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Judicial Review of Appeals-Judicial Review Page5

The majority cites a number of cases decided under the abuse of discretion standard, stating that "[i]n none of these types of cases have we held * * * that we are limited to the administrative record." Majority op. p. 26 (emphasis added). In three of the types of cases to which the majority alludes (involving section 482 reallocations, section 446 "clear reflection of income" determinations, and waivers of the former section 6659 addition to tax), the inapplicability of the record rule is consistent with the suggested approach discussed in the preceding paragraph. See Ewing v. Commissioner, supra at 65 (Halpern and Holmes, JJ., dissenting).

The other two types of cases cited by the majority involve declaratory judgments with respect to determinations of the Commissioner under section 7428 (tax-exempt status) and section 7476 (qualified status of retirement plans).⁷ De novo proceedings in those types of cases would be inconsistent with the approach we suggested in our Ewing dissent. Contrary to the majority's assertion, we have limited our review to the administrative record in those types of cases. See Houston Lawyer Referral Serv., Inc. v. Commissioner [Dec. 34,924], 69 T.C. 570, 577 (1978) ("To allow oral testimony * * * as to facts not otherwise in the administrative record to be introduced in evidence * * * in a section 7428 declaratory judgment proceeding would convert that proceeding from a judicial review of administrative action to a trial de novo" and "would permit an applicant [for tax-exempt status] to withhold information from the Internal Revenue Service and then to introduce it before the Court"); Tamko Asphalt Prods., Inc. v. Commissioner [Dec. 35,884], 71 T.C. 824, 837 (1979) (rejecting the argument of the taxpayer in a section 7476 proceeding "that it is entitled to a trial as in any other matter before this Court", the Court reasoned that "[t]o permit extrinsic evidence, other than that present in the administrative record, would convert a declaratory judgment proceeding from a judicial review of an administrative determination to a judicial trial de novo"), affd. [81-2 USTC ¶9648] 658 F.2d 735 (10th Cir. 1981).

e. Disregard of District Court Cases

The District Courts of the United States have jurisdiction to hear section 6330 appeals involving taxes over which the Tax Court does not have jurisdiction. Sec. 6330(d)(1)(B). As far as we can tell, those courts have uniformly limited their review for abuse of discretion in such cases to the administrative record. See Muller v. Rossotti, 93 AFTR 2d 2004-1782, 1786-1787, 2004-1 USTC par. 50,239, at 83,495 (M.D. Tenn. 2004) (quoting United States v. Carlo Bianchi & Co., 373 U.S. at 714); Living Care Alternatives, Inc. v. United States, 93 AFTR 2d 2004-761, 764 n.2, 2004-1 USTC par. 50,167, at 83,249 n.2 (S.D. Ohio 2003); Hart v. United States [2003-2 USTC ¶50,680], 291 F. Supp. 2d 635, 640 (N.D. Ohio 2003); Cmty. Residential Servs., Inc. v. United States, 91 AFTR 2d 2003-2190, 2190, 2003-1 USTC par. 50,458, at 88,339 (M.D.N.C. 2003) (citing Camp v. Pitts, 411 U.S. at 142-143); Dudley's Commercial & Indus. Coating, Inc. v. United States [2003-1 USTC ¶50,397], 292 F. Supp. 2d 976, 985 (M.D. Tenn. 2003) (citing Camp v. Pitts, supra at 142); Triad Microsys., Inc. v. United States, 90 AFTR 2d 2002-7332, 7334, 2003-1 USTC par. 50,106, at 87,030 (E.D. Va. 2002) (citing Camp v. Pitts, supra at 142); Carroll v. United States [2002-2 USTC ¶50,500], 217 F. Supp. 2d 852, 858 (W.D. Tenn. 2002) (citing United States v. Carlo Bianchi & Co., supra at 714); Remole v. United States, 89 AFTR 2d 2002-1202, 1208, 2002-1 USTC par. 50,224, at 83,429 (C.D. Ill. 2001); MRCA Info. Servs. v. United States [2000-2 USTC ¶50,683], 145 F. Supp. 2d 194, 198 (D. Conn. 2000) (quoting United States v. Carlo Bianchi & Co., supra at 714). The majority makes no mention of those cases. Are we to believe that Congress intended the appropriate scope of review in section 6330 cases to hinge on the type of tax involved? Certainly, the language of section 6330 suggests no such distinction.

II. The Contract Issue

The contract issue as framed by the majority (i.e., whether the OIC remained in effect despite petitioner's failure to timely file his 1998 return) is more nuanced than the majority opinion leads one to believe. The majority oversimplifies what respondent was bargaining for, disregards the significance of the fact that respondent repeatedly offered petitioner the opportunity to cure his default, and assumes, without analysis, that the concepts of materiality and substantial performance are dispositive of the contract issue.

A. Materiality of Timely Filing Requirement

The majority assumes that the only benefit the Commissioner seeks when accepting an OIC is the actual receipt of moneys owed under its terms: "Respondent suffered no monetary damage from petitioner's late filing of the 1998 return." Majority op. p. 41 (emphasis added). But collecting money is not the Commissioner's only purpose in agreeing to an OIC. The preamble to section 301.7122-1, Proced. & Admin. Regs., explicitly refers to the IRS's interest in promoting the voluntary compliance of taxpayers. T.D. 9007, 2002-2 C.B. 349, 350. Indeed, not only is this one of the policy underpinnings of the regulations; it can even be the basis by itself for accepting an OIC. The timely filing requirement is particularly important to the IRS as a monitoring device with respect to OICs, like the one here, which include future income level triggers that can result in additional payment obligations. See majority op. p. 4 n.3.

B. Opportunities To Cure

It is also important to emphasize how deliberate the IRS was before declaring the OIC in default. Respondent did not default petitioner's OIC as soon as he realized the 1998 return had not been timely filed. Following the guidance of 2 Administration, Internal Revenue Manual (CCH) (IRM), sec. 5.19.7.3.22.5, at 18,513, respondent first contacted petitioner to request the missing return and did so at least two more times thereafter. See majority op. p. 8. Those efforts by respondent were in keeping with the mandate of the IRM that in the event of potential default efforts "will be made to secure compliance". IRM sec. 5.8.9.4, at 16,382. Despite those efforts, petitioner did not provide the missing return until approximately 1 year after he was first requested to do so. That hardly qualifies as a "foot fault".

C. Doctrine of Express Conditions

Regardless of the nature of the breach and respondent's response thereto, we think that the most relevant doctrines of contract law are not "substantial performance" and "material breach."⁸ Petitioner's obligation to timely file all his returns for 5 years was an express condition and so, as a general rule, is subject to strict performance. See Calamari & Perillo, The Law of Contracts, sec. 11.9, at 403 (4th ed. 1998); 13 Williston on Contracts, sec. 38:6, at 384-385 (4th ed. 2000). The relevant question should be whether there is an "excuse of conditions" that may apply. Under that doctrine, petitioner would have to show that (1) strict compliance with the timely filing condition would result in an extreme forfeiture or penalty, and (2) timely filing was not an essential part of the bargain. See 2 Restatement, Contracts 2d, sec. 229 (1981); 1 Restatement, Contracts, sec. 302 (1932). If we are going to say that, as a matter of law, the Appeals officer should not have enforced the OIC in accordance with its terms, that is the line of inquiry we should pursue.⁹

D. United States v. Lane

Quite apart from any discussion of general contract law principles, we also disagree with the majority's treatment of the most similar case we have found, United States v. Lane [62-1 USTC ¶9467], 303 F.2d 1 (5th Cir. 1962). In Lane, the Court of Appeals rejected the taxpayer's argument that strict enforcement of his OIC would result in a forfeiture. As had petitioner, the taxpayer had entered into an OIC which required him to pay a specific amount, pay additional amounts if his annual income exceeded a floor, and make annual statements of his income "regardless of amount". The taxpayer paid the specific amount and then failed to make the annual statements of his income. The taxpayer's OIC provided, like petitioner's, that, in the event of default, the Commissioner could revive and collect the unpaid balance of the original debt. The District Court, ruling in favor of the taxpayer, had reasoned that "`the taxpayer can't be pushed back for years and years and after a settlement is made and have a forfeiture so to speak, of everything he paid in under that settlement agreement.' " Id. at 4.

The Court of Appeals for the Fifth Circuit reversed the District Court, holding that the OIC should be enforced as written. Id. at 5. It is worth considering the Court of Appeals' forceful language in that regard:

In the present case, the contracting parties expressed their mutual intention in clear and unmistakable terms. * * * [The OIC] expressly provided that the Commissioner, upon default by the taxpayer could terminate the compromise agreement and proceed to collect the unpaid balance of the original tax liability. This language is so precise, and the intention which it manifests is so evident, as to leave no doubt that the course of action taken by the Government here was fully authorized by the compromise agreement.

There was nothing illegal, immoral or inequitable in the compromise agreement. It did not provide for any "forfeiture". By express provision, the amounts to be paid under the compromise agreement * * * could not exceed the aggregate amount which the taxpayer conceded that he owed the Government from the start. By allowing the Government to revive the taxpayer's original liability, the taxpayer will not forfeit the amounts he has already paid, for those amounts will be applied to reduce the original liability. The agreement was precise, it was fair, and it was freely consented to by the taxpayer. There is no reason why it should not be enforced as written.

Id. at 4; see also Roberts v. United States [2002-1 USTC ¶50,173], 225 F. Supp. 2d 1138, 1149 (E.D. Mo. 2001) (quoting the latter paragraph in full).

III. Conclusion

We would sustain respondent's evidentiary objections on the basis of Magana v. Commissioner, [Dec. 54,765] 118 T.C. 488 (2002), and the record rule. We would also hold that, in light of petitioner's breach of an express condition of the OIC and his failure to cure that breach despite ample opportunity to do so, respondent's Appeals officer did not abuse his discretion in sustaining the proposed collection activity.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure. All amounts are rounded to the nearest dollar.

² The trust fund recovery penalties to be compromised under sec. 6672 were $102,030. By order dated Oct. 21, 2002, the Court granted respondent's motion to dismiss for lack of jurisdiction and to strike as to the trust fund penalties. The parties agree:

The doctrine of collateral estoppel will apply to prohibit the Respondent, as well as the Petitioner, from re-litigating the Petitioner's appeal of the Notice of Determination in the District Court if the Tax Court decides whether the Respondent abused his discretion in proceeding with collection of tax liabilities previously compromised prior to a decision of that issue by the District Court.

³ As additional consideration, petitioner signed a Form 2261, Collateral Agreement, in which he also agreed to pay 40 percent of his annual income in excess of $100,000 and not in excess of $130,000; 50 percent of annual income in excess of $130,000 and not in excess of $150,000; and 60 percent of annual income in excess of $150,000. Petitioner's annual income was less than $100,000 for 1995, 1996, 1997, 1998, and 1999. Accordingly, petitioner was not required to pay additional consideration.

⁴ Additionally, in numerous instances, we have noted the taxpayer's failure to present evidence at trial. This failure to present evidence supported our conclusion that the Appeals officer did not abuse his or her discretion. See, e.g., Dorn v. Commissioner [Dec. 55,209(M)], T.C. Memo. 2003-192 ("Petitioner did not offer sufficient evidence at his section 6330(b) hearing or before this Court to show he is entitled to prevail" when petitioner did not offer any evidence at trial related to the issues raised at his hearing); Maloney v. Commissioner [Dec. 55,158(M)], T.C. Memo. 2003-143 ("Petitioners did not present any evidence that their excess withholdings for 1984 exceeded [the stipulated amount of credits for increased Federal income tax withholdings, including FICA taxes]", and "they presented no evidence that they made deposits or that any FICA taxes were assessed after the applicable period of limitations had expired"), affd. 94 Fed. Appx. 969 (3d Cir. 2004); Schulman v. Commissioner [Dec. 54,757(M)], T.C. Memo. 2002-129 (settlement officer did not abuse her discretion where "petitioners presented no evidence at trial or on brief to otherwise substantiate their expenses" and where "petitioners did not introduce any evidence of any meaningful ties to Ozaukee County, other than the relative proximity of their residence"); Howard v. Commissioner [Dec. 54,697(M)], T.C. Memo. 2002-81 ("Petitioner also did not present any evidence at trial or otherwise show any irregularity in the assessment procedure.").

⁵ On remand, the U.S. District Court held that the taxpayer's failure to timely pay his 1995 taxes was a material breach of the offer-in-compromise. Further, the court held that "the doctrine of substantial performance has no relevance in this case as the Plaintiff completely failed to timely pay his 1995 federal income tax liability, and instead waited to pay it until April 10, 1997, so that he could offset his tax liability for 1995 with his losses in 1996." Roberts v. United States [2002-1 USTC ¶50,173], 225 F. Supp. 2d 1138, 1149 (E.D. Mo. 2001).

⁶ We note that by the terms of the offer-in-compromise, the offer-in-compromise did not apply to 2000.

¹ I do not mean to suggest, however, that respondent could not have considered contract law issues, as well as other facts and issues, as part of the balancing required under sec. 6330(c)(3)(C).

² By "hours-late" I mean hours after the "last collection" requirement of sec. 301.7502-1(c)(1)(iii)(B), Proced. & Admin. Regs.

³ I do not mean to imply that taxpayers are not required to comply with the technical requirements of the Internal Revenue Code and the regulations thereunder. However, respondent should have allowed petitioner to present evidence favoring petitioner's position despite petitioner's failure to comply with the last collection requirement of sec. 301.7502-1(c)(1)(iii)(B), Proced. & Admin. Regs.

¹ Although the Appeals officer's case activity records indicate that he telephoned a person in the National Office on at least two occasions regarding whether a defaulted offer-in-compromise could be reinstated, it does not appear from the records that formal guidance from the National Office was ever obtained.

¹ Seventeen judges voted in conference on Judge Vasquez's report in this case. Including Judge Vasquez, six judges agree fully with the report, while eight concur in the result but take exception to one or more of the report's particulars. Since we do not have a full exposition of the exceptions, we are unable to say exactly how strong the conference agreement is on any of the particulars of the report. We will assume, however, that a majority could be marshaled for each of the particulars we address here, and will refer to the "majority" in discussing those particulars.

² As part of the agreement, petitioner also waived the period of limitations on collection.

³ As we discussed in our dissenting opinion in Ewing v. Commissioner [Dec. 55,519], 122 T.C. 32, 57-59 (2004) (Halpern and Holmes, JJ., dissenting), the issue regarding the applicability of the APA is a red herring. The issue in Ewing was whether our review of the Commissioner's denial of sec. 6015(f) relief is subject to the record rule --the general rule of administrative law that a court can engage in judicial review of an agency action only on the basis of the record amassed by the agency. See id. at 56, 58. The record rule predates, and indeed is not codified in, the APA. Id. at 58 n.4.

⁴ We do note that, in our Ewing dissent, we addressed much of the authority relied on by the majority here in its scope of review analysis. See, e.g., Ewing v. Commissioner, supra at 60-61 (Halpern and Holmes, JJ., dissenting) (criticizing O'Dwyer v. Commissioner [59-1 USTC ¶9441], 266 F.2d 575 (4th Cir. 1959), affg. [Dec. 22,434] 28 T.C. 698 (1957)); id. at 60 n.7 (explaining the context of Nappi v. Commissioner [Dec. 31,384], 58 T.C. 282 (1972)); id. at 61 n.9 (explaining the context of Bowen v. Massachusetts, 487 U.S. 879, 903 (1988), and Beall v. United States [2003-2 USTC ¶50,551], 336 F.3d 419 (5th Cir. 2003)); id. at 64 n.11 (discussing APA sec. 559); id. at 65-66 (distinguishing Thor Power Tool v. Commissioner [79-1 USTC ¶9139], 439 U.S. 522 (1979), Bausch & Lomb, Inc. v. Commissioner [91-1 USTC ¶50,244], 933 F.2d 1084 (2d Cir. 1991), affg. [Dec. 45,547] 92 T.C. 525 (1989), and Krause v. Commissioner [Dec. 48,383], 99 T.C. 132 (1992), affd. sub nom. Hildebrand v. Commissioner [94-2 USTC ¶50,305], 28 F.3d 1024 (10th Cir. 1994)).

⁵ As noted earlier, see supra note 3, the record rule predates, and is not codified in, the APA. See also Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 60 n.8 and accompanying text (Halpern and Holmes, JJ., dissenting).

⁶ The fact that our application of an abuse of discretion standard may be the subject of a trial de novo does not necessarily mean that we are free to substitute our judgment for that of the Commissioner in such cases. See, e.g., Capitol Fed. Sav. & Loan Association v. Commissioner [Dec. 47,169], 96 T.C. 204, 209 (1991) (sec. 446); Bausch & Lomb, Inc. v. Commissioner [Dec. 45,547], 92 T.C. 525 (1989), affd. [91-1 USTC ¶50,244] 933 F.2d 1084 (2d Cir. 1991) (sec. 482).

⁷ Separately, the majority cites two Memorandum Opinions of this Court in support of the proposition that "[t]he Court has consistently conducted trials on the issue of whether the Commissioner's denial of a request to abate interest under section 6404 was an abuse of discretion." Majority op. pp. 25-26. In neither case did the Court address the issue of the appropriate scope of review. Although the issue is not before us today, we would conclude that, for the same reasons discussed herein and in our Ewing dissent, our review of the Commissioner's interest abatement determinations is not properly the subject of de novo proceedings. See Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 65 n.12 (Halpern and Holmes, JJ., dissenting).

⁸ While the majority assumes that Arkansas law governs the contract issue, it is quite possible that, under principles set forth in Clearfield Trust Co. v. United States, 318 U.S. 363, 366-367 (1943), and United States v. Kimbell Foods, Inc., 440 U.S. 715, 727-729 (1979), the Federal common law of contracts is the appropriate choice of law. See Saltzman, IRS Practice and Procedure, par. 15.03[4][b], at 15-82 n.200 (rev. 2d ed. 2002).

⁹ We are aware of authority indicating that, in the context of an executory accord (which an offer-in-compromise resembles), enforcement of the original obligation is justified only if the obligee's noncompliance with the accord is material. See Frank Felix Associates, Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 286-289 (2d Cir. 1997) (reasoning at 287 that, under a rule requiring strict compliance with the accord, the obligee "could obtain payment of a contested debt and, due to a minor breach of the accord, receive the windfall entitlement to reassert its pre-settlement claims" (Emphasis added.)). We are not aware of any authority addressing the interplay between that line of reasoning and the doctrine of express conditions. Again, if we are going to undertake a substantive analysis of contract law, those are the types of issues we should be addressing.

[Dec. 55,696(M)] Peggy A. Farley v. Commissioner.

Dkt. No. 6897-03L , TC Memo. 2004-168, July 19, 2004 .

[Appealable, barring stipulation to the contrary, to CA-3]

[Code Secs. 6320 and 6330]
Internal Revenue Service: Collection Due Process: Judicial review. --

The Tax Court refused to review the IRS's determination to proceed with collection of a taxpayer's unpaid tax liability. The taxpayer was given the opportunity to challenge the disallowance of claimed casualty losses by filing suit in district court, but she failed to do so. As a result, she conceded the correctness of the underlying tax liability. Since she had failed to allege any other issues that would allow the court to review the notice, her petition for judicial review was denied.

Peggy A. Farley, pro se; Brian D. Derdowski, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This matter is before the Court on respondent's motion for summary judgment, filed pursuant to Rule 121.¹ As explained in more detail below we shall grant such motion.

Background

The petition in this case was timely filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 with respect to the taxable years 1992 through 1997. At the time the petition was filed herein, petitioner resided in Newton, New Jersey. While the tax returns are not part of the record in this case, our recitation of the background of the case is based in part upon IRS transcripts of account. The facts do not appear to be in dispute.

Petitioner's 1990 and 1991 Federal income tax returns were filed September 20, 1993 . The returns each reflected a balance due after withholding; the taxes shown on the returns, plus interest and estimated tax penalty, were assessed. The balances due for 1990 and 1991 were ultimately paid in full by January 1999, after periodic payments and overpayment offsets from years after 1991.

Petitioner's 1992 through 1996 returns were filed as follows:

  Year                                          Date of Filing of Return

  1992                                                
Oct. 10, 1994

  1993                                                
Nov. 28, 1994

  1994                                                
Apr. 27, 1998

  1995                                                
July 27, 1998

  1996                                                
July 27, 1998

While there were withheld taxes and payment credits, a balance is due and owing with respect to each of the taxable years 1992 through 1996.

The 1997 tax return was filed on August 3, 1998 . While petitioner's account was credited with some withholding tax, a balance was reflected as due on the return. An additional tax was assessed on February 28, 2000 , based on an agreement by petitioner. A balance remains due.

On January 3, 1999 , petitioner filed amended returns for the taxable years 1990, 1991, 1992, and 1993. Petitioner claimed a casualty loss for 1990, which she sought to carry forward to the taxable years 1991 through 1993.

On November 17, 1999 , respondent notified petitioner of a proposed disallowance of the claimed casualty loss. On December 13, 1999 , respondent issued a letter to petitioner advising of the right to an Appeals Office hearing with respect to the disallowance. Petitioner requested a hearing before the Appeals Office. By letter dated November 2, 2000 , respondent's Appeals Office advised petitioner that the claim was disallowed on the merits and further indicated as follows:

If you wish to bring suit or proceedings for the recovery of any tax, penalties or other moneys for which this disallowance notice is issued, you may do so by filing such a suit with the United States District Court having jurisdiction, or with the United States Court of Federal Claims. The law permits you to do this within 2 years from the mailing date of this letter. However, if you signed a waiver of the notice of claim disallowance (Form 2297), the period for bringing suit began to run on the date you filed the waiver.

In an attachment to the letter, respondent explained the basis for the disallowance. Petitioner did not file suit with the United States District Court or the United States Court of Federal Claims.

On February 22, 2001 , respondent sent to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. The amounts listed as owing were set forth on the second page of the letter as follows:

                      Unpaid Amount from   Additional Penalty

TYE Amount Dec. 31      Prior Notices         & Interest        You Owe

 1992              $23,074.30           $31,031.44           $54,105.74

 1993               32,723.25            29,164.71            61,887.96

 1994               32,639.49            9,996.45             42,635.94

 1995               33,669.86            10,483.24            44,153.10

 1996               31,933.14            11,484.01            43,417.15

 1997               22,862.00            10,740.11            33,602.11

Petitioner requested a hearing by letter dated March 19, 2001 . On June 14, 2002 , an IRS revenue officer had a telephone conference with petitioner's representative concerning the February 22, 2001 , letter from the IRS. On April 7, 2003 , respondent sent petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and or 6330 (notice of determination), with respect to the taxable years 1992 through 1997. As indicated, a timely petition was filed in response thereto.²

The petition in this case, timely filed on May 8, 2003 ,³ in response to the notice of determination raises only issues of the underlying tax liability as claimed by petitioner in the amended returns for 1990 through 1993. Petitioner asserts that she is entitled to a casualty loss for 1990.

Respondent's motion for summary judgment was set for hearing, and the parties appeared and presented argument. Also, petitioner filed an objection to the motion.

Discussion

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See Fla. Peach Corp. v. Commissioner [Dec. 44,689], 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(b); Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner [Dec. 44,714], 90 T.C. 753, 754 (1988); Naftel v. Commissioner [Dec. 42,414], 85 T.C. 527, 529 (1985). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences will be read in a manner most favorable to the party opposing summary judgment. See Dahlstrom v. Commissioner [Dec. 42,486], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278], 79 T.C. 340, 344 (1982). We are satisfied from our review of the record that there is no genuine issue as to any material fact.

Section 6330 generally provides that the Commissioner cannot proceed with collection of tax by levying upon the property of any person until the person has been given notice and the opportunity for an administrative review of the matter. See Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179 (2000). Section 6330(d) provides for judicial review of the administrative determination in the Tax Court or a Federal District Court, as may be appropriate.

Section 6330(c) prescribes the matters that a person may raise at an Appeals Office hearing. Section 6330(c)(2)(A) provides that a person may raise collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. See Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1, 5 (2004); Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 609 (2000); Goza v. Commissioner, supra. In addition, section 6330(c)(2)(B) establishes the circumstances under which a person may challenge the existence or amount of his or her underlying tax liability. Section 6330(c)(2)(B) provides:

(2). Issues at hearing. --

* * * * * *

(B) Underlying Liability. --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.

In Montgomery v. Commissioner, supra, we were called upon to decide the meaning of the term "underlying tax liability". In that case we held that the amount the taxpayers reported due on their tax return along with statutory interest and penalties constituted the underlying tax liability. As the taxpayers in Montgomery did not receive a notice of deficiency, we had to further decide, whether they "did not otherwise have an opportunity to dispute such tax liability". The taxpayers argued before the IRS that they had overstated their tax liability for the taxable year 2000 on their original return and intended to submit an amended return. Although the parties agreed that the taxpayers would be permitted to submit an amended return, the IRS Appeals Office issued the taxpayers a notice of determination concerning collection action before the taxpayers submitted an amended return. The taxpayers subsequently submitted an amended return, but the record did not reflect whether the IRS considered it.

We concluded in Montgomery that, as of the time of the issuance of our opinion, the taxpayers had not had an opportunity to dispute the underlying tax liability. We opined that since the taxpayers did not have an earlier opportunity to dispute the underlying tax liability, they came within the provisions of section 6330(c)(2)(B) and could dispute the assessed amounts reflected on the tax return in the context of the collection proceeding.

In the present case, petitioner filed amended returns for 1990 through 1993 claiming a refund of taxes for those years. Petitioner was notified by the IRS of a proposed disallowance and was given an opportunity for a hearing in the IRS Appeals Office. On November 2, 2000 , the IRS Appeals Office issued a notice of disallowance which explained that if petitioner disagreed with the claim disallowance, that she had the right to file a suit for refund in either the United States District Court or the United States Court of Federal Claims. The record does not reflect that any suit was filed seeking a refund.

Petitioner asserts in her objection that:

9. Pursuant to receipt of respondent's appeals action, petitioner hired an attorney to conduct further action, especially court actions. Petitioner was not kept informed of the attorney's actions by the attorney and assumed that appropriate action was being taken.

10. Petitioner maintains that there should have been an appeal before the United States District Court relating to her case. Petitioner believes that the Court's decision related to the appeal would have been favorable to petitioner.

This case is clearly distinguishable from Montgomery. After submitting the amended returns, petitioner was given an opportunity to have the claim for refund considered by the IRS Appeals Office. Further, upon receipt of the notice of claim disallowance dated November 2, 2000 , petitioner was provided an opportunity to dispute the underlying tax liability by filing a suit for a refund in the United States District Court or the United States Court of Federal Claims. Petitioner did not file a suit for refund.

Based on the foregoing we are satisfied that petitioner had an opportunity to dispute the underlying tax liability within the meaning of section 6330(c)(2)(B), and, accordingly, we agree with respondent that petitioner is not entitled to challenge the underlying liability in this proceeding. Goza v. Commissioner [Dec. 53,803], 114 T.C. 176 (2000). Furthermore, petitioner has not raised an issue of a spousal defense, made a challenge to the appropriateness of respondent's intended collection action, or offered alternative means of collection. These issues are now deemed conceded. Rule 331(b)(4). Under these circumstances, we conclude that respondent is entitled to judgment as a matter of law sustaining the notice of determination.

An appropriate order and decision will be entered that respondent may proceed with collection action as determined in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 for the taxable years 1992 through 1997, dated April 7, 2003 .

An appropriate order and decision will be entered.

¹ Section references are to the Internal Revenue Code, as amended. Rule references are to the Tax Court Rules of Practice and Procedure.

² During the period of the collection proceeding, petitioner also sent to respondent a letter dated May 23, 2002, and Form 843, Claim for Refund and Request for Abatement, dated May 17, 2002, requesting abatement of interest and penalties for the taxable years 1992 through 1999. By letter dated Nov. 6, 2002, respondent issued a letter of final determination to petitioner disallowing the interest abatement claim under sec. 6404(e)(1). The letter advised petitioner of a right to file a petition with the Tax Court. The petition filed in this case does not make any reference to the request for interest abatement or the claim disallowance, nor was a copy of such correspondence attached to the petition.

³ The envelope in which the petition was contained reflects that it was received by Federal Express (priority overnight) on May 6, 2003. The timely mailing, timely filing provisions apply. See sec. 7502(a), (f); IRS Notice 2001-62, 2001-2 C.B. 307.

[Dec. 55,773(M)] Kathryn Ann Picchiottino v. Commissioner.

Dkt. No. 784-04L , TC Memo. 2004-231, October 12, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Sec. 6330]
Collection Due Process: Failure to appear: Failure to provide information. --

The IRS did not act arbitrarily when it determined to proceed with a levy to collect an outstanding tax liability arising out of a joint return filed by married taxpayers who later separated. The taxpayers reported the tax liability on their return for the year at issue but failed to pay that liability in full. In their requests for a Collection Due Process hearing, the taxpayers raised only two issues, the statute of limitations and the uncollectibility of the liability due to the taxpayers' inability to pay. However, neither taxpayer attended the scheduled hearing or provided the requested financial information to the IRS Appeals officer. Therefore, the IRS correctly determined that it could proceed with its collection activity.

Kathryn Ann Picchiottino, pro se; Jonae A. Harrison, for respondent.

P filed a petition for judicial review pursuant to sec. 6330, I.R.C., in response to a determination by R that levy action was appropriate.

Held: Because the record shows that no period of limitations precludes collection and because P failed to submit any current financial documentation in support of her claims of inability to pay, R's determination to proceed with collection action is sustained.

MEMORANDUM OPINION

WHERRY, Judge: This case is before the Court on respondent's motion for summary judgment pursuant to Rule 121.¹ The instant proceeding arises from a petition for judicial review filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. The issue for decision is whether respondent may proceed with collection action as so determined.

Background

For the taxable year 2001, petitioner filed a joint Form 1040, U.S. Individual Income Tax Return, with Scott Perry Picchiottino (Mr. Picchiottino) on April 15, 2002 , reporting a tax liability of $12,629.² Petitioner and Mr. Picchiottino did not fully pay the liability reflected on the return. Respondent assessed the liability for 2001 on June 10, 2002 .³

On March 8, 2003 , respondent issued to petitioner a Final Notice of Intent To Levy and Notice of Your Right To A Hearing, with respect to the 2001 liability.⁴ The notice listed a total amount due, including statutory additions, of $5,410.37.

In response to the notice, petitioner and Mr. Picchiottino timely submitted a Form 12153, Request for a Collection Due Process Hearing, dated March 10, 2003 . The Form 12153 was filed with the Internal Revenue Service (IRS) on or before March 27, 2003 . The form pertained to 2001 ⁵ and contained the following statement of disagreement with the proposed collection action: "TOLD STATUS WAS `UNCOLLECTABLE' by IRS Mrs. Hernandez #8903695".

On March 13, 2003 , a Notice of Federal Tax Lien Filing and Your Right to a Hearing was issued to petitioner with respect to 2001. Although petitioner and Mr. Picchiottino had checked boxes on the filed Form 12153 dated March 10, 2003 , discussed above, indicating disagreement with both a filed notice of Federal tax lien and a notice of levy, that Form 12153 was signed and sent by petitioner and Mr. Picchiottino before the notice of lien was issued. The Form 12153 was therefore, in respondent's view, premature and without effect as to the lien filing.⁶

By a letter dated April 21, 2003 , the IRS responded to the assertion in the Form 12153 regarding the collectibility of the liabilities. The letter explained the nature of the "not collectable" designation as follows: "Your account has been placed in a currently not collectable status. You still owe the balance due and penalty and interest will continue to accrue until the balance due has been paid in full, but we are not enforcing collection until you are able to make payments on the balance due at some point in the future."

Thereafter, the case was assigned to the IRS Office of Appeals in Phoenix, Arizona. Settlement Officer Thomas L. Tracy (Mr. Tracy) sent petitioner and Mr. Picchiottino a letter dated November 5, 2003 , scheduling a hearing for November 25, 2003 , and briefly outlining the hearing process. Petitioner and Mr. Picchiottino then submitted another Form 12153, pertaining to 1997, 1998, 1999, and 2001, dated November 7, 2003 , and received by the IRS on November 13, 2003 . They checked the box indicating disagreement with a filed notice of Federal tax lien and wrote: "Request without predjudice [sic] that hearing be held after Superior Court Action FN 2003-092649 is adjudicated."

Mr. Tracy responded by a letter to petitioner dated November 13, 2003 , stating:

I am in receipt of Form 12153 signed by you and Scott Picchiottino on November 7, 2003 . It states only that you wish a hearing after Superior Court Action FN 2003-092649. I understand that this is your divorce suit. I am sorry, but I cannot defer action on your case for an extended and indefinite period of time. I am extending to you the hearing opportunity that you had originally requested on March 10, 2003 .

I have enclosed a copy of my letter dated November 5, 2003 . The hearing was scheduled with Scott Picchiottino. I have left several messages for you to schedule an independent hearing but you have not responded to my messages. Please call me at (602)207-8117 to schedule the hearing that you requested. If we cannot schedule and hold your hearing by December 10, 2003 , I will make my determination based on information in the file and with no further opportunity for a hearing. You are welcome to attend the November 25 hearing or to schedule an independent hearing with me. If you no longer want a hearing, please sign and return the enclosed withdrawal form.

You are entitled to a hearing under Sections 6320 and 6330 of the Internal Revenue Code (IRC) relative to the 2001 tax year. Your hearing request lists additional years of liability that are not assessed in your name. Those tax periods do appear to be community debts and for which community property is subject to the Federal Tax Lien.

Your original hearing request said only, "Told status was `uncollectible' by IRS Mrs. Hernandez #893695". Indeed, Compliance did place your account in temporarily not collectible status shortly after the date of your hearing request.

The IRC 6320 hearing opportunity is relative to the Notice of Federal Tax Lien that was recorded for the 2001 tax year.⁷ The "uncollectible status" has no direct bearing on the recorded lien; the provisions of IRC 6325 afford the only bases for release of the lien --that the account be satisfied (paid), legally not enforceable or upon the posting of a bond.

The IRC 6330 hearing opportunity arose upon the issuance of a Notice of Intent to Levy, prior to the "uncollectible status" determination that was made by Compliance. If you wish for me to make an independent determination of the collection status of your account, the IRC 6330 issue, you must make full financial disclosure. I have enclosed a blank Form 433A financial statement for that purpose. You are not obliged to submit this form to me but if you wish me to consider collection alternatives, I must have the form submitted to me on or before the scheduled hearing date.

Please call me and afford to me your current address. Petitioner did not complete or return the financial form, did not attempt to reschedule a hearing, and did not otherwise contact Mr. Tracy. She did not appear for the conference, nor did Mr. Picchiottino, so no hearing was held.

It is determined that the Notice of Intent to Levy be sustained. The taxpayer asserts an inability to pay but has not provided financial information to substantiate the hardship claim. The financial statement, dated January 20, 2003 and upon which Compliance had made its currently-not-collectible determination, had been prepared and signed by the taxpayer's husband. It did not report income and assets of the taxpayer. The taxpayer did not complete and return the financial statement I had sent to her on November 13, 2003 . * * *

Petitioner's petition disputing the notice of determination was filed with the Court on January 14, 2004 , and reflected an address in Tempe, Arizona. The petition makes two assignments of error vis-a-vis respondent's determination: "Inability to pay and maintain household. Salary $35,000 yr" and "Statute for enforcement lapsed due to IRS delays".

After the pleadings were closed in this case, respondent filed the subject motion for summary judgment. Petitioner was directed to file any response to respondent's motion on or before September 17, 2004 . No such response has been received by the Court.

Discussion

Rule 121(a) allows a party to move "for a summary adjudication in the moving party's favor upon all or any part of the legal issues in controversy." Rule 121(b) directs that a decision on such a motion shall be rendered "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law."

The moving party bears the burden of demonstrating that no genuine issue of material fact exists and that he or she is entitled to judgment as a matter of law. Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994). Facts are viewed in the light most favorable to the nonmoving party. Id. However, where a motion for summary judgment has been properly made and supported by the moving party, the opposing party may not rest upon mere allegations or denials contained in that party's pleadings but must by affidavits or otherwise set forth specific facts showing that there is a genuine issue for trial. Rule 121(d).

Collection Actions

A. General Rules

Section 6331(a) authorizes the Commissioner to levy upon all property and rights to property of a taxpayer where there exists a failure to pay any tax liability within 10 days after notice and demand for payment. Sections 6331(d) and 6330 then set forth procedures generally applicable to afford protections for taxpayers in such levy situations. Section 6331(d) establishes the requirement that a person be provided with at least 30 days' prior written notice of the Commissioner's intent to levy before collection may proceed. Section 6331(d) also indicates that this notification should include a statement of available administrative appeals. Section 6330(a) expands in several respects upon the premise of section 6331(d), forbidding collection by levy until the taxpayer has received notice of the opportunity for administrative review of the matter in the form of a hearing before the IRS Office of Appeals. Section 6330(b) grants a taxpayer who so requests the right to a fair hearing before an impartial Appeals officer.

Section 6330(c) addresses the matters to be considered at the hearing:

SEC. 6330(c). Matters Considered at Hearing. --In the case of any hearing conducted under this section --

(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.

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

(B) Underlying liability. --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.

Once the Appeals officer has issued a determination regarding the disputed collection action, section 6330(d) allows the taxpayer to seek judicial review in the Tax Court or a District Court, depending upon the type of tax. In considering whether taxpayers are entitled to any relief from the Commissioner's determination, this Court has established the following standard of review:

where the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly at issue, the Court will review the Commissioner's administrative determination for abuse of discretion. [Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).]

B. Analysis

As a threshold matter, the Court notes that the tax liabilities at issue in this case derive from the amounts self-reported by petitioner and Mr. Picchiottino on their filed return. No notice of deficiency was issued to petitioner, and petitioner has not otherwise had an opportunity to dispute her liability for 2001. Accordingly, to the extent that any of the statements in the petition are properly construed as a challenge to the underlying liabilities, petitioner is not precluded by section 6330(c)(2)(B) from making such a challenge in this proceeding. Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1, 9 (2004).

1. "Statute for enforcement"

Petitioner asserts in the petition: "Statute for enforcement lapsed due to IRS delays". Although it is unclear what precisely is meant by the "statute for enforcement", it is clear that no pertinent statute operates as a time bar to respondent's proposed collection activity in the circumstances of this case.

Section 6501 sets forth limitations on assessment and provides as a general rule that income taxes must be assessed within 3 years after the filing of the underlying tax return. Sec. 6501(a). Section 6502(a) then specifies that where assessment was made within the pertinent period of limitations, the tax may be collected by levy within 10 years after the assessment of the tax. A hearing request under section 6330 will suspend the running of the period of limitations described in section 6502 during the period that "such hearing, and appeals therein, are pending." Sec. 6330(e)(1).

Here, petitioner's liabilities for 2001 were assessed on June 10, 2002 , and the corresponding return had been filed on April 15, 2002 . Accordingly, assessment was well within the 3-year period of limitations. Respondent received petitioner's Form 12153 on March 27, 2003 , at which time the applicable 10-year period of limitations for collection by levy had not expired. The running of this 10-year period was suspended by the Form 12153 and remains suspended. Hence, collection of petitioner's Federal income tax liability for the year in issue is not time barred.⁹

2. "Inability to pay"

Petitioner's claim regarding inability to pay bears upon issues such as collection alternatives that the Court reviews for abuse of discretion. Action constitutes an abuse of discretion under this standard where arbitrary, capricious, or without sound basis in fact or law. Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999).

Here, the record reflects no abuse of discretion by respondent in declining to alter the proposed collection activity on account of petitioner's unsupported assertions of financial difficulties. To enable the Commissioner to evaluate a taxpayer's qualification for collection alternatives or other relief in the face of allegations of economic hardship, the taxpayer must submit complete and current financial data.

Petitioner, however, never supplied a current Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or other financial information to respondent, despite an express request and explanation of the reason therefor from respondent. The notice of determination indicates that earlier financial information, furnished by petitioner's former husband, had generated the temporary "not collectible" designation made by "Compliance". These materials were not signed by petitioner and did not report her income and assets. Petitioner did not submit current financial information when asked to do so. She also failed to appear for the scheduled hearing and thus lost that opportunity to otherwise corroborate her claims.

Consequently, although the Court is sympathetic to any economic difficulties petitioner may have encountered or be encountering, it cannot be said that respondent acted arbitrarily or capriciously in determining to proceed with levy when petitioner submitted no documentation of her present financial circumstances. See Newstat v. Commissioner [Dec. 55,747(M)], T.C. Memo. 2004-208.

The petition makes no assignments of error other than the two contentions discussed above. As this Court has noted in earlier cases, Rule 331(b)(4) states that a petition for review of a collection action shall contain clear and concise assignments of each and every error alleged to have been committed in the notice of determination and that any issue not raised in the assignments of error shall be deemed conceded. See Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 185-186 (2001); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 183 (2000). Accordingly, the Court concludes that respondent's determination to proceed with collection of petitioner's tax liabilities was not an abuse of discretion. The Court will grant respondent's motion for summary judgment. To reflect the foregoing,

An appropriate order granting respondent's motion and decision for respondent will be entered.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

² One of the documents in the record may indicate that the amount reported on the 2001 return was $12,929. In any event, a possible discrepancy or ambiguity on this point is immaterial here in that it is clear the amount assessed was only $12,629.

³ We note that respondent's motion for summary judgment contains an apparently inadvertent error in listing the same date for the filing of the return and the assessment of the reported liability. The attached transcript of account for 2001 shows the correct dates.

⁴ Respondent issued to Mr. Picchiottino an identical Final Notice of Intent To Levy and Notice of Your Right to a Hearing with respect to the 2001 year.

⁵ This Form 12153 also listed 2002, but no collection activity is reflected by the record with respect thereto.

⁶ For the sake of completeness, we note that insofar as our jurisdiction could be interpreted to extend to the Notice of Federal Tax Lien Filing and Your Right to a Hearing, we would sustain the lien filing by summary judgment on grounds substantially identical to those discussed infra in connection with the levy.

⁷ An attachment to the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 underlying this action stated that because petitioner's Forms 12153 were untimely with respect to the notice of Federal tax lien, she was entitled only to a so-called equivalent hearing, not subject to judicial review, with respect to the lien notice.

⁸ As regards the lien, with respect to which petitioner was granted an opportunity for an "equivalent hearing", the attachment provided: "It is decided that the Notice of Federal Tax Lien be sustained. The conditions of IRC 6325 for release of lien have not been met; that the liability be satisfied, legally unenforceable or upon the posting of a bond. Neither do the conditions of IRC 6323(j) apply for withdrawal of the lien." See supra note 6.

⁹ The Court also notes that to the extent petitioner's argument might attempt to raise the doctrine of laches, which focuses on the concept of unreasonable and prejudicial delay, it is well settled that the United States is not subject to the defense of laches in enforcing its rights. United States v. Summerlin [40-2 USTC ¶9633], 310 U.S. 414, 416 (1940); Guaranty Trust Co. v. United States, 304 U.S. 126, 132-133 (1938). Rather, timeliness of Government claims is governed by the statutes of limitations enacted by Congress. Fein v. United States, 22 F.3d 631, 634 (5th Cir. 1994).

[Dec. 55,774(M)] Scott Perry Picchiottino v. Commissioner.

Dkt. No. 785-04L , TC Memo. 2004-232, October 12, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Sec. 6330]
Collection Due Process: Failure to appear: Failure to provide information.

The IRS did not act arbitrarily when it determined to proceed with a levy to collect an outstanding tax liability arising out of a joint return filed by married taxpayers who later separated. The taxpayers reported the tax liability on their return for the year at issue but failed to pay that liability in full. In their requests for Collection Due Process hearing, the taxpayers raised only two issues, the statute of limitations and the uncollectibility of the liability due to the taxpayers' inability to pay. However, neither taxpayer attended the scheduled hearing or provided the requested financial information to the IRS Appeals officer. Therefore, the IRS correctly determined that it could proceed with its collection activity.

Scott Perry Picchiottino, pro se; Jonae A. Harrison, for respondent.

P filed a petition for judicial review pursuant to sec. 6330, I.R.C., in response to a determination by R that levy action was appropriate.

Held: Because the record shows that no period of limitations precludes collection and because P failed to submit any current financial documentation in support of his claims of inability to pay, R's determination to proceed with collection action is sustained.

MEMORANDUM OPINION

Background

Petitioner filed Forms 1040, U.S. Individual Income Tax Return, for the taxable years 1997, 1998, and 1999, using the filing status of married filing separately. The 1997 return was filed on August 28, 2002 , and reported a tax liability of $1,631.² The 1998 return was filed on August 20, 2002 , and reported a tax liability of $7,853. The 1999 return was filed on August 28, 2002 , and reported a tax liability of $4,086. For the taxable year 2001, petitioner filed a joint return with Kathryn Ann Picchiottino (Ms. Picchiottino) on April 15, 2002 , reporting a tax liability of $12,629.³

Petitioner did not fully pay the liability reflected on any of the four returns. Respondent assessed the liabilities for 1997, 1998, 1999, and 2001 on November 18, 2002 , November 25, 2002 , October 21, 2002 , and June 10, 2002 , respectively.

On March 8, 2003 , respondent issued to petitioner two Final Notices of Intent To Levy and Notice of Your Right To A Hearing. One pertained to liabilities for 1997, 1998, and 1999, and listed a total amount due, including statutory additions, of $18,188.83. The other addressed 2001 and provided a total amount due, again including statutory additions, of $5,410.37.

In response to the notices petitioner timely submitted two Forms 12153, Request for a Collection Due Process Hearing, dated March 10, 2003 . The Forms 12153 were filed with the Internal Revenue Service (IRS) on or before March 27, 2003 . One was in petitioner's name only and addressed 1997, 1998, and 1999.⁴ The other was in the names of petitioner and Ms. Picchiottino and pertained to 2001.⁵ The Forms 12153 contained identical statements of disagreement with the proposed collection action; i.e., "TOLD STATUS WAS `UNCOLLECTABLE' by IRS Mrs. Hernandez #8903695".

On March 13, 2003 , a Notice of Federal Tax Lien Filing and Your Right to a Hearing was issued to petitioner with respect to all 4 years. Although petitioner had checked boxes on the two Forms 12153 discussed above indicating disagreement with both a filed notice of Federal tax lien and a notice of levy, those Forms 12153 were signed and sent by petitioner before the notice of lien was issued. The Forms 12153 were therefore, in respondent's view, premature and without effect as to the lien filing.⁶

By a letter dated April 21, 2003 , the IRS responded to the assertion in petitioner's Forms 12153 regarding the collectibility of the liabilities. The letter explained the nature of the "not collectable" designation as follows: "Your account has been placed in a currently not collectable status. You still owe the balance due and penalty and interest will continue to accrue until the balance due has been paid in full, but we are not enforcing collection until you are able to make payments on the balance due at some point in the future."

Thereafter, the case was assigned to the IRS Office of Appeals in Phoenix, Arizona. Settlement Officer Thomas L. Tracy (Mr. Tracy) sent petitioner and Ms. Picchiottino a letter dated November 5, 2003 , scheduling a hearing for November 25, 2003 , and briefly outlining the hearing process. Petitioner and Ms. Picchiottino then submitted another Form 12153 with respect to all 4 years dated November 7, 2003 , and received by the IRS on November 13, 2003 . They checked the box indicating disagreement with a filed notice of Federal tax lien and wrote: "Request without predjudice [sic] that hearing be held after Superior Court Action FN 2003-092649 is adjudicated."

Mr. Tracy responded by a letter to petitioner dated November 13, 2003 , stating:

I am in receipt of Form 12153 signed by you and Kathryn Picchiottino on November 7, 2003 . It states only that you wish a hearing after Superior Court Action FN 2003-092649 is adjudicated. I understand that this is your divorce suit. I am sorry, but I cannot defer action on your case for an extended and indefinite period of time.

We mutually scheduled the November 25 hearing and if that date is inconvenient, I will gladly reschedule to accommodate you. If we cannot schedule and hold a hearing by December 10, 2003 , I will make my determination from information in the file and with no further hearing opportunity.

The IRC 6320 hearing opportunity is relative to the Notice of Federal Tax Liens that were recorded.⁷ The "uncollectible status" has no direct bearing on the recorded liens; the provisions of IRC 6325 afford the only bases for release of lien --that the account be satisfied (paid), legally not enforceable or upon the posting of a bond.

The IRC 6330 hearing opportunity arose upon the issuance of a [sic] Notices of Intent to Levy, prior to the "uncollectible status" determination that was made by Compliance. If you wish for me to make an independent determination of the collection status of your account, the IRC 6330 issue, you must make full financial disclosure. I have enclosed a blank Form 433A financial statement for that purpose. You are not obliged to submit this form to me but if you wish me to consider collection alternatives, I must have the form submitted to me on or before the scheduled hearing date.

Petitioner did not complete or return the financial form, did not attempt to reschedule the hearing, and did not otherwise contact Mr. Tracy. He did not appear for the conference, nor did Ms. Picchiottino, so no hearing was held.

On January 8, 2004 , respondent issued to petitioner the aforementioned Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the proposed levy action. An attachment to the notice addressed the verification of legal and procedural requirements, the issues raised by the taxpayer, and the balancing of efficient collection and intrusiveness. With respect to the proposed levy, the attachment summarized: "It is determined that the Notices of Intent to Levy be sustained. The taxpayer asserts an inability to pay but has not provided current financial information to substantiate his hardship claim. There [sic] been no disclosure of community assets that might be subject to levy."⁸

Petitioner's petition disputing the notice of determination was filed with the Court on January 14, 2004 , and reflected an address in Tempe, Arizona. The petition makes two assignments of error vis-a-vis respondent's determination: "Inability to pay & maintain household. No job, no unemployment" and "Statute for enforcement lapsed due to inactivity by IRS agents".

Discussion

A. General Rules

Section 6330(c) addresses the matters to be considered at the hearing:

SEC. 6330(c). Matters Considered at Hearing. --In the case of any hearing conducted under this section --

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

B. Analysis

As a threshold matter, the Court notes that the tax liabilities at issue in this case derive from the amounts self-reported by petitioner on his filed returns. No notices of deficiency were issued to petitioner, and petitioner has not otherwise had an opportunity to dispute his liabilities for these years. Accordingly, to the extent that any of the statements in the petition are properly construed as a challenge to the underlying liabilities, petitioner is not precluded by section 6330(c)(2)(B) from making such a challenge in this proceeding. Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1, 9 (2004).

1. "Statute for enforcement"

Petitioner asserts in the petition: "Statute for enforcement lapsed due to inactivity by IRS agents". Although it is unclear what precisely is meant by the "statute for enforcement", it is clear that no pertinent statute operates as a time bar to respondent's proposed collection activity in the circumstances of this case.

Here, petitioner's liabilities for 1997, 1998, 1999, and 2001 were assessed on November 18, 2002 , November 25, 2002 , October 21, 2002 , and June 10, 2002 , respectively. The corresponding returns were filed on August 28, 2002 , August 20, 2002 , August 28, 2002 , and April 15, 2002 , respectively. Accordingly, assessment was well within the 3-year period of limitations. Respondent received petitioner's Forms 12153 on March 27, 2003 , at which time the applicable 10-year period of limitations for collection by levy had not expired. The running of this 10-year period was suspended by the Form 12153 and remains suspended. Hence, collection of petitioner's Federal income tax liabilities for the years in issue is not time barred.⁹

2. "Inability to pay"

Petitioner's claim regarding inability to pay, apparently on account of unemployment, bears upon issues such as collection alternatives that the Court reviews for abuse of discretion. Action constitutes an abuse of discretion under this standard where arbitrary, capricious, or without sound basis in fact or law. Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999).

Petitioner, however, never supplied a current Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or other financial information to respondent, despite an express request and explanation of the reason therefor from respondent. The notice of determination indicates that "aged" financial information had generated the temporary "not collectible" designation made by "Compliance", but that petitioner did not submit current materials when asked to do so. Petitioner also failed to appear for the scheduled hearing and thus lost that opportunity to otherwise corroborate his claims.

Consequently, although the Court is sympathetic to any economic difficulties petitioner may have encountered or be encountering, it cannot be said that respondent acted arbitrarily or capriciously in determining to proceed with levy when petitioner submitted no documentation of his present financial circumstances. See Newstat v. Commissioner [Dec. 55,747(M)], T.C. Memo. 2004-208.

An appropriate order granting respondent's motion and decision for respondent will be entered.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

² We note that respondent's motion for summary judgment contains apparently inadvertent errors in listing for each tax year the same date for the filing of the return and the assessment of the reported liabilities. The attached transcripts of account for each year show the correct dates.

³ One of the documents in the record may indicate that the amount reported on the 2001 return was $12,929. In any event, a possible discrepancy or ambiguity on this point is immaterial here in that it is clear the amount assessed was only $12,629.

⁴ The Form 12153, Request for a Collection Due Process Hearing, also listed 2000, but the record reflects no collection notice or other activity with regard to that year.

⁵ This Form 12153 also listed 2002, but again no collection notice or other activity is reflected by the record with respect thereto.

⁶ For the sake of completeness, we note that insofar as our jurisdiction could be interpreted to extend to the Notice of Federal Tax Lien Filing and Your Right to a Hearing, we would sustain the lien filing by summary judgment on grounds substantially identical to those discussed infra in connection with the levy.

⁷ An attachment to the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 underlying this action stated that because petitioner's Forms 12153 were untimely with respect to the notice of Federal tax lien, he was entitled only to an administrative, so-called equivalent hearing, not subject to judicial review, with respect to the lien notice.

⁸ As regards the lien, with respect to which petitioner was granted an opportunity for an "equivalent hearing", the attachment provided: "It is decided that the Notices of Federal Tax Lien be sustained. The conditions of IRC 6325 for release of lien have not been met; that the liability be satisfied, legally unenforceable or upon the posting of a bond. Neither do the conditions of IRC 6323(j) apply for withdrawal of the lien." See supra note 6.

⁹ The Court also notes that to the extent petitioner's argument might attempt to raise the doctrine of laches, which focuses on the concept of unreasonable and prejudicial delay, it is well settled that the United States is not subject to the defense of laches in enforcing its rights. United States v. Summerlin [40-2 USTC ¶9633], 310 U.S. 414, 416 (1940); Guaranty Trust Co. v. United States, 304 U.S. 126, 132-133 (1938). Rather, timeliness of Government claims is governed by the statutes of limitations enacted by Congress. Fein v. United States, 22 F.3d 631, 634 (5th Cir. 1994).

[Dec. 55,777(M)] Philip L. and Sara N. Eckert v. Commissioner.

Dkt. No. 1437-03L , TC Memo. 2004-235, October 13, 2004 .

[Appealable, barring stipulation to the contrary, to CA-7]

[Code Sec. 6330]
Notice of lien filing: Collection Due Process hearings: Tax liability outstanding. --

The IRS could proceed with collection of married taxpayers' outstanding income tax liability because the taxpayers failed to prove that they had already paid that tax liability. The taxpayers claimed that the IRS erroneously applied three checks to the taxpayers' outstanding employment tax liability, although they intended for those checks to be applied to their income tax liability for the year at issue. However, the taxpayers failed to present any credible evidence to support this assertion. To the contrary, the checks totalled the exact amount of the taxpayers' employment tax liability. Also, the taxpayers later sent two checks to be applied toward their income tax liability, which they likely would not have done if they had considered that liability paid with the previous checks.

Philip L. and Sara N. Eckert, pro sese; James A. Kutten, for respondent.

MEMORANDUM OPINION

CARLUZZO, Special Trial Judge: In a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 dated January 10, 2003 , respondent proposed to proceed with collection of petitioners' unpaid 1994 Federal income tax.¹ Petitioners object to respondent's proposed collection activity upon the ground that their 1994 Income tax liability has been fully paid.

Background

Some of the facts in this case have been stipulated and are so found. At the time the petition was filed, petitioners resided in O'Fallon, Illinois. References to petitioner are to Philip L. Eckert.

For years prior to 1994 petitioners owned 100 percent of the shares of, and operated Southwestern Illinois Family and Children's Testing and Therapy Clinic, Inc. (Southwestern). For periods during 1992 through 1995, Southwestern had unpaid Federal employment tax liabilities that totaled $26,000 (employment tax liabilities).²

During March 1996, petitioner delivered to respondent three checks in the amounts of $10,000, $15,000, and $1,000, for a total of $26,000. Each of the three checks contained petitioner's Social Security number and the notation "Pay only to IRS". None of the checks specifically identified the liability to which the check related. Respondent applied the $26,000 received from petitioner to Southwestern's $26,000 unpaid employment tax liabilities.

On June 1, 1999 , petitioners filed an untimely 1994 joint Federal income tax return (the 1994 return) on which they reported an income tax liability of $18,524. Withholding credits of $9,155, were applied against this liability, but no other payments were made with the return. On February 7, 2000 , the tax reported on petitioners' 1994 return, related additions to tax, and interest were assessed (the 1994 tax liability).

On April 27, 2001 , respondent issued to petitioners a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing, for the unpaid balance of their 1994 tax liability. On May 3, 2001 , respondent issued to petitioners a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. On May 8, 2001 , respondent filed a Notice of Federal Tax Lien (tax lien notice) with the Recorder of Deeds, St. Clair County, Belleville, Illinois, with respect to the 1994 tax liability.

During May 2001, petitioners sent to respondent two checks in the amounts of $11,859 and $10,000, designated to be applied to their 1994 tax liability. Both checks were subsequently dishonored for insufficient funds. On June 3, 2001 , before receiving notice that the checks had been dishonored, respondent released the tax lien notice. The release stated, in part, that petitioners had satisfied their 1994 tax liability.

On or about July 25, 2001 , petitioners sent to respondent a money order in the amount of $10,200. The money order included petitioner's Social Security number and the notation "1994 1040". The $10,200 payment was applied by respondent to petitioners' then outstanding 2000 tax liability.³

An administrative hearing was held on August 2, 2002 . During that hearing petitioner claimed that the 1994 tax liability had been paid in full by the three checks previously sent by petitioners to respondent in March 1996. As of the date of the administrative hearing, petitioners had not filed tax returns for 1995, 1997, 1998, 1999, or 2000. Consequently, respondent would not consider an installment agreement with respect to petitioners' 1994 tax liability. Petitioners subsequently filed a tax return for each of these years.

In August 2002, petitioners submitted a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. Petitioners listed their total monthly income and living expenses as $10,320 and $7,611, respectively. By letter dated August 8, 2002 , petitioners notified respondent that the $10,200 payment made on July 25, 2001 , was intended to be, and should have been, applied to their 1994 tax liability. Respondent subsequently took the necessary steps to apply the $10,200 payment to the 1994 tax liability.

On November 26, 2002 , the settlement officer who conducted the administrative hearing sent petitioners a letter inviting petitioners to discuss an installment agreement. Thereafter, petitioner twice informed the settlement officer that he would provide additional financial information in connection with an installment agreement, but petitioner never did so.

On January 10, 2003 , respondent issued to petitioners a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. In the notice of determination, respondent determined, in pertinent part: (1) The filing of the tax lien notice was sustained because the 1994 tax liability remained unpaid; (2) the notice of intent to levy was sustained because respondent could not reach an installment agreement with petitioners, and (3) all applicable laws and administrative procedures had been satisfied.

On August 12, 2003 , respondent filed a motion for summary judgment. On November 3, 2003 , the motion was denied and the case was remanded to respondent's Appeals Office for reconsideration regarding whether petitioners had fully paid their 1994 tax liability.

On November 20, 2003 , respondent revoked the release of the tax lien notice. In December 2003, respondent's settlement officer offered petitioners the opportunity for a further administrative hearing, but petitioners did not respond. On February 18, 2004 , respondent once again filed a Notice of Federal Tax Lien with respect to petitioners' 1994 tax liability.

Discussion

Petitioners do not allege any irregularities in the assessment process of their 1994 tax liability, and we are satisfied that there were none. Furthermore, petitioners do not claim that respondent has failed to satisfy any of the requirements of section 6320 or section 6330, and we are satisfied that respondent has satisfied all of those requirements. Instead, the dispute between the parties in this case focuses primarily on whether petitioners have fully paid their 1994 tax liability. According to respondent, they have not, and respondent has determined to collect the outstanding portion of that liability by levy and through the notice of tax lien. Because the amount or existence of petitioners' 1994 liability is properly at issue, we review de novo respondent's determination as to the existence of that liability.⁴ Boyd v. Commissioner [Dec. 54,495], 117 T.C. 127, 131 (2001); Landry v. Commissioner [Dec. 54,224], 116 T.C. 60, 62 (2001).

At the administrative hearing, petitioner claimed that all three of the checks delivered to respondent in March 1996 were intended in satisfaction of petitioners' 1994 tax liability and none of the checks should have been applied to Southwestern's unpaid employment tax liability. At trial, petitioner took the position that only the $10,000 check was erroneously applied to Southwestern's unpaid employment tax liability. Specifically, petitioner testified that in March 1996 an IRS employee "came knocking on my door * * * saying that we hadn't submitted the `94 tax return". According to petitioner, he gave the revenue agent the $10,000 check at that time, together with verbal instructions to apply the $10,000 to petitioners' 1994 tax liability. Like the other two checks delivered to respondent in March 1996, the $10,000 check did not bear any indication as to the tax liabilities to which the amount was to be applied. Furthermore, nothing in the record suggests that petitioners had previously received any correspondence from respondent with respect to the 1994 tax liability. At the time the checks were delivered to respondent, petitioners had not yet filed their 1994 return. The 1994 return was not filed by petitioners until June 1, 1999 . Furthermore, respondent did not assess petitioners' 1994 tax liability until February 7, 2000 .

Disregarding petitioner's self-serving, uncorroborated, and implausible testimony on the point, see Niedringhaus v. Commissioner [Dec. 48,411], 99 T.C. 202, 212 (1992), we find that petitioners have failed to present any credible evidence that the $10,000 payment made in March 1996 was intended to have been applied to petitioners' 1994 tax liability. To the extent that petitioners were visited by an IRS employee in March 1996, we think it more likely than not that the visit related to Southwestern's employment tax liabilities. Furthermore, we think it more than coincidence that the $26,000 paid to respondent in March of 1996 was, at the time, the amount of Southwestern's outstanding employment tax liability.

Our conclusion on this point is further supported by the payments made by petitioners in May 2001. As noted, in May 2001, petitioners sent two separate checks to respondent which totaled $21,859 to be applied to their 1994 tax liability. Both checks were subsequently returned for insufficient funds. Despite petitioner's explanation to the contrary, we find it implausible and unlikely that petitioners would make payments in excess of $21,000 with respect to the 1994 tax liability that they considered to have been previously paid.

Respondent introduced a certified transcript of account for petitioners' 1994 tax liability. The transcript reflects, among other things, petitioners' tax liability for the taxable year 1994 and all payments received with respect to this liability. The transcript provides that petitioners' withholding tax credit for 1994 was applied to their 1994 tax liability, as well as the two checks sent by petitioners in May 2001 and the subsequent reversals when the two checks were returned for insufficient funds.⁵

After applying the $10,200 payment to petitioners' 1994 taxable year, which respondent has agreed to do, a portion of petitioners' 1994 tax liability remains outstanding. Accordingly, respondent's determination to proceed with collection of petitioners' outstanding 1994 Federal income tax liability is sustained.

To reflect the foregoing,

Decision will be entered for respondent.

¹ Section references are to the Internal Revenue Code in effect at the time the petition was filed.

² All amounts are rounded to the nearest dollar.

³ At the time, it appeared that petitioners' 1994 liability had been paid in full.

⁴ Respondent agreed to apply the $10,200 money order sent by petitioners in July 2001 to the 1994 tax liability.

⁵ The transcript of petitioners' 1994 taxable year does not reflect the $10,200 payment by petitioners in July 2001 that was applied to petitioners' 2000 taxable year.

[2004-2 USTC ¶50,417] Patrick J. Moran, Plaintiff v. Commissioner of Internal Revenue Service of the United States of America, Defendant.

U.S. District Court, No. Dist. Ill., East. Div.; 00-3673, August 25, 2004 .

[ Code Secs. 6330 and 6672]

Trust fund recovery penalty: Collection Due Process hearing: Evidence of payment. --

An individual who claimed that trust fund recovery penalties (TFRPs) assessed against him by the IRS had been paid failed to provide evidence of payment or that the IRS had erred in its calculations. The question of whether payment had been made was the only issue raised at the taxpayer's Collection Due Process (CDP) hearing, and thus was the only issue that could be addressed on appeal. In the absence of evidence that the IRS had erred in its calculations, or that he had paid the TFRPs, the taxpayer did not create a genuine issue of material fact that could survive a motion for summary judgment.

MEMORANDUM OPINION AND ORDER

MAROVICH, District Judge: Plaintiff Patrick J. Moran ("Moran") filed a Complaint for review of the Notice of Determination of the decision issued by the IRS following a Collection Due Process ("CDP") hearing. Presently, Defendant Commissioner of Internal Revenue Service of the United States of America (the "IRS") brings a Motion for Summary Judgment to affirm the appeals officer's determination upholding the IRS's proposed collection action. For the following reasons, the Motion for Summary Judgment is granted and the officer's determination upholding the IRS's proposed collection action if affirmed.

BACKGROUND

The IRS contends that Moran's company, Multi-Label and Stencil Co., Inc. (the "Corporation") was delinquent in payment of taxes from January 1, 1991 to May 2, 1995. The IRS claims that Moran owes Trust Fund Recovery Penalties ("TFRPs") balances for periods ending in 12/31/92 (the "9212 assessments") and 12/31/94 (the "9412 assessments"), while Moran contends that the trust fund portion of the taxes from the Corporation was already paid and that the IRS failed to give him full credit for his payments. On September 12, 1994, the IRS assessed the TFRPs for the Corporation at $20,962.95 for the period ending in 12/31/91 and then later assessed the amount owed for the same period at $20,154.55. On May 2, 1995, the Corporation filed for Chapter 11 bankruptcy ans subsequently filed for Chapter 7 bankruptcy.

On February 13, 1999, Moran filed a timely request for a Collection Due Process hearing on the basis that the TFRPs for the corporation were previously paid. During the CDP hearing, the only issue addressed was whether the TFRPs had been paid. On May 17, 2000, the IRS issued Moran a Notice of Determination regarding the Corporation (the "Notice"). The IRS found that the amount due with penalty and interest was $2,794.28 for the period ending 12/31/92, and $12,379.75 for the period ending 12/31/94. The Notice stated that the initial balances without penalty were $1,985.23 and $10,875.39. The original amount of the TFRPs was $74,875.90, but now since no payment has been made, the figure has increased due to penalties. Within that same Notice, the IRS reminded Moran that he had filed a claim for a tax refund that contended that the TFRPs for the Corporation's employment taxes had "mostly been paid." Defendant's Local Rule 56.1 statement ("LRS") ¶1.

On June 16, 2000, Moran filed the present action to appeal the CDP hearing determination. The IRS asserts that although Moran filed a refund claim that stated that the TFRPs for the Corporation's employment taxes had "mostly been paid," Moran's then attorney, Wanda Zatopa ("Zatopa"), continued to argue that the TFRPs were completely paid. On June 4, 2003, this Court recommended that the parties attempt to settle this matter and to meet out of court and compare calculations. The parties met on: June 26, 2003 and July 15, 2003. Since those meetings, Moran has became a pro se litigant and has not suggested to the IRS that their calculations are incorrect. The IRS contends that after taking into account all abatements, corporate payments, and any other credits, the assessed unpaid balance of the 9212 assessments is now, without interest, $1,985.23. They also assert that since January 20, 2004, the balance due for the 9212 assessments is $5,091.04, which consists of the assessed unpaid balance in the amount of $1,985.23, and accrued interest in the amount of $3,105.83. Now, after taking into account all abatements, corporate payments, and any other credits, the IRS states that the assessed unpaid balance of the 9412 assessments is now, excluding interest, $10,795.39. As of January 20, 2004, the balance due for the 9412 assessments is $17,779.18, consisting of the assessed unpaid balance in the amount of $10,795.39, and accrued interest in the amount of $6,983.79. Finally, the IRS asserts that interest on the balance of 9212 and 9412 will continue to accrue until paid in full.

Moran asserts that at the CDP hearing he unsuccessfully attempted to raise other issues. The three issues Moran wants the court to consider are: (1) whether the IRS erred in its initial assessment and subsequent abatements; (2) whether Moran was a willful party; and (3) whether the complete abatement of the TFRP for the period ending 12/31/94 against responsible party is a total abatement of that period.

DISCUSSION

I. Standard for Motion for Summary Judgment

Summary judgment should be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56 (c). When making such a determination, the court must construe the evidence and make all reasonable inferences in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Summary judgment is appropriate, however, when the non-moving party fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); See also Courtney v. Biosound, 42 F.3d 414, 418 (7 ^th Cir. 1994).

II. Collection Due Process Hearing Determination

The only issue before this Court is the sole issue addressed in the CDP hearing --whether the TFRPs were paid. "[I]n seeking ... district court review of Appeals' Notice of Determination, the taxpayer can only ask the court to consider an issue that was raised in the taxpayer's CDP hearing." 26 C.F.R. §301.6330-1(f). It is clear that "judicial review is limited to those issues properly raised during the collection process hearing ... [even if a]n appeals officer's determination concerning the existence or amount of a taxpayer's trust fund recovery penalty liability is reviewed de novo." Konkel v. Commissioner [ 2001-2 USTC ¶50,520], No. 6:99-CV-1026-ORL-31C, WL 1819417 at 8 (M.D. Fla. Nov. 6, 2000). Therefore, even if a court in its de novo hearing of a CDP determination, may hear evidence not presented to the Appeals Officer, it may not consider issues which the taxpayer never raised. Washington v. Commissioner [ CCH Dec. 55,072], 120 T.C. 114, 122-23 (2003). Here, the only issue that was properly raised in the CDP hearing was whether the TFRPs for the Corporation were paid.

Here, although the parties' tax calculation numbers do not match, Moran provides no evidence of payment to create an issue of fact and therefore, summary judgment must be granted. Furthermore, it is Moran's contention that the IRS's tax calculations are wrong. Moran provides absolutely no evidence, records, or accounts of the calculations showing that the calculations were wrong or that the taxes were paid, he just states the numbers are wrong. "A party seeking a refund of a partial payment of a Section 6672 penalty assessment or the invalidation of that assessment has the burden of proving that the penalty assessment was erroneous." Bernardi v. United States [ 74-1 USTC ¶9170], 33 A.F.T.R.2d (P-H) 523, 525 (N.D. Ill. 1973), aff'd [ 75-1 USTC ¶9133], 507 F.2d 682 (7 ^th Cir. 1974), cert. denied, 422 U.S. 1042 (1975). Furthermore, the Court in Ruth v. United States [ 87-2 USTC ¶9408], 823 F.2d 1091, 1093 (7 ^th Cir. 1987) stated that "after the government decides who is liable, then that taxpayer has the burden of proof." Moran did go over his numbers with the IRS, however, after the IRS corrected Moran on the calculations, Moran provided them with no other calculations. Rather he contends merely that the numbers are wrong with no proof to support his assertion.

The IRS asserts that to date after taking into account all abatements, corporate payments, and any other credits, the assessed unpaid balance of the 9212 assessments is, without interest, $1,985.23. Additionally, since January 20, 2004, the balance due for the 9212 assessments is now $5,091.04 which consists of the assessed unpaid balance in the amount of $1,985.23 and accrued interest in the amount of $3,105.83. After taking into account all abatements, corporate payments, and any other credits, the IRS states that the assessed unpaid balance of the 9412 assessments is now, excluding interest, $10,795.39. As of January 20, 2004, the balance due for the 9412 assessments is $17,779.18, consisting of the assessed unpaid balance in the amount of $10,795.39 and accrued interest in the amount of $6,983.79. These collection figures are supported by the extensive Certificates of Official Record (including years of 1991, 1992, 1993, and 1994) provided to this Court by the IRS. These records include statement of complete assessments, credits and debits for the Company. The IRS also provided the Court their Civil Penalty Records from 1991, 1992, 1993, 1994, which include a breakdown of interest and penalties assessed against the Corporation. Furthermore, the IRS's has provided this Court with letters from the IRS to Moran regarding the CDP determination, statements from the IRS to Nancy Moran, (Moran's wife), IRS reports, and affidavits to support their claim. Whereas, Moran has provided no evidence --no bank statements, pay stubs, etc.-that would indicate payment to the IRS. In fact, the information provided by Moran is nothing more than copies of documents from the IRS which support the IRS's calculations. Since Moran has provided no evidence of payment or to create an issue of fact, summary judgment must be granted.

CONCLUSION

For the reasons set forth above, the IRS's Motion for Summary Judgment is granted.

[2005-1 USTC ¶50,129]Billy G. Asemani, Plaintiff v. United States of America, Defendant.

U.S. District Court, Mid. Dist. Pa.; CIV. 3:CV-04-0846, October 19, 2004 .

[ Code Secs. 6330 and 7122]

Collection Due Process hearing: District court jurisdiction: Offer in compromise. --

An individual's action to set aside an IRS determination denying his offer in compromise (OIC) was dismissed for lack of subject matter jurisdiction. Because the OIC was not considered a collection alternative in a Collection Due Process hearing, the plaintiff was not entitled to a judicial review of the IRS's denial of his OIC. In addition, none of the alternative grounds for the district court's jurisdiction offered by the plaintiff under the Mandamus Act, the Administrative Procedure Act and the Federal Torts Claims Act provided an opportunity for a judicial review of the IRS's determination.

MEMORANDUM AND ORDER

NEALON, District Judge: The Plaintiff, Billy G. Asemani, initiated this civil action by the pro se filing of a document entitled "Petition for Review of Final Administrative Agency Action" on April 19, 2004, in which he challenges the denial of an Offer in Compromise that he submitted to the Internal Revenue Service (IRS). (Doc. 1). The Government filed a motion to dismiss the action for lack of subject matter jurisdiction on August 25, 2004. (Doc. 21). A brief in support of the motion was filed on August 31, 2004. (Doc. 22). Plaintiff filed a brief in opposition to the motion to dismiss on September 8, 2004, alleging only that the Government's motion to dismiss should be denied as it was filed untimely. ¹ (Doc. 23). The Government filed a reply brief on September 10, 2004, (Doc. 24). On September 17, 2004, the Plaintiff filed a request for an extension of time in which to file a brief on the issue of subject matter jurisdiction. Since the Plaintiff did not address the question of jurisdiction in his original brief in opposition to the motion to dismiss, he was granted an extension of time to file a supplemental brief on this issue. (Doc. 27). On September 27, 2004, the Plaintiff filed a supplemental brief in opposition to the Government's motion to dismiss. (Doc. 28). A reply was filed by the Government on October 12, 2004. (Doc. 29). The motion is ripe for consideration and, for the reasons that follow, will be granted.

Background

The Plaintiff submitted an Offer in Compromise, IRS Form 656, dated August 30, 2001, to the IRS attempting to settle his outstanding liabilities for the tax years 1997 and 1998. (Complaint, Doc. 1, Exhibit A). Plaintiff offered the amount of $20,000 in compromise of an obligation which the Government avers exceeds $500,000. Asemani stated an inability to pay as justifying his offer on the Form 656 that he submitted to the IRS. (Complaint, Doc. 1, Exhibit A). The IRS rejected Asemani's Offer in Compromise initially and at all levels of administrative appeal that the taxpayer pursued. The IRS found that the Plaintiff did indeed have an ability to pay his outstanding obligations. Plaintiff now contends that the decision of the IRS to deny his Offer in Compromise was and abuse of discretion by an administrative agency and that the finding that he had an ability to pay was made without any basis in fact. He requests this court to set aside the decision of the IRS and to remand the matter for further proceedings. The Government contends that this court lacks jurisdiction over Plaintiff's claim.

Discussion

The United States District Court for the Eastern District of Louisiana recently addressed a district court's jurisdiction to review the IRS's actions in processing a taxpayer's Offer in Compromise in Desire Community Housing Corp. v. U.S., 2004 WL 838041 (E.D. La. March 3, 2004). There, the Court noted: "The authority to compromise a tax liability is stated in 26 U.S.C. §7122. The statute provides 'the Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense.' Section (c) further states that 'the Secretary shall prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute'.... Under Treasury Regulation §301.7122-1(b), the Secretary may only compromise a tax liability on one of three grounds. They include (1) doubt as to liability; (2) doubt as to collectibility; and (3) the promotion of effective tax administration." Id. at *2. In Desire, the IRS denied the taxpayers Offer in Compromise because it was not processable due to the taxpayer's failure to comply with certain procedural requirements. The Court held that no jurisdiction existed to review the IRS's determination.

Here, Asemani claimed before the IRS that there was a doubt as to collectibility of his outstanding obligations as he purportedly did not have sufficient assets to pay his outstanding taxes, interest and penalties. The IRS rejected that contention. Plaintiff now requests this court to set aside the IRS's determination and remand the mater to that agency.

In its first brief in support of its motion to dismiss, the Government argued that a taxpayer's only recourse in obtaining judicial review of a determination by the IRS to deny an Offer in Compromise is pursuant to 26 U.S.C. §§6630(c)(2)(iii) and 6320(c). This argument is well taken. Section 6630 of the Internal Revenue Code, addressing the notice and opportunity to be heard requirements before levy states, in relevant part:

(a)(1) In general. --No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates....

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

26 U.S.C. §§6630(c)(2)(iii) (emphases added). As indicated by the Government, the IRS has not commenced collection activity and has not indicated that it intends to do so. Should the IRS commence collection of Plaintiff's outstanding obligations, he will then have an opportunity to have the denial of his Offer in Compromise reviewed under the above procedure. Outside this setting, the Internal Revenue Code provides no opportunity for the type of review that the Plaintiff now seeks.

In his supplemental brief, Asemani proffered three alterative grounds for this court's jurisdiction to address his claim, viz., mandamus jurisdiction, the Administrative Procedures Act (APA) and the Federal Tort Claims Act (FTCA). None of these grounds, however, provide an avenue for judicial review in a district court of the IRS's decision to deny a taxpayer's Offer in Compromise.

The federal mandamus statute, 28 U.S.C. §1361 states: "The district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff." As this court has previously noted:

Issuance of a writ of mandamus is carefully circumscribed and used "only in extraordinary situations," since it is a "drastic" remedy. Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34 (1980) ( per curiam). The petitioner seeking mandamus must satisfy the "burden of showing that [his] right to issuance of the writ is 'clear and indisputable.'" Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 384 (1953) ( quoting United States v. Duell, 172 U.S. 576, 582 (1899). The Third Circuit has consistently adhered to this stringent standard. See, e.g., PAS v. Travelers Ins. Co., 7 F.3d 349, 357 (3d Cir. 1993) (denying writ of mandamus because it was not clear and indisputable that state claims were not preempted by ERISA); Sunbelt Corp. v. Noble, Denton & Associates, Inc., 5 F.3d 28 (3d Cir. 1993) (granting writ because it was clear and indisputable that district court did not have the legal authority to transfer a case to a district where personal jurisdiction was lacking); Travellers International AG v. Robinson, 982 F.2d 96, 98 (3d Cir. 1992), cert. denied, 113 S.Ct. 1946 (1993) (denying writ of mandamus because it was not clear and indisputable that petitioner was entitled to jury trial).

Hillyer v. Commissioner of Internal Revenue, 1994 WL 240348, *5 (M.D. Pa. Mar 30, 1994). Here, the Plaintiff has no clear and indisputable right to have the denial of his Offer and Compromise overturned. His remedies are circumscribed by the Internal Revenue Code as discussed above. Accordingly, he is not entitled to mandamus relief. See also Martin v. Commissioner of Internal Revenue [ 84-1 USTC ¶9183], 584 F.Supp. 977, 978 (N.D. Ohio 1984).

Similarly, the Administrative Procedures Act is inapplicable to this matter. "[T]he APA does not provide an independent source of jurisdiction, and in any case 'only applies to a final agency decision where there is no other adequate remedy.'" Helvie v. Beach, 2003 WL 22073142; at *3 (S.D. Fla. July 16, 2003) ( citing Einhorn v. DeWitt [ 80-2 USTC ¶9486], 618 F.2d 347, 350 (5th Cir. 1980). Moreover, the APA provides that "This chapter applies, according to the provisions thereof, except to the extent that --(1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. §701(a). As noted above, section 7122 of the Internal Revenue Code states that the "the Secretary may compromise any civil or criminal case arising under the internal revenue laws..." 26 U.S.C. §7122(a). The discretionary denial of the Plaintiff's Offer in Compromise by the IRS is not reviewable under the APA.

Lastly, Plaintiff has not stated a cognizable claim under the Federal Tort Claims Act. "The FTCA was designed primarily to remove the sovereign immunity of the United States from suits in tort and, with certain specific exceptions, to render the Government liable in tort as a private individual would be under like circumstances.... The Act accordingly gives federal district courts jurisdiction over claims against the United States for injury caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." Sosa v. Alverez-Machain, _____ U.S._____, 124 S.Ct. 2739, 2747 (2004). However, as the Supreme Court further recognized "the Act also limits its waiver of sovereign immunity in a number of ways." Id. at 2747-8. Indeed, 28 U.S.C. §2680(c) specifically states that the waiver of immunity does not apply to "[a]ny claim arising in respect of the assessment or collection of any tax..." The United States District Court for the Eastern District of New York has considered this specific issue and has concluded that the §2860(c) exception to the FTCA bars a taxpayer's challenge to the IRS's denial of an Offer in Compromise. Higgins v. United States [ 2003-2 USTC ¶50,563], 2003 WL 21693717 (E.D. N.Y. May 27, 2003). See also, Wheeler v. Baugh, 2002 WL 373461 (W.D. Pa. Jan. 29, 2002) ("The United States has waived its immunity for certain tort claims under the Federal Tort Claims Act ('FTCA'), 28 U.S.C. §2671 et seq. and 1346(b), although this immunity does not apply to torts allegedly committed by the IRS concerning the assessment and collection of taxes; the FTCA in fact explicitly exempts from its coverage 'any claims arising in respect of the assessment or collection of any tax.' 28 U.S.C. §2680(c).")

Based on the forgoing, the court concludes that there is no subject matter jurisdiction to hear this case and, therefore, the Government's motion to dismiss will be granted.

An appropriate Order is attached.

ORDER

AND NOW, this 19 ^th day of October, 2004, consistent with the accompanying Memorandum of this date, IT IS HEREBY ORDERED THAT:

1) The Defendant's Motion to Dismiss, ( Doc. 21), is GRANTED.

2) The Clerk of Court is directed to close this case.

¹ Even assuming that the motion was filed untimely, subject matter jurisdiction can be examined at any time during the pendency of an action. Accordingly, Plaintiff's assertion must be rejected.

[Dec. 55,994] Kevin P. Burke v. Commissioner.

Dkt. No. 17684-03L , 124 TC 189, No. 11, April 12, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6320 and 6330]
Liens and levies: Administrative hearings: Proceedings instituted for delay.

The IRS did not abuse its discretion in proceeding with collection against an individual for income taxes and additions to tax that were previously determined by the Tax Court. The individual could not challenge the validity of notices of deficiency or the existence or amount of his underlying tax liabilities since these issues had already been considered in the earlier proceeding. The IRS satisfied all applicable laws and administrative procedures governing the assessment and collection of the individual's tax liabilities, and the taxpayer did not allege any irregularity in the assessment or raise a valid defense or challenge to the collection. In addition, the IRS's motion to permit levy was granted because the individual's tax liability was not at issue in the appeal, and the IRS showed good cause why the levy should not be suspended. The taxpayer had used the collection review procedure to espouse frivolous and groundless arguments and to otherwise needlessly delay collection.
[Code Sec. 6673]
Penalties: Proceedings instituted for delay.

The IRS did not abuse its discretion in proceeding with collection against an individual for income taxes and additions to tax that were previously determined by the Tax Court. A Code Sec. 6673 delay penalty was awarded to the government because the taxpayer wasted judicial resources by raising frivolous arguments at the proceedings and in his brief. Issues raised by the taxpayer during the administrative process had been repeatedly rejected by the Tax Court and other courts or were refuted by the documentary record.

Kevin P. Burke, pro se; Robin M. Ferguson, Stephen S. Ash, for respondent.

R issued to P statutory notices of deficiency for 1993, 1994, 1995, 1996, and 1997. P filed with the Court a petition for redetermination at docket No. 13410-00. By Order and Order of Dismissal and Decision entered Apr. 10, 2002 , the Court dismissed the case on the ground P failed properly to prosecute the case. In addition, the Court imposed a penalty on P pursuant to sec. 6673(a), I.R.C. The Court's Decision was affirmed on appeal and became final.

R issued to P a Final Notice of Intent to Levy and Notice of Your Right to Hearing and a Notice of Federal Tax Lien Filing and Your Right to a Hearing with regard to his unpaid taxes for 1993 to 1997. P submitted to R a request for an administrative hearing, and R subsequently issued to P a Notice of Determination Concerning Collection Action(s). P filed with the Court a Petition for Lien or Levy Action Under Section 6320 and/or 6330.

P's case was called for trial. R subsequently filed a Motion to Permit Levy pursuant to sec. 6330(e)(2), I.R.C.

Held: P's challenges to R's notice of determination are frivolous and groundless. R's notice of determination is sustained.

Held, further, P is barred from challenging the existence or amount of the underlying tax liabilities for the years in issue, and R has shown good cause for lifting the suspension of the levy. R's Motion to Permit Levy is granted.

Held, further, a penalty under sec. 6673, I.R.C., is due from P and is awarded to the United States in the amount of $2,500.

WHERRY, Judge: Petitioner invoked the Court's jurisdiction under sections 6320 and 6330 in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 regarding his unpaid Federal income taxes for 1993, 1994, 1995, 1996, and 1997.¹ Respondent's Office of Appeals (Appeals Office) determined that it was appropriate to file a Federal tax lien against petitioner and that petitioner's unpaid taxes should be collected by levy.

This case was submitted to the Court following a trial. Thereafter, respondent filed a Motion to Permit Levy pursuant to section 6330(e)(2).

As discussed in detail below, we shall sustain the notice of determination upon which this case is based. In addition, respondent has shown good cause for lifting the suspension of the proposed levy, and we shall grant respondent's Motion to Permit Levy, and shall impose a penalty under section 6673.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The parties' stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time the petition was filed, petitioner resided in Phoenix, Arizona.

On September 27, 2000, respondent issued to petitioner notices of deficiency for 1993, 1994, 1995, 1996, and 1997. Petitioner filed with the Court a timely petition for redetermination at docket No. 13410-00. On April 10, 2002, the Court entered an Order and Order of Dismissal and Decision at docket No. 13410-00, denying petitioner's motion to dismiss,² dismissing the case on the ground that petitioner failed properly to prosecute, sustaining the income tax deficiencies and additions to tax that respondent determined in the notices of deficiency, and imposing a penalty on petitioner pursuant to section 6673.³ The Court's decision was affirmed on appeal without published opinion and is now final. See Burke v. Commissioner [2003-1 USTC ¶50,515], 65 Fed. Appx. 170 (9th Cir. 2003).⁴

On October 7, 2002 , respondent entered assessments against petitioner for the income taxes, additions to tax, and penalty under section 6673(a) as set forth in the Court's decision at docket No. 13410-00, as well as statutory interest. On October 7, 2002 , respondent issued to petitioner notices of balance due for the years 1993 to 1997. Petitioner failed to remit to respondent the amounts due.

On March 6, 2003 , respondent issued to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing requesting that petitioner pay his outstanding income taxes for the years 1993 to 1997. On or about March 7, 2003 , respondent filed with the County Recorder, Maricopa County, Arizona, a Notice of Federal Tax Lien regarding petitioner's unpaid income taxes for 1993 to 1997. On March 13, 2003 , respondent issued to petitioner a Notice of Federal Tax Lien Filing and Notice of Your Right to Hearing for the years 1993 to 1997. On April 4, 2003 , petitioner submitted to respondent a Form 12153, Request for Collection Due Process Hearing, challenging the validity of the assessments for the years in issue.

On August 20, 2003 , petitioner appeared at respondent's Appeals Office for an administrative hearing under sections 6320 and 6330. However, the hearing was aborted when the Appeals officer informed petitioner that he would not be permitted to make an audio recording of the hearing.

On September 9, 2003 , the Appeals Office issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 sustaining the filing of the tax lien and determining that it was appropriate to proceed with the proposed levy. The Appeals Office concluded that petitioner had previously challenged respondent's notices of deficiency for 1993 to 1997 in the Tax Court, and, therefore, he was barred from challenging the existence or amount of those tax liabilities pursuant to section 6330(c)(2)(B). The Appeals officer verified that all administrative and legal procedures governing the assessment and collection of petitioner's outstanding tax liabilities for 1993 to 1997 were met.

Petitioner filed with the Court a timely Petition for Lien and Levy Action. Citing Keene v. Commissioner [Dec. 55,213], 121 T.C. 8 (2003), petitioner argued that respondent abused his discretion in issuing a notice of determination without permitting petitioner to make an audio recording of the administrative hearing.

After filing an answer to the petition, respondent filed a Motion for Summary Judgment and to Impose a Penalty Under I.R.C. §6673. Citing Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195, respondent asserted that petitioner's arguments were frivolous and groundless, and, therefore, it was harmless error to deny petitioner the opportunity to make an audio recording of the administrative hearing. Although the Court denied respondent's motion, the Court cautioned petitioner that if he persisted in making frivolous and groundless arguments the Court would consider imposing a penalty on petitioner under section 6673.

This case was called for trial in Phoenix, Arizona. At the start of the trial, the Court reminded petitioner of the Court's earlier admonishment that he should abandon all frivolous arguments. Contrary to the Court's warning, petitioner continued to assert during the trial that the notices of deficiency that the Court sustained in the deficiency case at docket No. 13410-00 were invalid and that proper assessments were not entered for several of the years in issue. During the trial, and over petitioner's objection, the Court allowed respondent to offer into evidence Forms 4340, Certificate of Assessments, Payments and Other Specified Matters, regarding petitioner's account for the years 1993 to 1997. Following the trial, on March 11, 2005 , respondent's Motion to Permit Levy was filed with the Court.

OPINION

I. Collection Actions

A. Lien and Levy

Sections 6320 (pertaining to Federal tax liens) and 6330 (pertaining to levies) establish procedures for administrative and judicial review of certain collection actions. As an initial matter, the Commissioner is required to provide a taxpayer with written notice that a Federal tax lien has been filed and/or that the Commissioner intends to levy; the Commissioner is also required to explain to the taxpayer that such collection actions may be challenged on various grounds at an administrative hearing. See Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 37 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179 (2000).

Section 6330(c)(1) imposes on the Appeals Office an obligation to obtain verification that "the requirements of any applicable law or administrative procedure have been met." Section 6330(c)(2) prescribes the matters that a person may raise at an administrative hearing. Section 6330(c)(2)(A) provides that a person may raise issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. See Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 609 (2000); Goza v. Commissioner, supra. In addition, section 6330(c)(2)(B) establishes the circumstances under which a person may challenge the existence or amount of his or her underlying tax liability. Section 6330 (c) (2) (B) provides:

(2). Issues at hearing. --

* * *

When the Appeals Office issues a Notice Of Determination Concerning Collection Action(s) to a taxpayer following an administrative hearing, section 6330(d)(1) provides that the taxpayer has 30 days following the issuance of such notice to file a petition for review with the Tax Court or, if the Tax Court does not have jurisdiction over the underlying tax liability, with a Federal District Court. See Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 497-498 (2000). The procedure established under section 6330(d)(1) is made applicable to a proceeding regarding a Federal tax lien by way of the cross-reference contained in section 6320(c).

Petitioner's conduct in his earlier deficiency case at docket No. 13410-00, coupled with his actions in this proceeding, clearly demonstrates that petitioner exploited the collection review procedures primarily for the purpose of delay. As discussed below, petitioner's arguments have absolutely no merit. Moreover, petitioner ignored the opportunity that the Court extended to him at trial to assert a legitimate claim for relief.⁵

As previously mentioned, petitioner asserted that the notices of deficiency that respondent issued to him for 1993 to 1997 are invalid. This precise issue was previously considered and rejected by the Court when the Court denied petitioner's motion to dismiss filed at docket No. 13410-00. The Court's Order and Order of Dismissal and Decision entered at docket No. 13410-00 was affirmed on appeal and is now final. Sec. 7481. It follows that petitioner is barred from challenging either the validity of the notices of deficiency or the existence or amount of his underlying tax liabilities for 1993 to 1997 in this proceeding. See sec. 6330(c)(2)(B).

In addition, contrary to petitioner's position, the Forms 4340 offered into evidence at trial show that respondent (1) properly assessed the tax liabilities that respondent intends to collect from petitioner, and (2) properly notified petitioner of those assessments by way of notices of balance due. See, e.g., Hughes v. United States [92-1 USTC ¶50,086], 953 F.2d 531, 535-536 (9th Cir. 1992).

Numerous cases establish that no particular form of verification of an assessment is required, that no particular document need be provided to a taxpayer at an administrative hearing conducted under section 6330, and that a Form 4340 (such as that included in this record) and other transcripts of account satisfy the verification requirements of section 6330(c)(1). See Roberts v. Commissioner [Dec. 54,733], 118 T.C. 365, 371 n.10 (2002), affd. [2003-1 USTC ¶50,359] 329 F.3d 1224 (11th Cir. 2003); Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166 (2002); Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183 (2001).

Petitioner has not alleged any irregularity in the assessment procedure that would raise a question about the validity of the assessments or the information contained in the Forms 4340. Moreover, petitioner has failed to raise a spousal defense, make a valid challenge to the appropriateness of respondent's intended collection action, or offer alternative means of collection. These issues are now deemed conceded. Rule 331(b)(4).

The record reflects that the Appeals Office properly verified that all applicable laws and administrative procedures governing the assessment and collection of petitioner's tax liabilities were met. Accordingly, we hold that the Appeals Office did not abuse its discretion in determining to proceed with collection against petitioner.

B. Levy Upon Appeal

We turn now to respondent's Motion to Permit Levy. Section 6330(e) provides in pertinent part:

SEC. 6330(e). Suspension of Collections and Statute of Limitations. --

(1) In general. --Except as provided in paragraph (2), if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing and the running of any period of limitations * * * shall be suspended for the period during which such hearing, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such hearing. Notwithstanding the provisions of section 7421(a), the beginning of a levy or proceeding during the time the suspension under this paragraph is in force may be enjoined by a proceeding in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1) and then only in respect of the unpaid tax or proposed levy to which the determination being appealed relates.

(2) Levy upon appeal. --Paragraph (1) shall not apply to a levy action while an appeal is pending if the underlying tax liability is not at issue in the appeal and the court determines that the Secretary has shown good cause not to suspend the levy.

In sum, section 6330(e)(1) sets forth the general rule that respondent may not proceed with collection by levy if an administrative hearing is timely requested under section 6330(a)(3)(B) and while any appeals from such administrative hearing are pending.⁶ The Court is vested with jurisdiction to enjoin an improper collection action so long as a timely petition has been filed with the Court and then only in respect of the proposed levy that is the subject of such petition. Section 6330(e)(2) provides an exception to the suspension of the levy imposed under subsection (e)(1) if the person's underlying tax liability is not at issue in the appeal and the Court determines that good cause is shown not to suspend the levy.⁷

We further observe that, in the absence of any other limiting language, the "court" referred to in section 6330(e)(2) is best read as a reference to the court to which a collection review determination is appealed under section 6330(d); i.e, the Tax Court or Federal District Court. Consistent with the foregoing, the Tax Court has jurisdiction to entertain respondent's Motion to Permit Levy.

As previously discussed, petitioner is barred under section 6330(c)(2)(B) from challenging the existence or amount of his underlying tax liabilities for 1993 to 1997 in this proceeding. See Goza v. Commissioner [Dec. 53,803], 114 T.C. 176 (2000). Accordingly, the first element that respondent must establish to obtain relief under section 6330(e)(2) is satisfied. The question that remains is whether respondent has shown good cause why the levy should no longer be suspended.

Section 6330 does not include a definition of the term "good cause". Giving due consideration to the public policies underlying section 6330, we believe that respondent may show good cause that a levy should not be suspended where, as here, the taxpayer has used the collection review procedure to espouse frivolous and groundless arguments and otherwise needlessly delay collection.

Petitioner is no stranger to the Court. As outlined above, he abused the Court's procedures in the deficiency case at docket No. 13410-00, and he has exploited the collection review procedure primarily to delay collection. To permit any further delay in the collection process would be unconscionable. Accordingly, we shall grant respondent's Motion to Permit Levy.

II. Section 6673 Penalty

Section 6673(a)(1) authorizes the Tax Court to require a taxpayer to pay to the United States a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. We warned taxpayers in Pierson v. Commissioner [Dec. 54,152], 115 T.C. 576, 581 (2000), that abusing the procedural protections afforded by sections 6320 and 6330 by pursuing frivolous lien or levy actions for purposes of delaying the tax payment process would result in sanctions under section 6673 when that section was applicable. We have since repeatedly warned taxpayers regarding section 6673, as we did petitioner here, and have repeatedly disposed of cases premised on arguments akin to those raised here summarily and with imposition of the section 6673 penalty. See Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 265 (2002).

Petitioner was previously penalized for his frivolous arguments and delay perpetrated on the Court in connection with docket No. 13410-00 concerning his tax liability for the tax years 1993 through 1997. Although in this action petitioner was polite and eliminated several frivolous issues at trial, he nevertheless wasted judicial resources on other frivolous arguments at the proceedings and in his brief. It is inappropriate that taxpayers who promptly pay their taxes should have the cost of Government and tax collection improperly increased by citizens apparently unwilling to obey the law or shoulder their assigned share of the Government cost.

This Court's order of October 4, 2004 , explicitly addressed petitioner's substantive arguments, stating:

As respondent correctly notes in the motion for summary judgment, issues raised by petitioner during the administrative process, i.e., in his request for a collection due process hearing, have been repeatedly rejected by this and other courts or are refuted by the documentary record. Moreover the Court observes that maintenance of similar arguments has served as grounds for imposition of penalties under section 6673.

At the time of that order, the Court declined to grant summary judgment or impose a section 6673 penalty because respondent had denied petitioner the right to record the administrative hearing, see Keene v. Commissioner [Dec. 55,213], 121 T.C. 8 (2003), and as a result no face-to-face administrative conference ever occurred. Thus, the Court afforded petitioner a trial and at it an opportunity to raise any legitimate permitted issues, but none were raised, and the previously addressed frivolous issues were perpetuated. Hence, the Court concludes a section 6673 penalty of $2,500 shall be awarded to the United States in this case.

To reflect the foregoing,

An order and decision will be entered granting respondent's Motion to Permit Levy, and a decision will be entered for respondent including the imposition of a penalty under section 6673.

¹ Unless otherwise indicated, section references are to the Internal Revenue Code of 1986, as amended. Rule references are to the Tax Court Rules of Practice and Procedure.

² The Court rejected petitioner's argument that the notices of deficiency were invalid because they were issued before the Commissioner complied with the requirements of the partnership provisions set forth in secs. 6221 to 6234.

³ The Court's Order and Order of Dismissal and Decision entered Apr. 10, 2002, stated in pertinent part:

Petitioner failed to comply with the Court's Rules and Orders concerning stipulation. He has neither identified nor proven any deductions to which he might be entitled. He has not shown in any way that respondent's determination is erroneous, and he has presented only frivolous long-discredited arguments to the Court. He has not properly prosecuted this case, and dismissal is appropriate.

⁴ Petitioner did not file an appeal bond, see sec. 7485, and, therefore, respondent was free to proceed with assessment and collection for the years in issue.

⁵ Under the circumstances, petitioner has given us no reason to believe that remanding this matter to respondent's Appeals Office would be productive or otherwise advance the policies underlying secs. 6320 and/or 6330. Consistent with our reasoning in Keene v. Commissioner [Dec. 55,213], 121 T.C. 8, 19-20 (2003), and in Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195, we conclude that a remand is unwarranted.

⁶ See sec. 301-6330-1(g)(2), Q&A-G1, Proced. & Admin. Regs. ("The suspension period continues until * * * the Notice of Determination resulting from the CDP hearing becomes final upon either the expiration of the time for seeking judicial review or upon exhaustion of any right to appeals following judicial review. ").

⁷ Much like the statute, the legislative history of section 6330 simply states that "Levies will not be suspended during the appeal if the Secretary shows good cause why the levy should be allowed to proceed." H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 747, 1020.