T.C. Summary Opinion 2005-162

UNITED STATES TAX COURT

DANIEL CHARLES McDERMOTT, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19830-04S. Filed November 8, 2005.

Daniel Charles McDermott, pro se.

Michael W. Lloyd, for respondent.

DEAN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code as in

effect at the time the petition was filed. Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code of 1986, as amended. The decision to be entered is

not reviewable by any other court, and this opinion should not be

cited as authority.
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The petition in this case was filed in response to a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330. Pursuant to sections 6320(c) and 6330(d),

petitioner seeks review of respondent's filing of a Notice of

Federal Tax Lien for his 1991, 1992, 1993, and 1994 tax

liabilities. The issue for decision is whether respondent abused

his discretion by filing the notice of Federal tax lien as a

method of collecting petitioner’s tax liabilities.

Background

The stipulated facts and exhibits received into evidence are

incorporated herein by reference. At the time the petition in

this case was filed, petitioner resided in Colorado.

Petitioner failed to file tax returns for any of the years

1991 through 1994. Petitioner’s Federal income tax returns were

examined by respondent beginning in February of 1995. As part of

the audit, petitioner appeared at the office of the Internal

Revenue Service (IRS). Respondent proposed a determination that

petitioner, despite earning substantial income, failed to file

Federal income tax returns for all the years under examination. 

When asked, petitioner admitted to not filing tax returns but

objected to the proposed deficiency, asserting that respondent’s

proposed action was unconstitutional.
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1The record does not reveal why or to what address the

duplicate notice of deficiency was sent. But respondent

represents in his trial memorandum that the duplicate notice was

sent to an alternate address thought to be an additional address

of petitioner.

Petitioner advised the examining agent of his then current

address, stating that he was “staying with friends”. A statutory

notice of deficiency was mailed by certified mail and a duplicate

notice was sent by regular mail to petitioner.1 The duplicate

notice was returned with the envelope marked “insufficient

address”. The certified mailing of the notice of deficiency was

not returned.

Discussion

Section 6320 entitles a taxpayer to notice of his right to

request a hearing with the IRS Office of Appeals after a notice

of lien is filed by the Commissioner in furtherance of the

collection of unpaid Federal taxes. The taxpayer requesting the

hearing may raise any relevant issue with regard to the

Commissioner’s intended collection activities, including spousal

defenses, challenges to the appropriateness of the Commissioner’s

intended collection action, and alternative means of collection. 

Secs. 6320(b) and (c), 6330(c); see Sego v. Commissioner, 114

T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 180

(2000). 

The taxpayer may raise challenges “to the existence or

amount of the underlying tax liability”, however, only if he “did

not receive any statutory notice of deficiency for such tax

liability or did not otherwise have an opportunity to dispute
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such tax liability.” Sec. 6330(c)(2)(B). 

Where the validity of the tax liability is not properly part

of the appeal, the taxpayer may challenge the determination of

the Appeals officer for abuse of discretion. Sego v.

Commissioner, supra at 609-610; Goza v. Commissioner, supra at

181-182. 

Questions about the appropriateness of the collection action

include whether it is proper for the Commissioner to proceed with

the collection action as determined in the notice of

determination, and whether the type and/or method of collection

chosen by the Commissioner is appropriate. See, e.g., Swanson v.

Commissioner, 121 T.C. 111, 119 (2003) (challenge to

appropriateness of collection reviewed for abuse of discretion).

In order for petitioner to prevail under the abuse of

discretion standard, it is not enough for the Court to conclude

that the Court would not have authorized collection; the Court

must conclude that, in authorizing collection, the Appeals

officer has exercised discretion arbitrarily, capriciously, or

without sound basis in fact. Estate of Jung v. Commissioner, 101

T.C. 412, 449 (1993); accord Mailman v. Commissioner, 91 T.C.

1079, 1084 (1988). 
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The sum total of petitioner’s evidence is his testimony at

trial that “Well, my case is simply that I don’t owe the IRS

money.”

The Court finds petitioner’s “evidence” to be insufficient

to cast doubt on either the validity and amount of the underlying

tax liability, or the appropriateness of the collection action.

The Court finds that respondent did not abuse his discretion

in issuing his determination in this case. 

Reviewed and adopted as the report of the Small Tax Case

Division.

Decision will be entered 

 for respondent.