T.C. Summary Opinion 2007-64

UNITED STATES TAX COURT

ORLANDO BUJOSA, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19816-03S. Filed April 26, 2007.

Ralph J. Pocaro, for petitioner.

Joseph J. Boylan, for respondent.

NIMS, Judge: This case was heard pursuant to the provisions

of section 7463 of the Internal Revenue Code in effect when the

petition was filed. Pursuant to section 7463(b), the decision to

be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case. Unless 
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otherwise indicated, all subsequent section references are to the

Internal Revenue Code as amended, and all Rule references are to

the Tax Court Rules of Practice and Procedure. 

This case arises from a petition for judicial review filed

in response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination). The issues for decision are: (1) Whether

petitioner may challenge his underlying tax liabilities; (2) if

he may, whether remand to Appeals is necessary; and (3) if remand

is not necessary, whether respondent’s rejection of petitioner’s

offer-in-compromise constitutes an abuse of discretion.

Background

This case was submitted fully stipulated pursuant to Rule

122, and the facts as stipulated are so found. The stipulations

of the parties, with accompanying exhibits, are incorporated

herein by this reference. At the time he filed the petition,

petitioner resided in Linden, New Jersey.

Petitioner earned nonemployee compensation from L&P Trucking

in the amounts of $22,815 for 1987 and $20,830 for 1988, which

amounts were reported on Forms 1099-MISC, Miscellaneous Income. 

In 1988 petitioner also received $2,341 in wages reported on Form

W-2, Wage and Tax Statement (Form W-2), from The Newark Group and

wages reported on Form W-2 in the amount of $45 from Beacon Hill

Club. However, petitioner failed to file income tax returns for
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taxable years 1987 and 1988. Respondent mailed statutory notices

of deficiency for 1987 and 1988 to petitioner at his last known

address on March 9, 1994. Petitioner did not request judicial

review of these deficiencies.

On February 5, 2002, respondent issued and mailed a Final

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

Hearing regarding taxable years 1987 and 1988 to petitioner. 

This notice sought to collect taxes and additions to tax in the

amounts of $9,973.28 and $12,467.41, respectively, for 1987 and

$11,091.20 and $11,194.60, respectively, for 1988. Petitioner

timely requested a hearing regarding the proposed collection

action. Petitioner received a hearing consisting of telephone

conferences on November 25, 2002, and March 25, 2003. The

discussions primarily centered around an offer-in-compromise

(OIC), as the Appeals officer advised that petitioner’s

underlying tax liabilities would not be considered. 

After several attempted submissions, on April 23, 2003,

petitioner finally made a complete and reviewable offer based on

doubt as to collectibility. The Appeals officer forwarded the

OIC to respondent’s offer specialist for consideration. The

offer specialist reviewed the offer and made repeated requests of

petitioner for additional information. Petitioner failed to

respond to any of the requests, so respondent’s offer specialist

returned the OIC to the Appeals officer. The Appeals officer 
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subsequently made the determination that the proposed levy action

was appropriate for the taxable years 1987 and 1988, and a Notice

of Determination was issued.

Discussion

Before a levy may be made on any property or right to

property, a taxpayer is entitled to notice of the Commissioner’s

intent to levy and notice of the right to a fair hearing before

an impartial officer of the Internal Revenue Service (IRS)

Appeals Office. Secs. 6330(a) and (b), 6331(d). Taxpayers may

raise challenges to “the appropriateness of collection actions”

and may make “offers of collection alternatives, which may

include the posting of a bond, the substitution of other assets,

an installment agreement, or an offer-in-compromise.” Sec.

6330(c)(2)(A). The Appeals officer must consider those issues,

verify that the requirements of applicable law and administrative

procedures have been met, and consider “whether any proposed

collection action balances the need for the efficient collection

of taxes with the legitimate concern of the person [involved]

that any collection action be no more intrusive than necessary.” 

Sec. 6330(c)(3)(C). 

After the IRS Appeals hearing process, section 6330 gives

this Court jurisdiction to review the Appeals officer’s

determination. In an appeal to this Court pursuant to section

6330(d), a taxpayer may raise in his petition any issues that he
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raised at the Appeals hearing. See sec. 301.6330-1(f)(2), Q&AF5, Proced. & Admin. Regs. Where the underlying tax liability is

properly at issue, we review the Appeals determination with

respect to the existence and amount of tax liability de novo. 

Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000). When the underlying

tax liability is not properly at issue, we review the Appeals

officer’s determination using an abuse of discretion standard. 

Id. 

Underlying Tax Liability

First, we must decide whether petitioner’s underlying tax

liabilities are properly at issue. Petitioner’s petition raises,

and only raises, the issue of his underlying tax liabilities. In

addition to checking the “redetermination of deficiency box,” he

stated that he “was a truck driver in 1987-1988 and did not have

the income so as to owe these taxes.” In his request for a

hearing, he indicated on the Form 12153, Request for a Collection

Due Process Hearing, that he had filed his taxes every year and

was not aware of any deficiency. But, during the course of his

hearing and in response to his assertion on the Form 12153, the

Appeals officer told petitioner that his underlying tax

liabilities would not be considered, and the hearing proceeded

accordingly.
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A taxpayer may raise the issue of the underlying tax

liability only if he or she did not receive a statutory notice of

deficiency or did not otherwise have an opportunity to dispute

such tax liability. Sec. 6330(c)(2)(B). Actual receipt of the

notice of deficiency is required. Tatum v. Commissioner, T.C.

Memo. 2003-115. Generally, no challenge to the underlying tax

liability is allowed where there is evidence that a notice of

deficiency was mailed to the taxpayer and no factors are present

to rebut the presumption of delivery. See Sego v. Commissioner,

supra at 611. Where the taxpayer denies receipt of the notice of

deficiency and the Commissioner provides only a copy addressed to

the taxpayer and no evidence of its actual mailing, receipt for

purposes of section 6330(c)(2)(B) is not presumed. Calderone v.

Commissioner, T.C. Memo. 2004-240. In the present case,

petitioner asserted that he was not aware of any deficiency.

Respondent has offered only copies of the notices of deficiency

addressed to petitioner and concedes on brief that actual

delivery cannot be proven. Therefore, petitioner was entitled to

challenge his underlying tax liabilities in his hearing, and the

Appeals officer erred in not allowing petitioner’s arguments on

that issue.

Our de novo review of respondent’s determination with

respect to petitioner’s underlying tax liabilities permits us to

consider and resolve the issue. See Priestly v. Commissioner,
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T.C. Memo. 2003-267, affd. 125 Fed. Appx. 201 (9th Cir. 2005). 

In the case before us, remand to Appeals for consideration of

petitioner’s tax liabilities would be neither necessary nor

productive. See Lunsford v. Commissioner, 117 T.C. 183, 189

(2001); Sapp v. Commissioner, T.C. Memo. 2006-104; Priestly v.

Commissioner, supra. Further, a remand to respondent’s Appeals

Office would, more likely than not, needlessly delay the

collection of petitioner’s tax liabilities plus related additions

to tax and interest, which, if the proper amounts have been

assessed, are already long overdue. Priestly v. Commissioner,

supra.

Upon examination of the record, we find that petitioner has

offered nothing to indicate that any adjustment to respondent’s

assessments for 1987 and 1988 is warranted. Petitioner

stipulated to the receipt of income from the multiple sources for

both taxable years at issue. Further, petitioner advanced

nothing but nebulous protests against the assessed tax

liabilities. His petition simply asserted that he “was a truck

driver in 1987-1988 and did not have the income so as to owe

these taxes.” His Form 12153 stated only that he had filed his

taxes every year, that he was not aware of the liabilities, that

he never owned a company, that he did not have any records 
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reflecting the 15-year-old liabilities, and that he wanted to fix

the matter. Petitioner’s challenge lacks any substance, and the

underlying tax liabilities stand as assessed by respondent. 

Levy Action

Having established that petitioner’s tax liabilities were as

determined by respondent under our de novo review standard, we

now review respondent’s determination to proceed with collection

under an abuse of discretion standard. Under this standard, a

determination will be affirmed unless action was taken that was

arbitrary or capricious, lacks sound basis in fact, or is not

justifiable in light of the facts and circumstances. Mailman v.

Commissioner, 91 T.C. 1079, 1084 (1988). 

In the case before us, petitioner did not expressly

challenge the Appeals officer’s determination with respect to

collection, so we must first decide whether this determination is

even properly before the Court. In his petition, petitioner

checked the box for redetermination of a deficiency and

explicitly only raised the issue of his tax liabilities. While

Rule 331(b)(4) provides that any issue not raised in the petition

is deemed conceded, the circumstances in this case allow us to

consider the issue. Consideration of the issue is proper so long

as petitioner’s failure to provide notice to respondent did not

prejudice respondent. See Pagel, Inc. v. Commissioner, 91 T.C.

200, 212 (1988), affd. 905 F.2d 1190 (8th Cir. 1990); Martin v.
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Commissioner, T.C. Memo. 2003-288, affd. 436 F.3d 1216 (10th Cir.

2006). Here, the notice of determination concerning collection

action was attached to the petition. Respondent acknowledged on

brief that this was a “Petition for Lien or Levy Action under

Code Section 6320(c) or 6330(d).” Further, respondent

contemplated a challenge to the Appeals officer’s rejection of

petitioner’s OIC, which was the only subject of the hearing. So,

respondent cannot be considered surprised or prejudiced by the

Court’s consideration of this issue. 

We must therefore decide whether respondent’s rejection of

petitioner’s offer-in-compromise was an abuse of discretion. 

Section 7122 provides respondent with the authority to grant an

offer-in-compromise as an alternative to collection action. 

Respondent grants an OIC when there is a doubt as to the actual

tax liability, doubt as to collectibility, or for other purposes

relating to effective tax administration. Sec. 301.7122-1,

Proced. & Admin. Regs.; 1 Administration, Internal Revenue Manual

(CCH), sec. 5.8.1.1.2, at 16,253.

Petitioner’s offer based on doubt as to collectibility was

taken under consideration by respondent’s offer specialist. 

Doubt as to collectibility “exists in any case where the

taxpayer’s assets and income are less than the full amount of the

liability.” Sec. 301.7122-1(b)(2), Proced. & Admin. Regs. 

Evaluation of an OIC based on doubt as to collectibility requires 
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complete financial information from the taxpayer. Roman v.

Commissioner, T.C. Memo. 2004-20. Where the taxpayer fails to

provide the necessary information, rejection of the OIC does not

constitute an abuse of discretion. See id.; Willis v.

Commissioner, T.C. Memo. 2003-302. In this case, respondent’s

OIC specialist made, and petitioner failed to respond to,

repeated requests for additional information. Therefore, we hold

that there was no abuse of discretion in the rejection of

petitioner’s OIC. Respondent’s determination to proceed with

collection is upheld.

Decision will be entered

for respondent.