AO Martin, based on her review of the facts and applicable law, including case law, concluded that there was equitable tolling of the lookback period during the pendency of petitioners' respective and consolidated cases under chapter 11 of the Bankruptcy Code. Consequently, she reasoned, petitioners' 1991, 1992, and 1993 tax liabilities were not discharged under chapter 7 because they fell within the 3-year lookback period.

Furthermore, in suggesting an installment agreement, AO Martin required that if accepted it had to cover petitioners' tax liabilities for all unpaid years, including the challenged 1991, 1992, and 1993 liabilities. As previously noted, petitioners no longer challenge their 1991-93 liabilities.

As of January 22, 2002 , the date of the Notice of Determination upon which this case is based, the United States Supreme Court had not as yet decided Young v. United States [2002-1 USTC ¶50,257], 535 U.S. 43 (2002), which had been argued on January 9, 2002 , but was not decided until March 4, 2002 . In this case, the Supreme Court affirmed the decision of the United States Court of Appeals for the First Circuit in Young v. United States, 233 F.3d 56 (1st Cir. 2000), in which the Court of Appeals held that the 3-year lookback period in bankruptcy cases is automatically tolled during the pendency of an earlier proceeding under the Bankruptcy Code. In Young, 233 F.3d at 60, the Court of Appeals pointed out that five other Courts of Appeals had adopted the rule that the lookback period is automatically tolled during a prior bankruptcy. By contrast, the Court of Appeals noted that three other Courts of Appeals had held that the lookback period is not automatically tolled by a prior bankruptcy proceeding but that equitable considerations could permit tolling on a case-by-case basis. Id.

We believe that at the time petitioners rejected AO Martin's suggested installment agreement, and at the time the Notice of Determination was issued, there was sufficient reason to raise a doubt as to petitioners' tax liabilities for 1991, 1992, and 1993, so as to justify petitioners' rejection of an installment agreement based in part upon a concession of the 1991-93 liabilities.

The Supreme Court granted certiorari in Young v. United States, 533 U.S. 976 (2001), on September 25, 2001 , which predated by more than 3 months respondent's Notice of Determination. If AO Martin's research had revealed the grant of certiorari, prudence might have prompted postponing further action pending the likelihood that the Supreme Court would eventually resolve the equitable tolling issue, and lay to rest the "doubt as to liability" question for purposes of petitioners' Offer in Compromise. Since the Supreme Court resolved the tolling issue only after the above-described crucial events had transpired, we believe that petitioners are entitled to reconsider their rejection of the proposed installment agreement, and if they desire to do so, offer a collection alternative.

While we are reluctant to label respondent's issuance of the Notice of Determination an abuse of discretion based upon a somewhat technical reason for doing so, we hold that it is appropriate to remand this matter to the Commissioner for the sole purpose of permitting petitioners, if they wish to do so, to accept AO Martin's suggested installment agreement, as described above, or to offer another collection alternative pursuant to section 6330(c)(2)(A)(iii). Again we repeat that petitioners may not further challenge AO Martin's status as an impartial officer, or raise any new or additional issues.

To reflect the foregoing,

An appropriate Order will be issued.

¹ In Young v. United States [2002-1 USTC ¶50,257], 535 U.S. 43 (2002), the Supreme Court resolved the question whether tax liabilities in a posture similar to those of petitioners for tax years 1991-93 could be discharged in a bankruptcy proceeding. The Supreme Court held that the 3-year lookback period contained in 11 U.S.C. sec. 507(a)(8)(A)(i) (2000) of the Bankruptcy Code is subject to equitable tolling during the pendency of a prior bankruptcy petition. Following the holding of that case, petitioners no longer argue that their income tax liabilities for tax years 1991-93 were discharged as a result of their bankruptcy proceeding.

² As stated above, AO Petrohovich conducted two separate reviews of petitioners' tax liabilities. She conducted a sec. 6330 hearing with respect to certain of petitioners' tax years not here at issue. She also conducted a review of the initial denial of the Offer in Compromise. Her review of the Offer in Compromise was not conducted pursuant to sec. 6330.

[Dec. 55,344(M)] Edward H. and Anne G. Harrell v. Commissioner.

Docket No. 4063-02L, T.C. Memo. 2003-312^* , 86 TCM 585, Filed November 12, 2003 . [Appealable, barring stipulation to the contrary, to CA-4]


[Code Sec. 6330; Tax Court Rule 161]

[Collection Due Process: Hearing: Impartial IRS appeals officer: Tax Court rules: Motion for reconsideration: Motion denied.]

R filed a motion for reconsideration of our opinion in Harrell v. Commissioner [Dec. 55,298(M)], T.C. Memo. 2003-271, arguing that our disposition of this case constitutes both substantial error and unusual circumstances. R claims that the language in our opinion was ambiguous as to whether respondent's decision to issue the notice of determination was an abuse of discretion.

Held: We reaffirm our holding in Harrell v. Commissioner, supra, that R's decision to issue the notice of determination was an abuse of discretion. R's motion for reconsideration is denied.

Guy C. Crowgey, for the petitioners. Mary Ann Waters, for the respondent.

SUPPLEMENTAL MEMORANDUM OPINION

NIMS, Judge: Respondent moves the Court for reconsideration of its Memorandum Opinion at T.C. Memo. 2003-271. See Rule 161. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.

In Harrell v. Commissioner [Dec. 55,298(M)], T.C. Memo. 2003-271, we held that Appeals Officer Martin (AO Martin) was an impartial officer at the time she conducted the section 6330 hearing at issue in this case. We further held that AO Martin did not abuse her discretion in determining that the communications between Appeals Officer Barbara Petrohovich and Deborah Stanley, an attorney in respondent's counsel's office, did not violate petitioners' rights. We also remanded this case to the Commissioner for the sole purpose of permitting petitioners to reconsider their rejection of AO Martin's suggested installment agreement, which was based in part on petitioners' required concession of their 1991, 1992, and 1993 tax liabilities, or to offer another collection alternative pursuant to section 6330(c)(2)(A)(iii). Id.

In his motion to reconsider our decision in Harrell, respondent argues that the "Court's disposition of this case constitutes both substantial error and unusual circumstances."

Background

We adopt the findings of fact in our prior memorandum opinion, Harrell v. Commissioner, supra. For convenience we repeat the facts necessary to elucidate the ensuing discussion.

Respondent issued to petitioners a "NOTICE OF DETERMINATION CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330" dated January 22, 2002 (Notice of Determination). The Notice of Determination dealt with petitioners' income tax liabilities for tax years 1991, 1992, 1993, and 1999.

Petitioner Edward H. Harrell filed for chapter 11 bankruptcy on October 24, 1995 . Petitioner Anne G. Harrell filed for chapter 11 bankruptcy on December 18, 1996 . Petitioners' chapter 11 bankruptcy cases were consolidated on February 27, 1997 . Their consolidated chapter 11 bankruptcy case was dismissed on June 30, 1997 .

On the same day as the dismissal of their chapter 11 bankruptcy case, petitioners filed a petition for chapter 7 bankruptcy relief. Petitioners were granted a discharge in their chapter 7 bankruptcy case on June 11, 1998 .

On August 29, 1998 , notices of Federal tax lien were filed for petitioners' income tax liabilities for tax years 1991, 1992, and 1993.

On December 25, 2000 , the IRS issued to petitioners a "Final Notice - Notice of Intent to Levy" (Notice of Intent to Levy) with regard to income tax liabilities for tax years 1991, 1992, 1993, and 1999.

On January 23, 2001 , petitioners requested a hearing pursuant to section 6330 with respect to the Notice of Intent to Levy.

On April 13, 2001 , petitioners' case with respect to the Notice of Intent to Levy was assigned to AO Martin.

Before the issuance of the Notice of Intent to Levy, petitioners had submitted an offer in compromise for their 1991-93 tax years based on "doubt as to liability", taking the position that their liability for these years was discharged under chapter 7 of the Bankruptcy Code. They theorized that the returns for those years were filed outside the 3-year lookback period contained in the Bankruptcy Code. See 11 U.S.C. sec. 507(a)(8)(A)(i) (2000). At the section 6330 hearing, petitioners contended that collection by levy was not appropriate because their 1991-93 liabilities were discharged in their chapter 7 bankruptcy proceeding.

On January 22, 2002 , respondent issued the Notice of Determination, which dealt with petitioners' income tax liabilities for tax years 1991, 1992, 1993, and 1999. The Notice of Determination found that collection action by levy was proper and appropriate. Attached to the Notice of Determination is a memorandum that states, in part: "The tax liabilities will not be abated as the collection statute was tolled during the period of the prior bankruptcy."

Discussion

Reconsideration under Rule 161 permits us to correct manifest errors of fact or law, or to allow newly discovered evidence to be introduced that could not have been introduced before the filing of an opinion even if the moving party had exercised due diligence. See Estate of Quick v. Commissioner [Dec. 52,756], 110 T.C. 440, 441 (1998); see also Traum v. Commissioner [56-2 USTC ¶9965], 237 F.2d 277, 281 (7th Cir. 1956), affg. [Dec. 21,017(M)] T.C. Memo. 1955-127. The granting of a motion for reconsideration rests within the discretion of the Court, and we do not grant a motion for reconsideration unless the party seeking reconsideration shows unusual circumstances or substantial error. See Alexander v. Commissioner [Dec. 46,946], 95 T.C. 467, 469 (1990), affd. without published opinion sub nom. Stell v. Commissioner, 999 F.2d 544 (9th Cir. 1993); Estate of Halas v. Commissioner [Dec. 46,522], 94 T.C. 570, 573 (1990); Vaughn v. Commissioner [Dec. 43,183], 87 T.C. 164, 166-167 (1986); Estate of Bailly v. Commissioner [Dec. 40,659 ], 81 T.C. 949, 951 (1983). Reconsideration is not the appropriate forum for rehashing previously rejected legal arguments or tendering new legal theories to reach the end result desired by the moving party. See Estate of Quick v. Commissioner, supra at 441-442; Stoody v. Commissioner [Dec. 34,204], 67 T.C. 643, 644 (1977).

Respondent's main contention in support of his motion for reconsideration is that this Court was ambiguous in Harrell v. Commissioner [Dec. 55,298(M)], T.C. Memo. 2003-271, as to whether the issuance of the Notice of Determination, without awaiting the Supreme Court's opinion in Young v. United States [2002-1 USTC ¶50,257], 535 U.S. 43 (2002), was an abuse of discretion. For the sake of clarity, we deem it necessary to discuss our rationale in greater detail than we did previously.

As of January 22, 2002 , the date of the Notice of Determination upon which this case is based, the Supreme Court had not as yet decided Young, which had been argued on January 9, 2002 , but was not decided until March 4, 2002 . In this case, the Supreme Court held that the 3-year lookback period in bankruptcy cases is automatically tolled during the pendency of an earlier proceeding under the Bankruptcy Code.

In Harrell v. Commissioner, supra, we stated that we were "reluctant to label respondent's issuance of the Notice of Determination an abuse of discretion based upon a somewhat technical reason for doing so". Despite this reluctance, we nevertheless found that under the circumstances of this case, it was an abuse of discretion to issue the Notice of Determination.

We acknowledge that the circumstances surrounding this case are highly unusual. In large part because of the uncertainty as to how the Supreme Court would resolve the equitable tolling issue, petitioners were unwilling to accept a collection alternative that required them to agree with respondent that their 1991-93 tax liabilities were not discharged. As we stated in Harrell v. Commissioner, supra,

at the time petitioners rejected AO Martin's suggested installment agreement, and at the time the Notice of Determination was issued, there was sufficient reason to raise a doubt as to petitioners' tax liabilities for 1991, 1992, and 1993, so as to justify petitioners' rejection of an installment agreement based in part upon a concession of the 1991-93 liabilities.

By issuing the Notice of Determination at that time, respondent effectively denied petitioners the opportunity to present or consider collection alternatives that they might have presented or accepted had they known the outcome of Young v. United States, supra, before the issuance of the Notice of Determination. If, under this alternative scenario, petitioners had presented a collection alternative during the section 6330 hearing that was then rejected by respondent, petitioners would have been able to petition this Court pursuant to section 6330(d)(1) for review of that determination. Consequently, this Court finds it appropriate to retain jurisdiction over this case.

We have considered each of the remaining arguments of respondent and to the extent they are not discussed herein, find them to be either not germane or unconvincing.

Accordingly, we will deny respondent's motion for reconsideration.

To reflect the foregoing,

An appropriate order denying respondent's motion for reconsideration will be issued.

[Dec. 55,534(M)] Stephen Mitchell Day v. Commissioner.

Docket No. 1867-03L . T.C. Memo. 2004-30. Filed February 5, 2004 . [Appealable, barring stipulation to the contrary, to CA-4]


[Code Sec. 6330]

Collection Due Process: Hearing procedures: Impartial Appeals officer: Abuse of discretion. --

An IRS Appeals officer who denied an individual's request for a further postponement of his Collection Due Process (CDP) hearing did not abuse her discretion in determining that the IRS was entitled to proceed with collection. The record established that the Appeals officer was impartial because she had no involvement in any previous CDP hearing concerning the tax liabilities at issue in the present case. Moreover, because the taxpayer had been granted two prior postponements and had failed to submit an offer in compromise to the Appeals officer, he was deemed to have been afforded a proper opportunity for a hearing.

Stephen Mitchell Day, pro se. William J. Gregg, for the respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This case was commenced in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330¹ (notice of determination). The issue for decision is whether respondent abused his discretion in determining that the proposed levy action should proceed against petitioner's unpaid

Federal income taxes and related liabilities for 1995 and 1996.²

Background

Some of the facts have been stipulated, and they are so found. Petitioner resided in Castleton , Virginia , at the time the petition was filed.

Petitioner filed Federal income tax returns for taxable years 1995 and 1996. On November 18, 1996 , respondent made assessments against petitioner for an income tax deficiency and related penalties and interest for the 1995 taxable year. On January 5, 1998 , respondent made assessments for the 1996 taxable year. Respondent then issued petitioner a notice of intent to levy dated May 21, 2001 .

Petitioner filed a Form 12153, Request for a Collection Due Process Hearing, which was received by respondent on June 21, 2001 . Petitioner does not dispute the underlying tax liabilities for 1995 and 1996. Rather, in his request for a hearing under section 6330, petitioner noted that the proposed levy "will result in taxpayer's income being cut by 50%."

In a letter dated January 24, 2002 , Settlement Officer Craca informed petitioner that his hearing under section 6330 was scheduled for February 28, 2002 , at the Appeals Office in Washington , D.C. In response to petitioner's request for collection alternatives, Settlement Officer Craca asked petitioner to submit income tax returns for taxable years 1997 through 2000 and "A completed Offer in Compromise package for consideration."

At petitioner's request, the hearing originally scheduled for February 28, 2002 , was continued so as to provide petitioner an opportunity to prepare and file the requested documents. In March 2002, petitioner filed the requested income tax returns, but he did not file an offer in compromise.

In a letter dated June 12, 2002 , respondent informed petitioner that his case was being transferred to the Appeals Office in Houston , Texas (Houston Appeals Office), and that a new Appeals officer would be assigned his case. The Houston Appeals Office, in a letter dated July 17, 2002 , requested that petitioner file an income tax return for the 2001 taxable year and a form concomitant to an offer in compromise. A hearing under section 6330 was scheduled for August 14, 2002 , with said hearing to be conducted via telephone.

Petitioner did not submit to the Houston Appeals Office either an offer in compromise or the requested tax return for 2001. He instead objected to having his case transferred, because he wanted a face to face hearing under section 6330.

In a letter dated October 28, 2002 , Settlement Officer Craca informed petitioner that his case had been transferred back to the Appeals Office in Washington , D.C. , for resolution. She informed him that a hearing under section 6330 was scheduled for November 21, 2002 , and again requested that petitioner submit both "A completed Offer in Compromise package (Forms 656, 433A and 433B)" and a 2001 tax return.

Petitioner, through a representative, requested in a letter dated November 18, 2002 , a continuance of the hearing scheduled for November 21, 2002 . Petitioner indicated that his tax return preparer was "in California on vacation until after the Thanksgiving holidays," and that said preparer had all the documentation necessary for petitioner to complete forms concomitant to an offer in compromise and the requested tax return.

In a letter dated November 19, 2002 , respondent denied petitioner's request to postpone the hearing. Petitioner renewed his request on November 20, 2002 , citing delay by the Government, the unavailability of petitioner's tax return preparer, and a variety of personal reasons. Respondent again denied the request.

Respondent issued petitioner a notice of determination dated December 30, 2002 .

Petitioner timely filed with this Court a Petition for Lien or Levy Action Under Code Section 6330(d). The only relevant issue raised is whether petitioner was denied an opportunity for a fair and meaningful hearing under section 6330.³ Petitioner contends that Settlement Officer Craca was not impartial, based upon her letter dated November 19, 2002 , denying postponement of the hearing. Petitioner further contends that Settlement Officer Craca should have postponed the hearing scheduled for November 21, 2002 , to allow the attendance of petitioner's tax return preparer and to account for matters in his personal life.⁴

Discussion

This Court has jurisdiction to review the Commissioner's administrative determination under section 6330. Sec. 6330(d). Where, as here, the validity of the underlying tax liability is not at issue, we review such determination for abuse of discretion. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 183 (2000).

Under section 6330, a taxpayer is entitled to notice and an opportunity for a hearing before certain lien and levy actions are taken by the Commissioner in the process of collecting unpaid Federal taxes. Section 6330 provides that, upon request and in the circumstances described therein, a taxpayer has a right to a "fair hearing". Sec. 6330(b). A "fair hearing" consists of the following four elements: (1) An impartial officer will conduct the hearing; (2) certain issues may be heard such as an offer-in-compromise; (3) the conducting officer will receive verification from the Secretary that the requirements of applicable law and administrative procedure have been met; and (4) a challenge to the underlying tax liability may be raised only if the taxpayer did not receive a statutory notice of deficiency or receive an opportunity to dispute such liability. Sec. 6330(b) and (c); see Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 183-184 (2001); Vossbrinck v. Commissioner [Dec. 54,713(M)], T.C. Memo. 2002-96.

In the present case, the last two elements are not in dispute. With respect to the first element, section 6330(b)(3) provides in relevant part: "The hearing * * * shall be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax * * * before the first hearing under [section 6330]". Construing the language of section 6330(b)(3) and the regulation thereunder, we have held that an Appeals officer is impartial if he or she "did not participate in, and was not involved in, any previous Appeals Office hearing" concerning the taxpayer's tax and tax periods that are the subject of the current section 6330 proceeding. Harrell v. Commissioner [Dec. 55,298(M)], T.C. Memo. 2003-271; sec. 301.6330-1(d)(2), Q&A-D4, Proced. & Admin. Regs. Based upon the record in the present case, we conclude that Settlement Officer Craca was impartial.

With respect to the second element, that certain issues be heard, in Neugebauer v. Commissioner [Dec. 55,323(M)], T.C. Memo. 2003-292, the taxpayer requested that he be allowed to satisfy his outstanding liability through an offer-in-compromise. However, he failed to submit a properly completed Form 656, Offer in Compromise, and the required financial information for the consideration of his request. Accordingly, in Neugebauer v. Commissioner, supra, we granted the Commissioner's motion for summary judgment and sustained the Commissioner's determination regarding the proposed levy as a permissible exercise of discretion.

In Vossbrinck v. Commissioner, supra, the taxpayer alleged that he was denied a "fair hearing" under section 6330 because the Commissioner declined to postpone the hearing for a second time to allow taxpayer to seek a private letter ruling. We found the taxpayer's allegation to be without merit because the Commissioner had postponed the hearing once before at taxpayer's request, and the taxpayer did not submit a request for such a ruling until 8 days before trial and not before issuance of the notice of determination in that case. Accordingly, we held that the taxpayer in Vossbrinck was given a full and fair opportunity to seek an alternative resolution of his tax liabilities.

The hearing under section 6330 need not be conducted face to face. See Lunsford v. Commissioner, supra at 183; Armstrong v. Commissioner [Dec. 54,865(M)], T.C. Memo. 2002-224. But where a taxpayer is not afforded a proper opportunity for an Appeals hearing, the Court can remand the case to the Appeals Office to hold a hearing if we "believe that it is either necessary or productive". Lunsford v. Commissioner, supra at 189; Moore v. Commissioner [Dec. 55,002(M)], T.C. Memo. 2003-1; Bartschi v. Commissioner [Dec. 54,916(M)], T.C. Memo. 2002-268.

The facts in the present case are similar to those in Neugebauer and Vossbrinck. Petitioner's hearing under section 6330 was twice postponed at petitioner's request. Respondent initially invited petitioner to submit an offer in compromise as early as January 24, 2002 , but respondent's invitations went unheeded. Respondent initially requested as early as July 17, 2002 , that petitioner file a Federal income tax return for 2001, but respondent's request also went unheeded. Indeed, petitioner has had almost a full year to submit his offer in compromise before the notice of determination was issued on December 30, 2002 . There is no evidence that petitioner was prepared to file an offer in compromise, even at the time of trial. Based upon the record, we conclude that petitioner was afforded a proper opportunity for a hearing under section 6330 and that respondent did not abuse his discretion with respect to any of the matters in issue.

For the reasons discussed above, respondent's determination to proceed by levy with the collection of petitioner's outstanding liabilities for 1995 and 1996 should be sustained, and we so hold. We have considered all of petitioner's arguments and contentions that are not discussed herein relating to whether respondent may proceed with collection with respect to petitioner's outstanding liabilities for 1995 and 1996, and we find those arguments and contentions to be without merit and/or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue.

² According to respondent, petitioner's outstanding tax liabilities for 1995 and 1996 were $3,373.62 and $4,442.63, respectively, as of June 12, 2003.

³ As we indicated earlier, petitioner does not challenge the existence or amount of the underlying tax liabilities for 1995 and 1996. Moreover, petitioner concedes that respondent satisfied the verification requirement under sec. 6330(c)(1).

⁴ Petitioner also complains of delays by respondent. While this may be an issue of concern in other cases, any delay by respondent in the present case actually afforded petitioner ample opportunity to effect his expressed desire to submit a collection alternative. Petitioner cannot, on the one hand, complain about not having enough time to prepare and file an offer in compromise, and, on the other hand, complain about delays by respondent that had no effect on petitioner's ability to prepare and file such offer.

[Dec. 55,362(M)] Jerry D. Criner v. Commissioner.

Docket No. 7126-02L , T.C. Memo. 2003-328, 86 TCM 655, Filed November 25, 2003 . [Appealable, barring stipulation to the contrary, to CA-10]

[Code Secs. 6321 and 6330]

Collection due process: Hearing: Impartial IRS appeals officer: Tax lien: Property subject to tax lien: Real property.

The Tax Court rejected an individual's challenge to an adverse Collection Due Process (CDP) determination, and upheld the IRS's nominee notice of federal tax lien (NNFTL) filed against the taxpayer in connection with property he alleged was owned by his mother's estate. The record confirmed that the hearing officer had no prior involvement with the taxpayer's case and, as a result, he was deemed an impartial officer. Moreover, the NNFTL filed against the taxpayer was deemed valid. The taxpayer admitted during the CDP hearing that he inherited an interest in the property at issue upon his mother's death. As such, the IRS did not have to review state ( Oklahoma ) law to determine whether the taxpayer owned the requisite property interest. Additionally, federal lien procedures were appropriately followed, despite the absence of an advisory review. Finally, the court rejected the taxpayer's argument that the hearing officer erred in failing to consider reasonable collection alternatives.

Jerry D. Criner, pro se. Bruce K. Meneely, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

MARVEL, Judge: On March 28, 2002 , respondent mailed to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320¹ and/or 6330 (notice of determination) for unpaid Federal income tax liabilities of petitioner for 1990 through 1993. In response to that notice and pursuant to sections 6320 and 6330(d), petitioner timely petitioned this Court to review the determination to proceed with collection by filing a nominee Notice of Federal Tax Lien (NFTL).

The issue for decision is whether the Appeals Office abused its discretion in upholding respondent's filing of a nominee NFTL in this case.

FINDINGS OF FACT

Background

Petitioner resided in Claremore , Oklahoma , when he filed his petition in this case.

From 1975 to 1996, approximately, excluding the periods of time that he was incarcerated, petitioner derived at least some portion of his income from cheating at gambling. By his own estimate, since 1975, petitioner has earned substantial income by cheating at gambling.

At various times during the 1980s through the mid-1990s, petitioner was prosecuted in Nevada , New Jersey , and Oklahoma for money laundering, structuring monetary transactions, felony theft by deception, possession of slot machine cheating devices, fraud, and burglary, and he served time in prison. In connection with the Nevada prosecution, petitioner was arrested in Tulsa , Oklahoma , on May 13, 1987 . Petitioner had at least $30,000 in cash in his possession at the time of his May 13, 1987 , arrest.

Sometime during 1984 or 1985, petitioner established the Wesley Brown Society, allegedly an Oklahoma corporation. Petitioner was the president and sole owner of the Wesley Brown Society. Petitioner bought and sold real estate through the Wesley Brown Society, purchasing at least four properties and recording the title to those properties in the name of the Wesley Brown Society. Petitioner also purchased a car, registering it in the name of the Wesley Brown Society as lessee. The Wesley Brown Society did not file Federal or State tax returns.

Petitioner does not have a checking account and does not maintain any tax or financial records. Petitioner pays his living expenses with money orders or out of accounts titled in the names of family members.

The Claremore Property

The property where petitioner and his family reside is located at 20154 Carefree Valley Drive, Claremore, Oklahoma 74017-9101² (the Claremore property). The Claremore property consists of a large, two-story house on 8.5 acres, located about 15 minutes by car outside the city of Claremore , Oklahoma . The Claremore property was purchased on April 3, 1987 , from James T. and Virginia L. Arnold for $135,000 and was titled in the name of Alice Criner, petitioner's mother. No mortgage was recorded against the property in connection with the 1987 purchase. The record in this case contains no evidence of the source of the funds used to purchase the Claremore property in 1987.³

When the Claremore property was purchased in 1987, Alice Criner was in her mid-sixties. She had worked for St. John's Hospital for approximately 30 years. When Alice Criner retired sometime in the early 1980s, she was a cafeteria supervisor. In 1987, Alice Criner's income consisted of retirement benefits from St. John's Hospital and possibly Social Security benefits.

Alice Criner lived in the Claremore property for an unknown length of time between April 1987 and 1989. She never owned a car and did not know how to drive. For the last few years of her life, Alice Criner suffered from advanced-stage Parkinson's disease. Sometime between April 1987 and her death in 1989, Alice Criner became too ill to live at the Claremore property and was moved into a care facility in Broken Arrow , Oklahoma . Alice Criner died intestate on August 21, 1989 . Each of Alice Criner's six children received approximately $1,400 in death benefits from a life insurance policy as a result of her death.

Petitioner lived at the Claremore property "many times" before taking up permanent residence there in 1995. For example, petitioner, his wife, and their two children resided at the Claremore property from January 1988 through April 23, 1990 , and again from April 1, 1992 , through June 13, 1993 . Petitioner has taken care of the Claremore property since at least 1989 and has improved the property from time to time. For example, he constructed a pond and installed a spa on the Claremore property.

Petitioner also has maintained, and continues to maintain, utility accounts with respect to the Claremore property. For example, in order for a property owner in Rogers County, Oklahoma, to obtain water rights, he or she was required to submit proof of his or her property ownership to the Rural Water District No. 7 in Rogers County, Oklahoma. On May 1, 1987 , Rural Water District No. 7 in Rogers County, Oklahoma, issued a benefit unit certificate for water rights to petitioner for the Claremore property. On May 1, 1987 , petitioner became the tap owner with respect to the Claremore property. Petitioner also has an account with Verdigris Valley Electric Cooperative with respect to the Claremore property.⁴

On April 27, 1993 , petitioner purchased a cashier's check in the amount of $6,292.91, payable to the Rogers County Treasurer for ad valorem property taxes on the Claremore property for 1989, 1990, 1991, and 1992. Petitioner also paid the 1993 ad valorem property taxes on the Claremore property with a check drawn on the account of "Cass Criner, a minor, Jerry Criner, custodian, UTMA". On November 29, 2000 , petitioner's 18-year-old son, Candon Criner, purchased a cashier's check in the amount of $1,233.86, payable to the Rogers County Treasurer. At that time, Candon Criner probably was not living at the Claremore property and would not have had the money to buy the cashier's check without petitioner or one of petitioner's brothers or sisters giving him the funds.

Petitioner's Tax Liabilities

Petitioner did not file Forms 1040, U.S. Individual Income Tax Return, for 1990 through 1993. Petitioner signed a Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, on July 31, 1996 , consenting to the assessment of deficiencies in income tax and additions to tax under section 6651(a)(1) for 1990 through 1993. Respondent assessed the deficiencies in income tax and the additions to tax under section 6651(a)(1) for 1990 through 1993 on September 9, 1996 .

On December 4, 2001 , petitioner's collection matter was assigned to Revenue Officer Dale Baustert. Mr. Baustert's review of the file revealed that collection actions had been initiated against condominiums allegedly owned by petitioner in New Jersey and were still pending and that a request for a nominee NFTL with respect to the Claremore property had not been completed.

On December 11, 2001 , Mr. Baustert submitted a memorandum requesting authorization to file a nominee NFTL against the Claremore property to the Office of District Counsel in Oklahoma City , Oklahoma (Counsel). The memorandum request was sent through Dale Spannagel, group manager. In the memorandum, Mr. Baustert outlined the facts that formed the basis for his belief that petitioner was the equitable owner of the Claremore property: (1) No mortgage was recorded when the Claremore property was ostensibly purchased by Alice Criner, indicating a cash purchase; (2) petitioner had a long history of placing real and personal property in nominee names of his family members and the Wesley Brown Society; (3) on April 26, 1990 , petitioner's ex-wife recorded a quitclaim deed divesting herself of any interest that she had in the Claremore property; (4) Rogers County Treasurer's records indicate that petitioner, his wife, and their children have paid the ad valorem property taxes on the Claremore property; and (5) petitioner claimed to have "an arrangement" with his siblings to watch after the home, but he did not produce any affidavits from them when asked to do so by the revenue officer. The memorandum also noted that the Claremore property was listed for sale with Peck Realty for an asking price of $179,000.

On January 15, 2002 , Counsel issued an advisory opinion to Revenue Officer Baustert approving his request to file a nominee NFTL against the Claremore property. The January 15, 2002 , opinion listed the following facts in support of its conclusion authorizing the filing of a nominee NFTL: (1) The Claremore property was purchased free and clear at a time when petitioner had considerable amounts of cash that he had earned illegally; (2) title to the Claremore property is in the name of a close relative, i.e., petitioner's mother; (3) petitioner had admitted to a revenue officer that he owns a partial interest in the Claremore property; (4) petitioner had paid the property taxes on the residence and had lived in the residence for many years; (5) petitioner has a history of placing property that he owns in the names of other persons or entities; (6) petitioner failed to produce affidavits from his brothers and sisters confirming under oath that they have an ownership interest in the Claremore property; (7) petitioner's ex-wife filed a quitclaim deed releasing any ownership interest that she held in the property in April 1990; and (8) Counsel had already authorized on similar facts the filing of a nominee NFTL against certain New Jersey condominiums titled in the name of petitioner's wife.

On January 17, 2002 , Mr. Baustert filed a nominee NFTL against the Claremore property with the County Clerk , Rogers County , Claremore , Oklahoma . On January 31, 2002 , Mr. Baustert filed a corrected NFTL against the Claremore property with the County Clerk , Rogers County , Claremore , Oklahoma . Both the original and the corrected NFTL identified the "Claremore property" and listed the taxpayer as "Alice Criner as the Nominee of Jerry D. Criner".

On January 17, 2002 , respondent mailed to petitioner a "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320" covering 1990 through 1993. On January 30, 2002 , petitioner timely submitted Form 12153, Request for a Collection Due Process Hearing, requesting a hearing under section 6320 (the hearing). In his request for a hearing, petitioner stated that he disagreed with the nominee NFTL because the Claremore property belonged to his deceased mother.

In a letter to petitioner dated February 20, 2002 , Settlement Officer Scott Penny (Mr. Penny or hearing officer) acknowledged receipt of petitioner's hearing request and asked petitioner to provide documentation to substantiate his claim that the Claremore property listed in the nominee NFTL belonged to his deceased mother. Mr. Penny specifically requested documentation showing Alice Criner's ability to purchase the property for $135,000 in April 1987, probate records showing distribution of Alice Criner's estate, and any other documentation to support petitioner's claim. In the February 20, 2002 , letter, Mr. Penny noted that, based on his review of petitioner's file, it appeared that all legal and administrative procedures were met by respondent in filing the NFTL against Alice Criner as nominee of petitioner.

On February 25, 2002 , petitioner sent a letter to Mr. Penny expressing concern that Mr. Penny had already come to a conclusion regarding the validity of the nominee NFTL without "seeing, hearing or reviewing" petitioner's proof that he did not own the Claremore property. Petitioner also expressed doubt that a person employed by the Internal Revenue Service (IRS) or any other branch of the Federal Government could review the evidence and reach a fair and impartial ruling. Petitioner also advised Mr. Penny that he wanted to record the hearing, and he inquired as to whether petitioner and his sister and up to 30 witnesses would be reimbursed for the expense of attending the hearing. Petitioner enclosed with the letter Form 2848, Power of Attorney and Declaration of Representative, designating his sister, Jeannie McLelland, as his representative.

On March 7, 2002 , Mr. Penny sent a letter to petitioner informing him that the hearing had been scheduled for March 22, 2002 , and that, in accordance with petitioner's request, the hearing would be recorded but at no cost to the Government. The letter also stated that, because the hearing was petitioner's hearing, witnesses would not be allowed to speak during the hearing.⁵

On March 22, 2002 , petitioner and his sister, Jeannie McLelland, attended the hearing. Among other things, petitioner and Ms. McLelland placed on the record of the hearing a statement that they had intended to call approximately 12 witnesses but that they were told by Mr. Penny before the hearing that their witnesses could not appear and testify. Mr. Penny acknowledged their statement and did not deny its accuracy, but he also reminded petitioner of his request for testimony in the form of affidavits under oath. During the hearing, Mr. Penny also explained that he had reviewed the information in petitioner's case file and had verified that all applicable laws and administrative procedures governing the filing of a nominee NFTL had been met.

During the hearing, petitioner argued that his deceased mother owned the Claremore property and that, therefore, the nominee NFTL was unlawful. Petitioner and Jeannie McLelland explained that their mother had died without a will, that she had left the property to her six children, that her estate had not gone through probate, and that the property would remain in her name forever. Petitioner conceded, however, that he owned a one-sixth interest in the Claremore property by virtue of his mother's death. At the hearing, Mr. Penny again asked for documentation showing the ability of petitioner's mother to purchase the Claremore property in 1987 without the encumbrance of a mortgage, but petitioner did not produce the requested documentation at the hearing or at any time after the hearing. Petitioner also argued at the hearing that the assessments against him for 1990 through 1993 were invalid because he had rescinded his signature on the Form 870. Petitioner did not raise any spousal defenses or propose any specific collection alternatives during the hearing.⁶

On March 28, 2002 , respondent's Appeals Office issued a notice of determination in which it determined the following:

1. All legal and administrative procedures for filing a nominee NFTL were met.

2. The Appeals officer had had no prior involvement with respect to petitioner's 1990 through 1993 income tax liabilities.

3. Petitioner did not raise any spousal defenses during the hearing, and, consequently, none were considered.

4. Petitioner had signed a Form 870 agreeing to the assessment of the 1990 through 1993 income tax deficiencies and waiving his right to judicial review, thereby precluding any challenge to the amount of the underlying liabilities.⁷

5. All legal and administrative requirements for the filing of a nominee NFTL, including the requirement to request and obtain Counsel's approval, had been satisfied. Counsel's approval of the NFTL was based on documentation sufficient to show that petitioner was the sole owner of the Claremore property. Moreover, petitioner had admitted during the hearing that he owned an interest in the Claremore property.

6. No collection alternatives were discussed because an agreement could not be reached regarding the extent of petitioner's ownership interest in the Claremore property.

7. The filing of the nominee NFTL balanced the need for efficient collection of taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary and was appropriate under the circumstances.

In response to the notice of determination, petitioner mailed a letter dated March 30, 2002 , to this Court that this Court treated as a timely, but imperfect, petition appealing respondent's determination for 1990 through 1993. By order dated April 5, 2002 , this Court directed petitioner to file a proper amended petition. On August 1, 2002 , petitioner filed an amended petition in which he alleged as follows:

(a) The Notice of Determination is invalid, as the Appeals Team Manager whose name appears on the Notice of Determination did not make a determination that lien action against Petitioner should be sustained for any of the years at issue.

(b) The Notice of Federal Tax Lien which forms the basis of this case is invalid, as the Revenue Officer whose name appears on the Notice of Federal Tax Lien was not authorized to file nominee Notices of Federal Tax Lien without the written approval of his direct supervisor issued pursuant to §3421 of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA `98).

(c) The Appeals Officer who conducted Petitioner's Collection Due Process (CDP) hearing had prior involvement in Petitioner's case, prior to the hearing taking place, with respect to the tax for the tax periods covered by the hearing, in violation of I.R.C. §6320(b)(3), Treasury Regulation §301.6320-1(d)(1), and Treasury Regulation §301.6320-1(e)(1).

(d) The Appeals Officer who conducted Petitioner's CDP hearing determined, before the said hearing was concluded, that lien action against Petitioner was appropriate, in violation of I.R.C. §6330(c)(3)(A), I.R.C. §6330(c)(3)(B), and I.R.C. §6330(c)(3)(C) (each by and through I.R.C. §6320(e)).

(e) Respondent erred by determining it was appropriate to cause the filing, against certain real property, of a nominee Notice of Federal Tax Lien with respect to Petitioner. Respondent's determination was arbitrary.

(f) Respondent erred by determining that all applicable laws and administrative procedures to support his nominee lien action against Petitioner had been met, although he neither considered the applicability of the laws of the State of Oklahoma, nor considered Petitioner's status under those laws, with respect to the real property that is the subject of his nominee Notice of Federal Tax Lien.

(g) Respondent erred by determining that Petitioner had not proposed reasonable collection alternatives to Respondent's lien action.

(h) Respondent erred by not considering, exploring, or eliciting from Petitioner, what collection actions less intrusive than lien action would balance the government's need to efficiently collect the tax liabilities at issue with Petitioner's legitimate concern that the collection action be made by the method least intrusive to him.

(i) With respect to the tax liability for the year 1993, Respondent abused his discretion by determining it was appropriate to cause the filing, against certain real property, of a nominee Notice of Federal Tax Lien with respect to Petitioner, when he had already caused the filing of a Notice of Federal Tax Lien against Petitioner for the year 1993.

(j) Respondent abused his discretion by asserting against Petitioner a nominee theory with respect to specific real property, the existence and ownership of which was known to Respondent at least four years prior to the filing of his nominee Notice of Federal Tax Lien, yet which specific real property was never deemed by him to be the property of Petitioner.

 The errors identified in paragraphs (a), (b), (i), and (j) were not raised by petitioner at the hearing and were not considered by the Appeals Office in its notice of determination.   

OPINION

All property and rights to property of a taxpayer become subject to a lien in favor of the United States on the date a tax liability is assessed against a taxpayer, if the taxpayer fails to pay the tax liability after notice and demand for payment. Secs. 6321 and 6322. Until an NFTL is filed, however, the lien is without validity and priority against certain persons such as judgment lien creditors of the taxpayer. Sec. 6323(a).

After the Commissioner files the NFTL, the Commissioner must provide the taxpayer with written notice of the filing, informing the taxpayer of his right to request an administrative hearing on the matter. Sec. 6320(a)(1), (3)(B). If the taxpayer makes a timely request for an administrative hearing, section 6320(c) requires that the hearing be conducted pursuant to section 6330(c), (d), and (e). Section 6330(c)(2) provides that a person may raise any relevant issue relating to the disputed collection action and may contest the existence or amount of the underlying tax liability if the person did not receive a notice of deficiency or did not otherwise have the opportunity to dispute the underlying tax liability. See also Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 180-181 (2000).

Following the hearing, the hearing officer is required to issue a notice of determination regarding the disputed collection action. In the determination, the hearing officer must confirm that he or she took into consideration the verification presented under section 6330(c)(1). Sec. 6330(c)(3)(A); sec. 301.6320-1(e), Proced. & Admin. Regs. In addition, the determination must take into consideration any issues appropriately raised by the taxpayer, offers by the taxpayer for collection alternatives, and whether the disputed collection action represents a balance between the Government's need for efficient collection of taxes and the taxpayer's concerns regarding the intrusiveness of the proposed collection action. Sec. 6330(c). If the taxpayer disagrees with the hearing officer's determination, the taxpayer has the right to seek judicial review of the determination by appealing to this Court or, if this Court lacks jurisdiction over the underlying tax liability, to a Federal District Court . Sec. 6330(d).

If the taxpayer files a timely petition for judicial review, the applicable standard of review depends upon whether the underlying tax liability is at issue. Where the underlying tax liability is not at issue, the Court will review the Appeals officer's determination for abuse of discretion. Sego v. Commissioner, supra at 610.

In his amended petition, petitioner enumerates a plethora of "errors" allegedly committed by the Appeals Office in making its determination upholding the nominee lien filed against the Claremore property. Several of the errors involve arguments that were not raised at the hearing or considered by the Appeals Office in its notice of determination. We shall divide petitioner's alleged errors into two categories --those that were raised at the hearing and addressed in the notice of determination and those that were not --and evaluate them accordingly. Because petitioner concedes that he is not contesting the underlying tax liabilities, we shall review the Appeals Office's determination for abuse of discretion. Id.

A. Errors Raised at the Hearing

The errors listed in the amended petition that were raised by petitioner, either explicitly and implicitly, at the hearing and/or addressed in the notice of determination are as follows:

1. Respondent erred in determining that the hearing officer had no prior involvement with respect to the unpaid tax at issue in this proceeding.

2. Respondent erred in determining that the requirements of applicable laws and administrative procedures relative to the issuance and filing of the nominee NFTL had been satisfied and that the nominee NFTL was valid.

3. Respondent erred by not considering reasonable collection alternatives to respondent's nominee NFTL and by concluding that the filing of the nominee NFTL balanced respondent's need for efficient collection of taxes with petitioner's concern that the collection action be no more intrusive than necessary.

We consider each of the listed arguments below.

A.1. Impartial Officer

Section 6320(b)(3) provides, in pertinent part, that any hearing with respect to a lien under section 6320 "shall be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax". Petitioner alleges two errors in respondent's determination regarding the impartiality of the hearing officer. The first is that the hearing officer "had prior involvement * * * with respect to the tax for the tax periods covered by the hearing", contrary to section 6320(b)(3), and the second is that the hearing officer had "determined, before the said hearing was concluded, that lien action against Petitioner was appropriate".

Section 6320 requires that any hearing conducted under that section must be conducted by an impartial officer. Section 6320(b)(3), however, defines an impartial officer as "an officer or employee who has had no prior involvement with respect to the unpaid tax specified in section (a)(3)(A) before the first hearing under this section or section 6330." The impartiality requirement ensures that a hearing officer has had no prior involvement in the determination and assessment of the underlying tax liability that is the subject of the hearing.

The record confirms that the hearing officer in this case did not have any prior involvement with respect to the underlying tax liability before the hearing. Consequently, respondent did not abuse his discretion in determining that the section 6320(b)(3) requirement was met.

We also reject petitioner's assignment of error alleging that the hearing officer had prejudged the issues raised by petitioner. Section 6320(b)(3) limits the definition of "impartial officer" as noted above, and that definition does not address, and arguably does not permit, a challenge to the objectivity of the hearing officer who presides over a hearing under sections 6320 and 6330. However, we shall assume without deciding, for purposes of this analysis, that sections 6320 and 6330 permit a challenge in appropriate cases to a demonstrably biased hearing officer. See secs. 6320(c), 6330(c)(2)(A) (A person may raise at the hearing any relevant issue relating to the proposed collection action including the enumerated issues).

We have reviewed the transcript of the hearing, and we can see no evidence of prejudgment or bias. The hearing officer made an effort to explain to petitioner that petitioner must demonstrate that the filing of the nominee NFTL was not valid. It appears that petitioner's allegation of bias was directed at the hearing officer's refusal to invalidate the nominee NFTL based on evidence that the Claremore property was titled in Alice Criner's name. Petitioner's allegation of bias is not supported by the record in this case.

A.2. Validity of the Nominee NFTL

Section 6321 provides:

6321. If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

The language of section 6321 "is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have." United States v. Natl. Bank of Commerce [85-2 USTC ¶9482], 472 U.S. 713, 719-720 (1985); see also Drye v. United States [99-2 USTC ¶51,006] [99-2 USTC ¶60,363], 528 U.S. 49, 56 (1999). Among the property interests reached by section 6321 is an equitable interest owned by or for the benefit of a taxpayer in property titled in the name of a nominee. G.M. Leasing Corp. v. United States [77-1 USTC ¶9140], 429 U.S. 338, 350-351 (1977); United States v. Miller Bros. Constr. Co. [74-2 USTC ¶9817], 505 F.2d 1031 (10th Cir. 1974). Section 6321 authorizes the Government, among other things, to file a nominee NFTL against property of a taxpayer in the hands of an alter ego or nominee. G.M. Leasing Corp. v. United States, supra at 351.

Petitioner makes a vigorous and sometimes confusing attack on the nominee NFTL utilized by respondent in this case. As we understand petitioner's arguments, they are as follows:

a. Petitioner's deceased mother owns the Claremore property;

b. petitioner does not own an equitable or legal interest in the Claremore property and did not own such an interest when the disputed NFTL was filed;

c. even if petitioner is deemed to own an interest in the Claremore property, it is only a partial interest and a nominee NFTL should only be used when a taxpayer who is not the owner of record actually owns all of the property in question;

d. respondent was required to consider, but did not consider, Oklahoma law in reaching his determination that the filing of a nominee NFTL was appropriate;

e. even if the filing of a nominee NFTL was arguably appropriate, respondent did not follow the necessary administrative procedures in order to file a proper nominee NFTL.

We group these arguments in three categories and address them below.

a. Petitioner's Interest in the Claremore Property

The validity of any lien under section 6321 depends in the first instance on whether the taxpayer owned property or held an interest in property to which the lien may attach. Sec. 6321. Section 6321 does not create property rights but merely attaches federally defined consequences to rights created under State law. United States v. Natl. Bank of Commerce, supra at 722. Consequently, in order to address petitioner's arguments, we must first examine whether the Appeals Office abused its discretion in determining that petitioner had an interest in the Claremore property.

While the priority of competing claims to property is determined under Federal law, whether a taxpayer owns an interest in, or exercises a right with respect to, property is determined under State law. Aquilino v. United States [60-2 USTC ¶9538], 363 U.S. 509 (1960). However, "The question whether a state-law right constitutes `property' or `rights to property' is a matter of federal law." United States v. Natl. Bank of Commerce, supra at 727; see also Drye v. United States, supra at 58.

Petitioner argues that he was not the beneficial owner of the Claremore property under Oklahoma law. He undercut his argument during the hearing and before this Court, however, by admitting that he owned an interest in the Claremore property by reason of his mother's death. Alice Criner died intestate in 1989 and was survived by six children. Okla. Stat. Ann. tit. 84, §213B.2.a (West Supp. 2003), provides that, if there is no surviving spouse, the decedent's estate is distributed in undivided equal shares to the surviving children of the decedent and the issue of any deceased child.⁸ Under Oklahoma State law, petitioner, as one of six surviving children of Alice Criner, inherited an interest in the Claremore property in 1989 when Alice Criner died. Consequently, we hold that the Appeals Office did not abuse its discretion in determining that petitioner owned an interest in the Claremore property.

b. Respondent's Decision To Use a Nominee NFTL

Petitioner contends that the filing of a nominee NFTL is inappropriate when a taxpayer owns only a partial interest in the property. We disagree. A nominee NFTL lien may be used whenever legal title to property is held by a third party but equitable ownership, in whole or in part, resides with the taxpayer. G.M. Leasing Corp. v. United States, supra. It enables the Commissioner to perfect a lien under section 6323 on property in which a taxpayer has an interest that is titled in the name of a third party. Id.; see also Drye v. United States [99-2 USTC ¶51,006] [99-2 USTC ¶60,363], 528 U.S. 49 (1999) (holding that a disclaimer by the sole heir of an intestate decedent did not prevent a Federal tax lien with regard to the heir's unpaid tax liabilities from attaching to his inheritance); Wilkinson v. United States, 770 F. Supp. 1085 (W.D.N.C. 1991); United States v. Drexler, 60 AFTR 2d 87-5091, 87-2 USTC par. 9493 (E.D. Okla. 1985).

We are aware, of course, that the Appeals Office determined that petitioner was the sole equitable owner of the Claremore property.⁹ Petitioner argues that Oklahoma State law does not contemplate ownership in nominee form¹⁰ and that the Appeals Office did not consider Oklahoma law in making its determination upholding the nominee lien. We reject petitioner's arguments for several reasons.

First, petitioner concedes that he owns an interest in the Claremore property, although he disputes that he is the sole owner as respondent contends. Because of petitioner's concession, the hearing officer did not have to review Oklahoma State law to decide whether petitioner owns the requisite property interest to which the Federal tax lien in this case attaches.

Second, a nominee NFTL is a collection device, and a determination by respondent to use a nominee NFTL is governed by Federal law, not by Oklahoma State law. See G.M. Leasing Corp. v. United States [77-1 USTC ¶9140], 429 U.S. at 350-351. Only the determination of whether a taxpayer owns an interest in, or holds rights to, property is governed by State law. Drye v. United States, supra at 478; Aquilino v. United States, supra.

Third, even if the hearing officer was required to consider Oklahoma State law, petitioner has failed to show that he was prejudiced by any failure on the part of the hearing officer to do so. Although the transcript of the hearing reflects that the hearing officer did not research Oklahoma State law, the hearing officer referred to the substance of intestacy laws of Oklahoma in his discussions regarding the interest in the Claremore property that petitioner admits he inherited by reason of his mother's death in 1989.

Fourth, Oklahoma State law recognizes the principle of equitable or beneficial ownership on which the nominee lien is based. In Carey v. Winslow, 122 P. 174 (Okla. 1912), the Oklahoma Supreme Court found that, although certain stock was titled in the name of a third party, the judgment debtor, who had previously held legal title, had never parted with the beneficial ownership of the stock. The court held that the stock remained subject to the judgment debtor's debts. See also Baxley v. Timms, 316 P.2d 871 (Okla. 1957), in which the Oklahoma Supreme Court acknowledged that it was possible for a person to hold bare legal title to real property while the beneficial interest in the property remained in another.

We hold, therefore, that the Appeals Office did not abuse its discretion in determining that a nominee NFTL was a valid and appropriate collection procedure in this case.

c. Nominee Lien Procedures

Petitioner argues that, even if the use of a nominee NFTL is an appropriate collection procedure, respondent did not follow required administrative procedures in obtaining approval to file the nominee NFTL. Specifically, petitioner contends that respondent skipped a required review step when Revenue Officer Baustert forwarded his memorandum requesting authorization to file the nominee NFTL directly to Counsel.

The Internal Revenue Manual (IRM) requires that, before a nominee NFTL is filed, the Collection Office must obtain written approval from Counsel. 2 Administration, Internal Revenue Manual (CCH), sec. 5.12.1.18.1(3), at 16,836. The request for approval must show that, while a third party may have legal title to the property, the taxpayer owns an interest in the property and enjoys its full use and benefit. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.17.2.4.8.2, at 17,865. Factors which the IRM lists as support for the filing of a nominee NFTL include the following: (1) The taxpayer previously owned the property,¹¹ (2) the nominee paid little or no consideration for the property, (3) the taxpayer retains possession or control of the property, (4) the taxpayer continues to use and enjoy the property conveyed just as the taxpayer had before such conveyance, (5) the taxpayer pays all or most of the expenses of the property, and (6) the conveyance was for tax avoidance purposes. Id.

In accordance with the procedures outlined in the IRM, Revenue Officer Baustert submitted a memorandum, dated December 11, 2001 , to Counsel, requesting that a nominee NFTL be authorized with respect to the Claremore property. The memorandum listed several factors in support of the request that are enumerated in the IRM. On January 15, 2002 , Counsel approved Revenue Officer Baustert's request after reviewing the evidence supporting his request as well as additional information Counsel had obtained regarding petitioner's collection file.

At trial, petitioner argued that the following section in an ICS transcript¹² relating to petitioner's case proved that Mr. Baustert did not follow established guidelines in making his request for approval to file the nominee Notice of Federal Tax Lien:

Reviewed copy of nominee lien approval received during ICS downtime - control opened to maintain some advisory record thereof. Unless something was missed during ICS downtime, RO submitted request directly to counsel rather than following usual procedures of routing it through advisory. As such, there was no advisory review, record, or control. It is unclear why it was not sent to counsel through advisory. Although it is acknowledged that advisory review is not required by the IRM, it has been established practice here in the absence of extraordinary circumstances.

The hearing officer testified at trial that he reviewed the ICS transcript in making his determination. He explained that, although the advisory group normally reviewed the requests to decide if any additional supporting documentation was required, collection officers sometimes worked directly with Counsel, bypassing the advisory review. According to Mr. Penny, the revenue officer was dealing with another nominee NFTL on property allegedly owned by petitioner in another location, so the revenue officer had already established a direct path to Counsel. We find Mr. Penny's testimony credible on the subject of advisory review, and we note that such review was not one of the required steps enumerated in the IRM. We hold, therefore, that the Appeals Office did not abuse its discretion in determining that the requirements of any applicable law or administrative procedure have been met with respect to the nominee NFTL at issue in this case.

A.3. Consideration of Collection Alternatives

Petitioner also contends that respondent erred by not considering reasonable collection alternatives to respondent's nominee NFTL and disputes that the filing of the nominee NFTL properly balanced respondent's need for efficient collection of taxes with petitioner's concern that the collection action be no more intrusive than necessary. Petitioner, however, did not submit a completed Form 433-A, Collection Information Statement - Wage Earner, or Form 433-B, Collection Information Statement - Business, to document his claimed inability to pay. Even if petitioner had submitted completed Forms 433-A and 433-B, the disagreement between petitioner and respondent regarding the extent of his ownership interest in the Claremore property precluded any determination of petitioner's actual ability to pay the unpaid tax liabilities at issue.

We also note that petitioner did not offer any collection alternatives that would adequately protect respondent's need to perfect a lien with respect to petitioner's ownership interest in the Claremore property. At the trial in this case, petitioner had testified that the Claremore property would remain titled in the name of his deceased mother. Under the circumstances involved in this case, the nominee NFTL was a reasonable collection procedure that enabled respondent to perfect a Federal tax lien with respect to the Claremore property. We conclude therefore that the Appeals Office did not abuse its discretion in upholding the filing of the nominee NFTL.

B. Errors Not Raised at the Hearing

In an appeal from a notice of determination under sections 6320 and 6330, we ordinarily consider only those matters that were raised in the hearing and/or considered in the notice of determination. Magana v. Commissioner [Dec. 54,765], 118 T.C. 488, 493-494 (2002); Miller v. Commissioner [Dec. 54,164], 115 T.C. 582, 589 n.2 (2000). As we stated in Magana v. Commissioner, supra at 493,

it would be anomalous and improper for us to conclude that respondent's Appeals Office abused its discretion under section 6330(c)(3) in failing to grant relief, or in failing to consider arguments, issues, or other matter not raised by taxpayers or not otherwise brought to the attention of respondent's Appeals Office. * * *

Petitioner raised several issues for the first time in his petition that were not raised in the hearing or addressed in the notice of determination: (1) Whether the Appeals team manager whose name appears on the notice of determination actually made a determination as required by sections 6320 and 6330; (2) whether Revenue Officer Baustert had the requisite authority to file the nominee NFTL without the written approval of his direct supervisor; (3) whether respondent abused his discretion by filing a nominee NFTL after he had already caused an NFTL to be filed against petitioner for 1993; and (4) whether respondent abused his discretion by asserting a nominee theory with respect to certain real property, the existence and ownership of which was known to respondent at least 4 years before the nominee NFTL was filed. With the exception of the issue in (1) above, which challenges the adequacy of the notice of determination, petitioner should have raised the above-listed issues with the hearing officer at the hearing so that the Appeals Office could address the issues in its notice of determination. Petitioner did not do so, and, as a result, the notice of determination did not address those issues. We decline, therefore, to consider issues that could have been raised, but were not raised, at the hearing and addressed in the notice of determination. Magana v. Commissioner, supra.

With respect to petitioner's challenge to the notice of determination, petitioner offered no evidence at trial or argument on brief to support his contention that the Appeals team manager whose name appears on the letter portion of the notice of determination did not make the determinations in the notice. Moreover, petitioner's argument misconstrues the notice of determination, which consists of a cover letter and a summary of the hearing officer's determination regarding the matters considered at the hearing. The Appeals team manager who signed the letter portion of the notice of determination on behalf of the Appeals Office refers to the determination made as "our determination". The summary attached to the letter bears no signature and summarizes the determination made in petitioner's case. That summary is extracted verbatim from an "Appeals Transmittal and Case Memo" that was prepared by Mr. Penny and transmitted to the Appeals team manager, who approved Mr. Penny's determination on behalf of the Appeals Office. Taken in context, the determination in question is one made by Mr. Penny and approved by Mr. Penny's supervisor on behalf of the Appeals Office. Petitioner has failed to show that the determination in question is not a proper determination under section 6330.

Conclusion

Based on the record before us, we hold that the Appeals Office did not abuse its discretion in determining that respondent's filing of a nominee NFTL with respect to the Claremore property was an appropriate collection action in this case.

We have considered the remaining arguments of both parties for results contrary to those expressed herein and, to the extent not discussed above, find those arguments to be irrelevant, moot, or without merit.

To reflect the foregoing,

Decision will be entered for respondent.

¹ Section references are to the Internal Revenue Code of 1986, as amended and in effect at the time the petition was filed.

² The Claremore property address is also shown as Route 2, Box 2 - 3, Claremore , Oklahoma 74017 -9101. The legal description of the property is shown on the amended Notice of Federal Tax Lien as "Lot 3 in Block 2 of Amended Plat of Carefree Valley, an addition in Section 8, Township 21, North Range 17 East of the I.B.&M., Rogers County, Oklahoma, according to the recorded Plat thereof."

³ Alice Criner's daughter, Jeannie McLelland, testified that she did not know where her mother would have gotten the funds to purchase the Claremore property in 1987.

⁴ The Claremore property account with Verdigris Valley Electric Cooperative has never been listed under the name of Alice Criner.

⁵ Petitioner did not raise any issue regarding Mr. Penny's apparent prohibition of live testimony from witnesses at the hearing or at the trial before this Court. Petitioner did not argue in his trial memorandum or posttrial brief that the prohibition regarding live testimony deprived him of a fair hearing. Moreover, we note that, although Mr. Penny specifically requested, before the hearing, that petitioner bring to the hearing affidavits under oath from each of his siblings to document his claim that they own interests in the Claremore property, petitioner failed to do so. We conclude on these facts that the prohibition with regard to live testimony at the hearing did not deprive petitioner of the opportunity to present relevant testimony through affidavits under oath. Petitioner could have made a factual record in support of his position by submitting affidavits from his witnesses at the hearing, but petitioner failed to do so.

⁶ Petitioner had previously filed two offers in compromise which respondent either rejected or requested be withdrawn.

⁷ Petitioner did not contest this part of the Appeals Office's determination in his petition, at trial, or in his posttrial brief. Consequently, we do not address it in this opinion.

⁸ Oklahoma State law also provides that, when a person dies intestate leaving real property, title to the real property vests immediately in the decedent's heirs, subject only to administration proceedings. The heirs may immediately convey their interest in such property to another. DeWitt v. Cavender, 878 P.2d 1077 (Okla. Ct. App. 1994); Fessler v. Fariss, 304 P.2d 332, 340 ( Okla. 1956); Davis v. Morgan, 95 P.2d 856 ( Okla. 1939); see also Okla. Stat. Ann. tit. 84, sec. 213B.2.a. (West Supp. 2003).

⁹ At the hearing, petitioner did not offer any of the information previously requested by Mr. Penny and Revenue Officer Baustert regarding petitioner's claim that his siblings had an interest in the Claremore property. The silence of petitioner's siblings undermines petitioner's claim that each of them owns an interest in the Claremore property but does not necessarily prevent them from asserting any ownership right that they may have. A person who claims an ownership interest in property subject to a Federal tax lien may bring a quiet title action to challenge the lien against the property. See 28 U.S.C. sec. 2410 (2000). Generally, the Federal District Courts have jurisdiction over any civil action arising under any Act of Congress providing for internal revenue. 28 U.S.C. sec. 1340 (2000).

¹⁰ Petitioner's argument on this point is erroneous as a matter of Oklahoma State law because the concept of nominee ownership is recognized thereunder. When legal title to real property is conveyed to one person and another person furnishes the consideration for the property, a presumption arises under Oklahoma State law that the person who furnished the funds to purchase the property intended to acquire the equitable interest in that property. Boatright v. Perkins, 894 P.2d 1091 ( Okla. 1995). See also 60 Okla. Stat. Ann., tit. 60, sec. 137 (West 1994 & Supp. 2003), which provides that "When a transfer of real property is made to one person, and the consideration therefor is paid by or for another, a trust is presumed to result in favor of the person by or for whom such payment is made."

¹¹ Even if a taxpayer never transferred a particular asset to the current titleholder, a lien for his taxes may attach to it if purchased with funds he supplied. E.g., LiButti v. United States [97-1 USTC ¶50,235], 107 F.3d 110, 125 (2d Cir. 1997).

¹² An ICS transcript is a case file transcript that is maintained by the IRS to document case file actions taken by IRS personnel.

[2005-1 USTC ¶50,354] Ronald Herip, Plaintiff-Appellant v. United States of America , Defendant-Appellee.

U.S. Court of Appeals, 6th Circuit; 02-4078, September 2, 2004 .

Unpublished opinion affirming DC-Ohio, 2002-2 USTC ¶50,646.

[ Code Sec. 6330]

Notice of levy: Right to hearing: Collection Due Process hearing: Impartial hearing officers. --

A tax protestor's challenge to a Collection Due Process (CDP) hearing was without merit. The hearing officer had obtained verification that legal and administrative requirements under Code Sec. 6330 were satisfied by reviewing Form 4340 and, in addition, reviewing the underlying records. The lack of prior involvement by the hearing officer in the individual's case satisfied the impartiality requirement under Code Sec. 6330(b)(3). The IRS was authorized to conduct the CDP hearing based on the deficiency notices because the individual had admitted receipt of the notices. His arguments on the proper delegation of authority were frivolous.

[ Code Sec. 6702]

Collection Due Process hearing: Penalties: Frivolous return: Tax protestor. --

A tax protestor's challenge to a Collection Due Process (CDP) hearing was without merit. His arguments on the proper delegation of authority were frivolous. The civil penalties for filing amended returns stating his income as zero were upheld because his tax protestor arguments regarding the definition of income and the requirement to pay taxes were frivolous.

Before: Boggs, Chief Judge, Kennedy, Circuit Judge and Russell, District Judge. ^*

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

PER CURIAM: Mr. Herip is a tax protestor. He filed amended returns in 1998 purporting to show that his actual "adjusted gross income" between 1984 and 1996 was not the tens of thousands of dollars he initially reported but actually zero. He did not contest or appeal the notices of fines and penalties that the IRS assessed him as a result of these filings, but now contests and appeals the due process hearing the IRS held in order to ensure that he could pay. The district court granted summary judgment in the IRS's favor. We affirm.

I.

Mr. Herip brought this suit in district court to challenge the determination by the IRS Office of Appeals sustaining a proposed levy action to collect the unpaid civil penalties imposed on him for the filing of frivolous tax returns. Shortly after the complaint was filed, the district court entered an order notifying Mr. Herip that "there are no facts alleged in the complaint which could be construed to set forth a valid federal claim for relief" and ordering taxpayer to file an amended complaint. Mr. Herip responded with a one-page document summarizing his prior allegations. The United States moved for summary judgment with respect to all the claims asserted by Mr. Herip. The district court granted the United States 's motion for summary judgment; it concluded that Mr. Herip's challenges to his collection due process hearing and the resulting IRS determination were without merit. A final order dismissing the case was entered accordingly and Mr. Herip appealed.

On November 25, 1998, Mr. Herip filed an Amended US Individual Tax Return for 1984. On this return, Mr. Herip reported a reduction in his adjusted gross income for 1984 from $23,814.39 to zero, and a reduction of his taxable income from $21,059.71 to zero. Consequently, Mr. Herip sought a tax refund of approximately $3400. He justified this request by noting on his return that he "incorrectly reported my wages, savings account interest and other items as income. As defined by numerous Supreme Court decisions, income is corporate profit." Mr. Herip filed similar submissions for 1985 through 1996.

The IRS, on April 21, 1999, notified Mr. Herip that it had determined that "the information you sent is frivolous and your position has no basis in law." The IRS advised Mr. Herip to seek counsel and gave him 30 days to withdraw his amended returns or face $500 fines for each. Mr. Herip returned this notice with handwritten addendums challenging the IRS's basic authority to send him the notice and to tax his income. Mr Herip also filed a return for 1998 that stated his taxable income as zero because "wages not income [sic]." The IRS responded with a notice of deficiency and warning of a $500 civil penalty. The parties went through a similar pattern in 2000 concerning Mr. Herip's return for 1999.

The IRS sent Mr. Herip a "Final Notice - Notice of Intent to Levy and Notice of Your Rights to a Hearing" on June 16, 2001, which informed him of the agency's intent to file a levy for nonpayment of taxes. The notice warned Mr. Herip that the IRS could file a "Notice of Federal Tax Lien" to protect the government's interest and secure his property. The IRS also notified Mr. Herip that he owed civil penalties for his amended returns for 1984-1996, 1998-1999, and that he owed back taxes for 1996.

The June 16 notice included a form that allowed Mr. Herip to receive a collection due process hearing. That hearing was held on October 12, 2001. Afterwards, the IRS sent Mr. Herip a notice sustaining the proposed levy action to collect the civil penalties imposed for his frivolous filings.

II.

We review a district court's grant of summary judgment de novo. Kincaid v. Gibson, 236 F.3d 342, 346 (6th Cir. 2001). Summary judgment is appropriate when the evidence presented shows "'that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Id. (quoting Fed. R. Civ. P. 56(c)).

The underlying actions taken by the IRS are reviewed for abuse of discretion. See Goza v. Commissioner [ CCH Dec. 53,803], 114 T.C. 176, 181-82 (2000).

III.

Mr. Herip presents four arguments against the United States 's motion for summary judgment. First, he argues that the IRS failed to comply with 26 U.S.C. §6330(c)(1) when the hearing officer, and not the Secretary of the Treasury, verified the revenue service's compliance with their administrative procedures. Second, he argues that the IRS did not satisfy the jurisdictional prerequisites for a collections due process hearing. Third, he argues that there was no proper delegation in regard to the "Final Notice of Intent to Levy." Fourth, he argues that his wages do not constitute "taxable income." None of these arguments have merit.

1. Compliance with 26 U.S.C. §6330

Section 6330(c)(1) requires the hearing officer to "at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met" prior to imposing liability for taxes or penalties. The main purpose of the hearing is to ensure that the IRS's collection activities do not impose undue hardship on the taxpayer, who can also raise defenses to the underlying tax liability. §6330(c)(2)(B)("The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability."). Here the hearing officer reviewed Mr. Herip's file and determined that "it appears to me that all applicable laws and administrative procedures have been met." Mr. Herip argues that this does not constitute "verification" by a delegate of the Secretary of the Treasury, and also that it shows that the hearing officer was not "impartial" as required by 26 U.S.C. §6330(b)(3).

Mr. Herip's verification argument is without merit. Courts have recognized that officers conducting a collections due process hearing may rely on Form 4340 to provide verification. See, e.g., Roberts v. Commissioner, 329 F.3d 1224, 1228 (11th Cir. 2003) (collecting cases). The transcript does not reveal whether or not the hearing officer reviewed Form 4340. It does reveal, however, that the officer reviewed

[Mr. Herip's] Form 12153 and any attached correspondence; original copies of administrative files for the tax periods previously stated; case history leading up to the appealed collection action; and transcripts for each year were reviewed, which indicate that the taxes were properly assessed, remain unpaid and demand for payment has been made.

The purpose of Form 4340 is to provide an official summary of the revenue service's dealing with taxpayers, including "the record of assessments made against the taxpayer, the record of payments or credits applied to the taxpayer's account, the record of tax returns filed (if any), dates of notices and demands for payment, as well as dates of filing of Notices of Federal Tax Lien." Rodgers v. United States [ 98-2 USTC ¶50,784], 1998 WL 782587 at *2 n.2, 82 A.F.T.R.2d 98-6651 (D. Nev. 1998). Form 4340 traditionally provides prima facie evidence that the IRS has complied with its statutory duties. Roberts, 329 F.3d at 1228.

In this case, the hearing officer went one step more than normally required and actually reviewed the underlying records instead of relying solely on Form 4340. Mr. Herip presents no argument about how a more thorough verification than traditionally required violates his rights under §6330. Moreover, Mr. Herip presents no evidence that the alleged failure to verify harmed him because his arguments, i.e., that notice requirements were not satisfied and his underlying tax liability was assessed incorrectly, were frivolous, as discussed below.

Finally, the hearing officer's lack of prior involvement in Mr. Herip's case meets the impartiality requirement found in §6330(b)(3). For §6330 purposes, an impartial hearing officer is one who "has had no prior involvement with respect to the unpaid tax specified in subsection (a)(3)(A) before the first hearing under this section or section 6320." 26 U.S.C. §6330(b)(3); see also MRCA Information Services v. United States [ 2000-2 USTC ¶50,683], 145 F Supp.2d 194, 200 (D. Conn. 2000). Mr. Herip has presented no evidence that the hearing officer who conducted his collection due process hearing was previously involved in his case. Hence, the revenue service met §6330(b)(3)'s impartiality requirement in this instance.

2. Mr. Herip and the Notices of Deficiency

Mr. Herip argues that the Internal Revenue Service did not have jurisdiction to hold a collection due process hearing because it never issued him a proper "Notice of Deficiency" insofar as there was no proof that the notice he received was signed by a person who was delegated to do so by the Secretary of the Treasury. The district court correctly found that Mr. Herip admitted that he received notices of deficiency, which in turn authorized the IRS to conduct a collection due process hearing.

3. Mr. Herip and Delegations of Authority by the Secretary of Treasury

Mr. Herip raises a related argument that the district court improperly ignored the following issues of material fact:

a) whether the Director of the Service Center possessed a delegation order from the Secretary authorizing him to send out "notices of deficiency"

b) whether the Chief of the Automated Collection Branch possessed a delegation order from the Secretary authorizing him to send out "notices of deficiency"

c) whether the Secretary of the Treasury properly "verified" that "the requirements of any applicable law or administrative procedure have been met"

Mr. Herip's arguments regarding the proper delegation of authority are frivolous. See Nestor v. Commissioner [ CCH Dec. 54,655], 118 T.C. 162, 165-66 (2002); see also Israel v. Commissioner [ CCH Dec. 55,374(M)], T.C.M. 2003-338, 2003 WL 22940366 ( U.S. Tax Ct. Dec. 15, 2003). As we discussed earlier, so too are his arguments about whether the hearing officer provided proper verification.



4. Mr. Herip and the Income Tax

Finally, Mr. Herip argues that he cannot be penalized under §6702, which provides for civil penalties for income tax filings that are frivolous or are designed "to delay or impede the administration of Federal income tax laws." 26 U.S.C. §6702. The basis of Mr. Herip's argument is that the IRS did not prove pursuant to §6703 that Mr. Herip may be penalized for filing amended returns stating his income is zero. He argues, inter alia, that "no section of the Internal Revenue Code establishes an income tax 'liability'" and that "no section of the Internal Revenue Code provides that income taxes 'have to be paid on the basis of a return.'" Finally, he argues that the word income as defined by the Internal Revenue Code includes only corporate income.

We have held that substantially similar arguments are frivolous and "are totally without merit." Perkins v. Commissioner [ 84-2 USTC ¶9898], 746 F.2d 1187, 1188 (6th Cir. 1984) (citing 26 U.S.C. §61(a) and U.S. Const. Amend. XVI).

IV.

For the reasons given above, we affirm the district court's judgment.

^* Honorable Thomas B. Russell, United Stetes District Judge for the Western District of Kentucky, sitting by designation.

[2002-2 USTC ¶50,646] Ronald Herip, Plaintiff v. United States of America , Defendant

U.S. District Court, No. Dist. Ohio , East. Div., 1:02CV0540, 7/25/2002

[Code Secs. 6330 and 6512 ]

Collection action: Collection Due Process: Hearing procedures: Evidence.--In the absence of genuine issues of material fact, the IRS was entitled to summary judgment with respect to an individual's challenge to the propriety of his Collection Due Process hearing. The taxpayer failed to demonstrate any irregularity in the collection process. His contentions that the underlying notice of deficiency was invalid and that the Appeals officer assigned to his case failed to verify that the requirements of Code Sec. 6330 were met were rejected. The Appeals officer obtained and reviewed transcripts of account with regards to the tax year in issue, which served as presumptive evidence that an assessment was made against him and that notice and demand were properly sent.

[Code Sec. 7402 ]

Jurisdiction: District court: Exclusive jurisdiction of Tax Court: Sufficiency of complaint.--Jurisdiction was lacking over a taxpayer's claim contesting the determination of his tax liability. The Tax Court, rather than the district court, had exclusive jurisdiction over his liability for taxes.
MEMORANDUM & ORDER

O'MALLEY, District Judge:

On March 21, 2002 , pro se Plaintiff Ronald Herip filed this action against the United States of America ("the Government"). Mr. Herip sought to set aside a Notice of Determination issued by an Internal Revenue Service (IRS) Appeals Officer on February 27, 2002 . Mr. Herip asserted he was entitled to relief pursuant to 26 U.S.C. §6330 because the Appeals Officer failed to conduct the collection due process hearing in accordance with the law.

Upon initial review, the Court advised Herip that his complaint may be subject to dismissal for failure to state a claim upon which relief may be granted. On April 12, 2002 , the Court ordered Plaintiff to file an amended complaint setting forth a valid claim within 15 days. The Court indicated that there were no facts alleged in the original complaint which could be construed to state a valid federal claim for relief. See Goza v. Commissioner of Internal Revenue [CCH Dec. 53,803 ], 114 T.C. 176, 183 (T.C. 2000).

Plaintiff subsequently filed a timely "Amended Addition to Original Complaint" on April 26, 2002 . The document includes five paragraphs outlining Herip's basis for filing a complaint in this Court pursuant 26 U.S.C. §6330, as follows:

a. The Tax Court has no jurisdiction to review these issues.

b. The lawless seizure of property which the IRS seeks is not supported by any testimony or documented evidence.

c. Defendants did not conduct the CDP hearing in accordance with the law.

d. Defendant employees who issued the determinations had no basis in law or fact to issue such adverse determinations.

e. Defendant violated Plaintiff's rights and injured him by compelling him to expend time, money and energy to litigate these fraudulent determinations to prevent illegal seizure of his property pursuant to code 6331.

(Am. Compl. at 1). Contrary to the Court's order, Plaintiff filed an amended pleading which essentially summarizes the same issues raised in his original complaint.

On May 30, 2002 , the Government filed a motion for summary judgment, asserting that (1) the Court lacks jurisdiction over Plaintiff's federal income tax liability for tax year 1996; (2) the Court lacks jurisdiction over Plaintiff's damages claims; and (3) the IRS Appeals Office did not abuse its discretion in making the determination made at Plaintiff's Collection Due Process ("CDP") hearing. Plaintiff has opposed that motion, asserting that material disputes of fact exist that preclude judgment in favor of the Government and that, at a minimum, the Court should afford him discovery before entry of any judgment.

For the reasons stated below, the Court finds that further proceedings are unnecessary in this case and GRANTS Defendant's motion for summary judgment.

I. Background

For purposes of this motion, the following material facts are not in dispute. On June 28, 2001 , Herip filed a Request for a CDP Hearing, Form 12153 in response to a Notice of Intent to Levy/Seizure previously issued by the IRS. Plaintiff contested the IRS's Notice with respect to income tax due for 1996 and civil penalties imposed pursuant to 26 U.S.C. §6702 for tax years 1984 through 1999. He asserted that "the IRS made a procedural error in the assessments, such as no assessments were made. I did not have the opportunity to dispute the assessed liability." (Pl.'s Ex. C).

On October 12, 2001 , Plaintiff's CDP hearing was held before an IRS Appeals Officer. Plaintiff complains that the appeals officer failed to provide any of the "verification" he previously requested. ¹ From this he concludes that the IRS violated 26 U.S.C. §§6330(c)(1) and 6330(c)(3)(A). ² He alleges that no document was provided by the Appeals Officer that verified that the "requirements of any applicable law or administrative procedure have been met" as required by Treasury Regulation 301.6320-IT(e).

Herip further maintains that, because section 6211 does not provide for a "deficiency" if no return is filed or if no "tax due" is shown by the taxpayer on his return, the IRS could not legally issue a deficiency because he never indicated taxes were due on his tax return for the years at issue. ³ He also disputes the legitimacy of the deficiency notices sent to him because they were signed by a Director of a Service Center , and not personally by the Secretary, as Plaintiff asserts is required by law. Plaintiff asserts that because "there is no regulation that implements Code Section 6702, there is no regulation that Plaintiff can comply with . . ." (Orig. Compl. at 6-7) and, therefore, he is not required to pay any frivolous tax penalties. Herip explained that during the CDP hearing he "put both his checkbook and IR Code book on the table in front of the Appeals Officers and repeatedly offered to pay all of the taxes and penalties at issue right then and there, if [sic] Appeals Officers would provide him with the regulation that implements the frivolous penalty code section and requires him to pay the penalty." (Orig. Compl. at 6).

On February 27, 2002 , IRS Appeals Team Manager Joseph W. Weiss issued two Notices of Determination. The notices addressed Plaintiff's "1040 tax" for 1996 and "civil penalty taxes" pursuant to Internal Revenue Code (IRC) section 6702 for 1984-96. As an attachment to the Notice, Mr. Weiss provided an outline of the following issues discussed during the hearing: Summary and Recommendation, Brief Background, Discussion and Analysis, Verification of Legal and Procedural Requirements, Issues Raised by the Taxpayer, and Balancing Efficient Collection and Intrusiveness. In summarizing the issues Plaintiff raised during the CDP hearing, the Appeals Officer noted that Herip failed to show that any procedural error was made in the assessment.

With regard to the civil penalties at issue, Mr. Weiss noted that Herip was assessed civil penalties under IRC Section 6702 because he filed frivolous income tax returns from 1984 through 1996. The IRS issued a final notice of intent to levy to Herip by certified mail on June 16, 2001 . Plaintiff's Request for Collection Due Process Hearing was received by the IRS on July 3, 2001 . In addressing Plaintiff's income tax return for 1996, the Officer noted that the IRS sent Mr. Herip a notice on October 29, 1998 proposing changes to his income tax. Mr. Herip responded to the notice by filing an amended return, Form 1040X, showing "no income" and claiming a refund of the income tax paid. The return was determined to be a frivolous return and Plaintiff was assessed a civil penalty under IRC §6702, after being given an opportunity to correct the amended return. A statutory notice of deficiency was sent on March 17, 1999 by certified mail to Herip's last known address. On June 16, 2001 a final notice of intent to levy was sent to Plaintiff by certified mail to which he responded by requesting a CDP hearing.

Under the Determination heading, Issues Raised by the Taxpayer, the Appeals Officer explained the following to Herip: "You did not present any relevant issues at the hearing. You asked for a copy of the 'statutory notice of deficiency' and 'notice and demand'. The Internal Revenue Service does not maintain copies of 'notice and demand'. However, subsequent to the hearing, you were sent a literal transcript of your account. A copy of the 'statutory notice of deficiency' was also mailed to you with an explanation of the adjustments made to your return." (Ex. A at 4). He determined further that "[s]ince you did not show you did not receive the 'statutory notice of deficiency' mailed to you by certified mail on March 17, 1999 , you cannot raise the issue of the underlying liability at the Collection Due Process Hearing." Id. In each Determination, Mr. Weiss concluded "that no relief is to be granted and that the proposed levy action is sustained. The Internal Revenue Service has complied with code and procedural requirements in collecting the tax." (Ex. B at 2).

Herip challenges both Determinations because he believes the IRS's failure to provide information he considers critical to a valid CDP hearing renders the hearing illegitimate. Based on his conclusions, Herip requests that the Court invalidate the IRS Determination, order the government to reimburse him for the cost of bringing this action and award him "punitive damages as equity relief dictates."

II. Standard of Review

Federal Rule of Civil Procedure 56(c) governs summary judgment motions and provides:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.. . .

Rule 56(e) specifies the materials properly submitted in connection with a motion for summary judgment:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.. . . The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denial of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

However, the movant is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett, 477 U.S. 317 (1986).

In reviewing summary judgment motions, this Court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943-44 (6th Cir. 1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases the Court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict" Id. at 252.

Summary judgment is appropriate whenever the non-moving party fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. Moreover, "the trial court no longer has a duty to search the entire record to establish that it is bereft of a genuine issue of material fact." Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989) (citing Frito-Lay, Inc. v. Willoughby, 863 F.2d 1029, 1034 (D.C. Cir. 1988)). The non-moving party is under an affirmative duty to point out specific facts in the record as it has been established which create a genuine issue of material fact. Fulson v. City of Columbus , 801 F.Supp. 1, 4 (S.D. Ohio 1992). The non-movant must show more than a scintilla of evidence to overcome summary judgment; it is not enough for the non-moving party to show that there is some metaphysical doubt as to material facts. Id.

Pro se pleadings, however, are to be liberally construed. Boag v. MacDougall, 454 U.S. 364, 365 (1982) (per curiam); Haines v. Kerner, 404 U.S. 519, 520 (1972).

III. Analysis

A. The Appeals Office Did Not Abuse Its Discretion When Issuing Its Determination

The Government argues that this Court must review the determination of the IRS Appeals Office under an abuse of discretion standard. The Government contends that Herip received a valid CDP hearing where he had the opportunity to raise any relevant issue relating to his tax liabilities or the proposed collection action. Instead, the Government contends, Herip persisted in raising meritless arguments. Thus, the Government argues that the Appeals Office did not abuse its discretion in issuing its determination.

Under the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub.L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress enacted section 6330 (pertaining to levies) to provide due process protection for taxpayers in tax collection matters. This addresses instances where the Secretary is authorized to collect taxes by levy upon property belonging to a person who is liable to pay any tax, but the person neglects or refuses to pay such tax within 10 days after notice and demand for payment. 26 U.S.C. §6331(a). Before proceeding with the collection by way of levy, however, the IRS must provide notice to the person of his or her right to a hearing on the matter. 26 U.S.C. §6330(a). The individual has a right, within 30 days of the section 6330 notice, to request a collection due process hearing with the IRS Office of Appeals. 26 U.S.C. §6330(a)(3)(B). At the hearing, the taxpayer may raise any issue relevant to the unpaid tax and the proposed levy, including challenges to the propriety of the levy and may propose offers of collection alternatives. 26 U.S.C. §6330(c)(2).

At the conclusion of a CDP hearing, the Appeals Officer is tasked to formulate a determination based on: (1) the verification that the requirements of any applicable law or administrative procedure have been met; (2) the issues raised by the taxpayer; and (3) the proper balance between the need for efficient tax collection and the legitimate concern that any collection action be no more intrusive than necessary. 26 U.S.C. §6330(c)(3). Following the hearing, the Appeals Officer sends a Notice of Determination to the complainant that summarizes the matters raised during the hearing and responds to any offers or objections made by the complainant. If the individual is dissatisfied with the administrative determination, he or she has 30 days within which to appeal to "the Tax Court (and the Tax Court shall have jurisdiction to hear such matter); or (B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States." 26 U.S.C. §6330(d)(1). Review is limited to matters actually raised at the administrative hearing. Temp. Treas. Reg. §301.6330-IT(f) (2001).

Although section 6330 does not prescribe the standard of review that the district court is to apply in reviewing the Commissioner's administrative determinations, the legislative history indicates that the Court should conduct a de novo review only "where the validity of the tax liability was properly at issue at the administrative hearing." H. R. CONF. REP. NO. 105-599, at 266 (1998). Where the amount of the underlying tax liability is not properly part of the appeal, the Court reviews a Notice of Determination for abuse of discretion. Sego v. Comm'r of Internal Revenue [CCH Dec. 53,938 ], 114 T.C. 604, 609-10 (T.C. 2000); Goza v. Comm'r of Internal Revenue [CCH Dec. 53,803 ], 114 T.C. 176, 179-80 (T.C. 2000). See also MRCA Information Services v. United States [2000-2 USTC ¶50,683 ], 145 F.Supp.2d 194, 199 (D. Conn. 2000) (holding that district court applies an abuse of discretion standard when reviewing an IRS Settlement Officer's determination under 26 U.S.C. §6330). The Sixth Circuit has held that an administrative agency abuses its discretion where there is no evidence to support its decision, or the agency misapplies the law. National Engineering & Contracting Co. v. Occupational Safety & Health Administration, 928 F.2d 762, 768 (6th Cir. 1991).

Section 6330(c) provides that an individual may raise any relevant issues relating to the unpaid taxes or a proposed levy during the course of a CDP hearing, including spousal defense to collection, challenges to the appropriateness of the Commissioner's intended collection action, and offers of alternative means of collection. 26 U.S.C. §6330(c)(2)(A). The statute does, however, bar a person from contesting the existence or amount of the underlying taxes unless that individual did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax liability. 26 U.S.C. §6330(c)(2)(B).

Plaintiff's threshold complaint is that the IRS cannot assess any penalties against him because the underlying income tax liability is questionable. The basis for this argument is his attack on the legitimacy of the Notice of Intent to Levy issued by the IRS. Herip first claims that he never received the deficiency notices, yet he asks the Court, in his opposition brief, to take judicial notice that he received notice from the Chief of the Automated Collection Branch. (Plaint. Opp. Brief, p. 3). While Plaintiff can plead in the alternative, this admission, coupled with the attached copies of the deficiency notices in the Government's motion for summary judgment (Govn. Exh. D & I), clearly belie Herip's contention that he never received such notice. Herip also disputes the legitimacy of the deficiency notices sent to him because they were signed by the Director of a Service Center and the Chief of the Automated Collection Branch, not the Secretary "as required by law." He maintains that because "there is no regulation that implements Code Section 6702, there is no regulation that Plaintiff can comply with . . ." (Compl. at 6-7) and therefore he is not required to pay any frivolous tax penalties.

Herip is fundamentally challenging the merits of the IRS's determination in the Notice of Deficiency; he has not challenged the intended method of collection, offered an alternative means of collection, or raised spousal defenses to collection. His attempt to invalidate the notice based on the 'questionable' authority of the Director is without merit. It is well established that the authority to determine and issue statutory notices of deficiency is vested by statute in the Secretary of the Treasury or his delegate. §§6212(a), 7701(a)(11)(B), and 7701(a)(12)(A)(i) (emphasis added). Pursuant to 26 C.F.R. §§301.6212-1(a) and 301.7701-9(b), the Secretary has delegated to District Directors the authority to send deficiency notices. ⁴ Hoffman v. United States [2002-2 USTC ¶50,499 ], No. C02-5023RJB, 2002 WL 1299991, at *5 (W.D. Wash. May 3, 2002); (rejecting identical argument brought by plaintiff as frivolous and without merit); Kellogg v. Commissioner [CCH Dec. 43,643 ], 88 T.C. 167, 172 (T.C. 1987); Perlmutter v. Commissioner [CCH Dec. 27,434 ], 44 T.C. 382, 385 (T.C. 1965), aff'd [67-1 USTC ¶9246 ], 373 F.2d 45 (10th Cir. 1967). Herip, therefore, cannot sustain a claim that he was entitled to challenge the existence of an underlying income tax liability during the CDP hearing on grounds that he never received statutory notice of the deficiency. Again, he concedes he received notice of the deficiency--his only complaint is a misguided one about the authority of the signatory on that notice.

With regard to his claim that the Appeals Officer was obligated to respond to his prior requests for certain verifications at the CDP hearing, Plaintiff has failed to state a valid claim. The Settlement Officer owed the Plaintiff no duty to produce this information. Lindsey v. Commissioner of Internal Revenue [CCH Dec. 54,703(M) ], No. 9014-00L, T.C. Memo 2002-87, 2002 WL 487164 (T.C. Apr 2, 2002 ) (citing Nestor v. Commissioner [CCH Dec. 54,655 ], 118 T.C. 162, 166 (T.C. 2002) and holding that asserted error in IRS determination could not be based on petitioner's claim that the IRS appeals officer failed to furnish requested documentation prior to the CDP Hearing). Herip also argues that the appeals officer failed to provide documentation that supported the imposition of the penalties assessed against him, including the names of the individuals who determined that penalties were appropriate and whether such individuals were authorized to make these determinations. This argument is also without merit. Hoffman [2002-2 USTC ¶50,499 ], 2002 WL 1299991, at *5 (rejecting identical argument as frivolous and without merit); Kelly v. United States [2002-2 USTC ¶50,615 ], No. 4:01CV1803JCH, 2002 WL 1096809, at *8-9 (E.D. Mo. April 19, 2002 ) (rejecting identical argument as information sought was not required to be disclosed by the IRS in a CDP hearing and was irrelevant to plaintiff's underlying claims). The requests notwithstanding, Herip never draws a nexus between the information he requested and its relevance to the statutorily specified issues available for discussion during the CDP hearing.

The IRS hearing officer did not abuse his discretion when he determined that the requirements of applicable law had been met and that Herip had been afforded statutorily required administrative procedures. See 26 U.S.C. §6330(c)(1). The hearing officer also attempted to address the issues raised by Plaintiff; however, Herip did not acknowledge any of the statutorily-specified issues that may be raised at a collection due process hearing, such as spousal defenses, the appropriateness of an intended collection action, and possible alternative means of collection. See 26 U.S.C. §6330(c); see also Sego [CCH Dec. 53,938 ], 114 T.C. at 609. Instead, Plaintiff attempted to revisit the issue of his underlying tax liability at the collection hearing.

Based on the foregoing, Plaintiff has not, and cannot, prove any set of facts in support of his request to set aside the Notice of Determination that he is liable for frivolous tax penalties. Accordingly, the Government's motion for summary judgment on that ground is GRANTED and that portion of Plaintiff's appeal is DISMISSED. As the Court has concluded that Herip's underlying claim regarding the CDP hearing lacks merit, it need not reach the Government's second issue regarding the Court's jurisdiction over Herip's damages claims.

B. The Court Lacks Jurisdiction to Review Determinations of Herip's 1996 Tax Liability

The Government also argues that this Court lacks jurisdiction over any review of the IRS Appeals Office's determination relating to Herip's federal income tax liability for tax year 1996. The Government asserts that only a United States Tax Court, and not a District Court, has jurisdiction to hear these claims. Herip, in his opposition brief to the Government's motion for summary judgment, acknowledges that this Court would lack subject matter jurisdiction over such a claim and expressly disclaims intending to make such a claim. As such, that portion of Plaintiff's appeal is also DISMISSED.

IV. Conclusion

For the reasons stated above, the Court GRANTS Defendant's motion for summary judgment and DISMISSES this case.

The Court further certifies, pursuant to 28 U.S.C. §1915(a)(3), that an appeal from this decision could not be taken in good faith.

IT IS SO ORDERED.

¹ Plaintiff requested the following information regarding the IRS employees who imposed the "frivolous penalty": (1) names; (2) federal identification numbers; (3) delegation orders from the Secretary authorizing them to impose the penalty; (4) official job descriptions; (5) the Treasury Department regulation that allows them to impose a "frivolous penalty"; and (6) the Treasury Department regulation requiring Plaintiff to pay a penalty.

² The relevant subsections provide:

(1) Requirement of investigation.--The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.

26 U.S.C. §6330(c)(1).

(3) Basis for the determination.--The determination by an appeals officer under this subsection shall take into consideration--

(A) the verification presented under paragraph (1);

26 U.S.C. §6330(c)(3)(A).

³ The term "deficiency" is defined, in relevant part, under Title 26 Section 6211 as:

(1) the sum of

(A) the amount shown as the tax by the taxpayer upon his return, if a return was made by the taxpayer and an amount was shown as the tax by the tax payer thereon.. . .

⁴ To the extent Herip claims that a written delegation order is required, both 26 C.F.R. §§301.6212-1(a) and 301.7701-9(b) provide such written authority.

[2005-2 USTC ¶50,494] Comfort Plus Health Care, Inc., Plaintiff v. Commissioner of Internal Revenue Service, Defendant.

U.S. District Court, Dist. Minn. ; Civ. 04-4963 (JNE/JGL), July 14, 2005 .

[ Code Secs. 6159, 6330, 6651 and 7421]

Tax Court: Failure to pay federal employment taxes: Collection Due Process hearing: Abuse of discretion: Administrative record: Verification of tax liability: Reasonable cause: Federal tax lien: Offers in compromise. --

The IRS did not abuse its discretion in determining to proceed with collection actions against the taxpayer. The Appeals officer had no prior involvement in the determination of the taxpayer's unpaid taxes and, thus, did not violate the impartiality requirement under Code Sec. 6330(b)(3). In addition, because the taxpayer failed to supply evidence to dispute the record, the Appeals officer did not abuse his discretion in determining that the transcripts accurately stated the tax owed. Furthermore, the Tax Court confirmed that the Appeals officer's decision contained sufficient information for judicial review, and indicated that he performed the required balancing of the need for efficient collection of taxes against the legitimate concern that the action be no more intrusive than necessary. Finally, the taxpayer's request for injunctive relief against the IRS's collection actions was denied. The IRS was entitled to summary judgement on the taxpayer's claims, and the Taxpayer's Bill of Rights did not provide an exception to the anti-injunction provisions of Code Sec. 7421.

Patrick C. Nwaneri, Nwaneri & Assocs., P.L.L.C., for plaintiff. Michael R. Pahl, Department of Justice, for defendant.

ORDER

ERICKSEN, District Judge: Comfort Plus Health Care, Inc. (Comfort Plus) brought this action against the Commissioner of Internal Revenue Service (IRS) to obtain judicial review of a determination of an IRS Appeals Officer (AO). ¹ The case is before the Court on Comfort Plus's motions to remand the case to the IRS for further administrative proceedings, for a preliminary injunction, and for a new hearing to consider newly discovered evidence, and on the IRS's motions for summary judgment and to strike exhibits. For the reasons set forth below, the Court denies Comfort Plus's motions and grants the IRS's motions.

I. BACKGROUND

Comfort Plus is engaged in the business of providing in-home health care. Comfort Plus claims that two employees engaged in fraudulent activities from 1998 to 2002 that cost Comfort Plus approximately $400,000. Comfort Plus contends that these losses caused it to unintentionally default in payment of federal employment taxes.

On March 15, 2004, the IRS served Comfort Plus with a Notice of Intent to Levy. In a letter dated March 30, 2004, the IRS cla imed that Comfort Plus owed taxes and penalties totaling more than $400,000. In that letter, the IRS also indicated the possibility of abating penalties by correcting certain tax forms, but noted that it had not received any amended returns. The IRS also indicated that it would not consider a payment agreement because Comfort Plus had defaulted on two payment agreements, "continued to pyramid" tax liability, was not staying current with its Federal tax deposits, and appeared to be insolvent. On April 16, 2004, the IRS filed a Notice of Federal Tax Lien.

Comfort Plus exercised its right to a collection-due-process (CDP) hearing under 26 U.S.C. §6330 (2000), which provides for the right to a hearing before a levy may be made on any property or right to property. The evidence before the AO included the IRS Transcripts of assessments and payments (Transcripts) and a spreadsheet submitted by Comfort Plus entitled "Tax Analysis & Reconciliation." Comfort Plus claims the latter was prepared by its accountant and demonstrates a tax liability of approximately $123,000. Comfort Plus did not provide the AO any underlying documentation to support its tax analysis. In a Notice of Determination dated November 30, 2004, the AO found that the filing of the Notice of Federal Tax Lien and Notice of Intent to Levy were appropriate.

On December 8, 2004, Comfort Plus filed this action to obtain judicial review of the Notice of Determination. In its Complaint, Comfort Plus claims (1) that the IRS wrongfully determined that it owes taxes and penalties totaling more than $400,000, (2) that it is entitled to abatement of penalties because its failure to pay was due to reasonable cause, and (3) that the IRS wrongfully denied Comfort Plus other relief it sought, such as an offer-in-compromise and an installment plan.

II. DISCUSSION

A. Comfort Plus's motion for preliminary injunction

On May 26, 2005 , Comfort Plus withdrew its initial motions for a temporary restraining order and a preliminary injunction. On June 13, 2005 , Comfort Plus filed an "Urgent Motion for Preliminary Injunction." The motion seeks to restrain the IRS from levying on or seizing any property of Comfort Plus, enforcing any collection action against Comfort Plus, closing down Comfort Plus's business, or compelling Comfort Plus to declare bankruptcy pursuant to any Federal Tax Lien, pending the determination of this suit.

The Anti-Injunction Act provides in relevant part:

Except as provided ... no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

26 U.S.C. §7421(a) (2000). "The manifest purpose of §7421 is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for a refund." Enochs v. William Packing & Navigation Co. [ 62-2 USTC ¶9545], 370 U.S. 1, 7-8 (1962). However, "if it is clear that under no circumstances could the Government ultimately prevail" and "equity jurisdiction otherwise exists," collection may be enjoined. Id. As discussed below, a review of the administrative record reveals that the IRS has a chance of ultimately prevailing. In fact, the IRS is entitled to summary judgment on Comfort Plus's claims. Therefore, the Court denies Comfort Plus's request for injunctive relief pursuant to the Anti-Injunction Act. ²

B. Motion to strike

The IRS moves to strike three exhibits on which Comfort Plus relies, specifically Comfort Plus's fraud audit summary report and the felony guilty plea petitions of two former employees. Because these exhibits were not part of the administrative record, the IRS argues they are outside of the scope of this Court's review. Comfort Plus has submitted no evidence demonstrating that these exhibits were part of the administrative record. In fact, its own exhibits appear to demonstrate otherwise. In addition, the IRS has submitted the sworn declaration of Michael R. Pahl, wherein Pahl states that the above documents were not part of the administrative record. Because the Court's review is limited to the administrative record, see Hart v. United States [ 2003-2 USTC ¶50,680], 291 F.Supp.2d 635, 642 (N.D. Ohio 2003), the Court strikes the exhibits.

C. Motions to remand and for summary judgment

Comfort Plus asks the Court to remand the Notice of Determination to the IRS for a new appeal hearing because (1) the AO was not impartial, (2) the AO failed to make an adequate record of the administrative proceedings so as to damage Comfort Plus's right to judicial review, and (3) the AO did not consider whether the proposed collection action balances the need for efficient collection of taxes with the taxpayer's legitimate concern that the action be no more intrusive than necessary. The Court reviews the validity of tax assessments de novo and other AO determinations for an abuse of discretion. See Borchardt v. Comm'r of Internal Revenue, 338 F. Supp. 2d 1040, 1043 (D. Minn. 2004).

The IRS opposes Comfort Plus's motion to remand and also moves for summary judgment. Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) requires the nonmoving party to respond by submitting evidentiary materials that designate "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).



1. Jurisdiction

As a threshold matter, the IRS contends that the Court lacks jurisdiction to consider Comfort Plus's allegations regarding tax liability for periods that it did not request a CDP hearing within 30 days of the Notice of Intent to Levy, as required by 26 U.S.C. §6330. It is undisputed that Comfort Plus did not request a hearing within the required time for certain quarters of unpaid employment taxes, which are set forth in Exhibit O attached to the Complaint. Accordingly, the Court lacks subject-matter jurisdiction over any disputes regarding these quarters. See Living Care Alternatives of Utica v. United States [ 2004-1 USTC ¶50,225], 312 F.Supp.2d 929, 932 (S.D. Ohio 2004). Nevertheless, because Comfort Plus's allegations are not quarter-specific, the Court still must address all issues raised by Comfort Plus.

2. Impartial appeals officer

Comfort Plus argues that this case must be remanded to the IRS for a second CDP hearing because the AO was not impartial. In support of its argument, Comfort Plus relies exclusively on a letter sent to Comfort Plus by the AO on August 27, 2004, after Comfort Plus requested a CDP hearing. The August 27, 2004 letter reads in relevant part:

Your request for a Collection due Process hearing has been referred to Appeals for consideration. In reviewing your case, I see that the IRS has filed multiple Notices of Federal Tax Lien and issued multiple Notices of Intent to Levy and you disagree with these actions....

To give you an idea of how the Collection Due Process works, I've enclosed an Appeals Orientation Guide that explains the Appeals process. In short, my role as an Appeals Settlement Officer is to:

1. Verify that the IRS complied with all legal and administrative procedures.

My review of your case file indicates that the proper procedures were followed in filing the Notices of Federal tax Lien and issuing the Notices of Intent to Levy. The Revenue Officer advised the taxpayer of his Power of Attorney of the pending actions. These actions were undertaken due to noncompliance of the business.

Comfort Plus claims that the language used in the letter demonstrates that the AO violated the statute's impartiality mandate by substantively reviewing the matter prior to the hearing.

Section 6330(b)(3) requires that the CDP hearing "be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax ... before the first hearing." The statute does not define the meaning of "prior involvement." At least one court has noted that certain text following IRS Treasury Regulation §301.6330-1T explains:

Prior involvement by an employee or officer of Appeals includes participation or involvement in an Appeals hearing (other than a CDP hearing held under either section 6320 or section 6330) that the taxpayer may have had with respect to the tax and the tax period shown on the CDP notice.

See MRCA Info. Servs. v. United States [ 2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 200 (D. Conn. 2000).

Based on the record, there is no evidence that the AO in this case had the type of prior "involvement with respect to the unpaid tax" that is contemplated by the statute. While the AO reviewed the status, arguments, and procedural requirements of Comfort Plus's file prior to the hearing, there is no evidence that the AO had any prior involvement in the determination of the amount of taxes owed or played any substantive role in a prior hearing other than the CDP hearing held under section 6330. Comfort Plus maintains that the AO must not prepare for the hearing by reading the file, but instead must come to the hearing tabula rasa. The Court notes the dis tinction between preparation and impartiality and rejects the argument. Accordingly, the Court denies the motion to remand insofar as Comfort Plus asserts the AO was not impartial.

3. Failure to create an adequate record

Comfort Plus argues that the AO's decision contains insufficient information for meaningful judicial review on several issues and asks the Court to remand the matter for a new CDP hearing. The IRS, on the other hand, contends that the AO's decision contains enough information to permit judicial review and moves for summary judgment on the disposition of these issues.

a. Challenge to tax owed

In its Complaint, Comfort Plus challenges the amount of tax and penalties owed. Specifically, Comfort Plus contends that the AO failed to credit overpayments. The parties dispute the standard of review. According to Comfort Plus, this portion of the AO's decision should be reviewed de novo. The IRS argues that because Comfort Plus's claim centers on its assertion that the AO failed to properly credit Comfort Plus's tax payments, this decision is reviewed for an abuse of discretion.

The Complaint does not determine the nature or extent of this review of the Notice of Determination. Instead, the scope of the Court's review under section 6330(d) is limited to issues properly raised and considered during the CDP hearing. See Living Care [ 2004-1 USTC ¶50,225], 312 F.Supp.2d at 934. The record shows that the validity of the underlying taxes was not at issue before the AO. Instead, the AO considered and rejected Comfort Plus's claim that the IRS failed to credit overpayments. Therefore, the Court will review the AO's determination as to the amount of tax and penalties owed for an abuse of discretion.

The IRS asserts that the Transcripts reflect that Comfort Plus owes approximately $468,000. Comfort Plus does not dispute that the Transcripts reflect that amount. Based on its own spreadsheets, Comfort Plus contends it owes less money because the IRS failed to properly credit various overpayments. Comfort Plus also claims that the AO failed to point out what makes the Transcripts correct and failed to disprove the accuracy of Comfort Plus's spreadsheets. At the CDP hearing, however, Comfort Plus did not present any underlying evidence of the payments it contends were not credited. Instead, Comfort Plus relied on its spreadsheets without any indication that the accountant who prepared the spreadsheets had personal knowledge of any failure on the part of the IRS to credit overpayments.

IRS Certificates of Assessments and Payments are sufficient to establish the validity of federal tax assessments. United States v. Gerards, 999 F.2d 1255, 1256 (8th Cir. 1993); United States v. Langert [ 95-2 USTC ¶50,504], 902 F.Supp. 999, 1002 (D. Minn. 1995). The AO reviewed Comfort Plus's spreadsheets and determined that they contained numerous errors. In addition, the AO noted that he reviewed the records and found no lost payments or outstanding credit balances. Because Comfort Plus failed to bring forth competent underlying evidence to dispute the Transcripts, such as checks or federal tax deposits not credited, the Court concludes that the AO did not abuse his discretion in determining that the Transcripts accurately set forth the tax owed. In addition, the Court finds that the AO's decision contains sufficient information for judicial review. Therefore, the Court denies Comfort Plus's motion to remand and grants the IRS's motion for summary judgment on this issue. ³

b. Abatement of penalties

Comfort Plus also challenges the AO's decision not to abate penalties or interest on the ground that Comfort Plus had "reasonable cause" for its failure to pay employment tax. Specifically, Comfort Plus claims that the fraud of its two employees account for the existence of the alleged deficiency in some trust fund taxes. The Court reviews the AO's determination as to the appropriateness of the collection activity for abuse of discretion.

The IRS is authorized to abate certain penalties upon a showing of reasonable cause by the taxpayer. See 26 U.S.C. §6651 (2000). The Code of Federal Regulations sets forth the standards a taxpayer must meet to demonstrate reasonable cause for failure to pay taxes:

A failure to pay will be considered to be due to reasonable cause to the extent that the taxpayer has made a satisfactory showing that he exercised ordinary business care and prudence in providing for payment of his tax liability and was nevertheless either unable to pay the tax or would suffer an undue hardship ... if he paid on the due date. ... A taxpayer will be considered to have exercised ordinary business care and prudence if he made reasonable efforts to conserve sufficient assets in marketable form to satisfy his tax liability and nevertheless was unable to pay all or a portion of the tax when it became due.

26 C.F.R. §301.6651-1.

In his August 27, 2004 , letter to Comfort Plus, the AO explained in detail the requirements for a proper request for penalty relief. For example, the AO explained that Comfort Plus must identify specific payments for which it seeks relief and that it must pay the tax due before the IRS will abate a penalty for failure to pay for reasonable cause. The AO also informed Comfort Plus that the IRS would examine its compliance history to determine overall payment patterns. In the Notice of Determination, the AO noted that both the Revenue Officer and the Settlement Officer gave Comfort Plus specific instructions on how to prepare and perfect a request for penalty abatement. The AO also noted that Comfort Plus neither prepared nor perfected such a request. In addition, the record contains no evidence that Comfort Plus could have paid its taxes but for the employee embezzlement. Finally, the AO noted that Comfort Plus still owed back taxes and that the Transcripts demonstrated Comfort Plus's history of failing to comply with employment tax obligations.

For these reasons, the Court finds that the AO did not abuse his discretion in determining that Comfort Plus's penalties and interest should not be abated and, therefore, grants the IRS's motion for summary judgment on this issue. In addition, the Court finds that the AO's decision contains sufficient information on the issue of abatement of penalties to allow for judicial review and, therefore, denies Comfort Plus's motion to remand.

c. Rejecting an offer-in-compromise or installment plan

Comfort Plus asserts that the AO abused his discretion by failing to consider alternate collection methods, including an offer-in-compromise or installment plan. The IRS is authorized to enter into installment agreements if it determines that the agreement will facilitate collection of the liability. 26 U.S.C. §6159(a) (2000). The IRS has the discretion to accept or reject any proposed installment agreement. 26 C.F.R. §301.6159-1(b).

In the Notice of Determination, the AO noted that Comfort Plus failed to prepare the required form for a written offer-in-compromise. In addition, the AO explained that the starting point for an Offer in Compromise is the tax due and noted that Comfort Plus had only offered "five cents on the dollar." The AO also explained that Comfort Plus's offer to pay installments of $1,000 per month was wholly inadequate in light of its total balance due. Finally, the AO noted that "no documentation has been provided that would support the abatement of the civil penalties." Comfort Plus claims, without citation to any authority, that the IRS's failure to counter-offer was improper. Comfort Plus further contends that the IRS's primary basis for rejecting an offer-in-compromise or installment plan was an erroneous belief that Comfort Plus was not current on its second quarter 2004 payments.

The Court finds that the AO's decision contains sufficient information for judicial review and denies Comfort Plus's motion to remand. Moreover, even if Comfort Plus is correct in claiming that it was current on its 2004 taxes, there is an adequate basis for the AO's determination that Comfort Plus did not meet all of the requirements of an offer- in-compromise. See MRCA Info. Servs. [ 2000-2 USTC ¶50,683], 145 F.Supp.2d at 199 (explaining the task of the court is not to determine whether in its opinion an installment agreement would be appropriate, but to determine whether there is an adequate basis in law for the AO's decision). Therefore, the Court finds that the AO did not abuse his discretion in rejecting an offer- in-compromise or installment agreement. Accordingly, the Court grants the IRS's motion for summary judgment on this issue.

4. Balancing need for efficient collection of taxes with the taxpayer's legitimate concern that the action be no more intrusive than necessary.

The AO, in making his determination, must consider "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." 26 U.S.C. §6330(c)(3). Comfort Plus claims that the AO failed to perform this balancing because he did not consider certain hardships Comfort Plus would suffer if forced to make full and immediate payment of its past taxes due. Comfort Plus also argues that the AO failed to consider that Comfort Plus is "current in its payment of taxes due for the current year."

In a nearly four-page, single-spaced decision, the AO set out the history and present status of Comfort Plus's tax problems that led to the CDP hearing, which Comfort Plus participated in via telephone. The AO presented and addressed the individual issues raised by Comfort Plus, concluded that the full balance was legally due and owing, and noted that Comfort Plus had neglected or refused to pay. The AO also concluded that the Notice of Federal Tax Lien balances the efficient collection of taxes with Comfort Plus's concern that the collection be no more intrusive than necessary. In light of the facts and circumstances in the record, the Court finds that the AO did not fail to perform the required balancing. Accordingly, the Court denies Comfort Plus's motion to remand. In addition, the Court concludes that the decisio n to enforce the federal tax lien in this case was not an abuse of discretion.

5. Assessment of penalties for failure to pay tax for second quarter of 2004

In the Notice of Determination, the AO concluded that Comfort Plus "failed to make proper federal tax deposits in the proper amounts by the proper deadlines." Comfort Plus claims, based on the post-Notice of Determination affidavit testimony of its CEO, that it was current on its taxes for the second quarter of 2004. However, Comfort Plus did not provide the AO any underlying documentation to support this assertion prior to the AO's decision. Comfort Plus also asserts that the AO abused his discretion in determining that a penalty was properly assessed for Comfort Plus's failure to pay tax for the second quarter of 2004 because the AO refused to allow Comfort Plus additional time to resolve the dispute with the IRS Service Center before making his decision. There is no record evidence that Comfort Plus requested additional time. In addition, Comfort Plus does not cite to any authority requiring an AO to delay collection for the stated grounds. Accordingly, the Court finds that the AO did not abuse his discretion in determining that Comfort Plus failed to timely pay its second quarter 2004 taxes and grants the IRS's motion for summary judgment on this issue.



D. Comfort Plus's motion for new hearing to consider newly discovered evidence

Comfort Plus argues it has newly discovered evidence that demonstrates the IRS failed to forward to the AO documents that reveal employee embezzlement. According to Comfort Plus, the embezzlement caused it to default on its tax payments. Comfort Plus also asserts that this evidence implicitly reveals that the AO did not address the issue of embezzlement and, for that reason, the decision should be remanded.

The documents identified by Comfort Plus are a "fraud audit summary" and the felony guilty plea petitions of two former employees. After reviewing these documents, the Court finds that consideration of these document s would not alter the outcome of the case. The "fraud audit summary" was apparently prepared by, or on behalf of, Comfort Plus and, like its "Tax Analysis & Reconciliation" spreadsheets, is not supported by any underlying documentation. In addition, neither the "fraud audit summary" nor the guilty pleas establish that Comfort Plus could have paid its taxes but for employee embezzlement. Accordingly, the Court denies Comfort Plus's motion for a new hearing to consider newly discovered evidence.

III. CONCLUSION

Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:

1. Comfort Plus's Amended Motion to Remand Administrative Decision [Docket No. 14] is DENIED.

2. Comfort Plus's Urgent Motion for Preliminary Injunction [Docket No. 41] is DENIED.

3. IRS's Motion for Summary Judgment [Docket No. 21] is GRANTED.

4. IRS's Motion to Strike [Docket No. 35] is GRANTED.

5. Comfort Plus's Motion for a New Hearing to Consider Newly Discovered Evidence Prior to Judgment [Docket No. 44] is DENIED.

6. Comfort Plus's Complaint [Docket No. 1] is DISMISSED WITH PREJUDICE.

LET JUDGMENT BE ENTERED ACCORDINGLY.

¹ The Court has jurisdiction over this matter pursuant to 26 U.S.C. §6330(d)(1)(B) (2000).

² The Court is troubled by Comfort Plus's decision to file a second motion for a preliminary injunction in light of the fact that counsel for Comfort Plus withdrew Comfort Plus's initial motions for injunctive relief in the face of the IRS's assertion that the Anti-Injunction Act applied.

³ The Court notes that the result would be the same under the less deferential de novo standard of review. This is because, as explained above, there is nothing in the administrative record to support Comfort Plus's claim that it owed less money than the amount reflected in the Transcripts.

[2005-2 USTC ¶50,552] Heartland Automotive Enterprises, Inc., Plaintiff v. United States of America by and through Commissioner of Internal Revenue Service, Defendant.

U.S. District Court, Mid. Dist. Ga., Macon . Div.; 5:05-CV-44(CAR), July 19, 2005 .

[ Code Sec. 6330]

Notice of levy and rights to hearing: Judicial review of appeals determination: District Court jurisdiction: Impartial IRS appeals officer. --

A corporation's complaint seeking review of a Collection Due Process (CDP) determination was dismissed. Under Code Sec. 6330(c)(2)(B) and Reg. §301.6330-1(e)(3), a taxpayer may not challenge the merits of an underlying tax or penalty if the taxpayer previously had the opportunity to dispute the liability. Since the taxpayer had such an opportunity, the court was precluded from considering the taxpayer's liability for the penalties. However, the taxpayer was not without legal recourse because the taxpayer could pay the tax liability, penalties and interest and file a claim for refund. Then, if the IRS denied or failed to act on the refund claim, the taxpayer may file a refund suit. Finally, the court determined that the Appeals officer acted in an impartial matter and only took the appropriate actions to prepare for the Appeals hearing.

JUDGMENT

ROYAL, District Judge: Pursuant to this Court's Order dated July 19, 2005 , and for the reasons stated therein, JUDGMENT is hereby rendered in favor of Defendant(s). Plaintiff(s) shall recover nothing of Defendant(s). Defendant(s) shall also recover costs of this action.

ORDER ON DEFENDANT'S MOTION TO DISMISS OR ALTERNATIVELY FOR SUMMARY JUDGMENT

This case is presently before the Court on Defendant's Motion to Dismiss or Alternatively for Summary Judgment [Doc. 3]. Plaintiff Heartland Automotive filed a Response [Doc. 8], and Defendant, the United States of America , replied [Doc. 10]. Even accepting Plaintiff's facts as true, after having considered the briefs, information presented in the pleadings, relevant law, and the arguments of the parties, the Court hereby ORDERS that Defendant's motion is GRANTED for the reasons listed below.

A taxpayer in a collection due process proceeding, such as Plaintiff, may not challenge the merits of an underlying tax or penalty if the taxpayer previously had the opportunity to dispute the tax liability. I.R.C. §6330(c)(2)(B); Treas. Reg. §301.6330-1(e)(3) Q&A E2. Heartland had such a previous opportunity when it contacted the revenue officer assigned to collect the penalties, and she declined to abate the penalties at issue. Then, Heartland appealed that denial to the Office of Appeals of the Internal Revenue Service, and the appeal was assigned to Janice Murphy of the IRS Office of Appeals. Murphy determined that Heartland had not provided adequate evidence to establish a reasonable cause exception for not paying for not using the EFTPS system and in the case of the last quarter of 2001, not timely making its deposits. By letter dated October 9, 2003, she advised Heartland that its request for abatement was denied. This Court is precluded from considering Heartland's liability for the penalties at issue because Heartland had a prior opportunity to administratively contest that liability.

Despite the dismissal of this case, Plaintiff is not without an avenue by which it may challenge the merits of the penalty assessed against it. Plaintiff may pay the tax liability, file a claim for a refund with the IRS, and, if that claim is denied or if six months passes without action by the IRS, it may file a refund suit in federal court. See, e.g., 28 U.S.C. §1346(a)(1), 26 U.S.C. §§6532(a)(1) and 7422(a), and Treas. Reg. §301.6402-2. In other words, taxpayer's remedy in this case is a standard tax refund suit.

Also, the Court finds that Debra Daigle of the IRS Office of Appeals, the settlement officer for the Collection Due Process Hearing, had no prior involvement with the liabilities at issue. Daigle acted as an impartial officer of the IRS when she conducted the CDP hearing. Any action taken by Daigle prior to the hearing was standard preparation for a hearing of this type.

For the aforementioned reasons, Defendant's Motion to Dismiss is hereby GRANTED.

So Ordered.