1 Unless otherwise indicated, 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.

 T.C. Memo. 2002-267 

 

UNITED STATES TAX COURT

CHARLES G. AND DAPHNE C. M. HALL, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

 Docket No. 2906-02L. Filed October 21, 2002. 

 

Charles G. and Daphne C. M. Hall, pro sese.

Alan J. Tomsic and Karen Lynne Baker, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This matter is before

the Court on respondent’s motion for summary judgment, filed

pursuant to Rule 121.1 Respondent contends that there is no

dispute as to any material fact with respect to this lien action,
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and that respondent’s notice of determination dated January 3,

2002, should be sustained as a matter of law. 

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be

granted with respect to all or any part of the legal issues in

controversy “if the pleadings, answers to interrogatories,

depositions, admissions, and any other acceptable materials,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that a decision may be

rendered as a matter of law.” Rule 121(a) and (b); see

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The

moving party bears the burden of proving that there is no genuine

issue of material fact, and factual inferences will be read in a

manner most favorable to the party opposing summary judgment. 

Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982).

As explained in detail below, there is no genuine issue as

to any material fact, and a decision may be rendered as a matter

of law. We shall grant respondent’s motion for summary judgment.
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Background

A. Petitioners’ Form 1040 for 1998

On or about August 19, 1999, petitioners submitted to

respondent a joint Form 1040, U.S. Individual Income Tax Return,

for the taxable year 1998. On the Form 1040, petitioners listed

their filing status as “Married filing joint return”.

Petitioners entered zeros on applicable lines of the income

portion of their Form 1040, specifically including line 7 for

wages, line 22 for total income, and lines 33 and 34 for adjusted

gross income. Petitioners also entered a zero on line 56 for

total tax. Petitioners claimed an overpayment of $2,333 related

to Federal income tax withholding. Petitioners attached to their

Form 1040 four Forms W-2, Wage and Tax Statement, issued to

petitioners by various employers.

B. Respondent’s Deficiency Notice and Petitioners’ Response

On May 26, 2000, respondent issued to petitioners a joint

notice of deficiency. In the notice, respondent determined a

deficiency of $4,736 in petitioners’ Federal income tax for 1998

and an accuracy-related penalty under section 6662(a) for

negligence or disregard of rules or regulations of $480.53. The

deficiency was based principally on respondent’s determination

that petitioners failed to report the wage income as reported to

respondent by third-party payors on Forms W-2.
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By letter dated June 26, 2000, petitioners wrote to

respondent’s District Director in Las Vegas, Nevada,

acknowledging receipt of the notice of deficiency dated May 26,

2000, and requesting that the notice be withdrawn or that

petitioners be granted an Appeals Office hearing. Petitioners

did not file a petition with the Court challenging the notice of

deficiency. Accordingly, on October 9, 2000, respondent assessed

the determined deficiency and accuracy-related penalty, as well

as statutory interest. On that same day, respondent sent

petitioners a notice of balance due, informing petitioners that

they had a liability for 1998 and requesting that they pay it. 

Petitioners failed to do so.

C. Respondent’s Final Notice and Petitioners’ Response

On February 26, 2001, respondent sent petitioners a Notice

of Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320 (lien notice). The lien notice was issued in respect of

petitioners’ outstanding tax liability for 1998. 

On March 13, 2001, petitioners submitted to respondent a

Form 12153, Request for a Collection Due Process Hearing. 

Petitioners’ request stated that they were challenging the

validity of the assessments for 1998 on the grounds there is no

statute imposing tax liability upon them and they were not served

with a valid notice and demand for payment.
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2 At the time that the petition was filed, petitioners

resided in Las Vegas, Nevada. The envelope bearing the petition

contains a timely U.S. Postal Service postmark dated Jan. 31,

2002. See secs. 6330(d)(1), 7502.

D. The Appeals Office Hearing

On November 16, 2001, Appeals Officer Julie Peterson

conducted an Appeals Office hearing that petitioners attended. 

During the hearing, the Appeals officer provided petitioners with

a Form 4340, Certificate of Assessments, Payments, and Other

Specified Matters, regarding their account for the taxable year

1998. According to a purported transcript of the hearing

prepared by petitioners, petitioners declined to discuss

collection alternatives. Rather, petitioners stated that they

wished to challenge their underlying tax liability.

E. Respondent’s Notice of Determination

On January 3, 2002, respondent sent petitioners a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330. The notice stated that the Appeals Office had

determined that the lien filing was appropriate.

F. Petitioners’ Petition

On February 5, 2002, petitioners filed with the Court a

petition for lien or levy action seeking review of respondent’s

notice of determination.2 The petition includes allegations

that: (1) The Appeals officer failed to obtain verification from

the Secretary that the requirements of any applicable law or
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administrative procedure were met as required under section

6330(c)(1); (2) petitioners never received a notice and demand

for payment or valid notice of deficiency; and (3) petitioners

were denied the opportunity to raise “relevant issues”.

G. Respondent’s Motion for Summary Judgment

As indicated, respondent filed a motion for summary judgment

asserting that there is no dispute as to a material fact and that

respondent is entitled to judgment as a matter of law. In

particular, respondent contends that because petitioners received

the notice of deficiency dated May 26, 2000, they cannot

challenge the existence or amount of their underlying tax

liability for 1998 in this proceeding. Respondent further

contends that the Appeals officer’s review of Form 4340 with

regard to petitioners’ liability for 1998 satisfied the

verification requirement imposed under section 6330(c)(1) and

demonstrates that petitioners were issued a notice and demand for

payment. 

Pursuant to notice, respondent’s motion was called for

hearing at the Court’s motions session in Washington, D.C. 

Counsel for respondent appeared at the hearing and offered

argument in support of respondent’s motion. Although petitioners

did not appear at the hearing, they filed with the Court a

written statement pursuant to Rule 50(c).
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Discussion

A. Statutory Framework

Section 6321 imposes a lien in favor of the United States on

all property and rights to property of a person when a demand for

the payment of the person’s taxes has been made and the person

fails to pay those taxes. Such a lien arises when an assessment

is made. Sec. 6322. Section 6323(a) requires the Secretary to

file a notice of Federal tax lien if the lien is to be valid

against any purchaser, holder of a security interest, mechanic’s

lienor, or judgment lien creditor. Lindsay v. Commissioner, T.C.

Memo. 2001-285.

Section 6320 provides that the Secretary shall furnish the

person described in section 6321 with written notice of the

filing of a notice of lien under section 6323. The notice

required by section 6320 must be provided not more than 5

business days after the day of the filing of the notice of lien. 

Sec. 6320(a)(2). Section 6320 further provides that the person

may request administrative review of the matter (in the form of

an Appeals Office hearing) within 30 days beginning on the day

after the 5-day period. Section 6320(c) provides that the

Appeals Office hearing generally shall be conducted consistent

with the procedures set forth in section 6330(c), (d), and (e).

Section 6330(c) prescribes the matters that a person may

raise at an Appeals Office hearing. In sum, section 6330(c)
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provides that a person may raise collection issues such as

spousal defenses, the appropriateness of the Commissioner's

intended collection action, and possible alternative means of

collection. Section 6330(c)(2)(B) provides that the existence

and amount of the underlying tax liability can be contested at an

Appeals Office hearing if the person did not receive a notice of

deficiency for the taxes in question or did not otherwise have an

earlier opportunity to dispute the tax liability. See Sego v.

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114

T.C. 176, 179 (2000). Section 6330(d) provides for judicial

review of the administrative determination in the Tax Court or a

Federal District Court, as may be appropriate.

B. Summary Judgment

Petitioners challenge the assessments made against them on

the ground that the notice of deficiency dated May 26, 2000, is

invalid. However, the record shows that petitioners received the

notice of deficiency and disregarded the opportunity to file a

petition for redetermination with this Court. See sec. 6213(a). 

It follows that section 6330(c)(2)(B) generally bars petitioners

from challenging the existence or amount of their underlying tax

liability in this collection review proceeding.

Even if petitioners were permitted to challenge the validity

of the notice of deficiency, petitioners’ arguments have no

merit. See Nestor v. Commissioner, 118 T.C. 162, 165 (2002);
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Goza v. Commissioner, supra. As the Court of Appeals for the

Fifth Circuit has remarked: “We perceive no need to refute these

arguments with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984). Suffice it to say that petitioners are

taxpayers subject to the Federal income tax, see secs. 1(a)(1),

7701(a)(1), (14), and that compensation for labor or services

rendered constitutes income subject to the Federal income tax,

sec. 61(a)(1); United States v. Romero, 640 F.2d 1014, 1016 (9th

Cir. 1981).

We likewise reject petitioners’ argument that the Appeals

officer failed to obtain verification from the Secretary that the

requirements of all applicable laws and administrative procedures

were met as required by section 6330(c)(1). The record shows

that the Appeals officer obtained and reviewed a Form 4340 with

regard to petitioners’ taxable year 1998.

Federal tax assessments are formally recorded on a record of

assessment. Sec. 6203. “The summary record, through supporting

records, shall provide identification of the taxpayer, the

character of the liability assessed, the taxable period, if

applicable, and the amount of the assessment.” Sec. 301.6203-1,

Proced. & Admin. Regs.
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Section 6330(c)(1) does not require the Commissioner to rely

on a particular document to satisfy the verification requirement

imposed therein. Roberts v. Commissioner, 118 T.C. 365, 371 n.10

(2002); Weishan v. Commissioner, T.C. Memo. 2002-88; Lindsey v.

Commissioner, T.C. Memo. 2002-87; Tolotti v. Commissioner, T.C.

Memo. 2002-86; Duffield v. Commissioner, T.C. Memo. 2002-53;

Kuglin v. Commissioner, T.C. Memo. 2002-51. In this regard, we

observe that a Form 4340 such as the one relied upon by the

Appeals officer in this case contains all the information

prescribed in section 301.6203-1, Proced. & Admin. Regs. See

Weishan v. Commissioner, supra; Lindsey v. Commissioner, supra;

Tolotti v. Commissioner, supra; Duffield v. Commissioner, supra;

Kuglin v. Commissioner, supra. 

 Petitioners have not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessments or the information contained in the

Form 4340. See Davis v. Commissioner, 115 T.C. 35, 41 (2000);

Mann v. Commissioner, T.C. Memo. 2002-48. Accordingly, we hold

that the Appeals officer satisfied the verification requirement

of section 6330(c)(1). See, e.g., Nicklaus v. Commissioner, 117

T.C. 117, 120-121 (2001).

Petitioners also contend that they never received a notice

and demand for payment for 1998. The requirement that the 
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Secretary issue a notice and demand for payment is set forth in

section 6303(a), which provides in pertinent part:

SEC. 6303(a). General Rule.-–Where it is not

otherwise provided by this title, the Secretary shall,

as soon as practicable, and within 60 days, after the

making of an assessment of a tax pursuant to section

6203, give notice to each person liable for the unpaid

tax, stating the amount and demanding payment thereof. 

* * *

The Form 4340 that the Appeals officer relied on during the

administrative process shows that respondent sent petitioners a

notice of balance due on the same date that respondent made

assessments against petitioners for the tax and accuracy-related

penalty determined in the notice of deficiency. A notice of

balance due constitutes a notice and demand for payment within

the meaning of section 6303(a). See, e.g., Hughes v. United

States, 953 F.2d 531, 536 (9th Cir. 1992); Weishan v.

Commissioner, supra; see also Hansen v. United States, 7 F.3d

137, 138 (9th Cir. 1993).

Petitioners have failed to raise a spousal defense, make a

valid challenge to the appropriateness of respondent’s intended

collection action, or offer alternative means of collection. 

These issues are now deemed conceded. Rule 331(b)(4). Under the

circumstances, we conclude that respondent is entitled to 
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judgment as a matter of law sustaining the notice of

determination dated January 3, 2002.

In order to give effect to the foregoing,

An appropriate order granting

respondent’s motion and decision

for respondent will be entered.