121 T.C. 8 (T.C. 2003), 11604-02L, Keene v. Commissioner of Internal Revenue

Docket Nº:11604-02L
Citation:121 T.C. 8, 121 T.C. No. 2
Opinion Judge:DAWSON, Judge:
Attorney:Curtis B. Keene, pro se. Rollin G. Thorley and Robin Ferguson, for respondent.
Judge Panel:Dawson, Howard A., Jr., opinion; Armen, Robert N., Jr., opinion; Halpern, James S., concurrence; Vasquez, Juan F., concurrence; Wherry, Robert A., Jr., concurrence; Swift, Stephen J., dissent; Chiechi, Carolyn P., dissent ARMEN, Special Trial Judge: WELLS, GERBER, COLVIN, HALPERN, LARO, FOLEY, VA...
Case Date:July 08, 2003
Court:United States Tax Court

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121 T.C. 8 (T.C. 2003)

121 T.C. No. 2

CURTIS B. KEENE, Petitioner



No. 11604-02L

United States Tax Court

July 8, 2003

Special trial judge opinion adopted en banc. Respondent's motion for summary judgment denied. Remanded to allow petitioner to audio record appeals office hearing.


P filed a petition for levy action under sec. 6330(d), I.R.C., disputing R's notice of determination concerning collection action with respect to his 1991 tax liability on the ground that he was not permitted by the IRS Appeals Office to make an audio recording of his sec. 6330 hearing, in violation of sec. 7521(a)(1), I.R.C. Subsequently, P filed an amended petition again asserting his claimed right to audio record such hearing. P had previously submitted documents to R in his request for a collection due process hearing that asserted several frivolous and groundless arguments. R informed P by letter that he could make no audio recording. P gave R the required advance request to record. P appeared for the hearing but was told by R that he could not record it. P decided that he did not want to have a hearing if he could not record it, and he left with his recording equipment. P contends that sec. 7521(a)(1), I.R.C., provides him with the right to audio record his sec. 6330 hearing because it constitutes an " in-person interview" . R contends that P does not have a right to audio record the hearing because it is not an " interview" within the meaning of sec. 7521(a)(1), I.R.C. Held, P is entitled, pursuant to sec. 7521(a)(1), I.R.C., to make an audio recording of his sec. 6330 hearing with the Internal Revenue Service Appeals Office.

Curtis B. Keene, pro se.

Rollin G. Thorley and Robin Ferguson, for respondent.

Dawson, Howard A., Jr., opinion; Armen, Robert N., Jr., opinion; Halpern, James S., concurrence; Vasquez, Juan F., concurrence; Wherry, Robert A., Jr., concurrence; Swift, Stephen J., dissent; Chiechi, Carolyn P., dissent


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DAWSON, Judge:

This case was assigned to Special Trial Judge Robert N. Armen, Jr., pursuant to the provisions of section 7443A(b)(4), and Rules 180, 181, and 182. [1] The Court agrees with and adopts the opinion of the Special Trial Judge, which is set forth below.


ARMEN, Special Trial Judge:

This matter is before the Court on respondent's Motion for Summary Judgment, filed pursuant to Rule 121. The only issue raised by the parties is whether, pursuant to the provisions of section 7521(a)(1), petitioner is entitled to audio record his section 6330 hearing with the Internal Revenue Service Appeals Office.


Petitioner was a resident of Las Vegas, Nevada, when he filed his petition herein.

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This case involves the 1991 tax year. [2] Petitioner and his spouse, Fanny Keene, filed a timely joint Federal income tax return on which they reported wages of $ 32,047; taxable IRA distributions of $ 21,996; taxable pensions and annuities of $ 47,764; a business income loss of $ 48,483 on Schedule C from the operation of Hizzoner's Restaurant; and total tax of $ 9,327 with Federal income tax withheld of $ 2,837, and tax owed of $ 6,845. Respondent assessed the amount due as reported on the return. In 1992 and 1993 installment payments totaling $ 1,400 were made and applied to the amount of tax assessed. On or about May 14, 1993, petitioner filed for bankruptcy, and that proceeding was closed on February 4, 1994. During the years 1995, 1996, and 1997, overpaid credits totaling $ 552.97 were applied to the 1991 amount assessed. Also in 1997, there was a subsequent payment by levy of $ 523.17 and a miscellaneous payment of $ 494.22; both amounts were applied to the 1991 income tax liability. Five payments of $ 350 each were later made and applied to the 1991 tax liability.

On or about February 10, 2001, a Form 1040X, Amended U.S. Individual Income Tax Return, for the year 1991 was filed showing that no income tax was due for that year and claiming a refund of $ 2,837, which was the amount of Federal income tax withheld. The explanation petitioner gave for filing the 1991 amended return was:

Due to my ignorance, I mistakenly reported as " income" what were actually " sources" of income. In addition, the amounts that I incorrectly listed as " income" were, in fact, amounts that are exempt from taxation.

There was a three-page attachment to the amended return in which petitioner (not his spouse) made frivolous and groundless arguments why he did not owe the assessed tax.

By letter dated April 25, 2001, the amended return and attachment were determined by the Examination Branch, Ogden Compliance Service Center, to be frivolous. On November 1, 2001, after receiving additional groundless statements from petitioner, the Director of IRS Compliance Services disallowed petitioner's claim for refund.

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On January 21, 2002, respondent issued to petitioner a Final Notice -- Notice Of Intent To Levy And Notice Of Your Right To A Hearing with regard to petitioner's unpaid Federal income tax for 1991.

On February 11, 2002, petitioner submitted to respondent a Form 12153, Request for a Collection Due Process Hearing, which attached a statement setting forth the following contentions:

I never received a " notice and demand" for payment for any 1991 income taxes.

I claim there is no underlying, statutory liability in connection with the income taxes at issue.

I claim there is no statute requiring me " to pay" the income taxes at issue.

No law authorizes the IRS to claim that I owe more in income taxes than the " zero" I reported on my 1991 amended 1040X income tax return.

The IRS Decoding manual provides additional proof that I cannot own more in 1991 income taxes than the " zero" shown on my 1991 income tax return. The Secretary has not authorized any action for the collection of taxes and penalties as required by 26 U.S.C. 7401.

The Attorney General has not directed that any action against me for the enforced collection of any income taxes and penalties for the year 1991 " be commenced" as is required by 26 U.S.C. 7401.

In addition to everything else, Sections 6331, 7701 and 7608 clearly establish that IRS Revenue Officers or Revenue Agents have no authority to seize property in payment of income taxes.

Petitioner concluded his statement with a declaration of his intent to tape record the requested hearing.

By letter dated May 3, 2002, Appeals Officer Donna Fisher (the Appeals officer) informed petitioner that his hearing was scheduled for May 16, 2002. The Appeals officer's letter also stated:

Further, no audio or stenographic recordings are allowed on Appeals cases effective as of May 2, 2002, forward. Therefore, your request to tape record and/or bring a court reporter to the Collection Due Process hearing is denied.

By letter dated May 10, 2002, petitioner informed the Appeals Office that he would not be able to attend the hearing scheduled for May 16, 2002, and requested that it be rescheduled. Petitioner also requested that the Appeals officer provide him with the statutory or regulatory authority barring him from recording the hearing.

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By letter dated May 14, 2002, the Appeals officer informed petitioner that his hearing was rescheduled for June 3, 2002. The Appeals officer also enclosed with her letter a copy of an internal, apparently unpublished, Memorandum to All Appeals Area Directors dated May 2, 2002, from the Acting Chief of the Office of Appeals in Washington, D.C., which stated as follows:

Effective immediately, audio and stenographic recordings will no longer be allowed on Appeals cases. Taxpayers and/or representatives who have already requested such recording will be informed of the change in practice immediately, and advised that the request cannot be allowed.

Prior to enactment of IRC 7521, Service Compliance functions voluntarily allowed audio recordings. Appeals decided to follow this practice at that time. IRC 7521, enacted in 1988, provided for the allowance of audio recordings of conferences relative to the determination or collection of a tax, between the taxpayer and the Internal Revenue Service, provided that the Service was given at least ten (10) days advance notice of the taxpayer's intent to record the conference.

Although Appeals makes liability and collectibility determinations, Appeals' procedures differ from Examination and Collection function contacts that are not discretionary for the taxpayer. Contact with Appeals is discretionary for the taxpayer, and as such, recording has always been discretionary for Appeals.

It should also be noted that Appeals was deliberately excluded in Notice 89-51 that dealt with the audio recording provision, as Counsel determined that IRC 7521 was not applicable to Appeals.

Recently Appeals has had several incidents of audio recordings being altered to imply Appeals employees were making inappropriate comments. In some cases, those altered recordings were broadcast on the radio. We are also aware of instances where excerpts of stenographic records were combined in inappropriate ways and published in anti-tax newsletters and other anti-government publications.

These actions have had the result of undermining the appearance of Appeals' competence, impeding Appeals ability to adequately function in its role as a dispute resolution function. These incidents have interfered with our customers' perception of our ability to carry our Appeals' mission to be fair and impartial in our considerations; and therefore cannot be allowed to continue.

In addition, Appeals has always been concerned that the practice of recording...

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