1 5 5 T.C. No . 1

UNITED STATES TAX COURT
RICKEY B. BARNHILL, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 0 3 74 -1 8 L. Fi l edJ u l y 2 1, 2 0 20
.

P was a d i rect o r o f Co m

p an y (“ C”). C fai ledt o p ay

o v er t o R em p l o ym en t wi th h o l di n g t ax es fo r i ts em p l o y ees fo r 1 0 quart ers i n 2 0 1 0 -1 2 . R s en t an d P recei v eda Let t er 1 1 5 3 , “ Tru stFu n dReco v ery Pen al ty [“ TFRP”] Let t er”, p ro p o s i n g t o as s es s TFRPs u n der I.R.C. s ec. 6 6 7 2 ag ai ns t P as a res p o ns i b l e p ers o n fo r C. P fi l ed an ap peal d i s p u t i n g the TFRP l iab i l i t y b efo re R’ s Offi ce o f Ap peal s (“ Ap p eal s ”). Ap p eal s s en tP a Let t er 5 1 5 7 s ch edu l i n g a co n feren ce an dd es cri b i n g P’ s o p ti o ns fo r g i v in g i n fo rm at i o n an dm ak in g arg u m en t s . P al l eg es , an dth i s o p i ni o n as s u m es , th atP n ev er recei v ed th e l et t er; an dP d i dn o tp art i ci p at e i n t h e co n feren ce. Ap p eal s reject ed P’ s ap p eal , d et erm i n edth atP was a res po n si b l e p ers o n fo r C, an das s es s edI.R.C. s ec. 6 6 7 2 p en al ti es ag ai ns th i m . R fi l eda n o t ice o f Fed eral t ax l ien (“NFTL”), an dP t i m el y req u es t ed a co l l ect i on due p ro ces s (“ CDP”) h eari n g b efo re Ap p eal s . Atth e CDP h eari n g , P at t em p t edt o d i s pu t e h i s u n d erl y i n g l i ab i l i ty fo r th e p en al t i es . Ap p eal s reject edP’ s ch al len g e aft er d et erm i n i n g t h at , b ecau s e P h adrecei v edth e Let t er 1 1 5 3 , P h adh ada p ri o r o p p o rtu n i ty-2
-

t o ch al l en g e t h e l iab i l i ty i n h i s TFRP ap p eal . Ap p eal s i s s u edi ts d et erm i nat i o n s us t ai n i n g th e NFTL fi li n g . P t im el y fi l eda p et i t i o n i n th i s Co u rtfo r rev i ew o f Ap peal s ’ d et erm i nat i o n . R fi l eda m o t i o n fo r s u m m ary ju d g m en t , as s ert in g th at P’ s recei p t o f Let t er 1 1 5 3 affo rd edh i m a p ri o r “ o pp o rtu n i ty ”, fo r p u rp o s es o f I.R.C. s ec. 6 3 3 0 (c)(2 )(B), t o ch al l en g e h i s l i ab i l i ty fo r t h e TFRPs . P fi l edan o p p o s i t i o n . Hel d : If P recei v edLet t er 1 1 5 3 b utd i dn o trecei ve t h e s ub s equ en tco rres po n d en ce (Let t er 5 15 7 ), th en i n t h e TFRP h eari n g Ap p eal s d i d no taffo rdP an “ o p p o rtu ni ty ”, fo r p u rp o s es o f I.R.C. s ec. 6 3 3 0 (c)(2 )(B), t o d i s p ut e h i s u nd erl y i n g TFRP l i ab i l i ty . Onth es e fact s , P s h o u l dn o th av e b een p recl u d edfro m l at er d i s p u t i n g t h at l i ab i l i ty atth e CDP h eari n g ; an dAp p eal s wo u l dh av e ab u s edi t s d i s cret i o n i n d et erm i n i n g t o s u s t ai n th e NFTL.

Gu y C. Cro wg ey , fo r p et i t i o n er. W en dy C. Yan , fo r res p o n d en t
.

OPINION GUSTAFSON, Jud ge: Th i s i s a co l l ect i o n du e p ro ces s (“ CDP”) cas e b ro u gh t p u rs u an t t o s ect i o n s 6 3 2 0 (c) an d 6 3 3 0 (d ), 1 i n wh i ch p et it i o n er, Ri ck ey B. Barn h i ll , as k s u s t o rev i ew th e d et erm i n at i o n b y th e Offi ce o f Ap p eal s (“ Ap p eal s ”)

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de (“ th e Co d e”), an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an d Pro cedu re. Al l am o u n t s are ro u n d edt o th e n eares t d o l l ar.-3
-

o f t h e In t ern al Rev enu e Serv i ce (“ IRS”) t o s u s t ai n th e fi li n g o f a n o t i ce o f Fed eral t ax l i en (“NFTL”) t o co l l ects ect i o n 6 6 7 2 tru st fu n dreco v ery p en al t i es (“ TRFP”)
as s es s edag ai n sth i m

fo r fai l i n g t o co l l ectan dp ay o v er em pl o ym en tt ax es o f Iro n Cro ss , In c. (“ Iro n Cro s s ”), fo r 1 0 cal en d ar q uart ers en d i n g J u n e 3 0, 2 0 10 , th ro u g h Sep tem b er 3 0 , 2 0 1 2. Th e cas e i s b efo re t h e Co u rto n a m o ti o n fo r s u m m ary ju d g m en tfi l edb y

res p o n d en t , th e Co m

m i s si o n er o f t he IRS. Th e i s su e fo r d eci s i o n i s wh et her s ect i o n 6 3 3 0 (c)(2 )(B) p recl u d edM r. Barn h i ll atth e CDP h eari n g b efo re Ap p eal s (an d p recl u d es h i m i n th is cas e b efo re th e Tax Co urt ) fro m ch al l en g i n g h i s l i ab i l i ty

fo r t h e p en al t ies as s es s ed ag ai ns th i m b ecau se h e h adh ad a p ri o r o p p o rtu n it y

t o ch al l en g e t h atl i ab i l i ty i n a h eari ng b efo re Ap p eal s . Th e Co m m i s s i o n er m o v edfo r s u m m ary ju d g m en t , as s ert i n g th atM r. Barn h i l l was p recl u d edb ecau s e h i s p rev i o u s recei p t o f Let t er 1 1 5 3 co n cern i n g th atl i ab i l i ty affo rd edh i m a p ri o r “ o p p ortun i ty ”, fo r p u rp o s es o f s ect i o n 6 3 3 0 (c)(2 )(B), t o ch al l en g e t h at TFRP l iab i l i ty . M r. Barn h i l l fi l ed an o p po s it i o n . W e h o l dth at th ere i s a g en u i ne d i s p u t e as t o m at eri al fact s o n th e i s s u e o f wh et h er M r. Barn h i l l h ad a p ri o r o p p ortu n it y . W e wi l l th erefo re d en y th e Co m m i s si on er’ s m o t i o n .-4
- Back gro u n d Fo r p u rp o s es o f t h e Co m m i s s i o n er’ s m o t i o n , 2 we as s u m e co rrect th e fact s
as s ert ed b y

M r. Barn h i l l th at are s up p o rt edb y h i s fi l i ng s , as wel l as the fact s d em o n s trat edb y

th e Co m m i ss io n er t h at M r. Barn h i l l d i dn o td is p u te. See i n fra p artI.A. M r. Barn h i l l ’ s ro l e atIro n Cro s s M r. Barn h i ll was a d i rect o r o f Iro n Cro s s. He co n t en d s th at , fo r p u rp o s es o f
s ect i on 6 6 7 2 (a), s ee i n fra p artI.B., h e was n o ta “ p ers o n req u i redt o co l lect , tru th fu l l y acco u n tfo r, an dp ay

o v er” t h e em

p l o y m en t t ax es o f Iro n Cro s s an dd i d
n o t“ wi l l fu l l y

fai l [] t o co l l ects u ch t ax , o r t ru th fu l l y acco u n tfo r an dp ay

o v er s u ch t ax ”. Fo r p u rp o s es o f t h e Co m m i s s i o n er’ s m o t i o n , we as s u m e h is co n t en t i on s are
co rrect
. Iro n Cro ss ’ s em

p l o ym en tt ax es Iro n Cro s s o wedem

p l o ym en tt ax es --b o th th e em pl o y er s h are an d t h e “ tru s t fu n d tax es ”--i .e., th e em

p l o y ee s h are t h atIro n Cro s s h adb een req u i redt o wi th h o l d

2 See P & X M ark et s , In c. v . Co m m i s s io n er, 1 0 6 T.C. 4 4 1 , 4 42 n .2 (1 9 9 6 ) (“ Th e ‘ fact s ’ p res en t edi n t h i s Op i ni o n are s t at eds o l el y fo r p u rp o s es o f d eci d i n g th e m o t i o n an dare n otfi n d i n g s o f fact fo r t h i s cas e. Fed
. R. Ci v . P. 5 2(a)”), aff’ d wi th o u tp ub l i s hedo p i n i o n , 1 3 9 F.3 d 9 07 (9 th Ci r. 1 9 9 8 ).-5
-

fro m em p l o y ee wag es an dp ay o v er. Iro n Cro s s d i dn o tfi le an y t ax retu rn s , i n cl u d i n g em

p l o ym en tt ax retu rn s , an dd i dn o tp ay th e em p l o ym en t t ax es . Th e IRS as s es sed em

p l o ym en tt ax es ag ai ns tIro n Cro s s fo r t h e 1 0 cal en d ar qu art ers ati s su e. Th e IRS al s o p ro po s ed as s es s m en t s t o t al in g ap p ro x i m at el y $ 1 6 0 ,0 0 0 ag ai n s tM r. Barn h i l l as ci v i l p en al t i es u n d er s ect i on 6 6 7 2 (cal l ed“ 1 0 0 % p en al ty ”, “ tru s t fu n d reco v ery p en al ty ”, an d “ TFRP”) fo r t he u np ai dtru s tfu n d t ax es thatwere req u i redt o b e wi t h h el d fro m em pl o y ee wag es an dp ai do ver. M r. Barn h i l l co nt en d s th atth e p ro p o sedp en al ty as s es s m en tam o u n t s ex ceed ed
s ub s t an t i al l y

the act u al am o u n t s o f the t ru s tfu n dt ax es ; an d fo r p u rp o s es o f th e Co m m i s s i o n er’ s m ot io n , we s o as s u m e. Let t er 1 1 5 3 Th e IRS s en tM r. Barn h i l l a Let t er 1 1 5 3 , “ Tru s tFu ndReco veryPen al ty Let t er”, d at edNo v em

b er 1 6 , 2 0 1 6 , p ro p o s i n g t o as s es s th e TRFPs ag ai n s t h i m as a
res p o n s i b l e p ers o n wh o h adfai l edt o co l l ectan dp ay o ver em p l o ym en t t ax es wi th
res p ectt o em

p lo y ees o f Iro n Cro s s . Let t er 1 1 5 3 i n fo rm s th e t ax pay er t h ati f h e d o es no tag ree, t h en w it hi n 1 0 d ay s o f t h e d at e o f t h e l et t er h e can co n t actth e IRS
em pl o y ee i d en t i fi edi n th e l et t er o r wi thi n 6 0 d ay s h e can s ub m i ta wri tt en ap p eal
o r p ro t es t . See, e.g ., M as o n v . Co m m i s s i on er, 1 3 2 T.C. 3 0 1 , 3 08 (2 0 0 9 ). Th e IRS’ s Let t er 1 1 5 3 t o M r. Barn hi l l i s n o ti n th e Tax Co u rtreco rdi n thi s cas e, b u ti t-6
-

i s a fo rm l et t er, an dwe t ak e n o t i ce o f t h e Let ter 1 1 5 3 th atap p ears i n th e reco rdi n
an o th er cas e b efo re t h is Co u rt
. 3 Let t er 1 1 5 3 m ak es th e fo l l o wi n g s u g g es ti on : In cl u d e [i n th e p ro t es t ] an y ad d i t i o nal i n fo rm at io n th aty o u wan tth e Set t l em en tOffi cer/ Ap peal s Offi cer t o co ns i d er. Yo u m ay s t i l l ap p eal wi th ou tad d i t i o n al i n fo rm at i o n , b u ti n cl u di n g i tatth i s s t ag e wi ll h el p u s t o p ro ces s y o ur req u es tp ro m p t l y . [Em

p h as i s ad d ed .] Th u s, Let t er 1 1 5 3 i n di cat es th atth e t ax p ay er’ s fi l i n g o f h i s ap p eal i s th e fi rs t

“ s t ag e” i n th i s ap p eal p ro ces s , rat h er t h an b ei n g th e l as tch an ce i n thatp ro ces s t o
s ub m i ti n fo rm at io n . (Th e s ubs equ en t Let t er 5 1 5 7 , d es cri b edb el o w, i s t o th e s am e effect .) M r. Barn h i ll recei v edth e Let t er 1 1 5 3 , an d i n res p o n se h e t im el y m ai l eda p ro t es tt o Ap p eal s o n J an uary1 3 , 2 0 1 7 , ch al l en g i ng th e p ro po s edTFRP
as s es s m en t s . Let t er 5 1 5 7 In res p o n s e t o M r. Barn h i l l’ s ap p eal , Ap p eal s m ai l edt o M r. Barn h i l l (b y reg u l ar m ai l , n o tcert ifi ed ) a Let t er 5 1 5 7 , d at edAp ri l 5 , 2 01 7 . Inth e up p er-ri g h t 3 In Ch ad wi ckv . Co m

m i s s i o n er, 1 5 4 T.C. _

_ _ (J an . 2 1 , 2 0 2 0 ), a Let t er 1 1 5 3 s en tb y Ap p eal s t o th e t ax p ay er i n th at cas e i n 2 01 6 (t h e s am e y ear as Ap p eal s ’ s Let t er 1 1 5 3 t o M r. Barn h i l l ) ap p ears as Ex h ib i tD t o th e d ecl arat i on (Do c. 9 ) s ub m i t t edi n s up p o rto f t h e Co m m i s s i o n er’ s m ot i o n fo r s umm ary ju d g m en ti n th at cas e.-7
-

h an d co rn er t h e l et t er i d en t i fi eda “ Pers o n t o co n t act ” (b y n am e, em

p l o y ee n u m

b er,
an d p h o n e an dfax nu m

b ers ) an ds etan Ap p eal s co n feren ce as fo l lo ws : Co n feren ce i nfo rm at i on : Dat e: M ay

9 , 2 0 1 7 Ti m e: 1 0 am

EST Vi a t el ep ho n e: Cal l : * * * [t el ep h o n e n u m b er] Th e Let ter 5 1 5 7 readas fo l l o ws : Dear M r. Barn h il l : Th e Offi ce o f Ap peal s recei v edy o u r cas e fo r p o s s i b l e s et t l em en t , an d i t is as si g nedt o m e. I s ch edu l eda t el ep h o n e co n feren ce as s ho wnab o ve t o d i s cu s s p o s s i b l e s et t l em en t o f y o u r cas e. Cal l m e atth e t el ep h on e n um b er ab o v e wi th in two week s fro m th e d at e o f t hi s l et t er [i .e., Ap ri l 1 9 , 2 0 1 7 ] i f y o un eedt o res ch edu l e. Yo u ap p eal edth e IRS’ s d et erm i n at i on th aty o uare res p o ns i b l e fo r t h e Tru s tFu n d Reco v ery

Pen al ty (TFRP) u n d er In t ern al Rev en u e Co d e Sect io n 6 6 7 2 . InTFRP p ro t es t s , Ap p eal s co n s i ders i s s u es o f res p on s i b i l i ty

an d wi l l fu l n es s as wel l as th e co m p u t at i on o f t h e p en al ty am o u n t . I’ ll co n s i d er th e i nfo rm at i o n i n th e ad m i n i s trat i v e cas e fi le an d t h e i n fo rm at i o n p ro vi d edi n y o u r p ro tes t i n m ak in g m y d et erm i nat i o n . If y ouh av e ad d i t i o n al i n fo rm at io n t o p ro v i d e, p l eas e d o s o wi th in two week s fro m th e d at e o f t h i s l et t er [i .e., Ap ri l 1 9 , 2 0 1 7 ] . W e’ l l d i s cu s s thi s i n fo rm at io n an dm y p rel i m i n ary

fi nd i n g s du ri ng o u r s ch edu l edco n feren ce cal l
. The Appea l s pro ces s Ap p eal s i s an i n d ep en d en tfu n ct i o n wi th i n th e IRS. Ap p eal s rev i ews an dres o l v es d i s p u t es i n a fai r an di m p art ial m an n er b y

ap p l y i n g th e-8
-

l aw an dco u rtd eci s i o n s t o th e fact s o f y o u r cas e. I’ l l co n s i d er t h e fact s i n y o u r cas e an d t ry t o res o l ve y o u r d i s p u t e wi th th e IRS. If y o u ’ re n ew t o Ap p eal s , y o us h o u ldreadth e en cl o s edp ubl i cat i o n s [s i c]
. • Pub l i cat i o n 4 2 2 7, Ap p ea l s : W el co m e , i n cl u d es m o re d et ai l s ab o utth e Ap p eal s p ro ces s . Th e co n feren ce wi l l b e i nfo rm al an dwe’ l l d i s cu ss fact s , arg u m en t s , an dwh et her t h e l aw s up p o rt s y o u r p o s i t i o n . If y o up res en tn ew i n fo rm at i o n o r rai s e n ew i s s u es , I m ay refer y o u r cas e t o th e o ri g in at i n g o ffi ce fo r co n s i d erat i o n . If y o uh av e qu es t i o ns ab o u tth i s l et t er o r t h e Ap peal s p ro ces s , y o ucan cal l m e atth e n um

b er atth e t o p o f t h i s l et t er. Yo ucan al s o v is i t o u r web s i t e at www.i r

s .g ov/ a p p ea l s . M r. Barn h i ll al l eg es , an dfo r p u rp o s es o f t h e Co m m is s i o n er’ s m o t i o n we
as s u m e, th ath e d idn o t recei v e t h is Let t er 5 1 5 7 . Co n seq u en t l y , h e d i dn otg et
n o t i ce o f t h e co n feren ce t hath adb een s ch edu l edfo r M ay 9 , 2 0 1 7 , n o r th e co n t act i n fo rm at i o n fo r t h e Ap peal s o ffi cer as s i g nedt o h is cas e o r h er p h o n e n u m b er t o
u s e fo r as k in g qu es t i on s o r res ch edu l in g the co n feren ce. He d i d n o t recei v e Pub l icat i o n 4 2 2 7 ex p l ai ni n g th e Ap p eal s p ro ces s. He d i dn o ts ee t h e Ap peal s
o ffi cer’ s s u g g es t i o n th ath e co u l d p ro vi d e “ ad d i t i o nal i n fo rm at i o n ” b efo re th e Ap p eal s co n feren ce.-9
-

Th e fai l edAp p eal s co n feren ce Th e t i m e fo r t h e Ap p eal s co n feren ce arri v edat 1 0 a.m . o n M ay 9 , 2 0 1 7 ; b u t M r. Barn h i l l d i dn o tp h o n e i n , an dth e co n feren ce d i dn o to ccu r. Co n s equ en t l y , h e d i dn o t h av e t h e o ccas i o n --d es cri b edi n th e Let ter 5 15 7 --t o “ di s cu ss p o ss i bl e
s et t l em en to f y o u r cas e”, t o “ d i s cu s s th i s i n fo rm at i o n [h e co u ldp ro v id e] an d* * * [t he Ap p eal s o ffi cer’ s ] p rel i m i naryfi n d i n g s ”, t o “ d i s cu s s fact s , arg u m en ts , an d wh et h er t h e l aw s up p o rt s y ou r p o si t i o n ”, o r t o “p res en t n ew i n fo rm at i on o r rai s e
n ew i ss u es ”. No n e o f t h i s o ccu rredb ecau s e (we as s u m e) h e h adn o trecei v ed Let t er 5 1 5 7
. Let t er 1 5 3 6 Th e Ap p eal s o ffi cer d i dn o tat t em p tt o p h o n e M r. Barn h i l l o r o th erwi s e fo l l o wup t h e fai l edco n feren ce. Rat her, t wo d ay s aft er t h ats ch edu l edd at e--i .e.,
o n M ay 1 1 , 2 0 17 --Ap p eal s s en tt o M r. Barn h i l l a Let t er 1 5 3 6 th at s tat ed : W e’ re s o rry

th at we co u l dn ’ t reach ag reem en twi th y o uab o utth e p ro p o s ed as s es s m en to f t h e Tru s tFu n d Reco v ery Pen al ty . W e’ re retu rn i n g y o ur cas e t o th e Co l l ect i o n fu n ct i o n fo r as s es sm en to f t h e l i ab i l i ty as d et erm i n edb y

Ap p eal s . Th e CDP l i en n ot i ce an dCDP h eari n g req u es t Th e IRS as s es sed th e p en al t i es an dm ad e n o t ice an dd em an d . Wh en M r. Barn h i l l d i dn o tp ay

th e p en al t i es , th e Co m

m i s s i o ner s en th i m

o n Sep t em

b er 7 ,-1 0
-

2 0 1 7 , a Let t er 3 1 72 , “

No t i ce o f Fed eral Tax Li en Fi l i n g an d Yo u r Ri g h tt o a Heari n g Un d er IRC 6 3 2 0 ” (“ CDP Li en No t i ce”), ad v is i ng h i m th atth e IRS h ad fi led anNFTL wi th the Cl erko f t h e Ci rcu i tCo u rt o f Ch es t erfi el d Co un ty , Vi rg i n i a, an dth at M r. Barn h i l l h adth e ri g h tt o a h eari n g wi th Ap p eal s . M r. Barn h i ll ex erci sedth atri gh t ; an do n Oct o b er 5 , 2 0 1 7, the IRS recei v ed h i s fax edl et t er an dFo 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 n g ”, i n res p on s e t o th e CDP Li en No t i ce. In th atCDP req u es t , M r. Barn h i l l d i s p u t edh i s l i ab i l i ty fo r t he TFRPs , s t at i n g : Tax p ay er d o es n o t o we t h i s t ax . Tax p ay er i s n o t a res p o n s i b l e p art y u n d er IRC § 6 6 7 2 . Tax p ay er h as n oth ada m ean i n g fu l o pp o rtu n i ty t o ch al len ge t h i s as s es s m en t
. (On h is Fo rm

1 2 1 5 3 M r. Barn h i l l al s o req u es t edthe wi th drawal o r s ub o rd i n at i on
o f t h e l i enb ecau s e “ iti s creat i ng a s i g n i fi can th ard s h i p as i t i s a b lem is h o n h i s cred i trep o rt
. ” Ho wev er, h e h as ev i d en t ly ab an do n edth ati s s ue an dd idn o trai s e i t i n o p p os i t i on t o th e Co m m i s s i o n er’ s m o t i on .) CDP h eari n g an dd et erm i nat i o n Th e CDP h eari n g t oo kp l ace, b y m ean s o f wri t t en s ub m i ss i o n s an dtwo t el ep ho n e co n feren ces b et ween th e Ap p eal s o ffi cer an dM r. Barn h i l l’ s rep res en t at i v e. M r. Barn h i l l ’ s rep res en t at i v e s ub m i t t edi n fo rm at i o n ab o utIro n Cro ss an dM r. Barn h i l l ’ s ro l e th ere i n an at t em p tt o co n v i n ce t h e Ap p eal s o ffi cer-1 1
-

th atM r. Barn h i ll s h o u l dn o tb e h el dl i ab l e fo r t h e TFRPs . Ho w ev er, t h e Ap p eal s
o ffi cer u lt i m at el y

co n cl u d edth at , b ecau se M r. Barn h i l l h ad p rev i o u s l y recei v ed Let t er 1 1 5 3 an d h ads ub m i t t edan ap p eal , h e was n o ten t i t l edt o ch al l en g e h i s l i ab i l i ty atth e CDP h eari n g . Her co ncl u s io n was n otal t eredb y M r. Barn h i l l ’ s
co n ten t i o n s th ath e h adn ot recei v edth e Let ter 5 15 7 an dth erefo re h adn o tb een ab l e t o p art i ci p at e m ean i n g fu l l y i n the Ap p eal s co n feren ce ab o u t h i s TFRP l i ab i l i ty . OnAp ri l 3 0 , 2 0 1 8, Ap p eal s s en tM r. Barn h i l l 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 o f t h e In t ern al Rev enu e Co de”, i n wh i ch Ap p eal s s u st ai ned th e NFTL fi l i n g . Th e n o t i ce o f d et erm i n at i o n ex p l ai nedAp p eal s ’ co n cl u s io n s th atM r. Barn h i l l was p recl u d ed fro m ch al l en g i n g h i s u n derl y i n g l i ab i l i ty b ecau s e h e h adh ada p ri o r o p po rtu n i t y t o d o s o wh en h e h adrecei v edth e Let t er 1 1 5 3 p ro p os i n g th e p en al ty as s es sm en t s . M r. Barn h i ll t i m el y

fi l edh i s p et i t i o n i n th i s Co u rto n M ay 2 9 , 2 0 1 8, arg u i n g th ath e i s n o tl i ab l e fo r t h e TFRPs b ecau s e h e was n ota res p o n s i b l e p ers o n atIro n Cro ss , th at the am o u nt s o f t h e TFRPs were “ g ro s s l y o vers t at ed ”, an dth atAp p eal s erred b y co n cl u d i ng th ath e was n o t en ti t l edt o ch al len g e h i s l iab i l i ty i n the CDP h eari n g . M r. Barn h i l l ’ s ad dres s as s t at edo n th e p et i t i o n was i n Vi rg i n ia.-1 2
- Di s cu ss i o n I. Gen eral l eg al p ri n ci p l es A. Su m

m ary ju d g m en t Un d er Ru l e 1 2 1 (t h e Tax Co u rt ’ s an al o g t o Ru l e 5 6 o f th e Fed eral Ru l es o f Ci v il Pro cedu re (“ Ru l e 5 6 ”)), t h e Co u rtm ay g ran t s umm ary

ju d g m en twh ere t h ere i s n o g en u in e d i s p u t e as t o an y m at eri al factan da d eci s i o n m ay b e ren d eredas a
m at t er o f l aw. Th e m o v in g p art y (h ere, t h e Co m

m is si o n er) b ears th e b u rd en o f
s h o wi n g th atn o g enu i n e d i s p u t e o f m at eri al factex i s t s , an dthe Co u rt wi l l v i ew
an y fact ual m at eri al an d i n feren ces i n th e l i g ht m o s tfav o rab l e t o th e n o n m o v i n g p art y . Dah l s tro m v . Co m m i ss io n er, 8 5 T.C. 8 1 2 , 8 2 1 (1 9 85 ); cf. An d ers o n v . Li b ert y Lo bb y , In c., 4 77 U.S. 2 4 2 , 2 5 5 (1 9 86 ) (s am e s tan d ardu n d er Ru l e 5 6 ).

“ Th e o pp o s i n g p art y

i s t o b e affo rd edth e b en efi t o f al l reas on ab l e d o ub t , an dan y i n feren ce t o b e d rawn fro m th e u n d erl y i n g fact s co n t ai n edi n th e reco rdm u s tb e
v i ewed i n a l ig h tm o stfav o rab l e t o th e p art y o pp o s i n g the m o t i o n fo r s umm ary ju d g m en t .” Es p i no za v . Co m m i s s i o n er, 7 8 T.C. 4 1 2 , 4 1 6 (1 9 82 ). To res o l v e t h e Co m m i s s i o n er’ s m ot io n , we as s u m e t he fact s as s h o wnb y M r. Barn h i l l , th e n o n m o vi n g p art y , o r as s h own b y th e Co m m i s s i o n er an dn o t d i s p ut edb y M r. Barn hi l l. Of co urs e, i f we d en y

th e m o t i on fo r s u m

m ary ju d g m en t , th enthe d i s p u t edfact s-1 3
-

m ay b e s ub ject s fo r t ri al , wh ere we wi l l n o tas s um e t hatM r. Barn h il l ’ s al l eg at i o n s are t ru e b u t wi l l d eci d e t h e fact s o n th e b as is o f th e ev i d en ce. Two o f t h e m o s ts i g n i fi can to f t h es e as s u m edfact s are (1 ) t h atM r. Barn h i l l
was n ota p ers o n res po n s i bl e t o co l l ect , acco u n tfo r, an dp ay o v er th e em

p l o ym en t t ax es o f Iro n Cro s s an d (2 ) t h atth e IRS o v ers tat edth e am ou n ts o f t h e TFRPs . Th e Co m m i s s i o n er m ai n t ai n s t h e co n trary , 4 b u t fo r p u rp o s es o f h i s m ot i o n--arg u i n g th ata l iab i l i ty

ch al l en g e i s p recl u d ed --we m u s t as su m e t h atth e ch al l en g e i s a g o o d
o n e an dth ati f we en t ert ai n edi t , p et i t io n er wo u l dp rev ai l . Th e Co m m i s s i o n er as ks
u s t o h o ldn o tju stth ats ect i o n 6 3 3 0 (c)(2 )(B) p recl u d es n o n -m eri to ri ou s l i ab i l i t y ch al l en g es aft er t h e t ax p ay er h as recei v edLet t er 1 1 5 3 b u tth ats ect i o n 6 3 3 0 (c)(2 )(B) p recl u d es al l s u ch ch al len g es , reg ard l es s o f t hei r m eri t . W e th erefo re as s u m e M r. Barn h i l l ’ s ch al l en g e i s m eri to ri ou s , an dwe d eci d e wh et h er i t i s n o n et h el es s p recl u d ed
.

4 Th e Co m

m i ss i o n er arg ues i n h i s rep ly b ri ef t h at“ [i ] t was reas o nab l e fo r SO Hard i n g t o d et erm i n e p et i t i o ner was a res po n s i b l e an dwi l l fu l p art y u nd er I.R.C. § 6 6 7 2 ” an dt o d et erm i n e “ th atth ere was n o i n fo rm at i o n i n th e reco rd t o d i s p u t e t h e am ou n t s o f t h e TFRP as s es sm en t s ”; an dth e rep l y d es cri b es the ev i d en ce t h at s up p os ed l y

s up p o rt s th o s e d et erm i n at i o n s . Th is arg u m en t i s ato d d s wi th th e Co m m i s s i o n er’ s co n t en ti o n th atth e l i ab i l i ty ch al l en g e was n o tp ro p erl y b efo re Ap p eal s i n th e CDP h eari n g , an di ti s ato d d s wi th h i s co n t en t i o n th atwe can d eci d e t h i s cas e o n s u m

m ary ju d g m en t wi th ou t ad dres s i n g th e l i ab i l i ty i s su es . W e th erefo re i g n o re t h i s arg um en tfo r p urp o s es o f t hi s Op in io n .-1 4
-

Fo r p u rp o s es o f t h e Co m m i s s i o n er’ s m o t i o n , we al s o as s u m e t h at --as M r. Barn h i l l h as d ecl aredu n d er p en al ty o f p erju ry --h e d idn o t recei v e t he Let t er 5 1 5 7 . W e d o no tcro s s o u r fi n g ers b eh i n do u r b ackas we s t at e t h i s as s u m ed fact , th ou g h t h e Co m

m i s s i o n er’ s p ap ers s eem

t o s ug g es tth atwe s h o u l d
. Hi s
m o ti o n s tat es : “ Wh i l e p et i t i o n er cl ai m s h e d i dn o trecei v e t h e l et ter fro m Ap p eal s
o ffi cer Po l l acks ch edu li n g th e t el ep h o n e co n feren ce, s u ch l et t er was s en t t o th e
s am e ad dres s as th e Let t er 1 1 5 3 , wh i ch p et it i o n er recei v ed .” (Em p h as is ad d ed .) Hi s rep l y s t at es : “ Th e Ap p eal s o ffi cer s en tp et i t i on er a Let t er 5 1 57 t o h i s l as t kn o wn ad dres s (t h e ad dres s o n th e Let t er 1 15 3 ) s ch edu l i n g a t el ep h o n i c
co n feren ce. Pet i t i o n er cl ai m s h e d i d n otrecei v e t h e Let t er 5 1 5 7 .” (Em p h as i s ad d ed .) If t h e Co m

m i s s i o n er wi s h es t o rai s e d o ub t ab ou tth atas s ert i o n , th e fo ru m fo r t h ateffo rtwo u l db e a tri al , n o ta m o ti o n u n d er Ru l e 1 2 1 th atas s ert s we n eed
n o tri al
. B. “ Res po n s i b l e p ers o n ” p en al ty Anem p l o y er (h ere, Iro n Cro s s ) i s req u i redt o wi th h o l dfro m an em p l o y ee’ s wag es an dth en p ay

o v er t o th e IRS b o th i n co m e t ax , s ee s ec. 3 4 0 2 , an dth e
em pl o y ee’ s s h are o f So ci al Secu ri ty an dM ed i care t ax (i .e., Fed eral In s u ran ce Co n tri b u t i o n s Actt ax ), s ee s ec. 3 1 0 2. Un d er s ect i o n 7 5 01 (a), “ th e am o u nto f t ax
s o co ll ect ed o r wi thh el ds h al l b e h el dt o b e a s p eci al fu n di n tru s tfo r t h e Un i t ed-1 5
-

St at es ”; co n seq u en t l y , th es e wi th h el d t ax es are referred t o as “ tru s tfu n d t ax es ”. On e o f t h e m ean s Co n g res s h as en act ed t o en s u re t h atth es e t ru s tfu n dt ax es are p ai do ver t o t h e Go v ern m en ti s s ect i o n 6 6 7 2 , u n d er wh i ch “ th e o ffi cers o r
em pl o y ees o f t h e em

pl o y er res p o n s i b l e fo r effect u at i n g th e co l l ect i o n an dp aym en t
o f t ru s t-fu n dt ax es wh o wi ll fu l l y fai l t o d o s o are m ad e p ers o nal l y l i ab le t o a

‘ pen al ty ’ equ al t o th e am o u n t o f t he d el i n quen tt ax es . ” Sl o d o v v . Un i t edSt at es , 4 3 6 U.S. 2 3 8 , 2 4 4 -2 45 (1 9 7 8). Sect i o n 6 6 7 2 (a) p ro v i d es :

SEC. 6 6 72 (a). Gen eral Ru l e.--An y p ers o n req u i redt o co l l ect , tru th fu l l y acco u n tfo r, an dp ay o v er an y t ax i m p o s edb y th is t i t l e wh o wi l l fu l l y fai l s t o co l l ects u ch t ax , o r t ru thfu l l y acco u n t fo r an dp ay o v er s uch t ax , o r wi l l fu l ly at t em p ts i n an y m an n er t o ev ad e o r d efeat an y s u ch t ax o r t h e p aym en tth ereo f, s h al l , i n ad d i ti o n t o o ther p en al t i es p ro v id edb y

l aw, b e l i ab l e t o a p en al ty equ al t o th e t o t al am o u nto f the t ax ev ad ed , o r n otco l l ect ed , o r n o t acco un t ed fo r an d p ai d o v er. * * * Th e l i ab i l i ty ati ss u e h ere i s th i s p en al ty i m p o s edb y s ect i o n 6 6 7 2 , wh i ch th e IRS
as s es s edag ai n stM r. Barn h i l l t o reco ver Iro n Cro s s ’ s u np ai d t ru s tfu n dt ax es . Befo re t h e IRS m ay

as s es s a s ect i o n 6 6 7 2 p en al ty , i tm u stm ai l a p rel i m i naryn o t i ce (h ere, t h e Let t er 1 1 5 3 ) “ t o an ad dres s as d et erm i n edu n d er
s ect i on 6 2 1 2 (b )”, i .e., t o the res p o n si b le p ers o n ’ s l as tkn o wnad dres s (o r i tm ay d el i v er t h e n o t i ce i n p ers o n ) ad v i s i n g o f t he p ro p o s edas s es sm en to f a s ect io n 6 6 7 2-1 6
-

p en al ty . 5 Sec. 6 67 2 (b )(1 ); Bl an dv . Co m m i ss i o n er, T.C. M em o . 2 0 1 2 -8 4
. No t ifi cat i o n b y

m ai l (o r d el i v ery

i n p ers o n ) i s s u ffi ci en tt o co m pl y wi th t h e n o t i ce req u i rem en to f s ect i o n 6 6 72 (b )(1 ). See M as o n v . Co m m i s s i o n er, 1 3 2 T.C. at3 2 2- 3 2 3 . “ Th e Co m

m is s i o n er m ay

i s s u e n o t i ce an dd em an d fo r an das s es s th e p en al t y 6 0 d ay s aft er n o t i fi cat io n u n d er s ect i o n 6 6 7 2 (b )(1 ), du ri n g wh i ch p eri o d t h e t ax p ay er m ay

ap p eal th e p ro p o s edas s es s m en tan dreq ues tan Ap peal s co n feren ce.” Bl an d v . Co m

m i s si o ner, s l i p o p. at1 4 (ci ti n g s ect i o n 6 6 7 2 (b )(2 )). If t h e t ax p ay er ap p eal s an dth e Ap p eal s o ffi cer d et erm i nes th atth e t ax p ay er i s l iab l e fo r t h e p en al ty as a res p o n si b le p ers on , th e m at ter i s return edt o th e Co m m i s s i on er fo r
as s es s m en tan dco l l ect i o n . Th e Co m m i s s io n er i ni t i at es th i s co l l ect i o n p ro ces s b y i s su i ng a n o t i ce an dd em an dfo r p aym en tp u rs u an tt o s ect i o n 6 3 0 3
. C. Co l l ect io n rev i ew p ro cedu re If a t ax p ay er fai ls t o p ay

an y Fed eral t ax l i ab i l i ty

aft er n o ti ce an d d em an d , s ect i on 6 3 3 1 (a) au th o ri zes th e IRS t o co l l ectth e t ax b y l ev y o n th e t ax p ay er’ s p ro p erty ; an ds ect i o n 6 3 2 3 (f) au t h ori zes th e IRS t o fi l e an NFTL t o p ro t ectth e

5 A Let t er 1 1 5 3 co ns t itu t es th e n o t ice o f p ro po s edas s es s m en t o f a s ect i on 6 6 7 2 res po n s i b l e p ers on p en al ty req u i red b y

s ec. 6 6 7 2 (b ) as a p rereq u i s it e t o the IRS’ s i m

p o s i ti o n o f t h e p en al ty . See Rev . Pro c. 2 00 5 -3 4 , s ec. 4 .0 1, 2 0 0 5 -1 C.B. 1 2 3 3, 1 2 3 4 (s et t i n g fo rth th e p ro cedu res fo r m ai l i n g th atl et t er an d fo r t h e t ax p ay er’ s ex erci s e o f h i s ri g h t t o ei th er ag ree t o o r d i s p u t e t he p ro p o s ed as s es s m en twi th i n 6 0 d ay s o f t h e d at e o n th e l et t er).-1 7
-

Go v ern m en t ’ s i n teres t s . Ho wev er, Co ng res s h as ad dedt o ch ap t er 6 4 o f th e Co d e cert ai n p ro v is i o n s (i n s ub ch ap t er C, p artI, an di n s ubch ap t er D, p artI) en t i t l ed

“ Du e Pro ces s fo r Li en s ” an d“ D u e Pro ces s fo r Co l l ect i o n s”, an d t h e IRS m u s t
co m p l y wi th th o s e p ro vi s io n s b efo re i tcan p ro ceed wi th a l ev y o r s u st ai n t h e fi l i n g
o f an NFTL: Th e IRS m

u s tfi rs ti s s u e a fi n al n o ti ce o f i n t en tt o l ev y an d/ o r a
n o t i ce o f fi l i n g an NFTL an dm u s tn o t i fy th e t ax p ay er o f th e ri gh t t o an ad m i n is trat i v e h eari n g . Secs . 6 3 2 0 (a) an d (b ), 6 3 3 0 (a) an d(b )(1 ). Aft er recei v i n g
s u ch a n o t i ce, t h e t ax p ay er m ay req u es tth atad m in i s trat i v e h eari n g , s ecs . 6 3 2 0 (a)(3 )(B), (b )(1 ), 6 3 3 0 (a)(3 )(B), (b )(1 ), wh i ch i s cal l eda “ CDP h eari n g ” an d t ak es p l ace b efo re Ap p eal s , s ecs . 6 3 2 0 (b )(1 ), 6 3 3 0 (b )(1 ). If the t ax p ay er i s d i s s at i s fi edwi th th e o u t co m e t h ere, h e can ap peal th atd et erm i nat i on t o the Tax Co u rt , s ecs . 6 3 2 0 (c), 6 3 3 0 (d )(1 ), as M r. Barn h i l l h as d o n e. Atth e ag en cy -l ev el CDP h eari n g , th e Ap p eal s o ffi cer m u s td et erm i ne wh et h er t h e p ro p o s edco l l ect i o n act i o n m ay p ro ceed . Inth e cas e o f a n o t ice o f i n t en tt o l ev y , th e p ro cedu res fo r t h e ag en cy -l ev el CDP h eari n g b efo re Ap p eal s are
s etfo rt h i n s ect i o n 6 3 3 0 (c). Th e p ro cedu res fo r t h e ag en cy -l ev el h eari n g reg ard i n g an NFTL are t h e s am e as th o s e s etfo rt h i n s ect i o n 6 3 30 (c) fo r a n o t i ce
o f i n t en tt o l ev y . Sec. 6 3 2 0 (c). Th e Ap p eal s o ffi cer i s req ui redt o t ak e i n t o
co n si d erat io n s ev eral th i n g s: Fi rs t , th e Ap p eal s o ffi cer m u s tv eri fy th atth e-1 8
-

req u i rem en t s o f an y

ap p l i cab l e l aw o r ad m in i s trat iv e p ro cedu re h av e b een m etb y IRS p ers on n el
. Sec. 6 3 3 0 (c)(3 )(A). Th e at tach m en tt o th e n ot i ce o f d et erm i n at i on
s u m m ari zedth e Ap peal s o ffi cer’ s v eri fi cat i o n o f co m p l ian ce wi th t h es e req u i rem en t s . Inh i s o p p o s i t i o n t o th e Co m m is s io n er’ s m o t io n fo r s u m m ary ju d g m en t , M r. Barn h i l l m ak es n o d i s t i n ct co nt en t i o n ab o utthe v eri fi cat i o n req u i rem en t
. 6 Seco n d , th e t ax p ay er m ay “ rai s e atth e h eari n g an y rel ev an ti s s u e rel at i n g t o th e u npai dt ax o r t h e * * * [co l l ect i o n act i o n ] , i n cl ud i ng ” ch al l en g es t o th e ap p ro p ri at en es s o f t h e co l l ect i o n act i o n an do ffers o f co l l ect i on al t ern at i v es . Sec. 6 3 30 (c)(2 )(A). Ag ai n , M r. Barn h i l l h as n o trai sedan y i s s u e i n th i s reg ard
. Th i rd , the Ap p eal s o ffi cer m u s t d et erm i n e “ wh et her an y p ro p o sedco l l ect i o n act i on b al an ces th e n eedfo r t h e effi ci en tco l l ect i o n o f t ax es wi th th e l eg i t i m at e
co n cern of t h e p ers o n th atan y co l l ect i o n act io n b e n o m o re i n tru s i v e t han
n eces s ary .” Sec. 6 3 3 0 (c)(3 )(C). M r. Barn h il l h as n o tm ad e an y co nt en t i o n ab o u t th i s b al an ci n g . Fi n al l y , th e t ax p ay er m ay co n t es tthe ex i s t en ce an dam o u n to f t he
u n d erl y i n g t ax l iab i l i ty , b uto n ly i f h e d i dn o trecei v e a n o t ice o f d efi ci en cy o r

6 M r. Barn h i l l d o es co n t en dth atth e TFRP as s es s m en t s were i m p ro p er (b ecau s e t h ey

were n o t p reced edb y

a co m p l et e Ap p eal s co n feren ce).-1 9
-

o th erwi s e h av e an o p p o rtu n i ty t o d i s p u t e t he t ax l i ab i l i ty . Sec. 6 3 3 0 (c)(2 )(B). M r. Barn h i l l at t em

p t edt o ch al l en ge h i s u n derl y i ng t ax l i ab il i ty atthe CDP h eari n g
an d co n t i n u es th atat tem

p ti n th i s cas e. W e wi l l ad dres s th i s co n ten t i o n b el o w i n p artII. D. Tax Co u rtrev i ew Wh en Ap peal s i s s u es i t s d et erm i n at i o n , th e t ax p ay er m ay p et i ti o n th e Tax Co u rtfo r rev i ew, p u rs u an tt o s ect i o n 6 3 30 (d )(1 ), as M r. Barn h i l l h as d o n e. Wh ere th e u n derl 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 t ax pay er i s en t i t l ed t o d e n o v o
rev i ew. Go za v . Co m

m is s i o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 82 (2 0 0 0 ). As t o i s s u es o t h er th an th e u n d erl y i n g l iab i l i ty , we rev i ew t h e d et erm i n at i o n fo r ab u s e o f d i s cret i o n . Id . at1 8 2 . Th ati s , we d eci de wh et h er t h e d et erm i n at i o n was arb i trary , cap ri ci o u s , o r wi th o uts o u n d b as i s i n fact o r l aw. See M 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 ). II. An al y s i s Th e i s s u es i n M r. Barn h i l l ’ s p et i t io n an di n h i s res p on s e t o th e Co m m i s s i o n er’ s m ot io n fo r s u m m ary ju d g m en t al l rel at e t o h i s co n t en ti o n th ath e i s n o tl i ab l e fo r t h e TFRPs , b o th b ecau s e h e was n o t a “ res p o n si b l e p ers o n ” atIro n Cro ss an db ecau s e t h e TFRPs were o v ers t at edi n an y ev en t . Th e Co m

m i s s i o n er-2 0
-

h as m o v edth e Co u rtt o h o l d th ats ect i o n 6 3 3 0 (c)(2 )(B) p recl ud es M r. Barn h i l l fro m m ak i n g s u ch a co n t en t i o n b ecau s e o f h i s p ri o r recei p to f t h e Let t er 1 1 5 3
. A. Pri o r “ o p po rtu n i ty ” u n d er s ect i o n 6 3 3 0 (c)(2 )(B) M r. Barn h i ll can n o tch al l en g e h i s u n d erl y i n g l iab i li ty fo r t h e TFRPs i f h e h ad a p ri o r “ o p p ortun i ty

t o d is p u te s u ch t ax l i ab il i ty ” u n d er s ect io n 6 33 0 (c)(2 )(B), wh i ch p ro v i des :

Th e p ers o n m ay

al s o rai s e atth e [CDP] h eari ng ch al l en ges t o th e ex is t en ce o r am ou n to f t h e u nd erl y in g t ax l iab i li ty fo r an y t ax p eri o d i f t h e p ers o n d i d n o trecei v e an y s tatu t o ry n o ti ce o f d efi ci en cy fo r s u ch t ax l i ab i l i ty

o r d i dn o to th erwi s e h av e an o pp o rtu n i ty t o d i s p u t e s u ch t ax l iab i l i ty . [Em p h as is ad d ed .] Fo r p urp o s es o f s ect i on 6 33 0 (c)(2 )(B), a p ri o r co n feren ce wi th Ap p eal s , o ffered b efo re o r aft er as s es s m en t , i s an “ o p p ortu n it y ” t o d i s p u t e th e u nd erl y i n g l iab i l i ty
. See 2 6 C.F.R. s ec. 3 0 1 .6 3 2 0 -1 (e)(3 ), Q&A-E2 , Pro ced . & Ad m i n . Reg s. (s t at i n g th ata p ri o r o p p o rtu n it y

t o d i s p u t e a l i ab i li ty

“ i n cl ud es a p ri o r o p p o rtu ni ty fo r a
co n feren ce wi th Ap p eal s”); s ee al s o Iam es v . Co m m i s s i o n er, 8 50 F.3 d 1 6 0 , 1 6 5
- 1 6 7 (4 th Ci r. 2 0 17 ) (h o l d i n g t h at a t ax p ay er’ s p ri o r o p p o rtu n i ty fo r a co nferen ce wi th Ap p eal s o ccu rredwh en h e ap p eared atth e p re-as ses s m en th eari n g t h ro u g h
co u ns el wh o d i s pu t edh i s l i ab i li ty an dreq u es t edad d i t i o n al d o cu m en t s ); Lan d er v . Co m m i s s i o n er, 1 5 4 T.C. _

_ , _

_ (s l i p o p . at3 1 -3 2 ) (M ar. 1 2 , 2 0 2 0 ) (h o ld i n g th at th e t ax p ay ers h ad a p ri o r o p p o rtu n i ty t o ch al l en ge t h ei r u n d erl y i n g t ax l i ab i l i ty-2 1
-

b efo re Ap p eal s as p art o f a p o s t -as s es sm en tau d i t reco n s i d erat i o n p ro ces s wh en th e Ap p eal s o ffi cer “ en gag edwi t h p et i t i on ers , t o o ka fres h l o o k atth e reco rd , co n ced edcert ai n i s su es , an d ab at eda s i g n i fi can tp ort i on o f t h e t ax p rev i o u s l y
as s es s edag ai n stth em ”). In Lewi s v . Co m

m i s s i on er, 1 2 8 T.C. 4 8 (2 0 0 7 ), we h el dth at2 6 C.F.R.
s ect i on 3 0 1 .6 3 2 0-1 (e)(3 ), Q&A-E2 , Pro ced . & Ad m i n . Reg s ., was a reas o n ab l e i n t erp ret at io n o f s ect i o n 6 3 3 0 (c)(2 )(B). If a t ax p ay er h as a n o n -ju d i ci al
o p p o rtu ni ty

t o ch al l en ge t h e u n d erl y i n g l i ab i l i ty --i .e., an ag en cy -l ev el rev i ew h eari n g s u ch as an App eal s co nferen ce--t h e t ax pay er d o es “ o therwi s e h av e an
o p p o rtu ni ty

t o d is p ut e s u ch t ax l i ab i l it y ” wi th in th e m ean i n g o f t he s t atu t e. Lewi s
v . Co m m i s s i o n er, 1 2 8 T.C. at6 1 (“ Co n g res s * * * i n t en d edt o p recl u de t ax p ay ers wh o were p rev i o u s l y affo rd eda co n feren ce wi th th e Ap p eal s Offi ce fro m rai s i n g th e u n derl y i n g l iab i l i t i es ag ai n i n a co l l ect io n rev i ew h eari ng an db efo re t h i s Co u rt ”). Ho wev er, t h e reg u lat io n d o es n o tel ab o rat e o n the m ean i n g o f “ a p ri o r
o p p o rtu ni ty

fo r a co n feren ce wi th Ap p eal s ”. See 2 6 C.F.R. s ec. 3 01 .6 3 3 0-1 (e)(3 ), Q&A-E2 , Pro ced . & Ad m i n . Reg s . Atth e t i m e we d eci d ed Lewi s , we res erv edfo r
an o th er d ay

th e qu es t i on o f wh et h er t h e m ere o ffer o f a co n feren ce wi th Ap p eal s i s
s u ffi ci en tt o p recl u de t h e t ax pay er’ s rai s i n g t h e i s s u e o f l i ab i l i ty i n a l at er CDP h eari n g . Lewi s v . Co m

m i s s i o n er, 1 2 8 T.C. at 6 1 n .9 . Th o u g h we l at er h el dth ata-2 2
-

t ax p ay er’ s fai lu re t o p urs u e t h e Ap p eal s co n feren ce aft er recei p t o f t h e Let t er 1 1 5 3
co n st i tu t es s u ch a fo rfei tedo pp o rtu n i ty (as we ex p l ai n b el o w), we h av e n ot p rev i o u s l y ad dres s edthe q u es ti o n wh et h er a t ax pay er wh o p u rs u es the Ap p eal s
co n feren ce b ut , th ro u g h n o fau l to f h i s o wn , i s p rev en t edfro m p art i ci p at i n g i n i ti s al s o p recl u d ed u n d er s ect i o n 6 3 3 0 (c)(2 )(B) fro m l at er rai s i n g a l i ab i l it y

ch al l en g e i n a CDP h eari n g . In th e s p eci fi c co n tex to f CDP cas es i nv o l v i n g tru s tfu n d reco v ery p en al t i es , th i s Co u rth as h el dth ata t ax pay er h as an “ o p p o rtu n i ty ” t o d i s p u t e h i s l i ab i l i ty fo r a TFRP wh en h e recei v es a Let t er 1 1 5 3. See M as o n v . Co m m i s s io n er, 1 3 2 T.C. at3 1 7 -3 1 8 (h o l d i n g t h atm erel y m ai l i n g the Let ter 1 1 5 3 t o th e t ax p ay er’ s l as t kn o wn ad dres s i s n o t s uffi ci en tt o p ro v id e h i m wi th an o p p o rtu n i ty

t o d i s pu t e t h e t ax l i ab i l i ty

i f h e d o es n o tactu al l y

recei v e--an dd o es n o t i n ten t i o n al ly av o i d recei p t o f--t h e Let t er 1 1 5 3). Th u s , i f t h e t ax p ay er recei v es a Let t er 1 15 3 an dt ak es th e res u l t i n g “ o p p o rtu ni ty t o d i s p u t e” t h e u n d erl y in g TFRP l iab i l i ty atth e Ap p eal s
co n feren ce, t h en th e t ax p ay er i s p recl u d edb y s ect i o n 6 3 3 0 (c)(2 )(B) fro m ch al l en g i n g th e u n d erl y i n g t ax l i ab i l i ty i n a s ub s equ en tCDP h eari ng . Th e s am e i s tru e o f t he t ax p ay er wh o recei v es a Let t er 1 1 5 3 b utfo reg o es th e o p p o rtun i ty t o d i s p u t e l i ab i l i ty

b y fai li n g t o t i m el y

req u es tth e Ap p eal s co n feren ce. See Bl et s as
v . Co m m i s s i o n er, T.C. M em o . 2 0 1 8 -1 2 8 , at* 8 -* 9 (t h e t ax pay er recei veda-2 3
-

Let t er 1 1 5 3 b u tt o o k n o fu rt h er act i o n), aff’ d , 7 84 F. Ap p’ x 8 3 5 (2 d Ci r. 2 0 1 9 ); Sm it h v . Co m

m i s si o ner, T.C. M em o . 2 0 15 -6 0 , at* 2 4 (t h e t ax p ay er recei v eda Let t er 1 1 5 3 b u tfai l edt o t i m el y res p o n db ecau s e h i s rep res en tat i v e fai l edt o s en d h i s res po n s e); Th o m

p s o n v . Co m

m i s s i o n er, T.C. M em o . 2 0 1 2-8 7 , s l i p o p . at7 (t h e t ax p ay er recei v eda Let t er 1 1 5 3 b u tfai l edt o s ub m i ta p ro t es tt o Ap peal s d i s p u t i n g h i s l i ab i l i ty

fo r t h e t ru stfu n dreco v ery p en al ti es ); cf. Gi aqu i n t o v . Co m m i s s i o n er, T.C. M em o . 2 01 3 -1 5 0 , at* 1 4 -* 1 5 (t h e t ax p ay er wh o d el i b erat el y refu s edt o accep t d el i v ery o f a Let t er 1 1 5 3 h ad a p ri or o p p o rtun i ty t o d is p u te h i s l iab i li ty

fo r TFRPs ). 7 In s uch ci rcu m st an ces th e p ri m ary rem ai n i n g p u rp o s e o f t h e CDP h eari n g wo u ld b e fo r t he t ax p ay er an dth e s et t l em en to ffi cer t o d i s cu s s co l l ect i o n al t ern at i v es . M r. Barn h i l l d i dn o ts eeka co l l ect i o n al tern at i ve; h e s eek s o n l y
rev i ew o f th e d et erm i n at i on o f h i s l i ab i l i ty .

7 Th e l acko f o pp o rtu n i ty

fo r ju d i ci al rev i ew i n t h e Tax Co u rtaft er t h e o p p o rtu ni ty

fo r ag en cy -l ev el rev i ew up o n recei p to f t h e Let t er 1 15 3 d o es n o t s ev erel y p reju d i ce t h e t ax p ay er b ecau s e, as we h av e p rev i ou s l y n o t ed , “ the s ect i o n 6 6 7 2 p en al ty

i s d i v i s i b l e, s o th ata t ax p ay er m ay l i t i g at e t h e p en al ty

aft er h av i n g p ai dan am o u n t co rres po n d i n g t o th e t ax wi th h el dfro m a s i n g l e em p l o y ee”. See W eb er v . Co m

m i s s i o n er, 1 3 8 T.C. 3 4 8 , 3 6 3 n . 1 2 (2 0 1 2 ) (ci t i n g Dav i s v . Un i t ed St at es , 9 6 1 F.2 d8 6 7 , 8 7 0 n .2 (9 th Ci r. 1 9 9 2 ), an dBl an dv . Co m m is s i o n er, T.C. M em o. 2 0 1 2 -8 4 , s l i p o p . at2 2 n .1 3 ). Th u s , th e t ax pay er wh o s e l i ab i l i ty i s up h el d i n the Let t er 1 1 5 3 p ro ceed in g b efo re Ap p eal s can m ak e a s m al l “ t o k en ” p aym en t t o ward s t h e s ect i on 6 6 7 2 p en al ty , fi l e a refu n dcl ai m wi th the IRS an d , i f t he refu ndcl ai m

i s d en i ed , fi l e a refu n ds u i ti n a Fed eral Di s tri ctCo u rto r t he Co u rt o f Fed eral Cl ai m s .-2 4
-

B. Pri o r “ o p po rtu n i ty ” wh en an Ap p eal s co n feren ce i s th wart ed 1
. Let t er v s . o p p o rtu n i ty M r. Barn h i ll recei v edth e Let t er 1 1 5 3 i n v i t i n g h i s ap p eal , an d th e Co m m i s s i o n er co n t en d s th atth i s en d s the m at t er b ecau s e, as h e s ay s i n h i s m o t i o n : Th e Tax Co u rt h as h el dth atrecei p to f a Let t er 1 1 53 co n s t i tu t es an o p p o rtun i ty

t o d is p ut e t he t ax p ay er’ s l i ab i l i ty . M o rg an v . Co m m i ss i on er, T.C. M em o . 2 0 1 1-2 9 0 (ci t i n g M cCl u re v . Co m m i s s i o n er, T. C. M em o . 2 0 0 8 -1 3 6 ). So l u co rp Lt d . v . Co m m i s s i o n er o f In t ern al Rev en u e, T.C. M em o . 2 01 3 -1 1 8 (M ay 2 , 2 0 13 ) (t ax p ay er p recl u d ed fro m d i s p u t i ng l i ab il i ty in CDP h eari ng b ecau s e h e h ad p ri o r o p p o rtun i ty

s i nce h e recei v edLet t er 1 1 53 , ev eni f h e ch o s e n o tt o fi l e an ap p eal ). It is tru e t h atth e cl au s e “ th e recei p to f a Let t er 1 1 53 co n s t i tu t es an o p p o rtu n i ty ” i s
s h o rt h an dth at o u r o p i n i o n s h av e s o m et i m es u s ed i n th i s co n t ex t --ap paren t l y fi rs t i n M o rg an , 8 wh i ch s o ch aract eri zedth e h o l d i n g i n M cCl u re. Th ereaft er, we h av e rep eat edth ats am e cl au s e, o ft en ci t i n g M o rg an . 9 Ho wev er, i ti s cl ear t h at , s tri ct l y

8 See M o rg an v . Co m

m i s s i o n er, T.C. M em o . 2 0 1 1-2 9 0 , * 8 (“ W e h av e h el d th atth e recei p to f a Let t er 1 1 5 3 co n s t i tu t es an o p p o rtu n i ty t o d i s p ut e t h e t ax p ay er’ s l i ab i l i ty . M cCl u re v . Co m m i ss i o ner, T.C. M em o. 2 0 08 -1 3 6 ”).
9 See So lu co rp , Lt d . v . Co m m i s s i o n er, T.C. M em o . 2 0 1 3 -1 1 8 , at* 9 (“ W e h av e h el d t h atrecei p t o f a Let ter 1 1 5 3 co n s t i tu t es an o p p o rtu n i ty t o d i s p u t e t h e t ax p ay er’ s l i ab i l i ty . M o rg an v . Co m m is si o n er, T.C. M em o . 2 0 1 1-2 9 0 , 2 0 1 1 W L 6 7 6 2 9 2 9 , at* 3 (ci t in g M cCl u re v . Co m m i ss i on er, T.C. M em o . 2 00 8 -1 3 6)”); Len gu a v . Co m

m i s s i on er, T.C. M em o . 2 0 1 3-1 9 7 , at* 8 -* 9 (“ W e h av e h el d t h atth e recei p t o f Let t er 1 1 53 co n s t i tu t es an o p p o rtu n i ty t o d i s p u t e t h e t ax p ay er’ s l i ab i l i t y wi th i n th e m ean i n g o f s ect i on 6 3 30 (c)(2 )(B). E.g
. , So l u co rp , Lt d
. v . (co n ti n u ed ...)-2 5
-

s p eak i n g , th e Let t er 1 1 5 3 i ts el f d o es n ot“ co n s ti tut e” t h e o p p o rtu n i ty b u trat h er
en ab les , o r m ak es av ai l ab l e, o r p ro v i d es th e m ean s fo r, 1 0 o r g i v es ri se t o th e
o p p o rtu ni ty

t o ch al l en ge t h e TFRP l iab i l i ty . Th e “ o p p o rtu n i ty ” t o ch al l en g e a TFRP l i ab i l i ty

p l ai n l y t ak es p l ace i n th e Ap p eal s h eari n g ; i ti s th e h eari n g th at

“ co n s t i tu t es ” t he o p p o rtu n i ty . In M o rg an v . Co m m is s i o n er, T.C. M em o . 2 0 1 1 -2 9 0 , s l i p o p . at 4 -5 , th e t ax p ay er recei v ed the Let t er 1 1 5 3 , fi l eda p ro t es t , an d actu al l y p art i ci p at edi n th e t el ep h o n e co nferen ce wi th Ap p eal s wh ere h e co n t es t ed h i s l i ab i l i ty . Inco n tras t , s o m eo n e wh o h as recei v eda Let t er 1 1 5 3 b u ti s wai t i n g fo r h i s s ch edul edh eari n g i s s t il l awai t i n g h i s o p p o rtun i ty an d h as n o ty etg o t t en i t
. 2
. “ Recei v e” v s . “ h av e an o p p o rtu n it y ” Di s t in g u i sh i ng th e Let ter 1 1 5 3 fro m th e “ o p p o rtu n i ty ” t h ati t o ccas i o n s i s
co n si s t en twi th th e s t atu t o ry t ex t . Sect i o n 6 3 30 (c)(2 )(B) p ro v i d es two ci rcu m s t an ces th atb ar a l i ab i l it y ch al l en g e--“ th e p ers o n [1 ] d i dn otrecei v e an y

9 (...co n t in u ed ) Co m m i s s i o n er, T.C. M em o . 2 0 1 3 -1 1 8 ; M org an v . Co m m i s s i o n er, T.C. M em o . 2 0 1 1 -2 9 0 ”).

1 0 Th e i m p reci s i o n o f “ co n s t i tu t es an o p p o rtu n i ty ” i s m an i fes t i n So l u co rp , wh i ch i n o ne p l ace s tat es th at“ recei p to f a Let t er 1 1 5 3 co ns t i tu t es an o p p ortu n i t y t o d i s p u t e t h e t ax p ay er’ s l i ab i li ty ”, So l u co rp , Lt d . v . Co m m i s s io n er, at * 9 , b u ti n an o th er s t at es m o re p reci s el y that“ Let ter 1 15 3 p ro v id es a t ax p ay er wi th * * * th e m ean s o f p ro t es t i n g a p ro p os edTFRP as s es s m en t ad m in i s trat i v el y wi th th e Co m m i s s i o n er”, i d
. at * 8
.-2 6
-

s t atu to ry n o t i ce o f d efi ci en cy

fo r s u ch t ax l i ab i l it y

o r [2 ] d i dn o to th erwi se h av e an
o p p o rtu ni ty

t o d is p ut e s u ch t ax l i ab i l it y . ” (Em ph as i s ad d ed ). In th e i nco m e t ax d efi ci en cy

co n t ex t , m ere recei p t(o f t h e s t atu t o ry n o ti ce o f d efi ci en cy , th e

“ SNOD”) i s th e b ar; i n th e s ub s equ en tCDP co n t ex t , th e t ax pay er m ay ch al l en g e
an i n co m e t ax l i ab i li ty

o nl y i f h e “ d i dn o trecei v e” th e SNOD. Inh is m o t i o n th e Co m m i s s i o n er ad dres s es th e TFRP co n t ex tas i f i twere i d en t i cal --as i f t h e s t atu t e
s ai dth atth e p ut at i v e “ res po n s i b l e p ers o n ” m ay ch al l en g e TFRP l i ab i l i ty o n l y i f h e

“ d i d n o trecei v e” Let t er 1 1 53 ; b u ti td o es n o ts ay that . Inth e cas e o f t h e TFRP l i ab i l i ty (an do th er l i ab i li t i es n o ts ub jectt o d efi ci en cy

p ro cedu res ), th e t ax p ay er
m ay ch al l en g e l i ab il i ty

i n th e CDP h eari n g i f h e “ d i dn o to therwi s e h av e an
o p p o rtu ni ty

t o d is p ut e s u ch t ax l i ab i l it y . ” Sec. 6 3 3 0 (c)(2 )(B) (em p h as i s ad d ed ). Read i n g th es e s ub p arag rap h s i n t an d em s u g g es t s th atth e “ op p ortu n it y ” referen ced i n s ect io n 6 3 3 0 (c)(2 )(B) i s d ifferen tfro m th e recei p t o f t h e n o t i ce t h attri g g ers the
o p p o rtu ni ty . In Iam es v . Co m

m i s s i o n er, 8 5 0 F.3 dat1 6 5 , th e U.S. Co u rto f Ap peal s fo r th e Fo urt h Ci rcu i taffi rm edo u r h o l d i n g i n Lewi s th atth e ri g h t t o an ad m i n i s trat i v e h eari n g i n Ap p eal s “ co u n ts as ‘ an o p p o rtu n i ty t o d i s p ut e [o n e’ s ] t ax l i ab i l i ty ’ ” wi th i n th e m ean i n g o f s ect i on 6 3 30 (c)(2 )(B); an das ju s t i fi cat i on fo r t h at
co n cl u s i o n , th e co u rtreas o n edth at“ t ax p ay ers i n th es e [Ap p eal s] h eari n g s h av e a-2 7
-

g en ui n e ch an ce t o ex p l ai n wh y th ey s h o ul dn otb e h el d t o the am o u n t req u es t edb y th e Co m m i s s i o n er.” In Iam es , th e t ax p ay er “ [p ] l ai n l y * * * en jo y ed‘ an
o p p o rtu ni ty

t o d is p ut e [h i s ] l iab i l i ty ’ ” wh ere h e h ada h eari n g b efo re Ap p eal s an d ap p earedwi th co un s el wh o co n t es t ed h i s l i ab il i ty i n th e h eari n g . Iam es v . Co m m i s s i o n er, 8 5 0 F.3 dat1 6 7. Th e Co u rto f Ap p eal s o b s erv ed th ato n l y i n freq u en t ly

wi l l l i ab i l it y

p ro p erl y b e rai s edata CDP h eari n g , s t at i n g : “ W i th i n th i s co l l ect i o n -fo cu s edfram ewo rk , l i ab i l i ty rev iew p l ay s n o m o re t h an a m i n o r p art : Sect i on 6 33 0(c)(2 )(B) cat ch es t ax pay ers wh o wo u ldo th erwi s e fal l thro u g h th e crack s .” Id . at1 6 6 . W e h o l dth ata ci rcu m s t an ce i n wh i ch a t ax p ay er t i m el y req u es t s an d , thro ug h n o fau l t o f h i s o wn , i s d en i edth e o pp o rtun i ty t o p art i ci p at e i n a h eari n g b efo re Ap p eal s i s o n e s u ch i n s tan ce. W e h av e co n s is t en t l y

h el dth atwh ere a t ax p ay er h as t ak en al l o f t h e p ro p er
s t ep s t o av ai l h i m s el f o f t he o p p o rtu n i ty t o d i s p u te h i s l iab i l i ty

u n d er s ect i o n 6 3 3 0 (c)(2 )(B), t h e s t atu t e req u i res th atth e t ax p ay er i n fact real i ze t h ato p po rtu n i t y . See Perk in s v . Co m

m i s s i o n er, 1 2 9 T.C. 5 8, 6 6 -6 7 (2 0 0 7 ) (h o l d i n g t h atan Ap p eal s
co n feren ce i ni ti at edb efo re a req u es tfo r CDP h eari n g b u tn o ty etco n cl ud edwas
n o ta p ri o r o pp o rtu n i ty

t o d i s p u t e t h e t ax l i ab i l it y wi th in the m ean i n g o f s ect i o n 6 3 3 0 (c)(2 )(B)); M as o n v . Co m m i s s i o n er, 1 3 2 T.C. at3 1 8 -3 2 1 (h o l d in g th ata Let t er 1 1 5 3 m ai l edt o a t ax p ay er’ s l as tkno wnad dres s d i d n o tco n s t i tu t e a p ri o r-2 8
-

o p p o rtu ni ty

t o d is p ut e t he l i ab il i ty

wh ere i twas n otactu al l y recei v edan d
co n seq u en t l y

n o p ro t es twas fi l ed ); s ee al so Ro m an o -M u rp h y v . Co m m i s s i o n er, 1 5 2 T.C. 2 7 8 , 3 0 5 -3 13 (2 0 1 9) (h o l d i n g thatAp p eal s ab u s ed i ts d i scret io n b y
s u s t ai n i n g l ev y

p ro ceed i n g s fo r a TFRP wh ere t h e t ax p ay er’ s t i m el y p ro t es to f p en al ty d i dn o tres u l ti n a fi n al ad m i n i s trat i v e d et erm i n at i o n b y Ap peal s b efo re
as s es s m en tan do b s erv i n g thatth e t ax p ay er’ s p ro t es tth erefo re d i dn otres ul ti n a p ri o r o p p o rtu n i ty t o d i s p u t e t h e l i ab i l i ty ). Th erefo re, t o d et erm i n e wh et h er a TFRP l i ab i l i ty m ay

b e ch al l en gedi n a CDP cas e, we l o o kn o ts i m p l y t o s ee wh et h er t h e t ax p ay er “ recei v ed ” Let t er 1 1 5 3 b u twh et h er t h e t ax pay er “ ha[d ] an o p p o rtu n i ty ” t o d i s p u t e t h e TFRP p ro p o s edi n th e Let t er 1 1 5 3
.

3
. No -fau l td efau l tv s. “ l as t ch an ce” In th e cas es th e Co m

m is s i o n er ci t es , each t ax p ay er recei v eda Let t er 1 1 5 3
an d th enei th er p ro s ecu t edan u n s u cces s fu l ap p eal 1 1 o r fai l edt o d o s o . 1 2 No n e o f

1 1 See Iam es v . Co m

m i s s i o n er, 8 5 0 F.3 d1 60 , 1 6 6 -1 6 7 (4 th Ci r. 2 0 17 ) (“ He was rep res en t ed b y

co u n s el , wh o fi l edh is i n i t i al p ro t es twi th th e Offi ce o f Ap p eal s. Pri o r t o th e h eari n g , th e o ffi cer rev iewedth e rev en u e ag en t ’ s rep o rt , th e p ro t es t , an d o th er d ocu m en tat i o n . Th e o ffi cer al s o co n ferred wi th a t ech n i cal s p eci al i s t . Atth e h eari n g , Iam es ’ s co u n s el actu al ly co n t es t edIam es ’ s l i ab i l i ty an d as k edfo r ad d i t i on al d o cu m en t s. Th e o ffi cer fo l l o wedup o n th i s req ues t , b u t Iam es ’ s co un s el fai l edt o res p o n d ”); M o rg an v . Co m m i s s i o n er, s l i p o p. at6 (“ Pet i t i on er fi l eda p ro t es tt o th e p ro p o s edTFRPs , arg u i n g th atres p o n d en th ad fai l edt o co l l ect th e u np ai d em p l o ym en tt ax es ”); M cCl u re v . Co m m i s s i o n er, s l i p o p . at3 (qu o t i n g the NOD: “ Th e t ax p ay er recei v edth e n o t ice an ds ub m i tt edan (co n ti n u ed ...)-2 9
-

th o s e cas es i n v o lv es a ci rcu m s t an ce i n wh i ch th e t ax p ay er t i m el y s ub m i t t edh i s i n i t i al p ro t es tt o Ap p eal s b u tth en , b ecau se h e n ev er recei v edAp p eal s ’ fo l l o w-up i n Let t er 5 1 5 7 , was d ep ri vedo f h i s o p p o rtu n i ty t o p art ici p at e i n an Ap p eal s
co n feren ce. In th is cas e, h o wev er, o n th e fact s b efo re u s fo r p u rp os es o f t h e Co m m i s s i o n er’ s m ot io n , M r. Barn h i l l t i m el y s ub m i t t edh is i n i t i al p ro t es tb u t , th ro u g h n o fau l to f h i s o wn , was n o ti n fo rm edo f t h e s ch edu li n g o f t h e co nferen ce
an d was th ereb y

d ep ri vedo f h i s Ap p eal s co n feren ce an do f t he o p p o rtu n i ty (wh i ch th e Let t er 1 1 5 3 h ads i g n al ed ) t o s ub m i t“ ad d i ti o n al i n fo rm at i o n ” i n a l at er “ s t ag e” t o d i s p u t e h i s l i ab i l it y . In th e CDP co n t ex t , wh en Ap p eal s s en d s i t s i n i t i al l et t er t o th e t ax pay er
s ch edu l i n g a co nferen ce b u t recei v es n o res p on s e, Ap p eal s u s u al ly s en d s th e t ax p ay er a “ l as t ch an ce” l et t er t o en ab l e h i m t o co m p let e t h e p ro ces s . See, e.g .,

1 1 (...co n t i nu ed ) i n ad equ at e ap p eal . Th e t ax p ay er was affo rd edan o p p o rtu n it y t o p erfect h i s p ro t es t b u tfai ledt o d o s o b y

th e d ead li n e o f Decem

b er 2 4 , 2 0 0 1”); i d
. , s l i p o p . at8 (“ Pet i t i on er co n tes tedth e l i ab i li ty i n res p o n s e t o th e Let ter 1 15 3 , al th ou g h h i s co n tes twas u n s u cces s fu l . Ap p aren t l y h e fai ledt o fo l l o w up wi th Ap p eal s aft er b ei n g affo rd edthe o p p o rtu n i ty ”).

1 2 So l u co rp , Lt d. v
. Co m

m i s s i o n er, at* 3 (“ Pet i t i o ner d i dn o tres p o n d t o o r co n tes tth e p ro p o s edas s es s m en to f TFRPs as s etfo rt h i n th e Let t er 1 1 5 3”); i d
. at* 9 (“ Pet i t i o n er d oes n o tal l eg e t h ati td i dn o t recei v e t h e Let ter 1 15 3
. Acco rd in g ly , we co n cl u d e th at p et i t io n er recei v edth e Let ter 1 1 5 3 an d , th erefo re, h ad a p ri o r o p p ortu n it y

t o ch al len g e t h e u n d erl y i n g l i ab i l i t i es ”).-3 0
-

W o n g v . Co m

m i s si o ner, T.C. M em o . 2 02 0 -3 2 , at* 5
. Bu ti n M r. Barn h i ll ’ s TFRP
cas e, wh en Ap p eal s recei v edn o res p o n s e t o i t s i n i t ial s ch edu li n g l et t er (Let ter 5 15 7 ), Ap p eal s s i m p l y cl o s ed th e cas e a m ere t wo d ay s l at er an di n s tru ct ed Co l lect i on t o as ses s th e p en al t ies . Th ere m ay b e g o o d an ds u ffi ci en treas o n fo r th i s b ri s keffi ci en cy , b u t we can n o ts ay th ati t g av e M r. Barn h il l an “ o p po rtu n i t y ” t o d i s p u t e h i s l i ab i l it y . Th e Co m m is s i o n er u rg es u s t o h o l dth at Ap p eal s ’ act i on s were en o u g h t o
co n st i tu t e ano p po rtu n i ty , arg u i n g : Nei ther t h e p l ai n lan g u ag e o f I.R.C. § 6 3 3 0 (c)(2 )(B) n o r t he ap p l icab l e Treas u ry

reg ul at i o n s an d cas e l aw req u i re t h atthe t ax p ay er ex erci s e h i s ap p eal ri g h ts o r t h ata t ax p ay er act u al l y recei v e a co n feren ce (wh et h er t el ep h o n i c o r i n -p ers o n ) t o co n s t i tu t e a “p ri o r o p p o rtun i ty .” Th i s i s n o tthe fi rs t t i m e t h atth e Co m m i ss i o n er h as m ad e th i s arg u m en t b efo re t h e Tax Co u rt . See Sm i th v . Co m m i s s i o n er, at* 24 n .8 . InSm i th , th ou g h we d ecl i n ed t o ad dres s th i s arg u m en t(s in ce t o d o s o was u n n eces s ary , as M r. Sm i th h adfai l ed t o fi l e a t i m el y

p ro t es t ), we o b s erv ed : [Th e Co m

m is s io n er arg u es ] th ato n ce a p ers o n h as recei veda Let t er 1 1 53 , th atp ers o n s h o u l db e co n si d eredt o h av e h adan o p p o rtun i ty

t o d is p ut e t he t ru s t -fu n d -reco v ery p en al ty l i ab i l i t i es ev en i f t h e p ers o n actu al l y

t i m el y p ro t es t s th e Let ter 1 15 3 an dth e Offi ce o f Ap p eal s fai l s t o co n s id er t h e p ro t es t. If co rrect , th e arg u m en two u l d m ean th at i two u l dn oth av e m at t eredev en i f p et i ti o n er h ad t i m el y-3 1
-

ad m i n i s trat iv el y

ap p eal edth e Let ter 1 1 5 3 t o the Offi ce o f Ap p eal s , b u tres p on d en t arb i trari l y refu s edt o h ear h i s ap p eal . * * * Id . at* 2 4 -* 2 5 (fn . ref. o m i t t ed ). Th e fact s b efo re u s m ay n o ts u g g es ta d el i b erat e, arb i trary refu s al b y

Ap p eal s t o h ear M r. Barn h il l ’ s ap p eal , b u ta t ax p ay er wh o d i d
s u ffer s u ch a refu s al co u l d hard l y h av e recei v edan y l es s o f “ ano p p o rtu n i ty t o d i s p u t e * * * [h is ] t ax l i ab i l i ty ” fo r t h e TFRP ati s s u e wi th i n th e m ean i n g o f
s ect i on 6 3 3 0 (c)(2 )(B) t h an M r. Barn h i l l d i d . As we ex p lai n ab o v e i n p artII.B.2 ., recei p t o f t he Let t er 1 1 5 3 i s req u i redn o tfo r th e s ak e o f recei p ti t s el f b u trat h er fo r th e o p po rtu n i ty

i ti s s up p os edt o d el i v er. 4
. “ Harm l es s erro r” i n th e TFRP cas e? Th e Co m m is s i o n er fu rt h er arg u es th at“ ev en i f [i n th e TFRP cas e] a h eari n g
was req u ired (an dres p o n den ti s n o tco n ced i n g t h i s p o i n t), an y erro r wo u l db e h arm l es s erro r, as th e Ap p eal s o ffi cer co n s id eredp et i t i o n er’ s arg u m en t s / cl ai m s [ch al l en gi n g h i s TFRP l iab i l i ty ] p ri o r t o ren deri ng h er d eci s i o n .” Th e h arm l es s
erro r ru l e “ i s t o b e u s edo n l y ‘ wh en a m i s t ak e o f t h e ad m i n i s trat i v e b o dy i s o n e th atcl earl y

h adn o b eari n g o n th e p ro cedu re u s edo r t he s ub s tan ce o f d eci si o n reach ed .’ ” Ro m an o -M u rp h y v . Co m m i s s i o n er, 1 5 2 T.C. at 3 11 (qu o t i n g U.S. St eel Co rp . v . EPA, 5 9 5 F.2 d2 0 7 , 2 15 (5 th Ci r. 1 9 7 9 )).-3 2
-

Th e Ap p eal s o ffi cer m ay

h av e co n s i d ered M r. Barn h i ll ’ s i n i t ial (an do n l y ) ap p eal , b u twe can n o tco n cl u d e th ath er s ub s equ en t act i o n i n v ol vedo n l y h arm l es s
erro r. See, e.g ., i d. at3 1 2 -3 1 3 (h o l d i n g th atth e h arm l es s erro r ru le d o es n o tap p l y wh ere Ap p eal s co m

m i ts an ab u s e o f d i s cret i o n i n up h o l d i n g co l l ect i on act i o n fo r a TFRP wh ere s uch act i o n was n o tp reced edb y a fi nal ad m i n i s trat i v e d et erm i n at i o n
o f t h e as s es s m en t an dm ay h av e affect ed th e co ll ect i o n p ro cedu re fo r t h e p en al t y ); cf. Perk i n s v . Co m

m i s s i on er, 1 2 9 T.C. at7 0-7 1 (h o ld i n g t h ath arm l es s erro r
o ccu rredwh ere “ th e arg um en t s th atp et i t i o ner h as rai s edag ai n s tth e co l l ect i o n act i on are al l fri v o lo us an dg ro u n d l es s ”). Rat h er, M r. Barn h il l h adfi l ed h i s ap p eal i n res p o n s e t o i n s tru ct i o n s th at i n d i cat eda p ro ces s wi th m u l t i p l e “ s t ag e[s ] ” b u t (we as s u m e) d i dn o trecei v e t h e Let t er 5 1 5 7 an dPub l i cat i o n 4 2 2 7 ex p l ai n i n g th e Ap p eal s p ro ces s . Th e Let t er 5 15 7 i n d i cat edth ati n d eedth e p ro ces s s h o u l dh av e al l o wed , b efo re t h e Ap p eal s co n feren ce, fo r “ ad d i t i o nal i n fo rm at io n ” t o b e
s ub m i t t ed ; an dth en i ts h o ul dh av e al l o wed , atth e co n feren ce, fo r a “ d is cu s s [i o n ] ”
o f “ p o s s i bl e s et t l em en to f y o u r cas e”, o f t h e Ap p eal s o ffi cer’ s “p rel i m i n ary fi nd i ng s ”, an d o f “ fact s , arg u m en t s , an dwh eth er t h e l aw s upp o rt s y o u r p o si t i o n ”,
an d s ho u l dh av e al l o w edM r. Barn h i l l t o “p res en t n ew i n fo rm at io n o r rai s e n ew i s su es ”. Ev en i f t h e Ap p eal s o ffi cer co n sci en t i o u sl y co ns i d ered M r. Barn h i l l ’ s-3 3
-

i n i t i al ap p eal , we can n o ts ay th atth e o m i s s i o n o f al l th atp o t en t i al s ub s equ en t act i vi ty i n t h e TFRP p ro ces s was h arm l es s . 1 3 Co n seq u en t l y , o n the fact s we m us tas s u m e h ere, M r. Barn h i l l ’ s TFRP ap p eal was tru ncat edan d i n co m p l et e, an di td i dn o tco n s t i tu t e, fo r p u rp o ses o f
s ect i on 6 3 3 0 (c)(2 )(B), an “ o p p o rtu n i ty t o d i s p u t e s u ch t ax l i ab i l i ty .” As a res u l t , we can n o t , i n th e cu rren tp ro cedu ral co n t ex t , ru le o u tthe p o s s i b i li ty th atAp p eal s ab u sedi t s d i s cret i o n i n th e s ubs equen tCDP h eari n g wh en i tb arredM r. Barn h i l l’ s l i ab i l i ty ch al l en g e. Co n cl u s io n W e wi l l th erefo re d en y

th e Co m m i s s i o ner’ s m o t i on fo r s u m m ary ju d g m en t , an d t o th aten d

--
Anap p ro p ri at e o rd er wi ll b e i s s u ed
.

1 3 Si m i l arl y , an y

d efect res u l ti n g fro m

b arri n g M r. Barn h i l l ’ s l i ab i l i ty ch al l en g e i n th e CDP h eari n g i s n o tcu redb y Ap p eal s ’ co n s i d erat i on --o u ts i d e o f th e CDP h eari ng --o f M r. Barn h i l l ’ s o ffer-i n -co m p ro m i s e b as edo n d o ub t as t o l i ab i l i ty . By

Ap p eal s ’ l ig ht s th atwas an ap p ro p ri at e m an n er i n wh i ch Ap peal s co u ldco n s i d er M r. Barn h i ll ’ s l i ab i l i ty ch al l en g e; b u ti f, as we h ol d fo r p u rp o s es o f d en y i n g s u m

m ary ju d g m en t, h e was en ti t ledt o ch al l en g e h i s l i ab i l i ty i n the CDP h eari n g (s ub

jectth ereaft er t o ju d i ci al rev i ew u n d er s ect io n 6 3 3 0 (d )), t h en rel eg at in g th e l i ab i l i ty ch al len g e t o th e n o n -CDP co n t ex twas an ab us e o f d i s cret i o n .