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Settlement Officer Waters erred in refusing to consider
challenges to the underlying liability for that year.
The error was harmless in this case, however. As part of
the pretrial process, respondent's counsel undertook extensive
efforts through formal discovery to have petitioner reveal the
nature of his dispute over the underlying liability for 1996, to
no avail. When questioned at trial about the determination in
the notice of deficiency that he had income for 1996, petitioner
was evasive and offered no specific challenge to it. The
challenge petitioner offered at trial to the underlying
liabilities for 1990-93 was that he had no tax liability for
those years because the income he received was not taxable
because it was received in exchange for labor. In these
circumstances, we do not believe it is either necessary or
productive to remand the case to Appeals for a further hearing on
any challenge to the underlying liability for 1996. See Lunsford
v. Commissioner, 117 T.C. at 189. Petitioner has had ample
opportunity to obtain de novo review in this proceeding of any
legitimate challenge to the underlying liability for 1996.
Appeals Employees' Impartiality
In the absentee letter, petitioner also complained that a
second Appeals employee participated in the terminated conference
between petitioner and Settlement Officer Waters in December
2003. Petitioner argues that Settlement Officer Waters was
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