6321 Collection Due Process Hearings

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Donald A. Ramirez v. Commissioner.

Dkt. No. 22323-03L , TC Memo. 2005-179, July 21, 2005.

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

[Code Secs. 6321, 6330 and 6651]
Failure to file: Failure to pay: Additions to tax: Reasonable cause: Federal tax lien: Collection Due Process. --

An individual who filed his tax return two years late and who failed to pay the tax liability shown on the return when he did file, did not have reasonable cause for his failure to timely file. Although the taxpayer argued that he was unable to timely file his return because of his surgery and post-surgery illness, he was able to continue his legal practice, pay business expenses, manage two rental properties and care for two minor children during that time. Moreover, the taxpayer failed to show that the Appeals officer abused his discretion when he sustained the federal tax lien against him. The taxpayer had an outstanding balance due, and, although it had accepted an installment agreement, the IRS was not precluded from maintaining a tax lien while a balance was due.

Donald A. Ramirez, pro se; Rebecca Duewer-Grenville, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

 

HAINES, Judge: The petition in this case was filed in response to the Notices of Determination Concerning Collection Action Under Section 6320 (notices of determination) for 1996, 1997, and 1998.¹ Pursuant to section 6330(d), petitioner seeks review of respondent's determination sustaining a Federal tax lien. After concessions,² the issues for decision are: (1) Whether petitioner is liable for additions to tax under section 6651(a)(1) and (a)(2) for 1998; and (2) whether respondent abused his discretion in sustaining the Federal tax lien.

FINDINGS OF FACT

 

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. At the time the petition was filed, petitioner resided in San Bruno , California . Petitioner is a practicing attorney.

 

Petitioner had his gall bladder removed in 1996 and was off work for 4 months. After his recovery, petitioner was able to continue his legal practice, pay business expenses, manage two rental properties, and take care of two minor children.

 

On April 8, 2001, petitioner filed a Form 1040, U.S. Individual Income Tax Return, for 1998, showing a tax due of $8,122. Petitioner made no payments at the time of filing.

 

Upon receipt of the 1998 income tax return, respondent assessed the tax due of $8,122, an addition to tax for failure to timely file a return under section 6651(a)(1) of $1,827, an addition to tax for failure to timely pay the tax under section 6651(a)(2) of $1,015, and an addition to tax for failure to pay estimated tax under section 6654 of $257 against petitioner. Respondent did not issue a notice of deficiency to petitioner.

 

On April 9, 2003, respondent sent petitioner a Notice of Federal Tax Lien and Your Right to a Hearing Under IRC 6320 for 1998.

 

On May 5, 2003, respondent received petitioner's request for a section 6330 hearing. Theresa M. Amper (Ms. Amper), Appeals Collection Specialist, sent confirmation of receipt on July 31, 2003, and requested that petitioner complete a Form 433-A, Collection Information Statement for Individuals. Petitioner did not respond.

 

Ms. Amper sent a second letter on August 25, 2003, requesting petitioner complete a Form 433-A, and stating that if she did not hear from petitioner by September 9, 2003, his section 6330 hearing would consist of an administrative review of his file. Petitioner did not respond.

 

On September 24, 2003, Appeals Officer Gerry Melick (Ms. Melick) sent petitioner a letter requesting that petitioner contact her by phone to discuss petitioner's section 6330 hearing request. Petitioner did not respond. Ms. Melick sent a second letter on October 8, 2003, requesting that petitioner respond within 15 days. Petitioner did not respond.

 

Respondent conducted an administrative review of petitioner's file. On November 25, 2003, respondent sent petitioner notice of determination sustaining the filing of the Federal tax lien for 1998.

 

On December 23, 2003, petitioner timely filed a petition with the Court. Upon order of the Court, petitioner filed an amended petition on February 24, 2004, seeking review of the underlying tax liability and relief from the lien collection action under section 6320.

 

The parties have stipulated that, subsequent to petitioner's filing with this Court, an installment agreement has been entered into for petitioner's outstanding tax liability, and that any overpayments resulting from the allowance of petitioner's schedule A expense deduction for 1996 will be applied to the outstanding tax liability for 1998.

 

At trial, petitioner raised a reasonable cause defense to the section 6651 additions to tax, citing his 1996 surgery.

OPINION

 

Pursuant to section 6330(d)(1), within 30 days of the issuance of the notice of determination, the taxpayer may appeal the determination to this Court if we have jurisdiction over the underlying tax liability. Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 328-329 (2000). This Court has interpreted "underlying tax liability" in section 6330(d)(1) to include any amounts owed by the taxpayer pursuant to the tax laws, including additions to tax. Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 339 (2000). Petitioner timely filed his petition with this Court pursuant to section 6330(d)(1), and, because he was not issued a notice of deficiency and did not otherwise have the opportunity to dispute the underlying tax liability, petitioner may challenge the additions to tax. See id.; sec. 6330(c)(2)(B); Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1, 8-10 (2004).

 

Where the validity of the underlying tax liability is properly at issue, the Court will review the matter de novo. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181 (2000). Where the validity of the underlying tax liability is not properly at issue, however, the Court will review the Commissioner's administrative determination for abuse of discretion. Sego v. Commissioner, supra; Goza v. Commissioner, supra.

 

We shall review de novo whether petitioner is liable for the additions to tax under section 6651. See Downing v. Commissioner [Dec. 54,604], 118 T.C. 22, 29 (2002); Goodwin v. Commissioner [Dec. 55,320(M)], T.C. Memo. 2003-289; Joye v. Commissioner [Dec. 54,616(M)], T.C. Memo. 2002-14. If we find that petitioner is liable for the additions to tax, we shall review respondent's administrative determination sustaining the Federal tax lien for abuse of discretion. See Downing v. Commissioner, supra; Goodwin v. Commissioner, supra; Joye v. Commissioner, supra.

Issue 1: De Novo Review of Section 6651 Additions to Tax

Respondent determined that petitioner is liable for additions to tax pursuant to section 6651(a)(1) and (2) for 1998. Section 6651(a)(1) imposes an addition to tax for failure to file a return by the date prescribed (determined with regard to any extension for time for filing). Section 6651(a)(2) imposes an addition to tax for failure to pay the amount shown as tax on a return by the date prescribed (determined with regard to any extension for time for filing). If petitioner establishes that the failure to timely file or pay is due to reasonable cause and not due to willful neglect, he can avoid the additions to tax. Sec. 6651(a)(1) and (2).

 

Section 7491(c) requires respondent to carry the burden of production with respect to any addition to tax for failure to file or pay. Higbee v. Commissioner [Dec. 54,356], 116 T.C. 438, 446-447 (2001). To meet his burden of production, respondent must come forward with sufficient evidence indicating that it is appropriate to impose the additions to tax. Id. Once respondent meets this burden, petitioner must come forward with evidence sufficient to persuade the Court that respondent's determination is incorrect. Id.

 

The parties stipulate that petitioner filed his 1998 tax return 2 years late. In addition, the parties stipulate that petitioner has not fully paid his 1998 tax liability. We find that, on these facts, respondent met his burden of production under section 7491(c). As a result, petitioner must come forward with evidence sufficient to persuade the Court that respondent's determination that petitioner is liable for the section 6651(a)(1) and (a)(2) additions to tax is incorrect.

 

A showing of reasonable cause requires the petitioner to demonstrate that he exercised ordinary business care and prudence, but nevertheless was unable to file or pay the tax within the prescribed time. Sec. 301.6651-1(c)(1), Proced. & Admin. Regs. For illness to constitute reasonable cause for failure to file, petitioner must show that it incapacitated him to such a degree that he could not file his returns. Williams v. Commissioner [Dec. 18,247], 16 T.C. 893, 905-906 (1951); see, e.g., Joseph v. Commissioner [Dec. 55,022(M)], T.C. Memo. 2003-19 ("Illness or incapacity may constitute reasonable cause if the taxpayer establishes that he was so ill he was unable to file."); Black v. Commissioner [Dec. 54,963(M)], T.C. Memo. 2002-307 ("[W]e are unpersuaded that illness is the cause of petitioners' continuing delinquency."), affd. 94 Fed. Appx. 968 (3d Cir. 2004); Watts v. Commissioner [Dec. 53,669(M)], T.C. Memo. 1999-416 ("[A] taxpayer's selective inability to perform his or her tax obligations, while performing their regular business, does not excuse failure to file."); Wright v. Commissioner [Dec. 52,754(M)], T.C. Memo. 1998-224 ("[T]he duration of the incapacity must approximate that of the failure to file."), affd. [99-1 USTC ¶50,548] 173 F.3d 848 (2d Cir. 1999).

 

Petitioner's argument that the delay in filing and payment was due to reasonable cause was based solely on his 1996 surgery, the accompanying illness, and his inability to work for 4 months. However, after his recovery, petitioner was able to continue his legal practice, pay business expenses, manage two rental properties, and take care of two minor children. Petitioner's health problems in 1996 do not explain his failure to timely file or pay for 1998, nor his repeated failures to contact respondent's Appeals Office in 2003. On the basis of the facts presented, we conclude that petitioner did not have reasonable cause for his delay in filing and paying taxes.

Issue 2: Abuse of Discretion Review of Respondent's Determination

Because petitioner is liable for the additions to tax, we shall review respondent's administrative determination sustaining the Federal tax lien for abuse of discretion. Section 6321 imposes a Federal tax lien in favor of the United States on all property and rights to property of any person when a demand for payment of an outstanding tax liability has been made and the person fails to pay those taxes.

 

Petitioner has offered no evidence indicating that respondent abused his discretion in sustaining the Federal tax lien. Petitioner has yet to pay his outstanding tax liability for 1998. While an installment agreement has been entered into for petitioner's outstanding tax liability, that agreement does not preclude respondent from maintaining a lien while taxes are still outstanding. Secs. 6322 and 6323(j); cf. sec. 301.6323(j)-1, Proced. & Admin. Regs. (Commissioner may withdraw a notice of Federal tax lien under certain conditions). On the basis of the facts presented, we hold that respondent did not abuse his discretion in upholding the Federal tax lien.

 

We have considered all of petitioner's contentions, arguments, and requests, and to the extent that they are not discussed herein, we conclude them to be moot, irrelevant, or without merit.

 

To reflect the foregoing,

 

An appropriate order of dismissal and decision will be entered.

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

² The parties disagreed over petitioner's Schedule A, Itemized Deductions, for 1996, but respondent now concedes that petitioner is entitled to the deduction. The parties have also stipulated that, subsequent to his filing with this Court, petitioner fully paid his 1996 and 1997 tax liabilities, including additions to tax pertaining to those years. Upon payment, the Federal tax liens for 1996 and 1997 were released. Only 1998 remains at issue.

 

 

Keith and Cherie Orum v. Commissioner.

Dkt. No. 18317-02L , 123 TC 1, No. 1, July 1, 2004.

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

[Code Sec. 6330]
Levy for taxes: Collection Due Process hearing: Equivalent hearing: Tax Court review: Jurisdiction: Notice of determination: Decision letter: CDP notice: Last known address: Multiple CDP notices: Collection alternatives: Abuse of discretion. --

The Tax Court lacked jurisdiction over an IRS decision letter sustaining a levy against married taxpayers. Since the taxpayers' request for a Collection Due Process (CDP) hearing was untimely, their decision letter could not be treated as a notice of determination over which the court had jurisdiction. M. Craig, Dec. 54,933 (2002), distinguished. Moreover, although the taxpayers claimed that they had not received their first CDP notice, IRS records showed that it was sent via certified mail to their last known address. The 30-day period to request a CDP hearing began on the date that notice was issued and was not affected by a second notice of intent to levy that the IRS issued several months later. Finally, the IRS did not abuse its discretion when it rejected the taxpayers' proposed installment agreement and offer in compromise relating to another tax year. They failed to respond to an IRS request for additional financial information, they had defaulted on a prior installment agreement, and it appeared that their assets and income were sufficient to pay their liabilities.

Keith Orum, pro se; Sean R. Gannon, for respondent.

 

Ps filed joint Federal income tax returns for 1998 and 1999 but did not make full payment of the tax liabilities. On June 23, 2000, R sent Ps by certified mail a Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998. Ps did not file a sec. 6330, I.R.C., hearing request in response to this notice. On Dec. 14, 2001, R sent Ps a Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998 and 1999. P sent R a sec. 6330, I.R.C., hearing request dated Dec. 31, 2001, for 1998 and 1999.

 

In February 2002, Ps submitted an offer-in-compromise. R rejected the request on the basis of financial information submitted by Ps.

 

R granted Ps an equivalent hearing for 1998 and a sec. 6330, I.R.C., hearing for 1999. During the hearings, R requested additional financial information from Ps by Aug. 9, 2002, to consider an installment agreement. Ps failed to timely provide the additional information. R issued a decision letter for 1998 and a notice of determination for 1999 which concluded that the proposed collection activities would be sustained.

 

Ps filed a petition to dispute the decision letter and the notice of determination. R filed a motion to dismiss for lack of jurisdiction with respect to 1998.

 

1. Held: The June 23, 2000, notice of intent to levy was sent to the last known address of Ps.

 

2. Held, further, R's motion to dismiss for lack of jurisdiction is granted. Ps did not file a sec. 6330, I.R.C., hearing request within 30 days of the June 23, 2000, notice of intent to levy. See sec. 6330(a)(3), I.R.C. The Dec. 14, 2001, notice of intent to levy did not entitle petitioners to a sec. 6330, I.R.C., hearing. Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs. The decision letter subsequently issued does not provide a basis for the Court's jurisdiction under sec. 6330(d)(1), I.R.C. See Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 270 (2001); Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 262 (2001).

 

3. Held, further, R did not abuse his discretion in issuing the notice of determination for 1999, and the proposed collection action is sustained.

OPINION

 

HAINES, Judge: Respondent sent petitioner Keith Orum (Mr. Orum) and petitioner Cherie Orum (Mrs. Orum) a Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330 (decision letter) for 1998 and a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) for 1999.

 

The issues for decision are: (1) Whether the Court lacks jurisdiction under section 6330(d)(1)¹ with regard to 1998; and (2) whether there was an abuse of discretion in the determination that the proposed collection action for 1999 should be sustained.

Background

 

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

 

At the time of the filing of the petition, petitioners resided in La Grange Park, Illinois. Mr. Orum has lived at the same address his entire life. Mr. Orum is a patent attorney, and Mrs. Orum is a zookeeper.

 

Petitioners filed joint Federal income tax returns for 1998 and 1999 on November 29, 1999, and November 20, 2000, respectively, but did not make full payments of the tax liabilities when the returns were filed.

 

On November 29, 1999, respondent assessed tax liabilities of $63,683 plus additions to tax for 1998. Respondent issued petitioners three notices of demand for payment of the 1998 tax liabilities and additions to tax on November 29, 1999, January 3, 2000, and February 7, 2000.

 

On June 23, 2000, respondent sent petitioners, by certified mail, a Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, for 1998 (June 23, 2000, notice). The return receipt for the June 23, 2000, notice was signed on June 26, 2000.

 

On November 20, 2000, respondent assessed tax liabilities of $38,661 plus additions to tax for 1999. Respondent issued two notices of demand for payment of the 1999 tax liabilities and additions to tax on November 20 and December 11, 2000.

 

On January 5, 2001, petitioners entered into an installment agreement for the payment of the 1998 and 1999 tax liabilities. Petitioners did not make all of the monthly payments as required by the installment agreement schedule. By December 2001, the installment agreement was terminated.

 

On December 14, 2001, respondent sent petitioners a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998 and 1999 (December 14, 2001, notice). The taxes owed with statutory additions, as set forth in the final notice, were $41,435 and $44,345 for 1998 and 1999, respectively.

 

Mr. Orum sent respondent a Form 12153, Request for a Collection Due Process Hearing (hearing request), for 1998 and 1999, dated December 31, 2001. On the hearing request, petitioners stated: "Desires continuation of payment plan. Will contact IRS agent by phone to discuss. Have been working with agents in Chicago." Mr. Orum proposed to Settlement Officer Susan L. Vuicich (Ms. Vuicich) that petitioners be permitted to satisfy the 1998 and 1999 tax liabilities through another installment agreement.

 

On or about February 7, 2002, petitioners submitted a Form 656, Offer in Compromise, and Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals.

 

On June 20, 2002, respondent sent Mr. Orum a letter scheduling an equivalent hearing for 1998 and a section 6330 hearing for 1999 by telephone for July 23, 2002, and requesting Mrs. Orum's signature on the hearing request. The June 20, 2002, letter also stated:

 

You are not entitled to a Collection Due Process Hearing for 1998. According to our records a final notice was sent to you by certified mail for this year on June 22, 2000.² However, you are entitled to an equivalent hearing. I have enclosed Publication 1660, which explains an equivalent hearing.

 

You marked Form 12153 appealing the filed Notice of Federal Tax Lien. You are not entitled to a hearing on this issue as our records show no lien has been filed.

 

You subsequently submitted an offer in compromise under doubt as to collectibility and Effective Tax Administration. I have returned this offer to you under separate cover. You can resubmit your offer once you are current with filing your tax returns. However, let me explain why your offer would not be accepted. It appears that based upon the financial information you provided you have the ability to pay in full over the life of the collection statute, therefore there is no doubt as to collectibility. The explanation you provided for Effective Tax Administration does not meet the economic hardship criteria for consideration of your offer.

 

Our records show that you have not made any estimated payments for 2001 and 2002. You need to get current with your estimated tax payments for 2002 in order for me to consider any collection alternatives, such as an installment agreement to resolve your tax liabilities.

 

Please make your estimated tax payments for 2002 prior to the conference, so that we can discuss any alternatives to the proposed levy action.

 

On July 29, 2002, respondent received a facsimile of the completed hearing request containing the signatures of Mr. Orum and Mrs. Orum.

 

During the July 23, 2002, hearings, Ms. Vuicich requested from Mr. Orum additional financial information by August 9, 2002, for the Appeals Office to consider Mr. Orum's request for another installment agreement. Such requested information included an income and expense report on a cash basis for Mr. Orum's partnership for 2002, a copy of Mrs. Orum's pay statement, copies of the last 3 months of bank statements, copies of the most recent home equity loan and motorcycle loan, a breakdown of housing and transportation expenses, the amount of current State and local income taxes, the amount of life insurance premium, and the amount of out-of-pocket health care costs.

 

On July 25, 2002, Ms. Vuicich sent Mr. Orum computer-generated statements of account for 1998 and 1999.

 

On September 25, 2002, Ms. Vuicich reported in her Case Activity Record that petitioners had failed to provide the requested information. Ms. Vuicich also reported that Mr. Orum was not current with his estimated tax payments and the financial information she possessed was incomplete and unverified.

 

On October 17, 2002, respondent sent petitioners a decision letter for 1998. The decision letter stated in part:

 

Your due process hearing request was not filed within the time prescribed under Section 6320 and/or 6330. However, you received a hearing equivalent to a due process hearing except that there is no right to dispute a decision by the Appeals Office in court under IRC Sections 6320 and/or 6330.

 

* * * * * * *

 

It has been determined that no relief is to be granted and that the proposed enforcement action (levy) is sustained. You failed to provide the additional financial information as requested in order for us to consider your request for an installment agreement.

 

Further, the attachment to the decision letter stated:

 

You filed joint income tax returns for 1998 and 1999 with a balance due. You were sent a final notice of intent to levy by certified mail for 1998 on June 22, 2000. You entered into an installment agreement for $5,000 per month to pay taxes due for both 1998 and 1999. Your first payment was due March 5, 2001.

 

You did not make your monthly payments as required. A final notice was sent to you by certified mail on December 14, 2001 for 1998 and 1999. You submitted Form 12153, Request for a Collection Due Process Hearing, which was received on January 4, 2002. Your request was not received timely for 1998. You are entitled to an equivalent hearing only for the proposed levy action for this year. * * *

 

On October 17, 2002, respondent also sent petitioners a notice of determination for 1999. The "Summary of Determination" stated:

 

It has been determine [sic] that no relief is to be granted and that the proposed enforcement action (levy) is sustained. You failed to provide additional financial information as requested in order for us to consider your request for an installment agreement.

 

The attachment to the notice of determination stated:

 

On your Form 12153, you requested the continuation of a payment plan. You raised no other issues on your written protest.

 

Subsequent to making your request for a Collection Due Process Hearing, you submitted an Offer in Compromise, Form 656 under doubt as to collectibility effective tax administration. Your offer was received February 11, 2002. The Settlement Officer assigned to your case returned your offer because you were not in compliance with filing required tax returns. We had no record of your Form 1065 being filed for 1998 for Orum & Roth. The offer was returned with a letter dated June 20, 2002 explaining this.

 

Keith Orum contacted the Settlement Officer on July 17, 2002 to confirm the telephone conference and declined a face-to-face conference. The Settlement Officer reviewed her letter with Keith explaining the reasons why the offer would not be accepted. Those reason [sic] are as follows:

 

 The reason you provided for Effective Tax Administration does not meet the economic hardship criteria.

 

 Based upon the financial information you provided it appears you have the ability to pay the liabilities in full within the statutory period for collection

 

 You had not made any estimated tax payments for 2001 and 2002

 

Keith provided an adequate explanation why a Form 1065 for 1998 was not filed. The only other partner resigned prior to 1998. The partnership dissolved, but Keith continued to use the partnership federal employer's identification number (FEIN) for reporting employment tax returns. * * * Keith said he understood why an offer could not be considered and expressed an interest in an installment agreement.

 

* * * * * * *

 

A scheduled telephone conference was held on July 23, 2002 at 10:10 a.m. EST with Keith Orum. The Settlement Officer reviewed the information on Form 433A with him and identified additional information needed in order to determine an appropriate amount for an installment agreement. The additional financial information was to be provided by August 9, 2002.

 

* * * * * * *

 

We received an estimated tax payment for 2002 in the amount of $8,500 on September 6, 2002 however; we have not received the additional financial information nor heard from you.

BALANCING EFFICIENT COLLECTION AND INTRUSIVENESS

 

You have failed to provide by an agreed deadline the additional financial information requested. This information is necessary in order for us to consider an installment agreement. Absent your willingness to provide this information, alternatives to the proposed levy action such as an installment agreement could not be considered. * * *

 

On November 15, 2002, petitioners sent the Court a Petition for Lien or Levy Action Under Code Section 6320(c) or 6330(d) to dispute the decision letter for 1998 and the notice of determination for 1999. On January 21, 2003, petitioners sent the Court an amended petition pursuant to a Court order.

 

On July 30, 2003, respondent filed a motion to dismiss for lack of jurisdiction with respect to 1998. Petitioners filed an objection to respondent's motion.

 

The Court held a hearing on respondent's motion and trial for this case in Chicago, Illinois, on September 23, 2003, in which Mr. Orum appeared. Mr. Orum stated that he was not disputing the amounts of taxes owed for 1998 and 1999 but wanted to establish another installment agreement to satisfy those obligations.

Discussion

I. Respondent's Motion To Dismiss for Lack of Jurisdiction

Section 6331(a) provides that if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, then the Secretary is authorized to collect such tax by levy upon the person's property. Section 6331(d) provides that, at least 30 days before enforcing collection by way of a levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

 

Section 6330(a) provides that the Secretary shall notify a person in writing of his or her right to a section 6330 hearing with the Appeals Office regarding the proposed levy. The written notice must be given in person, left at the person's dwelling or usual place of business, or sent by certified or registered mail to the person's last known address. Sec. 6330(a)(2).

 

Section 6330(a)(2) provides that the prescribed notice (notice of intent to levy) shall be provided not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period. Further, section 6330(a)(3)(B) provides that the notice of intent to levy shall explain that the person has the right to request a section 6330 hearing during the 30-day period under section 6330(a)(2).

 

Where the Appeals Office issues a notice of determination to the taxpayer following a section 6330 hearing regarding a levy action, section 6330(d)(1) provides that the taxpayer will have 30 days following the issuance of such determination letter to file a petition for review with this Court or a Federal District Court, as may be appropriate. Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000). This Court's jurisdiction under section 6330 depends upon the issuance of a valid determination letter and the filing of a timely petition for review. Sec. 6330(d)(1); Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001).

 

The parties dispute whether a valid determination letter was issued for 1998 to give the Court jurisdiction under section 6330(d)(1). Respondent argues that this Court should dismiss the case as to 1998 upon the grounds that the decision letter does not constitute a determination sufficient to invoke the Court's jurisdiction pursuant to section 6330(d)(1). In objecting to respondent's motion, petitioners argue that: (1) They did not receive the June 23, 2000, notice; and (2) the December 14, 2001, notice offered petitioners a section 6330 hearing for 1998 because it was titled a "Final Notice".

 

A. Was the June 23, 2000, Notice Sent to Petitioners' Last Known Address?

 

As noted above, the notice of intent to levy must be given in person, left at the person's dwelling or usual place of business, or sent by certified or registered mail to the person's last known address. Secs. 6330(a)(2) and 6331(d)(2); secs. 301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs. The regulations under sections 6330 and 6331 reference section 301.6212-2, Proced. & Admin. Regs., to define "last known address". Secs. 301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs. Under section 6212, in general, the Commissioner is entitled to treat the address on a taxpayer's most recent tax return as the taxpayer's last known address, unless the taxpayer has given "clear and concise notification of a different address." Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 260 n.4 (2001); Abeles v. Commissioner [Dec. 45,203], 91 T.C. 1019, 1035 (1988); sec. 301.6212-2(a), Proced. & Admin. Regs.

 

Although respondent did not enter the June 23, 2000, notice into the record, as proof of its mailing respondent provided petitioners' Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, for 1998, which reported that the notice of intent to levy was issued on June 23, 2000, and a return receipt was signed on June 26, 2000. That certificate is "generally regarded as being sufficient proof, in the absence of evidence to the contrary, of the adequacy and propriety of notices and assessments that have been made." Gentry v. United States [92-1 USTC ¶50,225], 962 F.2d 555, 557 (6th Cir. 1992); see Schroeder v. Commissioner [Dec. 54,829(M)], T.C. Memo. 2002-190; Kaeckell v. Commissioner [Dec. 54,737(M)], T.C. Memo. 2002-114. Further, respondent provided an ACS LT11 Certified Mail List for 1998 which reported that a Notice of Intent to Levy and Notice of Your Right to a Hearing was sent to petitioners by certified mail at "LaGrange Park, IL 60526-134603" on June 23, 2000. See Weber v. Commissioner [Dec. 55,588], 122 T.C. 258, 259 n.3 (2004).

 

We also note that the parties stipulated that petitioners filed a tax return for 1998 before the June 23, 2000, notice was issued, and Mr. Orum reported on his offer-in-compromise application that he had been "current" with his tax liabilities from 1981 until 1998. Mr. Orum stated on his Form 433-A that he has lived at the same address his entire life. On the basis of the record and the Commissioner's practice of using the address of a taxpayer's most recently filed tax return as the last known address, we find that the address used for the June 23, 2000, notice was petitioners' last known address.

 

The only evidence that petitioners presented is testimony from Mr. Orum that he and Mrs. Orum did not receive the June 23, 2000, notice.³ That testimony is inconsistent with the evidence on the record. After observing Mr. Orum's demeanor at trial, the Court found his testimony, on this point, not credible. Mr. Orum pointed to petitioners' address listed on Ms. Vuicich's Case Activity Report which incorrectly listed petitioners' ZIP Code. We note that: (1) the Case Activity Report was created after the June 23, 2000, notice was sent to petitioners; and (2) respondent's official certified mailing list that reported the mailing of the June 23, 2000, notice listed the correct ZIP Code. Therefore, we do not accept Mr. Orum's testimony on this point and find that the June 23, 2000, notice was sent to petitioners' last known address.

 

B. Does the Court Lack Jurisdiction Over 1998?

 

Petitioners argue that the December 14, 2001, notice offered them a section 6330 hearing for 1998 because it was titled a "Final Notice" and the Commissioner can send only one notice of intent to levy under section 6330(a)(1). We disagree.

 

Section 6330(a)(1) provides, in relevant part, that the notice before levy "shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates." Petitioners misinterpret this sentence. We interpret this sentence to mean that the Commissioner need send only one notice of intent to levy for a taxable period. The Commissioner may issue more than one notice of intent to levy to a taxpayer. See sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs. Although more than one notice may be issued, the taxpayer is still entitled to only one hearing for the relevant tax period. Sec. 6330(b)(2); sec. 301.6330-1(b)(1), Proced. & Admin. Regs.

 

This interpretation is buttressed by the regulations under section 6330, which provide:

 

Q-B2. Is the taxpayer entitled to a CDP hearing when the IRS, more than 30 days after issuance of a CDP Notice under section 6330 with respect to the unpaid tax and periods, provides subsequent notice to that taxpayer that the IRS intends to levy on property or rights to property of the taxpayer for the same tax and tax periods shown on the CDP Notice?

 

A-B2. No. Under section 6330, only the first pre-levy or post-levy CDP Notice with respect to the unpaid tax and tax periods entitles the taxpayer to request a CDP hearing. If the taxpayer does not timely request a CDP hearing with Appeals following that first notification, the taxpayer foregoes the right to a CDP hearing with Appeals and judicial review of Appeals' determination with respect to levies relating to that tax and tax period. The IRS generally provides additional notices or reminders (reminder notifications) to the taxpayer of its intent to levy when no collection action has occurred within 180 days of a proposed levy. Under such circumstances, a taxpayer may request an equivalent hearing as described in paragraph (i) of this section.

 

* * * * * * *

 

Q-B4. If the IRS sends a second CDP Notice under section 6330 (other than a substitute CDP Notice) for a tax period and with respect to an unpaid tax for which a CDP Notice under section 6330 was previously sent, is the taxpayer entitled to a section 6330 CDP hearing based on the second CDP Notice?

 

A-B4. No. The taxpayer is entitled to only one CDP hearing under section 6330 with respect to the tax and tax period. The taxpayer must request the CDP hearing within 30 days of the date of the first CDP Notice for that tax and tax period.

 

Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs.

 

On June 23, 2000, respondent sent petitioners a notice of intent to levy for 1998 at their last known address. Petitioners did not send a hearing request until December 31, 2001, which is beyond the 30-day filing period required by section 6330(a)(3). Section 6330 does not authorize the Commissioner to waive the time restrictions imposed therein. Kennedy v. Commissioner [Dec. 54,315], 116 T.C. at 262. The fact that respondent, after the termination of the intervening installment agreement, sent petitioners a second notice of intent to levy on December 14, 2001, did not entitle petitioners to a hearing as contemplated under section 6330(b). See sec. 301.6330-1(b)(2), Q&A-B2, Proced. & Admin. Regs.

 

Under the circumstances, respondent was not obliged to conduct a section 6330 hearing as contemplated under section 6330(b). See sec. 301.6330-1(i)(1), Proced. & Admin. Regs. In place of the section 6330 hearing, the Appeals Office granted petitioners an equivalent hearing for 1998. Id. Thereafter, the Appeals Office issued a decision letter to petitioners stating that the proposed collection action was sustained. Id. The decision letter does not constitute a notice of determination under section 6330(d)(1) which would provide a basis for petitioners to invoke the Court's jurisdiction for 1998. See Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 270 (2001); Kennedy v. Commissioner, supra at 263.

 

This case is distinguishable from Craig v. Commissioner [Dec. 54,933], 119 T.C. 252 (2002), in which we held that we had jurisdiction under section 6330(d)(1) when the Appeals Office issued a decision letter to the taxpayer. Id. at 259. In Craig, the Commissioner mailed to the taxpayer a notice of intent to levy on February 22, 2001. Id. at 254. On March 17, 2001, the taxpayer timely requested a section 6330 hearing by mailing the Commissioner a letter accompanied by unsigned Forms 12153. Id. at 255. On May 6, 2001, the Commissioner received signed Forms 12153 but granted the taxpayer only an equivalent hearing. Id. at 255-256. A decision letter was then issued to the taxpayer following the equivalent hearing. Id. at 256. The Court held that "where Appeals issued the decision letter to petitioner in response to his timely request for a Hearing, we conclude that the `decision' reflected in the decision letter issued to petitioner is a `determination' for purposes of section 6330(d)(1)." Id. at 259. In the instant case, petitioners did not timely request a section 6330 hearing in response to the June 23, 2000, notice. As a result, we do not conclude that the decision in the decision letter is a determination for purposes of section 6330(d)(1).

 

We will grant respondent's motion to dismiss for lack of jurisdiction as to 1998 because the petition was not filed in response to a notice of determination sufficient to confer jurisdiction on the Court under section 6330(d)(1).

II. Respondent's Determination for 1999

Petitioners argue that respondent abused his discretion in the determination to sustain the proposed collection action for 1999 because respondent refused to process petitioners' offer-in-compromise and rejected petitioners' request for an installment agreement.

 

As discussed above, before a levy may be made on any property or right to property, a taxpayer is entitled to notice of intent to levy and notice of the right to a fair hearing before an impartial officer of the Appeals Office. Secs. 6330(a) and (b) and 6331(d). If the taxpayer requests a section 6330 hearing, he may raise in that hearing any relevant issue relating to the unpaid tax or the proposed levy, including challenges to the appropriateness of the collection action and "offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise." Sec. 6330(c)(2)(A). A determination is then made which takes into consideration those issues, the verification that the requirements of applicable law and administrative procedures have been met, and "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 6330(c)(3).

 

Petitioners raise issues only as to collection alternatives, in that they dispute respondent's rejection of another installment agreement and rejection of an offer-in-compromise. We review the determination for an abuse of discretion because the underlying tax liability is not at issue. Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 185 (2001); Nicklaus v. Commissioner [Dec. 54,477], 117 T.C. 117, 120 (2001).

 

Respondent's rejection of another installment agreement for petitioners was not an abuse of discretion. Installment agreements are based upon the taxpayer's current financial condition. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.19.1.5.4.1, at 18,299-65. Respondent's determination was based on information petitioners provided to Ms. Vuicich. See Schulman v. Commissioner [Dec. 54,757(M)], T.C. Memo. 2002-129. At the section 6330 hearing, Ms. Vuicich requested from Mr. Orum additional financial information by August 9, 2002, for the Appeals Office to consider Mr. Orum's request for another installment agreement. Petitioners failed to timely respond to Ms. Vuicich's request. As discussed with Mr. Orum at the section 6330 hearing, Ms. Vuicich found the information provided on petitioners' Form 433A to be incomplete and unverified. We find that the Appeals officer could have reasonably rejected an installment agreement proposal by petitioners on the basis of petitioners' failure to make the required monthly payments on the initial January 5, 2001, installment agreement that was terminated, and petitioners' failure to timely provide the requested information to Ms. Vuicich in order for her to consider another installment agreement.

 

Additionally, respondent's determination not to enter into an offer-in-compromise agreement with petitioners was not an abuse of discretion. Section 7122(a) authorizes the Secretary to compromise any civil case arising under the internal revenue laws. The regulations set forth three grounds for the compromise of a liability: (1) Doubt as to liability; (2) doubt as to collectibility; or (3) promotion of effective tax administration. Sec. 301.7122-1T(b), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 39024 (July 21, 1999);⁴ see sec. 7122(c)(1). Doubt as to liability is not at issue in the instant case.

 

The Secretary may compromise a liability on the ground of doubt as to collectibility when "the taxpayer's assets and income are less than the full amount of the assessed liability." Sec. 301.7122-1T(b)(3)(i), Temporary Proced. & Admin. Regs., supra. Additionally, the Secretary may compromise a liability on the ground of "effective tax administration" when: (1) Collection of the full liability will create economic hardship; or (2) exceptional circumstances exist such that collection of the full liability will be detrimental to voluntary compliance by taxpayers; and (3) compromise of the liability will not undermine compliance by taxpayers with tax laws. Sec. 301.7122-1T(b)(4), Temporary Proced. & Admin. Regs., supra; see 2 Administration, Internal Revenue Service (CCH), sec. 5.8.11.2, at 16,385-15 (taxpayer's liab