T.C. M em o . 2 0 1 7 -4 1

UNITED STATES TAX COURT
STEVEN L. ERTELT, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 0 7 39 -1 4 L. Fi l edM arch 1 , 2 0 17
.

St ev enL. Ert el t , p ro s e. Eri k W
. Nel s o n an dJ efferyRi ce, fo r res p o n d en t .

M EM ORANDUM FINDINGS OF FACT AND OPINION THORNTON, Jud g e: Pet i t io n er s eek s rev i ew p urs u an t t o s ect i on s 6 3 2 0 (c)
an d 6 3 3 0 (d )(1 ) o f t h e d et erm i n at i o n b y th e In t ern al Rev en u e Serv i ce (IRS) t o
up h o l dth e fi l i n g o f a n o t i ce o f Fed eral t ax l ien (NFTL) rel at i n g t o p et i t i o n er’ s- 2
-

[* 2 ] u np ai dFed eral i n co m e t ax l i ab il i t i es fo r 2 0 08 an d2 0 0 9
. 1 Th e i ss u es fo r d eci s i o n are: (1 ) wh et h er th e Co u rts h o ul d g ran t p et i ti o n er’ s m ot i o n t o reo p en th e
reco rd ; (2 ) wh eth er res p o n d en t p ro p erl y v eri fi edth atn o t i ces o f d efi ci en cy fo r 2 0 0 8 an d2 0 0 9 were m ai l edt o p et i t i o n er; (3 ) wh et h er p et i t i o ner m ay ch al l en g e h i s
u n d erl y i n g t ax l iab i l i t i es fo r 2 0 0 8 an d2 0 09 ; (4 ) wh et h er res po n d en tab u s edh i s d i s cret i o n b y

d en y i n g p et i t i o n er a face-t o -face h eari n g; an d(5 ) wh et h er p et i t i o ner
s h o u ldb e req u i redt o p ay th e Un i t edSt at es a p en al ty p u rs u an tt o s ect i o n 6 6 7 3 (a)(1 ). FINDINGS OF FACT Wh en p et i t i o n er fi l edh i s p et i t i o n , h e res i d edi n Cal i fo rn i a. Pet i t i o ner fai l edt o fi l e h i s 2 0 0 8 an d 2 0 0 9 Fed eral i n co m e t ax retu rn s . Co n s equ en t l y , th e IRS p rep areds ub s t i tu t es fo r retu rn s fo r p et i t io n er’ s 2 0 0 8 an d 2 0 0 9 t ax y ears p u rs u an t t o sect i o n 6 0 2 0 (b ). OnDecem

b er 2 7, 2 01 1 , th e IRS i ss u ed t o p et i t i o n er n o t i ces o f d efi ci en cy fo r t ax y ears 2 0 08 an d 2 0 09 , d et erm i n i n g d efi ci en ci es o n the b as i s o f i n co m e rep o rt edb y

th i rd -p art y

s o u rces as p ai dt o p et i t i o n er o n Fo rm s W -2 , W ag e an dTax St at em en t ; Fo rm s W -2 G, Cert ai n Gam bl i n g W i n ni n gs ; an d Fo rm s 1 0 99 -M ISC,

1 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e i n effect atal l rel ev an t t i m es , an d al l Ru l e referen ces are t o the Tax Co urtRu l es o f Pract ice an d Pro cedure.- 3
-

[* 3 ] M i s cel l an eo u s In co m e. Th e n o t i ces o f d efi ci en cy were ad dres sedt o p et i t i o n er ata Cal i fo rn i a ad dres s . Th atCal i fo rn i a ad dres s was p et i ti o n er’ s l as t kn o wn ad dres s as s h o wn in IRS reco rd s , th e ad dres s atwh i ch h e i n factrecei v ed
s ub s equ en tco rres po n d en ce fro m th e IRS, an dth e ad dres s th ath e l i s t edo n h i s p et i t i o n . Pet i t i o ner fai l edt o p et i t i o n th i s Co u rtwi thi n 9 0 d ay s i n res p o n s e t o th e
n o t i ces o f d efi ci en cy ; th e IRS t h erefo re as s es s edth e l i ab il i t i es s etfo rt h i n th o s e
n o t i ces . OnAu g u s t2 7 , 2 0 1 3, th e IRS m ai l edp et i t i on er a No t i ce o f Fed eral Tax Li en Fi l i n g an dYo u r Ri g htt o a Heari n g Un d er IRC 6 3 2 0 , wi th res p ectt o h i s
o u t s t an d i n g i n co m e t ax l i ab i l i ti es fo r 2 0 0 8 an d2 0 0 9. Pet i t i o ner t i m el y s ubm i t t ed a Fo rm 1 2 1 5 3 , Req u es tfo r a Co l l ect i o n Du e Pro ces s o r Equ iv al en tHeari ng . Inan at t ach m en tt o th e Fo rm

1 21 5 3 p et i t i o n er s t at ed : I res p ect fu l l y

req u es tfo r a Face-t o -Face Co l lect i o n Du e Pro ces s Heari n g i n an Ap p eal s o ffi ce t hati s cl o ses tt o m y p l ace o f res i d en ce. I wi l l b e au d i o reco rd i ng th e s ai dp ro ceed in g s. Th ere are a few i s su es I wo u l d l i k e t o ad dres s , i n cl ud i n g, b u tn o tl i m i tedt o th e fo l l o wi ng :

• I wi s h t o Veri fy wh et h er o r n otth e IRS co m p li edwi th al l p ro p er p ro cedu res as req u i redb y l aw.

• I d on ’ tb el i ev e I am l i ab l e fo r t h e as ses s edt ax .

• I s h o u l d NOT b e h el dres p o n si b l e fo r t h e p en al t i es accru ed
.- 4
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[* 4 ] • I wi s h t o ch al l en g e t h i s al leg ed“ li ab i l i ty ” b ei ng th atI NEVER

h adan o p p o rtu n it y

t o ch al l en g e i tp rev i o us l y .

• In th e cas e t h atth i s al l eg ed “ li ab i l i ty ” i s i n deed a p ro p er as s es s m en t an dth ati tcan b e p ro ven t o b e au then ti c an d o wed , I wo u l d l i k e t o d i s cu s s wh atal tern at i ves t o co l l ect i o n are av ai l ab le t o m e, i ncl u d i n g , b u tn o tl i m i t edt o , In s tal l m en t Ag reem en t s, Offer i n Co m p ro m i s e, an dan y o th er p aym en t arran g em en t s th atm ay

b e av ai l ab l e t o m e. It is n o tm

y i n t en t io n t o d i s cu s s an y

i s s u es th atth e IRS o r t h e Co urt s h av e co n s i d eredt o b e fri v o lo u s arg um en t s . If y o uh av e co n s i d ered an y o f t he i s s u es I h av e b ro u gh tup i n t h e p as tt o b e fri vo l ou s , I h ereb y ab an d o n th em . OnDecem

b er 1 9, 2 01 3 , Set t l em en t Offi cer M acau l ay (SO M acau l ay ) fro m th e IRS Offi ce o f Ap p eal s (Ap p eal s ) s en tp et i t i o ner a l et t er s ch edu l i n g a t el ep h o n e
co l l ect i o n du e p ro ces s (CDP) h eari n g fo r J anu ary 3 0 , 2 0 1 4 . Th e l et t er ex pl ai n ed th atp et i t i o n er “ m

us t p ro v i d e ad d i t io n al fi nan ci al o r retu rn i n fo rm at i o n t o qu al i fy ” fo r a face-t o -face h eari n g . Th e l et t er req u es t edth atp et i t io n er p ro v i d e a Fo rm 4 3 3 -A, Co l l ect i o n In fo rm at i o n St at em en tfo r W ag e Earn ers an d Sel f-Em pl o y ed In d i v i du al s , an d“ [p ] ro o f t h ates t i m at edt ax p aym en t s are p ai di n fu ll fo r t h e y ear t o d at e.” Pet i t i o n er d i dn ots ub m i tth e i n fo rm at i o n req u es t edi n th e Decem b er 1 9 , 2 0 1 3 , l et t er. OnJ an u ary

3 0 , 2 0 1 4 , SO M acau l ay

cal l edp et i t i on er t o co n du ct th e t el ep ho n e CDP h eari ng b ut h adt o l eav e a m es s ag e. Th ereaft er SO M acau lay s en t- 5
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[* 5 ] p et i t i o n er a l et t er d at edFeb ru ary 5 , 2 0 1 4 , s t at in g th ats h e h adtri edcal l i n g p et i t i o n er atth e s ch edu l edt i m e b u t h e h adn o tb een av ai l ab l e; i n d i cat i n g th ats h e
wo u l dm ak e a d et erm i n at i o n b y rev i ewi ng th e ad m i ni s trat i v e fi l e; an dreq ues t i n g th atp et i t i o n er p ro v id e wi th i n 1 4 d ay s an y ad d it i o n al i n fo rm at i on fo r
co n si d erat io n . Aft er SO M acau l ay s en tp et i t i o n er t h e l et t er d at edFeb ru ary 5 , 2 0 1 4 , s h e recei v eda l et t er fro m

p et i t i o n er d at edJ an uary 2 8 , 2 0 1 4 . Inth e l et t er p et i t i o n er
s t at ed : “ I wi ll n o t b e ab l e t o p art i ci p at e i n th i s t el ep h o ne co n feren ce y o u
s ch edu l edfo r 0 1 / 3 0 / 2 01 4 . I am u n d er t h e i m

p res si o n th atI am

en t i t l edt o a facet o -face Co l l ect i o n Du e Pro ces s Heari n g”. He s t at edth ath e “ d i dn o trecei v e an y
s t atu to ry n o t i ces o f d efi ci en cy

fo r t h e t ax y ears ati s s u e” an drei terat edth e
s t at em en ti n cl u d ed i n th e at t ach m en tt o the Fo rm 1 2 15 3
. SO M acau l ay

s en tp et i t i o n er a l et ter d at edFeb ru ary 1 3, 2 0 1 4 , s t at i n g th at th e face-t o -face h eari n g was d en i edb ecau s e “ th e acco u n t i s n o tcu rren t.” W i th h er l et t er SO M acau l ay

p ro v i d ed p et i t i o n er wi th tran scri p ts o f i n co m e rep o rt edt o th e IRS b y th i rdp art i es fo r t ax ab l e y ears 2 0 0 5 t h ro u g h 2 01 2 . Th e l et t er i n d i cat edth at i n o rd er fo r p et i t i on er “ t o d i s p u t e t h e as s es s m en t s m ad e, b as edo n the rep o rt ed i n co m e”, h e h adt o s ub m i tco m p l et edFed eral i n co m e t ax retu rn s fo r 2 0 0 5 t h ro u g h 2 0 1 2 an dth e req u i redes t im at edp aym en ts fo r t ax ab l e y ear 2 0 1 3 “ so th e acco u n t- 6
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[* 6 ] can b e cu rren t .” SO M acau l ay req u es t edth at the i nfo rm at i on b e recei v edn o l at er t h an M arch 2 8 , 2 0 1 4
. Pet i t i o ner d i dn o ts ubm i t th e req u es t edi nfo rm at i o n . Ina l et t er d at edM arch 6 , 2 01 4 , p et i t i o n er s t at edth ath e h adal read y p ro v id edth e i n fo rm at io n n eces s ary fo r Ap p eal s t o co n s i d er t h e i s s u es rai s edi n h i s CDP h eari ng req u es t an d rei t erat ed th ath e h adn o trecei v eds t atu t o ry n o t i ces o f d efi ci en cy

fo r t h e t ax y ears ati s s u e. OnAp ri l 7 , 2 0 1 4 , th e IRS i s s u ed p et i t io n er a No t i ce o f Det erm i n at i o n Co n cern i n g Co ll ect i o n Act i o n (s ) Un d er Sect i o n 6 3 2 0 an d/ or 6 3 30 s u s t ai ni n g th e l i enat is s u e. OnM ay 1 2 , 2 0 1 4 , p et i t i o n er fi l ed a l et t er wi th th i s Co u rt s tat i n g i n p art , as fo l l o w s : Dear Tax Co u rtJ u d g e, I recen t l y req u es t edfo r a Co l l ect i o n Du e Pro ces s Heari ng , an d I s tro n g l y b el i ev e t h atm

y req u es twas i g n o red . I recei v eda No t i ce o f Det erm i n at io n fro m

th e In t ern al Rev en ue Serv i ce fo r t h e y ears 2 0 0 8 an d2 0 0 9. Th e l et t er s t at es th atI s h o u ldfi l e a p et i t i o n wi th th e Un i t edSt at es Tax Co u rti f I b el i ev e t h atth e In t ern al Rev enu e Serv i ce h as m ad e a wro n g d et erm i n at i o n . I d o b el i ev e t h atthey h av e m ad e th e wro n g d et erm in at i o n , an dI’ m n o ts u re wh i ch ro u t e t o t ak e aft er th i s . Th e IRS cl ai m s th atI o we t h em s o m e am o u n to f fu nd s an dI s t il l h av e b een u n s u cces s fu l i n o b t ai n i n g an y k i n do f p ro o f as t o h o w th ey s up p o rtth ei r cl ai m s . [ 2 ]

2 Th e Co urt n o t es th atth e l et ter p et i t i o n er fi l edi s n earl y i d en t i cal t o l et t ers (co n ti n u ed ...)- 7
-

[* 7 ] By an o rd er s erv edM ay

2 3 , 2 0 1 4 , th e Co u rtd i rect edp et i t i o n er t o fi l e b y J u l y 7 , 2 0 1 4 , a p ro p er am en d edp et i t i o n. In h i s am en d edp et i t i o n p et it i on er cl ai m ed , am o n g o th er t h i n g s , thath e h adn ev er recei v edn o t i ces o f d efi ci en cy fo r th e y ears i n i s s u e an dth erefo re h adn o th ada p rev io u s o p p o rtu n it y t o ch al l en g e h i s
u n d erl y i n g l iab il i ti es . Pet it i o n er fu rt h er al l eg edthat“ [r] es p o n den td i d n o t m eetal l
o f t h e ap p l icab l e requ i rem en ts du ri n g th e Co l l ect i o n Du e Pro ces s Heari n g ”, i n cl u d i n g a face-t o -face h eari n g . OnJ u ne 5 , 2 0 15 , th e p art i es fi l eda jo i n t m o t i on t o s ub m i t th i s cas e fo r d eci s i o n wi th o uttri al u n d er Ru l e 1 2 2 . Th e Co u rtg ran t edth atm o t i on an den t ered a d eci s i o n i n fav o r o f res po nd en to n J u l y 2 4 , 2 01 5
. OnAu gu s t2 4 , 2 0 1 5, p et i t i o n er fi l eda m o ti o n t o v acat e o n t h e g ro u n d s th at h e h adn o t recei v edn o t i ces o f d efi ci en cy fo r 2 0 0 8 an d2 0 0 9 . Ano rd er d at ed

2 (...co n t in u ed ) fi led in Sn od gras s v . Co m m i ss i o n er, T.C. M em o . 2 0 1 6 -2 35 , Garret tv . Co m m i s s i o n er, T.C. M em o . 2 0 1 6 -1 7 9 , Si l va v . Co m m i s si o n er, T.C. M em o . 2 0 1 5
- 2 2 9 , Knu d sen v . Co m

m is s i o n er, T.C. M em o . 2 0 15 -6 9 , Po rt wi n e v . Co m m i s s i o n er, T.C. M em o . 2 01 5 -2 9 , aff’ d , _ _ _ F. Ap p’ x _

_ _ , 2 0 1 6 W L 4 4 74 8 3 2 (1 0 th Ci r. Au g . 2 4 , 2 0 1 6 ), an dCau d l e v . Co m m i s s i o n er, T.C. Dkt . No . 2 4 40 8 -1 4 L (Au g . 7 , 2 0 1 5 ), aff’ d , 6 5 1 F. Ap p ’ x 1 4 7 (4 th Ci r. 2 0 16 ). Th e fact s , p l ead i ng s , an darg u m en t s m ad e b y p et i ti on er i n t h i s cas e an db y th e t ax p ay er i n Po rt wi ne b ear a s tri k i n g s i m i l ari ty . InPo rt wi n e th e Co u rts u s t ai n edth e IRS’ NFTL an dwarn ed th e t ax p ay er t h atthe Co u rtwo u l d “ s tro n g l y co n s i d er” i m

p os i n g a p en al ty

u n der s ec. 6 6 7 3 (a)(1 ) i f h e ret u rn ed to th e Co u rt an d p ro ceed ed i n a s i m il ar fas hi o n i n th e fu tu re.- 8
-

[* 8 ] Sep tem

b er 1 8 , 2 0 1 5, g ran tedp et i t io n er’ s m o t i o n t o v acat e an d rem an d edth e
cas e t o Ap p eal s “ fo r cl ari fi cat i on o f t h e reco rd as t o th e b as i s fo r t h e d et erm i n at i o n th atal l req ui rem en t s o f ap p l i cab l e l aw were m etan d s p eci fi cal ly wh ether a
s t atu to ry n o t i ce o f d efi ci en cy

fo r 2 0 0 8 an d2 0 0 9 was s en t t o p et i t i o n er’ s l as t kn o wn ad dres s .” OnDecem

b er 1 6, 2 01 5 , res p o n d en tfi leda res p on s e t o the o rd er d at ed Sep tem b er 1 8 , 2 0 1 5, an dat tach edt o th e res p o n s e a Sup p l em en t al No t i ce o f Det erm i n at i on Co n cern i n g Co ll ect i o n Act i o n (s ) Un d er Sect i o n 6 3 2 0 an d/ o r 6 3 3 0 d at edNo v em

b er 2 5, 2 0 1 5 . Th e s up p l em en t al n o ti ce o f d et erm i n at i o n s t at edth at th e m ai l i ng o f t h e n o ti ces o f d efi ci en cy fo r 2 00 8 an d2 00 9 was v eri fi ed wi th a cert ifi edm ai l l is t i n d i cat i n g thatth e n o ti ces were m ai ledt o p et i t i o n er ath is l as t kn o wn ad dres s (t h e s am e Cal i fo rn i a ad dres s l i s t ed o n h i s p et it i on ). Aft er t ri al the p art i es fi l eds i m u l tan eo u s b ri efs . W i th h i s b ri ef p et i ti o n er fi led a m o t i o n t o reo p en th e reco rd , requ es t i n g th atth e Co u rt t ak e ju d i ci al n o t i ce
o f Ex hi b i t s A-P an d B-P. OPINION I. Pet i t i o ner’ s M o ti o n To Reo p en th e Reco rd Befo re we ad dres s th e s ub s t an t i v e i s s u es i n th i s cas e, we co n si d er p et i t i o n er’ s m o t io n t o reo p en th e reco rd . Reo p en i n g the reco rd t o recei v e- 9
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[* 9 ] ad d it i o n al ev i d en ce i s a m at t er wi th i n th e d i s cret i o n o f t h e t ri al co urt . Bu t l er
v . Co m m i s s i o n er, 1 1 4 T.C. 2 76 , 2 8 6 -2 8 7 (2 00 0 ) (ci t i n g Zen it h Rad i o Co rp . v . Hazel t i ne Res earch , In c., 4 0 1 U.S. 3 2 1 , 3 3 1 -3 3 2 (1 9 7 1 )), ab ro g at edo n o th er g ro u nd s , Po rt er v . Co m

m i s s i on er, 1 3 2 T.C. 2 0 3 (2 0 09 ). W e wi l l n o t g ran ta
m o ti o n t o reo p en th e reco rdu n l es s , am o n g o th er req u i rem en t s , th e ev i d en ce rel i ed
o n i s n o t m erel y

cu m u l at i ve o r i m

p each i n g , th e ev i d en ce i s m at eri al t o t h e i s s u es i n v o l v ed , an dth e ev i d en ce p ro b ab l y wo u ld ch an g e s om e as p ecto f t he o u t co m e o f th e cas e. Bu t l er v . Co m

m i s s i o n er, 1 1 4 T.C. at2 8 7
. Pet i t i o ner s eek s t o reo p en th e reco rdt o s ub m i twh atap pear t o b e u n d at ed
s creen s h o t s o f t he U.S. Po s tal Serv i ce (USPS) W eb s i t e (USPS.co m ), p u rp o rt i n g t o
s h o w th atth e USPS W eb s it e was u n ab l e t o fi ndcert ai n track i ng i n fo rm at i o n
en t eredi n t o th e W eb s i t e ats o m e u n s peci fi edd at e. Th es e d o cu m en t s h av e n o t b een pro p erl y

au then t i cat ed ; i n p art i cu l ar, t he s creen s h o t s d o n o ts h o w wh enth ey
were m ad e, an dth ere h as b een n o s h owi n g th at the p u rp o rt edtrack in g i n fo rm at i o n
wo u l dn o th av e ex pi red as o f t h e d at e t h e s creen s h o t s were m ad e. Attri al a s i m i l ar
o b ject i on was rai sed an ds u s t ai n edwi th res pect t o s i m i l ar d o cu m en t s p et i t i o n er
o ffered i nt o ev i d en ce. In an y ev en t , b ecau s e t h e p o s i t i o n s o f t he p art i es an dth e rel ev an t fact s are fu l l y

d is cl o s edi n th e reco rd , an dth e d o cu m en ts p et it i on er s eek s t o s ub m i t d o n o t ch an g e t h e o ut co m e o f t h i s cas e, reo p en i n g th e reco rd- 1 0 -

[* 1 0 ] wo u l d b e p o in tl es s. Acco rd i n g l y , p et i t i o n er’ s m ot i o n t o reo p en th e reco rd wi l l b e d en i ed
. II. St an dardo f Rev i ew Sect io n s 6 3 2 0 an d6 3 3 0 p ro v i d e p ro cedu res fo r ad m i n i s trat i ve an d ju d i ci al
rev i ew o f th e Co m

m i s s i on er’ s l i en an dl ev y act i o n s . Sect i o n 6 3 2 1 i m po s es a l i en i n fav o r o f t h e Un i t edSt at es o n al l p ro p erty an dri g h t s t o p ro pert y

o f a p ers o n wh o i s l iab l e fo r an d fai l s t o p ay t ax es aft er d em an dfo r p aym en th as b een m ad e. Fo r th e l i en t o b e v al i dag ai n s tcert ai n th i rdp art i es , th e Secret ary m u s tfi l e a n ot i ce o f Fed eral t ax l i en an d , wi th i n fi ve b u s i n es s d ay s th ereaft er, p ro v i d e wri tt en n o t i ce t o th e t ax p ay er. Secs . 6 3 2 0 (a), 6 32 3 (a). Th e t ax p ay er m ay then req u es t an ad m i n is trat i v e h eari n g b efo re an Ap p eal s o ffi cer. Sec. 6 3 2 0 (b )(1 ). On ce t h e Ap p eal s o ffi cer i s s u es a d et erm i n at i o n , the t ax p ay er m ay s eekrev i ew i n th e Tax Co u rt . Secs . 6 3 20 (c), 6 3 3 0 (d )(1 ). Sect io n 6 3 3 0 (c)(2 ) p res cri b es th e m at t ers th at a p ers o n m ay rai s e atan Ap p eal s h eari n g , i n cl u d i n g s po u s al d efen s es , ch al l en g es t o t h e ap pro p ri at en es s o f th e co l l ect i o n act i o n, an dco l l ect i o n al t ern at i ves . Inad d i t i o n t o co n s i d eri n g i s s u es rai s edb y th e t ax p ay er u nd er s ect i o n 6 3 3 0 (c)(2 ), th e Ap p eal s o ffi cer m u s t v eri fy th atth e requ i rem en t s o f an y ap p l i cab l e l aw o r ad m i n i s trat i ve p ro cedure h av e b een
m et . Sec. 6 3 3 0 (c)(1 ), (3 ). Th e ex i s t en ce o r am o u n t o f t h e u n d erl y i n g t ax l i ab i l i t y- 1 1 -

[* 1 1 ] m ay

b e co n tes tedatan Ap p eal s h eari n g o n ly i f t h e t ax p ay er d i dn o trecei v e a
n o t i ce o f d efi ci en cy

o r d i dn ot o t h erwi s e h av e an o p po rtu ni ty t o d i s p u t e t h e t ax l i ab i l i ty . Sec. 6 33 0 (c)(2 )(B); s ee Seg o v . Co m m i s si o n er, 1 1 4 T.C. 6 0 4 , 6 0 9 (2 0 0 0); Go za v . Co m

m i s s i o n er, 1 14 T.C. 1 7 6 , 1 8 0 -1 8 1 (2 00 0 ). If t h e v al i d i ty

o f the u nd erl y i n g t ax l i ab i l i ty i s p ro p erl y ati s s u e, t h e Co u rt wi l l rev i ew th e t ax pay er’ s l i ab il i ty d e n ov o . See Seg o v . Co m m i s si o n er, 1 1 4 T.C. at6 0 9 -6 1 0 . Wh ere t h ere i s n o d i s p u t e co n cern i ng th e u n d erl y i n g t ax l iab i l i ty , th e Co u rtrev i ews th e IRS d eci si o n fo r ab u s e o f d i s cret i o n . Go za v . Co m m i ss i o n er, 1 1 4 T.C. at1 82 . Ab u s e o f d i s cret i o n ex is t s wh en a d et erm i n at i o n i s arb i trary , cap ri ci ou s , o r wi tho u ts o u n db as i s i n fact o r l aw. See M u rp h y 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 ). III. Veri fi cat i o n Attri al an do n b ri ef p et i t i o n er arg u edth atAp p eal s fai l edt o v eri fy th at
res p o n d en t m ai l edt o p et i t i on er t h e n o t i ces o f d efi ci en cy o n wh i ch res p o n den t ’ s t ax as s es s m en t s an dl i enare b as ed . Pet i t i o n er al l eg es th atth e USPS Fo rm 3 8 7 7 cert ifi edm ai l i n g l i s tco n t ai n ed i n th e reco rdi s d efect i v e b ecau s e i td o es n o t
ex p res s l y i n d i cat e t h e n u m

b er o f i t em s res po n d en td el i v eredt o th e USPS an dd o es- 1 2 -

[* 1 2 ] n o ti n cl u d e t h e s i g n atu re o f t h e USPS em p l o y ee wh o recei v ed the i tem s fo r
m ai l i n g fro m

res p o n d en t. 3 Sect io n 6 3 3 0 (c)(1 ) req u i res Ap p eal s , as p arto f i t s rev i ew, t o v eri fy th ata
v al i dn o t i ce o f d efi ci en cy was i s s u edt o th e t ax p ay er. J o rd an v . Co m m i ss i o n er, 1 3 4 T.C. 1 , 1 2 (2 0 1 0 ); Ho y l e v . Co m m i s s i o n er, 1 3 1 T.C. 1 9 7 , 2 0 2 -2 0 3 (2 0 0 8 ). Wh ere, as i n th i s cas e, a t ax p ay er i d en ti fi es an i rreg u l ari ty i n th e as s es s m en t p ro cedure, an Ap p eal s o ffi cer can n o trel y s o l el y o n th e t ax tran s cri p t s i n o rd er t o
v eri fy th ata n o t ice o f d efi ci en cy was s en t . See Ho y l e v . Co m m is si o n er, 1 3 1 T.C. at2 0 5 n.7 (“ [W ] h ere a t ax p ay er al l eg es n o n o t i ce o f d efi ci en cy was m ai l edh e h as
* * * ‘ [i d en t ifi ed ] an i rreg u l ari ty [.] ’ ”) (al t erat i o n i n o ri g i n al ); s ee al s o Nes t o r v . Co m m i s s i o n er, 1 1 8 T.C. 1 6 2 , 1 6 6 -1 6 7 (2 0 0 2). In s t ead , th e Ap peal s o ffi cer m u s t

“ ex am i n e u n d erl y in g d o cu m en t s i n ad d i t i o n t o th e t ax tran s cri p t s , s u ch as th e t ax p ay er’ s return , a co p y

o f t h e n o t ice o f d efi ci en cy , an d t h e cert ifi edm ai l i n g l i s t ”. Ch i ef Co u n s el No t i ce CC-2 0 0 6-0 1 9 at1 8 (Au g . 1 8 , 2 00 6 ); s ee M arl ow v . Co m m i s s i o n er, T.C. M em o . 2 0 1 0 -1 1 3 , s l i p o p . at2 1 ; Cas ey v . Co m m is si o n er, T.C. M em o. 2 0 0 9 -1 3 1 , s l i p o p . at1 8-1 9 (n o t i n g th atth e Ap p eal s o ffi cer ex am i ned

3 Th e USPS’ m ai l i n g p ro cedu res req u i re p o s t al em p l oy ees t o en t er o n th e Fo rm 3 8 7 7 th e t o t al n u m

ber o f i t em s recei v edan dt o s i gn an dp o st m arkth e fo rm . USPS Reg i s t eredM ai l Han db o o kDM -9 0 1, at3 -4 .2 .1 (Ap ri l 2 0 1 0 ), h t tp : //www.ap wu .o rg / s i t es / ap wu/ fi l es /res o u rce-fi l es /DM -9 0 1 % 2 0 Reg i s tered %2 0 M ai l%2 0 4 -1 0 %2 0%2 8 1 .7 7 %2 0 M B%2 9 .p df.- 1 3 -

[* 1 3 ] n o t i ces o f d efi ci en cy th atwere i n th e ad m i ni s trat i v e fi l e an d co n cl u d edth at
a n o t i ce o f d efi ci en cy

h adb een m ai l edt o the t ax p ay er). In d efi ci en cy cas es th e Co m m i ss i on er b ears th e i n i t i al b u rd en o f p ro v i n g b y
co m p et en tan dp ers u as i ve ev id en ce t h atthe n o t i ce o f d efi ci en cy was p ro p erl y
m ai l edt o th e t ax p ay er. Cl o u g h v . Co m m i s s io n er, 1 1 9 T.C. 1 8 3 , 1 8 7 (2 0 02 ); Co l em an v . Co m

m i s s i o n er, 9 4 T.C. 8 2 , 9 0 (1 9 9 0 ); Au g u s t v . Co m m i s s io n er, 5 4 T.C. 1 5 3 5, 1 5 3 6 -1 5 3 7 (1 9 7 0 ). W e h av e al s o req u i redth e Co m m i s s i o n er i n d efi ci en cy

cas es t o s h o w th atth e n o t i ce o f d efi ci en cy was p ro p erl y

d el i v eredt o th e USPS fo r m ai li n g . See Cl o u g h v . Co m m i s si on er, 1 1 9 T.C. at1 87 . Th e acto f
m ai l i n g the n o ti ce o f d efi ci en cy i s g en eral l y

p ro v en b y d ocu m en t ary

ev i d en ce o f
m ai l i n g o r b y

ev i d en ce o f th e Co m

m i ss i o ner’ s m ai l i n g p ract i ces co rro b o rat edb y d i rect t es t i m o n y . Co l em an v . Co m m i s s io n er, 9 4 T.C. at9 0 ; M ag azi n e v . Co m m i s s i o n er, 8 9 T.C. 3 21 , 3 2 4 -3 2 6 (1 9 8 7 ). Ex actco m p l i an ce wi th USPS Fo rm 3 8 7 7 m ai l i n g p ro cedu res rai s es a p res u m p t i o n o f o ffi ci al reg u l ari ty i n fav o r o f t h e Co m m i s s i o n er. Ho y le v . Co m m i s s i o n er, 1 3 1 T.C. at 2 03 ; Co l em an v . Co m m i s s i o n er, 9 4 T.C. at 9 1 . Al tho u g h th i s i s n o ta d efi ci en cy cas e, we h av e ap p li edth es e s am e p ri nci p l es i n a CDP s et t in g . See M ey er v . Co m m i s s i o n er, T.C. M em o. 2 0 1 3 -2 6 8
. Wh ere t h e ex i s ten ce o f a n o t i ce o f d efi ci en cy i s n oti n d i s p u t e,

“ an Ap p eal s o ffi cer * * * [can ] rel y o n a p ro p erl y

co m p l et edPo s tal Serv i ce Fo rm- 1 4 -

[* 1 4 ] 3 8 7 7 t o m eet h i s v eri fi cat i o n o b l i g at i o n u n d er s ect i o n 6 3 3 0 (c)(1 ).” Ho y l e v . Co m m i s s i o n er, 1 3 1 T.C. at2 0 3. Pet i t i o ner co rrect l y p o i n t s o u tth atres p o nd en t i s n o ten t i t l edt o th e p res u m p t i o n o f o ffi ci al reg u l ari ty i n th i s cas e b ecau s e t h e cert i fi edm ai l i n g l i s ti s i n co m pl et e. Res p o n d en tm ay

s t i l l p rev ai l , h o w ev er, i f t h e ev i d en ce o f m ai l i n g i s
o th erwi s e s u ffi ci en t . See Co lem an v . Co m m i s s i o n er, 9 4 T.C. at 9 1; s ee al s o Wh eatv . Co m

m i s s i o ner, T.C. M em o . 1 9 9 2-2 6 8
. Al th ou g h an i n co m

p l et e cert i fi edm ai l in g l i s tth atd o es n o tco n t ai n al l o f t he i n fo rm at i o n req u i redb y

Fo rm 3 8 7 7 i s i n s u ffi ci en tt o creat e a p res u m p t io n o f p ro p er m ai l i n g , i tn ev ert h el es s h as s o m e p ro b at i v e v al u e. See Po rt wi n e v . Co m m i s s i o n er, T.C. M em o . 2 0 1 5 -2 9 , at* 1 1 , aff’ d , _

_ _ F. Ap p ’ x _

_ _ , 2 0 1 6 W L 4 4 7 4 8 3 2 (1 0 th Ci r. Au g . 2 4 , 2 0 1 6 ); M as s i e v . Co m m i ss i o n er, T.C. M em o . 1 9 9 5
- 1 7 3 , aff’ dwi th o u tp ub l is h ed o p i n i o n , 8 2 F.3 d4 2 3 (9 th Ci r. 1 9 9 6 ). In Bo b bs v . Co m m i s s i o n er, T.C. M em o . 2 0 0 5 -2 7 2 , 2 0 05 W L 3 1 5 7 9 19 , at* 2 -* 3 , th e Co u rt fo u n d t h atth e IRS h ades t ab l i s h edb y a p rep o n d eran ce o f ev i d en ce t h ata n o t i ce o f d efi ci en cy

was m ai l ed t o th e t ax p ay er’ s l as tkn o wn ad dres s wh ere t h e Fo rm 3 8 7 7 b o re a USPS d at e s t am

p an d l i s t edth e t ax p ay er’ s u nd i s pu t edad dres s b u t l ack ed
an y i n d i cat i o n o f h ow m an y

i t em s were recei v edb y

an dth e s i gn atu re o f t h e USPS
em pl o y ee. Fu rth erm o re, i f a n o t i ce o f d efi ci en cy i s m ai l edt o t h e t ax p ay er atth e- 1 5 -

[* 1 5 ] t ax p ay er’ s l as t kn o wnad dres s , actu al recei p to f t h e n o t i ce i s i m m at eri al ; the
n o t i ce i s v al i d . See, e.g ., Un i t edSt at es v . Zo l l a, 7 2 4 F.2 d 8 0 8 , 8 1 0 (9 th Ci r. 1 9 8 4 ). Li k e t he l i s ti n Bo b bs , th e cert i fi edm ai li ng l i s ti n th is cas e l ack s an y i n d i cat i o n o f t h e n u m

b er o f i t em s recei v edb y an d t h e s i g natu re o f t h e USPS
em pl o y ee. Ho w ev er, t h e cert i fi ed m ai l i n g l is t b ears a d at e s t am p an ds h ows p et i t i o n er’ s n am e, h i s ad dres s , an dth e cert i fi edm ai l art i cl e n u m b ers o f t h e
co rres p o n d i n g n o ti ces o f d efi ci en cy . Pet it i on er h as n o targ u ed th atth e ad dres s
reco rd edo n th e cert i fi edm ai l i ng l i s twas n o th i s l as tkno wnad dres s , n o r h as h e arg u ed th atres p on d en t fai l edt o fo l l o wh is es t ab l i sh edm ai l i n g p ro cedu res . At tri al p et i t i o n er o b

ject edt o th e i n t ro du ct i on o f t h e Fo rm 3 8 7 7 b ecau s e i twas n o tan
o ri g i nal d o cu m en t . Attri al an d o n b ri ef p et i t i o n er q u es t i o nedth e au th en t i ci ty o f th e d o cu m en t , p o i n ti ng t o a p u rp o rt edd i s crep an cy i n th at th e fo rm

l i s t s th e s en d er
as th e IRS i n Ho l t s v i l l e, New Yo rk , wh ereas th e USPS d at e s t am p i n d i cat es th e
n o t i ces o f d efi ci en cy were p o s t m ark edi n Det ro i t , M i ch i g an . Res p o n d en t
ex p lai n edattri al th atth e i s su an ce o f t h e n o t ices o f d efi ci en cy was au t o m at ed , an d al th o u g h th ey

were i s s uedfro m

Ho l t s v i l l e, New Yo rk , th ey were ro u t edth ro u g h th e co m pu t i n g cen t er an dm ai l edi n Det ro i t , M i ch i g an .- 1 6 -

[* 1 6 ] In th e s up p l em en tal n ot ice o f d et erm i n at i o n SO M acau l ay d i dn o trel y
s o l el y o n th e cert i fi edm ai l in g l i s tt o v eri fy th atthe n o t i ces o f d efi ci en cy h adb een
m ai l edt o p et i t io n er. SO M acau l ay al s o rev i ewedth e co p i es o f t he n o t i ces o f d efi ci en cy

fo r th e y ears ati ss u e. Each n o t i ce o f d efi ci en cy b ears th e s am e m ai l i n g d at e, m ai l i n g ad dres s , an dcert i fi ed m ai l art i cl e n u m b er as tho s e o n t h e
co rres p o n d i n g cert i fi edm ai l i n g l i s t . W e co ncl u d e t h at th e d at edco pi es o f t h e n o ti ces o f d efi ci en cy co m b i n ed wi th th e Fo rm

3 87 7 cert ifi edm ai l i ng l i s t b eari n g m at ch i n g cert i fi edm ai l art i cl e
n u m b ers s u ffi ce t o s h o w th atth e n o t i ces o f d efi ci en cy fo r t h e y ears at i s s ues were
m ai l edt o p et i t io n er at h i s l as tkn o wnad dres s . W e fu rt h er co n cl ud e an d h o l dth at th e v eri fi cat io n req u i rem en t o f s ect i o n 6 3 3 0 (c)(1 ) h as b een m et . IV. Ch al l en g e t o th e Un d erl y i n g Li ab i l i t i es Th e p art i es d i s ag ree as t o wh et h er p et i t i o n er recei v edth e n o t i ces o f d efi ci en cy

fo r 2 0 0 8 an d2 0 0 9 . Res p o n d en t as sert s th atp et i ti o n er recei v edth e
n o t i ces o f d efi ci en cy an d co n s equ en t l y i s n o ten t i t l edt o ch al l en g e h i s u nd erl y i ng l i ab i l i t i es i n t h i s co ll ect i o n p ro ceed i n g . Nev ert h el es s , res p o nd en t co n t en d s , p et i t i o n er’ s act u al recei p to f th e n o t i ces o f d efi ci en cy i s i m m at eri al b ecau s e h e was g i v en an o pp ortun i ty

t o ch al l en g e h i s l i ab i l i t i es i n t h e CDP h eari n g b u t refu s edt o t ak e ad v an t ag e o f th ato p po rtu n i ty .- 1 7 -

[* 1 7 ] Atth e CDP h eari n g t h e t ax p ay er m ay rai s e an y rel ev an ti s s u e rel at i n g t o th e
u np ai dt ax o r t he p ro p os edco l lect i o n m etho d
. Sec. 6 3 3 0 (c)(2 )(A). Gen eral l y , a t ax p ay er m

u s t rai s e an i s s u e ata CDP h eari ng t o p res erv e i t fo r t h i s Co u rt ’ s
co n si d erat io n . Gi am el li v . Co m m is s i o n er, 1 2 9 T.C. 1 07 , 1 15 (2 0 0 7 ); s ec. 3 0 1 .6 3 3 0 -1 (f)(2 ), Q&A-F3 , Pro ced . & Ad m in . Reg s . Th e m eri ts are n o tp ro p erl y rai s edi f t h e t ax p ay er ch al l en g es th e u n d erl y i ng t ax l i ab il i ty b utfai l s t o p res en t Ap p eal s wi th an y

ev i d en ce reg ard i n g th atl i ab i l i ty aft er b ei n g g i v ena reas o n ab l e
o p p o rtu ni ty

t o d o s o . Del g ad o v . Co m m i s s i on er, T.C. M em o . 2 0 1 1 -2 40 , s l i p o p . at 5 -6 ; s ecs . 3 0 1 .6 3 2 0 -1 (f)(2 ), Q&A-F3 , 3 0 1 .6 3 30 -1 (f)(2 ), Q&A-F3 , Pro ced . & Ad m i n . Reg s. Al th ou g h p et i t i o n er d i s p u t ed h i s u n d erl y i ng l i ab il i t i es o n Fo rm 1 2 15 3 , h e fai l edt o p ro v i d e an y

ev i d en ce t o th e Ap p eal s o ffi cer t o d i s p u t e res p o n den t ’ s cal cu l at io n s o f t h e u n d erl y i ng l i ab i l i t i es , wh i ch were b as edo n i n co m e rep o rt ed b y th i rd -p art y s ou rces o n Fo rm s W -2 , Fo rm s W -2 G, an d Fo rm s 1 09 9 -M ISC as p ai dt o p et i t i o n er. Pet i t i o n er d ecl i n edt o p art i ci p at e i n the t el ep h o n e h eari n g . He fai l edt o
s ub m i tretu rn s fo r the y ears ati s s u e, as th e SO i n s tru ct edh i m , o r an y o ther d o cu m en t at i o n t o ad dres s h i s t ax l i ab i l i t i es fo r t ho s e y ears . Al th o u g h p et i t i o n er
s en ts o m e l et t ers t o th e SO, n o n e o f t hem i n cl u d edev ena s u m

m ary o f wh ath e b el i ev edt o b e h i s tru e u n d erl y in g l i ab i li t i es . Acco rd i n g l y , we co ncl u d e t h at- 1 8 -

[* 1 8 ] p et i t i o n er d i dn o tp ro p erl y rai s e h i s u n d erl y in g l i ab i l i t i es du ri ng th e CDP h eari n g , an dth erefo re h e can n o td i s p u te t h em i n th i s p ro ceed i n g . Inan y ev en t , i n th i s p ro ceed i n g p et it i o n er h as rai sedn o m ean i n g fu l d i s p u t e as t o h i s u n d erl y i n g l i ab i l i t i es . Co ns equ en t l y , we rev i ew res po n d en t’ s d et erm i n at i o n fo r ab u se o f d i s cret i o n o n l y . V. Face-t o -Face CDP Heari n g Req ues t Pet i t i o ner arg u es th atSO M acau l ay ab u sedh er d i s cret i on i n refu s i n g t o
co n du ct a face-t o -face CDP h eari n g . Res p on d en targ u es th at p et it io n er was n o t
en t i t l edt o a face-t o -face CDP h eari n g b ecau s e, am o n g o th er reas o n s , h e fai l edt o p ro v id e t h e req u es t edi n fo rm at i o n i n cl ud i n g Fed eral i nco m e t ax retu rn s fo r 2 0 0 5 th ro u g h 2 0 1 2 an da co m

p l et edFo rm

4 3 3 -A. Th i s Co u rth as h el d t h ata face-t o -face h eari ng i s n otreq u i redu n d er s ect i on 6 3 3 0 . See Kat z v . Co m

m is s i o n er, 1 1 5 T.C. 3 29 , 3 37 -3 38 (2 0 0 0 ); W i l li am s o n v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -1 8 8 , s l i p o p . at8 -9 ; St ock t o n v . Co m m i s s i o n er, T.C. M em o . 2 00 9 -1 8 6 , s l i p o p . at1 1 ; Lei n eweb er v . Co m m i s s io n er, T.C. M em o . 2 0 0 4 -1 7 , s l i p o p . at1 0 -1 2 . W e h av e al so h el dthatan Ap p eal s o ffi cer’ s d en i al o f a face-t o -face h eari n g d o es n o t co n s t i tu t e an ab u s e o f d i s cret i o n wh ere a t ax p ay er fai l s t o p res en trel ev an targ u m en t s , refu s es t o p ro v i d e requ es tedfi n an ci al i n fo rm at i o n , an dh as n o tfi l edal l req u i redt ax retu rn s . See Zas tro w v .- 1 9 -

[* 1 9 ] Co m

m i s si o n er, T.C. M em o . 2 01 0 -2 15 , s l i p o p . at 8 ; M o l i n e v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -1 1 0 , s l i p o p . at8 -9 , aff’ d , 3 6 3 F. Ap p ’ x 6 7 5 (1 0 th Ci r. 2 0 1 0 ); Su m

m ers v . Co m

m i ss i on er, T.C. M em o . 2 00 6 -2 19 , s li p o p . at 1 7 -1 9. Th e reg u l at i o n s fu rt h er p ro v i d e t h at i f a face-t o -face h eari n g i s n o th el d , a h eari n g co n du ct edb y

t el ep ho n e, b y

co rres p o nd en ce, o r b y

rev i ew o f d o cu m en t s wi l l s u ffi ce fo r p u rp o s es o f s ect i o n 6 3 3 0 (b ). See s ec. 3 0 1 .6 3 30 -1 (d )(2 ), Q&A-D7 , Pro ced
. & Ad m i n . Reg s . Th e reco rdco n v i nces u s th ata face-t o -face h eari n g wo u l dn oth av e b een p ro duct i v e. Pet i t io n er was g i v enan o p p o rtu n i ty t o p art i ci p at e i n a t el ep h o n e CDP h eari n g b u td i dn o tt ak e ad v an tag e o f t h ato p p ortu n i ty . As i d e fro m h i s arg u m en t th ath e h adn o trecei v edn o t i ces o f d efi ci en cy fo r t h e y ears ati s s u e, p et i t io n er d i d
n o tp res en tan y

rel ev an targ u m en t s duri n g h i s co rres p o nd en ce CDP h eari n g . Ad d i t i o n al l y , al th o u g h req u es t edt o d o s o o n s ev eral o ccas i o ns , p et i t i o n er fai l edt o
s ub m i tfi nan ci al d o cu m en t at i o n (i .e., Fo rm 4 3 3 -A) an dfi l e p as t -du e ret u rn s fo r 2 0 0 5 thro u g h 2 0 1 2 . Thus , SO M acau l ay d i dn o tab us e h er d i s cret i on i n d et erm i n i n g th atp et i t i o n er was n o ten t i t l edt o a face-t o -face h eari n g. Th e reco rdrefl ect s t h atSO M acau lay v eri fi edth atres p o n d en ts at is fi edal l ap p li cab l e l eg al an d ad m i ni s trat i v e req u irem en ts , co n s i d eredal l rel ev an ti s s u es p et i t i o n er rai s ed , an d b al an cedth e i n tru s i v en es s o f t h e p ro p o s ed co ll ect i o n act i on- 2 0 -

[* 2 0 ] ag ai n s tth e n eedfo r effect i v e t ax co l l ect i o n. See s ec. 6 3 3 0 (c). W e t h erefo re
co n cl u d e th atSO M acau l ay d i dn o tab u s e h er d i scret i o n b y s u s tai n i n g th e
co l l ect i o n act i on . VI. Sect io n 6 6 7 3 Pen al ty Sect io n 6 6 7 3 au th o ri zes th e Co u rtt o i m p o s e a p en al ty

o f up t o $ 2 5 ,0 0 0 fo r fri v ol o u s an dg ro u n d l es s arg um en t s o r wh en ev er i tap p ears t o th e Co u rtth at

“p ro ceed i n g s b efo re * * * [u s] h av e b een i n s ti tut edo r m ai n t ai n edb y the t ax p ay er p ri m ari l y fo r d el ay ”. Sec. 6 6 7 3 (a)(1 )(A). Pet i t i o n er h as t ak en p os i t i o n s th atco u l d wel l b e co n s i d eredfri v o l o u s o r g ro u n d l es s , an dthe ci rcu m s t an ces s u gg es t th at th es e p ro ceed i ng s were i n s t i tu tedan dm ai n t ai n edp ri m ari l y fo r p u rp o s es o f d el ay . Al th o u g h we d o n o ti m

p o s e a p en al ty

t o day , we warn p et it i on er t h ath e m ay ex p ect a p en al ty i n th e fu tu re i f h e p ers i s t s , d es p it e o u r warn i ng , i n m ai n t ai n i ng g ro u nd l es s p o s i t i o n s o r i n st i tu ti n g o r m ai n t ai n i n g p ro ceed i n g s p ri m ari l y fo r d el ay . To refl ectthe fo reg o i n g , Anap p ro p ri at e o rd er an dd eci s i o n wi l l b e en t ered
.