Edythe Fishbach v. Commissioner.

Dkt. No. 10912-04L , TC Memo. 2005-38, March 2, 2005.

[Appealable, barring stipulation to the contrary, to CA-2. --CCH.]

[Code Sec. 6320]
Collection: Tax liens: Notice of lien filing. --

An individual's petition to review the IRS's determination with respect to a tax lien on her property was dismissed. The taxpayer had received a notice of deficiency, but had not taken the opportunity to challenge her underlying liability. She was, consequently, barred from addressing the underlying liability in later hearings.

Edythe Fishbach, pro se; Marc L. Caine, for respondent.

MEMORANDUM OPINION

 

LARO, Judge: Petitioner petitioned the Court under sections 6320(c) and 6330(d) to review respondent's determination as to his notice of tax lien upon petitioner's property.¹ Respondent filed the notice of lien to collect 1996 Federal income taxes with related additions thereto totaling approximately $24,860.85.² Respondent has filed a motion for summary judgment under Rule 121, which petitioner opposes. We shall grant respondent's motion for summary judgment.

Background

 

Petitioner failed to file a Federal income tax return for 1996. On May 18, 1999, respondent mailed petitioner a notice of deficiency, determining a deficiency for 1996 of $20,871, with additions to tax under sections 6651(a)(1) and (2) and 6654(a) of $2,286.90, $1,219.68, and $483.27, respectively. On August 13, 1999, petitioner petitioned this Court to redetermine these amounts. See Fishbach v. Commissioner, docket No. 13906-99S. Because petitioner failed to prosecute her case, this Court dismissed it on February 20, 2001, and entered a decision for respondent in the amounts stated in the notice of deficiency.

 

On February 6, 2003, respondent mailed to petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. Petitioner filed a request for the referenced hearing and then ceased all communication with respondent, save for one cryptic Form 656, Offer in Compromise, which stated as its basis a doubt as to liability but contained no supporting documentation. Petitioner did not reply to respondent's efforts to schedule the hearing. On June 17, 2004, respondent mailed to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the proposed lien. This petition followed.

Discussion

 

Summary judgment may be granted with respect to any part of the legal issues in controversy if the records before the Court "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(a) and (b); Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 259-260 (2002).

 

Respondent bears the burden of proving there is no genuine issue of material fact; all facts are interpreted in the light most favorable to petitioner. Craig v. Commissioner, supra at 260. However, petitioner must do more than merely allege or deny facts; she must set forth "specific facts showing that there is a genuine issue for trial." Rule 121(d); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Under this standard, petitioner has failed to raise any genuine issue of material fact, and summary judgment is appropriate.

 

Where a taxpayer liable for a tax liability fails to pay it after respondent demands payment a lien is by statute imposed upon all property and rights to property owned by the taxpayer. Sec. 6321. We review nonliability administrative determinations for abuse of discretion, and we review determinations as to the underlying tax liability de novo. See Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Hoffman v. Commissioner [Dec. 54,882], 119 T.C. 140, 144-145 (2002).

 

Petitioner raises no valid legal arguments. She argues, in both her request for a hearing and in her petition to this Court, that she does not owe any tax for 1996. This she may not do. Petitioner, having received a notice of deficiency and having forgone the opportunity to challenge her underlying liability in her prior case, is barred from doing so in this case. See sec. 6330(c)(2)(B); Ginalski v. Commissioner [Dec. 55,620(M)], T.C. Memo. 2004-104.

C. Conclusion

We shall grant respondent's motion for summary judgment.

 

To reflect the foregoing,

 

An appropriate order and decision will be entered for respondent.

¹ Unless otherwise noted, section references are to the applicable versions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.

² We say "approximately" as these amounts were computed before the present proceeding and have since increased on account of interest.

 

 

Michael Stein v. Commissioner.

Dkt. No. 10970-01L , TC Memo. 2004-124, May 24, 2004.

[Appealable, barring stipulation to the contrary, to CA-2. --CCH.]

[Code Sec. 6320]
Collection: Notice of federal tax lien: Appeal. --

An individual who filed no income tax returns, and who did not respond to IRS deficiency notices and other communications, was not allowed to contest the underlying tax liability in a proceeding to determine the validity of a notice of federal tax lien (NFTL). Attempts at resolving the liability through a compromise, installment plan, or other solution had been unsuccessful, largely because the taxpayer failed to file returns for the relevant years, respond to communications, or properly pursue appeal and other avenues for relief. The taxpayer had forfeited the right to contest the underlying tax liabilities through his procrastination and failure to respond to IRS mailings. Further, the IRS did not commit an abuse of discretion in sustaining the NFTL.

Michael Stein, pro se; John Aletta, for respondent.

MEMORANDUM OPINION

 

BEGHE, Judge: Petitioner failed to file timely Federal income tax returns for 1992, 1993, and 1994. Respondent filed "substitutes for return"¹ (SFRs) for those years, mailed petitioner statutory notices of deficiency to which he never responded, and thereafter assessed income tax liabilities against petitioner for those years.

 

As of March 8, 1999, petitioner's total unpaid tax liabilities for the above-mentioned years, including the unpaid assessed income tax liabilities, and additions to tax and interest, were as follows:

 

               Unpaid          Additions to Tax       Total Unpaid   

  Year      Assessments        and/or Interest        Liabilities    

  1992        $1,344.17            $1,068.95            $2,413.12    

  1993        5,505.15             1,910.12             7,415.27     

  1994       197,079.49            63,903.26           260,982.75    

 

On February 23, 2000, respondent filed a notice of Federal tax lien (NFTL) against petitioner's real property with respect to $203,928.81, the then-unpaid balance of petitioner's 1992 through 1994 tax liabilities. On July 26, 2001, respondent issued petitioner a notice of determination concerning collection action(s) under section 6320 and/or 6330,² which upheld respondent's NFTL.³

 

The issues for decision presented by petitioner's timely filed petition with this Court are:

 

1. Whether petitioner is liable for the deficiencies assessed by respondent. We hold petitioner is liable for the deficiencies because petitioner has not satisfied the conditions that would entitle him in this proceeding to contest respondent's deficiency determinations or assessments; and

 

2. whether respondent abused his discretion in sustaining the filing of the Federal tax lien against petitioner's property to secure petitioner's outstanding income tax liabilities for tax years 1992 through 1994. We hold respondent did not abuse his discretion in so doing.

Procedural Background

This case was tried in Hartford , Connecticut , on January 6, 2003. Respondent's opening brief was due April 7, 2003, and petitioner's answering brief was due June 5, 2003. On April 7, 2003, respondent filed his brief with the Court.

 

Petitioner filed five motions for extension of time to file his answering brief. These motions included three requests for extensions to obtain and review the trial transcript, a fourth request for extension because he did not receive notice of the granting of the request for the third extension until 2 days before the third extended due date, and a fifth request for extension pending adjudication of certain motions that petitioner stated "are concurrently being submitted to the Court in separate envelopes" but have never been received by the Court. The Court granted the first four of these motions, thereby extending the due date of petitioner's brief from June 5 to November 20, 2003.

 

The Court's order of November 5, 2003, denying petitioner's fifth motion filed November 3, 2003, was served by certified mail on petitioner at his specified mailing address, P.O. Box 210, Greenwich, Connecticut (the post office box address), and was returned unclaimed on November 28, 2003. Petitioner did not notify the Court of any change of his mailing address. On January 20, 2004, the Court ordered that a copy of the November 5, 2003, order be served on petitioner at the post office box address by certified mail and regular mail.

 

On March 10, 2004, the Court ordered petitioner and respondent to file, on or before March 22, 2004, a joint status report or separate status reports indicating whether and when petitioner filed Federal income tax returns for 1992 through 1994, and, if so, whether, notwithstanding the outstanding assessments and the lien controversy in the case at hand, respondent was examining those returns. Respondent's status report, filed March 19, 2004, indicated that petitioner had not filed the returns, and that, therefore, respondent was not in the process of examining them.

 

On April 6, 2004, petitioner filed a status report requesting an extension to file his brief and the motions he intended to file with his last extension request (but which he claimed to have failed by inadvertence to file). In this status report, petitioner asserted that "severe health problems" and his preoccupation with separate litigation as "a pro se defendant" had caused the delays in filing his brief and the motions. According to petitioner, the separate litigation involved "a dispute over fines imposed on petitioner by a condominium association" that had led to foreclosure litigation "involving the same condominium property that the Respondent has placed a lien on in the instant case." Petitioner stated he had not yet filed signed Federal income tax returns for the 1992 through 1994 tax years, but he was working with respondent's revenue officer to submit information to complete those returns. The Court denied petitioner's request for another extension of time to file his brief and notified petitioner that the Court would decide the case on the record and arguments previously submitted.

Factual Background

Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference.

 

Petitioner testified that "for purposes of the trial" and when he filed the petition in this case, he resided at One Strawberry Hill Court , Unit 11-C, Stamford , Connecticut (the Strawberry Hill address). Petitioner testified he is a resident of Nevada for State income tax purposes.

 

Petitioner testified he is a self-employed engineer who travels up to 3 months at a time more than once a year. In Form 433-A, Collection Information Statement for Individuals, filed with the Internal Revenue Service (IRS) on November 11, 1998, petitioner said he was a "volunteer" and "not employed."

 

Petitioner does not receive wages or salary from which tax is withheld. During the tax years at issue, petitioner paid estimated taxes, and petitioner held accounts with financial institutions that withheld taxes from his interest and dividend income.

 

As of July 26, 2001, petitioner had failed to file Federal income tax returns for his tax years 1988 through 2000.⁴ There is no record information or other evidence that petitioner has filed returns for his 1992 through 1994 tax years.

 

Petitioner "[dropped] everything" in 1988 when both his elderly parents were ill with cancer. Petitioner's parents died in 1990. Since 1988, petitioner has had a "combination of health problems (including * * * surgery)".

 

Petitioner could not locate his 1987 return among his papers and other personal possessions that were packed in boxes as a result of residential moves. Petitioner eventually found a copy of his 1987 return before trial but made no effort to have it admitted into evidence. Petitioner asserted his 1987 return shows a capital loss carryover of $187,000 and an overpayment of tax exceeding $12,000, and he had unspecified losses in subsequent years, including 1988 through 1993.

 

During 1996, petitioner used his address at 25 West Elm Street, Greenwich, Connecticut (the Elm Street address), to receive Forms 1099-B, Proceeds From Broker and Barter Exchange Transactions, and Forms 1099-Div, Dividends and Distributions, from financial institutions that paid investment income to him.

 

On December 12, 1996, after having prepared SFRs for petitioner's tax years at issue, respondent mailed three notices of deficiency to petitioner determining income tax deficiencies of $15,812, $10,210, and $153,787 for petitioner's 1992, 1993, and 1994 tax years, respectively, failure to file additions to tax under section 6651(a)(1) of $211 for 1992 and $24,758 for 1994, and additions to tax under section 6654 of $689 for 1992 and $7,352 for 1994 for failure to pay estimated tax.⁵ Respondent sent the notices of deficiency by certified mail to the Elm Street address.

 

On January 8, 1997, the U.S. Postal Service returned to respondent the notices of deficiency and the covering envelopes stamped "unclaimed". The envelopes displayed no indication that petitioner was no longer using the Elm Street address or that this address was invalid.

 

Petitioner did not file petitions with the Court disputing the determinations set forth in the statutory notices.

 

On May 5, 1997, respondent assessed income tax liabilities against petitioner for the tax years at issue on the basis of the SFRs and petitioner's failure to petition the Court to dispute the deficiencies determined in the statutory notices.

 

On or about December 28, 1997, respondent's revenue officer Ronald Mele (Revenue Officer Mele) confirmed with postal employees that petitioner's previous mailing address was the Elm Street address. On January 28, 1998, Revenue Officer Mele confirmed with postal employees that petitioner was using his Strawberry Hill address as his mailing address and updated respondent's computer records accordingly.

 

During a telephone conversation sometime in 1998, petitioner instructed Revenue Officer Mele to use the post office box address as his mailing address rather than the Strawberry Hill address.

Respondent's Proposed Levy

On March 8, 1999, respondent sent petitioner by certified mail addressed to petitioner at his post office box address a final notice of intent to levy and notice of right to a hearing. On May 14, 1999, respondent received petitioner's untimely Form 12153, Request for a Collection Due Process Hearing. On June 7, 1999, respondent granted petitioner a so-called equivalent hearing under section 301.63301T(i), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3413 (Jan. 22, 1999), because petitioner's request was untimely. On September 13, 1999, respondent's Appeals Office issued petitioner a decision letter upholding the proposed levy.

 

In a letter dated October 22, 1999, Revenue Officer Mele informed petitioner that respondent would begin levying on his income sources and assets on November 5, 1999.

 

On or about November 8, 1999, petitioner submitted a Form 9423, Collection Appeal Request, in which he attributed the delays in filing his returns to respondent's failure to follow through on petitioner's request for capital loss carryover information from 1987 that he needed to file his returns for the tax years at issue. Petitioner's Form 9423 states that Revenue Officer Mele was unable to obtain petitioner's 1987 return.

 

On or about December 7, 1999, petitioner submitted to Revenue Officer Mele a request to enter into an installment agreement to pay his tax liabilities for 1992 through 1994. On January 11, 2000, Revenue Officer Mele sent a letter to petitioner's post office box address denying petitioner's request for an installment agreement because petitioner had not filed income tax returns for 1992 through 1999. The January 11, 2000, letter specifically instructed petitioner to send an appeal request to Revenue Officer Mele at his office address on or before February 11, 2000, if petitioner wished to appeal the denial of his installment agreement request. Petitioner did not appeal the denial of his installment agreement request.

Lien Proceeding

On January 31, 2000, Revenue Officer Donald Angotta (Revenue Officer Angotta) replaced Revenue Officer Mele for purposes of collecting petitioner's 1992 through 1994 tax liabilities.

 

On February 23, 2000, respondent filed an NFTL with respect to petitioner's 1992 through 1994 tax liabilities against petitioner's real property at the land record office in Stamford , Connecticut . The lien attached to the condominium unit petitioner owned at the Strawberry Hill address.

 

On February 23, 2000, respondent's lien unit office mailed petitioner Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, to the Strawberry Hill address, with a copy of the NFTL and a Form 12153.

 

On March 15, 2000, respondent received from petitioner a Form 12153 with an attached letter to Revenue Officer Angotta and an attached memorandum (the attached memorandum). On the Form 12153, petitioner listed his telephone number and instructed the IRS to write to petitioner's post office box address, which he said he checked twice a month, if the IRS was unable to reach him by telephone. Petitioner placed the words "See Attachment", apparently referring to the attached memorandum, under both notations on the Form 12153 that allowed him to appeal either a "Filed Notice of Federal Tax Lien" or a "Notice of Levy".

 

In the attached memorandum, petitioner asserted he would complete his delinquent returns within 60-90 days to prove that he did not owe the tax liabilities determined by respondent.

 

In the attached memorandum, petitioner also stated he was appealing Revenue Officer Angotta's "levy warning letter" dated February 14, 2000, which, according to petitioner, stated: "Enforced collection may include placing a levy on your bank accounts, wages, receivables, commissions, etc."⁶ In the attached memorandum, petitioner asserted: "Mr Angotta informed me over the telephone that I have until March 15, 2000 to appeal this action."

 

In the attached memorandum, petitioner also said Revenue Officer Angotta failed to respond to petitioner's messages left on Revenue Officer Angotta's answering machine before February 11, 2000, in which petitioner stated that he was ready to personally meet with Revenue Officer Angotta to hand in his appeal.

 

In a letter dated June 22, 2000, Appeals Officer William A. Hirsch (Appeals Officer Hirsch) informed petitioner that respondent's NFTL had been assigned to him for consideration. After repeated failed attempts by Appeals Officer Hirsch and petitioner to get in touch with each other, Appeals Officer Hirsch, in a letter dated July 26, 2000, informed petitioner that he needed to file his delinquent returns by August 31, 2000, as a condition to discussing collection alternatives such as an installment agreement or an offer in compromise.

 

On October 3, 2000, Appeals Officer Hirsch telephoned petitioner and attempted to conduct a section 6320 hearing, at which time petitioner requested an extension of time to review his notes. During this conversation, Appeals Officer Hirsch granted petitioner's request for an extension to file his delinquent returns until November 30, 2000. Petitioner agreed to conduct the hearing by telephone rather than in person within 1 week of submitting his delinquent returns.

 

On October 4, 2000, Appeals Officer Hirsch sent petitioner a letter scheduling a telephone hearing for December 8, 2000.

 

On December 8, 2000, Appeals Officer Hirsch telephoned petitioner and conducted petitioner's section 6320 hearing, even though petitioner had not yet filed his delinquent returns. There is no evidence in the record that petitioner at any time either requested that the hearing be held in person or objected to the holding of a hearing by telephone.

 

On July 26, 2001, respondent's Appeals Office issued a notice of determination concerning collection actions informing petitioner of the determination not to withdraw the NFTL. As of that date, petitioner had not appealed the rejection of his installment agreement request.

 

On August 27, 2001, petitioner timely mailed his petition with the Court in response to the July 26, 2001, notice of determination; the Court received and filed the petition on September 4, 2001.⁷

Discussion

As a preliminary matter, we note that petitioner's mail and living arrangements, which have created and continue to create difficulties in contacting him, and his repeated failures to comply with deadlines, have impeded and delayed respondent's collection efforts and the efforts of the Court to resolve these matters.

 

We note that petitioner has uttered contradictory testimony and arguments and has failed to provide respondent and the Court with reliable information and documents to resolve this matter. Petitioner bears the risk of loss and the responsibility arising from failure to prepare and file returns and to preserve and locate his cost records and copies of prior returns for use in substantiating items required to be reported on his returns for the years in issue.

 

Petitioner's place of residence and employment status are uncertain insofar as the record in this case is concerned because he has given confusing, contradictory, and untrustworthy testimony on these issues. Petitioner testified that he is a resident of Nevada for State income tax purposes, although Nevada has no income tax. See Nev. Rev. Stat. Ann. secs. 360-377A (Michie 1999 & Supp. 2001). Perhaps he means he is a Nevada resident for the purpose of avoiding State income taxes.

 

Petitioner's testimony that he is a self-employed engineer who travels away from home for up to 3 months at a time more than once a year contradicts his claim that when he uses or has used the post office box address as his mailing address, he checks his mail twice a month. In Form 433-A, filed on November 11, 1998, petitioner said he was a "volunteer" and "not employed."

 

Petitioner has used the illness of his parents from cancer in 1988 and thereafter as a continued excuse for failing to file returns right up to the present, even though he also testified in another connection that his parents died in 1990.

 

On more than one occasion, petitioner defined what respondent had to do before petitioner would take action. Petitioner then did nothing because respondent's officials did not exactly follow petitioner's requirements as he defined and sought to impose them. Petitioner has failed to file returns with respect to more than 10 tax years, failed to timely appeal the denial of his installment agreement request, failed, after repeated extensions, to file his brief, and failed to file certain motions that he claimed he was filing before submitting his brief.

 

Petitioner repeatedly made legal arguments orally during the trial, even though we instructed petitioner to present his legal arguments in his brief. Although we could reject petitioner's contentions and declare him in default, and dismiss his case for failure to file his brief, see Rules 123, 151; Stringer v. Commissioner [Dec. 42,025], 84 T.C. 693 (1985), affd. without published opinion 789 F.2d 917 (4th Cir. 1986); Horn v. Commissioner [Dec. 54,847(M)], T.C. Memo. 2002-207, we choose instead to address the merits of respondent's determination to file a lien on petitioner's property, see Horn v. Commissioner, supra; Comey v. Commissioner [Dec. 54,518(M)], T.C. Memo. 2001-275.

 

Petitioner contests the filing of the NFTL. Petitioner failed to file a timely request for hearing with respect to respondent's proposed levy. We therefore have no jurisdiction to consider the levy. See Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 269 (2001); Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 261-262 (2001).⁸

 

We have jurisdiction to review respondent's determination of the validity of the Federal tax lien on petitioner's property under section 6320. See secs. 6211(a), 6213(a), 6214(a); Parker v. Commissioner [Dec. 54,464], 117 T.C. 63, 65 (2001); Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 327 (2000).

 

Where the validity of the underlying tax liability is properly at issue, the Court will review the matter de novo. 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. Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181-182 (2000). A taxpayer's underlying tax liability may be at issue if he did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability. See secs. 6320(c), 6330(c)(2)(B).

 

Petitioner claims he did not file petitions with this Court contesting the determinations in the three notices of deficiency because he did not receive the notices of deficiency.

 

The notices of deficiency were properly mailed on December 12, 1996, to petitioner's last known address, which, at the time, was the Elm Street address. There is no record evidence petitioner notified respondent before December 12, 1996, that the Elm Street address was no longer his mailing address. Respondent performed a thorough investigation to determine petitioner's address by contacting the U.S. Postal Service and using the numerous Forms 1099 petitioner received in 1996.

 

On January 8, 1997, the U.S. Postal Service returned to respondent the notices of deficiency and the covering envelopes stamped "unclaimed". The envelopes displayed no indication that petitioner was no longer using the Elm Street address or that this address was invalid. In the absence of clear evidence to the contrary, the presumptions of official regularity and delivery justify the conclusion that respondent sent the statutory notices, and the U.S. Postal Service properly attempted to deliver the notices. See United States v. Zolla [84-1 USTC ¶9175], 724 F.2d 808 (9th Cir. 1984); United States v. Ahrens [76-1 USTC ¶9241], 530 F.2d 781 (8th Cir. 1976); Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 611 (2000). The facts and circumstances of this case, including petitioner's failure to claim mail sent by the Court and the difficulties in contacting him, lead us to conclude that petitioner's conduct constituted deliberate refusal of delivery of the statutory notices. He thereby forfeited his opportunity to contest the underlying deficiencies in a proceeding in this Court under section 6330(d). See Goza v. Commissioner, supra at 183; Sego v. Commissioner, supra; Carey v. Commissioner [Dec. 54,849(M)], T.C. Memo. 2002-209.

 

Because the underlying tax liabilities are not properly at issue, we review respondent's determination for abuse of discretion. See Goza v. Commissioner, supra; Sego v. Commissioner, supra at 610; Hodgson v. Commissioner [Dec. 52,581(M)], T.C. Memo. 1998-70, affd. 18 Fed. Appx. 571 (9th Cir. 2001). We must decide whether respondent exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. See Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999); Fargo v. Commissioner [Dec. 55,514(M)], T.C. Memo. 2004-13.

 

Petitioner argues he is not liable for the deficiencies assessed by respondent. Petitioner also argues respondent's Appeals Office abused its discretion in sustaining the filing of the lien because: (1) Respondent did not comply with the notice requirements of section 6320(a); (2) respondent failed to comply with petitioner's request to conduct the section 6320 hearing in person rather than by telephone; and (3) respondent is precluded from filing the NFTL before petitioner appeals the rejection of his installment agreement request.

 

As explained below, we hold petitioner is liable for the deficiencies. We hold respondent's Appeals Office did not abuse its discretion by upholding respondent's filing of the lien.

Issue 1. Petitioner's Liability for the Assessed Deficiencies

 

Petitioner has stated that he wishes to contest the underlying liabilities for his tax years at issue. Petitioner argues that respondent's determination of the amounts of the assessed income tax liabilities is incorrect because petitioner would have little or no capital gains tax liability if respondent's SFRs had used the actual cost bases, instead of zero-cost bases, to determine his income from the sale of securities, and if the SFRs had accounted for a capital loss carryover from 1987.

 

Petitioner is liable for the assessed deficiencies because the conditions have not been satisfied that would entitle him to contest the deficiencies in this proceeding.

 

Petitioner was entitled at the hearing with the Appeals officer to challenge the existence or amount of the underlying tax liabilities for the periods in issue only if he did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the liabilities. See sec. 6330(c)(2)(B).

 

Petitioner forfeited his opportunity to contest the underlying deficiencies in a proceeding in this Court under section 6330(d) because of his deliberate refusal of delivery of the statutory notices. See supra pp. 18-19.

 

In any event, petitioner was not ready at trial to prove that the assessments overstated his tax liabilities. Taxpayers bear the burden of proving their entitlement to deductions. Rule 142(a); Welch v. Helvering [3 USTC ¶1164], 290 U.S. 111 (1933). The Commissioner is required only to prepare the substitute for return "from his own knowledge and from such information as he can obtain through testimony or otherwise." Sec. 6020(b); see Andary-Stern v. Commissioner [Dec. 54,852(M)], T.C. Memo. 2002-212. Petitioner did not offer into evidence any records, not even the 1987 return, that would tend to prove his contentions that he had cost bases greater than zero for purposes of determining gains and losses on the sale of his securities, or that he had a capital loss carryover from 1987. See Poindexter v. Commissioner [Dec. 55,604] , 122 T.C. 280 (2004); Horn v. Commissioner [Dec. 54,847(M)], T.C. Memo. 2002-207; Smith v. Commissioner [Dec. 54,669(M)], T.C. Memo. 2002-59. Respondent is not obligated to accept any late-filed returns unless petitioner can substantiate his claimed capital loss carryover or any other losses. See sec. 6001; Rules 142(a), 149(b); Horn v. Commissioner, supra; Smith v. Commissioner, supra; sec. 1.6001-1(a), (e), Income Tax Regs.

 

We do not accept petitioner's excuse that he intends to file returns for 1992 through 1994. Petitioner has procrastinated and has failed to file the returns more than 1 year after finding his 1987 return in 2002. See, e.g., Montgomery v. Commissioner [Dec. 55,618], 122 T.C. 1, 19 (2004) (Marvel, J., concurring) ("A taxpayer who procrastinates and seeks to rely solely on his announced intention to file an amended return as a defense to a proposed levy or lien * * * proceeds at his peril as his undocumented intention is not likely to be viewed as a credible challenge to the underlying tax liability."). So much more so with respect to petitioner, who has never even filed original returns for the years in issue.

Issue 2. Respondent's Exercise of Discretion in Sustaining the Lien

a. Overview of Lien Proceedings

The Federal Government obtains a lien against "all property and rights to property, whether real or personal" of any person liable for Federal taxes upon demand for payment and failure to pay. See sec. 6321; Iannone v. Commissioner [Dec. 55,618], 122 T.C. 287, 293 (2004). The lien arises automatically on the date of the assessment and continues until the tax liability is satisfied or the statute of limitations bars enforcement of the lien. Sec. 6322; Iannone v. Commissioner, supra. If the taxpayer fails to pay, the IRS usually files an NFTL with the appropriate State office in order to validate the lien against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. See sec. 6323(a); Lindsay v. Commissioner [Dec. 54,529(M)], T.C. Memo. 2001-285.

 

The Commissioner must provide the taxpayer with written notice of the filing of an NFTL not more than 5 business days after filing and must advise the taxpayer of the right to a hearing before the IRS Appeals Office. Sec. 6320(a)(1), (2) and (3).

 

If the taxpayer requests a hearing, the IRS Appeals officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. Secs. 6320(c), 6330(c)(1). The Appeals officer must also determine whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. Secs. 6320(c), 6330(c)(3).

 

The IRS may withdraw an NFTL if the taxpayer has entered into an installment agreement to satisfy the liability for which the lien was imposed (and the installment agreement does not specify that the lien will not be withdrawn). Sec. 6323(j)(1).

b. Abuse of Discretion

(i) Section 6320(a) Notice Requirements

We reject petitioner's argument that respondent should not have sustained the filing of the Federal tax lien because respondent failed to mail Letter 3172 and the accompanying NFTL to petitioner's last known address.

 

Notice of the lien filing may be given to the taxpayer in person, left at the taxpayer's dwelling, or sent by certified or registered mail to the taxpayer's last known address. Sec. 6320(a)(2).

 

On February 23, 2000, respondent timely mailed to petitioner's Strawberry Hill address, Letter 3172, with a copy of the NFTL.

 

Petitioner sent a Form 12153 that was received by respondent on March 15, 2000, within 30 days of respondent's filing of the NFTL and the mailing of the Letter 3172. Petitioner sent the Form 12153 to appeal the February 14, 2000, "levy warning letter" he claims was issued by Revenue Officer Angotta.

 

On December 8, 2000, respondent provided petitioner with a section 6320 hearing to contest the filing of the NFTL. Because the hearing had been timely requested within the prescribed 30-day period, petitioner's claims that respondent did not send Letter 3172 to petitioner's last known address and that petitioner never received it are beside the point. Even though, in the Form 12153, petitioner appealed an alleged "levy warning letter", Appeals Officer Hirsch's letters sent to petitioner before the section 6320 hearing clearly indicated that the section 6320 hearing would deal with the NFTL.

(ii) Section 6320 Hearing in Person

Petitioner argued Appeals Officer Hirsch did not properly conduct the section 6320 hearing in person.

 

Section 6320(c) requires that the section 6320 hearing be conducted under the provisions of section 6330(c), (d), and (e). The hearing under section 6330 need not be conducted face to face. See sec. 301.6320-1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs; see also Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183 (2001); Day v. Commissioner [Dec. 55,534(M)], T.C. Memo. 2004-30; Armstrong v. Commissioner [Dec. 54,865(M)], T.C. Memo. 2002-224.

 

Respondent was not required to provide petitioner with a face-to-face section 6320 hearing. There is no evidence in the record petitioner requested such a hearing. Petitioner agreed the telephone hearing constituted his section 6320 hearing and did not object to the holding of the hearing by telephone.

 

On the basis of the entire record and applicable law, we conclude that the Appeals officer properly conducted petitioner's section 6320 hearing under section 6320(c).

(iii) Appeal of Rejection of Installment Agreement

Petitioner argues that Revenue Officer Angotta prevented him from filing an administrative appeal of the denial of his installment agreement request, and that respondent's consideration of the appeal would have precluded respondent from filing the NFTL or levying against his property.

 

Respondent would not have been required to withdraw the NFTL even if petitioner had entered into an installment agreement to satisfy the liability for which the lien was imposed. See sec. 6323(j)(1); sec. 301.6323(j)-1(c), Proced. & Admin. Regs. IRS Publication 594, What You Should Know About the IRS Collection Process, cited by petitioner, specifically states that the Commissioner may file a tax lien even if an installment agreement is in effect. IRS Publication 594 at 6; see, e.g., Beery v. Commissioner [Dec. 55,553], 122 T.C. 184, 189-190 (2004) (section 6015(e)(1)(B) does not preclude the Commissioner from filing a Federal tax lien against an individual making an election under section 6015).⁹ We hold respondent was not precluded from filing the NFTL against petitioner's property.

Conclusion

Respondent's Appeals Office did not abuse its discretion in upholding respondent's filing of a Federal tax lien against petitioner's property to collect outstanding income tax liabilities for petitioner's 1992 through 1994 tax years. As required by section 6330(c)(1), the Appeals officer verified that the requirements of applicable laws and administrative procedures had been met. The Appeals officer also determined that the filing of the tax lien balanced the need for efficient collection of taxes with petitioner's legitimate concerns that any collection action be no more intrusive than necessary. Although this case does not involve a jeopardy assessment under section 6861, respondent's security interest in petitioner's property will be jeopardized if respondent's security interest is subordinated to those of other creditors, such as the party or parties involved in the foreclosure litigation with respect to petitioner's condominium against which respondent filed the NFTL. See sec. 6323(a); Lindsay v. Commissioner [Dec. 54,529(M)], T.C. Memo. 2001-285; see also Iannone v. Commissioner [Dec. 55,618], 122 T.C. at 293 (Federal tax liens are not extinguished by personal discharge in bankruptcy).

 

Petitioner's latest status report indicates petitioner is working with a revenue officer to attempt to reach agreement with respondent on his outstanding tax liabilities. If that is so, we commend respondent for displaying extraordinary patience and forbearance in attempting to continue to work with petitioner. See, e.g., Montgomery v. Commissioner [Dec. 55,618], 122 T.C. at 10 (the substantive and procedural protections contained in sections 6320 and 6330 reflect congressional intent that the Commissioner collect the correct amount of tax, and do so by observing all applicable laws and administrative procedures).

 

In the meantime, we have sustained respondent's lien; respondent has complied with all requirements for its validity. In any event, we do not intend to subject respondent's ability to collect petitioner's tax liabilities to further jeopardy.

 

To reflect the foregoing,

 

Decision will be entered for respondent.

¹ The Commissioner has previously represented to this Court that the term "substitute for return" (SFR) is a term used by the Commissioner for returns or partial returns prepared by the Commissioner where the taxpayer did not file a return. See Swanson v. Commissioner [Dec. 55,280], 121 T.C. 111, 112 n.1 (2003). The term "SFR" has also been used to describe a return prepared by the Commissioner under sec. 6020(b). There is no record evidence to prove or disprove respondent's assertion in his brief that the substitutes for return in this case meet the requirements of sec. 6020(b). For convenience, we refer to the returns prepared by respondent as SFRs.

² 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.

³ On Mar. 8, 1999, respondent sent petitioner a final notice of intent to levy and notice of the right to a hearing with respect to his total unpaid tax liabilities; petitioner did not file a timely request for a sec. 6330 hearing. After an equivalent hearing, respondent upheld the proposed levy. We do not have jurisdiction to consider the proposed levy. See infra p. 16. However, because petitioner has conflated the lien and levy issues and made some of the same arguments with respect to both of them, we sometimes refer to the proposed levy in considering petitioner's arguments against the lien.

⁴ As of Jan. 6, 2003, petitioner had filed returns for his 1995 and 1996 tax years.

⁵ Respondent did not determine penalties for petitioner's 1993 tax year.

⁶ The Feb. 14, 2000, letter was not part of the record.

⁷ Petitioner's mailing of the petition was a timely filing on the last day of the 30-day period specified by secs. 6320(c) and 6330(d), as extended by Rule 25. Aug. 25 and 26, 2001, were a Saturday and Sunday, respectively, and petitioner mailed the petition on Monday, Aug. 27, 2001. See Guerrier v. Commissioner [Dec. 54,605(M)], T.C. Memo. 2002-3.

⁸ Petitioner referred to respondent's alleged levies that occurred in January 1998 that were not part of the record. To the extent that petitioner refers to respondent's collection activities before July 22, 1998, we have no jurisdiction to review them. See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746 (which created new sec. 6330 and provided for an effective date of 180 days after July 22, 1998); see also Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 327-328 (2000).

⁹ In his petition and during trial, petitioner conflated the lien and levy issues. We do not have jurisdiction to consider any of petitioner's arguments with respect to respondent's proposed levy including petitioner's argument that his appeal of the rejection of his installment agreement request would preclude respondent's proposed levy. See supra p. 16.

 

Fletcher H. Hyler v. Commissioner.

Docket No. 11023-01L , T.C. Memo. 2002-321, 84 TCM 717, Filed December 30, 2002. [Appealable, barring stipulation to the contrary, to CA-9. --CCH.]

[Code Sec. 6213]

Notice of deficiency: Last-known address. --

The IRS mailed notices of deficiency to an individual's last known address, which was the address shown on the taxpayer's most recent return at the time the notice was issued. The taxpayer failed to show that he provided the IRS with clear and concise notice of a change of address, or that the IRS knew of a change of his address and did not exercise due diligence in ascertaining his correct address. The taxpayer's use of a new address in dealings with IRS employees who were not involved with issuing deficiency notices did not require them to compare such address to the last known address on file. Further, his submission of a Form 4868 seeking an automatic extension of time to file a return did not indicate that it was intended as a notification of change of address.

 

[Code Sec. 6320]

Notice of lien: Due process. --

An individual was not denied due process with respect to a notice of tax lien. The IRS met the requirements of its policy statement regarding filing notice of tax lien; the Tax Court noted that policy statements, however, do not confer enforceable rights on taxpayers. The IRS was not required to send to the taxpayer notice of intent to file the notice of tax lien prior to filing such notice. His contention that he had been denied due process due to an accumulation of procedural mistakes on the part of the IRS also was rejected.

 

[Code Secs. 6501 and 6651]

Assessment of taxes and penalties: Statute of limitations. --

The IRS's assessment of taxes and penalties against an individual was not barred by the three-year statute of limitations after the taxpayer filed his return. The assessments were made within the applicable limitations period and were valid. The taxpayer failed to show that failure to file penalties should have been abated because of prior administrative action and presented no evidence of error in the determination of taxable income or the calculations of his tax liability. His reliance on his assistant to file a timely return when he could have ascertained its due date did not constitute reasonable cause to abate penalties for late filing. Finally, the taxpayer's contention that the IRS conducted an unauthorized second examination of his books and records was rejected.

 

[Code Sec. 7811]

Notice of deficiency: National Taxpayer Advocate directive. --

Notices of deficiency issued to an individual regarding two tax years were not barred by a directive from the National Taxpayer Advocate's office. The Taxpayer Advocate actively assisted the taxpayer during the time he had an administrative claim for damages pending, including moving the locus for the dispute and requesting that the IRS cease collection actions until the taxpayer's claim had been considered. However, there was no credible support for his contention that the Taxpayer Advocate barred the issuance of any notices of deficiency. --CCH.

Fletcher H. Hyler, pro se. Thomas R. Mackinson, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

 

COHEN, Judge: After conducting a hearing, respondent sent to petitioner a Notice of Determination Concerning Collection Actions(s) Under Section 6320 and/or 6330. The notice of determination informed petitioner that the Appeals officer declined to invalidate assessments of Federal income taxes for petitioner's 1995 and 1997 taxable years and declined to withdraw the Notice of Federal Tax Lien. After concessions, the issues for decision are: (1) Whether notices of deficiency regarding petitioner's tax liabilities for 1995 and 1997 were barred by a directive from the National Taxpayer Advocate's office; (2) whether notices of deficiency for 1995 and 1997 were sent to petitioner's last known address; (3) whether petitioner was denied due process with respect to the notice of lien; and (4) whether assessment of taxes and penalties for 1995 was barred by the statute of limitations or otherwise violated applicable regulations. Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended.

FINDINGS OF FACT

 

Some of the facts have been stipulated, and the stipulated facts are incorporated in our findings by this reference. Petitioner resided in Portola Valley , California , at the time he filed his petition.

 

Petitioner holds at least one advanced academic degree and has lectured at the Stanford School of Business. During the years in issue, petitioner and his spouse owned a marketing corporation, Logical Marketing, Inc. Petitioner served as its chief executive officer.

 

On or about March 9, 1998, petitioner agreed to a decision in this Court at docket No. 25288-96 determining a deficiency in income tax due from him for 1993 in the amount of $57,255 and a penalty under section 6662(a) in the amount of $11,451. At the time the notice of lien involved in this case was filed, some part of the deficiency for 1993 had not been paid.

Petitioner's 1995 Federal Tax Return

Petitioner obtained an extension to August 15, 1996, to file his 1995 Federal income tax return. On February 17, 1997, respondent sent to petitioner a delinquency notice requesting that he file his 1995 return. The Internal Revenue Service (IRS) received an unsigned and undated 1995 return for petitioner on March 31, 1997; the return gave an address for petitioner in Woodside , California .

 

Shortly thereafter, the IRS made a mathematical adjustment to the 1995 income tax return relating to whether petitioner should receive credit for $3,800 in estimated tax payments or tax payments from a prior year against his tax liability of $3,857.41. The IRS sent to petitioner a notice of balance due. On July 25, 1997, the IRS filed a Notice of Federal Tax Lien for 1995 and for taxes outstanding for other periods. In July 1998, a payment of $6,748.62 was applied to the 1995 liability. This amount included tax of $3,857.41, an estimated tax penalty of $210.58, a late filing penalty of $867.92, a failure to pay tax penalty of $771.48, and assessed interest totaling $1,041.23. After the payment, the IRS abated $250.73 of the previously assessed failure to pay tax penalty and the entire $867.92 late filing penalty. The IRS also abated $185.51 of the assessed interest. These abatements resulted in a credit of $1,304.16 in favor of petitioner, which was applied to his outstanding liabilities for 1993.

 

Revenue Agent Brian Rausch (Rausch) began an examination of other aspects of petitioner's 1995 income tax return on December 31, 1997. Connie Stone (Stone), petitioner's sister and a resident of Virginia , represented petitioner. Stone falsely represented that she was licensed as a certified public accountant. The examination focused on Schedule C, Profit or Loss From Business, deductions claimed by petitioner. During the examination, Stone requested that petitioner's address be changed to her address in Henry , Virginia . The IRS entered this change into its records during the week of August 16, 1998. On August 18, 1998, the IRS received petitioner's 1997 Federal income tax return, which was timely filed pursuant to an extension of time. This return bore the Woodside address. Its receipt caused the IRS again to change its records, during the week of October 25, 1998, to reflect that petitioner's address was once again the Woodside address.

 

At the end of November 1998, petitioner moved from the Woodside address to Portola Valley , California . He submitted a mail forwarding request to the U.S. Postal Service reflecting his move.

 

Petitioner sold the Woodside property for $1.6 million and acquired the Portola Valley property for $4 million. He estimated that the Portola Valley property was worth $6.5 million when he bought it and $10 million at the time of trial in May 2002. He applied available funds to the debt on his Portola Valley residence rather than to his outstanding tax liabilities (acknowledged at $67,000) because of the perceived necessity of maintaining his residence and his lifestyle for business reasons.

 

On February 3, 1999, Rausch sent a 30-day letter explaining proposed deficiencies for 1995. In response, Stone filed a timely protest requesting that the proposed deficiency for 1995 be reviewed by the IRS Appeals Division. Appeals Officer Lawrence Dorr (Dorr) of the San Francisco Appeals Office undertook the requested review. Beginning in April 1999, he sent at least four contact letters to Stone and spoke with her on the telephone on at least one occasion. During the course of their discussions, Stone did not inform Dorr that petitioner had moved from the Woodside address shown on his 1997 return.

 

Stone did, however, send to Dorr a facsimile cover sheet requesting more time to submit information. On June 25, 1999, Dorr replied in a letter stating that, if his office did not see some progress on the matter within 2 weeks, it would be necessary to issue a notice of deficiency. Stone did not reply to that letter, and, on August 19, 1999, the San Francisco Appeals Office sent a notice of deficiency for 1995. The notice proposed a deficiency of $65,975 and an addition to tax of $16,494 for late filing, plus an accuracy-related penalty of $13,195.07. The notice was sent by certified mail to petitioner at the Woodside address, and a copy was sent to Stone in Henry , Virginia . Stone received the notice of deficiency but did not inform petitioner, believing that some contacts she had made with the Office of the Taxpayer Advocate precluded further action by the IRS.

 

Petitioner did not file a petition with this Court with respect to the 1995 deficiency during the time permitted, which expired November 17, 1999. On February 7, 2000, the deficiency for 1995 was assessed. The amounts assessed have not been paid.

Petitioner's 1997 Federal Income Tax Return

On July 16, 1999, the Philadelphia Service Center sent a notice of deficiency for 1997 by certified mail to petitioner at the Woodside address. That notice contained a mathematical computation based on failure to calculate the alternative minimum tax. Petitioner did not file a petition with this Court seeking review of the 1997 deficiency. That deficiency was assessed on December 20, 1999, and has not been paid. Petitioner subsequently submitted an amended 1997 return.

Petitioner's 1998 Federal Income Tax Return

Sometime before August 18, 1999, petitioner submitted an unsigned Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return for 1988. The Form 4868 listed petitioner's address as the Portola Valley address. The Form 4868 did not contain petitioner's Woodside address, nor did it state that the application was intended as a notification of a change of address. The IRS did not receive a 1998 Federal income tax return from petitioner until May 14, 2001. This was the first time that petitioner had submitted a Federal income tax return that reflected petitioner's Portola Valley address. Petitioner's taxable year 1998 is not otherwise before the Court.

Petitioner's Suit for Damages

Petitioner had some complaints about IRS collection activities. Petitioner and Stone contacted the Office of the Taxpayer Advocate concerning petitioner's complaints. They visited that office in Washington , D.C. , in February 1999 and provided the Portola Valley address to Sharese Stevens of that office. He filed an administrative claim for damages with the District Director in Oakland , California , on July 15, 1999. The claim listed petitioner's address as the Portola Valley address. The claim did not contain petitioner's Woodside address, nor did it state that the claim was intended as a notification of a change of address.

 

At the request of the National Taxpayer Advocate, consideration of petitioner's administrative claim was transferred from Oakland , California , to Seattle , Washington . The Office of the Taxpayer Advocate also requested suspension of collection activities during the consideration of petitioner's administrative claim, and the IRS did not undertake collection activities while petitioner's claim was pending.

 

In the Seattle Appeals Office, petitioner's claim was assigned for review to Special Procedures Advisor Jill Pace (Pace), who received it on August 6, 1999. On August 11, 1999, Pace sent to petitioner a form letter regarding the possibility of third-party contacts; her letter was sent to the Portola Valley address that was on petitioner's damages claim. Pace did not check IRS records to determine an alternate address for petitioner, and she was unaware that the address used by petitioner on the administrative claim was a new address. During her review of the administrative claim, Pace met with petitioner and Stone. Neither petitioner nor Stone informed Pace of petitioner's change of address the previous November. Petitioner did, however, provide a Form 2848, Power of Attorney and Declaration of Representative, appointing Stone as his representative for multiple income tax periods including 1993, 1995, and 1997.

 

On December 28, 1999, the holder of a deed of trust on petitioner's residence commenced a nonjudicial foreclosure proceeding with the filing of a Notice of Default and Election to Sell Under Deed of Trust. Petitioner did not inform the IRS of the default or the scheduling of the foreclosure sale.

 

On February 18, 2000, the District Director in Seattle , Pace's superior, denied petitioner's administrative claim for damages. Petitioner engaged an attorney, Richard R. Sayers (Sayers), to file a lawsuit in the United States District Court for the Western District of Virginia, captioned Logical Marketing, Inc. and Fletcher H. Hyler, III v. United States , Civil Action No. 7:00295, in which petitioner sought damages for IRS collection activities. Petitioner did not authorize Sayers to represent petitioner before the IRS, and the lawsuit did not seek to enjoin further efforts to collect petitioner's tax liabilities.

Collection Activities

Petitioner's collection case was transferred from Virginia to California and assigned to Revenue Officer David Rosado (Rosado) in Redwood City , California . Rosado obtained petitioner's Portola Valley address from the IRS computer system, which had been updated during the 12th week of the year 2000. At petitioner's behest, Rosado spoke to Stone on April 17, 2000, and informed her that he was considering filing a notice of Federal tax lien. Around this time, Stone received transcripts for the years 1993, 1995, and 1997 for petitioner's individual accounts.

 

On April 19, 2000, Rosado wrote to Stone. His letter noted that he and Stone had discussed a monthly payment plan for petitioner's 1993 income tax liability and asked for copies of a number of documents relating to petitioner's financial status. The letter further indicated that Rosado had enclosed transcripts of petitioner's income tax accounts for 1993, 1995, and 1997, as well as IRS publications relating to preparation of financial statements, to the IRS collection process, and to "Your Rights as a Taxpayer". The letter concluded as follows:

 

5. Notice of Federal Tax Lien. Per our conversation, I will delay Filing Notice of Federal Tax Lien until May 15, 2000. At that time I will reevaluate the need for filing. We had discussed alternatives to filing a Notice of Lien such as the posting of a bond. I would expect your proposal on this matter no later than 5/15/2000.

 

6. You had indicated that notice of assessment for 1995 and 1997 was not received. Is this correct?

 

7. For your information I have requested the administrative case file for 1995 and 1997, so that any issues can be addressed. As soon as I receive these files, I will share it with you. I also agreed to delay filing Notice of Federal Tax Lien for these periods until we can address the assessments. If there are no unresolved issues regarding assessments, then collection of the balance due will be addressed. Will also address filing of Notice of Federal Tax Lien.

 

8. During the interim, please advise Mr. Hyler that he can begin sending payments of $5000 to my office. Please note that penalties and interest continue to accrue on any unpaid balance. This is not an acceptance of a monthly payment proposal. That will be determined at a later time.

 

Please have the completed Collection Information Statement and verification in my office no later than May 15, 2000. If you have any concerns or questions, you can reach me at the telephone number listed above. I am required to advise you that failure to provide the above information by the May 15, 2000 [sic] may result in enforcement action such as, issuance of Final Notice, Issuance of Notice of Levy, serving summons, filing Notice of Federal Tax Lien. Once again do not hesitate to call. Thank you.

 

Stone never sent to Rosado the information that he had requested in the April 19, 2000, letter. Stone did, however, send copies of the letter to petitioner and to Sayers.

 

Sayers wrote to Rosado requesting that collection action be halted until petitioner's lawsuit against the Government for damages was resolved. Rosado received that letter on May 11, 2000, and sought legal advice from IRS counsel regarding whether to proceed with collection while the lawsuit was pending. On June 5, 2000, IRS counsel advised him that collection could be pursued.

 

On June 13, 2000, the IRS sent a Notice of Federal Tax Lien to the County Recorder in San Mateo, California, for filing, indicating that petitioner had unpaid Federal income tax liabilities for 1993, 1995, and 1997. On June 16, 2000, the IRS sent to petitioner a Notice of Tax Lien Filing and Your Right to a Hearing Under I.R.C. 6320 (Notice) for those years. The notice of lien was recorded in San Mateo County on June 21, 2000. On July 20, 2000, petitioner's counsel timely filed a request under section 6320 for a hearing.

 

At the hearing, petitioner's then counsel Edward T. Perry (who represented petitioner through trial of this action but was permitted to withdraw at the conclusion of the testimony and before briefs were due) raised the following issues:

 

a) the filing of the Notice of Federal Tax Lien created a hardship for petitioner;

 

b) the filing of the lien was not justified because the IRS failed to provide clear notice to petitioner of an intention to file a Notice of Federal Tax Lien in advance of the lien filing;

 

c) the underlying assessment for 1995 was invalid because the statute of limitations on assessment had expired prior to assessment;

 

d) the underlying assessments for 1995 and 1997 were invalid because the notices of deficiency were not mailed to petitioner's last known address;

 

e) the notice and demand for payment issued for each of the tax years 1995 and 1997 were invalid in that such notices were not mailed to petitioner's last known address and were issued during a stay of collection imposed by the Taxpayer Advocate;

 

f) the lien filing was defective in that it included the amount of a failure to file penalty for 1995, and the IRS had abated a previously assessed delinquency penalty; and

 

g) the lien filing was defective in that it included 1997, and petitioner did not recall an examination for that period.

 

While the Appeals process was in effect, the IRS issued Certificates of Subordination to permit petitioner to refinance his residential property on August 14, 2000, and again on July 31, 2001.

 

On August 31, 2001, the Appeals office issued an 8-page determination letter with respect to the matters raised at the hearing. It reported Appeals's determination that petitioner's liability for 1993 taxes was not properly at issue, because that year was the subject of a decision by this Court. It further determined that, because petitioner had been provided an opportunity to challenge the 1995 tax liability in the Appeals Division prior to assessment, the 1995 tax liability (including the late filing penalty) was not properly at issue in the hearing. Finally, it determined that no relief was available for either 1995 or 1997 because all administrative requirements had been met and notices of assessment and demand for payment with respect to those years had been sent to petitioner.

OPINION

Statutory Framework

Section 6321 imposes a lien in favor of the United States on all property and rights to property of a person when a demand for the payment of the person's taxes has been made and the person fails to pay those taxes. Section 6322 provides that such a lien arises when an assessment is made. To protect the Government's rights to recover its unpaid taxes, section 6323(a) provides that the IRS may file a notice of Federal tax lien in order to establish the priority of its claims against the taxpayer's other creditors.

 

In the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3401, 112 Stat. 746, Congress enacted sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide protections for taxpayers in tax collection matters. Section 6320 requires that the Secretary notify a person who has failed to pay a tax liability of the filing of a notice of lien under section 6323. The notice required by section 6320 must be provided not more than 5 business days after the day of the filing of the notice of lien, pursuant to section 6320(a)(2). Section 6320 further provides that the person so notified may request administrative review of the matter (in the form of a hearing) within 30 days beginning on the day after the 5-day period. Under section 6320(c), the hearing generally is to be conducted consistent with the procedures set forth in section 6330(c), (d), and (e). Section 6330(c) permits the person notified to raise collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. Section 6330(c)(2)(B) provides that the person notified may contest the existence and amount of the underlying tax liability at a hearing if that person did not receive a notice of deficiency for the taxes in question or did not otherwise have a prior opportunity to dispute the tax liability. See Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 609 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179 (2000).

 

Section 6330(d) provides for judicial review of the administrative determination by this Court or by a Federal District Court , as may be appropriate. 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. Where, however, the validity of the underlying tax liability is properly at issue, this Court will review the matter on a de novo basis. Sego v. Commissioner, supra at 610; see H. Conf. Rept. 105-599 at 266 (1998), 1998-3 C.B. 747, 1020.

The Notices of Deficiency Regarding Petitioner's Tax Liabilities for 1995 and 1997 Were Not Barred by a Directive From the Office of the Taxpayer Advocate

Within the IRS is an Office of the Taxpayer Advocate, headed by the National Taxpayer Advocate. Sec. 7803(c). Among the functions of the Office of the Taxpayer Advocate is to "assist taxpayers in resolving problems with the Internal Revenue Service". Sec. 7803(c)(2)(A)(i). A taxpayer seeking such assistance may file an application with the Office of the Taxpayer Advocate for a "Taxpayer Assistance Order" (TAO), which may be issued if the National Taxpayer Advocate determines that the taxpayer is or is about to incur "a significant hardship as a result of the manner in which the internal revenue laws are being administered" by the IRS. Sec. 7811(a)(1)(A). The Office of Taxpayer Advocate is not restricted to issuance of TAOs in carrying out its functions of aiding taxpayers; section 7811(e) provides that none of the provisions of section 7811 prevents the National Taxpayer Advocate from taking any action in the absence of a taxpayer application.

 

In this case, the Office of the Taxpayer Advocate actively assisted petitioner during the time that he had an administrative claim for damages pending. These activities included moving the locus of the dispute from San Francisco to Seattle and requesting that the IRS cease collection actions until petitioner's claim had been considered.

 

Section 7811(b)(2)(A) explicitly provides that a TAO may require cessation of any action with respect to the taxpayer "under chapter 64 (relating to collection)". The issuance of a notice of deficiency, however, is provided for in chapter 63, relating to assessments. Further, with exceptions not applicable here, a TAO may direct cessation of action under a provision other than chapter 64 only if that provision is "specifically described by the National Taxpayer Advocate in such order." Sec. 7811(b)(2)(D).

 

There is no credible support for petitioner's claim that a TAO barred the issuance, in July and August 1999, of the deficiency notices for his 1995 and 1997 income taxes. No copy of any TAO is in the record. Pace testified that the Office of the Taxpayer Advocate had requested a suspension of "the collection action". During July and August, there was no "collection action" related to petitioner's 1995 and 1997 taxable years. Petitioner's representative, Stone, claims to have been told in February 1999 that "no action would be taken." Her testimony, however, fails to make clear the context in which she allegedly received this advice. We do not believe that the request of the Office of the Taxpayer Advocate extended beyond collection actions to preclude the issuance of notices of deficiency for 1995 and 1997.

The Notices of Deficiency for 1995 and 1997 Were Sent to Petitioner's Last Known Address

Absent special circumstances, the IRS may not assess a deficiency in tax until after a valid notice of deficiency has been sent to the taxpayer. For that purpose, mailing a notice of deficiency to the taxpayer at the taxpayer's "last known address" is sufficient regardless of actual receipt or nonreceipt. Sec. 6212(b); see Pietanza v. Commissioner [Dec. 45,576], 92 T.C. 729, 735-736 (1989), affd. without published opinion 935 F.2d 1282 (3d Cir. 1991); Shelton v. Commissioner [Dec. 32,842], 63 T.C. 193 (1974).

 

Absent clear and concise notice of a change of address, a taxpayer's last known address is the address shown on the taxpayer's return that was most recently filed at the time that the notice was issued. King v. Commissioner [88-2 USTC ¶9521], 857 F.2d 676, 681 (9th Cir. 1988), affg. [Dec. 43,864] 88 T.C. 1042 (1987); Abeles v. Commissioner [Dec. 45,203], 91 T.C. 1019, 1035 (1988); compare sec. 301.6212-2, Proced. & Admin. Regs., effective January 29, 2001. In deciding whether a notice was mailed to a taxpayer at the taxpayer's last known address, the relevant inquiry "pertains to *** [the Commissioner's] knowledge rather than to what may in fact be the taxpayer's most current address." Frieling v. Commissioner [Dec. 40,284], 81 T.C. 42, 49 (1983).

 

In order to supplant the address shown on the most recent return, a taxpayer must clearly indicate that the former address is no longer to be used. Tadros v. Commissioner [85-2 USTC ¶9448], 763 F.2d 89, 91-92 (2d Cir. 1985); Alta Sierra Vista, Inc. v. Commissioner [Dec. 32,649], 62 T.C. 367 (1974), affd. without published opinion 538 F.2d 334 (9th Cir. 1976). A taxpayer's use of an address different from that on the last-filed return in correspondence with officials of the IRS does not constitute clear and concise notice of a change of address. King v. Commissioner, supra at 681. The acquisition of a different address by IRS personnel generally fails to constitute adequate notice of a change of address when those personnel are not involved in issuing the statutory notices. In United States v. Zolla [84-1 USTC ¶9175], 724 F.2d 808, 811 (9th Cir. 1984), the Court of Appeals for the Ninth Circuit explained:

 

If we required agents mailing notices of deficiency to take into account address information acquired by agents in different divisions in the course of unrelated investigations, the IRS could ensure that notices were validly addressed only by systematically recording in a central file all address information acquired in any fashion. We decline to require the IRS to do that. *** it would impose an unreasonable administrative burden on the IRS. ***

 

In this case, the notices of deficiency were mailed to the Woodside address listed on petitioner's 1998 return --the last return filed by petitioner prior to the mailing of the notices in July and August 1999. Consequently, the notices of deficiency were mailed to petitioner at his last known address, unless petitioner can show otherwise.

 

Petitioner has not demonstrated that, before the 1995 and 1997 notices of deficiency were mailed, he provided the IRS with clear and concise notice of a change of address. Nor has he shown that, prior to the mailing of the notice of deficiency, the IRS knew of a change in petitioner's address and did not exercise due diligence in ascertaining petitioner's correct address. See Abeles v. Commissioner, supra; Alta Sierra Vista, Inc. v. Commissioner, supra at 374.

 

Petitioner maintains that he provided notification of his Portola Valley address on several occasions. None of those occasions, however, provided the clear and concise notice needed to charge the IRS in the summer of 1999 with knowledge that Portola Valley was the last known address.

 

Petitioner principally urges that the IRS received clear and concise notice of an address change when, in 1998, Rausch was conducting an examination of petitioner's 1995 return. During this examination, Stone informed Rausch that petitioner's address had changed to Henry , Virginia . The IRS entered this change into its records but soon thereafter received petitioner's 1997 Federal income tax return. This return bore the Woodside address. Its receipt caused the IRS to change its records, during the week of October 25, 1998, to reflect that petitioner's address was once again the Woodside address. That address remained unchanged on IRS records until late in 2001, when petitioner's 1998 Federal income tax return was filed. In July and in August 1999, when the 1995 and 1997 notices of deficiency were mailed, IRS records indicated that petitioner's address was the Woodside address, the one appearing on his last-filed Federal income tax return. There is no indication that either notice was returned to the IRS undelivered, so there was no reason for the IRS to conduct a further search for petitioner's address. (Petitioner speculated at trial that mail may have been stolen from his mailbox at the Portola Valley residence. If that were the case, however, it would not be attributable to any error on the part of the IRS.)

 

In any event, petitioner did not move to Virginia . The Virginia address was the address of Stone. Subsequent correspondence between Dorr and Stone indicated that petitioner continued to live in California while Stone lived in Virginia . Moreover, a copy of the 1995 notice was sent to the Henry, Virginia , address. Stone neglected to advise petitioner of receipt of that notice. Petitioner seeks to disavow some communications sent to Stone. His inconsistent positions concerning her authority and her misrepresentations of her capacity are not attributable to respondent. See Lefebvre v. Commissioner [Dec. 41,151(M)], T.C. Memo. 1984-202, affd. [85-1 USTC ¶9351] 758 F.2d 1340 (9th Cir. 1985). Any confusion was created by petitioner and his representative, and their communications cannot be characterized as clear and concise.

 

We are unpersuaded by petitioner's contentions that, on other occasions, he or Stone had provided clear and concise notification of his new Portola Valley address before the 1995 and 1997 deficiency notices were mailed. Those occasions involved persons who were either with the Office of the Taxpayer Advocate, the Special Procedures Office, or the Collection Division. Petitioner's use of a new address in dealings with persons who were not involved with the issuing of deficiency notices did not require them to compare the address petitioner used to the last known address otherwise on file. United States v. Zolla [84-1 USTC ¶9175], 724 F.2d at 811; see also Rev. Proc. 90-18, 1990-1 C.B. 491.

 

Another notification of a new address, petitioner argues, came when IRS received an unsigned Form 4868 seeking an automatic extension of time within which petitioner might file his 1998 Federal income tax return. The Form 4868, which was mailed sometime prior to August 18, 1999, used the Portola Valley address. However, the Form 4868 does not indicate that it is intended as a notification of a change of address. Under these circumstances, the submission of a Form 4868 does not constitute the requisite notification that the address it contains is a new address for the taxpayer. Monge v. Commissioner [Dec. 45,827], 93 T.C. 22, 32 (1989).

 

We conclude that petitioner's haphazard use of his new address did not constitute "clear and concise written notification". He fell short of placing the examination division on notice that the Woodside address, the address appearing on his last-filed return, was not his last known address. We conclude that the notices of deficiency for 1995 and 1997, which were mailed to the Woodside address, were valid.

Due Process Was Not Offended by Efforts To Collect Petitioner's Tax Liabilities

The IRS has published a list of policies regarding the administration of the internal revenue laws in the Internal Revenue Manual. One section of the Manual describes the filing of notices of tax lien, as follows:

 

(1) Notices of lien generally filed only after taxpayer is contacted in person, by telephone or by notice: A notice of lien shall not be filed, except in jeopardy assessment cases, until reasonable efforts have been made to contact the taxpayer in person, by telephone or by a notice sent by mail, delivered in person or left at the taxpayer's last known address, to afford him/her the opportunity to make payment. All pertinent facts must be carefully considered as the filing of the notice of lien may adversely affect the taxpayer's ability to pay and thereby hamper or retard the collection process. [1 Administration, Internal Revenue Manual (CCH), sec. 1.2.1.5.13, at 3002-3003.]

 

Policy statements in the Internal Revenue Manual do not confer enforceable rights on taxpayers. Vulcan Oil Tech. Partners v. Commissioner [Dec. 52,609], 110 T.C. 153, 161 (1998), affd. without published opinions sub nom. Tucek v. Commissioner [99-2 USTC ¶50,942], 198 F.3d 259 (10th Cir. 1999), Drake Oil Tech. Partners v. Commissioner [2000-1 USTC ¶50,378], 211 F.3d 1277 (10th Cir. 2000). In any event, it is apparent to us that the IRS met the requirements of the policy statement before filing the notice of lien. Early in 2000, Rosado contacted petitioner's representative, Stone, and discussed with her payment of amounts owing. His letter of April 19, 2000, enclosed transcripts of petitioner's income tax accounts for 1993, 1995, and 1997. It suggested that petitioner begin making payments of $5,000 monthly to reduce the amount of tax owing and resulting interest charges. The letter requested information from petitioner and explained:

 

I am required to advise you that failure to provide the above information by the May 15, 2000 [sic] may result in enforcement action such as, issuance of Final Notice, Issuance of Notice of Levy, serving summons, filing Notice of Federal Tax Lien. ***

 

This letter, a copy of which Stone forwarded to petitioner, adequately provided petitioner with the opportunity to make payment of the liabilities specified and warned him of the consequences of doing nothing.

 

Petitioner further argues that respondent was required to send to him notice of intent to file the notice of tax lien before the notice was actually filed, but petitioner is incorrect. Section 6320 only requires that notice be sent to the taxpayer within 5 days after the notice of tax lien has been filed.

 

Petitioner argues that respondent violated some procedures set forth in the Fair Debt Collection Practices Act (FDCPA), Pub. L. 95-109, 91 Stat. 874 (1977), 15 U.S.C. sec. 1692 (2000). By its terms, however, that act does not apply to employees of the Government whose collection activities are part of their jobs. See 15 U.S.C. sec. 1692a(6) (2000). Congress has amended the Internal Revenue Code to require respondent to observe some FDCPA procedures. See sec. 6304 as added by RRA 1998, sec. 3466, 112 Stat. 768; see also H. Conf. Rept. 105-599, at 291 (1998), 1998-3 C.B. 747, 1045. Petitioner's reliance upon FDCPA practices that Congress has not included in the Internal Revenue Code is unavailing.

 

Nor has petitioner convinced us that respondent has deprived him of constitutional due process by a perceived accumulation of procedural mistakes. As we noted at trial, mistakes have been made by both sides in this dispute. None of respondent's mistakes, however, have deprived petitioner of his right to notice and a fair hearing, either at the administrative level or before this Court.

The Assessment of Taxes and Penalties for 1995 Was Valid

Respondent concedes that petitioner did not receive a copy of the notice of deficiency for 1995 and that the underlying liability for 1995 is therefore properly considered in this proceeding. Whether the limitations period has expired constitutes a challenge to the underlying tax liability. Boyd v. Commissioner [Dec. 54,495], 117 T.C. 127, 130 (2001).

 

Petitioner contends that the statute of limitations bars assessment of his liabilities for 1995 and that the additions to tax should be abated because of prior administrative action. He has not presented any evidence of error in the determination of taxable income or the calculations of tax liability. Section 7491(a) does not apply because the examination of petitioner's liabilities in issue commenced before the effective date of that section.

 

The Commissioner has 3 years from the time a return is filed to issue a notice of deficiency with respect to income tax. See secs. 6212(a), 6213(a), 6501(a). Section 7502(a)(1) provides that, in certain circumstances, a timely mailed return will be treated as though it were timely filed. Section 7502(a)(2) provides that the timely mailing/timely filing rule applies if the postmark date on an envelope falls within the prescribed period on or before the prescribed date. To establish that a return has been timely filed, we require reliable testimony or other corroborating evidence of the circumstances surrounding the return's preparation and mailing. See, e.g., Estate of Wood v. Commissioner [Dec. 45,604], 92 T.C. 793 (1989), affd. [90-2 USTC ¶50,488] 909 F.2d 1155 (8th Cir. 1990); Mitchell Offset Plate Serv., Inc. v. Commissioner [Dec. 29,829], 53 T.C. 235, 239-240 (1969); see also Schwechter v. Commissioner [Dec. 53,738(M)], T.C. Memo. 2000-36; Rakosi v. Commissioner [Dec. 48,878(M)], T.C. Memo. 1993-68, affd. without published opinion [95-1 USTC ¶50,133] 46 F.3d 1144 (9th Cir. 1995).

 

Petitioner argues that Stone timely mailed a 1995 return on his behalf on or before August 15, 1996. Thus, he concludes, assessment of his 1995 taxes on February 7, 2000, was beyond the applicable period of limitations. There is neither reliable testimony nor corroborating evidence, however, sufficient to prove his claim.

 

Petitioner entrusted the preparation and filing of his return to Stone. Stone and her former office assistant testified about office procedures in 1996. Stone testified that she stamped petitioner's name on the return. The assistant testified that the return would have been hand delivered to a window at the local post office, but no proof of mailing was obtained. Stone claimed that a check was enclosed with the return and never cleared the bank, but her testimony about the amount of the check was inconsistent with the balance shown on the copy of the return later produced. There was no explanation of the failure to follow up on the uncleared check. There is no evidence that a 1995 return was received by the IRS before March 31, 1997, when an unsigned and undated copy was delivered after an inquiry from the IRS. The record shows that petitioner was chronically delinquent in his tax obligations, and we cannot accept these unpersuasive assertions that a particular return was timely. We conclude that the assessment for 1995 was timely. (We need not, therefore, address respondent's contention that the return described by Stone was invalid for lack of petitioner's signature.)

 

The addition to tax under section 6651(a) is applicable unless a taxpayer establishes that the failure to file was due to reasonable cause and not willful neglect. Petitioner failed to exercise ordinary care and prudence in filing his 1995 return. Stone's office procedures may have contributed to the failure to make or to prove a timely filing. Nevertheless, reliance on an agent to file a timely return when the due date of the returns was ascertainable by the taxpayer does not constitute reasonable cause for excusing the taxpayer from statutory penalties for late filing. United States v. Boyle [85-1 USTC ¶13,602], 469 U.S. 241 (1985). Petitioner was aware that he had not signed a return for 1995. Accordingly, petitioner is liable for the addition to tax under section 6651(a)(1).

 

Petitioner argues that earlier administrative actions of the IRS require a different result. Petitioner asserts that, because of previous abatement of $867.92 in late filing penalties, section 6406 operates to estop respondent from assessing $16,494 in late filing penalties that were subsequently determined in the notice of deficiency for 1995. Petitioner is incorrect. Section 6406 precludes review by "any other administrative or accounting officer, employee or agent of the United States " (emphasis added) of a decision of the Secretary or his delegate with respect to a claim by the taxpayer. Secs. 6406, 7701(a)(11)(B). By its terms, section 6406 does not preclude the Secretary or his delegate from reviewing prior actions. As explained in Hacker v. Commissioner [Dec. 49,126(M)], T.C. Memo. 1993-285, affd. 29 F.3d 632 (9th Cir. 1994):

 

The legislative history of section 6406 indicates that such section was originally added for the purpose of prohibiting review of a decision of the Secretary of the Treasury (and his delegates, including the Commissioner) by employees of other agencies, such as the Comptroller General. See Hearings on H.R. 8245 Before the Senate Comm. on Finance, 67th Cong., 1st Sess. 299-300 (Sept. 1-Oct. 1, 1921); see also Crocker v. United States [71-1 USTC ¶9465], 323 F. Supp. 718, 724-725 (N.D. Miss. 1971). Clearly, section 6406 does not estop the Commissioner, or his successor, from reviewing his own decisions. See E.A. Landreth Co. v. Commissioner [Dec. 3715], 11 B.T.A. 1, 23 (1928); see also Burnet v. Porter [2 USTC ¶711] , 283 U.S. 230 (1931); McIlhenny v. Commissioner, 39 F.2d 356 (3d Cir. 1930), affg. [Dec. 4316] 13 B.T.A. 288 (1928); Estate of Meyer v. Commissioner [Dec. 31,336], 58 T.C. 69, 71 (1972).

 

The evidence before us discloses no reason for the original abatement of $867.92. On the contrary, the evidence justifies imposition of the late filing additions.

 

Petitioner also contends that respondent conducted an unauthorized second examination of his books in violation of section 7605(b). Petitioner's error arises from his misreading of the certificate of assessment and payments. This document indicates that the matter of petitioner's 1995 tax liabilities was transferred without assessment from the IRS Examination Division to the IRS Appeals Office and then, when petitioner's administrative appeal was unavailing, back to the Examination Division for the assessment of the taxes in issue. It does not show that there was an unauthorized second examination of petitioner's books and records with respect to his 1995 taxable year.

 

Our review of the procedures used in assessing and collecting petitioner's Federal income tax liabilities supports the Appeals officer's determination that the Notice of Federal Tax Lien should not be withdrawn. Petitioner has not shown that respondent erred in declining to invalidate assessments of Federal income taxes for 1995 or 1997. The assessments were made within the applicable period of limitations and were valid.

 

We have considered petitioner's other arguments. Many of them relate to matters not properly before the Court or not supported by evidence or authority. All lack merit.

 

To give effect to the foregoing,

 

Decision with be entered for respondent.

 

Francisco and Angela Aguirre v. Commissioner

Docket No. 9379-00L., 117 TC --, No. 26, 117 TC 324, Filed December 28, 2001

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

[Code Secs. 6320 and 6330 ]

[Collection Due Process hearings: Procedures: Form 4549: Petition for redetermination: Waiver: Notice of deficiency.]Petitioners (Ps) filed returns for 1992-94. Respondent (R) examined those returns, and Ps signed a Form 4549, Income Tax Examination Changes, in which they waived the right to contest their tax liability in the Tax Court and consented to the immediate assessment and collection of tax for 1992-94. R issued to Ps a notice of intent to levy with respect to Ps' taxes due for tax years 1992-94. Ps requested a hearing pursuant to sec. 6330(b), I.R.C., solely to dispute the amount of their tax liabilities for 1992-94. R sent a notice of determination to Ps stating that collection of their tax liability for 1992-94 would proceed. Ps petitioned this Court to review R's determination. R subsequently filed a motion for summary judgment, to which Ps did not respond.Held: Ps may not contest their underlying tax liability for tax years 1992-94 because, by signing Form 4549, they consented to the immediate assessment and collection of tax for those years.

Francisco and Angela Aguirre, pro se. David C. Holtz, for the respondent.

OPINION

COLVIN, Judge:

This matter is before the Court on respondent's motion for summary judgment. For reasons stated below, we will grant respondent's motion.

All section references are to the Internal Revenue Code as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

Background

Petitioners are married and lived in Hacienda Heights , California , when they filed their petition.

Petitioners filed joint returns for 1992, 1993, and 1994. Respondent examined petitioners' 1992, 1993, and 1994 returns in 1995. On July 13, 1995, petitioners signed a Form 4549, Income Tax Examination Changes, in which they consented to the immediate assessment and collection of tax for 1992, 1993, and 1994. It stated:

Consent to Assessment and Collection--I do not wish to exercise my appeal rights with the Internal Revenue Service or to contest in United States Tax Court the findings in this report. Therefore, I give my consent to the immediate assessment and collection of any increase in tax and penalties, and accept any decrease in tax and penalties shown above, plus any additional interest as provided by law. I understand that this report is subject to acceptance by the District Director.

In 1999, respondent sent to petitioners a Notice of Intent to Levy and Notice of Your Right to a Hearing relating to petitioners' 1992-94 tax years. Petitioners then filed a Form 12153, Request for a Collection Due Process Hearing, for those tax years. ¹ Petitioners requested the hearing solely to dispute the correctness of their underlying tax liabilities. On August 22, 2000, respondent sent petitioners a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (the determination letter), in which respondent stated that collection from petitioners of their tax liability for 1992-94 would proceed. On September 5, 2000, petitioners filed a petition for lien or levy action under section 6320(c) or 6330(d).

Respondent filed a motion for summary judgment on April 13, 2001. On April 17, 2001, the Court issued an order directing petitioners to file a response to respondent's motion. The order included a reminder to the parties that the case would be called from the calendar at the April 30, 2001, Los Angeles , California , trial session. Petitioners failed to file a response to respondent's motion, and they did not attend, or have someone appear on their behalf at, the calendar call.

Discussion

A. Contentions of the Parties

Respondent contends, inter alia, that petitioners waived their right to challenge collection of their tax liability for 1992-94 because they signed Form 4549 consenting to the immediate assessment and collection of their tax liability for those years.

In their petition, petitioners stated as a basis for relief only that:

We disagree with the determination, because although we were present at the time of the original audit, many of our deductions were disallowed when they were correct. We have been requesting an audit reconsideration to present general ledegers [sic] and documents properly organized in order to verify our deductions in a cohesive manner.

B. Summary Judgment

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689], 90 T.C. 678, 681 (1988). We may grant summary judgment if the pleadings, answers to interrogatories, depositions, admissions, affidavits, and any other acceptable materials show that there is no genuine issue of material fact and 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). The moving party bears the burden of proving that there is no genuine issue of material fact. Dahlstrom v. Commissioner [Dec. 42,486], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278], 79 T.C. 340, 344 (1982).

C. Analysis

No genuine issues of material fact preclude us from deciding this matter. Rule 121(b). We conclude that respondent is entitled to summary judgment. First, by signing Form 4549, petitioners consented to the immediate assessment and collection of their tax liability for 1992-94. See Hudock v. Commissioner [Dec. 33,519], 65 T.C. 351, 363 (1975) (Form 4549 is evidence of the taxpayer's consent to the immediate assessment and collection of the proposed deficiency). Petitioners cannot now challenge the tax liability to which they have consented.

Petitioners signed the Form 4549 in 1995, before enactment in 1998 ² of sections 6320 and 6330, which provide procedures for an Appeals Office hearing and judicial review of collection actions. However, our deficiency jurisdiction existed in 1995. By signing the Form 4549, petitioners explicitly waived the right to contest in the Tax Court their tax liability for the years included in the Form 4549. Petitioners thus expressly waived the opportunity to obtain prepayment judicial review of their tax liability for those years. Petitioners requested the section 6330 hearing and filed their petition in this case solely to dispute the correctness of their underlying tax liabilities. The fact that section 6330 now provides an opportunity to contest tax liability for taxpayers who did not receive a notice of deficiency, sec. 6330(c)(2)(B), provides no consolation to petitioners who themselves made the choice not to receive such notice, see Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 611 (2000) (taxpayers who deliberately refused to accept delivery of the notices of deficiency repudiated the opportunity to contest the notices of deficiency in the Tax Court).

Second, by failing to file a response to respondent's motion and to attend the calendar call, or have someone appear on their behalf, petitioners waived their right to contest the motion. Rule 121(d); Lunsford v. Commissioner, 117 T.C.--(2001).

Accordingly, we will grant respondent's motion for summary judgment.

An appropriate order and decision will be entered.

¹ The record does not indicate whether respondent conducted a hearing in petitioners' case.

² Secs. 6320 and 6330 were enacted as part of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746

 

Harry James Inman v. Commissioner

Docket No. 13390-99L., T.C. Memo. 2001-107, 81 TCM 1583., Filed May 4, 2001

[Appealable, barring stipulation to the contrary, to CA-4.--CCH.]

[Code Sec. 6320 ]

Liens and levies: Notice of federal tax lien: Collection due process hearing.--A pipefitter was not entitled to relief under Code Sec. 6320 because the notice of the filing of a lien that was mailed to him predated the applicability of the statute.

[Code Sec. 6330 ]

Liens and levies: Notice of intent to levy: Collection due process hearing: Judicial review: Abuse of discretion, no evidence of.--The IRS's determination to proceed with collection pursuant to a lien filed against the wages of a pipefitter was not an abuse of discretion. While the taxpayer was entitled to challenge the assessment for all of the tax years at issue since he did not receive a deficiency notice for any of those years, he did not offer any credible evidence to support his contention that he did not owe the tax as assessed. Moreover, he failed to explain why his offer to pay $50 a month and forgo tax refunds in the future were appropriate alternatives to levy.

Harry James Inman, pro se. Edwina L. Charlemagne, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COLVIN, Judge:

Respondent sent to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 in which respondent determined that a levy on petitioner's wages was appropriate to satisfy petitioner's outstanding liabilities for Federal income taxes, additions to tax, interest, and fees. On August 31, 1999, those amounts were as follows:

                                  Unpaid Additions to Tax and Interest

                              --------------------------------------------

                     Unpaid

Year               Income Tax Sec. 6651(a) (1) Sec. 6651(a) (2)  Interest

1985 ............. $2,308.83     $ 1,153.80       $ 1,282.00    $14,998.10

1986 .............  1,765.00         419.63           466.25      4,905.82

1987 .............  1,019.00         229.28           254.75      2,334.63

1992 .............    155.61         453.60           343.04      1,094.82

1994 .............  1,714.00         385.65           428.50        997.72

1995 .............  2,005.00              --           501.25        664.67

                   ---------- ---------------- ---------------- ----------

   Total .........  8,967.44       2,641.96         3,275.79     24,995.76

Respondent also assessed $18 for a lien fee for 1992.

We must decide the following issues:

1. Whether petitioner is entitled to relief under section 6320 . We hold that he is not.

2. Whether petitioner is liable for the amounts determined by respondent (including additions to tax and interest) for the years 1985, 1986, 1987, 1992, 1994, and 1995. We hold that he is.

3. Whether respondent may proceed with levy action. We hold that respondent may.

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

FINDINGS OF FACT ¹

Petitioner lived in Greensboro , North Carolina , when he filed the petition in this case. Petitioner is a civilian employee of the Defense Department at Camp Lejeune . He works full time as a pipe fitter for about $20 per hour.

Petitioner filed his income tax returns for 1985 on April 19, 1996, for 1986 on March 27, 1996, for 1987 on April 19, 1996, for 1992 on April 23, 1995, and for 1994 on March 14, 1996. He timely filed his 1995 tax return.

Respondent issued a notice of Federal tax lien on September 3, 1996, for 1985, 1986, 1987, 1992, 1994, and 1995, relating to income tax liabilities that petitioner reported on his return, less withholding credits and other payments, and including additions to tax for failure to timely file returns and pay tax, lien fees, and interest.

Respondent issued a Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing, which petitioner received on February 17, 1999. See secs. 6330 and 6331 . Petitioner filed a request for a hearing. In it, he stated that "every time I talk to someone I get a different set of figures", and that no one had explained how he could owe the amounts sought by respondent. At that hearing, petitioner did not otherwise contest the underlying tax liability or accept any of the payment options proposed by respondent. Respondent determined that petitioner's wages should be levied in a notice of determination concerning collection actions under section 6330 sent on July 8, 1999. In response, petitioner filed the petition in this case.

OPINION

A. The Notice of Lien

Petitioner contends that he is entitled to relief under section 6320 from the notice of lien. We disagree. Section 6320 was first effective January 19, 1999. See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401(d) , 112 Stat. 685, 750. Thus, section 6320 does not apply to the notice of Federal tax lien issued on September 3, 1996.

B. Underlying Tax Liability

Respondent did not send a notice of deficiency to petitioner for 1985, 1986, 1987, 1994, or 1995, but respondent did send a notice of deficiency for 1992. Respondent does not contend that petitioner may not raise issues relating to 1992 in this case, in part because it is not clear whether petitioner received that notice of deficiency. Thus, petitioner may challenge the underlying liability for all of those years. See sec. 6330(c)(2)(B) (taxpayer may challenge amount of underlying tax liability if taxpayer did not receive notice of deficiency for period); Landry v. Commissioner [Dec. 54,224 ], 116 T.C. 60, 62 (2001). However, petitioner has done so only in the most minimal way, alleging that he does not understand how he can owe so much, but without offering any credible evidence or challenging that he is liable for the amounts he reported late.

C. The Levy Action

We have jurisdiction to review respondent's determination to proceed with the levy action on an abuse of discretion basis. See sec. 6330(d) ; Goza v. Commissioner [Dec. 53,803 ], 114 T.C. 176, 181-182 (2000); H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 755, 1020. Petitioner contends that he cannot pay the taxes that are due, but he is willing to forgo income tax refunds to which he may be entitled for the current and future years. He testified that he had offered to pay respondent $50 per month, but he did not show why that amount would be appropriate. He offered no credible evidence showing that respondent's determination was an abuse of discretion. Thus, we conclude that petitioner is not entitled to relief.

Decision will be entered for respondent.

¹ Petitioner refused before and at trial to stipulate facts not fairly in dispute as required by Rule 91, including whether copies of income tax returns with his name and signature for 1985, 1986, 1987, 1992, 1994, and 1995 were his. Thus, the Court ordered that respondent's proposed factual stipulations were deemed established.