T.C. M em o . 2 0 2 0 -4 5

UNITED STATES TAX COURT

J ASON E. SHEPHERD, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 9 1 46 -1 8 L. Fi l edAp ri l 1 3 , 2 0 2 0
.

J as o n E. Sh ep h erd , p ro s e. Gary R. Sh ul er, J r., fo r res p o nd en t .

M EM ORANDUM OPINION GUY, Sp eci al Tri al J u d g e: Th i s co l l ect i o n rev i ew cas e i n v o l v i ng a Fed eral t ax l i en i s an ap p eal fro m a n ot i ce o f d et erm i n at i o n i s s u edb y th e In t ern al Rev en ue Serv i ce (IRS) Offi ce o f Ap p eal s (Ap p eal s Offi ce). Th e IRS s eek s t o co l l ecttru s t fu n d reco v ery

p en al t ies (TFRPs ) as s es sedag ai n s tp et i t i o n er p u rs u an t t o s ect i o n- 2
-

[* 2 ] 6 6 7 2 fo r t h e s i x qu art erl y p eri o d s en d i ng Sep t em b er 3 0 , 2 0 1 0 , th ro ug h Decem b er 3 1 , 2 0 11 (t ax ab l e p eri o d s i n i s s ue). 1 Th e cas e i s b efo re t h e Co u rto n res p o n d en t’ s m o t i o n fo r s u m m ary ju d g m en t , wi th a s up p o rt i n g d ecl arat i o n , fi l edp u rs u an tt o Ru l e 1 2 1 . Pet i t i o n er fi l eda
res p o n s e i n o p p os i ti o n t o res p on d en t ’ s m o ti on . As d i s cu ss edi n d et ai l b el ow, we wi l l g ran tres p o n d en t ’ s m o t i on an den t er a d eci si on s u s t ai n i n g th e co l l ect i o n act i on . Back gro u n d Th e p art i es d o n o t d is p u t e t h e fo l l o wi ng b ack g ro u n d fact s wh i ch are d rawn fro m th e p l ead in g s , res p o n den t ’ s m o t i o n , a d ecl arat i o n ex ecu t edb y Set t l em en t Offi cer M ari a Sm i th an dex h ib i t s at t ach edth eret o , an dp et i t i o ner’ s res p o n s e t o
res p o n d en t’ s m o t i o n. Pet i t i o n er res i d edi n Fl o ri da wh enth e p et i t i o n was fi l ed
. I. Em p lo ym en t Tax es an dAs s es s m en to f TFRPs Pet i t i o ner was th e ch i ef ex ecu t iv e o ffi cer o f Ad v an cedCare Am b u l an ce Serv i ce, LLC (ACAS). Al th ou g h ACAS fi l edFo rm s 9 41 , Em p l o y er’ s Qu art erl y

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de (Co d e), as am en d edan di n effect atal l rel ev an tt i m es , an dRu l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re. Al l m o net ary am ou n t s are ro u n dedt o t h e n eares td o l l ar.- 3
-

[* 3 ] Fed eral Tax Retu rn , fo r t h e t ax ab l e p eri o d s i n i s s u e, t h e co m pan y fai l edt o
rem i tth e fu l l am o u n t o f em p l o y m en t t ax es du e wi th th o s e retu rn s . OnJ an u ary

1 4 , 2 0 1 3 , Rev en u e Offi cer Tamm y Ru s s el l (RO Ru s s el l ),
as s i g n edt o co l l ectACAS’ em p l o ym en tt ax es , p rep areda Fo rm 4 1 8 3 , Reco m m en d at i o n re: Tru s tFu n dReco v ery Pen al ty As s es s m en t , reco m

m en d i n g th atTFRPs b e as s es s edag ai n s tp et i t i o ner as a “ res p o n s i b l e p ers on ” fo r t h e t ax ab l e p eri o d s i n i s s u e. 2 RO Ru s s el l ’ s i m m ed i at e s up erv is o r ap p ro v edan ds i gn edth e Fo rm 4 1 8 3 th ats am e d ay . OnJ an u ary

3 0 , 2 0 1 3 , th e IRS s en ta Let t er 1 1 5 3, Tru stFu n dReco v ery Pen al ty Let t er, b y

cert ifi edm ai l ad dres s edt o p et i t i o n er’ s l as tkn o wnad dres s . Th e Let t er 1 1 5 3 s t at edth atth e IRS p ro p o s edt o as s es s TFRPs t o t al in g $ 1 6 5,7 4 2 fo r t h e t ax ab l e p eri o d s i n i s s u e an do ffered p et i t i o n er t h e o p p o rtu n i ty t o req u es t an ad m i n is trat i v e ap p eal . OnFeb ru ary 1 9 , 2 0 1 3 , th e U.S. Po s tal Serv i ce ret u rn edth e
en v el o p e b eari n g th e Let ter 1 1 5 3 t o th e IRS u n d el i v eredan dm ark ed

“ UNCLAIM ED UNABLE TO FORW ARD”. On J ul y

2 2 , 2 0 1 3 , th e IRS as s es s ed

2 Sec. 6 6 7 2(a) au th o ri zes th e as s es s m en to f TFRPs an dp ro vi d es th ata res p o n s i b l e p ers o n wh o fai ls t o co ll ecto r p ay o v er an y t ax “ sh al l , i n ad d i t io n t o o th er p en al t ies p ro v i d edb y l aw, b e l i ab l e t o a p en al ty equ al t o th e t o t al am o u n to f th e t ax ev ad ed , o r n o t co l l ect ed , o r n o t acco u n tedfo r an d p ai do v er.”- 4
-

[* 4 ] th e TFRPs an ds en tp et i t i o n er a n o t i ce an dd em an dfo r p aym en t . He d i dn o t
rem i tp aym en t . II. No t i ce o f In ten tt o Lev y an dAdm i n i s trat i v e Pro ceed i n gs In Oct o b er 2 0 13 th e IRS m ai l eda n o t i ce o f i nt en tt o l ev y t o p et i ti o n er reg ard i n g th e u np ai d TFRPs an di n fo rm i n g h i m o f t h e ri g h tt o req u es tan ad m i n is trat i v e h eari n g wi th th e Ap p eal s Offi ce. Pet i ti o n er res p o n d edb y t i m el y
s ub m i t t i n g a Fo rm 12 1 5 3 , Req u es tfo r a Co l l ect io n Du e Pro ces s o r Equ i v al en t Heari n g , t o th e Ap p eal s Offi ce. Du ri n g th e co u rs e o f t h e ad m i n i s trat i v e h eari n g th atfo l l o wedp et i t i o n er p ro p os edan i n s tal l m en t ag reem en t as an al t ern at i v e t o th e l ev y act i on an d
s ub m i t t edfi n an ci al i n fo rm at i o n i n t en d edt o p ers u ad e t he Ap p eal s Offi ce t h at
en fo rcem en to f t h e p ro p o sed l ev y wo u l dcau s e eco n o m i c h ard s h ip . Aft er
co n si d eri n g p et i t i o n er’ s fi n an ci al s t an d i ng , th e Ap p eal s Offi ce co n cl ud ed th atth e p ro p os edl ev y

wo u l dres u l t i n eco n o m i c h ard s h i p an dth erefo re p l aced p et i t i o n er’ s
acco u n t in cu rren t l y

n ot co ll ect i b l e s t atu s. 3

3 Cu rren t l y

n o t co l l ect i b l e s t atu s i s d i s cu s sedi n d et ai l atIn t ern al Rev en u e M an u al p t . 5 .1 6
. 1 (Sep t . 1 8 , 2 01 8 ).- 5
-

[* 5 ] III. Pet i t i on er’ s Offer-i n -Co m p ro m i se an dAdm i n i s trat iv e Pro ceed i n g s In M arch 2 01 6 p et i t i o n er s ub m i t t edan o ffer-i n -co m p ro m i s e (OIC) t o th e IRS as s ert i n g t h atth ere was d o ub tas t o h i s l i ab i l i ty an do fferi n g $ 1 i n fu l l
s at i s fact i o n o f t h e TFRPs . An IRS o ffer s p eci al i s ti n v es t ig at edth e m at t er an d i n fo rm edp et i t i o n er i n Ap ri l 2 0 1 7 th ath is OIC h adb een reject edo n t h e g ro u n d th atth ere was n o d o ub tas t o h is l i ab il i ty fo r t h e TFRPs . Pet i t io n er req u es t ed Ap p eal s Offi ce rev i ew o f t h e reject i o n o f h i s OIC. By l et t er d at edDecem

b er 7 , 2 0 1 7 , th e Ap p eal s Offi ce i n fo rm edp et i t io n er t hati th ads u st ai nedth e reject i o n o f h i s OIC, ex p l ai n i n g i n rel ev an tp art : “ Y o u r Do ub tas t o Li ab i l i ty Offer i n Co m p ro m i s e p ro p o s al i s reject edi n fu l l . Th e Offi ce o f Ap p eal s d et erm i n edth at p arto f t he l i ab i l i ty

[fo r t ax ab l e p eri o d s en d in g i n 2 0 1 0] co u l d b e redu ced , b u t d o i n g s o req u i redy o u t o s i gn an Offer i n Co m p ro m i s e wi thd rawal fo rm .” Pet i t io n er d i dn o twi th draw h i s OIC. IV. No t i ce o f Fed eral Tax Li en an dAdm i ni s trat i v e Pro ceed i n gs In Feb ru ary

2 0 1 8 , aft er d et erm i n i n g th atp et i t i o n er’ s fi nan ci al s t an di n g h ad i m p ro v ed , th e IRS rem o v edh i s acco u n t fro m cu rren t l y n o t co ll ect i b l e s t atu s , fi l ed
a n o t i ce o f Fed eral t ax l i en i n res pect o f t he u np ai d TFRPs , an ds en tp et it i o n er
n o t i ce o f t h atact i o n an do f h i s ri g h tt o req u es tan ad m in i s trat i ve h eari ng wi th th e Ap p eal s Offi ce. Pet i ti o n er s ub m i t teda t i m el y req u es tfo r an ad m i n i s trat i v e- 6
-

[* 6 ] h eari n g an das s ert edth ath e s ho u l d n o t b e h el d l i ab l e fo r t h e TFRPs . He d i d
n o trai se an y

o th er i s su e o r o ffer a co l l ect i o n al t ern at i v e t o th e l i en . Th e Ap p eal s Offi ce co n cl u d edth atp et it i o n er h ada p ri o r o p p o rtu n i ty t o ch al l en g e h i s l i ab i l i ty

fo r th e TFRPs an d was b arredfro m reas s ert i n g t h atcl ai m i n
acco rd an ce wi th s ect io n 6 3 30 (c)(2 )(B). In the ab s en ce o f an y o th er i s s u e fo r
rev i ew t h e Ap peal s Offi ce i s s u eda n o t i ce o f d et erm i n at io n t o p et i ti o n er s u s t ai n i n g th e l i en . V. Pet i t i on an d Rem an dt o th e Ap p eal s Offi ce Pet i t i o ner i n v o k edth e Co u rt ’ s juri s d i ct i o n b y fi l in g a t i m el y

p et i ti o n fo r
rev i ew o f th e n o t i ce o f d et erm i n at i o n . Inth e p et i t io n an dthro u g h o u tth i s act i o n p et i t i o n er h as as sert ed th at h e s h o u l dn o tb e co n si d ereda res po n s i b l e p ers o n wh o i s s ub jectt o TFRPs i n res pect o f ACAS’ u np ai dem p l o ym en tt ax es . Aft er t h e p et i t io n was fi l edth e Co urtg ran t edres p o nd en t’ s m ot i o n t o
rem an d t h e cas e t o th e Ap p eal s Offi ce fo r fu rt h er p ro ceed in g s t o co n s i der wh et her th e IRS h adp ro p erl y

as ses s edth e TFRPs . Th e Ap p eal s Offi ce rev i ewed th at
m at t er an di ss u ed a d et ai l eds up p l em en t al n o ti ce o f d et erm i n at i o n s u m m ari zi n g th e b ack gro un dfact s o u t l i nedab o v e an dco n cl u d i ng th at th e TFRPs were p ro p erl y
as s es s ed
.- 7
-

[* 7 ] Di s cu ss i o n Su m m ary ju d g m en ti s i n t en d edt o ex p ed i te l i t i g at i o n an d av o i du n n eces s ary
an d ex p en s i ve t ri al s. Fl a. Peach Co rp . v . Co m m i s s i o ner, 9 0 T.C. 6 7 8 , 6 8 1 (1 9 8 8 ). Ei th er p art y

m ay m ov e fo r s u m

m ary ju d g m en tupo n al l o r an y p arto f t he l eg al i s su es i n co n tro v ers y . Ru l e 1 2 1 (a). Su m m ary ju d g m en ti s warran t edo n l y i f t h ere i s n o g en u in e d i s p u t e o f an y m at eri al factan dth e m ov i ng p art y i s en t i t l edt o ju d g m en tas a m at t er o f l aw. Ru l e 1 2 1 (b ); Naft el v . Co m m i s s i o n er, 8 5 T.C. 5 2 7 , 5 2 9 (1 98 5 ). Th e m o vi ng p arty

b ears th e b u rd en o f p ro v i n g th atn o g en u i n e d i sp u t e ex i s ts
as t o an y m at eri al fact an dth ath e i s en t i t l edt o ju d g m en tas a m at t er o f l aw. See FPL Grp ., In c. & Sub s . v . Co m m i s s i o n er, 1 15 T.C. 5 5 4 , 5 5 9 (2 0 0 0 ); Bo ndv . Co m m i s s i o n er, 1 0 0 T.C. 3 2 , 3 6 (1 9 9 3 ); Naft el v . Co m m i ss i o ner, 8 5 T.C. at5 2 9
. In d eci d i n g wh et her t o g ran t s umm ary ju d g m en tth e fact ual m at eri al s an d i n feren ces drawnfro m

th em m us tb e co n s i d eredi n th e l ig htm o s t fav o rab l e t o the
n o n m o v i n g p art y . See FPL Grp ., In c. & Sub s . v . Co m m i ss i o ner, 1 1 5 T.C. at5 5 9
. Wh ere a m o t i o n fo r s u m

m ary ju d g m en ti s p ro p erl y

s upp o rt ed , h o wev er, t h e
n o n m o v i n g p art y

m u s t s etfo rt h s p eci fi c fact s s h o w i n g th atth ere i s a g en u i n e d i s p u t e fo r t ri al . Ru l e 1 2 1(d ).- 8
-

[* 8 ] Res p o n d en t ’ s m ot i o n fo r s u m m ary ju d gm en ti s wel l fo u n d ed b as edo n th e
av erm en t s th erei n , th e s up p o rt i n g d ecl arat i o n , an drel at ed ex hi b i t s . Al th o u g h p et i t i o n er fi l eda res p o n se i n o pp o s i t i o n t o res p on d en t ’ s m o t i o n , h e h as n o t i d en t i fi edan y

m at eri al factth atrem ai n s i n d i s p ut e o r p res en t eda g enu i n e i s s u e fo r tri al
. I. Co ll ect i o n Du e Pro ces s Sect io n 6 3 2 1 p ro v i des th ati f an y p ers o n l i ab le t o p ay

an y t ax n eg l ect s o r refu ses t o p ay

th e s am e aft er d em an d , th e u np ai d am o u n t , i n cl u d i ng an y i n teres t , ad d it i o n t o t ax , o r as ses s ab l e p en al ty , s h al l b e a l i en up on al l p ro pert y an dri g h t s t o p ro p erty b el o n g i n g t o s u ch p ers o n i n fav o r o f t h e Un it ed St at es . Al th o u g h s ect i o n 6 3 2 2 p ro v i d es th at th e l i en i m po s edb y s ect i o n 6 3 2 1 g en eral l y

ari s es wh en th e t ax i s as s es s ed , s ect i o n 6 3 23 (a) p ro v i d es th atth e l i en i s n o tv al i das ag ai n stcert ai n o f th e p ers o n ’ s cred it o rs u n t i l a n o t i ce o f l i en i s fi l edi n acco rd an ce wi th s ect i o n 6 3 2 3 (f). Sect io n 6 3 2 0 (a) p ro v i d es th atth e Co m m i s s io n er s h al l n ot ify

a p ers o n i n wri t in g wh en a n o t ice o f l i en i s fi l edu n d er s ect i o n 6 3 23 an do f t h e p ers o n ’ s ri g h t t o req u es tan ad m i n i s trat i v e h eari n g wi th th e Ap p eal s Offi ce. If a p ers o n m ak es a t i m el y requ es tfo r an ad m in i s trat i v e h eari n g , th e h eari n g wi l l b e h el db efo re an i m p art i al o ffi cer o r em

p lo y ee o f t h e Ap p eal s Offi ce. Sec. 6 3 2 0 (b ). Fo r p u rp o s es- 9
-

[* 9 ] o f s ect i o n 6 3 20 , s ubs ect i o n s (c), (d ), (e), an d(g ) o f s ect io n 6 33 0 g en eral l y ap p ly . Sec. 6 3 2 0(c). Wh en co n du ct i n g ad m i n i s trat i v e h eari n g s i n co l lect i o n m at t ers , th e Ap p eal s Offi ce m u s tv eri fy th atth e req ui rem en t s o f an y ap p li cab l e l aw o r adm i n i s trat i v e p ro cedure h av e b een m eti n p ro ces s i n g the cas e. Sec. 6 3 3 0 (c)(1 ), (3 )(A). Th e Ap p eal s Offi ce al s o m

u stco n s id er an y

i s s u es rai s edb y the p ers o n rel at i n g t o th e
u np ai dt ax o r co l l ect io n act i o n , i n cl ud i n g o ffers o f co l l ect i o n al t ern at i v es , ap p ro p ri at e s p o u s al d efen s es , an dch al len g es t o th e ap p ro p ri at en es s o f t h e
co l l ect i o n act i on . Sec. 6 3 3 0 (c)(2 )(A), (3 )(B). A p ers o n m ay ch al l en g e t h e
ex i s t en ce o r am o u n to f t h e u n d erl y i n g t ax l i ab i l it y i f t he p ers o n d i dn o trecei v e a
n o t i ce o f d efi ci en cy

o r d i dn ot o t h erwi s e h av e an o p po rtu ni ty t o d i s p u t e s u ch t ax l i ab i l i ty . Sec. 6 33 0 (c)(2 )(B). Fi n al l y , th e Ap p eal s Offi ce m u stco n s id er wh et h er th e co l l ect i o n act i o n b al an ces th e n eedfo r effi ci en tco l l ect io n ag ai n s tth e p ers o n ’ s
co n cern th at co l lect i o n b e n o m o re i n tru s i v e th an n eces s ary . Sec. 6 3 30 (c)(3 )(C). Th e Co u rth as juri s di ct i o n u n d er s ect i o n 6 33 0 (d ) t o rev iew ad m i n i s trat i v e d et erm i n at i o n s i n co ll ect i o n act i o n s . Wh ere t h e u n d erl y i n g t ax l i ab i l it y i s p ro p erl y ati ss u e, th e Co u rtwi l l rev iew t h e m at t er o n a d e n o v o b as i s . Go za v . Co m m i s s i o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 8 2 (2 0 0 0). Wh ere t he u n d erl y i n g l i ab i l i ty i s
n o tp ro p erl y ati ss u e, t h e Co u rtwi l l rev i ew t h e ad m i n i st rat i v e d et erm i n at i on fo r- 1 0 -

[* 1 0 ] ab us e o f d i s cret i o n. Id
. Anab u s e o f d i s cret io n o ccu rs i f t he Ap peal s Offi ce
ex erci s es i t s d i s cret io n “ arb i trari l y , cap ri ci o u s l y , o r wi th o u t s ou n d b as is i n facto r l aw.” W o o dral v . Co m

m i s s i o n er, 1 1 2 T.C. 1 9, 2 3 (1 99 9 ). II. TFRPs Sect io n 6 6 7 2 i m

p os es a p en al ty

fo r t h e wi l l fu l fai l ure t o co l l ect , acco u n tfo r,
an d p ay o v er i n co m e an d em p l o ym en tt ax es o f em

p l o y ees . Sect i o n 6 6 7 1 p ro v i d es i n rel ev an tp artth atas s es sab le p en al t i es , i n cl u d i n g TFRPs u n d er s ect i o n 6 6 7 2 , s h al l b e as ses s edan d co l l ect edi n th e s am e m an n er as t ax es ag ai n sta p ers on , i n cl u d i n g an o ffi cer o r em p l o y ee o f a co rp o rat i o n , wh o i s u n d er a du ty t o co m p ly wi th th e req u i rem en t s o f s ect i o n 6 6 7 2
. III. Ch al l en g e t o Un d erl y i n g Li ab i l i ty As p rev i o u sl y

m en ti o n ed , a p ers o n m ay ch al l en ge t h e ex i s t en ce o r am o u n t
o f t h e u n d erl y i n g t ax l iab i l i ty i n a co l l ect i on rev iew p ro ceed i ng i f t h e p ers o n d i d
n o trecei v e a n o t i ce o f d efi ci en cy o r d i dn oto th erwi s e h av e an o p p o rtu n it y t o d i s p u t e s u ch t ax l iab i l i ty . Sec. 6 3 3 0 (c)(2 )(B). Al th o u g h p et i t i on er d i dn o trecei v e
a n o t i ce o f d efi ci en cy , 4 th e Ap p eal s Offi ce d et erm i nedth ath e n ev ert hel es s h adan earl ier o p p o rtu n i ty

t o ch al l en g e h i s l i ab i l it y fo r t h e TFRPs wi th i n t h e m ean i n g o f

4 Th e as s es s m en t an dco l l ect i o n o f TFRPs are n o t s ub ject t o d efi ci en cy p ro cedures . See M as o n v . Co m m i s s i o n er, 1 3 2 T.C. 3 0 1 , 3 17 (2 00 9 ).- 1 1 -

[* 1 1 ] s ect i o n 6 3 30 (c)(2 )(B) an dco n s equ en tl y was b arredfro m

reas s ert i n g th at cl ai m i n th e ad m i n i s trat i v e p ro ceed in g co n cern i n g th e l ien ati ss ue. Res p o n d en tm ai n t ai n s th atp et i t i o n er h adtw o p ri o r o p p o rtu n i t i es t o co n t es t h i s l i ab i l i ty

fo r t h e TFRPs . Fi rs t , wh enh e o b t ai n ed Ap p eal s Offi ce rev i ew o f t h e
n o t i ce o f i n t en tt o l ev y

i ss u edt o h i m

i n 2 01 3 , an da s eco n dt i m e i n 2 0 1 6 an d2 0 1 7 wh en h e s ub m it t edh i s OIC i n res p ecto f t he TFRPs
. 5 Al th ou g h the p h ras e “ o p p o rtu n i ty t o d i s p u t e” i s n o td efi n edi n the Co d e, t h e Secret ary h as p ro m u l g at edreg ul at i o n s reg ard i n g s ect i o n 6 3 3 0 (c)(2 )(B) p u rs u an tt o th e au th o ri ty

p res cri b edi n s ect i o n 7 8 0 5(a). Sect i on 3 0 1
. 6 33 0 -1 (e)(3 ), Q&A-E2 , Pro ced
. & Ad m i n . Reg s . , s t at es i n p ert i n en tp art :

Q-E2 . Wh en i s a t ax p ay er en ti t l edt o ch al l en g e t h e ex i s t en ce o r am o u nto f the t ax l i ab i l i ty s p eci fi edi n th e CDP No t i ce? A-E2 . A t ax p ay er i s en t i t l edt o ch al len g e t h e ex i s t en ce o r am o u nto f the u nd erl y i n g l i ab i l i ty fo r an y t ax p eri o ds p eci fi edo n t h e CDP No t ice i f t he t ax p ay er d i dn otrecei v e a s t atu t o ry n o t i ce o f d efi ci en cy

fo r s u ch l i ab i l i t y

o r d i dn oto th erwi s e h av e an o p po rtu n i ty t o d i s pu t e s u ch l i ab i l i ty . Recei pto f a s t atu t ory n o t i ce o f d efi ci en cy fo r t h i s p u rp os e m ean s recei p ti n t i m e t o p et i t i o n th e Tax Co u rt fo r a red et erm in at i o n o f t h e d efi ci en cy d et erm i n ed i n th e n o t i ce o f d efi ci en cy . Ano p po rtu ni t y t o d is p u t e t h e u n d erl y i n g l i ab i l i ty i n cl u d es a p ri o r o p p o rtu ni t y fo r a co n feren ce wi th Ap p eal s th atwas o ffered ei th er b efo re o r aft er t h e as s es s m en to f t h e l i ab i l it y . * * *

5 Becau s e we ag ree wi th res p o n d en to n the fi rs tp o i n t , we n eedn otco n s i d er th e i m p acto f t h e ad m i ni s trat i v e p ro ceed i n g rel at edt o p et i t io n er’ s OIC.- 1 2 -

[* 1 2 ] In Lewi s v . Co m

m i s s i on er, 1 2 8 T.C. 4 8 , 6 1 (2 0 0 7), t h e Co u rtup h el dan earl ier v ers i o n o f t he reg u l at io n qu o t edab o v e as a reas o n ab l e i n t erp ret at i o n o f
s ect i on 6 3 3 0 i n th e co n t ex t o f t h e as s es s m en tan dco l lect i o n o f a t ax n o ts ub jectt o th e d efi ci en cy

p ro cedu res . Th e Co u rt s o f Ap p eal s t h ath av e rev i ewedth e reg u l at i o n h av e reach edth e s am e co n cl u s i o n . See Ou r Co u n try Ho m e En ters ., In c.
v . Co m m i s s i o n er, 8 5 5 F.3 d7 7 3 , 7 8 7 (7 th Ci r. 2 0 1 7 ); Kel ler Tan kServ s. II, In c. v . Co m m i s s i o n er, 8 5 4 F.3 d1 1 7 8 , 1 1 9 9 (1 0 th Ci r. 2 0 1 7 ); Iam es v . Co m m i s s i on er, 8 5 0 F.3 d1 6 0, 1 6 4 (4 th Ci r. 2 0 17 ). As th e Co u rtex p l ai n edi n Lewi s v . Co m m i ss i o n er, 1 2 8 T.C. at6 0 -6 1 : Ul t i m at el y , wh i l e i ti s p o ss i b le t o i n terp rets ect i o n 6 3 3 0 (c)(2 )(B) t o m ean th atev ery t ax p ay er i s en t i t l edt o o n e o p p o rtun i ty

fo r a p reco l lect i o n ju d i ci al rev i ew o f an u n d erl y i n g l i ab i l i ty , we fi n di tu n l i k el y th atth i s was Co n gres s ’ s i nt en t . As we s ee i t , i f Co n g res s h adi n t en dedt o p recl u d e o n l y tho s e t ax p ay ers wh o p rev io us l y

en jo y edthe o p p o rtu n i ty

fo r ju d i ci al rev i ew o f th e u n d erl y i n g l i ab il i ty

fro m rai s i n g th e u n derl y i ng l i ab i l i ty ag ai n i n a co l l ect i o n rev i ew p ro ceed i n g, the s tatu t e wo u l dh av e b een draft ed t o cl earl y s o p ro v i d e. Th e factth atCo n g res s ch o s e n o tt o u s e s u ch ex p l ici tl an g u ag e l ead s u s t o b el i ev e t h atCo n g res s al s o i n ten d ed t o p recl u d e t ax p ay ers wh o were p rev i o u s ly affo rd eda co n feren ce wi th th e Ap p eal s Offi ce fro m

rai s i n g the u n d erl y i n g l i ab i l i t i es ag ai n i n a co l l ect i o n rev i ew h eari n g an db efo re t h i s Co u rt . Th e reco rdrefl ect s t h atp et i t i o n er was p rev i ou s l y affo rd eda co n feren ce wi t h th e Ap p eal s Offi ce wh enh e requ es t edan do b t ai n edan ad m i n i st rat i v e h eari n g reg ard i n g th e n o t i ce o f i n ten tt o l ev y i s s u ed t o h i m

i n 2 0 1 3 . Al th o u g h p et i t i o n er- 1 3 -

[* 1 3 ] h adth e o pp ortun i ty t o d o s o , h e d i d n o tas kth e Ap p eal s Offi ce t o rev i ew h i s l i ab i l i ty fo r t h e TFRPs . In s tead , h e p ers uad edth e Ap p eal s Offi ce t hati m m ed i at e
co l l ect i o n wo u l dcau s e eco n o m i c h ard s h ip an das a res u l th i s acco u n twas p l aced i n cu rren t l y

n o tco l l ect i b l e s t atu s . Un d er th es e ci rcu m s t an ces th e Ap p eal s Offi ce co rrect l y d et erm i n edth at p et i t i o n er h adan earl i er o pp o rtu n i ty t o ch al l en g e t h e TFRPs wi thi n th e m ean i n g o f
s ect i on 6 3 3 0 (c)(2 )(B). See Bl an dv . Co m m i s s i o ner, T.C. M em o. 2 0 1 2 -8 4 , 2 0 1 2 W L 9 6 7 6 5 1 , at* 7 -* 8 (h o ld i n g th atan equ i val en tl ev y h eari n g wi th the Ap p eal s Offi ce co n s t itu t eda p ri o r o p po rtu n i ty t o d i s p u t e TFRPs u n d er s ect i o n 6 3 3 0 (c)(2 )(B)). Co n s equ en t l y , we s u s tai n th e d et erm i n at i o n o f t h e Ap p eal s Offi ce th atp et i t i o n er was n oten ti t l edt o ch al l en g e h i s l i ab il i ty fo r t h e TFRPs as p arto f th e ad m in i s trat i ve p ro ceed i n g u n d er rev i ew. IV. Veri fi cat i o n --Val i di ty of As s es s m en t s W e n ex tco ns i der wh et h er t h e Ap p eal s Offi ce p ro p erl y v eri fi ed th atth e req u i rem en t s o f an y

ap p l i cab l e l aw o r ad m in i s trat iv e p ro cedu re were m eti n p ro ces s i n g p et i t i o n er’ s cas e. See s ec. 6 3 3 0 (c)(1 ). W e rev i ew t he v eri fi cat i o n req u i rem en tfo r ab u s e o f d i s cret i o n , s ee Gard n er v . Co m m i s s i o n er, 1 4 5 T.C. 1 6 1 , 1 8 3 (2 01 5 ), aff’ d, 7 0 4 F. Ap p ’ x 7 2 0 (9 th Ci r. 2 0 1 7), an dd o s o wi th o u treg ardt o wh et h er t h e t ax p ay er rai s edi tatth e Ap p eal s Offi ce h eari n g , s ee Ho y l e v .- 1 4 -

[* 1 4 ] Co m

m i s si o n er, 1 3 1 T.C. 1 9 7 , 2 0 2 -2 0 3 (2 0 08 ), s up p l em en t edb y 1 36 T.C. 4 6 3 (2 01 1 ). A. Sect i o n 6 7 51 (b )(1 )--Su p erv i s ory Ap pro v al Sect io n 6 7 5 1 (b ) req u i res wri t ten ap p ro v al o f th e i n i t ial p en al ty d et erm i n at i o n b efo re t h e d at e wh en th e t ax p ay er i s fi rs ts en t wri t t en n o t i fi cat i o n o f th e p en al t i es p ro p o sed
. Cl ay v . Co m m i s s i on er, 1 5 2 T.C. 2 2 3 , 2 4 9 (2 01 9 ); s ee al s o Ch ai v. Co m

m is s i o n er, 8 5 1 F.3 d1 9 0 , 2 2 1 (2 d Ci r. 2 0 1 7 ), aff’ g i n p art , rev ’ g i n p artT.C. M em o . 2 0 1 5 -4 2
. InCh ad wi ckv . Co m m is s i o n er, 1 54 T.C. _

_ , _ _ (s l i p
o p . at1 1 -1 7 ) (J an . 2 1 , 2 0 2 0), we recen t l y co nfi rm edth at TFRPs are p en al t i es wi th i n th e s co p e o f s ect i o n 6 7 5 1 (b )(1 ) an das s u ch m ay n o tb e as s es sedu n les s th e i n i t i al d et erm i n at i o n o f s u ch as s es s m en ti s p ers o n al l y ap p ro v ed(i n wri t i n g) b y t h e i m m ed i at e s up erv i s o r o f t he i n di v i du al m ak i n g s u ch d et erm i n at i o n. W e co n cl u d ed th at“ Let t ers 1 1 5 3 were t he d o cu m en t s i n wh ich th e IRS fi rs tfo rm al ly
co m m u n icat edt o * * * [t h e t ax p ay er] i t s d efi n it e d eci s io n t o as sertth e TFRPs .” Id . at_ _ (s li p o p. at1 7 ). Th e reco rds h o ws thato n J an u ary 1 4 , 2 0 1 3 , RO Ru s sel l p rep areda Fo rm 4 1 8 3 reco m

m en d i n g th atTFRPs b e as ses s edag ai n stp et it i on er fo r t he t ax ab l e p eri o d s i n i s s u e an dh er i m m ed i at e s up erv i s or ap p ro v edan d s ig n ed the fo rm th at
s am e d ay . OnJ an u ary

3 0 , 2 0 1 3 , th e IRS s en ta Let t er 1 1 5 3 t o p et it i on er b y- 1 5 -

[* 1 5 ] cert i fi ed m ai l wi th th e ai m o f n o t i fy i n g h i m

o f t h e p ro p o sedTFRP
as s es s m en t s . Th e TFRPs were as s es s edo n J u l y 2 2 , 2 0 1 3. In th e l i g h to f t h e s t ep s o u t l i n edab ov e an dco n s is ten twi th th e Co u rt ’ s
an al y s i s i n Ch ad wi ck , res p o n d en ts at i s fi edth e req u i rem en t s o f s ect i o n 6 7 51 (b ) i n th i s cas e. In p art i cu l ar RO Ru s s el l ’ s i m m ed i at e s up erv i s o r au th o ri zedth e
as s es s m en to f t h e TFRPs i n d i s p u t e b efo re th e IRS fi rs tat t em p t edt o n o t i fy p et i t i o n er (b y

Let ter 1 1 5 3 ) t h atTFRPs wo u l db e i m p o s edag ai n s th i m . See Bl ackb u rn v . Co m

m i s s i on er, 1 5 0 T.C. 2 18 , 2 2 3 (2 0 18 ) (h o l d i n g th atth e ex i s t en ce
o f a p en al ty

ap p ro v al fo rm

i n th e reco rdwas s u ffi ci en tt o es tab l i s h th e s et t l em en t
o ffi cer’ s v eri fi cat i o n o f as s es s m en t s wh en th e ad m i n i s trat iv e reco rdrefl ect s
co m p l ian ce wi th ad m i n i s trat i v e p ro cedu res ). B. Sect i o n 6 6 7 2 (b )(1 )--Preas s es s m en tNo t ice Befo re TFRPs m ay

b e as s es s ed , th e Co m

m i s s io n er n o rm al l y

m u s tm ai l a Let t er 1 1 5 3 t o th e res p o n si b l e p ers o n ’ s l as tkn o wnad dres s ad v is i ng th at a p en al t y wi l l b e as s es s ed
. Sec. 6 6 7 2 (b )(1 ). Al th o u gh th e IRS p ro p erl y m ai l ed Let t er 1 1 5 3 t o p et i ti o n er b y

cert i fi edm ai l , ad dres s edt o h is co rrect (l as t kn o wn ) ad dres s , th e U.S. Po s t al Serv i ce ret urn edi t t o the IRS u n d el i v eredan dm ark ed“ UNCLAIM ED UNABLE TO FORWARD”. Al t h o u g h p et i t i o n er d i d n o t actu al ly recei v e t h e Let t er 1 1 5 3 , i t i s wel l s et t ledthatth e m ai l i ng o f s ect i o n 6 6 7 2 n ot i fi cat io n t o a- 1 6 -

[* 1 6 ] t ax p ay er’ s l as t kn o wnad dres s i s s u ffi ci en tt o ad vi se a res p o n si bl e o ffi cer o f th e as s ert i o n o f a TFRP. See M as o n v . Co m m i s s i o n er, 1 3 2 T.C. 3 0 1 , 3 2 2 -3 2 3 (2 0 0 9) (ci t i n g Hi ck ey

v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9-2 , fo r t h e p ro p o s i t i o n th atwh ere t h e n ot i ce h as b een m ai l edt o th e t ax p ay er’ s l as tkn o wn ad dres s , i ti s
n o tn eces s ary

fo r t h e t ax p ay er t o recei v e i tb efo re th e Co m m i s s i o ner can as s es s a TFRP). V. Co n cl u s i o n To recap i tu l at e, t h e Ap p eal s Offi ce co rrect l y d et erm i n edth atp et i t i o n er was b arred fro m

ch al l en g in g h i s l i ab i l i ty

fo r t h e TFRPs i n acco rd an ce wi th s ect i o n 6 3 3 0 (c)(2 )(B). Pet it i o n er d i dn o trai s e an y o th er i s s u e reg ard i n g th e co l l ect i o n act i on o r p ro po s e an al t ern at iv e s u ch as an OIC o r ani n st al lm en t ag reem en t . Th e Ap p eal s Offi ce p ro p erl y

v eri fi edth atthe req ui rem en t s o f an y ap p li cab le l aw o r ad m i n is trat i v e p ro cedu re were m eti n p ro ces s i n g p et i t i on er’ s cas e an do th erwi s e d i dn o t ab u s e i ts d i s cret i o n . Co n s equ en t l y , th e Co urtwi ll g ran t res p on d en t ’ s
m o ti o n fo r s u m

m ary ju d g m en tan den ter a d eci s i o n s u s t ai n i n g th e co l l ect i on act i on . Anap p ro p ri at e o rd er an dd eci s i o n wi l l b e en t ered
.