United States Tax Court

T.C. Memo. 2022-13

MOHAMMAD A. KAZMI,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 5013-18L. Filed March 1, 2022.

—————

Molly A. Recar, for petitioner.

Jay D. Adams and Sarah E. Sexton Martinez, for respondent.

MEMORANDUM OPINION

PARIS, Judge: This case is before the Court on a Petition for 

review of a Notice of Determination Concerning Collection Action(s) 

Under Section 6320 and/or 6330, dated February 13, 2018 (notice of 

determination).1 The notice of determination sustained a notice of 

federal tax lien (NFTL) filing (NFTL filing) with respect to trust fund 

recovery penalties (TFRPs) under section 6672. The TFRPs were 

assessed against petitioner for failing to collect and pay over 

employment taxes owed by Urgent Care Center, Inc. (Urgent Care), for 

taxable quarters ending June 30 and September 30, 2014 (periods at 

1 Unless otherwise indicated, all statutory references are to the Internal 

Revenue Code (Code), Title 26 U.S.C., in effect at all relevant times, all regulation 

references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all 

relevant times, and all Rule references are to the Tax Court Rules of Practice and 

Procedure.

Served 03/01/22
2

[*2] issue), resulting in outstanding liabilities of $6,184.23 and 

$4,190.77, respectively.2 

The issues for decision are: (1) whether petitioner is entitled to 

challenge the underlying liabilities, and if so, whether he is a 

responsible person who willfully failed to pay over employment taxes 

under section 6672, and (2) whether the settlement officer in the 

Internal Revenue Service (IRS) Office of Appeals (Appeals) abused his 

discretion in sustaining the collection action.

Petitioner argues that he may challenge his underlying liabilities

because a Letter 1153, Proposed Trust Fund Recovery Penalty, does not 

constitute a prior opportunity under section 6330(c)(2)(B) since the 

Commissioner’s denial of a Letter 1153 appeal does not result in an 

opportunity for the taxpayer to seek judicial review before the Tax 

Court. Petitioner further argues that he is not a responsible person 

liable for TFRPs under section 6672, or—in essence—that the 

Commissioner has the wrong person. 

The Commissioner argues that petitioner is prohibited from now 

challenging his underlying liabilities because he failed to appeal the 

earlier Letter 1153, which constituted an opportunity to dispute them

under section 6330(c)(2)(B). The Commissioner further argues that the 

Court should therefore apply an abuse of discretion standard and hold 

that the Commissioner did not abuse his discretion.

The Court will hold for the Commissioner. This Court has 

consistently held that a properly served and received Letter 1153 

constitutes a prior opportunity to challenge the underlying liability and 

therefore a failure to appeal it prohibits the same challenge at a 

collection due process hearing (CDP hearing). In addition, the Court will 

hold the Commissioner did not abuse his discretion in sustaining the 

NFTL filing with respect to the periods at issue.

2 The notice of determination and pleadings also include a TFRP for the tax 

period ending December 31, 2014. Contemporaneous with this collection due process 

hearing request, petitioner also pursued relief through Collections. Petitioner 

submitted Form 843, Claim for Refund and Request for Abatement, filed September 

26, 2016. The case activity record reflects that Form 843 was submitted after the NFTL 

filing in July 2016 but before the CDP hearing in January 2018. The administrative 

record includes the transcript for December 31, 2014, which reflects that the TFRP 

was abated in full December 2, 2016. The tax period ending December 31, 2014, is 

therefore moot and was dismissed by separate order.
3

[*3] Background

The parties submitted this case for decision without trial under 

Rule 122. Relevant facts have been stipulated or are otherwise included 

in the record. See Rule 122(a). Petitioner, Mohammad A. Kazmi, resided 

in Illinois when he timely filed his petition. 

I. The Corporation

Urgent Care is an Illinois corporation taxed under federal law as 

an S corporation. Urgent Care did not pay the employment taxes 

reported on its Forms 941, Employer’s Quarterly Federal Tax Return,

for the periods at issue. The sole owner of Urgent Care is Aref Senno, 

M.D. Dr. Senno, who is not a party to this case, was also the sole officer, 

director, and manager of Urgent Care. 

II. Petitioner’s Involvement with the Corporation

Mr. Kazmi was employed by Urgent Care as a part-time hourly 

bookkeeper during the periods at issue. He had no ownership interest in 

Urgent Care. He was not an officer of Urgent Care. His name was not 

on any of Urgent Care’s bank accounts. He did not have check signing 

authority for Urgent Care nor any authority to make payments on behalf 

of Urgent Care. At all times, he worked under the authority and 

direction of Dr. Senno. 

The record includes Form 4180, Report of Interview with 

Individual Relative to Trust Fund Recovery Penalty or Personal 

Liability for Excise Taxes. The form reflects Mr. Kazmi as the person 

interviewed and includes his signature dated October 20, 2015. In 

section 1, block 8 of the form, Mr. Kazmi described his job title as 

“bookkeeper” and his duties as “to take care of payroll.” In section 2, 

block 1 of the form, he indicated that he did not determine financial 

policy for Urgent Care, that he did not authorize payments of bills or 

creditors, and that he did not authorize payroll. He did indicate that he 

was authorized to transmit payroll tax returns and make federal tax 

deposits and that he was aware that withheld taxes had not been 

remitted.

The record also includes Form 4183, Recommendation re: Trust 

Fund Recovery Penalty Assessment. The form was filled out by the 

revenue officer and contains his signature as well as his supervisor’s 

signature. Both signatures are dated December 16, 2015. The revenue 

officer recommended that Mr. Kazmi be assessed a TFRP because he 
4

[*4] was “one of the corporation’s bookkeepers and current [power of 

attorney], [who] has been granted the status, duty, authority and power 

to direct the collecting, accounting, and paying of trust fund/employment 

taxes.” It further states that as power of attorney, he was “responsible 

for opening/responding to all IRS correspondence and contacts.” It 

describes his duties as “reviewing expenses, bills, and 

discussing/arranging payment to creditors along with other 

bookkeepers” and that “[t]hese decisions are often made independently 

without the involvement of the corporate President.” 

Unable to collect the full tax liability from Urgent Care, the 

Commissioner determined that Mr. Kazmi was a jointly and severally 

liable3 responsible person and proposed assessing TFRPs against him in 

a Letter 1153 dated December 16, 2015. Mr. Kazmi does not dispute 

receiving the Letter 1153 or signing the accompanying PS Form 3811, 

Domestic Return Receipt.4 A taxpayer has 60 days to challenge a Letter 

1153 by submitting a written appeal, but Mr. Kazmi made no appeal. 

The Commissioner then timely assessed TFRPs against Mr. Kazmi on 

March 22, 2016.

III. Collection Due Process

On July 19, 2016, the Commissioner issued Mr. Kazmi a Letter 

3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing 

Under I.R.C. sec. 6320. This time, Mr. Kazmi sought to challenge the 

NFTL filing by submitting Form 12153, Request for a Collection Due 

Process or Equivalent Hearing. The Form 12153 challenged the 

underlying liabilities but neither requested collection alternatives nor 

made other challenges to the appropriateness of the collection action.5

3 Dr. Senno was also determined a responsible person. See infra Discussion 

Part I and note 10.

4 The Court accepts the parties’ stipulation that Mr. Kazmi received the Letter 

1153 on January 8, 2016, despite the certified mail receipt bearing a seemingly 

impossible date stamp of January 8, 2015. The Court presumes without deciding that

the discrepancy is attributable to clerical error on the part of the U.S. Postal Service.

5 The notice of determination states that Mr. Kazmi’s Form 12153 indicated 

“[a]batement of the [TFRP] . . . as a collection alternative.” First, Mr. Kazmi did not 

check any boxes on his Form 12153 for “Collection Alternative” (those alternatives 

being an installment agreement, offer-in-compromise, or inability to pay). Second, it is 

not apparent on the face of the Form 12153 that Mr. Kazmi requested abatement. 

Ultimately, the confusion is irrelevant since the outcome of this case does not depend 

on whether Mr. Kazmi’s Form 12153 requested abatement for the periods at issue. See 

infra Discussion Part VI.A.
5

[*5] The Commissioner received Mr. Kazmi’s Form 12153 on August 22, 

2016.

Attached to the Form 12153 and included in the administrative 

record is a letter dated August 15, 2016, from Dr. Senno describing the 

situation with Mr. Kazmi as follows: Mr. Kazmi, as “a part time 

bookkeeper is not responsible for collection or accounting or making 

payments for any tax obligation for the corporation. His duty is to 

perform whatever task is given to him by me. He is not authorized to 

sign any check or documents on behalf of the company. Hence, I request 

you to have his name removed as a person for any tax obligation for 

Urgent Care Center Inc. By the way, I have an installment payment 

agreement of $450.00 per month with IRS for [Urgent Care].”

Mr. Kazmi’s request for a CDP hearing was assigned to a 

settlement officer in Appeals. On December 21, 2017, the settlement 

officer sent Mr. Kazmi Letter 4837, Substantive Contact Letter, which 

scheduled a CDP hearing for January 23, 2018, and requested that he

provide certain information, including a completed Form 433-A, 

Collection Information Statement for Wage Earners and SelfEmployment Individuals.

Before the CDP hearing, the settlement officer verified that the 

requirements of applicable laws and administrative procedure had been 

met, including the proper issuance of the Letter 1153, notice and 

demand, the NFTL filing, and the notice of a right to a CDP hearing. 

The settlement officer further determined that Mr. Kazmi was 

prohibited from challenging the underlying liabilities in a CDP hearing 

because the Letter 1153 provided him with a prior opportunity to contest 

his underlying liabilities of which he failed to take advantage. 

Mr. Kazmi did not answer when the settlement officer telephoned 

on January 23, 2018, so the settlement officer sent Letter 4000, 

Substantive Contact Letter, giving him 14 days to provide any 

additional information for his case. He telephoned the settlement officer 

on January 26, 2018. They discussed his underlying liabilities6 (namely, 

6 “A taxpayer’s underlying tax liability includes all ‘amounts a taxpayer owes 

pursuant to the tax laws that are subject of the Commissioner’s collection activities.’” 

McNeill v. Commissioner, 148 T.C. 481, 488 n.10 (2017) (quoting Callahan v. 

Commissioner, 130 T.C. 44, 49 (2008)); see Katz v. Commissioner, 115 T.C. 329, 338–

39 (2000) (“Although the term ‘underlying tax liability’ is defined in neither sections 

6320 and 6330 nor the legislative history, Congress’ intent in ensuring due process to 
6

[*6] his position that he was neither a responsible person nor willful in 

failing to remit payroll taxes). He again stated that he did not wish to 

pursue collection alternatives. And he never provided Form 433-A or any 

additional financial information relative to a collection alternative or 

other challenge to the appropriateness of the collection action.

The settlement officer sustained the NFTL in the notice of 

determination dated February 13, 2018, and Mr. Kazmi timely 

petitioned this Court for redetermination. 

Discussion

I. Section 6672 TFRPs

Employers have a duty to withhold or collect from an employee’s 

wages the employee’s share of federal tax7 and then must pay over the 

withheld amounts to the Federal Government. Dixon v. Commissioner, 

T.C. Memo. 2019-79, at *16 (citing Jarrett v. Commissioner, T.C. Memo. 

2018-73, at *31). Such withheld amounts are known as “trust fund 

taxes,” Jarrett, T.C. Memo. 2018-73, at *31 (citing Pollock v. 

Commissioner, 132 T.C. 21, 25 n.10 (2009)), because they are “held to be 

a special fund in trust for the United States,” § 7501(a).

When net wages are paid to an employee and the employer does 

not pay over the withheld funds, the Commissioner has no recourse 

against the employee. Cashaw v. Commissioner, T.C. Memo. 2021-123, 

at *9 (citing Mazo v. United States, 591 F.2d 1151, 1154 (5th Cir. 1979)). 

For this reason, section 6672 provides a collection tool allowing the 

Commissioner to impose a TFRP on certain persons who fail to withhold 

and pay over trust fund taxes. See Newsome v. United States, 431 F.2d 

742, 745 (5th Cir. 1970). The TFRP under this section is equal to the 

total amount of the tax not paid over. Mazo, 591 F.2d at 1154. The TFRP 

must be paid upon notice and demand by the Commissioner and shall 

be assessed and collected in the same manner as taxes. § 6671(a). The 

TFRP is known as an “assessable penalty” because the Commissioner 

taxpayers when the Commissioner seeks to collect taxes by liens or levies suggests that 

the term includes any amounts owed that are the subject of the Commissioner’s 

collection activities.” (quoting H.R. Rep. No. 105-599, at 263–67 (1998) (Conf. Rep.))).

7 These include the employee’s share of (1) Social Security tax, see §§ 3101(a), 

3102(a), (2) Medicare tax, see §§ 3101(b), 3102(a), and (3) federal income tax, see

§§ 3402(a)(1), 3403.
7

[*7] can assess8 the TFRP against a taxpayer without first having to 

issue the taxpayer a notice of deficiency. See generally Smith v. 

Commissioner, 133 T.C. 424, 428–30 (2009) (providing an overview of 

assessable penalties); Williams v. Commissioner, 131 T.C. 54, 58 n.4

(2008) (noting that assessable penalties fall outside of the deficiency 

notice regime of sections 6212 to 6214 and thus fall outside this Court’s 

deficiency jurisdiction). The assessable penalty was approved on 

December 16, 2015, by the group manager on Form 4183. See Blackburn 

v. Commissioner, 150 T.C. 218, 223 (2018). 

Section 6672(a) imposes the TFRP on (1) “[a]ny person required 

to collect, truthfully account for, and pay over any tax imposed by this 

title” who (2) “willfully fails to collect such tax, or truthfully account for 

and pay over such tax, or willfully attempts in any manner to evade or 

defeat any such tax or the payment thereof.” 

The term “person” includes an officer or employee of a corporation 

who is under a duty to collect, account for, and pay over the tax. 

§ 6671(b). Such persons are referred to as “responsible,”9 and the term 

may be applied broadly. Mason v. Commissioner, 132 T.C. 301, 321 

(2009) (citing Logal v. United States, 195 F.3d 229, 232 (5th Cir. 1999), 

and Barnett v. IRS, 988 F.2d 1449, 1454 (5th Cir. 1993)). Whether 

someone is a responsible person is “a matter of status, duty and 

authority, not knowledge.” Mazo, 591 F.2d at 1156. 

The U.S. Court of Appeals for the Seventh Circuit, the court to 

which an appeal of this case would presumably lie absent a stipulation 

to the contrary, see § 7482(b); Golsen v. Commissioner, 54 T.C. 742, 757 

8 An “assessment” is “the formal recording of a taxpayer’s tax liability” in the 

IRS’s records. Baltic v. Commissioner, 129 T.C. 178, 183 (2007); see also Hibbs v. Winn, 

542 U.S. 88, 100 (2004) (“An assessment is made ‘by recording the liability of the 

taxpayer in the office of the Secretary in accordance with rules or regulations 

prescribed by the Secretary.’” (quoting section 6203)); Treas. Reg. § 301.6203-1. It is 

“essentially a bookkeeping notation.” Laing v. United States, 423 U.S. 161, 170 n.13 

(1976) (“The ‘assessment,’ essentially a bookkeeping notation, is made when the 

Secretary or his delegate establishes an account against the taxpayer on the tax 

rolls.”).

9 The IRS collects the trust fund liability only once. Consequently, the IRS 

cross-references payments against the trust fund liability of the employer and 

payments against the TFRPs of responsible persons. See Weber v. Commissioner, 138 

T.C. 348, 358 (2012). In addition, for circumstances in which there is more than one 

responsible person, a taxpayer who paid the TFRP may bring a separate suit against 

the other responsible person(s) claiming a right of contribution. § 6672(d); see Weber, 

138 T.C. at 358 n.8.
8

[*8] (1970), aff’d, 445 F.2d 985 (10th Cir. 1971), considers the following 

to be indicia of “responsible person” status: (1) holding corporate office, 

(2) owning stock in the company, (3) serving on the board of directors, 

(4) having authority to sign checks, and (5) having control over corporate 

financial affairs, United States v. Kim, 111 F.3d 1351, 1362–63 (7th Cir. 

1997).

A responsible person will be held liable for a TFRP only where the 

failure to pay the withholding tax was willful. § 6672. “Willful” for this 

purpose does not mean the responsible person must have a “criminal or 

other bad motive . . . , but simply a voluntary, conscious and intentional 

failure to collect, truthfully account for, and pay over the taxes withheld 

from the employees.” Newsome, 431 F.2d at 745. To establish 

willfulness, there is no requirement that the responsible person 

intended to deprive the Federal Government of the withholding tax. Id.

at 747. Willfulness can exist where the “responsible person acts with a 

reckless disregard of a known or obvious risk that trust funds may not 

be remitted to the [Federal] Government.” Mazo, 591 F.2d at 1155. 

Willfulness is typically proven by evidence that a responsible person 

paid other creditors when withholding taxes were due to the Federal 

Government. Gustin v. United States, 876 F.2d 485, 492 (5th Cir. 1989). 

Mr. Kazmi contends that he is not liable for a TFRP because he 

was not a responsible person who willfully failed to pay over the 

withheld taxes for any of the periods at issue. Because the underlying 

tax liability of a TFRP is the penalty itself, the Court must first decide 

whether Mr. Kazmi is entitled to challenge his underlying liabilities

before reaching the merits of his contention. See cases cited supra note 6.

II. Section 6320

Before imposing a TFRP under section 6672, the IRS must 

properly notify the responsible person and properly assess the penalty 

against that person. In order to properly assess, the Commissioner must 

generally notify the taxpayer in writing by mail to the taxpayer’s last 

known address advising that the person will be subject to an assessment 

of the TFRP. §§ 6672(b)(1), 6212(b); Mason, 132 T.C. at 322. Letter 1153 

satisfies this preliminary notice requirement. See Mason, 132 T.C. 

at 317–18, 322.

The Commissioner may not assess a TFRP for at least 90 days 

after providing the notice (in this case, Letter 1153). § 6672(b)(3). Within 
9

[*9] those 90 days, the taxpayer may challenge the notice by requesting 

an administrative hearing before Appeals. § 6672(b)(3)(A). 

If the responsible person fails to pay the TFRP after notice and 

demand, the amount becomes a lien in favor of the United States upon 

that person’s property and rights to property. § 6321. The IRS may then 

file an NFTL to protect the priority of the lien against certain third 

parties. § 6323. Once the IRS files an NFTL, it must notify the person of 

the filing and of the person’s right to a CDP hearing to appeal the NFTL 

filing. § 6320(a) and (b).

III. Jurisdiction and Burden of Proof

Sections 6320(c) and 6330(d)(1) grant this Court jurisdiction to 

review the Commissioner’s determination that a proposed collection 

action was proper. Williams, 131 T.C. at 58 n.4; Callahan, 130 T.C. 

at 48. Taxpayers who challenge their underlying tax liabilities in cases 

arising under section 6320 or 6330 bear the burden of proof regarding 

their correct tax liabilities. See Rule 142(a); Thompson v. Commissioner, 

140 T.C. 173, 178 (2013). 

IV. Standard of Review

In general, a taxpayer must raise an issue at a CDP hearing to 

preserve it for this Court’s review. Perkins v. Commissioner, 129 T.C. 58, 

63 (2007); Magana v. Commissioner, 118 T.C. 488, 493 (2002); Treas. 

Reg. § 301.6330-1(f)(2), Q&A-F3. In reviewing a determination under 

section 6330(c)(2), the Court considers only issues that the taxpayer 

properly raised during the CDP hearing. Treas. Reg. §§ 301.6320-1(f)(2), 

Q&A-F3, 301.6330-1(f)(2), Q&A-F3; see Giamelli v. Commissioner, 129 

T.C. 107, 115 (2007). Therefore, “[a] taxpayer is precluded from 

disputing the underlying liability [in this Court] if it was not properly 

raised in the CDP hearing.” Thompson, 140 T.C. at 178. A taxpayer 

during a CDP hearing does not properly raise an issue, including an 

issue concerning his underlying tax liability, if he “fails to present to 

Appeals any evidence with respect to that issue after being given a 

reasonable opportunity to present such evidence.” Treas. Reg. 

§ 301.6320-1(f)(2), Q&A-F3; see Pough v. Commissioner, 135 T.C. 344, 

349 (2010). The taxpayer must also raise the issue in his petition to this 

Court. Rule 331(b)(4) (“Any issue not raised in the assignments of error 

shall be deemed to be conceded.”). 

A taxpayer cannot challenge an underlying liability in a CDP 

hearing, and this Court cannot review that liability, if the taxpayer had 
10

[*10] an earlier opportunity to dispute the assessment of that liability. 

§ 6330(c)(2)(B); Mason, 132 T.C. at 317. 

Where a taxpayer’s underlying tax liability is properly at issue 

before this Court, the Court reviews the Commissioner’s determination 

regarding the underlying liability de novo. Sego v. Commissioner, 114 

T.C. 604, 610 (2000). The Court reviews any other administrative 

determination regarding proposed collection actions for abuse of 

discretion. Id.; Goza v. Commissioner, 114 T.C. 176, 182 (2000). An 

abuse of discretion is any action that is arbitrary, capricious, or without 

sound basis in law or fact. Woodral v. Commissioner, 112 T.C. 19, 23 

(1999). 

V. Underlying Liabilities

The liabilities in this case involve TFRPs. Before TFRPs can be 

assessed, the Commissioner must generally notify the taxpayer in 

writing by mail to the taxpayer’s last known address advising that 

TFRPs will be assessed. § 6672(b)(1); Mason, 132 T.C. at 322. Letter 

1153 satisfies this preliminary notice requirement. See Mason, 132 T.C. 

at 317–18, 322. 

The Commissioner issued Mr. Kazmi a Letter 1153. Mr. Kazmi 

does not dispute receiving Letter 1153 or signing the accompanying PS 

Form 3811, Domestic Return Receipt.10 The Letter 1153 satisfied the 

notice requirement of section 6672. See id. The assessment of the TFRPs 

against Mr. Kazmi was thus valid. The Court may therefore consider the 

merits of that assessment—i.e., the underlying liabilities—provided 

that Mr. Kazmi was not statutorily precluded from raising them during 

his CDP hearing. 

A Letter 1153 also provides a taxpayer with an administrative 

means for protesting a proposed assessment of TFRPs. In the specific 

context of CDP cases involving TFRPs, this Court has held that, for 

purposes of section 6330(c)(2)(B), a taxpayer has an “opportunity” to 

dispute his underlying tax liability for a TFRP when he receives Letter 

1153. See Mason, 132 T.C. at 317–18. Thus, if the taxpayer receives 

Letter 1153 but fails to challenge the underlying tax liability at the 

Appeals conference, then the taxpayer is precluded by section 

6330(c)(2)(B) from challenging the underlying tax liability in a 

10 A Letter 1153 that is neither received nor deliberately refused by a taxpayer 

does not constitute an opportunity to dispute the taxpayer’s liability. See Mason, 132 

T.C. at 318; Fitzpatrick v. Commissioner, T.C. Memo. 2016-199, at *18.
11

[*11] subsequent CDP hearing. This is the circumstance in which Mr. 

Kazmi now finds himself. 

Mr. Kazmi does not dispute that he failed to challenge the Letter 

1153. Instead, he asks this Court to overturn its previous holdings that 

Letter 1153 constitutes a prior opportunity. His argument is that 

Letter 1153 does not provide a prior opportunity under section 

6330(c)(2)(B) because the Commissioner’s denial of a Letter 1153 appeal 

does not result in an opportunity for the taxpayer to seek judicial review 

before the Tax Court. 

Mr. Kazmi is correct to the extent that, if a taxpayer appeals 

Letter 1153 and the Commissioner denies the appeal, the taxpayer 

cannot at that stage challenge the denial of the appeal in the Tax Court. 

This is so because the Tax Court is a Court of limited jurisdiction. See

§ 7442; Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392, 396 

(1971). It has only the jurisdiction which is conferred on it by statute.

Burns, Stix Friedman & Co., 57 T.C. at 396; see also § 7442. But the Tax 

Court’s lack of jurisdiction does not necessarily mean that a taxpayer 

lacks any opportunity for judicial review.

This Court addressed an argument similar to Mr. Kazmi’s in 

Bishay v. Commissioner, T.C. Memo. 2015-105, aff’d without published 

opinion, 2017 WL 11453028 (1st Cir. 2017). In that case, the Court noted 

that 

[t]he lack of opportunity for judicial review after the Letter 

1153 proceeding does not severely prejudice the taxpayer 

because, as we have previously noted, “the section 6672 

penalty is divisible, so that a taxpayer may litigate the 

penalty after having paid an amount corresponding to the 

tax withheld from a single employee”. See Weber v. 

Commissioner, 138 T.C. 348, 363 n.12 (2012) (citing Davis 

v. United States, 961 F.2d 867, 870 n.2 (9th Cir. 1992), and 

Bland v. Commissioner, T.C. Memo. 2012-84). Thus, the 

taxpayer whose liability is upheld in the Letter 1153 

proceeding can make a small “token” payment towards the 

section 6672 penalty, file a refund claim with the IRS, and, 

if the refund claim is denied, file a refund suit in the 

Federal District Court or the Court of Federal Claims. 

Bishay, T.C. Memo. 2015-105, at *17 n.9.
12

[*12] At this time, the Court declines to overturn its previous holdings 

that a properly mailed and received Letter 1153 constitutes a prior 

opportunity. Mr. Kazmi’s failure to challenge the Letter 1153 thus 

precluded him from challenging his underlying liabilities in the CDP 

hearing, and the Court will review for abuse of discretion the 

Commissioner’s determination to sustain the NFTL filing.

VI. Abuse of Discretion

A. In General

In reviewing for abuse of discretion the Court must uphold the 

settlement officer’s determination unless it is arbitrary, capricious, or 

without sound basis in law or fact. See Murphy v. Commissioner, 125 

T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006); see also Keller v. 

Commissioner, 568 F.3d 710, 716–18 (9th Cir. 2009), aff’g in part T.C. 

Memo. 2006-166, and aff’g in part, vacating in part decisions in related 

cases. The Court does not conduct an independent review or substitute 

its own judgment for that of the settlement officer. Murphy, 125 T.C. 

at 320. 

At the agency-level CDP hearing, the settlement officer must 

determine whether the proposed collection action may proceed. The 

procedures for the agency-level hearing regarding an NFTL are similar 

to those set forth in section 6330(c) for a notice of intent to levy. 

§ 6320(c). 

First, the settlement officer must verify that the requirements of 

any applicable law and administrative procedure have been met by IRS 

personnel. § 6330(c)(3)(A). The attachment to the notice of 

determination summarized the settlement officer’s compliance with 

these requirements.11 However, the Court construes Mr. Kazmi’s 

contention that the Commissioner has the wrong person as an argument 

that not all requirements of applicable law were met and addresses it 

infra Discussion Part VI.B.

Second, the taxpayer may “raise at the hearing any relevant issue 

relating to the unpaid tax or the [collection action], including” challenges 

11 Mr. Kazmi has not raised whether the settlement officer failed to obtain 

verification of compliance with the supervisory approval requirement under section

6751(b). In any event the Form 4183 in the administrative record reflects the 

settlement officer’s verification of supervisory approval. See Blackburn, 150 T.C. 

at 223.
13

[*13] to the appropriateness of the collection action and collection 

alternatives such as an installment agreement or an offer-incompromise.12 § 6330(c)(2)(A). Mr. Kazmi declined to propose any 

collection alternatives before or during his CDP hearing. It is not an 

abuse of discretion for a settlement officer to sustain a collection action 

and not consider collection alternatives where the taxpayer has 

proposed none. See McLaine v. Commissioner, 138 T.C. 228, 242–43 

(2012); Kendricks v. Commissioner, 124 T.C. 69, 79 (2005); see also

Treas. Reg. § 301.7122-1(d)(1) (requiring that offers to compromise a tax 

liability must be made in writing and include all the information 

prescribed or requested by the IRS).

Third, the taxpayer may contest the existence and amount of the 

underlying liability, but only if he did not receive a notice of deficiency 

or otherwise have an opportunity to dispute the tax liability. 

§ 6330(c)(2)(B). As the Court discussed supra, Mr. Kazmi could not 

contest his underlying liabilities in the CDP hearing because he received 

but did not challenge the Letter 1153, which provided him with a prior 

opportunity. In such a case the primary purpose of the CDP hearing was 

for Mr. Kazmi and the settlement officer to discuss collection 

alternatives. See Bishay, T.C. Memo. 2015-105, at *17.

Fourth, the settlement officer must determine “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.” § 6330(c)(3)(C). Mr. Kazmi 

does not argue this point. Moreover, the actions sustained by the 

settlement officer’s determination—i.e., the filing of an NFTL, rather 

than issuing a notice of intent to levy—was among the less intrusive 

collection methods available to the IRS. The IRS was only preserving its 

place in Mr. Kazmi’s line of creditors. The IRS chose the least intrusive 

collection method and did not abuse its discretion in doing so.

B. Verification of Responsible Person

To Mr. Kazmi, it seems clear that the Commissioner has the 

wrong person because he was merely a part-time bookkeeper. He was 

not an officer or director of the company. He had no ownership stake in 

the company. He had no authority to sign checks. As Urgent Care’s sole 

12 For a review of various grounds for compromise, see Treasury Regulation 

§ 301.7122-1(b) and T.D. 9007, 2002-2 C.B. 250. For an overview of the legislative 

history surrounding compromises, see generally H.R. Rep. No. 105-599, at 289 (1998)

(Conf. Rep.), and T.D. 8829, 1999-2 C.B. 235.
14

[*14] owner wrote, Mr. Kazmi’s sole duty was “to perform whatever task 

is given to him.” 

The Court construes Mr. Kazmi’s contention that he is not a 

responsible person to whom the TFRP should be applied as an argument 

that the law requires the Commissioner to determine whether someone 

is a responsible person to whom the TFRP applies as a condition 

precedent to the issuance of a Letter 1153, that Mr. Kazmi met none of 

the indicia of responsible person status, and that the settlement officer 

must have acted arbitrarily when he verified that the requirements of 

applicable law had been met. 

The term “responsible person” is derived from the mandate in 

section 6672(a) that “[a]ny person required to collect, truthfully account 

for, and pay over any tax imposed by this title” shall be liable for the 

TFRP. Congress added section 6672(b)(1) to the Code in 1996 as part of 

The Taxpayer Bill of Rights 2, Pub. L. No. 104-168, § 901, 110 Stat. 1452, 

1465. That section requires that “[n]o [TFRP] shall be imposed . . . unless 

the Secretary notifies the taxpayer in writing . . . that the taxpayer shall 

be subject to an assessment of such penalty.” § 6672(b)(1). In other 

words, it requires that once the Commissioner determines someone is a 

responsible person subject to the TFRP, he must provide that person 

with notice (i.e., Letter 1153) before assessing the TFRP. 

The record indicates that the settlement officer complied with 

procedural requirements and gave due consideration to Mr. Kazmi’s 

case. Before the issuance of the Letter 1153, the settlement officer 

verified that a determination had been made that Mr. Kazmi was a 

responsible person to whom the TFRP applied and that the penalty had 

received supervisory approval. See Blackburn, 150 T.C. at 223. The 

settlement officer also verified that the Letter 1153 was sent by certified 

mail and received by Mr. Kazmi. As the Court stated supra p. 12, in 

reviewing for abuse of discretion, it does not substitute its own judgment 

for that of the settlement officer. A difference of reasonable minds does

not rise to the level of arbitrariness required for finding an abuse of 

discretion.

VII. Conclusion

In view of the foregoing, the Court sustains the notice of 

determination for the NFTL filing for taxable quarters ending June 30 

and September 30, 2014. 
15

[*15] The Court has considered all arguments by the parties and, to the 

extent not specifically mentioned above, concludes that they are moot, 

irrelevant, or without merit.

To reflect the foregoing,

An appropriate decision will be entered.