1 Unless otherwise indicated, all section references are to

(continued...)

T.C. Memo. 2007-120

UNITED STATES TAX COURT

WILLIAM F. MIDDLETON, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 1326-05L. Filed May 10, 2007.

William F. Middleton, pro se.

Katherine Lee Kosar, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HAINES, Judge: Petitioner filed a petition with this Court

in response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination).1 Pursuant to section 6330(d), petitioner seeks
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1(...continued)

the Internal Revenue Code, as amended, and all Rule references

are to the Tax Court Rules of Practice and Procedure. Amounts

are rounded to the nearest dollar.

2 On May 30, 2006, this Court’s order to show cause under

Rule 91(f), dated Apr. 28, 2006, was made absolute, and 

the facts and evidence set forth in respondent’s proposed

stipulation of facts attached as Exhibit A to respondent’s motion

for order to show cause under Rule 91(f), filed on Apr. 27, 2006,

were deemed stipulated pursuant to Rule 91(f)(3) for purposes of

this case. 

review of respondent’s determination. The issues for decision

are: (1) Whether petitioner’s underlying income tax liability is

valid; and (2) whether petitioner was granted an opportunity for

an administrative hearing pursuant to section 6330(b).

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. 

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.2 Petitioner resided in

Mililani, Hawaii, when he filed his petition. 

Pursuant to the Court’s opinion in Middleton v.

Commissioner, T.C. Memo. 2002-164, on March 7, 2003, the Court

entered a decision holding petitioner liable for a deficiency in

Federal income tax of $34,763, as well as an addition to tax

under section 6651(a)(1) and an accuracy-related penalty under

section 6662(a) of $8,691 and $6,953, respectively, for 1991. On

August 28, 2003, respondent assessed the deficiency, addition to

tax, penalty, and interest for 1991. 
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On May 1, 2004, respondent mailed petitioner a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing (notice

of levy), with respect to 1991. On May 9, 2004, petitioner

submitted Form 12153, Request for a Collection Due Process

Hearing. In his request, petitioner stated he disagreed with the

amount of the tax liability and his attorney, Randall Bailey (Mr.

Bailey), was prepared to negotiate an offer in compromise. 

On May 21, 2004, respondent mailed a letter in response to

petitioner’s request for an administrative hearing, in which

respondent stated: “Thank you for your inquiry dated May 9,

2004. We are investigating and will reply by Aug. 25, 2004”. On

July 14, 2004, respondent mailed another letter to petitioner

informing him that respondent’s Appeals Office would notify him

of the date and time of his administrative hearing.

On December 21, 2004, respondent’s Appeals Office mailed

petitioner and Mr. Bailey the notice of determination sustaining

the notice of levy. In the notice of determination, Settlement

Officer Karen O’Neal found:

In our letter dated September 10, 2004, and our followup letters dated October 28, 2004 and November 17,

2004, we asked you to contact us to schedule your

Collection Due Process hearing. Since you did not

contact our office, you offered no alternative to the

proposed collection action. Therefore, we made our

decision based upon the information in your case file

and computer transcripts of your account history. 
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In response to the notice of determination petitioner filed

his petition with this Court on January 21, 2005. Paragraph 4 of

the petition stated:

My tax matters are being handled by Mr. Randall Baily 

* * *, and is attorney of record. Brief Background [in the

notice of determination] is incorrect Mr. Baily did contact

Karen O’Neal (Employee ID No 91-07370) Left Message. Ms.

O’Neal return[ed][his] call and left [a] message. Mr. Baily

faxed information to Ms. O’Neal. Further Mr. Baily asked

that case be put in inactive/non-collectable status for now

since I have been disabled per Social Security Determination

as of 10/21/01 and have not been employed since that time. 

* * * . 

OPINION

Petitioner contends respondent failed to prove petitioner’s

income tax liability was valid or allow him an opportunity for an

administrative hearing within the meaning of section 6330(b). 

Consequently, petitioner contends respondent’s determination to

proceed with the collection action was erroneous and an abuse of

discretion.

Petitioner disputed his 1991 income tax liability in

Middleton v. Commissioner, supra, and the Court found him liable

for the deficiency in tax, addition to tax, and penalty that

respondent assessed on August 28, 2003. Therefore, petitioner is

precluded from contesting his 1991 income tax liability. See

sec. 6330(c)(2)(B); Behling v. Commissioner, 118 T.C. 572,

576-577 (2002). 

Where the validity of the underlying tax liability is not

properly at issue, the Court will review the Commissioner’s
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determination for abuse of discretion. Sego v. Commissioner, 114

T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181

(2000). The abuse of discretion standard requires the Court to

decide whether the Commissioner’s determination was arbitrary,

capricious, or without sound basis in fact or law. Woodral v.

Commissioner, 112 T.C. 19, 23 (1999); Keller v. Commissioner,

T.C. Memo. 2006-166; Fowler v. Commissioner, T.C. Memo. 2004-163. 

Petitioner contends he was not given an opportunity for an

administrative hearing pursuant to section 6330(b). Generally,

if a taxpayer requests an administrative hearing, the hearing

will be held with the Commissioner’s Appeals Office. Sec.

6330(b); sec. 301.6330-1(d)(1), Proced. & Admin. Regs. An

administrative hearing will be conducted by an employee or

officer of Appeals who, before the first hearing under section

6320 or section 6330, had no involvement with respect to the tax

for the tax period to be covered by the hearing, unless the

taxpayer waives this requirement. Sec. 6330(b)(3). An

administrative hearing may, but is not required to, consist of a

face-to-face meeting, one or more written or oral communications

between an Appeals officer or employee and the taxpayer or the

taxpayer’s representative, or some combination thereof. Sec.

301.6330-1(d)(2), A-D6, Proced. & Admin. Regs.

In determining whether petitioner received an administrative

hearing, the Court considers section 301.6330-1(d)(2), A-D7,
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Proced. & Admin. Regs., which provides:

The taxpayer must be offered an opportunity for a

hearing at the Appeals office closest to taxpayer’s

residence, * * * . If that is not satisfactory to the

taxpayer, the taxpayer will be given an opportunity for

a hearing by correspondence or by telephone. If that

is not satisfactory to the taxpayer, the Appeals

officer * * * will review the taxpayer’s request for a

CDP hearing, the case file, any other written

communications from the taxpayer * * * and any notes of

any oral communications with the taxpayer or the

taxpayer’s representative. Under such circumstances,

review of those documents will constitute the CDP

hearing for the purposes of section 6330(b). 

At trial, petitioner admitted he was aware Ms. O’Neal was

respondent’s representative handling his administrative hearing

request before the receipt of the notice of determination. 

Petitioner asserted in his petition and testified that Mr. Bailey

was in contact with Ms. O’Neal and Mr. Bailey attempted to have

Ms. O’Neal place petitioner in noncollectible status and faxed

some materials to her. 

The record is clear, contrary to the statement in the notice

of determination, that petitioner’s representative, Mr. Bailey,

contacted Ms. O’Neal. However, petitioner admitted that he

failed to complete a Form 433-A, Collection Information Statement

for Wage Earners and Self-Employed Individuals, which Mr. Bailey

had mailed to him and that Mr. Bailey did not submit an offer in

compromise on his behalf. Moreover, there is no evidence in the

record which supports petitioner’s statement that materials were

faxed to Ms. O’Neal. The only information Ms. O’Neal had
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available to her to make a determination was what was already

contained in the administrative record. 

Petitioner’s testimony clearly demonstrates he was granted

an opportunity for an administrative hearing within the meaning

of section 6330(b). Even though he was not personally in contact

with Ms. O’Neal, his attorney, Mr. Bailey was. Additionally, Ms.

O’Neal’s review of petitioner’s administrative file and computer

transcripts of account reveals that respondent’s determination

was not arbitrary, capricious, or without sound basis in fact or

law. See Leineweber v. Commissioner, T.C. Memo. 2004-17; Mann v.

Commissioner, T.C. Memo. 2002-48; sec. 301.6330-1(d)(2), A-D7,

Proced. & Admin. Regs.

For the foregoing reasons, this Court holds that

respondent’s determination to proceed with collection was not an

abuse of discretion. Because petitioner did not raise a valid

claim, such as a spousal defense or an alternative means of

collection, such claims are deemed conceded. See Rule 331(b)(4). 

In reaching these holdings, the Court has considered all

arguments made and, to the extent not mentioned, concludes that

they are moot, irrelevant, or without merit.

To reflect the foregoing,

Decision will be

entered for respondent.