T.C. Summary Opinion 2005-180

UNITED STATES TAX COURT

JESSE R. LANCE, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 18041-04S. Filed December 7, 2005.

Jesse R. Lance, pro se.

J. Craig Young, for respondent.

WELLS, Judge: This case was heard pursuant to the

provisions of section 7463 in effect at the time the petition was

filed. The decision to be entered is not reviewable by any other

court, and this opinion should not be cited as authority. 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. 
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This matter is before the Court on respondent’s motion to

dismiss for lack of jurisdiction as to income tax preparer

penalties assessed pursuant to section 6694. At the time of 

the filing of the petition, petitioner resided in Georgetown,

South Carolina.

On September 9, 2004, respondent’s Appeals Office issued a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330, determining that a proposed lien was

appropriate with respect to income tax liabilities for

petitioner’s 1992, 1997, 1998, and 2000 tax years (tax notice). 

The tax notice identified the liability in issue as follows:

Tax Period(s) Ended: 

Form 1040, years 1992, 1997, 1998, 2000

The tax notice provided the following instructions for petitioner

to pursue a judicial review of the determination: If you want to

dispute this determination in court, you must file a petition 

with the United States Tax Court for a redetermination within 30 

days from the date of this letter.

Also on September 9, 2004, respondent’s Appeals Office

issued a second Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330, determining that a

proposed lien was appropriate with respect to petitioner’s 1992 
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1Petitioner filed an amended petition on Oct. 19, 2004. We

note that petitioner has not challenged in this Court the

determination of respondent’s Appeals Office with respect to the

proposed lien related to the income tax liability for

petitioner’s 1992, 1997, 1998, and 2000 tax years, as set forth

in the tax notice. 

and 1993 tax years (penalty notice). The penalty notice 

identified the liability in issue as follows:

Tax Type/Form Number and Tax Period(s) Ended:

Civil Penalties, periods ended 12/31/1992, 12/31/1993

The record reveals that the penalties in issue include income tax

preparer penalties assessed, pursuant to section 6694(a) and (b),

for petitioner’s 1992 and 1993 tax years (the preparer

penalties). The penalty notice provided the following

instructions for petitioner to pursue a judicial review of the

determination:

If you want to dispute this determination in court, you

have 30 days from the date of this letter to file a

complaint in the appropriate United States District

Court for a redetermination.

Petitioner timely filed a petition with this Court for

judicial review of the determination with respect to the preparer

penalties.1 On November 2, 2005, respondent filed the instant

motion to dismiss for lack of jurisdiction as to the preparer

penalties.

Section 6321 provides that if any person liable to pay any

tax neglects or refuses to pay the same after demand, the unpaid

tax shall be a lien in favor of the United States upon all
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2SEC. 6321. Lien for Taxes.--

If any person liable to pay any tax neglects or refuses to

pay the same after demand, the amount (including any interest,

additional amount, addition to tax, or assessable penalty,

together with any costs that may accrue in addition thereto)

shall be a lien in favor of the United States upon all property

and rights to property, whether real or personal, belonging to

such person.

3SEC. 6320(a). Requirement of Notice.--

(1) In General.--The Secretary shall notify in writing

the person described in section 6321 of the filing of a

notice of lien under section 6323.

4SEC. 6320(a). Requirement of Notice.--

(3) Information included with notice.--The notice

required under paragraph (1) shall include in simple and

nontechnical terms--

(A) the amount of the unpaid tax;

(B) the right of the person to request a hearing

during the 30-day period beginning on the day after the

(continued...)

property and rights to property belonging to such person.2

Section 6320(a)(1) provides that the Secretary shall notify

persons described in section 6321 of the filing of a notice of

lien.3 Section 6320(a)(3) provides that such notification shall

inform the person in simple and nontechnical terms of (1) the

amount of the unpaid tax, (2) the right of the person to request

a hearing before an impartial officer of the Commissioner’s

Appeals Office, (3) the administrative appeals available to the

taxpayer, and (4) the provisions relating to the release of liens

on property.4 
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4(...continued)

5-day period described in paragraph (2);

(C) the administrative appeals available to the

taxpayer with respect to such lien and the procedures

relating to such appeals; and

(D) the provisions of this title and procedures

relating to the release of liens on property.

5SEC. 6330(d). Proceeding After Hearing.--

(1) Judicial review of determination.--The 

person may, within 30 days of a determination under

this section, appeal such determination–-

(A) to the Tax Court (and the Tax Court shall

have jurisdiction with respect to such matter); or

(B) if the Tax Court does not have 

jurisdiction of the underlying tax liability, to 

a district court of the United States.

If a court determines that the appeal was to an 

incorrect court, a person shall have 30 days after the

court determination to file such appeal with the

correct court.

The determination of the Commissioner’s Appeals Office is

subject to judicial review pursuant to section 6330(d)(1).5 See

sec. 6320(c). However, the jurisdiction of this Court to review

determinations by the Commissioner’s Appeals Office pursuant to

section 6320 is limited to actions in which the underlying

liability is of a type over which the Court normally has

jurisdiction. Sec. 6330(d)(1); Weber v. Commissioner, 122 T.C.

258, 264 (2004); Moore v. Commissioner, 114 T.C. 171, 175

(2000); Van Es v. Commissioner, 115 T.C. 324, 328-329 (2000). 

“The Tax Court is a court of limited jurisdiction, and we may
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6SEC. 6694. Understatement of Taxpayer’s Liability by

Income Tax Return Preparer.

(a) Understatements Due to Unrealistic Positions.--If--

(1) any part of any understatement of liability with

respect to any return or claim for refund is due to a

position for which there was not a realistic possibility of

being sustained on its merits,

(2) any person who is an income tax return preparer

with respect to such return or claim knew (or reasonably

should have known) of such position, and

(3) such position was not disclosed as provided in

section 6662(d)(2)(B)(ii) or was frivolous, 

such person shall pay a penalty of $250 with respect to such

return or claim unless it is shown that there is reasonable cause

for the understatement and such person acted in good faith.

(b) Willful or Reckless Conduct.--If any part of any

(continued...)

exercise our jurisdiction only to the extent authorized by

Congress.” Moore v. Commissioner, supra at 175. The Court’s

deficiency jurisdiction generally is limited to the

redetermination of income, estate, and gift taxes. See secs.

6211, 6213(a). 

As noted above, the liabilities in issue were incurred with

respect to income tax preparer penalties assessed pursuant to

section 6694(a) and (b) for petitioner’s 1992 and 1993 tax years. 

Section 6694(a) and (b) generally provide that an income tax

preparer may be subject to a penalty for preparation of a return

on which there is an understatement due to an unrealistic

position or due to willful or reckless conduct by the preparer.6
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6(...continued)

understatement of liability with respect to any return or claim

for refund is due--

(1) to a willful attempt in any manner to understate

the liability for tax by a person who is an income tax

return preparer with respect to such return or claim, or

(2) to any reckless or intentional disregard of rules

or regulations by any such person, 

such person shall pay a penalty of $1,000 with respect to such

return or claim. With respect to any return or claim, the amount

of the penalty payable by any person by reason of this subsection

shall be reduced by the amount of the penalty paid by such person

by reason of subsection (a).

Section 6696(b) provides that the deficiency procedures that

serve as a jurisdictional prerequisite for this Court do not

apply with respect to the assessment or collection of income tax

preparer penalties assessed pursuant to section 6694:

SEC. 6696(b). Deficiency Procedures Not to

Apply.--Subchapter B of chapter 63 (relating to

deficiency procedures for income, estate, gift, and

certain excise taxes) shall not apply with respect to

the assessment or collection of the penalties provided

by sections 6694 and 6695.

Because we lack jurisdiction with respect to the underlying

amounts in issue, we lack jurisdiction to review respondent’s

Appeals Office determination with respect to the collection of

those liabilities. Weber v. Commissioner, supra; Moore v.

Commissioner, supra; Van Es v. Commissioner, supra. Accordingly,

in the instant case, we conclude that this Court lacks

jurisdiction to review the determination of respondent’s Appeals
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7In this proceeding, we need not address the issue of

whether the penalty notice complied with sec. 6320(a)(3).

8In a statement filed as a response to the instant motion to

dismiss, petitioner contends that the preparer penalties were the

result of the racism of employees of the Internal Revenue

Service. Because this Court lacks jurisdiction with respect to

the preparer penalties, we do not address petitioner’s

contentions.

Office with respect to the collection of income tax preparer

penalties assessed pursuant to section 6694.7 We have considered

all contentions that the parties have raised.8 To the extent not

addressed herein, those contentions are without merit or

unnecessary to reach. 

To reflect the foregoing,

 An appropriate order

will be entered.