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19, 23 (1999). Acting without a sound basis in fact or law means
that an agency such as the IRS “makes an error of law * * * or
rests its determination on a clearly erroneous finding of fact
* * * [or] applies the correct law to facts which are not clearly
erroneous but rules in an irrational manner.” United States v.
Sherburne, 249 F.3d 1121, 1125-26 (9th Cir. 2001); see also
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 402-03 (1990).
Industrial serves up a gallimaufry of arguments that the
Commissioner abused his discretion, but we focus on four: (1)
the cover letter sent to Talbott was an impermissible ex parte
communication; (2) Industrial was denied a face-to-face hearing
in a location close to its place of business; (3) Talbott
unilaterally scheduled a date and time for the CDP hearing
without consulting Industrial; and (4) Talbott ignored evidence
of the agreement settling Industrial’s deficiency case while it
was on appeal. Industrial also requests an award of litigation
costs under section 7430.
1. Ex Parte Communication
Section 6330 sets out the process for administrative review
of decisions by the IRS to levy taxpayers’ property. One of the
protections that section gives taxpayers is a promise that the
hearing will be conducted by an IRS employee who is impartial.
Sec. 6330(b)(3). Congress reinforced this requirement by
directing the Commissioner to reorganize the IRS so that the
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