David and Theresa Smeton - Page 8




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               D.  The Appeals Office Hearing                                         
               Prior to an Appeals Office hearing, Appeals Officer Tony               
          Aguiar (the Appeals officer) reviewed Form 4340, Certificate of             
          Assessments, Payments, and Other Specified Matters, with regard             
          to petitioners’ taxable year 1997.  A copy of the Form 4340,                
          dated December 27, 2000, is attached to respondent’s Motion for             
          Summary Judgment, which was served on petitioners.                          
               On February 15, 2001, the Appeals officer conducted an                 
          Appeals Office hearing that petitioners attended.  According to a           
          purported transcript of the hearing prepared by petitioners,                
          petitioners declined to discuss collection alternatives.  Rather,           
          petitioners stated that they wished to challenge their underlying           
          tax liability, and they requested that the Appeals officer                  
          provide verification that all applicable laws and administrative            
          procedures were followed in the assessment and collection                   
          process.                                                                    
               E.  Respondent’s Notice of Determination                               
               On March 9, 2001, respondent sent petitioners a Notice of              
          Determination Concerning Collection Action(s) Under Section 6320            
          and/or 6330.  The notice stated that the Appeals Office had                 
          determined that it was appropriate for respondent to proceed with           
          the collection of petitioners’ outstanding tax liability.6                  


               6  The attachment (Form 3193) to the Notice of                         
          Determination, which was authored by the Appeals officer, states            
                                                             (continued...)           





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