T.C. Memo. 2009-108

UNITED STATES TAX COURT

NOEL NELSON, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13212-05L. Filed May 20, 2009.

Noel Nelson, pro se.

Bradley C. Plovan, for respondent.

MEMORANDUM OPINION

GOEKE, Judge: This case is before the Court for review of a

lien action with respect to petitioner’s unpaid tax liabilities

for 1996 and 2000. The issue for decision is whether the

settlement officer abused his discretion in sustaining the lien. 

We hold that the settlement officer did not abuse his discretion. 
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1Unless otherwise indicated, all section references are to

the Internal Revenue Code.

Background

Some of the facts have been stipulated. The stipulation of

facts and the accompanying exhibits are incorporated by this

reference. Petitioner resided in Maryland at the time of filing

his petition.

Petitioner did not file income tax returns for 1996 and

2000. Respondent prepared substitutes for returns for petitioner

for both years pursuant to section 6020(b).1 Respondent mailed

notices of deficiency for 1996 and 2000 to petitioner’s last

known address, which has been petitioner’s address since at least

1995. Petitioner denies receiving the notices. A copy of the

2000 deficiency notice sent by certified mail was returned to

respondent because petitioner did not claim it timely. 

Petitioner did not petition this Court in response to the

notices, and respondent assessed the income tax deficiencies for

1996 and 2000. Thereafter respondent issued to petitioner

notices of intent to levy for 1996 and 2000. Petitioner did not

request a collection due process hearing (CDP hearing) in

response to either levy notice. Respondent began to levy upon

petitioner’s monthly Social Security benefits. 

On December 17, 2004, respondent issued to petitioner a

notice of Federal tax lien for 1996 and 2000. Petitioner timely
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requested a CDP hearing. The Appeals Office gave petitioner

approximately 2 weeks to submit Form 433-A, Collection

Information Statement for Wage Earners and Self-Employed

Individuals (collection information statement). Petitioner

requested additional time. In a letter dated April 11, 2005, the

settlement officer assigned to petitioner’s case again requested

a collection information statement, advised petitioner that he

had to file all delinquent tax returns before the Appeals Office

could consider an offer-in-compromise, and specifically pointed

out that petitioner had not filed returns for 1997, 1999, 2002,

2003, and 2004. The settlement officer also set a date for a

telephone conference. Petitioner requested a face-to-face

hearing. The settlement officer responded that petitioner would

have a face-to-face hearing if he provided the requested

collection information statement before the scheduled date for

the telephone conference. Petitioner responded by reiterating

his request for a face-to-face hearing and sought additional time

to provide the requested collection information statement.

On the scheduled date for the telephone conference, the

settlement officer called petitioner’s representative and left a

message that he was closing the case because petitioner had not

provided the collection information statement and had not

responded to the scheduled telephone conference. Throughout this

time petitioner’s representative was hospitalized following an
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accident that left him a quadriplegic. On June 17, 2005,

respondent issued a notice of determination sustaining the filing

of a tax lien for 1996 and 2000. Petitioner timely filed a

petition with this Court seeking review. Upon respondent’s

motion, the Court remanded the case to the Appeals Office for a

face-to-face hearing. 

In a letter dated November 21, 2005, the settlement officer

again requested petitioner to provide a collection information

statement, advised petitioner that he had to file all delinquent

tax returns before the Appeals Office could consider an offer-incompromise, and specifically identified the years for which

petitioner had not filed returns. During a hearing on January

18, 2006, petitioner requested an offer-in-compromise based on

both doubt as to collectibility and doubt as to liability. 

Petitioner also stated that he had not received the notices of

deficiency for 1996 and 2000. The settlement officer stated that

the notices were mailed to petitioner’s last known address, which

is petitioner’s current address and has been his address since

1995. The settlement officer explained that petitioner had to

file all delinquent tax returns to qualify for an offer-incompromise. The settlement officer informed petitioner that he

could pursue an offer-in-compromise with respondent’s Compliance

Division once he had filed his delinquent returns and provided a

collection information statement. On February 10, 2006,
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respondent issued a supplemental notice of determination

sustaining the lien for 1996 and 2000.

Discussion

Section 6321 imposes a lien on all property and property

rights of a taxpayer liable for taxes where a demand for the

payment of the taxes has been made and the taxpayer has failed to

pay. Upon request the taxpayer is entitled to an administrative

hearing before an impartial officer or employee of the Appeals

Office. Sec. 6320(b). At the hearing a taxpayer may raise any

relevant issue regarding the collection action including possible

collection alternatives such as an offer-in-compromise. Sec.

6330(c)(2)(A). The taxpayer may also contest the existence or

amount of the underlying tax liability if the taxpayer did not

receive a notice of deficiency for the tax liability or otherwise

have an opportunity to dispute the tax liability. Sec.

6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). 

Following the hearing, the Appeals officer must determine

whether the collection action should proceed. The Appeals

officer must consider: (1) Whether the requirements of

applicable law and administrative procedure have been met, (2)

any issues the taxpayer raised, and (3) whether the collection

action balances the need for efficient collection of taxes with

the taxpayer’s legitimate concern that any collection action be

no more intrusive than necessary. Sec. 6330(c)(3). 
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Where the validity of the underlying tax liability is

properly at issue, the Court reviews the tax liability de novo. 

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the

underlying tax liability is not properly at issue, we review

determinations regarding collection actions for abuse of

discretion. Id. at 182. The abuse of discretion standard

requires the Court to decide whether the Appeals officer’s

determination was arbitrary, capricious, or without sound basis

in fact or law. Mailman v. Commissioner, 91 T.C. 1079, 1084

(1988). 

Petitioner’s underlying tax liabilities for 1996 and 2000

are not at issue because petitioner previously had an opportunity

to dispute them. The parties stipulated that respondent issued

notices of deficiency for 1996 and 2000. Petitioner testified

that he did not receive either notice, and the settlement officer

acknowledged that the 2000 notice was returned to respondent. A

taxpayer’s ability to contest the underlying tax liability

depends on whether the taxpayer received a notice of deficiency

or otherwise had an opportunity to dispute the tax liability. 

Sec. 6330(c)(2)(B). Petitioner had such an opportunity with

respect to the 1996 and 2000 tax liabilities because respondent

also sent notices of intent to levy for both years to petitioner

at his last known address before issuing the lien notice at

issue. Petitioner did not dispute that he received the levy
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notices. Because petitioner had an opportunity to dispute the

underlying tax liabilities in response to the levy notices,

petitioner is precluded from raising his tax liabilities in this

case. See Bell v. Commissioner, 126 T.C. 356, 358-359 (2006);

sec. 301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs. Moreover,

petitioner did not present any records relating to his 1996 or

2000 taxable income at either the CDP hearing or the trial. 

The settlement officer’s determination to sustain the lien

was reasonable in view of petitioner’s repeated failure to

provide the requested collection information statement and to

file his delinquent returns. Petitioner did not raise any

appropriate defenses to the lien or any possible collection

alternatives. Although petitioner requested an offer-incompromise at the CDP hearing, he had not prepared one. In

addition, he did not provide the necessary collection information

statement or file the delinquent returns. Rather, he sought

additional time to prepare the collection information statement

and the returns. 

Petitioner stated that he did not know that he was required

to file the delinquent returns to qualify for an offer-incompromise. However, the settlement officer had previously

advised petitioner in two separate letters that he had to file

all delinquent returns to qualify for an offer-in-compromise and

specifically identified 5 years for which petitioner had failed
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to file in addition to the 2 years at issue. At the hearing the

settlement officer advised petitioner to prepare the delinquent

returns and pursue an offer-in-compromise with respondent’s

Compliance Division. Since the hearing petitioner has taken

steps to resolve his tax liabilities, has retained a new

accountant, and has started to prepare his delinquent returns.

We hold that respondent did not abuse his discretion in

sustaining the lien on the basis of petitioner’s failure to

submit the requested collection information statement and the

delinquent returns. See Giamelli v. Commissioner, 129 T.C. 107,

111-112 (2007); Cavazos v. Commissioner, T.C. Memo. 2008-257;

Gazi v. Commissioner, T.C. Memo. 2007-342; Prater v.

Commissioner, T.C. Memo. 2007-241; Roman v. Commissioner, T.C.

Memo. 2004-20; Rodriguez v. Commissioner, T.C. Memo. 2003-153. 

To reflect the foregoing,

Decision will be entered

for respondent.