *   *   *     b) * * * I am requesting that you have at the CDP hearing *     * * 2004 Tax Ct. Memo LEXIS 89">*105  a "delegation" order, emitting directly from     the Secretary, authorizing the IRS employee who signed for     him (them), the authority to impose and file such notices     of liens against us.     c) In lieu of having such a "delegation order," I     am requesting that you have the job description of IRS     employee(s) and the individual who signed the notice at     issue for him to see if any such authority is included in     their job description.           *   *   *   *   *   *   *   2) The document also says that "We have made a demand   for payment of this liability." (Emphasis added)     a) Please note (as explained in paragraph 4 herein), we     claim we never received such a "demand" for     payment.        1) If you claim otherwise, than I demand that you have        at the CDP hearing the Form Number of the document        that you claim was sent to us as constituting the        "demand" referred to in paragraph 2) 2004 Tax Ct. Memo LEXIS 89">*106  above.        2) Since the Code Section establishing the        "liability" referred to above is also not        identified, I am requesting that you specifically        identify the Code Section establishing * * *   3) VERIFICATION FROM THE SECRETARY     I also expect you to have at the CDP hearing   "verification from the Secretary that the requirements of   any applicable law or administrative procedure have been   met." That is the specific statement from the Secretary (or   his delegate) that THE LAW requires you to have. PLEASE BE   ADVISED THAT SECTION 6330(c)(3)(A) REQUIRES THAT THIS   VERIFICATION BE "PRESENTED" TO US. Please don't   tell us at the CDP hearing that in lieu of having that specific   document from the Secretary as required by law to be   "presented" to us, that you have some unsigned, IRS   transcript. * * * I will not accept any claim of yours that   "the courts have held that an unsigned, computer printout   satisfies the legal requirements of Code Sections 6320 &  6330," in lieu of "presenting" 2004 Tax Ct. Memo LEXIS 89">*107  us with   "verification (from the Secretary) . . . that the   requirements of any applicable law or administrative procedure   have been met," stated in the law. * * *     4) Also, pursuant to Code Section 6201(1), before I can owe   any income taxes there has to be an assessment based on a   "return or list." I filed a return showing no taxes due.   Therefore, I don't see how the IRS could have made a lawful   assessment from a return showing no income taxes due and   owing, unless the IRS prepared another 1040 showing a   different amount due. Therefore, at my CDP hearing, I am   demanding that the following items be produced and made   available to us:     a) Proof of assessment. * * * Please have a form 4340 at     my CDP hearing certifying that such an assessment has been     made.           *   *   *   *   *   *   *   6) We claim there is no underlying, statutory liability in   connection with the income taxes at issue.     a) In addition, we are challenging the "existence"     of2004 Tax Ct. Memo LEXIS 89">*108  the underlying tax liability as the law (     Sec. 6330(c)(2)(B)) and regulation (301.6330-1T-(e))     specifically permit us to do. If the appeals officer     believes otherwise, he need only identify for us the Code     Section that establishes such a liability * * *. The * * *     IR Code * * * that we will bring to the CDP hearing lists     some 40 taxes under the caption "Liability for     tax"; however, I cannot find an entry for "income     taxes." * * *           *   *   *   *   *   *   *     b) The issue of the "existence" of the     "underlying tax liability" is certainly relevant as     to whether or not we owe the income taxes at issue. Since     the legal "existence" of an income tax liability is     such an easy thing to establish * * * why wouldn't the     appeals officer simply identify such a Code section if it     exists? The only possible reason for him not doing so,     is if that no such Code section does exist.     c) One2004 Tax Ct. Memo LEXIS 89">*109  (nonsensical) excuse the appeals officer might offer     * * * is to claim that he is not going to get into this     issue because we allegedly got a notice of deficiency and     so we had an "opportunity to dispute such a tax     liability" as mentioned in Section 6330(c)(2)(B).     However, we never had such an opportunity. Attached, as     Exhibit D, is a copy of the "deficiency notice"     [1999] we received. It was prepared and sent out by Gwen     Krauss who is identified as Director of the Customer     Service Center, Chamblee Georgia. However, Code Section     6212 provides that it is "the Secretary" who     "determines that there is a deficiency" and that     "he is authorized to send such notice." * * *     Therefore, after receiving those Deficiency Notices from     Gwen Krauss * * * we wrote her * * * asking her to supply     us with her delegation of authority from the Secretary to     send out such Notices (pursuant to Code Sections     7701(a)(11)(B) & 7701(a)(12)(A)(i)), 2004 Tax Ct. Memo LEXIS 89">*110  and she never answered our     letter. We have since received proof that Gwen Krauss     has no such delegation of authority. Therefore, the     Deficiency Notices we received from her were invalid -- and     we are barred from petitioning Tax Court from invalid     Deficiency Notices. Beside, we are not challenging the     "amount" of the alleged "deficiency": we     are challenging its "existence," as a matter of     law. However, since Tax Court is not a court of law (See     Freytag v. C.I.R., 501 U.S. 868">501 U.S. 868, 111 S. Ct. 2631">111 S. Ct. 2631, 115 L. Ed. 2d 764">115 L. Ed. 2d 764 * * * the Tax     Court would have no jurisdiction to consider the legal     question of whether or not the Internal Revenue Code     establishes an income tax "liability" as a matter     of law.           *   *   *   *   *   *   *   7) We claim there is no statute requiring us "to pay"   the income taxes at issue. Another relevant issue is "Whether or not there is a   statute requiring us 'to pay' the income taxes at issue?" 2004 Tax Ct. Memo LEXIS 89">*111    Code Section 6321 provides that only when one fails "to pay   any tax" can there be "a lien in favor of the United   States." Therefore, before there can be a "lien in favor   of the United States" there must be a statutory requirement   "to pay" the income taxes at issue. The Index of the   Code we will bring to our CDP hearing contains a Section   entitled "Payment of tax." (Attached as Exhibit H) It   contains over 60 entries. * * * however, there is no entry we   can find for "income taxes." It is therefore our   belief that there is no law requiring us "to pay" income   taxes, and this certainly is a "relevant issue" that is   appropriately raised at a CDP hearing -- since, if the appeals   officer can not identify any statute that requires us "to   pay" income taxes, how can he approve an IRS lien on   our property in connection with a tax the payment for which he   can not find shown in any law?           *   *   *   *   *   *   *   8) We maintain that there is no law that authorizes the IRS   to claim that we owe more in income taxes2004 Tax Ct. Memo LEXIS 89">*112  * * * than the   "zeros" we reported on our income tax returns for those   years [1996, 1997, and 1999].     * * * Section 6201(a)(2)(A) further provides that with   respect to taxes "payable by stamp," the Secretary is   authorized "to estimate the amount of tax which has been   omitted to be paid" by stamp. However, we cannot find   any provision in Code Section 6201 or any other Code   Section that authorizes the Secretary (let alone the IRS) to   similarly "estimate the amount of tax" which we   allegedly omitted from our 1996[, 1997, and 1999] tax returns.   Therefore it is our contention that no law authorizes the   Secretary (let alone any IRS agent) to determine that we owe   more in income taxes than the "zeros" we reported on our   1996[, 1997, and 1999] income tax returns. * * *           *   *   *   *   *   *   *     This is also to remind you that I will be tape recording   the CDP hearing and I will have a court reporter present. I will   also have a witness present. [Reproduced literally; fn. refs.  2004 Tax Ct. Memo LEXIS 89">*113  omitted.]On October 21, 2002, the settlement officer sent a letter to petitioners with respect to their taxable years 1996, 1997, and 1999. That letter stated in pertinent part:   Your Collection Due process appeal request has been assigned to   me for consideration.   I will contact you as soon as I am able to review your file and   determine if we can resolve your case by correspondence or phone   in lieu of a personal conference. If a personal conference is   needed, I will schedule a meeting with you or your   representative.           *   *   *   *   *   *   *   In order for your appeal to be considered, you must be in [sic]   current in filing tax returns. If you have not done so, please   file the delinquent return(s) immediately. * * *On October 23, 2002, the settlement officer sent a letter to petitioners with respect to their taxable years 1996, 1997, and 1999. That letter stated in pertinent part:   HEARING IN PERSON OR BY TELEPHONE     o IN PERSON should you prefer to discuss the      case in person, I have scheduled2004 Tax Ct. Memo LEXIS 89">*114  a conference for      November 6, 2002 at 10:00 AM * * *     o TELEPHONE HEARING If you prefer a telephone      hearing, please call me at * * *     o CONFIRM WITHIN 7 DAYS please call me within      7 days of the date of this letter to confirm whether you      will appear. If the date is not convenient, I will be      happy to reschedule the hearing.           *   *   *   *   *   *   *   Please see the tax transcripts and important   information enclosed concerning your hearing.On October 31, 2002, the settlement officer sent a letter to petitioners with respect to their taxable years 1996, 1997, and 1999. That letter stated in pertinent part:   This letter is to confirm that your hearing date is changed to   November 20 at 10:00 AM. per your request.     * * * Our records also indicate that you have not filed   your 1998 and 2001 income tax returns. If you have filed them,   please provide your copy of the returns.On November 13, 2002, petitioners sent the settlement officer a letter. 2004 Tax Ct. Memo LEXIS 89">*115  That letter stated in pertinent part:     We have requested a Collection Due Process Hearing as   provided for in Code sections 6320 & 6330 * * *, which is   scheduled for November 20, 2002. We are writing to make clear   our position as relates to the harassment, threats of seizures   and liens by the IRS.     Based on these omissions we are contacting the Taxpayer   Advocate for resolution of these options.     Further, we are requesting an impartial officer, for the up   coming Due Process Hearing. This request in based on the   partiality of the current officer in indicating that we must be   current in filing tax returns for our appeal to be considered.   This is blatantly false. * * *     We intend to record the hearing and have a witness in   attendance.           *   *   *   *   *   *   *     It is clear that before any appeals officer can recommend   the seizure of any property pursuant to Code Section 6331    certain elements have to be present. For one thing (pursuant to   that statute) 2004 Tax Ct. Memo LEXIS 89">*116  that person has to be statutorily "liable to   pay" the taxes at issue, and only after he "neglects or   refuses to pay the same within 10 days after notice and   demand," can his property be subject to seizure. Therefore,   apart from the appeals officer having to identify the statute   that makes me "liable to pay" the taxes at issue, he   needs to have a copy of the statutory "notice   and demand" which I "neglected" and   "refused" to pay. In addition, we can't be   "liable" to pay an income tax, if the tax in question   has never been assessed against me as required by Code Sections   6201 and 6203. So we will need to see a copy of the record of   our assessments. And since (as provided by Code Section  6201(a)(1) and IRS Transaction Code 150) all assessments have to   be based on filed returns, I will have to see a copy of   the return from which any claimed assessment is based.   In lieu of producing these specific documents "verification   from the Secretary (of the Treasury) that the requirements of   any applicable law or administrative procedure have been  2004 Tax Ct. Memo LEXIS 89">*117  met," will be acceptable. But the appeals officer better   have either the specific documents as identified above, or   "verification from the Secretary." If the appeals   officer cannot produce neither document, than no Due Process   Hearing should be scheduled until he has those documents in   hand. If the appeals officer recommends "enforcement of   collection action including levy," without having produced   these specific documents, then it will be obvious that the   appeals officer is simply attempting to thwart and   circumvent the Code Section 6330 in order to enable the IRS to   continue its practice of making the illegal seizures uncovered   by the Senate Finance Committee * * * which   THE "DUE PROCESS HEARING" was designed to   eliminate.     Summarizing: We requested a "Due Process Hearing"   as outlined in Form 12153. We are "challenging the   appropriateness of (the) collection action" as specified in  6330(c)(2)(A)(ii) since the IRS denied all of our requests for   the initial "examinations" and "interviews" as   provided for in Publications 12004 Tax Ct. Memo LEXIS 89">*118  & 5. In addition, no lien for   taxes pursuant to Code Sections 6321 and 6322 is possible   because no valid, underlying assessment was ever made. In   addition, we never received the statutory "notice and   demand" for payment of the taxes at issue as required by  Code Sections 6203, 6321, and 6331. If the appeals officer is   going to claim that a particular document sent to me by the IRS   was a "Notice and Demand" for payment, then I am   requesting that he also provide me with a T. D. or Treas. Reg.   which identifies that specific document as being the official,   statutory "Notice and Demand" for payment.     In addition, we are "challenging the existence of the   underlying tax liability" as we are authorized to do in Code  Section 6330(c)(2)(B). In addition, we did not receive a (valid)   notice of deficiency in connection with any of the years at   issue. We are also requesting that the appeals officer have at   the "Due Process Hearing" a copy of the "Summary   Record of Assessment" (Form 22 C) together with the   "pertinent parts of the assessment which2004 Tax Ct. Memo LEXIS 89">*119  set forth the name   of the taxpayer, the date of the assessment, the character of   the liability assessed, the taxable period, and the amount   assessed" as provided for in Treas. Reg. 301.6203-1.     Also you are reminded that the Section 6330(c)(1)    REQUIRES you to have "verification from the   Secretary (or someone with delegated authority from him)   that the requirements of any applicable law or administrative   procedures have been met." So unless you have, at the very   least, that document, you should not even schedule a Due Process   Hearing. * * * [Reproduced literally; fn. ref. omitted.]On November 16, 2002, petitioners sent a letter to "Internal Revenue Service Appeals Office Supervisor". In that letter, petitioners stated in pertinent part:   This is to indicate irregularities in our requested Due Process   Hearing. According to title 26 sections 6320 and 6330 only a   single year is at issue for each hearing/appeal. Yet we are   confronted with a partial (prejudiced) appeals officer for the   following reasons:     1. 2004 Tax Ct. Memo LEXIS 89">*120  Multiple years of [sic] combined into a single session,     we are only allotted one hearing/appeal per year in     question.     2. The hearing/appeals officer is making demands outside of     sections 6320 and 6330 regarding "filings must be     current". Which is blatantly incorrect and harassing.On November 20, 2002, respondent's settlement officer held an Appeals Office hearing with petitioners regarding the respective notices of intent to levy with respect to their taxable year 1996 and their taxable years 1997 and 1999. James Cain accompanied petitioners to the Appeals Office hearing. The settlement officer did not allow petitioners to make an audio recording of the Appeals Office hearing.On November 26, 2002, the settlement officer sent a letter to petitioners (settlement officer's November 26, 2002 letter) with respect to their taxable years 1996, 1997, and 1999. That letter stated in pertinent part:   This letter is pertaining to your letter dated 11-13-2002 and   the hearing on 11-20-2002. I will attempt here to address the   points raised in your appeals request and also discuss2004 Tax Ct. Memo LEXIS 89">*121  those   matters that can be considered under this process.  Section 601.106(b)) of the Regulations and Internal Revenue   Manual Section 8122.5 provide that the Appeals Division of the   Internal Revenue Service cannot consider arguments based on   moral, religious, political, constitutional, conscientious or   similar grounds. Formal appeal procedures do not extend to these   types of arguments.   On the issue of impartiality, the statute defines impartiality   as "prior involvement with respect to the same unpaid   tax." You have not alledged [sic], and I, the Settlement   Officer have had no such prior involvement with your unpaid tax   liability. With regards to your request of the delegation   authority of an IRS official, please see the attachment listing   court cases showing the courts presume that the IRS official(s)   have properly discharged their official duties if there is no   clear evidence to the contrary. The burden of proof is upon you   to prove that I am not an impartial officer.   Your 1996 and 1997 taxes have not been discharged by the 2004 Tax Ct. Memo LEXIS 89">*122    Bankruptcy Court. You can contact your bankruptcy attorney for   more information.   Your request for appeal on form 12153 is a Collection Due   Process (CDP) Appeals. The three key points that Appeals can   consider in a CDP hearing involve items such as those listed   below:     1. Applicable administrative procedures     2. Relevant issues such as innocent spouse, collection     alternatives and underlying liability.     3. Efficient collection measures versus intrusiveness.   Based upon a review of your case file, I find no error in the   part of the Service in sending you the proper notices of an   outstanding liability. The records indicated that notices were   issued for all of the years reflecting a balance due and asking   you either pay in full or call the IRS to discuss payment   arrangements. To date, no agreement has been instituted.   The underlying liability appears to be correct. The assessments   were based on your income and withholdings. You have not pointed   to any errors and you have been unwilling to discuss2004 Tax Ct. Memo LEXIS 89">*123  collection   alternatives which include full payment, monthly payment, offer   in compromise etc.   Please respond within 2 weeks of the date of this letter if you   have valid issues or want to propose a payment resolution. If I   do not receive a timely response, I will proceed with the   issuance of a decision letter that will sustain the levy action.On November 27, 2002, the IRS Team Manager for Area 2, General Appeals, wrote a letter to petitioners. That letter stated in pertinent part:   This is in response to your letter dated November 16, 2002 that   was addressed to this office. I apologize for not responding   earlier but I have been away from the office.   In your letter you are concerned about the fact that the   Settlement Officer who met with you considered more than one   year (return) at the meeting and that she asked about subsequent   filings of Federal tax returns. You also ask that this matter be   reassigned. There is nothing wrong with the Settlement Officer's   handling of either of these items. I, therefore, will not   reassign this matter to another2004 Tax Ct. Memo LEXIS 89">*124  Appeals or Settlement Officer.   There is nothing wrong with the Settlement Officer considering   all of the tax periods before Appeals at one hearing. In   addition, taxpayers must be current in the filing of their   Federal tax returns before we can offer collection alternatives   to help them. Thus, the Settlement Officer was merely asking   about subsequent filings to see if she could offer collection   alternatives to you for the amounts owed in the periods under   our jurisdiction. Both actions are appropriate.   In addition, I would urge you to "step back and look at the   course of action" you are taking. The returns you have filed   showing nothing but zeros, and the arguments you have made, have   no merit whatsoever. The arguments you are making are frivolous   and make no sense. In fact, if you pursue these arguments in the   courts, the Court will, in all probability, and should, assert   it's own penalty for filing a frivolous lawsuit. The court cases   clearly support the Service's position on the issues you raise   and indicate that the courts are tired of these2004 Tax Ct. Memo LEXIS 89">*125  types of   illogical issues.   I strongly urge you to move away from the destructive path you   are following, file proper tax returns as required by law, and   make arrangements to pay the taxes you owe for the schools you   attend, the roads you ride on, the military that defends you,   the courts that protect your legitimate rights, and the freedoms   you enjoy. Please look at the arguments you are making and ask   yourself if they make any sense. Read the court cases cited by   the Settlement Officer in the attachment (copy attached) to her   letter to you dated November 26, 2002 and evaluate the merits of   the arguments you are making. If you do not take steps to   correct the situation, it will become more and more burdensome   with larger, unpaid liabilities increased by interest and   penalties.   I cannot recommend that you seek the advice of an expert.   However, if you go to any reputable Attorney or Certified Public   Accountant in your area, I am confident that they will tell you   that your arguments are not correct and they will recommend that  2004 Tax Ct. Memo LEXIS 89">*126  you quickly take corrective action. Neither the IRS, nor the   Courts, nor the Congress, nor any reputable professional will   support the arguments you are making.   My comments are not intended to offend you in any way. They are   made out of my concern for individuals and intended to provide   you with assistance. I hope this addresses the concerns   contained in your letter dated November 16, 2002.   Finally, I have enclosed a copy of a relatively new court case   (Steven R. Smith, United States District Court of Nevada,   2002 TNT 223-17) in which the taxpayer makes arguments similar   to those you have made about Delegation Orders, etc. As you can   see, the Court decides the case in favor of the Government.On December 10, 2002, in response to the settlement officer's November 26, 2002 letter to petitioners, petitioners sent a letter to the settlement officer (petitioners' December 10, 2002 letter). Petitioners' December 10, 2002 letter stated in pertinent part:   In response to your letter of November 26, 2002, and based upon   your invitation to do so, we raise these valid issues in2004 Tax Ct. Memo LEXIS 89">*127  regard   to your statements and exhibits:     1. We did not raise any arguments based on moral,     religious, political, constitutional, conscientious or     similar grounds, so we will not help you to pretend that we     did.     2. On the issue of impartiality, your letter of November     26th proves that you are NOT impartial to the proposed     collection action:        a.) We did not raise any arguments whatsoever. We        asked for the documents that the laws describe, which        must be present before a determination can be made by        you to proceed with collection by distraint.        We cite as a valid issue: The Statute, IR Code     6330(c)(3) entitled " Basis for the     determination. The determination by an appeals     officer under this subsection shall take into     consideration-A.) the verification presented under     paragraph (1),; B.) the issues raised under paragraph (2),     which is "any relevant2004 Tax Ct. Memo LEXIS 89">*128  issue relating to the     unpaid tax or proposed levy" . . .        b.) You state * * * "Based upon a review of your        case file, I find no error in the part of the Service        in sending you the proper notices of an outstanding        liability", yet, you do not name by what Statute        we are made liable and you do not present for us the        documents which support the assessments with the        authority of the Service employees that were involved        in making such assessments. You state that notices of        balance due were issued . . . Well, IR Code Section        6331 cannot apply to us until we have neglected or        refused to pay 10 days following the Notice and Demand        for Payment. Seven Statutes and various IRS        Publications refer to the requirement for the Notice        and demand for payment. We find no authority referring        to a "notice of balance due". We did not    2004 Tax Ct. Memo LEXIS 89">*129      receive a statutory Notice and Demand for payment.        c.) You state in your letter * * * "The underlying        liability appears to be correct. The assessments were        based on your income and withholdings." The        underlying liability is based upon what statute? Where        did you find a liability for the income tax in the        Internal Revenue Code? * * * we are contesting not        only the existence and the amount of the underlying        liability for the taxes and penalties at issue, but,        also the authority of the Revenue Officers who changed        our returns and who sent out the Final Notice giving        rise to our opportunity to a Collection Due Process        Hearing -- our right to a fair and impartial hearing        conducted by an impartial appeals officer who has        fulfilled the requirement of the investigation as        provided for in IR Code Section 6330(c)(1). If you did    2004 Tax Ct. Memo LEXIS 89">*130      indeed conduct that impartial investigation, you        should be able to provide us with the documents you        inspected to verify the validity and accuracy of the        assessments. * * * We have requested the documentation        that the law provides that we may see.        d.) Further, the exhibits attached to your letter are        totally irrelevant to our case. They, too, point to        your bias toward the government. First of all, the        definition of Gross Income does not make one liable        for the tax. The issue of the Sixteenth Amendment of        the Constitution is not a relevant issue to be raised        when all we are asking for is proof that the        verification from the Secretary requirement has been        fulfilled; that the Notice and Demand for payment        requirement as been met; that the assessments are        valid and accurately determined and recorded pursuant        to2004 Tax Ct. Memo LEXIS 89">*131  some statute by authorized Internal Revenue Service        personnel; and, that you have personally acquired        verification from somebody other than yourself that        all of the administrative procedures and applicable        laws have been met. Verification means, a formal        written statement. * * * We are in the dark as to what        happened on our case, as all of the notices came        without reference to any delegation orders or other        legal basis for their issuance. Many of them were not        even signed! Why wouldn't you want us to see the        authority for these notices if indeed they are        "Statutory", as you claim them to be?     3. Finally, you stated in your letter that we have not     pointed to any errors and that we have been unwilling to     discuss collection alternatives . . . and, then you     threatened to proceed with an issuance of a letter that     will sustain the levy action. We cannot fathom2004 Tax Ct. Memo LEXIS 89">*132  what premise     you found to base those statements on. It is absurd! You     have not provided one document required of you by the law,     and, until you do, you have nothing more than a     wish for our property. Here are the errors you     have ignored thus far that we have clearly outlined in     previous correspondences and at our "Collection Due     Process Hearing":        A.) The FINAL NOTICE we received was not sent out by        the Secretary or his delegate. * * *        B.) We did not receive the Statutory Notice and demand        for the unpaid tax from the Secretary or his delegate.        * * *        C.) The assessments were not made by authorized IRS        personnel. We know this because no where in the Code        is there any mention of IRS agents having the        authority to make a return for income taxes, and no        where in the Internal Revenue Manual does it speak of        the authority2004 Tax Ct. Memo LEXIS 89">*133  of IRS agents to make 1040 Forms or to        do anything with respect to returns of income tax.        * * *        D.) Another very relevant issue we have raised and        that goes to prove the fact that you have not been        impartial to the proceedings thus far is that we have        asked for you to cite the Statute in the Internal        Revenue Code that provides for the payment of the        income tax. Now, whether or not there is a law that        requires the payment of the income tax cannot be        deemed frivolous or merit less. * * * [Reproduced        literally.]On November 5, 2002, John W. Raymond (Mr. Raymond), an attorney, sent a letter (Mr. Raymond's November 5, 2002 letter) to the settlement officer with respect to petitioners' chapter 7 bankruptcy case. That letter stated in pertinent part:     Reference the attached letter dated October 21, 2002 which   you sent to Gerald and Jessica Frey. Be advised that Gerald and   Jessica Frey filed a Chapter2004 Tax Ct. Memo LEXIS 89">*134  7 Bankruptcy, Case No. 02-51961-   DHA, in the United States Bankruptcy Court, Eastern District of   Virginia, Newport News Division, on July 3, 2002. Internal   Revenue Service was a listed creditor and was sent Notice of the   bankruptcy filing by the bankruptcy court.     Debtors received their bankruptcy Discharge on October 10   [sic], 2002. (copy of Order attached) Their liability for tax   debts for calendar year 1996 and 1997 were discharged in the   bankruptcy.The "bankruptcy discharge" referred to in Mr. Raymond's November 5, 2002 letter is an order dated October 12, 2002 (U.S. Bankruptcy Court's October 12, 2002 order) of the United States Bankruptcy Court, Eastern District of Virginia (U.S. Bankruptcy Court). That order stated as follows:     It appearing that the debtor(s) is/are entitled to a   discharge,   IT IS ORDERED:     The debtor(s) is/are granted a discharge under section 727    of title 11, United States Code * * *.The U.S. Bankruptcy Court's October 12, 2002 order further stated: " SEE BACK SIDE OF THIS ORDER FOR IMPORTANT INFORMATION ". The2004 Tax Ct. Memo LEXIS 89">*135  back side of that order stated in pertinent part:   Debts that are Not Discharged     Some of the common types of debts which are not discharged   in a chapter 7 bankruptcy case are:     a. Debts for most taxes;On December 9, 2002, Mr. Raymond sent a letter to an IRS bankruptcy specialist (Mr. Raymond's December 9, 2002 letter). That letter stated in pertinent part:     You and I discussed the above matter on November 19, 2002.   You informed me that the 1996 and 1997 taxes had not been   discharged in the Freys' bankruptcy as a substitute return had   been filed by the IRS for the Freys and the Freys did not file   the returns until November 13, 2000. The Freys state that they   filed the returns prior to November 2000.     The Freys inform me that they received the 09-20-1999   Notice Number CP 504 on September 30, 1999. The Notice had been   mailed to a prior address so the Freys did not get it for ten   days. Mr. Frey called Mrs. Lee (as noted on page two of exhibit   A) of the IRS and was informed by Mrs. Lee that the IRS had no   returns2004 Tax Ct. Memo LEXIS 89">*136  for 1996 and 1997. Mrs. Lee advised the Freys to mail   the returns to IRS, Attn: ASFR, Philadelphia, PA 19255.     The Freys had previously filed the returns but complied   with Mrs. Lee's directions. The returns were still packed with   their household goods because of the Freys' move. The Freys   found the returns (copies attached) dated them 11-1-99 and   mailed the returns to the ASFR address given by Mrs. Lee.     The Freys received nothing further from the IRS until 2001   when the Freys were advised that the IRS had not received the   1997 return. The Freys dated the 1997 returns 5-30-01 and mailed   them to the IRS.     It appears to me that the taxes should have been discharged   in the bankruptcy based on the 1999 filing date.On January 14, 2003, the IRS bankruptcy specialist to whom Mr. Raymond had sent Mr. Raymond's December 9, 2002 letter sent a letter to Mr. Raymond. That letter stated in pertinent part:     This is in regards to correspondence we received on   December 11, 2002. In your correspondence you provided copies of   tax returns2004 Tax Ct. Memo LEXIS 89">*137  for years 1996 and 1997. I have reviewed the   information you have provided and have made these determinations  base[d] on the information. Tax year 1996 will be processed as   the original filed return and if excepted [sic] as filed, there   will not be any balance due. The tax return 1996 that you   provided shows and [sic] overpayment of $ 3,839.28. The Refund   Expiration Date for 1996 is April 15, 2000, therefore, the   above-mentioned debtor's will not receive the overpayment. The   information provided for tax year 1997, I could find no evidence   that the return was filed or received prior to the date that   Internal Revenue Service made the assessment of August 13, 2001.   Tax year 1997 still remains to be nondischargeable as we had   determined at discharge.On January 23, 2003, the Appeals Office issued to petitioners a notice of determination with respect to their taxable years 1996, 1997, and 1999. That notice of determination stated in pertinent part:   Summary of Determination   The determination of the Appeals Office is to sustain the   decision to issue the Final2004 Tax Ct. Memo LEXIS 89">*138  Notice of Intent To Levy/Seizure.   The assessment is valid and the actions were appropriate.   You did not respond to this office's request for information and   made no proposals to resolve the delinquent liability. The case   is being returned to the Compliance Office for appropriate   collection actions.An attachment to the notice of determination stated in pertinent part:   Summary of the issues and brief back ground:   * * * You filed a timely request for a hearing with Appeals   under the provisions of IRC 6630 concerning the appropriateness   of propsong a levy action to secure payment for the above listed   tax liabilities [with respect to petitioners' taxable years   1996, 1997, and 1999]. You claimed your gross income was not   taxable and your tax assessments were illegal and not valid. A   hearing was held with you on 11-20-2002. The hearing was   terminated when you claimed the Settlement Officer had no   authority to conduct the hearing. The issues you raised were   later responded by correspondence from the Settlement Officer  2004 Tax Ct. Memo LEXIS 89">*139  and the Appeals Team Manager   Verification of Applicable Law and Administrative   Procedures   With the best information available, the requirements of various   applicable law or administrative procedures have been met.   Internal Revenue Code (IRC) Section 6331(d) requires that the   Internal Revenue Service (IRS) notify a taxpayer at least 30   days before a Notice of Levy can be issued. The tax transcript   shows that this notice was mailed to you * * *           *   *   *   *   *   *   *   You were given the opportunity to raise any relevant issue   related to the unpaid tax of the proposed levy at the hearing *   * *   This Settlement Officer has had no prior involvement with   respect to this tax liability.   Relevant Issues Presented by the Taxpayer   Records show you filed the 1996, 1997 and 1999 tax returns   claiming zero income even though you attached forms W-2 with the   returns showing your gross income * * *. The tax assessments   were made based on these incomes. The Final2004 Tax Ct. Memo LEXIS 89">*140  Notice pertaining to   the unpaid balance of these tax periods was sent to you on 06-   20-2002. You were also advised by the Settlement Officer that   the 1996 and 1997 tax liabilities were not discharged by the   bankruptcy court. You made frivolous claims such as the IRS   agents had no authority to make income tax assessments, the   gross income were not taxable and the assessments were illegal.   You were provided with the tax transcripts demonstrating the   fact of assessment. The transcripts show the same essential   information found on a Form 4340, Certificate of Assessments and   Payments. * * *           *   *   *   *   *   *   *   Under Section 6330(c)(2)(B), neither the existence nor the   amount of the underlying tax liability can be contested at an   Appeals Office hearing unless the taxpayer did not receive a   notice of deficiency for the tax in question or did not   otherwise have an earlier opportunity to dispute such tax   liability. Records indicated the notices of deficiency were   mailed to you * * *. You received a notice2004 Tax Ct. Memo LEXIS 89">*141  of deficiency, but   yet failed to file a petition for redetermination with the   Court. Therefore, your issue of the underlying tax liability   cannot be considered by the Appeals Office under the CDP appeal.   Balancing Efficient Tax Collection with Concern Regarding   Intrusiveness   Appeals has verified, or received verification, that applicable   laws and administrative procedures have been met; has considered   the issues raised; and has balanced the proposed collection with   legitimate concern that such action be no more intrusive than   necessary by IRC Section 6330(c)(3).   Collection alternatives include full payment, installment   agreement, offer in compromise and currently uncollectible due   to financial hardship. At the hearing and subsequent   correspondence, you did not raise a spousal defense or challenge   the Compliance's proposed levy action by offering a less   instrusive collection alternative. As of this date, you have not   provided the information for us to determine your ability to pay   and submitted no resolution2004 Tax Ct. Memo LEXIS 89">*142  to your tax liability.   The Appeals Office believes that the Compliance Office's   decision to issue the Final Notice was appropriate and sustains   the action in full. The case is being returned to Compliance for   appropriate collection actions. [Reproduced literally.]On February 20, 2003, petitioners filed with the Court a petition for review of the notice of determination with respect to their taxable years 1996, 1997, and 1999 and attached to the petition certain exhibits. The petition and most of those exhibits contained the same types of statements, contentions, arguments, and questions that petitioners set forth in petitioners' attachment to their 1996 Form 1040, petitioners' attachment to their 1997 Form 1040A, petitioners' attachment to their 1996 Form 12153, petitioners' attachment to their 1997 and 1999 Form 12153, and the various letters described above that petitioners sent to the IRS with respect to their taxable years 1996, 1997, and 1999.On May 29, 2003, the Court issued an Order (Court's May 29, 2003 Order) in which, inter alia, the Court indicated that it had reviewed the petition and the exhibits attached thereto and found the2004 Tax Ct. Memo LEXIS 89">*143  petition and certain of those exhibits to contain statements, contentions, arguments, and questions that the Court found to be frivolous and/or groundless. In that Order, the Court reminded petitioners about section 6673(a)(1).                OPINIONA taxpayer may raise challenges to the existence or the amount of a taxpayer's underlying tax liability if the taxpayer did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B). Where the validity of the underlying tax liability is properly placed at issue, the Court will review the matter on a de novo basis. Sego v. Commissioner, 114 T.C. 604">114 T.C. 604, 114 T.C. 604">610 (2000); Goza v. Commissioner, 114 T.C. 176">114 T.C. 176, 114 T.C. 176">181-182 (2000).The record establishes that respondent issued to petitioners respective notices of deficiency relating to their taxable years 1996, 1997, 1999 2 and that they did not file a petition with the Court with respect to any of such notices. On the instant record, we find that petitioners may not challenge the existence or the amount of petitioners' unpaid liability for 1996, petitioners' unpaid liability for 1997, and petitioners' unpaid liability for 1999. See sec. 6330(c)(2)(B); 114 T.C. 604">Sego v. Commissioner, supra; 114 T.C. 176">Goza v. Commissioner, supra.Where, as is the case here, the validity of the underlying tax liability for each of the years 1996, 1997, and 1999 is not properly placed at issue, the Court will review the determination of the Commissioner for abuse of discretion. 114 T.C. 604">Sego v. Commissioner, supra;2004 Tax Ct. Memo LEXIS 89">*144 114 T.C. 176">Goza v. Commissioner, supra.We turn to the issues that petitioners raised in petitioners' attachment to their 1996 Form 12153, in petitioners' attachment to their 1997 and 1999 Form 12153, in the letters that petitioners sent to the IRS with respect to their taxable years 1996, 1997, and 1999, at their Appeals Office hearing, and in the petition and the exhibits attached to the petition, which we shall review for abuse of discretion. We find petitioners' attachment to their 1996 Form 12153, petitioners' attachment to their 1997 and 1999 Form 12153, the various letters that petitioners sent to the IRS with respect to their taxable years 1996, 1997, and 1999, and the matters that petitioners raised at their Appeals Office hearing to be frivolous and/or groundless. 3 In the Court's May 29, 2003 Order, we found that petitioners' petition and certain exhibits attached thereto contained statements, contentions, arguments, and questions that were frivolous and/or groundless. We conclude that the following allegations in petitioners' petition raise valid issues that we shall address: Petitioners' allegation that the Appeals Office improperly refused to allow them to make an2004 Tax Ct. Memo LEXIS 89">*145  audio recording of their Appeals Office hearing, as required by section 7521(a)(1), and petitioners' allegation that petitioners' unpaid liability for 1996 and petitioners' unpaid liability for 1997 were discharged in petitioners' bankruptcy proceeding.We consider first petitioners' position that the refusal by the Appeals Office to permit them to make an audio recording of the Appeals Office hearing held on November 20, 2002, was improper under section 7521(a)(1). Throughout the period commencing with petitioners' sending to the IRS their 1996 Form 1040 reporting total income of $ 0 and total tax of $ 0 and ending with their filing briefs with the Court, petitioners have made statements, contentions, arguments, and requests and raised questions that the Court finds to be frivolous and/or groundless. Consequently, even though we held in Keene v. Comm'r, 121 T.C. 8">121 T.C. 8 (2003),2004 Tax Ct. Memo LEXIS 89">*146  that section 7521(a)(1) requires the Appeals Office to allow a taxpayer to make an audio recording of an Appeals Office hearing held pursuant to section 6330(b), we conclude that (1) it is not necessary and will not be productive to remand this case to the Appeals Office for another hearing under section 6330(b) in order to allow petitioners to make such an audio recording, see Lunsford v. Comm'r, 117 T.C. 183">117 T.C. 183, 117 T.C. 183">189 (2001), and (2) it is not necessary or appropriate to reject respondent's determination to proceed with the collection action as determined in the notice of determination with respect to petitioners' taxable years 1996, 1997, and 1999, see id. 4We next consider petitioners' position that the U.S. Bankruptcy Court discharged petitioners' unpaid liability for 1996 and petitioners' unpaid liability for 1997. 5An individual debtor is not to be discharged in a bankruptcy proceeding from certain specified categories of2004 Tax Ct. Memo LEXIS 89">*147  debt. 11 U.S.C. sec. 523(a)(2000). The first such category is described in pertinent part in 11 U.S.C. sec. 523(a)(1) as follows:  section 523. Exceptions to discharge     (a) A discharge under section 727, 1141, 1228(a), 1228(b),or 1328(b) of this title [title 11] does not discharge an   individual debtor from any debt --     (1) for a tax * * * --           *   *   *   *   *   *   *(B) with respect to which a return, if required --(i) was not filed; * * *In the instant case, respondent did not process and file as tax returns the 1996 Form 1040 and the 1997 Form 1040A which respondent received from petitioners and in which petitioners reported total income of $ 0 and total tax of $ 0. That was because respondent determined that2004 Tax Ct. Memo LEXIS 89">*148  those documents were frivolous. 6An individual debtor is not discharged in a bankruptcy proceeding from a debt for tax with respect to which a return is not filed. 11 U.S.C. sec. 523(a)(1)(B)(i). On the record before us, we find that pursuant to 11 U.S.C. sec. 523(a)(1)(B)(i) the U.S. Bankruptcy Court did not discharge petitioners from their unpaid liability for 1996 and petitioners' unpaid liability for 1997.Based upon our examination of the entire record before us, we find that respondent did not abuse respondent's discretion in determining to proceed with the collection action as determined in the notice of determination with respect to petitioners' taxable years 1996, 1997, and 1999.Although respondent does not ask the Court to impose a2004 Tax Ct. Memo LEXIS 89">*149  penalty on petitioners under section 6673(a)(1), the Court will sua sponte determine whether to impose such a penalty. Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $ 25,000 whenever it appears to the Court, inter alia, that a proceeding before it was instituted or maintained primarily for delay, sec. 6673(a)(1)(A), or that the taxpayers' position in such a proceeding is frivolous or groundless, sec. 6673(a)(1)(B).In Pierson v. Commissioner, 115 T.C. 576">115 T.C. 576, 115 T.C. 576">581 (2000), we issued an unequivocal warning to taxpayers concerning the imposition of a penalty under section 6673(a)(1) on those taxpayers who abuse the protections afforded by sections 6320 and 6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions. The Court's May 29, 2003 Order reminded petitioners about section 6673(a)(1). Before the trial in this case began, the Court again reminded petitioners about section 6673(a)(1) and indicated that if petitioners advanced frivolous and/or groundless arguments at trial, the Court would impose a penalty2004 Tax Ct. Memo LEXIS 89">*150  on them under that section. During the trial, upon questioning by the Court, Mr. Frey indicated that petitioners continue to adhere to the statements, contentions, arguments, requests, and questions set forth in petitioners' attachment to petitioners' 1996 Form 1040 and petitioners attachment to petitioners' 1997 Form 1040A.On the record before us, we find that petitioners have advanced, we believe primarily for delay, frivolous and/or groundless statements, contentions, arguments, requests, and questions with respect to their taxable years 1996, 1997, and 1999, thereby causing the Court to waste its limited resources in addressing such matters. As a result of petitioners' position and actions in the instant case with respect to those taxable years, we shall impose a penalty on them pursuant to section 6673(a)(1) in the amount of $ 4,000.We have considered all of petitioners' statements, contentions, arguments, requests, and questions that are not discussed herein, and we find them to be without merit and/or irrelevant.To reflect the foregoing,Decision will be entered for respondent.  Footnotes1. All section references are to the Internal Revenue Code in effect at all relevant times.↩2. With respect to petitioners' taxable year 1996, the transcripts of account that a representative of respondent prepared relating to that year reflected that respondent issued a notice of deficiency to petitioners with respect to their taxable year 1996. With respect to petitioners' taxable year 1997, the transcripts of account that a representative of respondent prepared relating to that year did not reflect that respondent issued a notice of deficiency to petitioners with respect to their taxable year 1997. However, the revenue agent who testified on behalf of respondent at the trial in this case indicated that transcripts of account do not necessarily reflect such information. Indeed, although the record in the instant case contains a copy of the notice of deficiency that respondent issued with respect to petitioners' taxable year 1999, the transcripts of account that a representative of respondent prepared relating to that year did not reflect that respondent issued such a notice to petitioners. The notice of determination with respect to petitioners' taxable years 1996, 1997, and 1999, as well as the settlement officer's history sheet or case activity records relating to those years, reflected that respondent issued respective notices of deficiency with respect to those years. In this connection, it is noteworthy that, in petitioners' attachment to petitioners' 1996 Form 12153 and petitioners' attachment to petitioners' 1997 and 1999 Form 12153, as well as in various letters described above that petitioners sent to the IRS with respect to their taxable years 1996, 1997, and 1999, petitioners did not complain that they did not receive notices of deficiency with respect to 1996, 1997, and 1999. Instead, they argued in those documents that they did not receive valid notices of deficiency for any of those years because the notices of deficiency that they received were not signed by the Commissioner of Internal Revenue (Commissioner) or a properly authorized delegate of the Commissioner. Finally, we note that we did not find credible Mr. Frey's testimony that he did not receive notices of deficiency with respect to 1996, 1997, and 1999. Such testimony is inconsistent with other testimony of Mr. Frey that he may have received such notices and is contrary to other evidence in the record.↩3. We also find petitioners' attachment to their 1996 Form 1040 and petitioners' attachment to their 1997 Form 1040A to be frivolous and/or groundless.↩4. See Kemper v. Comm'r, T.C. Memo. 2003-195↩.5. Petitioners did not argue at their Appeals Office hearing that the U.S. Bankruptcy Court discharged petitioners' unpaid liability for 1999.↩6. We have recently observed: "The majority of courts, including this Court, have held that, generally, a return that contains only zeros is not a valid return." Cabirac v. Comm'r, 120 T.C. 163">120 T.C. 163, 120 T.C. 163">169↩ (2003).