T.C. M em o . 2 0 1 8 -7 3

UNITED STATES TAX COURT

DAVID J
. J ARRETT, Pet i ti o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 9 0 25 -1 5 L. Fi l edM ay 3 1 , 2 0 1 8
.

Ch arl es R. M ark h am , fo r p et i ti o n er. An d rea M . Fal d erm ey er, fo r res p o nd en t
.

M EM ORANDUM OPINION CHIECHI, J ud g e: Th is cas e ari s es fro m a p et it i on fi l edi n res p o n s e t o a
n o t i ce o f d et erm i n at i on co n cern i n g co l l ect i o n act i on (s ) u n der s ect i o n 6 3 2 0 an d/ o r 6 3 3 0 o f t h e In t ern al Rev en u e Co d e (n o t ice o f d et erm i n at i o n). W e m us td eci d e- 2

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[* 2 ] wh et h er t o s u s t ai n th e d et erm i n at i o n s i n t h e n o t i ce o f d et erm i nat i o n . 1 W e h o l dth atwe wi ll s u s t ai n th os e d et erm i n at i o n s . Back gro u n d Th e fact s i n th i s cas e, wh i ch th e p art i es s ubm i t t edu n d er Ru l e 1 2 2 , 2 h av e b een st i p u l at edb y

th e p art ies an dare s o fo un d

. Atal l rel ev an tt im es , i n cl u d i n g atth e t i m e h e fi l edth e p et i t i o n i n th i s cas e, p et i t i o n er res i d ed ata cert ai n ad d res s i n W es tHo l l ywo o d , Cal i fo rn i a (W es tHo l l y wo o dad dres s ). Atal l rel ev an tt im es , p et i t i o n er was a m em b er o f t he b o ardo f d i rect o rs o f Ho l lywo o dArt s (Ho ll ywo o d Art s ’ b o ard ), a t ax -ex em p to rg an i zat io n fo rm edi n 2 0 0 6 thatp ro v i d edart s -b as ededu cat i o n an dd ev el o p m en tt o at -ri sk , ru n away , an d h o m el es s y o u th s i n Ho l l yw oo d , Cal i fo rn ia. Th e Ho l l ywo o dArt s ’ b o ard was
res p o n s i b l e fo r the o veral l p o l i cy an dd i rect i o n o f Ho l l y

wo o dArt s . Th e

1 Wh enreferri n g h erei n t o th e d et erm i n at i o ns i n th e n ot i ce o f d et erm in at i o n , we are n o treferri n g t o t h e d et erm i n at i o n i n th atn o t i ce t h at p et i t io n er d i d n o th av e t h e ri gh tt o ch al l en g e t h e u n d erl y i n g t ax l i ab i l it i es . Th e p art i es ag reed b efo re t h i s cas e was s ub m i t t edth atp et i t i o n er h as th e ri g h tt o ch al l en g e t he u n d erl y i n g t ax l i ab i l i t i es . Ho wev er, p et i t i on er co nced es th o se l iab i li t ies o n b ri ef an dad v an ces o n l y cert ai n o t her reas on s i n s up p o rto f h i s p o s i t i o n thatres p o n d en ti s p recl u d ed fro m co ll ect i n g th o s e l i ab i l i t i es . 2 Al l Ru 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 s ect i on , s ubt i t l e, an dch ap t er referen ces are t o the In t ern al Rev en u e Co d e (Co de) i n effect atal l rel ev an tt i m es .- 3

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[* 3 ] Ho l lywo o dArt s ’ b oard h adfi nal ap p ro v al au t h o ri ty o v er t h e o rg an i zat i o n ’ s
an n ual b u d g et
. No ne o f t he m em b ers o f t h e Ho l l yw oo dArt s ’ b o ardrecei v edan y
co m p en s at i o n . F r o m J a n u a r y 2 5 , 2 0 1 0 , u

nt i l J a n u a r y 2 0 1 2 , p e t i t i o n e r w a s t

r e a s u r e r o f t h e H o l l yw o o d A

r t s ’ b o a r d , w h i c h w a s a

n u n c o m p e n s a t e d a n d v o l u nt a r y , b u t n o t h o n o r a r y , p o s i t i o n . A s H o l l y

w o o d A r t s ’ t r e a s u r e r , p e t i t i o n e r h a d a c c e s s t o H o l l y w o o d A r t s ’ a c c o u nt i n g b o o k s a

n d r e c o r d s . P e t i t i o n e r ’ s d

ut i e s i n t h a t p o s i t i o n i n c l u d e d ( 1 ) a s s i s t i n g i n t

h e p r e p a r a t i o n o f H o l l yw o o d A

r t s ’ b u d g e t , ( 2 ) ma

k i n g H o l l yw o o d A

r t s ’ f i n a n c i a l i n f o r ma t i o n a v a i l a b l e t o b o a r d m e m b e r s a n d t h e p u b l i c , ( 3 ) f i l i n g e a c h c a l e n d a

r q u a r t e r F o r m 9 4 1 , Em

p l o y e r ’ s Q u a

r t e r l y F e d e r a l T ax Re t

u r n ( F o r m 9 4 1 ) , ( 4 ) c o l l e c t i n g a

n d p a y i n g o v e r t o t

h e I n t e r n a l Re v e n u e S e r v i c e ( I R S ) t ax e s u n d e r c h a p t e r 2 1 , F e d e r a l I n s u

r a n c e C o nt r i b ut i o n s A c t , a

n d c h a p t e r 2 4 , C o l l e c t i o n o f I n c o m e T ax a t S o u r c e o n W a g e s , o f s u

b t i t l e C , E m

p l o y m e nt T a x e s , 3 ( 5 ) g i v i n g a r e p o r

t a t e a c h m e e t i n g o f t

h e H o l l yw o o d A

r t s ’ b o a r d , a n d ( 6 ) c h a i r i n g H o l l yw o o d A

r t s ’ f i n a n c e c o m mi t t e e . 4

3 W e s hal l refer t o t h e t ax es i m p o s ed b y ch ap t er 2 1 as So ci al Secu ri t y t ax es an d M ed icare t ax es . W e s h al l refer t o th e t ax es wi t h h el du n d er ch ap ter 2 4 as t ax es wi t h h el do n wag es . W e s h al l s o m et i m es refer co l l ect i v el y t o So ci al Secu ri t y

t ax es an d M ed icare t ax es u n d er ch ap t er 2 1 an dt ax es wi t h h el do n wag es u n d er ch ap t er 2 4 o f s ub t i t l e C as em

p l o y m en tt ax es o r t ru s tfu n dt ax es . 4 Ho l l yw o odArt s ’ fi n an ce co m m i t t ee was res p on s ib l e fo r (1 ) d ev el o pi n g an d (co n ti n u ed ...)- 4

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[* 4 ] In J an uary2 0 1 2 , p et i t i o n er was el ect ed ch ai rm an o f t h e Ho l l ywo o dArt s ’ b o ard

. Fo r each o f t he fo l l o w i n g t ax ab l e p eri o d s (s o m et i m es , qu art ers ati s s u e), Ho l lywo o dArt s fi l edwi t h t h e IRS Fo rm 9 4 1 o n th e d at es i n d i cat ed , i n wh i ch i t
s h o wedth e fo ll o wi ng l i ab i l i t y fo r em p l o ym en t t ax es : Q u art er En d ed Dat e Fi l ed Li ab i l it y Sh o wn 3 / 3 1/ 20 1 0 4 / 3 0 / 2 0 10 $ 7,9 3 9 .2 5 6 / 3 0/ 20 1 0 1 0 / 5 / 2 0 10 7 ,4 8 7 .0 4 9 / 3 0/ 20 1 0 1 0 / 3 1 / 2 0 10 9 ,4 1 3 .1 8 3 / 3 1/ 20 1 2 4 / 1 0 / 2 0 13 5 ,5 6 0 .2 4 6 / 3 0/ 20 1 2 4 / 1 0 / 2 0 13 4 ,0 8 0 .7 2 1 2 / 31 / 2 0 12 4 / 1 0 / 2 0 13 9 0 3 .0 3 Ex cep t fo r $ 1 ,3 42 .4 6 wi t h res p ect t o th e qu art er en dedo n M arch 3 1, 2 0 10 , an d $ 4 ,3 5 2 .6 4 wi t h res p ectt o t h e qu art er en dedo n M arch 3 1 , 2 0 12 , Ho l l y wo o dArt s d i dn o t p ay

th e em p l o ym en tt ax l i ab i l i t y s ho wn i n Fo rm 9 41 fo r an y

o f t h e qu art ers ati ss u e b efo re o r wi th t h e fi l in g o f Fo rm 9 4 1 fo r each o f t h o s e qu art ers .

4 (...co n t in u ed ) rev i ewi n g th e o rg an izat i o n ’ s fi s cal p ro cedu res , (2 ) d ev el o p i ng , rev i ewi n g, an d s ub m i t t i n g fo r ap pro v al t o th e Ho l l ywo o dArt s ’ b oard th e o rg an i zat io n ’ s an n u al b u d g et , an d (3 ) rev iewi n g an ds ub m i t t i n g each qu art er t o t h e Ho l l ywo o dArt s ’ b o arda rep o rt s ho wi ng th e o rg an i zat i o n ’ s i n co m e an dex p en s es fo r each s u ch qu art er.- 5
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[* 5 ] On M arch 5 , 2 01 1 , res p on d en tas s i g n eda rev en u e o ffi cer (fi rs trev en u e
o ffi cer) t o (1 ) co l l ectthe em p l o ym en tt ax l i ab i l i t y

wh i ch Ho l lywo o dArt s h ad
s h o wn i n Fo rm

9 4 1 t h at i th adfi l edfo r each o f t h e qu art ers en d edo n M arch 3 1 , J u n e 3 0, an dSep t em

b er 3 0, 2 0 1 0 (s o m et i m es , qu art ers ati s s u e i n 2 0 1 0 ) an dwh i ch i t hadn o tp ai dan d(2 ) i n v es t ig at e wh y Ho l l yw o o dArt s d i dn otfi l e Fo rm 9 4 1 fo r t h e qu art er en d edo n Decem b er 3 1 , 2 0 1 0 (fi rs trev en u e o ffi cer’ s o ri g i n al
as s i g n m en t ). In p erfo rm i n g th atas s i g n m en t , th e fi rs trev en u e o ffi cer d et erm i n ed t h atn o to n l y

h adHo l l ywo o d Art s n o tp ai di ts em pl o ym en tt ax l i ab i li t y

fo r each o f t h e qu art ers en d edo n M arch 3 1 , J u n e 3 0, an dSep t em b er 3 0 , 2 0 10 , wh i ch i th ad
s h o wn i n Fo rm

9 4 1 t h at i th adfi l edfo r each o f t h o s e qu art ers , i tal s o h adn o tp ai d i t s em p l o ym en t t ax l i ab il i ty

fo r each o f t h e qu art ers en d edo n M arch 3 1 , J un e 3 0 , an d Decem

b er 3 1 , 2 0 1 2 (s o m et i m es , qu art ers ati s s u e i n 2 0 1 2 ), wh ich i t h ad
s h o wn i n Fo rm

9 4 1 t h at i th adfi l edfo r each o f t h o s e qu art ers . Co n s eq u en t l y , th e fi rs trev en u e o ffi cer ex p an d edth e fi rs t rev en u e o ffi cer’ s o ri g i n al as si g n m en tt o i n cl u d e t h e quart ers ati s s ue i n 2 0 1 2
. (W e s hal l s o m et i m es refer t o the IRS’
ex am i n at i o n o f Ho l l ywo o dArt s ’ em p l o y m en t t ax l iab i li t y

fo r each o f t h e qu art ers ati ss u e i n 2 01 0 an deach o f t h e qu art ers ati s s u e i n 2 0 1 2 as Ho l l ywo odArt s ’
em pl o y m en tt ax ex am i n at i o n .)- 6

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[* 6 ] As p arto f Ho l l ywo o dArt s ’ em p l o ym en t t ax ex am i nat i o n , th e fi rs trev en u e
o ffi cer m ad e en tri es i n a s o -cal l edi nt eg rat edco l lect i o n s erv i ces h i s t o ry tran s cri p t
m ai n t ai n edwi t h res p ect t o Ho ll ywo o dArt s . Th o s e en t ri es d es cri b edthe fi rs t
rev en u e o ffi cer’ s act iv i t i es du ri n g th atex am i n at i o n an di n cl u d ed n o t es th atth at
o ffi cer h adm ad e d es cri b i n g co m m u n i cat i on s h el d, res u l t s o f t he fi rs trev en u e
o ffi cer’ s i n v es t i g at i o n , co m m en t s o n an y

p ro g res s m ad e, act i o ns t ak en , an dth e
n ex t act i o n s o r s t ep s t o b e t ak en . In Au g u s t 2 0 1 3 , res p o n d en tas s i g n eda d i fferen trev en u e o ffi cer (s eco n d
rev en u e o ffi cer) t o Ho ll ywo o dArt s ’ em p lo ym en tt ax ex am i n at io n . As p arto f Ho l lywo o dArt s ’ em

p l oym en t t ax ex am i n at i o n, t he s eco n d rev en u e o ffi cer m ad e
en t ri es i n th e i n t eg rat edco l l ect i o n s erv i ces h i s to ry tran s cri p tm ai n t ai n edwi t h
res p ectt o Ho l lywo o dArt s . Th o s e en t ri es d es cri b edth e s eco n drev en u e o ffi cer’ s act i vi t i es du ri n g th at ex am i nat i o n an d i ncl u d edn o t es thatth ato ffi cer h adm ad e d es cri b i ng co m

m un i cat i o ns h el d , res u l t s o f th e s eco ndrev en ue o ffi cer’ s i n v es t ig at i o n , co m

m en ts o n an y

p ro g res s m ad e, act i o n s t ak en , an d t h e n ex tact i o ns o r
s t ep s t o b e t ak en . Th e s eco n drev en ue o ffi cer co n cl u d eddu ri ng th e fal l o f 2 01 3 th ati two u l d b e v i rtual l y

i m p o ss i b l e t o co l l ectfro m

Ho l l ywo o dArt s an y

u np ai dem

p l oym en t t ax es fo r t h e quart ers ati ss ue. On Decem ber 1 0 , 2 0 13 , th e s eco n d rev en u e o ffi cer- 7
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[* 7 ] b eg anan i n v es t ig at i o n i n t o as s es s i n g t h e s o-cal l ed t ru stfu n d reco v ery p en al t y
u n d er s ect i o n 6 6 7 2 (s ect i o n 6 6 7 2 p en al t y ) wi t h res p ectt o th os e u np ai dt ax es , wh i ch h e d et erm i n ed t o t al ed$ 17 ,6 0 9 .8 1 as o f t h atd at e. OnDecem b er 1 0 , 2 0 1 3 , t h e s eco n drev en ue o ffi cer i d en t i fi edcert ai n o ffi cers o f Ho l l ywo o dArt s, i ncl u d i ng p et i t i o n er, as p o t en t i al l y l i ab le fo r t h e s ect i o n 6 6 72 p en al t y . On Decem

b er 1 0, 2 01 3 , th e s eco n d rev en u e o ffi cer al s o i s s u eds u m m o n s es t o Ban ko f Am eri ca req u i ri ng i tt o p ro du ce b an ks i g n ature card s , co rp o rat e
res o l ut i o ns , b an k s t at em en t s, an dcan cel edch eck s fo r al l o f Ho l l yw o o dArt s ’ b an k
acco u n t s fo r t he p eri o dJ an u ary 1 th ro u g h Sep tem

b er 3 0 , 2 0 1 0 (Ban ko f Am eri ca
s u m m o n ses fo r 2 0 1 0 ). On Decem

b er 1 2, 2 01 3 , th e s eco n d rev en u e o ffi cer co n t act edp et i t i o n er b y t el ep ho n e (Decem

b er 1 2 , 2 01 3 cal l ) an dad v i s edh i m th at h e wo u l db e recei v i n g
n o t i ce o f t h e Ban k of Am eri ca s u m m o ns es fo r 2 0 1 0. He al s o ex p l ai n edt o p et i t i o n er t h e s ect i o n 6 6 7 2 p en al t y . Wh en t he s eco n d rev en u e o ffi cer at t em p t edt o i n t erv i ew p et i t io n er du ri n g t h e Decem ber 1 2, 2 0 13 cal l , p et i ti o n er d ecl i n edan d i n d i cat edth ath e wan t edt o “ co n s u l to u t si d e co u ns el ” an dt o res ch edu l e t h e i n t erv i ew fo r earl y

2 0 1 4
. Th ereaft er t h ro u g h earl y

Feb ru ary 2 0 1 4 , th e s eco n drev en u e o ffi cer co n t i n u ed h i s i n v es ti g at i o n as p art of t h e Ho l l y wo o dArt s ’ em

p l oym en tt ax ex am i n at i o n ,- 8

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[* 8 ] wh i ch i n cl u d edh i s rev i ew i n J an u ary 2 01 4 o f t he d o cu m en t s th ath e h ad recei v edth atm o n th p u rs u an t t o th e Ban k o f Am eri ca s u m m o ns es fo r 2 0 1 0 . Th e
s eco n drev en u e o ffi cer co n cl u d edo n t h e b as i s o f h i s i n v es t i g at i o n th atp et it i o n er
an d Rach el Ro m an s k i (M s. Ro m an s k i ), Ho l l yw o o dArt s’ ex ecu t i v e d irect o r, were t h e o n ly o ffi cers o f Ho l l ywo odArt s o n wh o m th e IRS s h ou l dco n si der i m p o s i n g t h e s ect i o n 6 6 7 2 p en al t y

fo r each o f t h e qu art ers at i s s u e. Th e s eco n drev en ue o ffi cer d et erm i n edas h e co n ti n u edh i s i n v es ti g at i o n i n earl y 2 0 1 4 t o i s su e ad d i t i on al s u m m o ns es t o Ban ko f Am eri ca req u iri n g i tt o p ro duce b an k s i g n atu re card s , co rp o rat e res o lu t i o n s, b an ks t at em en ts , an d
can cel edch eck s fo r al l o f Ho l l ywo o d Art s ’ b an kacco u n t s fo r each o f t h e qu art ers
en d edo n M arch 3 1 , J u n e 3 0 , an dDecem b er 3 1 , 2 01 2 (Ban ko f Am eri ca
s u m m o n ses fo r 2 0 1 2 ). OnJ an u ary 2 8 , 2 0 1 4 , th e s eco n drev en ue o ffi cer p rep ared fo r m ai l in g th e Ban k o f Am eri ca s umm on s es fo r 2 0 1 2 an dn o t i ces o f t h o se
s u m m o n ses ad d res s edt o Ho l l ywo o dArt s , p et i ti o n er, an dM s . Ro m an s k i,
res p ect i vel y . As o f J an u ary

2 8 , 2 0 1 4, t h e s eco n drev en u e o ffi cer h adco n cl u d ed t hati t
was p ro p er t o i s s u e Let t er n u m b er 1 1 5 3, a s o -cal l edtru s tfu n dreco v ery p en al t y l et t er (Let t er 1 15 3 ), t o each o f p et i t i o n er an dM s. Ro m an s k i

.- 9

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[* 9 ] On Feb ru ary 3 , 2 0 1 4 , an IRS act i n g g ro up m an ag er, T. Ni ch t er (g ro up
m an ag er Ni ch ter), o f t h e g ro up i n wh i ch th e s eco ndrev en u e o ffi cer wo rk ed
co n du ct ed a s o-cal l edas s es sm en ts t atu t e ex p irat i o n d at e (ASED) rev i ew o f t h e p ro g res s o f t h e Ho l l ywo o d Art s’ em p l o ym en t t ax ex am in at i o n . On Feb ru ary 3 , 2 0 1 4 , th e s eco n drev en u e o ffi cer p rep ared an ds ub m i t t edfo r ap p ro v al t o g ro up m an ag er Ni ch t er Fo rm 4 1 8 3 , Reco m

m en d at io n re: Tru s tFu n d Reco v ery Pen al t y As s es s m en t(Fo rm 4 1 83 ), wi t h res pect t o each o f t he q u art ers at i s su e (s o m et i m es , Feb ru ary 3 , 2 0 1 4 Fo rm 4 1 8 3 o r Feb ru ary

3 , 2 0 14 s ect i o n 6 6 7 2 p en al t y reco m

m en dat i o n fo rm ). 5 Th e Feb ru ary 3 , 2 0 1 4 s ect i o n 6 6 7 2 p en al t y
reco m m en d at i o n fo rm

s h o wedp et i t i o n er’ s n am e an dM s . Ro m an s k i ’ s n am e u n d er t h e h ead in g o n th atfo rm , “ Pers o n s ag ai ns twh om th e t ru s tfu n d reco v ery

p en al t y i s b ei n g co n s i d ered ”. Onth e s am e d at e o n wh ich g ro up m an ag er Ni ch t er recei v ed t h e Feb ru ary

3 , 2 0 1 4 Fo rm

4 18 3 , h e ap p ro vedi t
. On Feb ru ary 4 , 2 0 1 4 , Let t er 1 1 5 3 , wh i ch was ad d res s edt o p et i ti o ner’ s l as t kn o wn ad d res s (p et i t i o n er’ s Let t er 1 1 5 3 ), was m ai l edt o h i m b y cert i fi edm ai l

. Sp eci fi cal l y , th e s eco n drev en u e o ffi cer m ai ledt o p et i t i o n er b y cert i fi edm ai l i n a

5 Th e Feb ru ary

3 , 2 0 1 4 Fo rm

4 1 8 3 al s o p ert ai n edt o Ho l l y wo o dArt s ’ qu art er en d edo n Decem

b er 3 1 , 2 0 10 . As d i s cu s sedb el o w, th e s eco n drev en u e o ffi cer d i d n o ti n cl u d e t h atquart er i n an at t ach m en t , Fo rm 2 7 5 1 , Pro p o s edAs s es s m en to f Tru s tFu ndReco v ery

Pen al t y (s o m et i m es , Fo rm

2 75 1 ), t o p et it i o n er’ s Let t er 1 1 5 3 t h ath e m ai l ed t o p et i t i o n er.- 1 0 -

[* 1 0 ] wi nd o wen vel o p e 6 p et i t io n er’ s Let t er 1 1 5 3 , wh ich was ad d res s ed t o h i m at h i s W es t Ho l l ywo o dad d res s . 7 As o f Feb ru ary 4 , 2 0 14 , p et i t i o ner’ s W es t Ho l lywo o dad d res s was h is l as tkno wn ad d res s fo r Fed eral t ax p u rp o s es . 8 At t ach edt o th e wi n d o w en v el o pe i n wh i ch the s eco n drev en u e o ffi cer
m ai l edt o p et i t io n er b y cert i fi edm ai l p et i ti o n er’ s Let t er 1 1 53 was U.S. Po s t al Serv i ce (USPS) Fo rm

3 80 0 , Cert i fi edM ai l Recei p t , o n wh i ch th e cert i fi edm ai l t rack i n g n u m

b er ap p earedan d o n wh i ch “ D av i dJ . J arret t ” was h an dwri t t en aft er t h e fo l lo wi n g p rep ri n t edwo rd s o n th atfo rm : “ Sen tTo ”. Al s o at t ach edt o t h e

6 Becau s e t h e s eco n d rev en u e o ffi cer m ai l edp et it i on er’ s Let t er 1 1 5 3 t o p et i t i o n er i n a wi n d o w en vel o p e, t hatwi n do w en v el o p e d i d n otb ear an ad d res s l ab el

. If p et i t i o n er’ s Let t er 1 1 5 3 h adb een fo l ded an d p l aced i n th e wi nd o w en v el o p e co rrect l y , th e W es tHo l l ywo o dad d res s o f p et it i on er p ri n t edo n th atl et t er t h atth e s eco n drev en u e o ffi cer ad d res s ed t o h i m atth at ad d res s wo u l dh av e b een v i s i b l e th ro u g h t h e wi n d o w i n t h e wi n d o w en v el o p e.

7 On Feb ru ary

4 , 2 0 1 4, t he s eco n drev en u e o ffi cer m ai l edb y cert i fi edm ai l a s ep arat e Let t er 1 1 5 3 t o M s . Ro m an s k i . As d i scu s s edb el o w, th e s eco n d rev en u e o ffi cer t h ereaft er d et erm i n edth atM s . Ro m an s k i s ho u ldn o tb e l iab l e fo r t h e s ect i on 6 6 7 2 p en al t y .

8 Pet i t i on er’ s Let t er 1 1 5 3 m ai l edt o p et it i on er at h i s W es t Ho l lywo o dad d res s s h o wedo n th e fi rs t p ag e, a few i n ch es t o t h e ri g h tan d d o wn fro m p et i t i o ner’ s n am e an dW es tHo l l yw o o d ad d res s , th e fo l l o wi n g “ Bu s in es s Nam e an dAd dres s ”: HOLLYW OOD ARTS c/ o DAVID J ARRETT 5 93 9 HOLLYW OOD BOULEVARD 3 RD FLOOR HOLLYW OOD, CA 9 0 0 2 8 -5 4 0 9 -3 9 1- 1 1 -

[* 1 1 ] wi nd o wen vel o p e i n wh ich th e s eco n drev en u e o ffi cer m ai l edt o p et it i o n er b y cert i fi edm ai l p et i t i o n er’ s Let t er 1 1 5 3 was USPS Fo rm 3 8 1 1 , Do m es t i c Ret u rn Recei p t, o n wh i ch p et i t io ner’ s W es tHo l l yw oo dad d res s was h an d wri t t en . Ab o v e p et i t i o n er’ s h an d wri t ten W es tHo ll ywo o d ad dres s o n t h atUSPS fo rm “ H o l l ywo o d Art s ” was h an dwri t t en , an db el o w th at W es tHo l lywo o d ad d res s “ Dav i dJ arret t ”
was h an d wri t t en . Pet i t i o ner’ s Let ter 1 1 5 3 s t at edi n p ert i n en t p art : Ou r effo rt s t o co l l ectthe fed eral em pl o ym en t o r ex ci s e t ax es due fro m t h e b u s i n es s n am edab ov e h av e n o tres u l t edi n fu l l p aym en t o f t h e l i ab i l i t y . W e t herefo re p ro p o s e t o as ses s a p en al t y ag ai n s t y o uas a p ers on req u i redt o co l l ect , acco u n tfo r, an d p ay o v er wi t hh el d t ax es fo r t h e ab o ve b u s i n es s . Un d er th e p ro vi si o ns o f In t ern al Rev en u e Co d e s ect i o n 6 6 7 2 , i n d i vi du al s wh o were req u i redt o co l lect , acco u n tfo r, an dp ay o v er t h es e t ax es fo r th e b us i n es s m ay b e p ers o n al l y

l iab l e fo r a p en al ty

i f t h e b u s i n es s d o es n ’ t p ay

th e t ax es . Th es e t ax es , d es cri bedi n th e en cl os edFo rm

2 7 51 , co n s i s to f em

p l o y m en tt ax es y ou wi t h h el d(o r s h o u l d h av e wi t h h el d ) fro m th e em p lo y ees ’ wag es (an dd id n’ tp ay ) o r ex ci se t ax es y o uco l l ect ed(o r s h o u l dh av e co l l ect ed ) fro m p at ro n s (an d d i d n ’ t p ay ), an d are co m m o n ly referred t o as “ t ru s tfu n d t ax es .” Th e p en al t y

we p ro p o s e t o as s es s ag ai n s t y o ui s a p ers on al l i ab i l i t y cal l edth e Tru stFu ndReco v ery Pen al t y . Iti s equal t o the u np ai dtru s t fu n dt ax es wh ich the b u s i n es s s t i l l o wes th e g ov ern m en t . If y o u ag ree wi t h t hi s p en al t y

fo r each t ax p eri o ds h own , p l eas e s i g n Part 1 o f t he en cl os edFo rm

2 7 51 an dretu rn i t t o u s i n t h e en cl o s ed en vel o p e. If y o ud o n ’ t ag ree, h av e ad d i t i o n al i n fo rm at io n t o s up p orty o ur cas e, an dwi s h t o try

t o res o lv e t h e m at t er i n fo rm al l y , co n t actth e p ers o n- 1 2 -

n am edatth e t o p o f t h i s l et t er [t h e s eco n drev en u e o ffi cer] wi t h i n t en d ay s fro m th e d at e o f t h i s l et t er. Yo u al s o h av e t he ri g h tt o ap p eal o r p ro tes t t h i s act i on . To p res erv e y o u r ap p eal ri g h t s y o un eedt o m ai l u s y ou r wri t ten ap p eal wi t h i n 6 0 d ay s fro m th e d at e o f t h i s l et t er (7 5 d ay s i f th is l et t er i s ad d res s ed t o y o uo u t s i de t h e Un i t edSt at es ). Th e i n st ru ct io n s b el o w ex p lai n h o w t o m ak e t h e req u es t.

* * * * * * * Yo u m ay ap p eal y o u r cas e t o th e l o cal Ap p eal s Offi ce. * * * Th e s eco n drev en ue o ffi cer at t ach edFo rm 2 7 51 t o p et it i on er’ s Let t er 1 1 5 3
. In th at fo rm , res p o n d en tp ro p o s ed , i n t er al i a, t o as s es s ag ai n s tp et i ti o n er, as a

“ p ers o n res p o n s ib l e”, t h e fo l lo wi n g s ect i o n 6 6 72 p en al t y l i ab il i ty wi t h res p ectt o each o f Ho l l ywo o dArt s ’ qu art ers ati s s ue: 9 [* 1 2 ]

9 Th e s ect i o n 6 6 72 p en al t y l i ab i l i t y fo r each o f Ho l l ywo odArt s ’ qu art ers at i s su e t hatth e s eco n d rev en u e o ffi cer p ro p o s edt o as s es s ag ai ns tp et i t i o n er refl ect edp aym en t s m ad e aft er Fo rm 9 4 1 fo r each o f th o s e qu art ers h adb een fi l ed

.- 1 3 - Q u art er En d ed Sect io n 6 67 2 Pen al t y 3 / 31 / 2 0 1 0 $ 1 ,6 1 7.1 0 6 / 30 / 2 0 1 0 5 ,0 5 6 .0 2 9 / 30 / 2 0 1 0 6 ,2 7 9 .0 9 3 / 31 / 2 0 1 2 1 ,2 0 7 .6 0 6 / 30 / 2 0 1 2 2 ,8 4 3 .0 3 1 2 / 31 / 2 0 1 2 6 0 6 .9 7 To t al 1 7 , 6 0 9 .8 1 On M arch 1 7 , 2 0 1 4 , th e USPS ret u rn edt o th e IRS t h e wi n d o w en v el o p e
co n tai n i n g p et it i o n er’ s Let t er 1 1 5 3 th at t he s eco n d rev en u e o ffi cer h adm ai l edt o p et i t i o n er o n Feb ru ary

4 , 2 0 1 4 , b y cert i fi ed m ai l t o h i s W es tHo ll ywo o dad d res s . Th e USPS h ads t am

p edth e fo l l o wi n g o n th aten v el op e: “ U NCLAIM ED” “

NIXIE -- RETURN TO SENDER -- ATTEM PTED -- NOT KNOW N -- UNABLE TO FORW ARD”. Pet i t i o ner d i dn o trecei v e p et i t i o n er’ s Let t er 1 1 5 3. Co n s equ en t ly , h e d i dn o t h av e a p ri o r o p p o rtu ni t y

t o co n t es twh et her h e i s l i ab l e fo r t h e s ect i o n 6 6 72 p en al t y fo r each o f Ho l l yw o o dArt s ’ qu art ers ati s s u e. 1 0 [* 1 3 ]

1 0 As d i s cu s s edb el o w, p et i t i o n er co n ced es o n b ri ef t h ath e i s a res p o n s i b l e p ers o n an dth ath e act edwi l lfu l l y wi t h i n th e m ean i n g o f s ec. 6 67 2 (a). Ho wev er, as al s o d i s cu s s edb el ow, h e d i s p u tes fo r o t h er reas on s wh et h er h e s h o u l db e req u i redt o p ay

an y u np ai d em

p l o ym en tt ax l i ab i li t y

fo r each o f t h e qu art ers at

(co n ti n u ed ...)- 1 4 -

[* 1 4 ] On Feb ru ary 1 2 an d March 2 6 , 2 01 4 , th e s eco n drev en u e o ffi cer i n terv i ewed M s . Ro m an s ki wi t h res p ectt o h er l iab i l i ty fo r t h e s ect i on 6 6 7 2 p en al t y fo r each o f Ho l l ywo o dArt s ’ qu art ers ati s s ue. Th at rev en u e o ffi cer co n cl u d edo n th e b as i s o f t h os e i n t erv i ews an dn o t edo n M arch 2 6 , 2 0 1 4, i n t h e i n t eg rat edco l l ect i o n
s erv i ces h i s t o ry t ran s cri p t m ai n t ai n edwi th res p ectt o Ho l l ywo odArt s th atM s . Ro m an s k i d i dn o t m eet w hath e ch aract eri zedi n t h attran s cri p tas “ t h e res p o n s i

b i l i t y an dwi l l fu l nes s t es t ” o f s ect i o n 6 67 2 (a). Co n seq u en t l y , h e ch an g edh i s
o ri g i nal co n cl u s i o n as t o M s . Ro m an s k i , b u tn o t as t o p et i t io n er, wh i ch ap p eared i n the Feb ru ary

3 , 2 0 1 4 s ect i o n 6 6 7 2 p en al t y reco m m en d at i o n fo rm

wi th res p ectt o each o f Ho l l ywo o dArt s ’ qu art ers ati s s ue (i

. e., t he Feb ru ary 3 , 2 0 1 4 Fo rm 4 1 8 3 ), t h ath e h adp rep ared an ds ub m i t t edt o g ro up m an ag er Ni ch t er fo r ap p ro v al o n Feb ru ary 3 , 2 0 1 4 , an d wh i ch g ro up m an ag er Ni ch t er ap p ro v ed o n th e s am e d at e. On M arch 3 1 , 2 0 1 4 , th e s eco n d rev en u e o ffi cer n o t edi n th e i n t eg rat ed
co l l ect i o n s erv ices h i s t o ry tran scri p tm ai nt ai n ed wi t h res p ect t o Ho l l yw o o dArt s t h atth e p eri o do f l i m i t at i o n s fo r as s es s i n g t h e s ect i o n 6 6 7 2 p en al t y fo r each o f Ho l lywo o dArt s ’ quart ers ati s su e i n 2 0 1 0 was t o ex p i re o n M ay 5 , 2 0 1 4 . Th at
was b ecau s e h e h ads en tp et i t i o n er’ s Let ter 1 1 5 3 t o p et i t i o n er o n Feb ru ary 4 , 2 01 4
.

1 0 (...co n t i nu ed ) i s su e i n 2 0 1 0
.- 1 5 -

[* 1 5 ] Onth e s am e d at e, t he s eco n d rev en u e o ffi cer al s o n o t edth e fo l l o w i n g i n t h at t ran s cri p t : “ RO [rev en u e o ffi cer] m ay n eedt o d o a q u ickas s es s m en t b ecau s e t h e ASED [i .e., th e as s es s m en ts t atu t e ex p i rat i on d at e] wi l l ex p i re wi t h i n 3 0 d ay s o f 4 / 5 / 1 4 .” On Ap ri l 3 , 2 0 1 4 , th e s eco n drev en u e o ffi cer co n s u l t edIn t ern al Rev en u e M an u al (IRM ) p t . 5 .7 .4 .7
. 2 (Au g . 5 , 2 0 1 3 ), t it l ed“ Res ci s s io n o f Pro p o s ed As s es s m en t ”, b ecau s e h e h adch an g edh i s co ncl u s i o n as t o M s . Ro m an s k i th at ap p earedi n th e Feb ru ary

3 , 2 0 14 Fo rm

4 1 83 . Al s o o n Ap ri l 3 , 2 0 1 4 , th e s eco n d
rev en u e o ffi cer s ub m i t t eda req u es tt o g ro up m an ag er Ni ch t er fo r h i s ap p ro v al (1 ) t o am en dth e Feb ru ary 3 , 2 0 1 4 Fo rm

4 1 8 3 as t o M s . Ro m an s k i o n l y b y p rep ari n g an o t h er Fo rm 4 1 8 3 i n wh i ch h e wo u l d i nd i cat e t hatM s . Ro m an s k i i s n o t l i ab l e fo r t he s ect i o n 6 6 7 2 p en al t y fo r each o f Ho l l y

wo o dArt s ’ quart ers ati s s u e
an d (2 ) t o p rep are an d i s s u e t o M s . Ro m an s k i Let t er 1 1 5 3 W , Pro po s edTru s tFu n d Reco v ery Pen al t y Res ci s s i o n No t i fi cat i o n (Let t er 1 1 5 3 W ), t h e l et t er t hatth e IRS

u s ed to res ci n dan y Let t er 1 1 5 3 th ati th adp rev i o u s l y i s s u ed

. On Ap ri l 3 , 2 0 1 4 , th e d at e o n wh i ch g ro up m an ag er Ni ch t er recei v edth e
s eco n drev en u e o ffi cer’ s req u es tfo r ap pro v al t o am en dth e Feb ru ary 3 , 2 0 14 Fo rm 4 1 8 3 as t o M s . Ro m an sk i o n l y an dt o p rep are an di s s u e t o h er Let t er 1 1 5 3 W (M s . Ro m an s k i ’ s Let ter 1 1 53 W ), t h atg ro up m an ag er ap p ro v edthatreq u es t . Onth e- 1 6 -

[* 1 6 ] s am e d at e o n wh i ch g ro up m an ag er Ni ch t er ap pro v edthe s eco n d rev en u e
o ffi cer’ s req u es t , th atrev en u e o ffi cer p rep ared an am en d edFo rm 4 1 83 wh ich was
am en d edo n l y i n s ofar as i tp ert ai n edt o M s . Ro m an s k i. 1 1 Al t h ou g h t h e s eco n d
rev en u e o ffi cer s h o wed i n th e am en d edFo rm 4 1 8 3 u nd er t h e h ead in g “ Pers o n s ag ai n s twh o m

th e t ru s tfu n d reco v ery

p en al t y i s b ei n g co n s id ered ” p et i t i o n er’ s
n am e an dM s. Ro m an s k i ’ s n am e, h e al s o s h o wedu nd er M s . Ro m an s k i ’ s n am e t h e fo l l o w i n g p ert i n en tl an g u ag e: “ M s . Ro m an s ki i s n o t l i ab le fo r t h e TFRP [t ru s t fu n d reco v ery

p en al t y ] .” On Ap ri l 4 , 2 0 1 4 , th e s eco n drev en u e o ffi cer s i g n edan d s ub m i tt edFo rm 4 1 8 3 am en d edas t o M s . Ro m an s k i o n l y t o g ro up m an ag er Ni ch t er fo r h i s ap p ro v al . Onth e s am e d at e, t h at g ro up m an ag er ap p ro v edth atam en d edFo rm 4 1 8 3 (Ap ri l 4 , 2 0 1 4 am en dedFo rm 4 18 3 ). On Ap ri l 8 , 2 0 1 4 , th e s eco n drev en u e o ffi cer m ai l edM s . Ro m an s k i ’ s Let t er 1 1 5 3 W t o M s . Ro m an s k i

. On Ap ri l 8 , 2 0 1 4 , th e s eco n drev en u e o ffi cer req u es teda qu i ck as s es s m en t
o f t h e s ect i o n 6 6 7 2 p en al t y ag ai n s tp et i t i o n er fo r Ho l l ywo o d Art s ’ qu art ers at

1 1 As was o f t ru e o f t h e Feb ru ary 3 , 2 0 1 4 Fo rm

4 18 3 , th e am en d edFo rm 4 1 8 3 p ert ai n edn o to nl y

t o t h e qu art ers ati s s u e b utal s o t o Ho ll yw o o dArt s ’ qu art er en d edo n D ecem

b er 3 1 , 2 0 1 0 . As d i s cu s sedab o v e, t he s eco n d rev en u e o ffi cer d idn o t i n cl u d e t h atqu art er i n Fo rm 2 7 5 1 at t ach ed t o p et i t i o n er’ s Let t er 1 1 5 3
.- 1 7 -

[* 1 7 ] i s s u e. In d o i n g s o , th e s eco n drev en u e o ffi cer p rep ared an d s ig n ed o n th at d at e Fo rm

2 74 9, Req u es tfo r Tru stFu n dReco veryPen al t y As s es sm en t , p ert ai n i n g t o al l s i x o f Ho l l yw o odArt s ’ qu art ers at i ss u e an da s ep arat e Fo rm 2 8 5 9 , Req u es t fo r Qu i cko r Pro m

p tAs s es s m en t(Fo rm

2 8 5 9 ), p ert ai n i n g t o each o f t h o se s i x qu art ers . Gro up m an ag er Ni ch t er s i g n edeach Fo rm 2 85 9 o n Ap ri l 8 , 2 0 1 4. On Ap ri l 1 6 , 2 0 1 4, res p o n d en tas ses s edth e fo l l o w i ng s ect i o n 6 6 7 2 p en al ty ag ai n s tp et i t i o n er fo r each o f Ho l l ywo o dArt s ’ qu art ers ati s s u e: 1 2

Qu art er En d ed Sect io n 6 67 2 Pen al t y 3 / 31 / 2 0 1 0 $ 1 ,6 2 0.5 6 6 / 30 / 2 0 1 0 5 ,0 6 6 .8 4 9 / 30 / 2 0 1 0 6 ,2 9 2 .5 2 3 / 31 / 2 0 1 2 1 ,2 1 0 .1 8 6 / 30 / 2 0 1 2 2 ,8 4 9 .1 1 1 2 / 31 / 2 0 1 2 6 08 .2 7 To t al 1 7 , 6 4 7 .4 8 Al s o o n Ap ri l 1 6, 2 0 14 , res p o n d en tm ai l edFo rm 3 55 2 , No t i ce o f Tax Du e
o n Fed eral Tax Retu rn , t o p et i t i o n er at h i s l as tkno wn ad d res s (i .e., p et i t i o ner’ s W es tHo l l ywo odad d res s ) fo r each o f Ho l l ywo o dArt s ’ qu art ers ati s s ue.

1 2 Th e s ect i o n 6 6 7 2 p en al t y fo r each o f Ho l l ywo o dArt s ’ qu art ers at i s s u e t h atres p o n d en t as s es s edag ai n s tp et i t i o n er o n Ap ri l 1 6 , 2 0 1 4 , i n cl u d edi n t eres tas p ro v id edb y

l aw.- 1 8 -

[* 1 8 ] On J u ne 5 , 2 0 14 , res p o n d en ti s s u edt o p et i t i o n er a fi nal n o t ice o f i n t en tt o l ev y an dn o t i ce o f y o u r ri g h t t o a h eari ng (n o t i ce o f l ev y ) wi t h res p ectt o th e
res p ect i ve s ect i o n 6 6 7 2 p en al t i es fo r Ho ll ywo o dArt s ’ qu art ers ati ss u e. On J u ne 2 4 , 2 01 4 , res p o n d en ti s s u edt o p et i ti o ner a n o t i ce o f Fed eral t ax l i enfi l i n g an dy o u r ri g h tt o a h eari n g u n d er IRC s ect i o n 6 3 2 0 (n ot i ce o f l i en ) wi t h
res p ectt o t h e res p ect i v e s ect i o n 6 6 72 p en al t ies fo r Ho l lywo o d Art s ’ quart ers at i s su e. On J u ne 2 9 , 2 01 4 , p et i t i o n er s ub m i t t edFo rm 1 2 1 5 3 , Req u es tfo r Co l l ect i o n Du e Pro ces s o r Equ i v al en tHeari n g (Fo rm 1 21 5 3 ), wi th res p ect t o t h e n o t ice o f l ev y an dth e n o t ice o f l i en th ath e h ad recei v ed . Res p o n d en t as s i g n eda s et t l em en t
o ffi cer t o p et i ti o ner’ s Fo rm 1 2 1 5 3
. On J u ne 3 , 2 0 15 , th e s et t l em en to ffi cer s en tp et i t i o n er an dh i s au t h o ri zed rep res en t at i v e a l et t er i n fo rm i n g th em th atres p o n d en t’ s Ap peal s Offi ce i n Lo s An g el es (Ap p eal s Offi ce) h adrecei v edp et i t i o n er’ s Fo rm 1 2 1 5 3 . On t h e s am e d at e, t h e s et t l em en to ffi cer s en tan o t h er l et t er t o p et i t i o n er an dh i s au th o ri zed rep res en t at i v e, i n wh i ch h e d es cri b edth e h eari n g p ro ces s u n d er s ect i o n s 6 3 2 0 an d 6 3 3 0 (Ap p eal s Offi ce h eari n g ) an ds ch edu leda t el ep h o n e Ap p eal s Offi ce h eari n g
o n J u l y 2 , 2 0 1 5 . (W e s h al l refer t o th e Ap peal s Offi ce h eari n g wi th res p ectt o p et i t i o n er’ s Fo rm

1 2 15 3 as p et i t i o n er’ s Ap p eal s h eari n g .)- 1 9 -

[* 1 9 ] On J u ne 1 8 , 2 01 5 , p et i t i o n er’ s au th ori zedrep res en t at i v e s en ta l et t er (J u n e 1 8 , 2 0 1 5 l et ter) t o th e s et t l em en to ffi cer, i n wh ich h e req ues t ed t h atp et i ti o n er’ s Ap p eal s h eari n g b e co n duct edth ro u g h co rres p on d en ce. Th atrep res en t at i v e al s o p ro p os edi n h i s l et t er t hatp et i t i o n er m ai l a ch eckt o the s et t l em en to ffi cer i n an
am ou n tthatwo u l d p ay

al l o f t h e res p ect i v e u npai dem p l o ym en tt ax l i ab i l i t i es fo r Ho l lywo o dArt s ’ quart ers en dedo n M arch 3 1 , J u n e 3 0, an dDecem b er 3 1 , 2 0 1 2
. Pet i t io n er’ s rep res en tat i v e fu rth er s tat edi n h i s J u n e 1 8, 2 0 1 5 l et ter t o th e
s et t l em en to ffi cer t h atp et it io n er d i dn o ti n t en dt o o ffer an y o t h er co l l ect i o n al t ern at i v es du ri n g p et it io n er’ s Ap p eal s h eari n g . On J u ly 2 9 , 2 0 15 , th e s et t l em en to ffi cer res p on d edb y l et ter (J u l y

2 9 , 2 0 1 5 l et t er) t o p et i ti o n er’ s au th o ri zedrep res en t at i v e’ s J un e 1 8 , 2 0 1 5 l et t er. In th e J u l y 2 9 , 2 0 1 5 l et ter, t h e s et t l em en to ffi cer p ro v i d edp et i ti o n er an d h is au t h o ri zed rep res en t at i v e i n s t ru ct i o n s fo r p et i t i o n er’ s p aym en t o f t h e res p ect iv e u np ai d
em pl o y m en tt ax l i ab i l it i es fo r Ho l l ywo o dArt s ’ quart ers en dedo n M arch 3 1 , J u n e 3 0 , an dDecem

b er 3 1 , 2 0 12 , as wel l as fo r i t s quart er en d edo n M arch 3 1 , 2 0 1 0 , b ecau s e o n l y

a v ery s m al l am o u n twas u np ai dfo r t h atqu art er. Th e s et t l em en t
o ffi cer al s o i n cl u d edwi t h h i s J u l y 2 9 , 2 0 1 5 l et t er t h e p ap erwo rkfo r p et i t i o n er t o
co m p l et e i n o rd er t o req u es ta p art i al rel eas e o f t h e l i en t h atres p o n den th adfi l ed , as s etfo rt h i n t h e n o ti ce o f l i en .- 2 0 -

[* 2 0 ] In ad d i t i o n t o th e m at t ers thatp et i t i o n er’ s au th o ri zedrep res en t at i v e i d en t i fi edi n h i s J u n e 1 8 , 2 0 1 5 l et t er t o the s et t l em en to ffi cer, p et i t i o n er rai s edth e fo l l o w i n g i s s u es du ri n g p et i t i o n er’ s Ap peal s h eari n g : h is u n d erl y i n g l i ab i l i t y fo r t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r th e quart ers ati s s u e, t h e v al id i t y o f t h e IRS’ as s es s m en to f t ho s e p en al t i es , wi t h d rawal o f t h e l i en , an dthe ap p ro p ri at en es s
o f t h e p ro p o s ed co l l ect i o n act i o n s. 1 3 As p arto f h i s co n s i d erat i o n o f p et i t io n er’ s Fo rm 1 2 1 5 3 an dth e arg u m en t s ad v an ceddu ri n g p et i t i on er’ s Ap p eal s h eari n g , th e s et tl em en t o ffi cer rev i ewed p et i t i o n er’ s Let t er 1 1 5 3 an di t s m ai l i n g en v el o pe. He al s o rev i ewedIRS t ran s cri pt s an dv eri fi edthatth e ad dres s o n p et i t i o n er’ s Let t er 1 1 5 3 was p et i t i o n er’ s l as tkn o wn ad d res s as o f Feb ru ary 4 , 2 01 4 . Th e s et t l em en t o ffi cer v eri fi edth atth e IRS m ai l edp et i t i o n er’ s Let t er 1 1 5 3 t o p et i t i o n er’ s l as t kn o w n ad d res s v i a cert i fi ed

m ai l o n Feb ru ary

4 , 2 0 1 4, an dth atth e USPS h adm ark edth atl et t er “ u n cl ai m ed ”
an d h adretu rn ed itt o th e IRS o n M arch 1 7 , 2 0 1 4
. As p arto f h i s co n s i d erat i o n o f p et i t io n er’ s Fo rm 1 2 1 5 3 an dth e arg u m en t s ad v an ceddu ri n g p et i t i on er’ s Ap p eal s h eari n g , th e s et tl em en t o ffi cer co n s id ered

1 3 Atn o p o i ntdu ri n g t h e Ap p eal s Offi ce h eari n g d i dp et it i on er’ s au t h o ri zed rep res en t at i v e arg u e t h atth e s eco n drev en u e o ffi cer fai l edt o ex erci s e du e d i l i g en ce b y n o tt ak i n g ad d i t io n al s t ep s t o n o t i fy p et i t i o n er o f t h e p ro p o s ed as s es s m en to f t h e s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati s su e aft er t he USPS ret u rn edt o th e IRS as u n cl ai m edp et i t i o n er’ s Let t er 1 1 5 3
.- 2 1 -

[* 2 1 ] M as o n v . Co m

m is s i o n er, 1 3 2 T.C. 3 0 1 (2 0 0 9), an dco n cl ud ed t hatp u rs u an t t o that cas e t h e as s es s m en t s t h atth e IRS h adm ad e fo r al l o f t h e qu art ers ati s s u e
were v al i dreg ard les s o f wh et h er p et i t i o ner recei v edp et it i o n er’ s Let t er 1 1 5 3
. Th e s et t l em en to ffi cer al s o co n s i d eredas p arto f h i s co ns i d erat i o n o f p et i

t i on er’ s Fo rm 12 1 5 3 an dth e arg u m en t s ad van ceddu ri n g p et i t i o n er’ s Ap p eal s h eari n g p et i ti o n er’ s arg u m en t s (1 ) t h atp et it i o n er was n o ta wi l l fu l o r res p on s i b l e p ers o n s ub

ject t o th e s ect io n 6 67 2 p en al t y an d(2 ) t h ath e s at i s fi ed t h e ex cep t i o n
u n d er s ect i o n 6 6 7 2 (e) (s ect i o n 6 6 7 2 (e) ex cep t i o n ) fro m th atp en al t y

fo r m em b ers
o f t h e b o ardo f d i rect o rs o f t ax -ex em p to rg an izat i o ns wh o are v o l u n t eers . As p arto f h i s co n s i d erat i o n o f p et i t io n er’ s Fo rm 1 2 1 5 3 an dth e arg u m en t s ad v an ceddu ri n g p et i t i on er’ s Ap p eal s h eari n g , th e s et tl em en t o ffi cer rev i ewedth e d o cu m en t s i n th e IRS’ ad m i n i s t rat i v e reco rdrel at i n g t o Ho ll ywo odArt s ’
em pl o y m en tt ax ex am i n at i o n , i n cl u d i n g i t s can cel edch eck s an db an k s tat em en t s
an d n o t es o f i n t erv i ews wi th cert ai n em p l o y ees o f Ho l l yw o o dArt s. Aft er h i s co n s id erat i o n o f p et i t i o n er’ s arg u m en t s an dh i s rev i ew o f p ert i n en t l aw an dcert ai n i n fo rm at i on th atp et it i o n er h adp ro v i d ed , th e s et t lem en to ffi cer d et erm i n edth atp et i t i o n er was n o tp erm i t t edt o d i s p ut e h i s u n d erl y in g l i ab i l i t y fo r t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r th e quart ers ati s s u e. Th atwas b ecau s e,
acco rd i n g t o th e s et t l em en t o ffi cer, p et i t i o n er h adh ada p ri o r o p po rtu ni t y t o- 2 2 -

[* 2 2 ] d i s p u t e t h atu n derl y i n g l i ab i l i t y wh en th e IRS h ad m ai l edh i m p et i t i o n er’ s Let t er 1 1 5 3
. Th e s et t l em en to ffi cer al s o d et erm i n edaft er h i s co n s i d erat i on o f p et i t i o n er’ s arg u m en t s an dh i s rev i ew o f th e IRS’ ad m in i st rat i ve reco rd p ert ai n i n g t o p et i t i o n er’ s l i ab i li t y

fo r t h e res p ect iv e s ect i o n 6 6 7 2 p en al ti es fo r t h e qu art ers ati ss u e an d p ert i nen tl aw t h atth e p eri odo f l i m i t at i o ns fo r t h e IRS’ as s es s m en to f t h e res p ect i ve s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 0 1 0 was ex t en d edt o M ay 5 , 2 01 4 , b ecau s e t h e IRS h adm ai l edp et i t io n er’ s Let ter 1 1 5 3 t o h i m o n Feb ru ary

4 , 2 0 1 4 . Co n s equen t l y , acco rd i n g t o th e s eco n drev en u e o ffi cer, t h e IRS’ as s es s m en t
o n Ap ri l 1 6 , 2 01 4 , o f t h o s e p en al t i es fo r t h e qu art ers at i ss u e i n 2 01 0 was t i m el y . In ad d i t i o n , th e s et t l em en to ffi cer d et erm i nedas a res u l to f h i s co n s i d erat i o n
o f p et i ti o n er’ s arg u m en t s an dh i s rev i ew o f p ert i nen tl aw an d cert ai n i n fo rm at i o n t h atp et i t i o n er h adp ro v id edth atp et i t i o n er (1 ) d i d n o t qu al i fy fo r th e s ect i o n 6 6 7 2 (e) ex cep ti o n an d(2 ) d i d n o tp ro v i d e an y i n fo rm at i o n t o s upp o rtwi t h drawal
o f t h e n o t i ce o f l i en fi l edas s etfo rth i n th e n o t i ce o f l i en an dd i dn o ts at i s fy th e cri t eri a p res cri b edi n s ect i o n 6 3 2 3 (j) fo r wi t h d rawal o f a n ot i ce o f l i en . On Oct o b er 2 2 , 2 01 5 , th e Ap p eal s Offi ce i s s u edt o p et i t i o n er t h e n o t i ce o f d et erm i n at i o n s us t ai n i n g th e fi l i n g o f t h e l ien an dth e p ro p o s edl ev y wi t h res p ect- 2 3 -

[* 2 3 ] t o th e res pect i v e u np ai d s ect i o n 6 6 7 2 p en al ti es fo r t h e qu art ers ati ss u e. 1 4 Th e n ot i ce o f d et erm i n at i on s t at edi n p ert i n en t p art : Su m m ary o f Det erm i n at i o n Yo u h ada p ri o r o pp o rtu n i t y t o ap p eal th e p ro p o sedas s es s m en to f t h e Tru s tFu n d Reco v ery

Pen al t y . Th erefo re we are u n ab le t o co n s i d er i t ag ai n p er In t ern al Rev en u e Co d e s ect i o n 6 3 3 0 . Yo ual s o d ecl i n ed t o o ffer an y co ll ect i o n al t ern at i v es s t at i ng th at y o uweren ’ t l i ab l e. Th erefo re we are u n ab l e t o o ffer an y t o y o u . Th e fi l in g o f th e No ti ce o f Fed eral Tax Li en i s s u s t ai n edas i s th e p ro p os edl ev y b y Co l l ect io n. An at t ach m en tt o t h e n o t i ce o f d et erm i n at i o n s tat edi n p ert i n en t p art :

SUMMARY AND RECOMMENDATI ON Yo u fi leda req u es tfo r a Co l lect i o n Du e Pro ces s (CDP) h eari n g u nd er In t ern al Rev en u e Co d e (IRC) § 6 3 2 0 an d§ 6 3 3 0 fo l l o w i n g t h e recei p t o f Let t er 3 1 7 2 , No t i ce o f Fed eral Tax Li en Fi l i n g an dYo ur Ri g h t t o a Heari n g Un d er IRC 6 3 2 0 . Th e l et ter was i s s u edb y th e Fi el d Co l l ect io n Offi ce i n L o s An g el es , CA, wh ich i s s u edth e n o t i ce o n J u n e 2 4 , 2 0 1 4 wi t h a d ead l i n e t o fi l e a req u es tfo r t h e CDP h eari n g o f J u l y 3 1 , 2 0 1 4. Yo ual so recei v eda Let t er 1 0 5 8, Fi n al No t i ce - No t i ce o f In t en t t o Lev y

an d Yo u r No t i ce o f Yo u r Ri gh tt o a Heari ng , fro m t h e s am e San t a Barb ara Fi el dCo ll ect i o n Offi ce. Th e Let t er 1 0 5 8 was d at edJ u n e 5 , 2 0 1 4 an db y l aw, y ou h adu n ti l J ul y

4 , 2 0 1 4 t o fi le a req u es t fo r a CDP h eari ng . Yo u r Fo rm 1 2 1 5 3 req u es t i n g a CDP h eari n g was recei vedJ u l y 1 , 2 0 1 4 . Th erefo re, i twas a t i m el y req ues t s i nce i twas s ub m i t tedb y th e du e d at e s t at edo n th e Let t er 3 1 7 2 an d wi t h in t h e d ead l in e o f th e L-1 0 5 8
.

1 4 As o f t h e d at e o n wh ich res p o n d en ti s s u edth e n o ti ce o f d et erm i n at i o n , p et i t i o n er h adn oten tered i n to an i n s t al l m en tag reem en t t o s at i s fy th e res p ect i v e u np ai ds ect i o n 6 6 7 2 l i ab i l i t i es fo r t h e qu art ers at i ss u e.- 2 4 -

[* 2 4 ] On y o u r req ues tfo r a CDP h eari n g, y ou s p eci fi cal l y s tat edth aty ou are n o tp ro po s i n g an y

co l l ect i o n al t ern at i v es . A co n feren ce was h el d aty o u r req ues t v i a co rres p o nd en ce. Yo u[r] fi nal co m m u ni cat io n s t at edth aty o uare n o trai s i n g an y co l l ect i o n al t ern at i v es b ecau s e y o u d i s ag reed wi t h the l i ab i l i t y i s s u e fo r t h e p eri o d s en d i n g J u n e 3 0 , 2 0 10 an dSep t em

b er 3 0 , 2 0 1 0
. Ho wev er, y o u d i ds t at e t h aty o uwo u ldb e p ay i n g th e o t h er t wo p eri o d s i n fu l l wi t h i n 6 0 d ay s . Yo ureq u es t eda s t at em en tas t o th e b al an ce du e o n t hes e l i ab i l i ti es . A ch eck o f o u r i n t ern al co m

pu t er s y s t em s i n d i cat es th atth e p eri o ds th aty o u i n t en d o n p ay in g h av e t h e fo l l o wi n g b al an ces du e as o f Oct o b er 3 0 , 2 0 1 5[.] Yo u d i dn o tp ro p os e an y

co l l ect i o n al t ern at i v es b ecau s e y o us t at ed t h aty o uwere n o tl i ab l e fo r t h e Tru s tFu ndReco v ery Pen al t y . A rev i ew o f t h e ad m i n is t rat i v e fi l e i n d i cat es th aty o u h ada p ri or o p p o rtun i t y

t o cl ai m ap p eal [s i c] th e p ro p o s edas s es s m en t , b u ty o u fai l edt o d o s o . Inad d i t i o n , y o u[s ic] a rev i ew o f t h e fi l e cl earl y i n d i cat es th aty o uare a res p o n s i b le p ers o n an dthaty o uwi l l fu l l y fai l edt o p ay

o v er t h e t ru s tfu n dt ax es . Th e d et ai ls o f m y fi n d in g s are o u t l in edb el o w. Th erefo re t h e p ro p o s edl ev y act i o n b y co l l ect i on i s s u s t ai n ed an das i s [s i c] th e fi l i n g o f th e No t i ce o f Fed eral Tax Li en (NFTL). BRI EF BACKGROUND Th e t ax l i ab i li t y

res u l t edwh en y o u were as s es s edth e Tru s tFu n d Reco v ery Pen al t y (TFRP) [s i c] a No n -Pro fi tOrg an izat i o n cal led Ho l l y wo o dArt s . Ho l l ywo o dArt s was en g ag edi n art s edu cat i o n , jo b read in es s p ro g ram s , an di n du s t ry i n t ern s h i ps t o h o m el es s i n di v i du al s . Yo u s erv edas the Ch ai rm an o f t h e o rg an i zat i o n . Ho l l y wo o dArt s h as n o w cl o s edi ts d o o rs . Ori g i n al l y , y o u r cas e was as s i g n edt o an o t h er Set tl em en t Offi cer. Up o n t h e reas si g nm en to f t h e Set t l em en tOffi cer, y o ur cas e was s ub s eq u en t l y

tran sferred t o m e. On J u ne 3 , 2 0 15 , I m ai l eda s ub s t an t i al co n t actl et t er t o y o uan dy o ur rep res en t at i v e. OnJ u l y 1 , 2 0 1 5 , I recei v eda v o i ce m ai l m es s ag e- 2 5 -

fro m y o ur rep res en tat i v e s t at i n g t h ath e wan t edt o h av e a co n feren ce b y co rres po n d en ce. Aft er n u m ero u s ex ch an g es o f fax es an dl et t ers , t h atp ro ces s h as n ow en d ed . Bas edup o n th e fact s b el o w, I fi n dthat y o uare l i ab l e fo r th e TFRP an ds i n ce y o uh av e d ecl i n edt o s ubm i t an y co ll ect i o n al t ern at iv es , I am therefo re req u i redt o s u st ai n th e fi li n g o f t h e NFTL an dth e p ro p os edl ev y act io n b y Co l l ect i o n . DI SCUSSI ON AND ANALYSI S 1 . Veri fi ca ti o n o f Leg a l a nd Pro cedura l Requi rem ents Th e req u i rem en ts o f ap pl i cab l e l aw o r ad m in i s t rat i ve p ro cedures h av e b een m etan d t h e act i o n s t ak en o r p ro p os edwere ap p ro p ri at e u nd er t h e ci rcu m s t an ces .

• I h av e v eri fi edth ro u g h t ran s cri p tan al y s i s th atth e as s es s m en t was p ro p erl y m ad e p er IRC § 6 20 1 fo r each t ax an d p eri o d l i s t edo n the CDP n o t i ce.

• Th e n o t i ce an dd em an dfo r p aym en t l et t er was m ai ledt o y ou r l as tkn o wn ad d res s , wi t h i n 6 0 d ay s o f t h e as s es s m en t , as req u iredb y

IRC § 6 3 0 3.

• Th e No t i ce o f Fed eral Tax Li en (NFTL) was fi l ed o n J u n e 2 0 , 2 01 4 an d as req u i redb y

IRC § 6 3 2 0 , y o u were m ai l eda co p y o f th e NFTL an d a l et ter ad v i s i n g y o uo f y o u r ri g h t t o fi l e a req u es t fo r a CDP h eari n g .

• I h av e v eri fi edth e co l l ect i o n p eri o dal l owedb y s tatu te t o co l lect the t ax h as b een s u s pen d edb y th e ap p ro p ri at e co m

pu t er co d e fo r t h e t ax p eri o d s ati s s u e.

• Th ere i s n o o ffi ce [s i c] i n co m p ro m i s e o r i n s t al l m en tag reem en t p en d i n g o r cu rren t l y

i n effect . Th ere i s al s o n o p en d in g i n n ocen ts p ou s e req u es t
. [* 2 5 ]- 2 6 -

[* 2 6 ] • Th ere i s n o p en di ng b an krup tcy cas e, n o r d i dy o uh av e a p en d i n g b an krup t cy

cas e atth e t i m e o f t he CDP n o t i ce. I h av e h adn o p ri o r i n vo lv em en twi th y o u co ncern i n g t he ap p l i cab le t ax p eri o ds b efo re th i s CDP cas e. Co l l ect i o n fo l l o wedal l l eg al an d p ro cedu ral req u i rem en ts an d t h e act i o n s t ak en o r p ro p o s edwere ap p ro p ri at e u n der t h e ci rcu m s t an ces . 2 . I s sues Ra i s ed by Yo u A. Cha l leng es to the Ex i s tence o f Am ount o f Li a bi l ity : Yo u ch al len g edth e l iab i l i t y i n a n u m b er o f way s : (1 ) As s es s m en tn o twi t h i n t h e St atu t o ry Peri o d - Yo u s tat edth at t h e as s es sm en t s were [s i c] m ad e o n Ap ri l 1 6 , 2 0 1 4 were i l leg al b ecau s e t hat[s i c] au t h o ri t y fo r m ak i n g t h e as s es s m en ts ex p i red o n Ap ri l 1 5 , 2 01 4 p er In tern al Rev en u e Co d e * * * § 6 6 7 2
. Ho wev er, IRC § 6 6 7 2 (b )(3 ) cl earl y s tat es th at t h e s t atu t e fo r m ak i ng th e as s es s m en t s wo n ’ t ex p i re u n t i l at l eas t 9 0 d ay s aft er t h e m ai l i n g o f t h e Let t er-1 1 5 3 p ro p o s i n g th e as s es s m en t . In t h i s i ns t an ce, t h e Let t er-1 1 5 3 was n o t m ai ledu n t i l Feb ru ary 4 , 2 01 4 . Th erefo re, t h e As s es s m en tSt atu t e ex p i rat io n Dat e (ASED) wo u l dn o th av e ex p i redu n t i l M ay 5 , 2 0 1 4
. Th e as s es s m en t s were l awfu l l y an d t i m el y

m ad e. (2 ) Yo u al s o cl ai m edth aty o u d idn o trecei v e p ro p er n o t i fi cat io n o f t h e p ro p o s edas ses s m en t s . A rev i ew o f o u r i n t ern al reco rd s i n d icat ed t h atth e Let t er 1 1 53 was m ai l edt o y o u r l as t kn o w n ad d res s o n Feb ru ary

4 , 2 01 4 . Th i s i s th e ad d res s o f * * * Th at was y o u [r] o ffi ci al ad d res s o f reco rdatth e t i m e th e l et ter was an di t has b een y o u r o ffi ci al Las tKn own Ad d res s i n 2 01 1 . It s t i l l i s y o u [r] cu rren t ad d res s o f reco rd

. Th e Let t er-1 1 5 3 was m ai l edv i a cert i fi edm ai l # 7 0 0 8 -1 3 0 0-0 0 0 0 -6 7 1 9 -8 3 9 4. Th e p hy s ical en v el o pe i s cl earl y m ark ed “ UNCLAIM ED” an di t was retu rn ed t o th e IRS o n M arch 1 7 , 2 0 1 4
.- 2 7 -

[* 2 7 ] (3 ) W i t h reg ardt o the n o n-recei p t o f t h e Let t er-1 15 3 , y o u s t at ed

t h ats i n ce y o u d i d n ’ trecei v e t h e l et t er t h at i twas n ’ t v al id

. Ho wev er, t h e v ery

co u rtcas e t haty o uci t e, M as on v . Co m m is s i o n er, 1 3 2 TC 1 4 [s ic] s t at ed , “ O u r fi n d i n g t hat p et it i o n er (M as o n ) d i dn o t recei v e t h e Let t er 1 15 3 d i dn o t i n v al i d at e t h e t ru s tfu ndp en al t y as s es s m en t.” (4 ) Yo u h av e s tat edthatth e IRS s h o u l d n ’ t h av e as s es s edth e TFRP ag ai n s t y o ub ecau s e y o uwere an u np ai d, v o l u n t eer m em b er o f a b o ardo f a n o n -p ro fi to rg an i zat i o n , Po l i cy St at em en t5 -1 4
. A k ey co nd i t i o n o f t h i s s t at em en ti s thatth e v o l u n t eer d i d n o t p art i ci pat e i n th e d ay -t o -d ay o r fi n an ci al o p erat i o n s o f t he o rg an i zat i o n . Ho w ev er, a rev i ew o f t h e fi n an ci al d ocu m en t s i n d icat ed t h aty o uwere n o to nl y i nv o lv edi n t h e d ay -t o -d ay o perat io n s , b uty o uwere o n e o f t h e k ey d eci s i o n m ak ers . In fact , y o u r rep res en t at i v e s t at ed t h atth ey h ada rub b er s t am p m ad e o f y ou r s i g n atu re ju s ti n cas e y o uweren ’ t i n th e o ffi ce. Cl earl y , y o u were i n v o l v edi n a d ay -t o -d ay o p erat i on o f t h e b us i n es s . (4 ) Ev en tho u g h th ere was am pl e ev i d en ce t o d ecl in e t o co n s i d er y ou r l i ab i li ty

i n t h i s m at t er, I s t i l l rev i ewedth e TFRP fi l e. Yo u t o o k t h e p o s i t i o n t h aty o uwere m erel y an u np ai dv ol un t eer wh o was n o ti n v o l v edi n t h e d ay -t o -d ay o perat i o n o f t h e b us i n es s . Ho wev er, a rev iew o f t he fi l e i n d i cat edth aty ou h el d t h e t i t l e o f Ch ai rm an . Th e reco rdal s o refl ect s thaty o us i g ned ch eck s o n b eh al f o f t h e co rp orat i o n du ri ng th e u np ai d qu art ers i n qu es t i o n . Fu rth erm ore, t h e b an ks t at em en t s i n d i cat e t hat s u ffi ci en tfu n d s were i n p l ace h ady o uel ect edt o p ay th e d el in qu en t t ax l i ab i l it i es . (5 ) Th ere are s t at em en t s fro m o t h er em p l o y ees i n th e fi l e i n d icat i n g th at y o uh ad t h e co n t ro l o v er th e m o ney , fi n an ce[s ] , an dth e h i ri n g an dfi ri n g o f em pl o y ees . (6 ) Yo u r rep res en t at i ve s t at edth atthere was a rub b er s t am p m ad e o f a s i g n ature wh atwas u s edt o s i g n a l oto f t h e ch eck s an dt ax- 2 8 - ret u rn s . Si n ce y o u ’ v e i n d i cat edth aty o uwere ju s t an u npai d v ol un t eer o f th e ch ari t y , wh y wo ul d t h ere h av e b een a n eces s i t y t o h av e a ru b b er s t am

p m ad e o f y o u r s i g n ature? In v i ew o f t h e ab o v e fact s , I cam e t o th e co n cl u s i on th at y o uwo u l d h av e b een d eem ed to b e l i ab l e fo r t h e TFRP ev eni f y o uco u l d h av e rai s edth e i s s ue co n s id eri n g th aty o ud ecl i nedan earl y o p p o rtu n i t y t o d o s o . B. Co l l ecti on Al terna ti v es Offered by Ta x pa y er: In i t i al l y y ou s t at edth aty o uweren ’ ti n t eres t ed i n an y co l lect i o n al t ern at i v es s i n ce y o u d i d n ’ to we t he t ax . Wh il e y o u s t i l l h av e t ak en t h e s am e p o s i t io n wi t h reg ardt o th e t wo l arg e u np ai d l i ab i l i t i es , y o u h av e s t at ed s tat ed[s i c] th atth e co l l ect i o n al tern at i ve i s t o fu l l p ay th e s m al l er am ou n t s o wed wi t h i n 1 4 d ay s o f Sep tem ber 2 8 , 2 0 1 5 , th e d at e o f y ou r l as tco m

m u n i cat io n wi t h t hi s o ffi ce. Si n ce y o uh adb een ad v i sedi n a l et t er/ fax d at edJ u l y 2 9 , 2 01 5 , th atan y

p o rt i o n o f th e t ax l i ab i l i t y co u ld b e p ai do ff atan y t i m e, n o p aym en th as b een recei v ed b y ei t h er t h i s o ffi ce o r t h e Rev en u e Offi cer fo r t h es e am ou n t s . Th erefo re th ere i s n o n eedt o d el ay an y fu rt her t h e m o v i n g fo rwardo f t h i s cas e. Per y o ur req u es t , th e am o u n ts th atare cu rren t l y o wedare l i st edb el o w. Ty

p e o f Tax Peri o d Bal an ce Du e Tru stFu ndReco v ery

Pen al t y 03 / 3 1 / 2 01 0 $ 0 .2 0 Tru stFu ndReco v ery

Pen al t y 06 / 3 0 / 2 01 0 $ 5,2 2 4 .4 4 Tru stFu ndReco v ery

Pen al t y 09 / 3 0 / 2 01 0 $ 6,5 7 5 .9 2 Tru stFu ndReco v ery

Pen al t y 12 / 3 1 / 2 01 0 $ 1 7 .6 6 Tru stFu ndReco v ery

Pen al t y 06 / 3 0 / 2 01 2 $ 1 .0 4 Tru stFu ndReco v ery

Pen al t y 12 / 3 1 / 2 01 2 $ 9 .8 5

To t al Du e: $ 1 1,8 2 9 .1 1 [* 2 8 ]- 2 9 -

[* 2 9 ] Yo u h av e d ecl in edt o co n s i der an y co l l ect i on al t ern at i v es fo r t h e p eri o d s en d i ng 0 6 / 3 0 / 20 1 0 an d0 9 / 3 0 / 20 1 0 b ecau s e y o us t at edth ati n y o u r o p i n i o n y o uare n o tl iab l e fo r t hes e p eri o d s . Yo uh av e al s o s t at edth atth e o t h er fo u r p eri o d s wi l l b e p ai db y

y o u r [s i c] wi t h i n 1 4 d ay s . Th erefo re, t h ere i s n o fu rt h er act i on t o b e d o n e b y th i s o ffi ce wi t h reg ardt o y o u r req u es t s. C. Li en W i thdra w al I co n s id eredwh et h er an y o f t h e cri t eri a fo r al l o wi n g wi t hd rawal o f t h e l i en ex is t edi n y o u r cas e. IRC § 6 32 3 (j) al l o ws th e wi t h d rawal o f a fi l ed NFTL wi t h o u tfu l l p aym en tan dwi th o u tp reju d ice u nd er t h e fo l l o w i n g co nd i t i o ns :

• Th e fi l i n g o f t h e NFTL was p rem atu re o r o t h erwi s e n o ti n acco rd an ce wi t h ad m i n i s t rat i ve p ro cedures o f t h e In tern al Rev en u e Serv i ce,

• Th e t ax p ay er h aden t ered i n t o an i n s t al l m en t ag reem en tu n d er IRC § 6 15 9 t o s at i s fy t h e t ax l i ab i l i ty fo r wh i ch the l i en was i m p o sedb y m ean s o f i n s t al lm en tp aym en t s , u n l es s s u ch ag reem en tp ro v id es o t herwi s e,

• W i t h d rawal o f t h e l i en wi ll faci l i t at e co l l ect io n o f t h e t ax l i ab i l i t y , o r

• W i t h the co n s en to f t h e t ax p ay er o r t he Nat i o n al Tax p ay er Ad v ocat e (NTA), t h e wi t h d rawal o f s u ch n o t i ce wo ul db e i n t h e b es ti n t eres t o f t h e t ax p ay er (d et erm in edb y th e NTA) an d t h e Un i t edSt at es . A NFTL m ay

b e wi t h d rawn i n co nn ect i o n wi t h th e t ax p ay er en t eri n g i n t o an i n s t al l m en tag reem en tb u t , as d es cri b edab o ve, y o ud o n o t qu al ify fo r an i n s t al l m en tag reem en t . M o [r] eo v er, t h ere i s n o th i ng el s e i n th e ad m i ni s trat iv e fi l e t h ati n d i cat es wi t h drawal o f t h e fi l ed l i ens h o u l d b e co n s i d ered an dy o uh av e p ro v i d edn o ad di t i o n al- 3 0 -

i n fo rm at i o n th ati n d icat es th e wi t h d rawal o f t h e fi l edNFTL s h o u l db e co n s i d ered

. E. Other i s s ues tha t Yo u Ra i s ed: Yo u h av e req u es t edth atwe h av e [s i c] i s s u e a p art i al l i en rel eas e wi t h reg ardt o th e NFTL that ’ s o f reco rd . As was ex pl ai nedt o y o ui n th e l et t er/ fax d at edJ u l y

2 9 , 2 0 1 5 , Ap p eal s n ei t h er reco rd s n o r rel eas es NFTL’ s . Yo u were s en tPubl i cat i o n 1 4 5 0 o n h ow t o ap p ly fo r a Cert ifi cat e o f Rel eas e al o n g wi th Pub l i cat i o n 4 2 3 5 wh i ch ad v i s edy o u wh ere s u ch ap pl i cat i o n s h o u l db e s en t. 3 . Ba l a nci ng o f need fo r effi ci ent co l l ecti o n w i th ta x pa y er co ncern tha t the co l l ecti o n a cti o n be no m o re i ntrus i v e tha n neces sa ry . I b al an cedth e co m

p et in g i n teres ti n fi n d i n g th e fi l i n g o f t h e NFTL ap p ro p ri at e as wel l as th e p ro p o s ed l ev y . Yo uh av e p ro p o sed p aym en ti n fu l l of s o m e o f t he l i ab i li t ies , b utp aym en th as n o tb een recei v edy et . Yo uh av e s t at edal s o th aty o uare s ti ll o f t h e o p i n i o n t h aty o uare n o tl i ab l e fo r t h e TFRP i n s pi t e o f t h e ev i d en ce t o th e co n t rary . Ret ai n i n g th e NFTL b al an ces th e n eedfo r effi ci en t co l l ect i o n ag ai ns t y o u r co n cern th ati tb e n o m o re i n t ru si v e t h an n eces s ary . Th e fi l i n g o f t h e NFTL i s s u s t ai n ed , as i s th e p ro po s ed l ev y . Di s cu ss i o n W e s t artb y

s u m m ari zi n g ap p l i cab le p ro v i s i o ns o f t h e Co d e an dp ert i n en t
cas el aw t h at wi l l b e h el pfu l i n o u r co n s i derat i o n o f t h e p art i es ’ res p ect iv e p o s i t i on s wi t h res p ect t o th e IRS’ as s es s m en to f t h e s ect i o n 6 6 72 p en al t i es at i s su e, wh i ch th e Ap p eal s Offi ce d et erm i n edi n th e n o t i ce o f d et erm i n at i on i s v al i d

. [* 3 0 ]- 3 1 -

[* 3 1 ] An em

p l o y er i s req u i redt o wi t h h o ldo r co l l ect fro m an em p lo y ee’ s wag es
an d t h ereaft er “ p ay o v er” t o th e Fed eral Go v ern m en t(Go v ern m en t ) th e em p l o y ee’ s s hare o f (1 ) So ci al Secu ri t y t ax , s ee s ecs . 3 1 0 1(a), 3 1 02 (a); (2 ) M ed i care t ax , s ee s ecs . 3 1 0 1 (b )(1 ), 3 1 02 (a), an d(3 ) Fed eral i nco m e t ax , s ee s ecs . 3 4 0 2 (a)(1 ), 3 4 0 3 . Fed eral t ax es th atan em p l o y er wi t h h o l d s fro m

an em p lo y ee’ s wag es are

“ h el dt o b e a s p eci al fu n d i n tru s tfo r t h e Un i t edSt at es .” Sec. 7 5 0 1 (a). Co n s equ en tl y , th ey

are k n o wn as “ t ru s tfu n d t ax es ”. See Po l l o ckv . Co m m i ss i on er, 1 3 2 T.C. 2 1 , 2 5 n .1 0 (2 0 0 9 ). On e o f t h e m ean s o f en s u ri n g th atthe em p l o y er co l lect s an dp ay s o v er t o the Go v ern m en tth e t ru s t fu n dt ax es i s s ect i o n 6 6 7 2 . See Pu rcel l v . Un it edSt at es , 1 F.3 d9 3 2 , 9 3 6 (9 t h Ci r. 1 9 93 ). Sect i o n 6 6 7 2 (a) p ro v id es i n p ert i n en t p art : “ An y p ers o n req u i redt o co l l ect , tru t hfu l l y acco u n tfo r, an dp ay

o v er an y t ax * * * wh o wi l l fu l l y fai l s t o co l l ects u ch t ax , o r t ru t hfu l l y acco u n t fo r, an dp ay

o v er an y t ax
* * * s h al l * * * b e l i ab l e t o a p en al t y equ al t o t h e t o t al am o un t o f th e t ax * * * n o t
co l l ect ed , o r n otacco u n t edfo r an dp ai d o ver.” As p ert i n en th ere, s ect i o n 6 6 7 1 (a) p ro v id es th atth e s ect i o n 6 6 7 2 p en al t y i s t o b e p ai d up o n n o t i ce an dd em an db y th e Co m m i s s i o n er o f In t ern al Rev en u e (Co m m is si o n er) an di s t o b e as ses s edan d
co l l ect edi n the s am e m an n er as t ax es .- 3 2 -

[* 3 2 ] Li ab i l i t y

fo r t h e s ect i o n 6 6 7 2 p en al ty m ay b e i m p o s ed up o n an y

“ res p o n s i bl e p ers o n ” wh o “ act edwi l l fu l l y i n fai l i n g t o co l l ecto r p ay o v er * * * wi t h h el d t ax es .” Dav i s v . Un i t ed St at es , 9 6 1 F.2 d8 6 7, 8 6 9-8 7 0 (9 t h Ci r. 1 9 92 ). A “ res p o n s i bl e p ers o n ” i s o ne wh o h as th e “ ‘ fi n al wo rdas t o wh atb i l ls s ho u l do r s h o u l dn o t b e p ai d , an d wh en .’ ” Pu rcel l , 1 F.3 dat9 3 6 (qu ot i n g W i l s o n v . Un it ed St at es , 2 5 0 F.2 d3 1 2 , 3 1 6 (9 t h Ci r. 1 9 5 8 )). Fai l ure t o co l l ecto r p ay o v er wi t h h el dt ax es i s

“ wi l l fu l ” wh en i tres u l t s fro m a “ ‘ v ol u n tary , co n s ci o u s an di nt en t i o n al act t o p refer
o t h er cred i t o rs o v er t he Un i t edSt at es .’ ” Id . at9 3 8 (quo t in g Dav is , 9 6 1 F.2 dat 8 7 1 ). Th e l i ab i l i t y o f a res p o n si b l e p ers o n fo r t h e s ect i o n 6 6 7 2 p en al t y i s s ep arat e
an d d i st i n ctfro m t h e u n d erl y i n g tru s tfu n d t ax l i ab i l i t y o f an em pl o y er. See Du n can v . Co m

m is s i o n er, 6 8 F.3 d3 1 5 , 3 1 8 (9 t h Ci r. 1 99 5 ), aff’ g o n t h i s p o i n t , rev ’ g an drem an d i n g o n o t h er p o i n t s T.C. M em o . 1 9 9 3 -3 7 0 ; M as o n v . Co m m i s s i on er, 1 3 2 T.C. at3 2 1 ; So l u co rp , Lt d . v . Co m m i s s io n er, T.C. M em o . 2 0 13 -1 1 8 , at

* 1 2 . Ho w ev er, t h e IRS co l l ect s th e t ot al am o u n to f t h e u n d erl y i n g tru s tfu n dt ax l i ab i l i t y on l y o n ce. See W eb er v . Co m m i s s i o n er, 1 3 8 T.C. 3 4 8 , 3 5 8 (2 0 1 2 ). To en s u re t hatthe t o t al am o u n to f t h e u n d erl y i n g tru s tfu ndt ax l i ab i l i t y i s
co l l ect edo n l y

o n ce, th e IRS cro s s -referen ces p aym en t s ag ai n s tth e t ru s tfu n dt ax l i ab i l i t y of an em

p l o y er an dp aym en t s ag ai n s tth e s ect i o n 6 6 7 2 p en al t y l iab i l i t y o f- 3 3 -

[* 3 3 ] a res po n s i bl e p ers o n , s ee IRM p t . 5 .1 9
. 1 4 .3 .5 (J an . 1 3, 2 0 16 ), an dth o s e p aym en t s u l t im at el y

redu ce t h e am o u n to f t h e s ect i o n 6 6 72 p en al t y l i ab il i ty o f each res p o n s i b l e p ers o n, s ee W eb er v . Co m m i s s i o n er, 1 38 T.C. at3 5 8
. Pet i t i o ner s tat es o n b ri ef: “ [T] h e p et i t i o n er wi l l o n l y b e rai s i n g the i s s u es o f wh et h er o r n o t t h e p et i t i o ner i s n o tl i ab l e du e t o an i m p ro p er n o t ice o r o t h er p ro cedural d efect i n th e [s ect i o n ] 6 6 7 2 as s es s m en t p ro ces s * * * . Th e p et it i o n er i s
n o tg o in g t o b e co n t es t i n g l i ab i l i t y o n th e b as i s o f p ers on al wi l l fu l n es s o r res p o n s i bi l i t y .” W e co n cl u d e t h atp et i t i o ner co n ced es o n b ri ef (1 ) th ath e i s a res po n s i b le p ers o n an dth ath e act edwi l lfu l l y wi t h i n th e m ean i n g o f s ect i o n 6 6 7 2 (a) 1 5 an d (2 ) t h ath e i s n o tco n t es t i n g u n d er s ect i o n 6 3 30 (c)(2 )(B) t h e ex i s t en ce o r t h e
am ou n to f t h e u nd erl y i n g l i ab i li t y fo r t h e res p ect i v e s ect io n 6 67 2 p en al t i es fo r (1 ) t h e qu art ers ati ss u e i n 2 0 10 , an d(2 ) t h e qu art ers ati s s u e i n 2 0 12
. Pet i t i o ner al s o s t at es o n b ri ef t h atth e res p ect i v e s ect io n 6 67 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 01 2 “ h av e n o w b een p ai di n fu ll ”, t h ath e “ co n s i d ers th em
m o otan dwi l l rai s e n o i s s ues i n reg ard s t o t h em wi t h res p ectt o ei t h er l i ab i l i t y o r p ro cedural ly ”, an d t h ath e “ d o es n o tco n s i d er th em t o b e ati s s ue an dwi l l th erefo re
n o tad dres s th em

fu rt h er.” Pet it i o n er ad dedth e fo l l o wi ng fo ot no t e t o t hes e

1 5 Pet i t i o ner d o es n o tt ak e th e p o s i ti o n o n b ri ef, as h e d i ddu ri n g p et i t i o n er’ s Ap p eal s h eari n g , th ath e qu al i fi es fo r t he s ect i o n 6 6 7 2 (e) ex cep t i on . W e co n cl u d e t h atp et i t i o n er h as ab an d o n edt ak i n g an y s uch p o s i t i o n h ere.- 3 4 -

[* 3 4 ] s t at em en t s : “ Th i s i s n o tm ean tt o p recl ud e t h e co u rt fro m ad d res s in g 2 0 1 2 i n an y o f i t s fi n d i ng s i f i ts ees fi t .” W e are u n wi l l i n g t o al l o w p et i t i o n er t o co n ced e an dab an d o n an y arg u m en t reg ard i n g th e s ect i o n 6 6 7 2 p en al t i es fo r t he q u art ers ati s s u e i n 2 0 1 2 an dth en i n t h e s am e b reat h, s o t o s p eak , t o p l ace t ho s e p en al t i es ati s s u e i f t h e Co urtwere t o d eci d e t o i gn ore p et i ti o n er’ s co n ces s io n o f, an dab an d o nm en t o f an y arg u m en t wi t h res p ect t o , th o se p en al ti es . W e co n cl ud e t h at p et it i on er h as co n ced ed , an d ab an do n edad v an ci n g an y arg u m en twi t h res p ectt o , an y o f t h e res pect i v e s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 0 12 . W e s h al l n o tco ns i d er th o s e p en al t i es o r d eci d e an y

qu es t i on s th atm i g h trem ai n wi t h res p ectt o t h em . On b ri ef, p et it i o n er s et s fo rt h the fo l l o wi n g i s s u es fo r u s t o d eci d e reg ard i n g t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r th e quart ers ati s s u e i n 2 0 1 0: 1
. Can res p o n d en tm eeti t s b u rd en o f p ro o f wi t h th e s t i p u l at ed ev i den ce t h atth e 1 1 5 3 (DO) n o t i ce was co rrect l y m ai l ed t o th e p et i t i o ner’ s l as tkn o w n ad d res s o n Feb ru ary 4 t h , 2 01 4 ? 2
. As s u m i ng arg u en d o thatth e 1 1 53 (DO) n o t ice can b e s h o wn t o h av e b een m ai ledt o th e l as tkn own ad d res s , d o es res p o n den t ’ s Rev en u e Offi cer i ncu r an y ad d i ti o n al res p o ns i b il i ty t o p erfo rm an y ad di t i o n al act i o n s as “ reas on ab le d il i gen ce” wh en th e cert i fi edm ai l was return edt o h i m “ u n cl ai m ed ” o n M arch 1 7, 2 01 4 ? 3
. Wh ati s t h e co n s eq u en ce t o th e res p o n d en twh en th e Rev en u e Offi cer i s su es Let t er 1 1 5 3 (DO) BEFORE recei v i n g ap p ro v al fro m t h e g ro up m an ag er i n ap p aren t v i o l at i o n o f IRC 6 7 5 1 (b )?- 3 5 - (Al t h o u g h m an ag eri al ap p ro v al was recei veds ub s eq u en tt o th e p ro p o s al ) 4
. W as t h e t ru stfu ndreco v ery as s es s m en tm ad e o n Ap ri l 1 6 , 2 0 14 v al idwi t h res pect t o th e 2 0 10 t ax y ear? It is p et i t i o n er’ s p os i ti o n th atwe s h o u ldn o t s u s t ai n th e d et erm i n at i o n s i n t h e n o ti ce o f d et erm i n at i o n . Th ati s b ecau s e, acco rd i n g t o p et i t i o n er, (1 ) t h e
s eco n drev en u e o ffi cer d i dn o tm ai l p et it io n er’ s Let ter 1 1 5 3 t o h i s l as tkn o wn ad d res s (p et it i on er’ s l as tkn o wn ad d res s co n t en t i o n ); (2 ) t h e s eco n drev en u e
o ffi cer d idn o t ex erci s e du e d i li g en ce b y t ak i n g ad d i t io n al s t ep s t o n o t i fy p et i t i o n er ab o utth e p ro p o sed as s es s m en to f t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r th e qu art ers ati s su e i n 2 0 1 0 aft er t h e USPS ret u rn edt o th e IRS as u n cl ai m ed p et i t i o n er’ s Let t er 1 1 5 3 (p et i t i on er’ s due d i l i g en ce co nt en t i o n); an d(3 ) t h e p eri o d
o f l i m i t at i o n s p res cri b edb y s ect i o n 6 6 7 2(b ) h adex p i redas o f Ap ri l 1 6 , 2 0 1 4 , th e d at e o n wh i ch t h e IRS as s es s edth e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r th e qu art ers ati s su e i n 2 0 1 0 (p et i t i o n er’ s s t atu t e o f l i m i tat i on s co n t en t i o n ). In th e
ev en t t h atwe were t o ag ree wi t h p et i ti o n er’ s l as tkn own ad d res s co n t en t i o n , p et i t i o n er’ s du e d i l ig en ce co n t en t i o n , an d/ o r p et it i on er’ s s t atu t e o f l i m i t at i on s
co n ten t i o n , p et i t i o n er m ai n t ai n s th atth e n o t i ce o f d et erm i nat i on an dth e IRS’
as s es s m en to f t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r t he q u art ers at i s s ue i n 2 0 1 0 are i n v al i d an d t h atco n s eq u en t l y we s h o ul dreject t h e d et erm i n at i on s i n th at [* 3 5 ]- 3 6 -

[* 3 6 ] n o t i ce t o s u s t ai n th e n o t i ce o f l i en an d t h e n o ti ce o f l ev y wi t h res p ectt o t h o s e qu art ers . Pet i t i o ner al s o ad v an ces a fo u rt h co n t en t i o n o n b ri ef t h atth e IRS d idn o t
co m p l y wi t h th e req u i rem en t s o f s ect i o n 6 75 1 (b )(1 ) (p et i t i o n er’ s s ect i o n 6 7 5 1 (b )(1 ) co n t en t i o n). 1 6 In th e ev en tth atwe were t o ag ree wi t h p et it i on er’ s
s ect i on 6 7 5 1 (b )(1 ) co n t en t i o n , p et i t i o n er d o es n o to ffer h i s v i ew as t o t h e
co n seq u en ce o f t he IRS’ fai l u re t o co m p l y wi t h s ect i o n 6 7 5 1 (b )(1 ). In s t ead , h e
s t at es o n b ri ef: “ Pet i t i o ner i s cl earl y aware t h at t h i s ap p ro v al [req u i red b y s ect io n 6 7 5 1 (b )(1 )] was o b t ai n ed s ub s equ en tt o th e i s s u an ce [o f t h e] p ro p os edas s es s m en t
o f t h e [s ect i o n 6 6 7 2 ] p en al t y an dp erh ap s th e t ech n i cal v i ol at i o n o f [s ect i o n ] 6 7 5 1 (b ) i f t h ere i s o n e atal l i s n o m ore t han a ‘ fo o tfau l t ’ . Ho wev er, p et i t io n er d o es w i s h t o rai s e i t.” W e rev iew fo r ab u s e o f d i s cret io n p et i t i o n er’ s co n t en t i o n s , n o n e o f wh i ch p l aces ati s s u e t h e ex i s ten ce o r t h e am o u n t o f t h e u n d erl y i n g l iab i l i t y fo r th e
res p ect i ve s ect i o n 6 6 7 2 p en al t i es fo r t h e quart ers ati s s u e i n 2 0 1 0. See Lee v
. Co m m i s s i o n er, 1 4 4 T.C. 4 0 , 5 0 (2 0 1 5 ); Seg o v . Co m m i s s io n er, 1 1 4 T.C. 6 0 4 , 6 1 0

1 6 W e s h al l s o m et i m es refer co l l ect iv el y t o p et i t i o n er’ s l as tkno wn ad d res s co n ten t i o n , p et i t i o n er’ s du e d i l i g en ce co n t en t i o n , p et it i on er’ s s t atu t e o f l i m i t at i o n s co n ten t i o n , an dp et i t i o n er’ s s ect i o n 6 75 1 (b )(1 ) co n ten t i o n as p et i ti o n er’ s co n ten t i o n s .- 3 7 -

[* 3 7 ] (2 0 0 0 ); 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 ). Anab u s e o f d i s cret i o n o ccu rs wh en a d et erm i n at i o n i s arb i t rary , cap ri ci o u s , o r wi th o uts o u n d b as i s i n fact o r l aw. See M urp hy v . Co m m i s s i o n er, 1 2 5 T.C. 3 0 1 , 3 2 0 (2 0 0 5 ), aff’ d , 4 6 9 F.3 d2 7 (1 s tCi r. 2 0 0 6 ). W e co ns i der fi rs tp et i t i o n er’ s l as tkn own ad dres s co n t en t i on . Ino rd er t o i m p o s e a s ect i on 6 6 7 2 p en al t y , s ect i o n 6 6 7 2 (b )(1 ) requ i res th e IRS t o n ot i fy th e t ax p ay er i n p ers o n o r i n wri t i n g b y m ai l t o an ad dres s as d et erm in edu n d er s ect i on 6 2 1 2 (b ) t h atth e t ax p ay er wi l l b e s ub jectt o an as s es sm en to f t h atp en al t y . Pu rs u an tt o s ect i o n 6 2 1 2 (b )(1 ), a n ot i ce o f d efi ci en cy m ai l edt o a t ax p ay er’ s “ l as tkn o wn ad d res s ” i s v al i dev en i f t h e t ax p ay er n ev er recei v es t h atn o t i ce. See, e.g ., Fri el i n g
v . Co m m i s s i o n er, 8 1 T.C. 4 2 , 5 2 (1 9 8 3 ). In cas es l i k e t h e p res en t cas e i n v o l v i n g th e s ect i o n 6 6 7 2 p en al t y , th e IRS

m ai l s Let t er 1 1 5 3 t o t h e t ax p ay er. See M as o n v . Co m m i s s i on er, 1 3 2 T.C. at3 2 2
. Pu rs u an t t o s ect i o n 6 6 7 2(b )(1 ) wh i ch i n co rp o rat es th e m ai l i ng ad d res s req u i rem en t s o f s ect i o n 6 2 1 2 (b )(1 ) an dth e cas el aw t h ereu n d er, Let t er 1 1 5 3 m ai ledt o a t ax p ay er’ s l as tkn o wn ad d res s i s v al i dev en i f t h e t ax p ay er n ev er recei ves th at l et t er. See M as o n v . Co m m i s s io n er, 1 3 2 T.C. at3 2 2 -3 2 3
. Th e Co m m is s i o n er b ears th e b u rd en o f s h o wi n g th e p ro per m ai l i n g o f t h e
n o t i ce o f d efi ci en cy , s ee Co l em an v . Co m m i s s io n er, 9 4 T.C. 8 2 , 9 0 (1 9 9 0 ), an dth e- 3 8 -

[* 3 8 ] Co m

m i s si o n er’ s p ro du ct i o n o f a p ro p erl y co m pl et edUSPS cert ifi edm ai l l i s t wi l l res u l ti n the p res u m

p t i o n o f t h e p ro p er m ai l in g o f t h atn ot i ce, s ee Un i t ed St at es v . Zo l l a, 7 2 4 F.2 d8 0 8 , 8 1 0 (9 t h Ci r. 1 9 8 4 ). Ho wev er, t he Co m m i ss i o n er i s
n o treq u i redt o p ro du ce a USPS cert i fi edm ai l l i sti f t h e Co m m i s s i o ner p ro du ces
ev i d en ce t h ati s o t h erwi s e s u ffi ci en tt o es t ab l i s h p ro p er m ai l i n g . See Co l em an v . Co m m i s s i o n er, 9 4 T.C. at 9 0 . Wh ere t h e ex i s t en ce o f a n o t ice o f d efi ci en cy i s n o t i n d i s p u t e, t h e Co m

m i s s io n er m

u s ts h o w o n ly

th e actu al t i m el y m ai l i n g o f t h e
n o t i ce o f d efi ci en cy . See i d

. W e co ncl u d edi n M as o n v . Co m m is s io n er, 1 3 2 T.C. at3 1 8 , th at“ [w] h en a Let t er 1 1 5 3 i s m ai l ed , th e Co m m i s s i o n er m

us tfo l l o w th e s am e m ai l i n g p ro cedu res t h atare p ro v i d edfo r n ot i ces o f d efi ci en cy i n s ect io n 6 21 2 (b )” an dth at“ t h e s am e
ev i d en ce t h ates tab l i s h es th atth e Co m m i s si o n er m ai l eda n o t i ce o f d efi ci en cy t o a t ax p ay er’ s l as tkn o wn ad d res s s h o ul db e s u ffi ci en tt o es tab l i s h th at t h e Co m m i s s i on er p ro p erl y

s en ta Let t er 1 1 5 3 .” In th e p res en t cas e, th e p art i es s t i p u l at ed t hato n Feb ru ary 4 , 2 01 4 , p et i t i o n er’ s Let t er 1 1 5 3 was m ai l edt o p et i t io n er’ s l as t kn o w n ad d res s (p art i es ’ l as tkn o w n ad d res s s t i p u l at i o n ). In t o t al d i s reg ardo f t h ats t ip u l at i o n, p et i t i o n er t ak es th e- 3 9 -

[* 3 9 ] p o s i t i o n o n b ri ef t h at p et i t i o n er’ s Let t er 1 1 5 3 was n o tm ai ledt o p et i t i o n er’ s l as tkn o wn ad d res s . 1 7 Ru l e 9 1 (e) p ro v id es th at a s t i p u l at i o n i s t o b e t reat ed , t o t h e ex ten to f i t s t erm s , as a co n cl u s i v e ad m i s s i o n b y t h e p art ies t o the s t i pu l at io n u nl es s we
o t h erwi s e p erm i t o r t h os e p art i es o t h erwi s e ag ree. Ru l e 9 1(e) fu rt h er p ro v i d es th at we wi l l n o tp erm i ta p art y t o a s t i p u l at i o n t o qu al i fy , ch an g e, o r co n t rad icta
s t ip u l at i o n i n wh o l e o r i n p art , ex cep tth atwe m ay d o s o wh ere ju s t i ce req u i res . W e h av e co n cl u d edth at , “ [w] i t h ‘ ju s t i ce’ as o u r s t an d ard , we d o h av e b ro ad d i s cret i o n t o d et erm i n e [u n der Ru l e 9 1 (e)] wh en i t i s ap p ro p ri at e t o s etas i d e a
s t ip u l at i o n .” Lo v en g u t h v . Co m m i s s i o n er, T.C. M em o . 2 0 0 7 -7 0 , 2 00 7 W L 9 2 2 2 3 1 , at* 3 . Ho wev er, we h av e al s o co n cl u dedth ato ur d i s cret i on i n s et t i n g
as i d e a s t i p u l at i o n u n d er Ru l e 9 1 (e) “ i s t em p ered b y t he i m

po rt an ce o f m ak i n g

1 7 In s up p o rto f h i s co n ten t i o n o n b ri ef th atp et i t i o n er’ s Let t er 1 1 5 3 was n o t m ai l edt o p et i t io n er’ s l as tkn own ad d res s , n o to n l y d o es p et i t i o n er i g n o re th e p art i es ’ l as tkn o w n ad dres s s ti p u l at i o n , h e al s o ad v an ces cert ai n arg um en t s wh i ch rel y o n cert ai n al l eg ed fact s th atare n o tes t ab l i s hedb y th e reco rdan d wh i ch s p ecu l at e ab ou tcert ai n o t h er al l eg ed fact s thatal so are n otes t ab l i s h edb y th e reco rd . Inad d i t i o n , i n s up p o rto f p et i t i o n er’ s l as tkn o wn ad d res s co n t en t i o n , p et i t i o n er m i ss t at es o n b ri ef t h e req u i rem en t s o f s ec. 6 2 1 2(b ) an dm i s ap pl i es cert ai n cas el aw. Fi n al l y , p et i t io n er arg u es o n b ri ef t h at res p on d en th as n o t s at i s fi edres po n d en t ’ s b u rd en o f s h o wi ng th atth e s eco n drev en u e o ffi cer m ai l ed p et i t i o n er’ s Let t er 1 1 5 3 t o h i s l as tkno wn ad d res s . On t h e reco rdb efo re u s , we reject th e arg u m en t s d es cri b edi n th i s fo o t n o te t h atp et it i o n er m ak es i n s upp o rto f p et i t i o n er’ s l as tkn o wn ad d res s co n t en t i o n.- 4 0 -

[* 4 0 ] s t i p u l at i o n s s t i ck --we en fo rce s t i p u l at i o n s u n l es s n o tju s t‘ i nju st i ce,’ b u t

‘ m an i fes ti nju s t ice’ wo u l dres u l t .” Id . Inex erci s i n g o u r d is cret i o n u n d er Ru l e 9 1 (e), we m ay “ co n s id er fact o rs th atm i gh tn otb e s u ffi ci en tt o up s eta co nt ract
. ” Id . at* 4 . Th at i s t o s ay , “ s om et h i n g l es s th ana co n t ract ual d efen s e i s a p erm i s s i b l e g ro un dfo r l et t i ng o n e p art y t o a p ret ri al s t i p u l at i o n o u to f h is ag reem en t .” Id

. Bas edup on o f o u r ex am i n at i o n o f t h e en ti re reco rdb efo re u s , we fi n dth at ju s t ice d oes n ot req u i re u s t o s etas i d e t h e p art i es ’ l as tkn o wn ad dres s s t i p u l at i o n . Ou r ex am i nat io n o f t h atreco rdd i dn o td i s cl o s e an y ev i d en ce t h atco n t rad i ct s th at
s t ip u l at i o n , l etal o n e cl earl y co n t rad i ct s t hats t i p u lat i o n , cf. Cal -M ai n e Fo o d s , In c.
v . Co m m i s s i o n er, 9 3 T.C. 1 8 1, 1 9 5 (1 9 8 9 ). To th e co n t rary , we h av e fo u n dfact s
o n th e b as i s o f t h e reco rdth atare co n s i s t en t wi t h an dth att o tal l y s up p ortth e p art i es ’ l as tkn o w n ad dres s s ti p u l at i o n . On th e reco rdb efo re u s an dp u rs uan tt o ap pl i cab l e s ect i o n s o f t h e Co d e an d ap p os i t e cas el aw, we reject p et i t i o n er’ s l as tkn own ad d res s co n ten t i o n . W e tu rn n ex tt o p et i t i o n er’ s du e d i li g en ce co n t en t i o n . Pet i t i o ner m ai n t ai n s t h atth e s eco n drev en u e o ffi cer s h o u l d h av e t ak en ad d i t io n al s t ep s t o n o t i fy p et i t i o n er ab o u tth e p ro po s edas s es s m en to f t he s ect io n 6 67 2 p en al t i es fo r t h e qu art ers ati s su e i n 2 0 1 0 aft er t h e USPS ret u rn edt o th e IRS as u n cl ai m edp et i t i o n -- 4 1 -

[* 4 1 ] er’ s Let t er 1 1 53
. 1 8 In ad van ci n g t hatarg u m en t , p et i t i o ner rel i es o n J o n es v . Fl o wers , 5 4 7 U.S. 2 2 0 (2 00 6 ), M u l v an i a v . Co m m is s i o n er, 7 69 F.2 d 1 3 7 6 (9 t h Ci r. 1 9 85 ), aff’ g T.C. M em o. 1 9 8 4 -9 8 , an dW al l i n v . Co m m i s s i o n er, 7 4 4 F.2 d6 7 4 (9 t h Ci r. 1 9 8 4 ), rev ’ g T.C. M em o . 1 98 3 -5 2
. W e fi n dtho s e cas es t o b e m at eri al l y d i s t i n gu i sh ab l e fro m

the i n st an tcas e an dp et i t i o n er’ s rel i an ce o n t h em t o b e
m i s p l aced

. Pet i t i o ner’ s du e d i l i g en ce co n t en t i o n n o to n l y rel i es o n i n ap p o si te cas el aw, i t al s o fai l s t o ack n owl ed g e an dap p l y ap p l i cab l e cas el aw th atreject s th atco n t en t i o n . As d i s cu s s edab o v e, p u rs u an tt o s ect i o n 6 6 7 2 (b )(1 ) wh i ch i n co rp o rat es t h e m ai l i ng ad dres s req u i rem en t s o f s ect i o n 6 2 12 (b )(1 ) an dth e cas el aw t h ereu n d er, Let t er 1 1 5 3 m ai l edt o a t ax p ay er’ s l as t kn o wn ad d res s i s v al i dev en i f t h e t ax p ay er n ev er recei v es th atl et t er. As th e Co u rto f Ap p eal s fo r th e Ni n t h Ci rcu i t , th e co u rtt o wh i ch an ap p eal i n thi s cas e wo u l dn o rm al l y l ie, co n cl ud edi n Ki ng v . Co m m i s s i o n er, 8 5 7 F.2 d 6 7 6 , 6 8 1 (9 t h Ci r. 1 9 8 8 ), aff’ g o n o t h er g ro u n d s 8 8 T.C. 1 0 4 2 (1 98 7 ), i n v ol v i n g a
n o t i ce o f d efi ci en cy :

1 8 Res p o nd en targ u es th atp et i t i o n er d i d n o trai s e p et i t i o n er’ s due d i l i g en ce co n ten t i o n du ri n g p et i t i on er’ s Ap p eal s h eari ng an dth atth erefo re res p o n d en tco u l d n o th av e ab u sed res p on d en t’ s d i s cret i o n i n fai l i n g t o co n s id er an y s u ch co n t en t i o n . W e ag ree. Fo r t h e s ak e o f co m p l et en es s , we n o n ethel es s ad d res s p et i ti o n er’ s du e d i l i g en ce co n t en t i o n .- 4 2 -

[* 4 2 ] Un d er I.R.C. § 6 2 1 2 (b ), v al i d i t y o f t h e n o t i ce tu rn s o n wh et h er th e IRS u s ed t h e l as tkn own ad d res s wh en th e n ot i ce was m ai l ed

. No t h i n g i n t h e s t atu t e s u g g es ts th at t h e IRS i s o b l i g at edt o t ak e ad d i ti o n al s t ep s t o effect u at e d el i v ery i f t h e n o t i ce i s ret u rn ed ; i nd eed , a n o t i ce m ai l edt o th e l as tkn o wn ad d res s i s s u ffi ci en tev en i f i t i s n ev er recei v ed . W al li n , 7 4 4 F.2 dat6 7 6 . Co n s eq uen t l y , we d o n o t b el i ev e t h atCo o l Fu el [, In c. v . Co n n et t , 6 8 5 F.2 d 3 0 9 (9 t h Ci r. 1 9 8 2)] i m p o s es a du t y

o f reas o n ab l e d i l i g en ce b ey o ndth e t i m e t h atth e n o t i ce i s m ai l ed . * * * W e al s o reject edan arg u m en ts i m i l ar t o p et i t io n er’ s du e d i l i g en ce co n t en t i o n i n Hi ck ey

v . Co m m is s i o n er, T.C. M em o . 2 0 0 9 -2 , 2 0 0 9 W L 2 0 9 8 3 , at* 4
. Th ere, t h e t ax p ay er “ arg u e[d ] th atth e as s es s m en t o f t h e t ru s t fu ndreco v ery p en al t y was i m

p ro p er b ecau s e h e d idn o trecei v e t h e n o ti ce t h e IRS s en t t o h i m
an d b ecau s e t h e IRS m ad e n o fu rt h er effo rtt o n o t i fy h i m o f t h e p ro p o s ed
as s es s m en taft er t h e USPS ret u rn ed t h e u ncl ai m edn o ti ce t o th e IRS.” Id . In reject i n g th atarg u m en t , we rel i edo n s ect io n 6 67 2 (b )(1 ) wh i ch i nco rp o rat es th e
m ai l i n g req u i rem en t s o f s ect i o n 6 2 1 2 (b ) an d cas el aw thereu n d er. See i d . at* 4 -* 5
. On th e reco rdb efo re u s an dp u rs uan tt o ap pl i cab l e s ect i o n s o f t h e Co d e an d ap p os i t e cas el aw, we reject p et i t i o n er’ s du e d i l i g en ce co nt en t i o n . W e co ns i der n o w p et i t i o n er’ s s t atu t e o f l i m i t at i o n s co n ten t i o n . Pet i t i o n er
m ai n t ai n s th atth e p eri o d of l i m i t at i o n s p res cri b edb y s ect i o n 6 6 7 2 (b ) h ad ex p i red wh en th e IRS as ses s edo n Ap ri l 1 6 , 2 01 4 , th e res p ect i ve s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 01 0 . Al t h o u g h n o tal to g et h er cl ear, i tap p ears th atp et i

-- 4 3 -

[* 4 3 ] t i o n er’ s s up p o rtfo r t h atco n cl u s i o n i s h i s co n t en ti o n th atth e s eco n drev en u e
o ffi cer d idn o t m ai l p et i t i o ner’ s Let t er 1 1 5 3 t o p et i t i o n er’ s l as t kn o wn ad d res s . W e h av e reject edp et i t io n er’ s l as tkn o wn ad d res s co n t en t i o n . A fo rt i ori , we reject p et i t i o n er’ s s t atu t e o f l i m it at i o n s co n t en t i o n . Fo r t h e s ak e o f co m

p l et en es s , we ex p lai n b ri efl y wh y th e p eri o d o f l i m i t at i on s fo r as s es s i ng th e res pect i v e s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers at i s s u e i n 2 0 1 0 h adn o t ex p iredas o f Ap ri l 1 6 , 2 0 1 4 , th e d at e o n wh i ch th e IRS as s es s ed t h o s e p en al t i es . Pu rs u an t t o s ect i o n 6 67 2 (b )(3 ), th e p eri o d o f l i m i t at io ns fo r
as s es s i n g th e res p ect i v e s ect i o n 6 6 7 2 p en al ti es fo r t h e qu art ers ati s s u e i n 2 0 1 0 g en eral l y i s th e t h ree-y ear p eri o dp res cri b edb y s ect i o n 6 5 0 1 (a). Sect i o n 6 6 7 2 (b )(3 ) ex t en d s th atth ree-y ear p eri o d i f a n o t i ce d es cri b ed i n s ect i o n 6 6 7 2 (b )(1 ) i s d el i v ered i n p ers o n o r i s m ai l edt o a t ax p ay er’ s l as tkn own ad d res s b efo re t h e p eri o d o f l i m it at i o n s p res cri b edb y s ect i o n 6 5 0 1 ex p i res wi t ho u t reg ard t o s ect io n 6 6 7 2 (b )(3 ). In th atev en tan das p ert i n en t h ere, p urs u an t t o s ect i o n 6 6 7 2 (b )(3 ) t h e p eri o do f l i m i t at i o n s p res cri b ed b y s ect i o n 6 5 0 1 wi l l n otex p i re b efo re t h e d at e 9 0 d ay s aft er t h e d at e o n wh i ch the n o t i ce d es cri b edi n s ect i o n 6 6 7 2 (b )(1 ) was d el iv ered i n p ers o n o r m ai l edt o a t ax p ay er’ s l as tkn o wn ad d res s . Th e p eri o d o f l i m i t at i o n s u n der s ect io n 6 5 0 1 (a) fo r as s es s i n g an y t ax i m p o s edb y th e Co d e b eg i n s ru n n i n g wh en th e retu rn req u iredt o b e fi l ed b y th e- 4 4 -

[* 4 4 ] t ax p ay er i s fi led . As p ert i n en th ere, s ect io n 6 50 1 (b )(2 ) p ro vi d es t h atwh ere a ret u rnfo r a p eri oden d i n g wi t h o r wi t h i n a cal en d ar y ear wi t h res p ectt o t ax
u n d er ch ap t er 2 1 , Fed eral In su ran ce Co n t ri b u t io n s Act , o r ch ap t er 2 4 , Co l l ect i o n
o f In co m e Tax at So u rce o n W ag es , o f s ub t i t l e C i s fi l edb efo re Ap ri l 1 5 o f t h e
s u cceed in g cal en d ar y ear, t h at ret u rn wi l l b e co n s i dered fi ledo n Ap ri l 1 5 o f t h at
s u cceed in g cal en d ar y ear. Ho l l y wo o dArt s was o b l i g at edt o rep o rti n Fo rm 9 4 1 i ts res p ect i v e em

p l oy m en tt ax es u n d er ch ap t ers 2 1 an d 2 4 o f s ub t it l e C fo r each o f t h e qu art ers ati s s u e i n 2 0 1 0 (i .e., the q u art ers thaten d edo n M arch 3 1 , J u n e 3 0 , an d Sep t em b er 3 0 , 2 0 1 0 ). Ho l l y

wo o d Art s was req u i redt o fi l e Fo rm 9 4 1 fo r each o f t h o s e qu art ers b y n o lat er t h an th e en d o f t h e m o n t h fo l l o wi ng each s u ch qu art er. See s ecs . 6 0 1 1 (a), 6 0 7 1(a); s ec. 3 1.6 0 1 1 (a)-4 T(a)(1 ), Tem po raryEm

p l o ym en tTax Reg s ., 7 3 Fed

. Reg . 7 9 3 5 8 (Dec. 2 9 , 2 0 0 8 ); s ec. 3 1 .6 07 1 (a)-1 (a)(1 ), Em p l o ym en tTax Reg s . Ho l l y wo o dArt s fi l edt im el y

Fo rm 9 4 1 fo r each o f t h e qu art ers th aten d edo n M arch 3 0 an d Sep t em

b er 3 0, 2 0 1 0 . Itfi l edl at e o n Oct o b er 5 , 2 0 10 , Fo rm 9 4 1 fo r t h e qu art er t h aten d edo n J u n e 3 0 , 2 0 1 0 . Pu rs u an t t o s ect i o n 6 5 0 1 (b )(2 ), Fo rm 9 4 1 t h atHo l l ywo odArt s fi ledfo r each o f t h e qu art ers en dedo n M arch 3 1 , J u n e 3 0 , an d Sep t em

b er 3 0 , 2 0 1 0 , i s a ret u rn thati s d eem edfi l edo n Ap ri l 1 5 , 2 0 1 1 . W e
co n cl u d e th atth e p eri o do f l i m i t at i o n s p res cri b edb y s ect i on 6 5 0 1 (a) fo r as s es s i n g- 4 5 -

[* 4 5 ] Ho l l ywo o dArt s ’ em p l o ym en tt ax es i m

p o s ed b y ch ap t ers 2 1 an d 2 4 o f t h e Co d e wo ul d h av e ex p i redo n Ap ri l 1 5 , 2 0 1 4 . W e fu rt h er co n cl u d e t h atth e p eri o d
o f l i m i t at i o n s fo r as s es s i n g t h e s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 0 1 0 al s o wo u l dh av e ex p i redo n Ap ri l 1 5 , 2 0 1 4 , wi t h o u treg ardt o s ect i o n 6 6 7 2 (b )(3 ). See s ec. 6 6 71 (a). W e h av e fo u n d t h ato n Feb ru ary 4 , 2 0 1 4, t he s eco n drev en u e o ffi cer m ai l ed t o p et i ti o n er b y

cert i fi edm ai l p et i t i o n er’ s Let t er 1 1 5 3 wh i ch was ad d res sedt o p et i t i o n er’ s l as tkn o wn ad d res s. W e h o l dth at p u rs u an t t o s ect i on 6 6 7 2(b )(3 ) t h e t h ree-y ear p eri o do f l i m i t at i o ns p res cri b edb y s ect i o n 6 5 0 1 (a) fo r as s es s i n g th e
s ect i on 6 6 7 2 p en al t i es fo r t h e qu art ers ati s s u e i n 2 0 1 0 , wh i ch wo u l d h av e ex p i red
o n Ap ri l 1 5 , 2 01 4 , wi t ho u treg ardt o s ect i o n 6 6 72 (b )(3 ), d i dn otex p i re b efo re M ay 5 , 2 01 4 , th e d at e wh ich i s 9 0 d ay s aft er t h e d at e (i .e., Feb ru ary 4 , 2 0 1 4 ) o n wh i ch p et i t i o n er’ s Let t er 1 1 5 3, t he n o t i ce d es cri b edi n s ect i o n 6 6 7 2 (b )(1 ), was m ai l edt o h i s l as t kn o wn ad d res s . Res p o n d en tas s es s edp et i t i on er’ s s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati ss u e i n 2 0 10 o n Ap ri l 1 6 , 2 0 1 4. W e h o ldth atth e p eri o do f l i m i tat i on s fo r as s es si n g ag ai n stp et i t i o n er t h e res p ect i v e s ect i o n 6 6 7 2 p en al t i es fo r t h e qu art ers ati ss u e i n 2 0 10 h adn o t ex p i redas o f t h e d at e o n wh i ch res p o n d en t as s es s edth o s e p en al t i es .- 4 6 -

[* 4 6 ] On th e reco rdb efo re u s an dp u rs uan tt o ap pl i cab l e s ect i o n s o f t h e Co d e, we reject p et i t i o n er’ s s t atu t e o f l im i t at i o n s co n t en t i o n. W e co ns i der fi nal l y

p et i t i o n er’ s s ect i o n 6 7 5 1 (b )(1 ) co n t en t io n . Ho wev er, we ad d res s i n i t i al l y

res p o n d en t’ s p o s i t io n reg ard i n g th e ap p li cat i o n o f t h ats ect i on i n thi s cas e. Iti s res p on den t ’ s p o s i t io n t h ati n a s ect i o n 6 3 2 0 o r 6 33 0 m at t er i n v o l v i n g a s ect io n 6 6 72 p en al t y i ti s n o tn eces s ary

u nd er s ect i o n 6 3 3 0 (c)(1 ) t h at t h e Ap p eal s o ffi cer v eri fy t h at t h e IRS co m pl i edwi t h s ect i o n 6 7 5 1 (b )(1 ). Th ati s b ecau s e, acco rd i n g t o res p on den t , s ect io n 6 75 1 (b )(1 ) d oes n o t ap p l y t o a s ect i o n 6 6 7 2 p en al t y . Res p o n d en tfu rt h er m ai nt ai n s t h at i f we were t o d et erm i n e th at
s ect i on 6 7 5 1 (b )(1 ) ap p l i es t o a s ect i o n 6 6 7 2 p en al t y , th e reco rdes t ab l i s h es th atth e IRS co m p l iedwi t h s ect i o n 6 7 5 1 (b )(1 ) b efo re i tas s es s edo n Ap ri l 1 6 , 2 0 1 4 , th e
res p ect i ve s ect i o n 6 6 7 2 p en al t i es fo r t h e quart ers ati s s u e i n 2 0 1 0. W e n eedn o td et erm i ne wh et h er res p o n den ti s co rrect t h ats ect i o n 6 7 5 1 (b )(1 ) d o es n o tap p l y t o a s ect i o n 6 67 2 p en al t y . Th at i s b ecau s e, as ex p l ai n ed b el o w, we fi n do n th e reco rdb efo re u s th atth e s eco ndrev en u e o ffi cer d i dn o t ab u se h i s d i s cret i o n i n co n cl ud i n g i n th e n o t i ce o f d et erm i n at i o n th at“ [t ] h e req u i rem en t s o f ap p l icab l e l aw o r ad m in i s t rat i ve p ro cedures h av e b een m etan dth e act i on s t ak en o r p ro p os edwere ap p ro p ri at e u n d er t h e ci rcu m s t an ces .” See- 4 7 -

[* 4 7 ] Bl ack

b u rnv . Co m

m i s s i o n er, 1 5 0 T.C. _

_ (Ap r. 5 , 2 0 18 ). Ou r d i s cu s s i o n b el o w as su m es th ats ect i o n 6 7 5 1 (b )(1 ) ap p li es t o a s ect i o n 6 6 72 p en al t y . W e b eg i n o ur ex p l an at i o n o f o u r fi n d i n g th at t h e s eco n drev en u e o ffi cer d i d

n o tab us e h i s d i s cret i o n i n co n cl u d i n g i n t he n o t i ce o f d et erm i n at i o n that“ [t ] h e req u i rem en t s o f ap p l icab l e l aw o r ad m in i s t rat i ve p ro cedures h av e b een m etan dth e act i on s t ak en o r p ro p os edwere ap p ro p ri at e u n d er t h e ci rcu m s t an ces ” b y ad d res s i n g p et i t i o n er’ s s ect i o n 6 7 5 1 (b )(1 ) co n t en t i on . Acco rd i n g t o p et i t i o ner, t h e 1 1 5 3 (DO) [p et i t i o n er’ s l et t er 1 15 3 ] was d at edan ds en tFeb ru ary 4 , 2 0 1 4 wh i l e t h e ap p ro v edFo rm 4 18 3 t hatres p o n den ti n cl u d es as Ex h i b i t1 7 -R was d at edAp ri l 4 t h , 2 01 4 . * * * Pet i t i o n er i s cl earl y aware t h atth i s ap p ro v al was o b t ai n eds ub s eq u en tt o th e i s s u an ce [o f t h e] p ro p os edas s es s m en to f t h e p en al t y [i n p et i t io n er’ s Let ter 1 1 5 3 ] an dp erh ap s t h e t ech n i cal v io l at i o n o f [s ect i o n ] 6 7 51 (b )[(1 )] i f t h ere i s o n e at al l i s n o m o re t h an a “ fo o tfau l t ”. [ 1 9 ] Sect io n 6 7 5 1 (b )(1 ) p ro v i d es th at“ [n ] o p en al t y * * * s h al l b e as ses s edu n l es s t h e i n i ti al d et erm in at i o n o f s uch as s es s m en ti s p ers o n al l y ap pro 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 h e i n di v i du al m ak i ng s u ch d et erm i n at i o n ”. Iti s ap p aren t t h atp et i t i o n er’ s s ect i on 6 7 5 1 (b )(1 ) co nt en t i o n i s b as edo n h i s as s u m p t io n

1 9 Pu rs u an tt o t h e p art i es ’ req u es t, we o rd ered p et i t i o ner t o fi l e a s eri at i m o p en in g b ri ef, res po n d en tt o fi le a s eri at i m an s weri n g b ri ef, an dp et i t io n er t o fi l e a s eri at i m rep l y b ri ef. Pet i t i o n er an dres p o n d en tfi l eda s eri at i m o p en i n g b ri ef an da s eri at i m an s weri n g b ri ef, res p ect i v el y . Pet i t io n er fi l ed a n o t i ce o f i nt en tn ott o fi l e a s eri at i m rep l y b ri ef. Pet it i o n er d o es n o tco nt en dth at u n d er s ec. 6 7 5 1 (b )(1 ) g ro up m an ag er Ni ch t er i s n otth e i m m ed i at e s up erv i s or o f t h e s eco n drev en u e o ffi cer. W e co n cl u d e t h atp et i t i o n er h as ab an do n edad v an ci n g an y s u ch arg u m en t
.- 4 8 -

[* 4 8 ] th atu n der s ect i o n 6 7 5 1(b )(1 ) t h e s o -cal ledi n i t i al d et erm i nat i on o f t h e
as s es s m en to f a s ect i o n 6 6 7 2 p en al t y thatreq ui res ap p ro v al b y t h e i m m ed iat e
s up erv i s o r o f t h e i n d iv i du al m ak i n g s uch d et erm i n at i o n i s Let t er 1 1 5 3 , th e l et t er t h atth e IRS u s es t o p ro p o s e th e as s es s m en to f a s ect i o n 6 6 7 2 p en al t y ag ai n s ta
res p o n s i b l e p ers o n. J u s t as we co n cl u dedthatwe n eedn o td et erm i ne wh et h er res p o n d en ti s
co rrect t h ats ect io n 6 75 1 (b )(1 ) d o es n o tap p l y t o a s ect i o n 6 6 7 2 p en al t y , we
co n cl u d e th atwe n eedn o t d et erm in e wh et h er p et i t i o n er i s co rrect th atu n der
s ect i on 6 7 5 1 (b )(1 ) t h e i n i t i al d et erm i n at io n o f t h e as s es sm en to f a s ect io n 6 6 7 2 p en al t y i s Let t er 1 1 5 3
. Th ati s b ecau s e we fi n d o n th e reco rdb efo re u s t h atth e
s up erv i s o r’ s ap pro v al th ats ect i o n 6 7 5 1 (b )(1 ) req ui res t o o kp l ace b efo re t h e
s eco n drev en u e o ffi cer m ai l edb y cert i fi edm ai l o n Feb ru ary 4 , 2 0 14 , p et i t i o n er’ s Let t er 1 1 5 3 ad d res s edt o h i m ath i s l as t kn o wn ad d res s. Ou r d is cu s s io n b el o w
as s u m es n o to n l y t h ats ect i o n 6 7 5 1 (b )(1 ) ap pl i es t o a s ect io n 6 67 2 p en al t y b u tal s o t h atu n d er s ect i o n 6 7 5 1 (b )(1 ) t h e i n i t i al d et erm i n at i o n o f t h e as s es s m en to f a
s ect i on 6 6 7 2 p en al t y

th atreq ui res ap p ro v al b y th e i m m ed i at e s up erv i s o r o f t h e i n d i v i du al m ak i n g s u ch d et erm i n at i on i s Let ter 1 1 5 3
.- 4 9 -

[* 4 9 ] In ad v an ci n g p et i t i o n er’ s s ect i o n 6 7 5 1 (b )(1 ) co nt en t i o n , p et i t i o n er rel i es o n b ri ef 2 0 o n l y o n “ Fo rm

4 1 8 3 thatres p o n d en ti n cl u des as Ex h ib i t1 7 -R [wh i ch ] was d at edAp ri l 4 t h , 2 0 1 4 ”. Pet i t i o n er i g n o res o n b ri ef t he Feb ru ary 3 , 2 0 1 4 Fo rm 4 1 8 3 thatwe fo un dth e s eco n d rev en ue o ffi cer h adp rep ared an dth at g ro up
m an ag er Ni ch ter h adap p ro v edo n Feb ru ary 3 , 2 01 4 , b efo re t h ato ffi cer m ai l edb y cert ifi edm ai l o n Feb ru ary 4 , 2 0 1 4 , p et i ti o n er’ s Let t er 1 1 5 3 wh i ch was ad d res s ed t o p et i ti o n er’ s l as tkn o wn ad dres s . Th e Feb ru ary 3 , 2 0 1 4 Fo rm 4 1 8 3 s h owed p et i t i o n er’ s n am e an d M s . Ro m an s k i ’ s n am e u nd er t h e h ead in g o n t h atfo rm

“ Pers o n s ag ai n s t wh o m

th e t ru s tfu n d reco v ery

p en al t y i s b ei n g co n si d ered ”. Th e
s eco n drev en u e o ffi cer at tach edFo rm 2 7 5 1 , Pro p os edAs ses s m en to f Tru s tFu n d Reco v ery Pen al t y , t o p et i ti o n er’ s Let t er 1 1 5 3 . Inthatfo rm , res p o n d en t p ro p o s ed , i n t er al i a, t o as s es s ag ai ns tp et i t i o n er, as a “ p ers on res p o n s i b l e”, t h e res p ect i v e
s ect i on 6 6 7 2 p en al t i es wi t h res p ectt o t he q u art ers at i s s ue i n 2 0 1 0
. It w as n otu n t i l M arch 2 6 , 2 0 14 , th atth e s eco n drev en u e o ffi cer co n cl u d ed t h atM s . Ro m an sk i s ho u l dn o tb e s ub jectt o an y

s ect i o n 6 6 72 p en al t y

an dn o t edi n t h e i n t eg rat edco l l ect i o n s erv i ces h i st o ry tran s cri p tm ai n t ai n edwi t h res pect t o Ho l lywo o dArt s t h at M s . Ro m an s k i d i dn o t m eetwh ath e ch aract eri zed i n t h at t ran s cri p tas “ t h e res p o n s ib il i t y an dwi l lfu l n es s t es t ” o f s ect i o n 6 6 7 2 (a). Co n s e2 0 Bu ts ee i n fra n ot e 2 2.- 5 0 -

[* 5 0 ] qu en t l y , h e ch an g edh i s o ri g i n al co n cl u s i o n as t o M s . Ro m an s k i , b u tn o tas t o p et i ti o n er, wh i ch ap peared i n t h e Feb ru ary 3 , 2 0 1 4 Fo rm 4 1 8 3 wi t h res p ectt o each o f Ho l l ywo o dArt s ’ qu art ers en d edo n (1 ) M arch 3 1 , J u n e 3 0 , an d Sep t em b er 3 0 , 2 0 1 0 , an d (2 ) M arch 3 1 , J u n e 3 0 , an dDecem b er 3 1 , 2 0 1 2 , th ath e h adp rep ared
an d s ub m i t t edt o g ro up m an ag er Ni ch t er fo r ap pro v al o n Feb ru ary 3 , 2 0 1 4 , an d wh i ch g ro up m an ag er Ni ch t er ap pro v edo n t h e s am e d at e. On Ap ri l 3 , 2 0 1 4 , th e s eco n drev en u e o ffi cer co n s u l t edIRM p t
. 5 .7 .4 .7 .2 , t i tl ed“ Res ci s s i o n o f Pro p o s edAs s es s m en t ”, b ecau s e h e h adch an g edh i s
co n cl u s i o n as t o M s . Ro m an s k i th atap p eared i n the Feb ru ary 3 , 2 01 4 Fo rm

4 1 83
. Al s o on Ap ri l 3 , 2 0 1 4, t he s eco n drev en u e o ffi cer s ubm i t t eda req ues tt o g ro up
m an ag er Ni ch ter fo r h i s ap p ro v al (1 ) t o am en dth e Feb ru ary 3 , 2 0 1 4 Fo rm

4 1 8 3 as t o M s . Ro m an s k i o n l y

b y p rep ari n g an ot h er Fo rm

4 1 8 3 i n wh i ch h e wo ul di n d i cat e t h atM s . Ro m an sk i i s n o t l i ab l e fo r t h e s ect i o n 6 6 72 p en al t y fo r each o f Ho l lywo o dArt s ’ quart ers ati s su e an d(2 ) t o p rep are an di s s u e Let t er 1 1 5 3 W , th e l et t er t hatth e IRS u s edt o res ci n dan y Let t er 1 1 5 3 t h ati th ad p rev i o u sl y i s s u edt o M s . Ro m an s k i

. On Ap ri l 3 , 2 0 1 4 , th e d at e o n wh i ch g ro up m an ag er Ni ch t er recei v edth e
s eco n drev en u e o ffi cer’ s req u es tfo r ap pro v al t o am en dth e Feb ru ary 3 , 2 0 14 Fo rm 4 1 8 3 as t o M s . Ro m an sk i o n l y an dt o p rep are an di s s u e t o h er Let t er 1 1 5 3 W , th at- 5 1 -

[* 5 1 ] g ro up m an ag er ap p ro v edth atreq u es t . Onth e s am e d at e o n wh i ch g ro up
m an ag er Ni ch ter ap p ro v edth e s eco n drev en u e o ffi cer’ s req u es t , th atrev en u e
o ffi cer p rep ared an am en d ed Fo rm 4 1 8 3 wh i ch was am en d edo n l y i n s o far as i t p ert ai n edt o M s . Ro m an sk i (i .e., th e Ap ri l 4 , 2 0 1 4 am en d edFo rm 4 1 8 3 ). 2 1 Al t h o u g h th e s eco n d rev en ue o ffi cer s h o wed i n t h e Ap ri l 4 , 2 0 1 4 am en dedFo rm 4 1 8 3 u n d er t h e h ead in g “ Pers o n s ag ai n s twh om th e t ru s tfu n d reco v ery

p en al t y i s b ei n g co n s i d ered ” p et i t i o ner’ s n am e an d M s. Ro m an s ki ’ s n am e, h e al s o s ho wed

u n d er M s. Ro m an s k i ’ s n am e t he fo l l o wi n g p ert i n en t l an g u ag e: “ M s. Ro m an s k i i s
n o tl i ab l e fo r t h e TFRP [t ru s t fu n dreco veryp en al t y ] .” On Ap ri l 4 , 2 0 1 4 , th e s eco n drev en u e o ffi cer s i g n edan d s ub m i tt edthe Ap ri l 4 , 2 01 4 am en d edFo rm

4 1 8 3 , wh i ch was am en d edas t o M s . Ro m an sk i o nl y , t o g ro up m an ag er Ni ch t er fo r h i s ap p ro v al . Onthe s am e d at e, th at g ro up m an ag er ap p ro v edth e Ap ri l 4 , 2 0 1 4 am en d edFo rm 4 1 8 3
. On Ap ri l 8 , 2 0 1 4 , th e s eco n drev en u e o ffi cer m ai l edM s . Ro m an s k i ’ s Let t er 1 1 5 3 W t o M s . Ro m an s k i

.

2 1 As was o f t ru e o f t h e Feb ru ary 3 , 2 0 1 4 Fo rm

4 18 3 , th e am en d edFo rm 4 1 8 3 p ert ai n edn o to nl y

t o t h e qu art ers ati s s u e b utal s o t o Ho ll yw o o dArt s ’ qu art er en d edo n D ecem

b er 3 1 , 2 0 1 0 . As d i s cu s sedab o v e, t he s eco n d rev en u e o ffi cer d idn o t i n cl u d e t h atqu art er i n Fo rm 2 7 5 1 at t ach ed t o p et i t i o n er’ s Let t er 1 1 5 3
.- 5 2 -

[* 5 2 ] On th e reco rdb efo re u s , we fi n dth at g ro up m an ag er Ni ch t er ap p ro v edo n Feb ru ary 3 , 2 0 1 4 , p et i ti o n er’ s Let t er 1 1 5 3 th atth e s eco ndrev en u e o ffi cer m ai l ed b y cert i fi edm ai l o n Feb ru ary 4 , 2 0 1 4 , t o p et i t i o n er ath i s l as tkn own ad d res s . 2 2 On t h atreco rd , we fu rt h er fi n dth atth e IRS co m p l i edwi t h th e req ui rem en t s o f s ect i o n 6 7 5 1 (b )(1 ). Bas edup on o ur ex am i n at i o n o f t h e en t i re reco rdb efo re u s an dp et i t i o n er’ s
co n ces si o n s , we fi n d t h at t h e Ap p eal s Offi ce d i d n o tab u s e d is cret i o n i n m ak i n g t h e d et erm i n at i o n s i n th e n o t i ce o f d et erm i n at io n . Onth atreco rd , we h o l dth atwe wi l l s u s t ai n th e d et erm i n at i on s i n th atn o ti ce.

2 2 By Ord er d at edFeb ru ary

1 5 , 2 01 8 (Feb ru ary

1 5 , 2 0 1 8 Ord er), we g av e t h e p art i es th e o p p o rtu n i t y , b y o rd eri n g t h em

t o fi l e res pect i ve res p o n s es t o th ato rd er, t o s up p l em en tth ei r res p ect iv e v i ews o n b ri ef, i n t h e l i g h to f Graev v . Co m m i s s i on er, 1 4 9 T.C. _

_ _ (Dec. 2 0 , 2 0 1 7 ), s up pl em en t i n g an do verru l i ng i n p art1 4 7 T.C. 4 6 0 (2 0 1 6 ), reg ard in g p et i t i o n er’ s co n t en t i o n o n b ri ef th ats ec. 6 7 51 (b )(1 ) ap p li es t o th e s ect io n 6 6 7 2 p en al t y an d t hatth e IRS d i dn o ts at i s fy s ec. 6 7 5 1 (b )(1 ) i n thi s cas e. On Ap ri l 1 8 an dAp ri l 1 9 , 2 0 1 8 , res po n d en tan dp et i t i o n er, res p ect i vel y , fi l edthei r res pect i v e res p o n s es t o o u r Feb ru ary 1 5 , 2 0 1 8 Ord er. In h i s res po n s e t o o u r Feb ru ary 1 5 , 2 0 1 8 Ord er, p et i t i o n er n ow ack n o wl ed g es th at g ro up m an ag er Ni ch t er s i g n edo n Feb ru ary 3 , 2 0 1 4 , th e o ri g i n al Fo rm 4 1 8 3 t h at t h e s eco n drev en ue o ffi cer h adp rep ared , i n wh ich h e s h o wedb ot h p et it i o n er an d M s . Ro m an s k i as “ Pers o n s ag ai n s t wh o m t h e t ru s t fu ndreco v ery p en al t y i s b ei n g co n si d ered ”. Pet i t io ner fu rt h er ack n o wl ed g es i n th atres p o n s e t h atg ro up m an ag er Ni ch t er t hereb y ap p ro v edo n Feb ru ary 3 , 2 0 1 4 , p et i t i on er’ s Let t er 1 1 5 3 t h atth e s eco n drev en u e o ffi cer m ai l edt o p et i t i o n er o n Feb ru ary 4 , 2 0 1 4
.- 5 3 -

[* 5 3 ] W e h av e co n s id ered al l o f t h e co n t en ti o n s an darg u m en t s o f t h e p art i es th at
are n o td i s cu ss edh erei n , an dwe fi n dth em t o b e wi t h o u tm eri t, i rrel ev an t , an d/ o r
m o ot
. To refl ectthe fo reg o i n g an d t h e p art ies ’ res p ect i v e co nces s i o n s , An ap p ro p ri at e d eci s i o n wi l l b e en t ered

.