T.C. Mem o. 2 01 5- 48

UNITED STAT ES TAX COURT

WALTER THO RWAL D SKALLERUP 3RD, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 20 09 3- 11 L. Fi le d M arch 16 , 20 15
. P p et it io ne d fo r rev ie w of Ap pe al s' d et erm in at io n t o p ro ceedby li ento co ll ectunpa idin co m e ta x l iabi li ti es . Held : P's pre vi ou s o pp ortu ni ti es to ch al le ng e und erl y in g t ax li ab il it ie s fo r al l b uttwo of t he y ears inis su e p recl ud e o urco ns id eri ng un de rlyin g l iabi li ti es for

th os e y ears . Held , furth er, P h as fai le d t o s ho w th atov erp aym en ts of t ax were n otpro pe rly app li edby R.

W al te r Tho rwal d S ka ll erup 3 rd , pro se. Luk e D. Ortn er, fo r res po nd en t.- 2 -

[* 2] MEMORANDUM FINDINGS OF FACT AND OPINION HALPERN, Ju dg e: Thi s ca se is be fo re u s t o re vi ew a Not ic e o f Dete rm in at io n C on cern in g C ol le ct io n Act io n( s) Und er Se ct io n 6 32 0 a nd/o r 63 30 (n ot ic e) i ss ue d b y

th e In te rn al Rev enue Serv ic e App eal s Off ic e (Ap pe al s) . The
no ti ce co nc ern s p et it io ne r's 20 02 , 20 03 , 20 04 , 20 05 , 20 06 , 20 07 , and20 08 Fed eral in co m e ta x l iabi li ti es , anditsu st ai ns Set tl em en t Offi cer M ic ha el Edward s' de te rm in at io n tha t a n ot ic e o f Fed eral tax li en(NFTL) fo r th os e y ears sh ou ld st an d. We revi ew th e n ot ic e p ur su an t t o s ect io ns 63 20 (c) and63 30 (d )(1 ). Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o t he Int ern al Rev enue Co de of 1 98 6, as am en de d a ndineffe ctat a ll rel ev an t t im es . FINDINGS OF FACT Pet it io ne r res id edinNew Mex ic o a t the ti m e h e fi le d t he pe ti ti on . On o r ab ou t No ve m

be r 23 , 20 10 , res po nd en t s en t t o p et it io ne r a Let te r 31 72 , Not ic e o f Fed eral Tax Li enFil in g a ndYou r Ri gh t t o aHeari ng Und er IR C 63 20 , whi chsetforth pe ti ti on er's unpa idtax li ab il it ie s fo r th e y ears inis su e an d in fo rm edhi m

th atanNFTL hadbe enfil edrel at in g t o t ho se li ab il it ie s. In
res po ns e, pe ti ti on er t im el y reque st eda he ari ng un de r se ct io ns 63 20 an d 6 33 0. In- 3 -

[* 3] hi s re qu es t, p et it io ne r reque st ed"co m pl et e d is m is sa l" of t he NFTL. H e ob jecte d t o the fil in g o f th e NFTL onth e g ro un ds th at [a] larg e Cap it al Los s C arryov er h as lawf ul ly she lt eredan y

an d a ll Sch edul e D cap it al ga in s; an d t he m in im al in te res t an d d iv id en d in co m e o n S ch edul e B h as be enlawf ul ly she lt eredby Schedul e A ex pe ns es , lo ss es an d g ift s et c. So for so m e ti m e n ow the re h as be en no rep ortabl e in co m e o n wh ic h t o b as e o r cal cu la te an nu al in co m e ta x. Pet it io ne r fu rth er al le ge d t ha t the ad jus tm en ts forhi s t ax y ears 20 02 th ro ug h 20 06 were m ad e o ut si de th e p eri odof l im it at io ns . He als o d is ag reedwith ad jus tm en ts m ad e to hi s re tu rn s fo r 20 06 an d 2 00 7, an d h e o bjec te d t ha t
res po nd en t " ha s fa il edto sh ow p ro babl e cau se why su chad jus tm en ts sh ou ldbe
m ad e (as requi redby the Bil l o f Ri gh ts to th e U.S. Co ns ti tu ti on )" wi thres pe ctto ta x years 2 00 6, 2 00 7, an d 2 00 8. Pe ti ti on er d idno t p ro po se a co ll ect io n a lt ern at iv e in hi s re qu es t. By let te r da te d M ay

10 , 20 11 , Mr. Edward s s ch edul eda te le ph on e co ll ect io n due pro ces s h eari ng for Ju ne 23 , 20 11 . In tha t l et te r, he in fo rm ed pe ti ti on er tha t h e h adbe enpro vi de d apri orop po rtu ni ty to ch al le ng e th e li ab il it ie s fo r 20 03 an d 2 00 4 i n a n e arl ie r he ari ng an d t hu s co ul d n otch al le ng e th e un de rlyin g l iabi li ti es for

th os e y ears du rin g t he tel ep ho ne he ari ng . He als o s ta te d th at , inord er fo r hi m

to co ns id er co ll ect io n a lt ern at iv es , pet it io ne r ha d t o p ro vi de- 4 -

[* 4] hi m with aco m

pl et edFo rm

43 3- A, Col le ct io n In fo rm at io n S ta te m en t fo r W ag e Earn ers an d S el f-Em pl oyed In di vi du al s. Pet it io ne r res po nd edby lett er d at edJu ne 15 , 20 11 . In tha t l et te r, pe ti ti on er st at edth athe no lo ng er h adtel ep ho ne or I nt ern etservi ce an d wo ul d b e unabl e to pa rti ci pa te inth e h eari ng at t he sch edul edti m e. He of fere d t o p art ic ip at e in a he ari ng face to face or b y co rres po nd en ce. Pet it io ne r al so rei te rat edhi s di sa gr eem en t wi th th e li ab il it ie s an d a ss ert edth atov erp aym en ts of t ax m ad e in th e 19 90 s s ho ul d h av e su ffi ci en tl y co ve redan y

tax li ab il it ie s due . Upo n re cei vi ng pe ti ti on er's Ju ne 15 let te r, Mr. Edward s s en t p et it io ne r an ot he r le tt er, d at edJu ne 23 , 20 11 , with wh ic h h e en cl os edtra ns cri pt s o f pe ti ti on er's acco un ts forall th e y ears inis su e. Inth atlet te r, he in fo rm edpe ti ti on er th atth e cl ai m edcap it al lo ss es were dul y no te d o n p et it io ne r's returns an d t ha t th ere wer e n o o ve rp aym en ts whi chpe ti ti on er co ul d c la im as c red it s ag ai ns t h is li ab il it ie s fo r th e y ears inis su e. Mr. Edward s fu rth er s ta te d t ha t, upo n re vi ew of pe ti ti on er's fil es , he d et erm in edth atpe ti ti on er was no t en ti tl edto ch al le ng e h is
un de rlyin g l iabi li ty for 2 00 2 o r 20 05 be cau se he ha d p rev io us ly hadanApp eal s he ari ng du rin g wh ic h h e was affo rd edop po rtu ni ti es to ch al le ng e co ll ect io n a ct io n fo r th os e y ears . Mr. Edwar ds als o a dv is edpe ti ti on er tha t h e co ul d s ub m it
am en de d re tu rn s fo r ta x years 2 00 6, 2 00 7, an d 2 00 8. He en cl os edwith t he let te r a- 5 -

[* 5] Fo rm 43 3- A reque st in g tha t p et it io ne r co m pl et e an d re tu rnth e Fo rm 43 3- A
an d a m en de d re tu rn s fo r th e y ears pe rm it te d. He warn edpe ti ti on er tha t fa il ur e to do so by Jul y

11 , 20 11 , wou ldres ul t i n h is clo si ng th e cas e an d s us ta in in g t he NFTL fil in g. Pet it io ne r res po nd edby lett er d at edJu ne 30 , 20 11 . In tha t l et te r, pe ti ti on er
m ai nt ai ne d h is po si ti on th at"[l ]oss es on th e US an d fo rei gnst oc k e xc ha ng es * * * ha ve res ul te d i n ali fe-t im e rec or d o f ne ga ti ve Sch edul e D in co m e." He ad de d: "An d o ve rp aym en ts m ad e in th e 1 99 0's ha ve be enlawf ul ly app li edto subs eque nt ta x years t o c ov er wh atli tt le tax is du e an nu al ly, if a ny, on S ch edul e B i nt eres t an d di vi de ndin co m e." Pe ti ti on er d idno t i nc lu de a co m pl et edFo rm

43 3- A with h is le tt er, n ordi d h e subm itam en de d re tu rn s fo r 20 06 , 20 07 , and20 08 , as re qu es te d. Mr. Edward s re cei ve d p et it io ne r's Ju ne 30 let te r an d re vi ewedpe ti ti on er's
cas e fi le . He det erm in edth at , bec au se pe ti ti on er h adno t p ro vi de d a ny inf orm at io n with re sp ectto th e NFTL fil in g o r a co ll ect io n a lt ern at iv e, di d n otpro vi de an y in fo rm at io n t o e st ab li sh th atth e NFTL sh ou ldbe withd rawn , anddi d n otsubm it
am en de d re tu rn s fo r th e y ears reque st ed , th e fi li ng of t he NFTL sh ou ldbe
su st ai ne d. Pet it io ne r ha d the fol lo win g o pp ortu ni ti es to ch al le ng e th e und erl y in g li ab il it ie s fo r ta x years 2 00 2- 05 an d 2 00 7. Fo r ta x years 2 00 2 a nd20 03 , pet it io ne r- 6 -

[* 6] rece iv eda no ti ce o f in te ntto lev y ; an d, b ecau se hi s re qu es t fo r a s ect io n 6 33 0 he ari ng was n otti m el y , he r ecei ve d a n e qu iv al en t h eari ng du rin g wh ic h h e h adth e op po rtu ni ty to ch al le ng e th e und erl y in g t ax li ab il it ie s fo r th os e y ears . Peti ti on er al so ha d the op po rtu ni ty to ch al le ng e h is tax li ab il it ie s fo r 20 04 an d 2 00 5 wh enhe ha d aco ll ect io n due pro ces s h eari ng fol lo win g h is rece ip t o f a n ot ic e o f in te ntto le vy with res pe ctto th os e y ears . Pet it io ne r ha d t he op po rtu ni ty to d is pu te th e 1
un de rlyin g l iabi li ty for t ax y ear 2 00 7 b y vi rtu e o f ha vi ng rece iv eda no ti ce o f de fic ie nc y

forth aty ear. On Au gu st1, 2 01 1, Ap pe al s i ss ue d t he no ti ce, s us ta in in g t he fil in g o f th e NFTL for a ll th e y ears inis su e. Pet it io ne r ti m el y fil eda pe ti ti on see ki ng our rev ie w of re sp on de nt 's d et erm in at io n. OPINION I. In tro du ct io n Sect io n 6 32 1 i m

po se s a l ie n i n fa vo r of

th e Uni te d S ta te s o n a ll pro pe rty and pr op erty rig ht s o f a p ers onwho is li ab le for , andfai ls to pa y , tax es aft er d em an d fo r pa ym en t h as be enm ad e. The l ie n a ris es when ass es sm en t i s m ad e an d

Fo ll owi ng th athe ari ng , App eal s i ss ue d ano ti ce o f de te rm in at io n s us ta in in g 1 th e n ot ic e o f in te ntto lev y . In re sp on se to th atno ti ce o f de te rm in at io n, p et it io ne r fil edanun ti m el y

pe ti ti on with thi s C ou rt a t d oc ke t No . 26 18 8- 08 L. By ord er da te d F eb ru ary 9, 2 00 9, we d is m is se d t ha t p et it io n fo r la ckof ju ris di ct io n.- 7 -

[* 7] co nt in ue s u nt il th e as se ss edli ab il ity is pa idor b eco m es un en fo rceabl e b y laps e o f ti m e. Sec. 6 32 2. Se ct io n 6 32 3 p ro vi de s tha t the li enim po se d b y sec ti on 63 21 is no t v al idag ai ns t ce rta inpe rs on s u nt il no ti ce o f th e li enis fil edin
acco rd an ce wi th th e ru le s p ro vi de d. Sect io n 6 32 0( a) p ro vi de s tha t, af te r th e Co m

m is si on er h as fil edno ti ce o f th e li en , th e Co m

m is si on er m

us t n ot ify the tax pa y er o f th e fac t o f fi li ng an d, am on g ot he r th in gs , th e ta xp ay er's rig htto reque sta he ari ng . If th e ta xp ay er t im el y reque st s a h eari ng , th e h eari ng is to be co nduc te d b y App eal s, an d the App eal s of fic er co nduc ti ng th e h eari ng m us t v eri fy th atth e requi rem en ts of any app li cab le law or a dm in is tra ti ve pro cedur e h av e b eenm et . See s ecs . 63 20 (c), (b )(1 ), 63 30 (c)( 1) . The t ax pa y er re qu es ti ng th e h eari ng m ay rai se "an y

rel ev an t i ss ue " rel at in g t o the unpa idtax or the Co m m is si on er's co ll ect io n a ct io n. Se c. 63 30 (c)( 2) (A). The t ax pay er "may als o ra is e atth e h eari ng ch al le ng es to th e ex is te nc e o r am ou ntof t he un de rlyin g t ax li ab il ity " i f th e ta xp ay er d idno t re cei ve a st atut ory

no ti ce o f de fic ie nc y

for , or d idno t o th erwi se ha ve anop po rtu ni ty to di sp ut e, su chtax li ab il ity . Sec. 6 33 0( c)(2 )(B)
. Fo ll owi ng th e h eari ng , th e App eal s o ffi cer m us t d et erm in e whe th er the
co ll ect io n a ct io n i s t o p ro ceed , tak in g i nt o a cco un t the ve rif ic at io n t he App eal s of fic er h as m ad e, th e is su es rai se d b y th e ta xp ay er atth e h eari ng , andwhet he r th e- 8 -

[* 8] co ll ect io n a ct io n " ba lanc es th e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi th th e le gi ti m at e co nc ernof t he pe rs onth atan y co ll ect io n a ct io n b e n o m or e in tru si ve th anne ces sa ry ." Sec . 63 30 (c)( 3) (C). We hav e juri sd ic ti onto rev ie w su ch de te rm in at io ns wher e th e ta xp ay er ap pe al s wi th in30 day s. Sec . 63 30 (d )(1 ). Whe re a t ax pay er's un de rlyin g l iabi li ty is p ro pe rly befo re u s, we re vi ew th e un de rlyin g l iabi li ty de n ov o. Se go v. Co m mis si on er, 1 14 T.C. 60 4, 6 10 (20 00 ). Oth erwi se , gen eral ly, we rev ie w App eal s' d et erm in at io n o f th e m at te rs rai se d a t th e h eari ng forab us e o f di sc ret io n. Se e Lun sf or d v . Comm is si on er, 1 17 T.C. 18 3, 18 5 (2 00 1) . App eal s ab us es it s d is cret io n i f it s d et erm in at io n i s ar bi trary , cap ric io us , or wi th ou t s ou ndba si s i n l aw orfact . See Murp hy v. Co m m is si on er, 12 5 T.C. 3 01 , 32 0 (2 00 5) , aff'd , 46 9 F .3d27 (1s t Ci r. 20 06 ). Insee ki ng Tax C ou rt r ev ie w of ano ti ce o f de te rm in at io n, the tax pa y er ca n as k the Co urt t o c on si de r on ly an is su e, in cl ud in g ach al le ng e to th e und erl y in g t ax li ab il ity , th atwas p ro pe rly rais edat t he he ari ng . See s ec. 3 01 .63 30 -1 (f)(2 ), Q&A-F3 , Pro ced . & Adm in . Reg s. Anis su e is no t p ro pe rly rais edif the tax pa y er fai ls to reque stco ns id erat io n o f th atis su e b y App eal s o r if

he reque st s co ns id erat io n b utfai ls to pre se ntev id en ce t o Ap pe al s co nc ern in g t ha t i ss ue aft er be in g g iv ena reas on ab le op po rtu ni ty to d o s o. Id .; s ee al so Tho m ps onv.- 9 -

[* 9] Co m m is si on er, 1 40 T.C. 17 3, 1 78 (20 13 ) ("A t ax pa y er i s p recl ud edfro m di sp ut in g the un de rlyin g l iabi li ty if itwas n otpro pe rly rais edinth e CDP he ari ng ."). II. Ana lysis A. Rev ie w of Un de rlyin g Li ab il it ie s Inth e p et it io n, p et it io ne r ch al le ng es th e ad jus tm en ts th atres po nd en t m ad e to hi s t ax li ab il it ie s, ar gu in g tha t h is in co m e sh ou ldha ve be enoff se t b y cap it al lo ss es carr ie d fo rwardto th e y ears inis su e an d t ha t re sp on de ntsh ou ldno t h av e de ni edcert ai n o th er d educ ti on s cl ai m edon Sch edul e A, Ite m iz edDedu ct io ns . Pet it io ne r al so co nt en ds th atres po nd en t s ho ul d h av e ap pl ie d c ert ai n o ve rp aym en ts of tax m ad e dur in g the 19 90 s ag ai ns t p et it io ne r's unpa idtax li ab il it ie s fo r th e y ears in is su e. Bec au se pe ti ti on er h adpre vi ou s o pp ortu ni ti es to ch al le ng e th e und erl y in g li ab il it ie s fo r ta x years 2 00 2- 05 an d 2 00 7, h e m ay no t ch al le ng e th os e li ab il it ie s (in cl ud in g a ny peri odof l im it at io ns cla im ), an d we r ev ie w App eal s' d et erm in at io n with re sp ectto th os e y ears forab us e o f di sc ret io n. Se e Lun sf or d v
. Co m m is si on er, 1 17 T.C. at 1 85
. W ith re sp ectto tax y ears 20 06 an d 2 00 8, p et it io ne r di sa gr eedwith the
un de rlyin g l iabi li ti es inhi s re qu es t fo r a h eari ng , all eg in g t ha t cl ai m edlo ss es an d- 10 -

[* 10 ] Sch edul e A de du ct io ns for20 06 an d 2 00 8 s ho ul d h av e o ffs etany tax ab le in co m e fo r th os e y ears , bu t d idno t p res en t t o M r. Edwar ds an y ev id en ce i n supp ort o f th os e as se rti on s (o r hi s p eri odof l im it at io ns cla im for20 06 ). The refo re, the is su es were n otpro pe rly rais eddu rin g p et it io ne r's he ari ng , andhe
m ay no t ra is e th em

he re. See sec . 30 1.6 33 0- 1( f)(2 ), Q&A-F3 , Pro ced . & Adm in
. Reg s. B. Ove rp aym en ts of Tax Pet it io ne r al so all eg es th atMr. Edwa rd s fa il edto ap pl y cert ai n ov erp aym en ts of t ax m ad e dur in g p rev io us tax y ears ag ai ns t h is li ab il it ie s fo r th e y ears inis su e. Pet it io ne r co nt en ds th athe ov erp ai d h is tax es inth e 1 99 0s an d earl y 20 00 s an d tha t tho se ov erp aym en ts sh ou ldhave be enap pl ie d a ga in sthi s t ax li ab il it ie s fo r th e y ears inis su e. Sect io n 6 40 2( a) p erm it s the Secr et ary to cred itth e am ou ntof a n ov erp aym en t, i nc lu di ng any in te res t al lo wedth ereo n, ag ai ns t " an y li ab il ity in
res pe ctof a n i nt ern al rev enue tax on th e p artof t he pe rs on who m ad e th e ov erp aym en t" . In ce rta in si tu at io ns , th is Co urt wi ll co ns id er a t ax pa y er's cla im th athi s l iabi li ty for the y ear i nv ol ve d i n aco ll ect io n p ro ceed in g s ho ul d b e o ffs et- 11 -

[* 11 ] by ove rp aym en ts forothe r y ears . See, e.g ., Gou ldv. Co m mis si on er, 1 39 2 T.C. 41 8, 4 64 (20 12 ), aff'd , 55 2 F ed . App x. 2 50 (4t h C ir. 2 01 4)
. The tra ns cri pt s fo r pe ti ti on er's acco un ts , up on whi chMr. Edward s re li ed du rin g the co nduc t o f th e h eari ng , in di cat e th atpe ti ti on er's tax pa y m en ts were pr op erl y cred it edto hi s ac co un t. Pet it io ne r di d n otcla im du rin g h is he ari ng or a t tri al , anddo es no t cl ai m

on bri ef, tha t h e m ad e an y pa ym en ts ot he r th anth os e cred it edto hi s ac co un ts or t ha t re sp on de ntap pl ie d t ho se pay m en ts in co rrec tl y . Rathe r, he m erel y

rep eat s h is cla im

th at"[g ]ros s o ve rp aym en ts were m ad e to th e res po nd en t i n the 19 90 's * * * so th atno ad di ti on al ba lanc es rem ai n p ay ab le to th e res po nd en t fo r th e y ears indi sp ut e." Th e rec or d s ho ws tha t M r. Edwar ds
co ns id eredth atcla im

bu t d et erm in edth atth ere wer e n o o ve rp aym en ts to ap pl y . Pet it io ne r di d n otde m on strat e to Mr. Edwa rd s, an d h as no t d em on st rat edto th e Co urt, an y

erro r in th e tr an sc rip ts su gg es ti ng th atres po nd en t fa il edto ap pl y an y

A tax pa y er's en ti tl em en t t o c red it s ag ai ns t h is unpa idtax for a 2 de te rm in at io n year fo r anall eg edov erp aym en t i n apri ory ear d ep en ds on whet he r he ass ert edhi s o ve rp aym en t cl ai m withi n t he ap pl ic ab le pe rio d o f li m it at io ns . See Brad y v. Co m mis si on er, 1 36 T.C. 42 2, 4 28 (20 11 ). A clai m fora cred itor r efu nd of anov erp aym en t m

us t b e fi le d " withi n 3 y ears fro m th e ti m e th e return was fil ed or2 years fr om

th e ti m e th e ta x was pa id , whi ch ev er o f su chpe rio ds ex pi res th e la te r, or if n o re tu rnwas fi le d b y

th e ta xp ay er, wit hi n 2 y ears fro m th e ti m e th e ta x was pa id ." Sec . 65 11 (a); see als o Go ul d v . Comm is si on er, 1 39 T.C. 41 8, 4 64 (2 01 2) , aff'd , 55 2 F ed . App x. 2 50 (4t h C ir. 2 01 4)
.- 12 -

[* 12 ] av ai labl e o ve rp aym en ts ag ai ns t the li ab il it ie s atis su e. Ther e were n o ov erp aym en ts th atco ul d b e ap pl ie d a ga in stth e li ab il it ie s i n i ss ue . III. Co nc lu si on The reco rdsh ows th atMr. Edwa rd s v eri fie d t ha t the requi rem en ts of a ny ap pl ic ab le law o r adm in is tra ti ve pro cedur e were m et . He addres se d t he is su es pe ti ti on er ra is eddu rin g the he ari ng an d d et erm in edth atth ere wer e n o ov erp aym en ts to ap pl y

ag ai ns t p et it io ne r's unpa idli ab il it ie s. Pet it io ne r di d n ot pr op erl y rai se an y othe r is su es . Mr. Edwar ds de te rm in edth atth e fi li ng of t he NFTL app ro pr ia te ly bal an cedth e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi th pe ti ti on er's co nc ernth atth e co ll ect io n a ct io n b e n o m or e in tru si ve th anne ces sa ry . See s ec. 6 33 0( c)(3 ). The d et erm in at io n t o s us ta in th e fi li ng of t he NFTL was n ot
anab us e o f di sc ret io n. Deci si on wil l b e en te red fo r res po nd en t.