T.C. Memo. 2007-237

UNITED STATES TAX COURT

RICHARD FRANSEN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8682-06L. Filed August 20, 2007.

Richard Fransen, pro se.

Marie E. Small, for respondent.

MEMORANDUM OPINION

CHIECHI, Judge: This case is before the Court on respondent’s motion for summary judgment (respondent’s motion). We

shall grant respondent’s motion.

Background

The record establishes and/or the parties do not dispute the

following.
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1All section references are to the Internal Revenue Code in

effect at all relevant times. All Rule references are to the Tax

Court Rules of Practice and Procedure.

Petitioner resided in Brooklyn, New York, at the time he

filed the petition in this case. 

Petitioner did not file a Federal income tax (tax) return

for each of his taxable years 2000, 2001, and 2002.

On August 10, 2004, respondent issued to petitioner a notice

of deficiency with respect to his taxable year 2002 (2002 notice), which he received. In that notice, respondent determined

the following deficiencies in, and additions to, petitioner’s

tax:

 Additions to Tax 

Year Deficiency

Sec.

6651(a)(1)1

Sec.

6651(a)(2)

Sec.

6654

2002 $53,753 $3,704.40 $1,811.04 $411.70

On September 14, 2004, respondent issued to petitioner a notice

of deficiency with respect to his taxable years 2000 and 2001

(2000 and 2001 notice), which he received. In that notice,

respondent determined the following deficiencies in, and additions to, petitioner’s tax:

 Additions to Tax 

Year Deficiency

Sec.

6651(a)(1)

Sec.

6651(a)(2)

Sec.

6654

2000 $43,959 $4,631.17 $4,837.00 $967.34

2001 35,660 3,294.22 2,562.17 486.97
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2Form 4340, Certificate of Assessments, Payments, and Other

Specified Matters (Form 4340), with respect to petitioner’s

taxable year 2002 indicates that the 2002 notice was “closed” on

Dec. 28, 2004. Form 4340 with respect to each of petitioner’s

taxable years 2000 and 2001 indicates that the 2000 and 2001

notice was “closed” on Feb. 1, 2005. 

Petitioner did not file a petition with the Court with respect to

the 2002 notice or the 2000 and 2001 notice.2

On February 7, 2005, respondent assessed petitioner’s tax,

as well as additions to tax and interest as provided by law, for

his taxable year 2002. (We shall refer to those unpaid assessed

amounts, as well as interest as provided by law accrued after

February 7, 2005, as petitioner’s unpaid liability for 2002.)

On February 7, 2005, respondent issued to petitioner the

notice and demand for payment required by section 6303(a) with

respect to petitioner’s unpaid liability for 2002.

On February 21, 2005, respondent assessed petitioner’s tax,

as well as additions to tax and interest as provided by law, for

each of his taxable years 2000 and 2001. (We shall refer to

those unpaid assessed amounts, as well as interest as provided by

law accrued after February 21, 2005, as petitioner’s unpaid

liabilities for 2000 and 2001.)

On February 21, 2005, respondent issued to petitioner the

notice and demand for payment required by section 6303(a) with

respect to petitioner’s unpaid liabilities for 2000 and 2001. 

On September 20, 2005, respondent filed a notice of Federal
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3In petitioner’s Form 12153, petitioner’s authorized representative indicated disagreement with not only the notice of tax

lien that respondent issued to petitioner but also certain

notices of intent to levy and your right to a hearing (notice of

intent to levy) that respondent issued to petitioner. In this

connection, Form 4340 with respect to petitioner’s taxable year

2002 indicates that on Apr. 18, 2005, respondent issued a notice

of intent to levy with respect to petitioner’s taxable year 2002

and that on May 9, 2005, respondent issued a notice of intent to

levy with respect to petitioner’s taxable years 2000 and 2001. 

Petitioner’s authorized representative did not mail petitioner’s

Form 12153 until Oct. 27, 2005, which was more than 30 days after

the respective dates on which respondent issued those notices of

intent to levy. As discussed below, the notice of determination

concerning collection action(s) under section 6320 and/or 6330

(notice of determination) addresses only the notice of tax lien

and makes no determination with respect to the respective notices 

of intent to levy issued with respect to petitioner’s taxable

years 2000 and 2001 and 2002. 

tax lien with respect to petitioner’s taxable years 2000, 2001,

and 2002. On September 27, 2005, respondent issued to petitioner

a notice of Federal tax lien filing and your right to a hearing

(notice of tax lien) with respect to those years. 

On October 27, 2005, petitioner’s authorized representative

mailed to respondent Form 12153, Request for a Collection Due

Process Hearing (petitioner’s Form 12153), and requested a

hearing with respondent’s Appeals Office (Appeals Office). In

that form, petitioner’s authorized representative indicated

disagreement with the notice of tax lien3 and stated:

TAXPAYER HASN’T FILED HIS 1999-2004 INCOME TAX RETURNS. 

HE HAS ENGAGED OUR FIRM TO PREPARE SUCH INCOME TAX

RETURNS AND OBTAIN FINANCING TO LIQUIDATE HIS IRS

LIABILITIES AND REQUEST AN ABATEMENT OF PENALTIES AND

INTEREST DUE TO HIS EMOTIONAL AND PHYSICAL STATE. 

AMENDED INCOME TAX RETURNS ARE REQUIRED. IT WILL TAKE

APPROXIMATELY 60 DAYS TO PREPARE SUCH AMENDED INCOME
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TAX RETURNS. THEREFORE, A LIEN AND LEVY WILL INHIBIT

THE TAXPAYER TO OBTAIN PROPER FINANCING. [Reproduced

literally.]

On January 19, 2006, a settlement officer with the Appeals

Office (settlement officer) sent a letter to petitioner with

respect to petitioner’s Form 12153. In that letter, the settlement officer offered petitioner the opportunity to have a hearing

on February 28, 2006. On February 28, 2006, petitioner’s authorized representative called the settlement officer and requested

a two-week period within which to (1) submit a tax return for

each of petitioner’s taxable years 2000, 2001, and 2002 and

(2) propose a collection alternative. The settlement officer

granted that request. On March 28, 2006, the settlement officer

called petitioner’s authorized representative (March 28, 2006

call). During the March 28, 2006 call, petitioner’s authorized

representative indicated that he had nothing to submit with

respect to petitioner’s taxable years 2000, 2001, and 2002 and

requested that a notice of determination be issued with respect

to those years.

On April 5, 2006, the Appeals Office issued to petitioner a

notice of determination with respect to petitioner’s taxable

years 2000, 2001, and 2002. That notice stated in pertinent

part:

Summary of Determination

You did not offer any collection alternatives for

Appeals consideration. Collection is sustained.
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An attachment to the notice of determination stated in pertinent

part:

Summary

You filed a request for a Collection Due Process (CDP)

hearing under Internal Revenue Code (IRC) § 6320 following receipt of a Letter 3172 Notice of Federal Tax

Lien Filing and Your Rights to a Hearing. A copy of

the Notice of Federal Tax Lien (NFTL) and Letter 3172

were provided with the administrative file. Accordingly, the tax periods shown above [taxable years 2000,

2001, and 2002] were those on the NFTL sent for filing

on September 27, 2005. Balances are still due as

verified by computer transcripts. Your Form 12153

requesting a CDP hearing, was received on November 1,

2005. This was timely submitted as it was mailed

within the 30-day period for requesting a CDP hearing.

I mailed you a letter on 1/19/2006 giving you the

opportunity for a hearing on 2/28/2006. On 2/28/2006

your representative * * * contacted me and requested an

additional two weeks to prepare your delinquent returns

and submit a collection alternative. [petitioner’s

authorized representative] * * * was granted the additional time. On 3/28/2006 I contacted him again for

the information. He stated he had nothing to submit

and requested this determination be issued.

You have not filed an income tax return since 1989, 

The IRS requested that you file returns for 2000, 2001

and 2002 and gave you an opportunity to appeal the

proposed assessments. You did not do so, therefore the

underlying liability issue is precluded within Collection Due Process under IRC §6330. There is no information in the file that warrants the withdrawal of the

filed NFTL. The filed NFTL is the appropriate action

in this case.

Brief Background

The CDP notice was for unpaid income tax liabilities

for your 2000, 2001 and 2002 Form 1040. The returns

were prepared by the IRS when you failed to file them

yourself. The IRS assessed tax as follows:
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2000 $ 43,959.00 Withholding $ 23,226.00

2001 $ 35,660.00 Withholding $ 21,019.00

2002 $ 53,753.00 Withholding $ 37,289.00

You were also assessed late filing penalty on these

years. Interest and failure to pay penalty continue to

accrue on the unpaid assessment.

Your lack of compliance is considered egregious. You

have not filed an income tax return since 1989. You

have made no estimated tax payments and have not had

sufficient withholding to cover the tax. You have not

been in compliance with the filing and payment requirements for 14 years, despite the fact that you have had

considerable income and you were able to set aside more

than $225,000 in pension and stocks and bonds in lieu

of filing and paying your taxes.

You have not supplied financial information to help us

resolve your account. You have not presented any

alternatives to the NFTL or future collection action,

including possible seizure of your assets.

Discussion and Analysis

Verification of Legal and Procedural Requirements

The requirements of applicable law or administrative

procedures have been met and the actions taken were

appropriate under the circumstances.

* I verified through transcript analysis that assessment was made on the applicable CDP notice periods per

IRC § 6201 and the notice and demand for payment letter

was mailed to the taxpayer’s last known address, within

60 days of the assessment, as required by IRC § 6303.

* Per transcript analysis, there was a balance due when

the NFTL filing was requested. This balance is still

due.

* IRC § 6321 provides a statutory lien when a taxpayer

neglects or refuses to pay a tax liability after notice

and demand for payment. Transcripts of the account

show that the IRS issued notice and demand for each of

the tax periods involved and those periods remain

unpaid.
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* Per review of computer transcripts, the CDP notice

(Letter 3172) was sent by certified mail to your last

known address, no later than 5 business days after the

NFTL was recorded (IRC § 6320(a)). This was also the

address shown on your CDP hearing request. The lien

was filed on September 20, 2005 and the Letter 3172 was

mailed on September 27, 2005, which is within 5 business days of the lien filing.

* The collection period allowed by statute to collect

these taxes has been suspended by the appropriate

computer codes for the tax periods at issue. Transaction Code 520, has been posted for each of the taxes

and periods listed on the NFTL as the date the IRS

received the CDP hearing request.

* Per transcript analysis, a CP504 notice, warning of a

possible filing of a NFTL, was issued for the tax

periods subject to the hearing at least 31 days prior

to the NFTL filing. The notice was mailed on May 9,

2005.

* There is no pending bankruptcy case, nor did you have

a pending bankruptcy case at the time the CDP notice

was sent (11 U.S.C. § 362(a)(6)).

! This Appeals employee has had no prior involvement with this taxpayer concerning the

applicable tax periods before this CDP case.

Issues Raised by the Taxpayer

Challenges to the Existence or Amount of the Liability

You have challenged the existence or the amount of the

liability on the returns prepared by the IRS under IRC

§6020(b). The underlying liability issue is precluded

from this hearing. Furthermore, you have not prepared

and submitted your own returns which would allow the

IRS to adjust your tax liabilities.

Challenges to the Appropriateness of the Collection

Action

You have not requested the NFTL be withdrawn. However,

I have considered whether any of the criteria for

allowing withdrawal of the lien existed in your case.
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IRC § 6323(j) allows the withdrawal of a filed notice

of lien without full payment and without prejudice

under the following conditions:

* The filing of the notice of lien was premature or

otherwise not in accordance with administrative procedures of the Internal Revenue Service;

* The taxpayer had entered into an agreement under IRC

§ 6159 to satisfy the tax liability for which the lien

was imposed by means of installment payments, unless

such agreement provides otherwise;

* Withdrawal of the lien will facilitate collection of

the tax liability; or

* Withdrawal of the lien would be in the best interests

of the taxpayer (as determined by the National Taxpayer

Advocate) and the United States. Similar to the above

provision, each set of circumstances should be analyzed

to determine if this condition exists.

There is nothing in the Collection administrative file

that indicates withdrawal of the filed lien should be

considered and you have provided no additional information that indicates the withdrawal of the filed lien

should be considered.

Collection Alternatives Offered by the Taxpayer

On your Form 12153 requesting the CDP hearing, you

raised no other issues or offered an alternative to

collection. You failed to present me with the delinquent returns and financial information as I had requested, and your representative offered no collection

alternatives at the hearing, other than to request an

additional delay for an undetermined period of time.

Other issues raised by the Taxpayer

You raised no other issues.

Balancing of Need for Efficient Collection With 

Taxpayer Concern That the Collection Action Be No 

More Intrusive Than Necessary

I balanced the competing interests when finding the

filing of the NFTL is appropriate. You did not offer

any collection alternatives during the CDP hearing

process. As discussed above, the assessment(s) at

issue are valid.
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During the past 16 years you set aside funds for a

pension and invested in stocks and bonds while knowingly failing to file and pay your income taxes, despite the fact that you had earned income from wages

and self-employment income. The fact that you filed

returns up until 1989 indicates that you were aware of

the filing and withholding requirements. You invested

your income during the past 16 years in lieu of filing

and paying your taxes, which indicates your failure to

file and pay your tax as willful and egregious.

Given your failure to propose any collection alternatives and your non-compliance with the tax laws, the

Notice of Federal Tax Lien balances the need for efficient collection with your concern that the collection

action be no more intrusive than necessary.

The notice of determination makes no determination with respect

to the respective notices of intent to levy issued with respect

to petitioner’s taxable years 2000 and 2001 and 2002. 

Petitioner filed a petition with respect to the notice of

determination. In that petition, petitioner alleged:

5. The determination of the tax set forth in the said

notice of deficiencies are based upon the following

errors.

(a). The notices of deficiency did not take into account allowable cost bases for stock transactions.

(b). The notices of deficiency did not take into account certain allowable itemized deductions including

real estate taxes and other deductible expenses.

6. The facts upon which the Petitioner relies, as the

bases of the Petitioner’s case, are as follows:

(a). Petitioner’s income should be reduced by his costs

of securities sold and certain allowable itemized

deductions.
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4In the petition, petitioner refers to the respective notices of intent to levy that respondent issued with respect to

petitioner’s taxable years 2000 and 2001 and 2002. Petitioner’s

authorized representative did not file timely petitioner’s Form

12153 with respect to those notices, see sec. 6330(a)(2) and

(3)(B) and (b), and the notice of determination makes no determination with respect to those notices. We conclude that we do not

have jurisdiction to consider petitioner’s arguments with respect

to the notices of intent to levy. See Offiler v. Commissioner,

114 T.C. 492, 498 (2000).

(b). The taxpayer will file his 2000, 2001 and 2002

income tax returns with the Internal Revenue Service

Hartford, Connecticut Office reflecting the correct

information.

(c). The penalties should be abated due to reasonable

causes as discussed in Form 12153, copy enclosed.

Discussion

The Court may grant summary judgment where there is no

genuine issue of material fact and a decision may be rendered as

a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner,

98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). We

conclude that there are no genuine issues of material fact

regarding the questions raised in respondent’s motion. 

In the petition, petitioner alleged that the 2000 and 2001

notice and the 2002 notice are wrong and that the additions to

tax for those years “should be abated”.4

We first address petitioner’s allegation in the petition

that the Court should abate the respective additions to tax for

his taxable years 2000, 2001, and 2002. Although not altogether

clear, petitioner appears to be requesting the Court to review
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5Assuming arguendo that petitioner’s allegation in the

petition that the Court should abate the respective additions to

tax for his taxable years 2000, 2001, and 2002 is not intended as

a request by petitioner for the Court to review under sec. 6404

respondent’s failure to abate those additions, but instead is a

request to review de novo the propriety of those additions to

tax, we shall not do so. That is because the phrase “underlying

tax liability” in sec. 6330(c)(2)(B) is “a reference to the

amounts that the Commissioner assessed for a particular tax

period.” Montgomery v. Commissioner, 122 T.C. 1, 7 (2004). What

the Court concluded in Montgomery applies in the instant case: 

“petitioners’ underlying tax liability consists of the amount

(continued...)

under section 6404 respondent’s failure to abate those additions

to tax. We hold that we do not have jurisdiction to do so. See

sec. 6404(h); see also Washington v. Commissioner, 120 T.C. 114,

124 n.15 (2003); Krugman v. Commissioner, 112 T.C. 230, 237

(1999).

We now address petitioner’s allegation in the petition that

the 2000 and 2001 notice and the 2002 notice are wrong. A

taxpayer may raise challenges to the existence or the amount of

the taxpayer’s underlying tax liability if the taxpayer did not

receive a notice of deficiency or did not otherwise have an

opportunity to dispute the tax liability. Sec. 6330(c)(2)(B). 

Respondent issued to petitioner the 2000 and 2001 notice and

the 2002 notice, which he received. Petitioner did not file a

petition with the Court with respect to either of those notices. 

On the instant record, we find that petitioner may not challenge

the existence or the amount of the underlying tax liability,

including any additions to tax,5 for each of his taxable years
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5(...continued)

that petitioners reported due on their tax return along with

statutory interest and penalties.” Id. at 8. 

2000, 2001, and 2002. 

 Where, as is the case here, the validity of the underlying

tax liability is not properly placed at issue, the Court will

review the determination of the Commissioner of Internal Revenue

for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610

(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

Based upon our examination of the entire record before us,

we find that respondent did not abuse respondent’s discretion in

making the determinations in the notice of determination regarding the notice of tax lien with respect to petitioner’s taxable

years 2000, 2001, and 2002.

We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

On the record before us, we shall grant respondent’s motion.

To reflect the foregoing,

An order granting respondent’s

motion and decision for respondent

will be entered.