T.C. Memo. 2004-208

UNITED STATES TAX COURT

ROBERT NEWSTAT, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 16989-02L. Filed September 16, 2004.

P filed a petition for judicial review pursuant to

sec. 6330, I.R.C., in response to a determination by R

that levy action is appropriate for the taxable years

1985 and 1999.

Held: With respect to 1985, R’s determination to

proceed with collection action is sustained. With

respect to 1999, the case is remanded for further

consideration by the Internal Revenue Service Office of

Appeals.

Robert Newstat, pro se.

Jack T. Anagnostis, for respondent.
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1 Unless otherwise indicated, section references are to the

Internal Revenue Code of 1986, as amended, and Rule references

are to the Tax Court Rules of Practice and Procedure.

2 The parties have stipulated that the amount owed should

have been $121,164, calculated by crediting $66,747 against the

reported liability of $187,911. The difference resulted from

petitioner’s inclusion in the amount owed shown on his return of

a $5,987 “penalty” computed by petitioner on the Form 2210,

Underpayment of Estimated Tax by Individuals, accompanying his

1985 return.

MEMORANDUM OPINION

WHERRY, Judge: This case was filed in response to a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330.1 The issue for decision is whether respondent

may proceed with collection as so determined.

Background

This case was submitted fully stipulated pursuant to Rule

122. The stipulations of the parties, with accompanying

exhibits, are incorporated herein by this reference.

Petitioner requested and obtained extensions of time until

October 15, 1986, to file his 1985 Form 1040, U.S. Individual

Income Tax Return. On that date, petitioner filed his 1985

return reporting total tax of $187,911; total payments, through

withholding, of $66,747; and an amount owed of $127,151.2 No

payment was submitted with the return. At the time, petitioner

was involved in a pending bankruptcy, which he had filed in May

or June of 1986.
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3 The Final Notice--Notice of Intent to Levy and Notice of

Your Right to a Hearing also reflected trust fund recovery

penalties for various quarterly periods in 1982, 1983, and 1986,

which are not at issue in this proceeding.

On November 17, 1986, respondent assessed the total tax

shown on petitioner’s return, plus additions to tax and interest,

and applied the reported payments. Notices of balance due were

also sent on November 17 and December 22, 1986. Respondent

thereafter examined petitioner’s return and on October 14, 1992,

issued to petitioner a notice of deficiency with respect to 1985. 

The notice reflected determinations by respondent of a deficiency

based on unreported income and of additions to tax under sections

6653(b) and 6661.

Petitioner filed a petition with this Court disputing

respondent’s determinations on January 12, 1993, at docket No.

974-93. The case was resolved by entry of a stipulated decision

on December 20, 1995. The decision document provided: “That

there is no deficiency in income tax due from, nor overpayment

due to, the petitioner for the taxable year 1985” and that there

were no additions to tax due from petitioner.

On October 6, 1999, respondent issued to petitioner a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing with respect to, among other liabilities, his Federal

income taxes for 1985.3 As of that date, the amount owed by

petitioner for 1985, including additions to tax and interest,
- 4 -

totaled $477,912.76. In response to the notice, petitioner’s

representative, Douglas A. Fendrick (Mr. Fendrick), timely

submitted a Form 12153, Request for a Collection Due Process

Hearing, received by respondent on November 4, 1999. The Form

12153 contained the following explanation of petitioner’s

disagreement with the notice of levy as it pertained to the 1985

liabilities: “Statute of limitation may have expired”.

On February 14, 2001, petitioner filed a joint Form 1040

with his wife for the taxable year 1999 reporting a tax liability

of $19,748. No prepayments had been made for 1999, nor was any

payment submitted with the return. The reported tax liability

was assessed on April 2, 2001, along with additions to tax and

interest. A notice of balance due was also sent on that date.

Respondent issued to petitioner and his spouse a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing on September 7, 2001, with respect to the 1999 year. The

notice reflected a total assessed balance and statutory additions

of $29,191.87. In response, a timely Form 12153, signed only by

petitioner, was received by respondent on October 9, 2001. 

Petitioner attached to the Form 12153 an explanation of his

disagreement, communicating why he believed the amount requested

for payment was incorrect. Petitioner represented that he noted

on the 1999 return that: (1) The income reported on the Schedule

C, Profit or Loss From Business, for his sole proprietorship was
- 5 -

gross income, not taxable income; (2) the reason for this manner

of reporting was that records concerning his business expenses

were lost at the time he filed the return; and (3) he would file

an amended return when he recovered materials to support Schedule

C deductions. Although petitioner never filed an amended 1999

return, the attachment to his Form 12153 expressed interest in

being allowed to make installment payments based on net, rather

than gross, income.

Petitioner’s collection case for 1985 was assigned to

Appeals Officer Joan R. Carter (Ms. Carter), of the Internal

Revenue Service (IRS) Office of Appeals in Newark, New Jersey. 

Following her receipt of the case, Ms. Carter sent a letter dated

February 5, 2002, to Mr. Fendrick responding to the concerns

expressed in petitioner’s Form 12153. The letter opened with the

following statement: “Since my efforts to contact you by

telephone have not been very successful the last few attempts,

this letter summarizes how the collection statute expiration date

was determined for each of periods listed above.” With respect

to 1985, the letter then provided:

Assessment Date 11-17-1986

Original Collection Statute Date 11-17-1996

Bankruptcy Petition TC 520 6-9-1986

Bankruptcy Lifted TC 521 9-22-1989 (Statute Suspended 3yrs.

3mos. 14days)

Original Collection Statute Date 11-17-1996

Plus: Suspension Period 3yrs. 3mos. 14days

New Collection Statute Date 3-23-2000

Collection Due Process Appeal 11-8-1999 (Statute Suspended While

in Appeals)
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4 An attachment to the Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 gives Mar.

26, 2002, as the date this message was left. That date, however,

is difficult to reconcile with the letter sent by Ms. Carter in

response, described infra in text.

In closing, the letter stated:

I have enclosed Form 433-A for Mr. Newstat to complete

so that I may evaluate collection alternatives. Please

return completed Form 433-A to me by February 25, 2002.

In addition, please call me by February 25, 2002 at the

telephone number shown above to discuss any questions

you may have regarding the computation of the

collection statute expiration dates and collection

alternatives.

Petitioner received a copy of the foregoing letter in mid-March

of 2002.

At some point after receipt of the February 5, 2002, letter,

Mr. Fendrick advised Ms. Carter by a voice mail message4 that he

no longer represented petitioner, that petitioner was in the

process of retaining a new attorney, and that he expected that

Ms. Carter would be hearing from the new counsel within 2 weeks. 

Ms. Carter responded with a letter dated March 28, 2002, sent

directly to petitioner and explaining that “Approximately one

month has passed since Mr. Fendrick informed me of this change

[of representatives], and no one has contacted me on your behalf

regarding this matter.” In the letter, the heading of which

referenced the 1985 income tax, Ms. Carter scheduled an in-person

appointment for April 9, 2002, and advised petitioner that if he

did not appear for the meeting or call beforehand to cancel, she
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 would close his case based upon the information available in the

case file.

Meanwhile, petitioner had been notified by a letter dated

January 2, 2002, that his collection case with respect to 1999

had been assigned to the IRS Office of Appeals in Oklahoma City,

Oklahoma, due to a heavy workload in the New Jersey office. The

letter informed petitioner that if he preferred a face-to-face

conference, his case would be returned to the New Jersey office

upon request. By a facsimile sent in early February of 2002,

petitioner represented that he had previously communicated such a

preference for an in-person hearing and further cited his

intention to have a representative appear with him at the

meeting. At some point thereafter, not otherwise revealed by the

record, petitioner’s collection case for 1999 was reassigned to

Ms. Carter.

By a letter dated April 2, 2002, Robert W. Lynch (Mr. Lynch)

advised Ms. Carter that he had been retained to represent

petitioner. His letter referenced the proposed April 9, 2002,

appointment and informed Ms. Carter: “Neither Mr. Newstat nor I

will be able to attend that day. I will call you after my

meeting with Mr. Newstat [when Mr. Lynch would obtain the case

file] to discuss this matter in detail, and to reschedule a

meeting, if appropriate.”
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5 The power of attorney authorized representation with

respect to employment taxes for certain quarterly periods in

1982, 1983, and 1986, as well.

In a subsequent letter to Ms. Carter dated April 22, 2002,

Mr. Lynch made a request under the Freedom of Information Act

(FOIA) and section 6103 for all records pertaining to the

determination of petitioner’s 1985, but not 1999, liability. 

Mr. Lynch asked that the administrative file first be made

available at the IRS office in Cherry Hill, New Jersey, in order

to determine which documents should be copied, and that

collection action “remain suspended pending production of the

requested documents and our meeting.” Mr. Lynch also enclosed

with the letter a Form 2848, Power of Attorney and Declaration of

Representative, authorizing his representation of petitioner

regarding income taxes from Form 1040 for the years 1985, 1999,

and 2000.5

Thereafter, by a letter dated April 24, 2002, Mr. Lynch

confirmed a telephone conversation with Ms. Carter of that date

during which he “agreed to withdrawal [sic] my document request

as a Freedom of Information Act and Internal Revenue Code § 6103

Request, provided my request can be reinstituted without

prejudice as a FOIA request upon my subsequent written notice to

you.” A further letter of May 30, 2002, from Mr. Lynch to Ms.

Carter confirmed a meeting scheduled for June 13, 2002, as well

as Mr. Lynch’s understanding that “a six or seven inches high
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stack of records concerning Mr. Newstat and his federal tax

liabilities” would be available at the meeting for his review.

However, by letter dated June 11, 2002, Mr. Lynch asked that

Ms. Carter contact him to reschedule the planned meeting. The

basis for this request was that petitioner wished to be present

when the records were reviewed but would be unable to attend the

June 13, 2002, conference because of health problems. Mr. Lynch

also enclosed with the letter a new Form 2848 authorizing his

representation of petitioner for “All tax periods 1980 through

2001, inclusive” on grounds that “there may be issues for years

other than those set forth on my previously submitted power of

attorney”.

Per Mr. Lynch’s request, the meeting was rescheduled for

June 26, 2002. A letter from Mr. Lynch to Ms. Carter dated June

13, 2002, confirmed this date and communicated the following:

Both Mr. Newstat and I will attend to review his file. 

I will provide Mr. Newstat with forms 433-A and 433-B. 

I need to first confirm there are outstanding tax

liabilities. I understand if Mr. Newstat does not

submit the financial disclosure forms during our

meeting, you will permit Mr. Newstat to review and copy

portions of his file but will likely close the appeal

file concerning this matter and the Service will resume

collection activity.

Mr. Lynch provided petitioner with a copy of this letter.

On June 26, 2002, Mr. Lynch, but not petitioner, attended

the scheduled meeting with Ms. Carter. At the meeting, Mr. Lynch

reviewed the files made available to confirm petitioner’s
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6 The stipulation of facts filed by the parties incorrectly

refers to the Aug. 28, 2002, letter as being sent approximately 1

month after the June 26, 2002, meeting.

7 The heading likewise listed the various period in 1982,

1983, and 1986 germane to the trust fund recovery penalties.

liabilities and asked Ms. Carter to photocopy and provide

selected documents from those files. Mr. Lynch concurred with

Ms. Carter that he would submit petitioner’s Form 433-A,

Collection Information Statement for Wage Earners and SelfEmployed Individuals, within 2 weeks so that collection

alternatives could be considered. Approximately 2 months later,6

Mr. Lynch advised Ms. Carter by letter dated August 28, 2002,

that petitioner had been hospitalized several times over the

summer but that a meeting had been scheduled with petitioner for

September 3, 2002, to complete the Form 433-A.

Thereafter, a letter dated September 27, 2002, and

referencing in the heading both the 1985 and 1999 tax periods,7

was sent by Ms. Carter to Mr. Lynch. The letter stated:

Enclosed you will find the documents you requested

during our conference with respect to the above

referenced matter. According to your letter dated

August 28, 2002, you were to call me after you met with

Mr. Newstat to finalized [sic] Form 433-A on September

3, 2002. I have not heard from you to date nor have I

received Form 433-A as requested. Therefore, a

determination has been made to uphold the collection

action proposed with respect to the above periods.

You and Mr. Newstat will be receiving the determination

letters issued discussing the basis for my findings.
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8 A separate notice of determination was issued regarding

the trust fund recovery penalties.

On that September 27, 2002, date, respondent also issued to

petitioner the aforementioned Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330. The notice

expressly pertained to the 1985 and 1999 taxable years8 and

sustained the proposed levy action. An attachment to the notice

recounted the administrative history of petitioner’s case and

concluded with the following:

The liability at issue for tax years 1985 and 1989

[sic] resulted from self-filed income tax returns that

have gone unpaid to date. Mr. Newstat failed to submit

Form 433-A and without this information I am unable to

evaluate your ability to pay. Since we were unable to

fully pursue collection alternatives because of your

lack of interest, collection alternatives could not be

achieved. Thus, the notice of intent to levy is

necessary and the least intrusive means of collection.

Petitioner’s petition challenging this notice of

determination was filed with the Tax Court on October 31, 2002,

at which time petitioner resided in Mt. Laurel, New Jersey. The

petition focused on petitioner’s contention that he was denied a

“Due Process Hearing” and prayed that the Court issue an order

that he be provided with such a hearing.

Petitioner’s case was initially calendared for trial in

Philadelphia, Pennsylvania, on October 20, 2003, but was

continued to February 9, 2004, on petitioner’s motion, which

motion relied principally on his assertions of poor health. 
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9 Petitioner has at no time contended, nor does the record

support, that the point raised in his Form 12153, Request for a

Collection Due Process Hearing, regarding expiration of the

period of limitations for 1985 was intended to refer to other

than, as interpreted by respondent, the statute of limitations on

collection. Respondent’s subsequent communications clearly

expressed and addressed this understanding of the issue, and

neither petitioner nor his representatives ever sought to alter

that understanding or otherwise to focus discussion on any

perceived problem with the assessment.

Respondent on December 8, 2003, then filed a motion for summary

judgment. After an extension of time, again requested on claims

of poor health, petitioner filed a response opposing the motion. 

Petitioner reiterated his position that he never received a “due

process hearing” and also, for the first time, alleged that the

original assessment of the 1985 liabilities in November of 1986

was prohibited by the bankruptcy law then in effect (and that the

period of limitations for a proper assessment had since

expired).9

Respondent’s motion for summary judgment was denied, and the

parties ultimately agreed to submit this case fully stipulated

under Rule 122. Both parties filed opening and reply briefs,

although petitioner did so only after being granted extensions of

time on account of further assertions of health problems.

Discussion

I. General Rules

Section 6331(a) authorizes the Commissioner to levy upon all

property and rights to property of a taxpayer where there exists
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a failure to pay any tax liability within 10 days after notice

and demand for payment. Sections 6331(d) and 6330 then set forth

procedures generally applicable to afford protections for

taxpayers in such levy situations. Section 6331(d) establishes

the requirement that a person be provided at least 30 days’ prior

written notice of the Commissioner’s intent to levy before

collection may proceed. Section 6331(d) also indicates that this

notification should include a statement of available

administrative appeals. Section 6330(a) expands in several

respects upon the premise of section 6331(d), forbidding

collection by levy until the taxpayer has been furnished notice

of the opportunity for administrative review of the matter in the

form of a hearing before the IRS Office of Appeals. Section

6330(b) grants a taxpayer who so requests the right to a fair

hearing before an impartial Appeals officer.

Section 6330(c) addresses the matters to be considered at

the hearing:

SEC. 6330(c). Matters Considered at Hearing.--In

the case of any hearing conducted under this section--

(1) Requirement of investigation.--The

appeals officer shall at the hearing obtain

verification from the Secretary that the

requirements of any applicable law or

administrative procedure have been met.

(2) Issues at hearing.--

(A) In general.--The person may raise at

the hearing any relevant issue relating to
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the unpaid tax or the proposed levy,

including--

(i) appropriate spousal defenses;

(ii) challenges to the

appropriateness of collection actions;

and

(iii) offers of collection

alternatives, which may include the

posting of a bond, the substitution of

other assets, an installment agreement,

or an offer-in-compromise.

(B) Underlying liability.--The person

may also raise at the hearing challenges to

the existence or amount of the underlying tax

liability for any tax period if the person

did not receive any statutory notice of

deficiency for such tax liability or did not

otherwise have an opportunity to dispute such

tax liability.

Once the Appeals officer has issued a determination

regarding the disputed collection action, section 6330(d) allows

the taxpayer to seek judicial review in the Tax Court or a

District Court, depending on the type of tax involved. In

considering whether taxpayers are entitled to any relief from the

Commissioner’s determination, this Court has established the

following standard of review:

where the validity of the underlying tax liability is

properly at issue, the Court will review the matter on

a de novo basis. However, where the validity of the

underlying tax liability is not properly at issue, the

Court will review the Commissioner’s administrative

determination for abuse of discretion. [Sego v.

Commissioner, 114 T.C. 604, 610 (2000).]
- 15 -

10 To the extent that certain of petitioner’s statements

raise the complaint that respondent failed to produce a

“certificate of assessments” for 1985 until after the petition

was filed in this case, sec. 6330 imposes no requirement that the

taxpayer be provided with such documentation. Nestor v.

Commissioner, 118 T.C. 162, 166-167 (2002). Furthermore, in

(continued...)

II. Analysis

A. 1985

1. Appeals Hearing

The petition focuses on petitioner’s contention that he was

not afforded a “Due Process Hearing” and requests that this case

be remanded for such a hearing. Petitioner acknowledges that a

meeting between his representative and Ms. Carter took place on

June 26, 2002, but he argues that this meeting was merely for

review of documents in lieu of his FOIA request concerning the

1985 year and was not a “Due Process Hearing”. He thus does not

dispute that the June 26, 2002, meeting pertained to 1985 but

claims that it was not the hearing provided for in section 6330. 

Relevant caselaw precedent and regulatory authority, however,

indicate that the circumstances here are not such as to render

remand appropriate for further consideration of 1985.

Hearings conducted under section 6330 are informal

proceedings, not formal adjudications. Katz v. Commmissioner,

115 T.C. 329, 337 (2000); Davis v. Commissioner, 115 T.C. 35, 41

(2000). There exists no right to subpoena witnesses or documents

in connection with section 6330 hearings.10 Roberts v.
- 16 -

10(...continued)

light of the Court’s conclusions infra regarding res judicata,

petitioner would lack grounds for arguing that he was prejudiced

in raising any available issues concerning assessment validity by

the alleged delay.

Commissioner, 118 T.C. 365, 372 (2002), affd. 329 F.3d 1224 (11th

Cir. 2003); Nestor v. Commissioner, 118 T.C. 162, 166-167 (2002);

Davis v. Commissioner, supra at 41-42. Taxpayers are entitled to

be offered a face-to-face hearing at the Appeals Office nearest

their residence. Where the taxpayer declines to participate in a

proferred face-to-face hearing, hearings may also be conducted

telephonically or by correspondence. Katz v. Commissioner, supra

at 337-338; Dorra v. Commissioner, T.C. Memo. 2004-16; sec.

301.6330-1(d)(2) Q&A-D6 and D7, Proced. & Admin. Regs. 

Furthermore, once a taxpayer has been given a reasonable

opportunity for a hearing but has failed to avail himself or

herself of that opportunity, we have approved the making of a

determination to proceed with collection based on the Appeals

officer’s review of the case file. See, e.g., Taylor v.

Commissioner, T.C. Memo. 2004-25; Leineweber v. Commissioner,

T.C. Memo. 2004-17; Armstrong v. Commissioner, T.C. Memo. 2002-

224; Gougler v. Commissioner, T.C. Memo. 2002-185; Mann v.

Commissioner, T.C. Memo. 2002-48. Thus, a face-to-face meeting

is not invariably required.

Regulations promulgated under section 6330 incorporate many

of the foregoing concepts, as follows:
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Q-D6. How are CDP hearings conducted?

A-D6. * * * CDP hearings * * * are informal in

nature and do not require the Appeals officer or

employee and the taxpayer, or the taxpayer’s

representative, to hold a face-to-face meeting. A CDP

hearing may, but is not required to, consist of a faceto-face meeting, one or more written or oral

communications between the Appeals officer or employee

and the taxpayer or the taxpayer’s representative, or

some combination thereof. * * *

Q-D7. If a taxpayer wants a face-to-face CDP

hearing, where will it be held?

A-D7. The taxpayer must be offered an opportunity

for a hearing at the Appeals office closest to

taxpayer’s residence or, in the case of a business

taxpayer, the taxpayer’s principal place of business. 

If that is not satisfactory to the taxpayer, the

taxpayer will be given an opportunity for a hearing by

correspondence or by telephone. If that is not

satisfactory to the taxpayer, the Appeals officer or

employee will review the taxpayer’s request for a CDP

hearing, the case file, any other written

communications from the taxpayer (including written

communications, if any, submitted in connection with

the CDP hearing), and any notes of any oral

communications with the taxpayer or the taxpayer’s

representative. Under such circumstances, review of

those documents will constitute the CDP hearing for the

purposes of section 6330(b). [Sec. 301.6330-1(d)(2)

Q&A-D6 and D7, Proced. & Admin. Regs.]

This Court has cited the above regulatory provisions with

approval. See, e.g., Taylor v. Commissioner, supra; Leineweber

v. Commissioner, supra; Dorra v. Commissioner, supra; Gougler v.

Commissioner, supra.

With respect to the instant case, petitioner was initially

provided with an opportunity for a face-to-face hearing by means

of Ms. Carter’s March 28, 2002, letter scheduling a conference
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for April 9, 2002. The letter referenced the 1985 tax year and

clearly explained that the purpose of the conference was to

accomplish objectives outlined in section 6330; i.e., to address

the issues raised in petitioner’s appeal request and to discuss

collection alternatives. The letter also warned that failure to

appear or to make alternative arrangements would result in

closing of the matter based on information in the case file.

Petitioner declined to meet with Ms. Carter on April 9th,

and his representative sent a letter stating that he would call

Ms. Carter “to reschedule a meeting, if appropriate.” A

conference was eventually scheduled, after delay attempting to

accommodate petitioner, for June 26, 2002. Although it is

apparent that document review precipitated by the FOIA request

was to be a part of the meeting, the record does not support

petitioner’s claim that the conference was entirely separate and

otherwise divorced from petitioner’s broader collection appeal

for 1985. Mr. Lynch explicitly stated in his letter of June 13,

2002, discussing the scheduled appointment: “I understand if

Mr. Newstat does not submit the financial disclosure forms during

our meeting, you will permit Mr. Newstat to review and copy

portions of his file but will likely close the appeal file

concerning this matter and the Service will resume collection

activity.”
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11 Considerations of both practicality and fairness are

implicated in this premise. Indefinite delay in the payment of

tax is the equivalent of nonpayment. The Government, upon which

all citizens depend, cannot function if tax revenues are not

collected. Unjustified delay by some is unfair to those who

(continued...)

The above-quoted language evidences an awareness that the

June 26, 2002, meeting was also to be petitioner’s forum for

advancing issues such as collection alternatives. Furthermore, a

copy of the letter was sent to petitioner, such that he should

have been alerted if this scenario differed from his own

understanding.

When petitioner was unable personally to attend the June 26,

2002, meeting, Ms. Carter met with his representative and even

waited 3 more months for any additional information from

petitioner before closing the case. Mr. Lynch apparently

attempted to meet with petitioner during that time to obtain

completed financial forms. Petitioner recites in his petition:

The reason Newstat did not respond to Appeal

Officer request for production of form 433-A- was that

between April to September 2002 and continuing at this

time his income was in disarray. * * * He wanted to

have a grasp of his income before he gave out Form 433-

A. Newstat had read section 6330 and believed

presenting and explaining his financial condition at

due process hearing in person was his right and he did

not lose that right by waiting until due process

hearing to present and explain himself in person.

A difficulty with this posture is that respondent cannot be

expected to wait indefinitely until a taxpayer is ready to submit

information germane to his or her collection case.11 In
- 20 -

11(...continued)

shoulder their burden to pay timely.

12 See supra note 9.

addition, with regard to his desire to submit information in

person, petitioner had been unable to attend any of the

previously proposed conferences and at no time communicated to

Ms. Carter a readiness or willingness to meet after the June 26,

2002, date. Moreover, the above-quoted regulations confirm that

a conference between an Appeals officer and a taxpayer’s

representative, not the taxpayer himself, may fulfill the

statutory directive for a hearing.

Hence, at the time respondent issued the notice of

determination, Ms. Carter had addressed in writing the sole

statute of limitations issue raised by petitioner for 1985 in his

Form 1215312 and had held a face-to-face conference with

petitioner’s representative, the consequences of which Mr. Lynch

clearly understood and had communicated to petitioner. In these

circumstances, the Court is satisfied that, with respect to 1985,

petitioner was offered and received a full and fair hearing which

complied with the requirements of section 6330.

2. Review of Underlying Liabilities

As previously indicated, the petition filed in this case

focused solely on the contention that petitioner had not been

afforded a proper hearing for purposes of section 6330. 
- 21 -

Petitioner’s opposition to respondent’s motion for summary

judgment and his posttrial briefs, however, raise the argument

that the assessment of his 1985 liabilities was invalid on

account of his then-pending bankruptcy, with the corresponding

implication that the statute of limitations on assessment has now

expired.

This Court has held that claims regarding whether

assessments were made within the limitations period constitute

challenges to the underlying tax liabilities. Hoffman v.

Commissioner, 119 T.C. 140, 145 (2002); Rodriguez v.

Commissioner, T.C. Memo. 2003-153; MacElvain v. Commissioner,

T.C. Memo. 2000-320. Respondent advances several arguments as to

why petitioner is not entitled to so challenge his underlying

1985 liabilities in this proceeding. Respondent’s principal

assertions in this regard are that petitioner is precluded from

raising the validity of the 1985 assessment here either by res

judicata or by the fact that petitioner failed to raise the issue

during the collection hearing process.

The U.S. Supreme Court in Commissioner v. Sunnen, 333 U.S.

591, 597 (1948), summarized the judicial doctrine of res

judicata, i.e., claim preclusion, in the following oft-quoted

pronouncement:

The general rule of res judicata applies to repetitious

suits involving the same cause of action. It rests

upon considerations of economy of judicial time and

public policy favoring the establishment of certainty
- 22 -

in legal relations. The rule provides that when a

court of competent jurisdiction has entered a final

judgment on the merits of a cause of action, the

parties to the suit and their privies are thereafter

bound “not only as to every matter which was offered

and received to sustain or defeat the claim or demand,

but as to any other admissible matter which might have

been offered for that purpose.” Cromwell v. County of

Sac, 94 U.S. 351, 352. The judgment puts an end to the

cause of action, which cannot again be brought into

litigation between the parties upon any ground

whatever, absent fraud or some other factor

invalidating the judgment. * * *

The Supreme Court also addressed application of the foregoing

principles in the particular context of tax litigation:

These same concepts are applicable in the federal

income tax field. Income taxes are levied on an annual

basis. Each year is the origin of a new liability and

of a separate cause of action. Thus if a claim of

liability or non-liability relating to a particular tax

year is litigated, a judgment on the merits is res

judicata as to any subsequent proceeding involving the

same claim and the same tax year. * * * [Id. at 598.]

The Tax Court and other courts have since interpreted the

Supreme Court’s directives specifically as they pertain to

decisions of this Court. We, for instance, have stated: “As a

general rule, * * * where the Tax Court has entered a decision

for a taxable year, both the taxpayer and the Commissioner (with

certain exceptions) are barred from reopening that year.” 

Hemmings v. Commissioner, 104 T.C. 221, 233 (1995). Likewise,

“the Tax Court’s jurisdiction, once it attaches, extends to the

entire subject of the correct tax for the particular year.” 

Erickson v. United States, 159 Ct. Cl. 202, 309 F.2d 760, 767

(1962).
- 23 -

Here, respondent issued to petitioner a notice of deficiency

on October 14, 1992, with respect to his 1985 taxable year, and

petitioner instituted a case for redetermination in this Court. 

That case was concluded without trial by entry of a stipulated

decision on December 20, 1995. The decision provided that there

was “no deficiency in income tax due from, nor overpayment due

to, the petitioner for the taxable year 1985”.

Now, however, petitioner in essence seeks to argue that he

overpaid his taxes for 1985. If petitioner’s reported liability

of $187,911 was never validly assessed, then the taxes would not,

as a legal matter, be considered owed by or due from petitioner. 

As a result, the $66,747 paid by petitioner for 1985 through

withholding and credited to that liability would constitute an

overpayment. For tax purposes, “overpayment” is typically

defined in its usual sense as “any payment in excess of that

which is properly due.” Jones v. Liberty Glass Co., 332 U.S.

524, 531 (1947); see also Estate of Smith v. Commissioner, 123

T.C. 15, 21 (2004). Petitioner could have made this challenge

during the earlier Tax Court proceeding and did not do so. This

Court has jurisdiction to determine overpayments in the context

of deficiency proceedings, and the cause of action or claim in a

deficiency proceeding thus encompasses the amount of tax, if any,

that a party is required to pay for the taxable period under
- 24 -

consideration. Sec. 6512(b); Barton v. Commissioner, 97 T.C.

548, 552-554 (1991).

The validity of the assessment is therefore a matter that

could have been raised and litigated in connection with the

deficiency proceeding, which involved the identical parties and

the same tax year. Accordingly, because the decision in that

case was not appealed and has since become final, res judicata

precludes petitioner from now disputing the validity of the

underlying 1985 assessment in this collection action.

Petitioner’s sole argument on brief with respect to res

judicata rests on his complaint that the 1985 case was concluded

by a stipulated decision. Petitioner states in this regard: 

“There are no details presented to Court as to what was

considered to reach that stipulation between the parties; res

judicata depends upon judgment on the merits. In that case the

judgment was entered by practice, and or [sic] procedure which is

distinguished from judgment on merits.”

Contrary to petitioner’s position, however, it is wellsettled, blackletter law that “For res judicata purposes, an

agreed or stipulated judgment is a judgment on the merits.” 

Baker v. IRS, 74 F.3d 906, 910 (9th Cir. 1996); see also United

States v. Intl. Bldg. Co., 345 U.S. 502, 503-506 (1953)

(upholding res judicata effect of stipulated Tax Court decisions,

regardless of whether the underlying agreement reached the
- 25 -

13 Additionally, the Court notes that petitioner’s stated

contention that, pursuant to sec. 6330(c)(1), it was the

responsibility of the Appeals officer to determine whether

relevant law and procedure had been complied with in the

assessment and collection process does not here warrant a

departure from application of res judicata. First, since

petitioner has at no time throughout the administrative

proceeding or this litigation produced any evidence establishing

the specific dates or circumstances of his bankruptcy action, to

accept his contention as sufficient to invalidate the

determination would work a significant broadening of the

verification requirement beyond the parameters suggested in this

Court’s prior jurisprudence. See Lunsford v. Commissioner, 117

T.C. 183, 186-188 (2001) (upholding use of IRS transcripts for

purposes of complying with the verification requirement until the

taxpayer provides evidence of irregularity in assessment

process). Second, although the Secretary retained authority to

abate the challenged assessment in these circumstances if he

concluded it was procedurally defective, that authority is

discretionary, not mandatory. Given petitioner’s earlier

opportunity to raise this challenge in his deficiency case and

his signing of a stipulated decision to the contrary, the Court

(continued...)

“merits” of the controversy); Erickson v. United States, supra at

768 (same); Krueger v. Commissioner, 48 T.C. 824, 828-829 (1967)

(same).

The Court concludes that the circumstances of the instant

case meet all prerequisites for application of res judicata and

that petitioner is precluded under the doctrine from challenging

his underlying liability for 1985 in this proceeding. Hence,

petitioner’s challenge to the validity of the assessment provides

no defense to the proposed collection action, and we need not

reach respondent’s alternative contention that failure to raise

the issue during the Appeals hearing process would likewise

foreclose its consideration before this Court.13
- 26 -

13(...continued)

would be hard pressed to declare that an abuse of discretion was

committed in relying on the outcome of the previous litigation.

3. Review for Abuse of Discretion

In light of the Court’s conclusions supra regarding

challenges to the underlying liabilities, disposition of this

case as to 1985 rests upon whether the record reflects an abuse

of discretion on the part of respondent in determining to proceed

with collection efforts in the form of levy. Action constitutes

an abuse of discretion under this standard where it is arbitrary,

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

Commissioner, 112 T.C. 19, 23 (1999). The Court considers

whether the Commissioner committed an abuse of discretion in

rejecting a taxpayer’s position with respect to any relevant

issues, including those items enumerated in section

6330(c)(2)(A); i.e., spousal defenses, challenges to the

appropriateness of the collection action, and offers of

collection alternatives.

Here, to the extent that petitioner’s apparent interest in a

collection alternative such as an installment agreement or offer

in compromise might pertain to 1985 as well as 1999, the record

reflects no abuse of discretion by respondent in deciding instead

to proceed with levy. To enable the Commissioner to evaluate a

taxpayer’s qualification for an installment agreement or offer in

compromise, and particularly in the face of allegations of
- 27 -

economic hardship, the taxpayer must submit complete financial

data.

Petitioner, however, has never supplied a completed Form

433-A or other financial information to respondent, despite

requests from respondent and the efforts and warnings of his own

representative. Mr. Lynch’s June 13, 2002, letter, of which a

copy was sent to petitioner, expresses clearly that petitioner

would be expected to provide relevant financial disclosure forms

at the June 26, 2002, meeting in order to prevent closure of his

case and resumption of collection activity. In light of this

admonition, petitioner’s continued recalcitrance after the

conference with regard to supplying the necessary data is not

well taken.

Consequently, although the Court is sympathetic to

difficulties petitioner may have encountered in connection with

his health and economic situation, it cannot be said that

respondent acted arbitrarily or capriciously in determining to

proceed with levy for 1985 when petitioner submitted no

documentation, during or after a proper hearing, of his financial

circumstances. The Court shall sustain respondent’s collection

action with respect to 1985. 

B. 1999

With respect to 1999, petitioner’s submissions to this Court

focus solely on his contention that he did not receive a “due
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process hearing”. Specifically, petitioner states on brief that

“after petitioner requested his 1999 case be returned to New

Jersey, from Oklahoma City OK.[sic], the record is blank and

respondents [sic] did not address that case; there was no due

process hearing concerning that case and it cannot be included in

Notice of determination as after thought [sic].”

As previously indicated, the record for 1985 reveals that a

conference concededly pertaining to petitioner’s 1985 year was

held on June 26, 2002, and that petitioner’s representative

understood, and communicated to petitioner, that the outcome of

the meeting could lead to closure of the collection case and

resumption of collection activity. Concerning 1999, in contrast,

the record is essentially silent from the time of petitioner’s

February 7, 2002, request for transfer to New Jersey until the

issuance of the notice of determination addressing both 1985 and

1999 on September 27, 2002.

The notice of determination supports that the 1999 case was

at some point assigned to Ms. Carter, but there is no indication

as to when the assignment occurred or whether the assignment was

ever communicated to petitioner or his representative. None of

the interim letters reference 1999 or the contentions raised by

petitioner in his Form 12153 for that year. Rather, the only

explicit mention of 1999 is on the power of attorney submitted by

Mr. Lynch on April 22, 2002, which authorized his representation
- 29 -

of petitioner in connection with income taxes for 1985, 1999, and

2000. That year was also included by reference to the taxable

years 1980 through 2001 specified in the power of attorney

submitted by Mr. Lynch on June 11, 2002. These documents fall

short of establishing an understanding that 1999 was presently

before Ms. Carter and that any upcoming meeting would pertain to

1999. Any such implications are further weakened by the fact

that no evidence indicates that the years 1980, 1981, 1984, 1987,

2000, and 2001, likewise listed on one or both of the Forms 2848,

were the subject of any collection proceeding.

Given the overall state of the record, the Court cannot

conclude from the evidence that either petitioner or Mr. Lynch

was aware that Ms. Carter was simultaneously handling the 1985

and 1999 years and that communications during the spring of 2002

and the June 26, 2002, conference were to represent petitioner’s

opportunity to be heard with respect to his 1999 year. In these

circumstances, the Court holds that petitioner has not been

afforded a hearing within the meaning of section 6330 for the

1999 year.

The foregoing conclusion does not, however, end the inquiry. 

As this Court has indicated, remand to Appeals, even in cases

where a proper section 6330 hearing was not held, is appropriate

only when “necessary or productive”. Lunsford v. Commissioner,

117 T.C. 183, 189 (2001); see, e.g., Harrell v. Commissioner,
- 30 -

T.C. Memo. 2003-271 (concluding that circumstances justified

remand). Conversely, for instance, we do not remand cases where

the only arguments advanced are based on previously rejected

legal propositions or where the existing record allows for

disposition of all issues raised without need for further

development before Appeals. E.g., Keene v. Commissioner, 121

T.C. 8, 19-20 (2003); Lunsford v. Commissioner, supra at 189;

Kemper v. Commissioner, T.C. Memo. 2003-195.

Here, because the assessments at issue for 1999 were based

upon the amounts reported on petitioner’s filed tax return, and

petitioner never received a notice of deficiency or other

opportunity to dispute those amounts, he would be entitled to

challenge his underlying liabilities in this collection

proceeding. Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). 

The Form 12153 submitted by petitioner indicates a desire to

claim business expenses not shown on his original return. In

light of our conclusion regarding the lack of a hearing for 1999,

we believe that petitioner should be afforded a final opportunity

to supply relevant documentation. Petitioner will also have a

further chance to raise relevant issues reviewed for abuse of

discretion, such as collection alternatives.

We caution petitioner, however, that were it not for the

unusual circumstances of this case, his history of delay and

failure to supply information would give us pause. We remind
- 31 -

petitioner that section 6330 does not afford him an unlimited

right to present information in person and at a time or place of

his choosing. If petitioner cannot promptly meet with an Appeals

officer to submit documentation and other pertinent data, we

would expect him to do so through a representative or by written

or telephonic communication. Otherwise, respondent will be in a

position to close petitioner’s 1999 case on the existing record.

In conclusion, with respect to 1985, the Court will sustain

respondent’s determination to proceed with collection action. 

With respect to 1999, the Court will remand the case for further

proceedings, in the form of a section 6330 hearing, before

Appeals. 

To reflect the foregoing,

An appropriate order will

be issued.