In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2952

ROBERT W. CLEVELAND,

Petitioner-Appellant,

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent-Appellee.

Appeal from the United States Tax Court. 

No. 31367-08—Peter J. Panuthos, Chief Special Trial Judge.

SUBMITTED JANUARY 21, 2010—DECIDED MARCH 31, 2010

Before COFFEY, FLAUM, and KANNE, Circuit Judges.

PER CURIAM. Robert Cleveland filed a petition in the

Tax Court with the idea of keeping the Internal Revenue

Service (“IRS”) from increasing the amount of income

tax withheld from his wages. His legal theory parrots

a claim now making the rounds in the courts. The

Tax Court dismissed the case for lack of subject-matter

jurisdiction. We affirm that decision.

After concluding that Cleveland’s employer was not

withholding enough income tax from his paychecks, the
2 No. 09-2952

IRS invalidated the Form W-4, Employee’s Withholding

Allowance Certificate, on file for Cleveland. The IRS

notified the employer, using Form Letter 2800C, to withhold income tax at a specified rate and to ignore any

future Form W-4s received from Cleveland. Cleveland

learned about the increase of his withholding rate when

the IRS mailed him a corresponding Form Letter 2801C,

which included instructions for averting the lock in rate

by contacting the IRS to verify or correct the information in his invalidated Form W-4. See 26 C.F.R.

§ 31.3402(f)(2)-1(g)(2); I.R.M. ¶ 5.19.11.3.3 (2009). These

form letters, commonly called “Lock-in Letters,” are

integral to the Withholding Compliance Program as a

means to reign in those taxpayers who attempt to circumvent the withholding requirement, or try to evade the

proper payment of income tax, by overstating their withholding allowances or falsely claiming exempt status.

See I.R.M. ¶ 5.19.11.1.1 (2009); Davis v. Comm’r, 96 T.C.M.

(CCH) 269, 2008 WL 4703706, at *4 (2008); cf. United

States v. King, 126 F.3d 987, 988, 993-94 (7th Cir.

1997) (explaining that falsely claiming exempt status on

Form W-4 to impede withholding of tax can support

prosecution for attempted tax evasion).

After receiving the letter, Cleveland filed a petition in

the Tax Court to initiate a Collection Due Process

hearing contesting that the IRS improperly increased the

withholding rate on his wages. Under 26 U.S.C. § 6330(d),

a taxpayer who initiates a Collection Due Process

hearing in order that he or she might contest a proposed

levy may challenge an unfavorable decision by the IRS

Office of Appeals—the “notice of determination,” see 26
No. 09-2952 3

C.F.R. § 301.6330-1(e)(3) (A-E8)—in the Tax Court. On the

one hand Cleveland described his Lock-in Letter as the

“notice of determination” he was appealing; on the

other hand he asserted that the letter constituted a “levy”

on his wages without the statutorily mandated prior

notice and opportunity to request a Collection Due

Process hearing. See 26 U.S.C. §§ 6330(a)(1), (a)(3)(B),

6331(b), (d)(1). In his petition, Cleveland asked for an

order commanding the IRS to return the money withheld by his employer and cease the “unlawful collection”

of income tax from his wages. The Tax Court dismissed

Cleveland’s petition for lack of subject-matter jurisdiction reasoning that the Lock-in Letter he received was not

an appealable “notice of determination,” and was not

issued in conjunction with an attempt to collect by levy.

The jurisdiction of the Tax Court is limited. 26 U.S.C.

§ 7442; Comm’r v. McCoy, 484 U.S. 3, 7 (1987); Drobny v.

Comm’r, 113 F.3d 670, 677 (7th Cir. 1997). In cases where

the IRS seeks to collect unpaid tax by means of a lien or

levy, the Tax Court has jurisdiction to review an adverse

determination by the IRS Office of Appeals. 26 U.S.C.

§§ 6320(c), 6330(d); Cox v. Comm’r, 514 F.3d 1119, 1124

(10th Cir. 2008); Boyd v. Comm’r, 451 F.3d 8, 10 n.1 (1st Cir.

2006). But as Cleveland concedes, the Office of Appeals

was never involved in this matter and did not issue a

notice of determination. A Lock-in Letter, as the Tax Court

has held and we agree, is not a notice of determination.

See Davis, 2008 WL 4703706, at *6; Ballard v. Comm’r, 93

T.C.M. (CCH) 1394 (2007); see also Van Wyke v. Comm’r, 310

F. App’x 179, 180 (9th Cir. 2009) (nonprecedential disposition); Landess v. Comm’r, No. 09-9001, 2009 WL 4269682, at
4 No. 09-2952

*1 (10th Cir. Dec. 1, 2009) (nonprecedential disposition);

Ghani v. Comm’r, No. 09-9005, 2009 WL 4269679 (10th Cir.

Dec. 1, 2009) (nonprecedential disposition); Tuka v. Comm’r,

No. 09-1598, 2009 WL 3236066, at *1 (3d Cir. Oct. 9, 2009)

(nonprecedential disposition). It follows that, even if we

could accept Cleveland’s theory that the underlying

dispute concerned a collection action within the ambit of

§ 6330, the Tax Court would not have subject-matter

jurisdiction because there was no issuance of a notice

of determination. See Boyd, 451 F.3d at 10 n.1; Offiler v.

Comm’r, 114 T.C. 492, 498 (2000) (explaining that Tax

Court jurisdiction in cases arising from challenges to liens

and levies is “dependent on the issuance of a valid notice

of determination” from Office of Appeals); 14 JACOB

MERTENS, JR., THE LAW OF FEDERAL INCOME TAXATION

§ 50.22 (2009) (explaining that a notice of determination

from Office of Appeals “is a taxpayer’s ‘ticket’ to the Tax

Court” in cases arising from liens and levies).

Furthermore, we wish to make clear that we do not

agree with Cleveland’s premise. A Collection Due

Process hearing is available to taxpayers when the IRS

attempts to collect a tax liability by levy, 26 U.S.C.

§ 6330(a), (b)(1), but the withholding of tax from a paycheck is not a “levy” as that term is understood in

26 U.S.C. § 6331(b). A levy, Cleveland believes, includes

“the power of distraint and seizure by any means,” id.,

and withholding, according to him, is a coercive taking

of his wages. As the Commissioner points out, Cleveland

conflates two distinct statutory mechanisms: one for

withholding tax before the filing of a return has fixed

the taxpayer’s liability, and the other for seizing a tax-
No. 09-2952 5

payer’s property to satisfy an already determined but

unpaid tax liability. Cleveland’s displeasure with the payas-you-go nature of withholding does not make the

deductions from his paycheck the type of “forcible means

of extracting taxes from a recalcitrant taxpayer” that

qualifies as a levy. See Interfirst Bank Dallas, N.A. v. United

States, 769 F.2d 299, 304-05 (5th Cir. 1985) (defining “levy,”

as used in § 6331(b), to mean compulsion beyond the

“implicit threat of audits, tax liens, and other legal sanctions” that prompts taxpayers to pay tax, since “few

taxpayers pay taxes purely as an act of free choice”); see

also Andrew Crispo Gallery, Inc. v. Comm’r, 86 F.3d 42, 45

(2d Cir. 1996) (explaining that the statutory definition

connotes compulsion); United States v. Barbier, 896 F.2d

377, 379 (9th Cir. 1990) (“A levy forces debtors to relinquish their property. It operates as a seizure by the IRS

to collect delinquent income taxes.”). Instead, a levy is

“the IRS’s administrative authority to seize a taxpayer’s

property to pay the taxpayers tax liability.” H.R. REP.

NO. 105-599, at 263 (1998) (Conf. Rep.); S. REP. NO. 105-174,

at 67 (1998). Withholding, in contrast, occurs throughout

the tax year while the tax liability is inchoate. See 26

U.S.C. § 3402. The legislative history indicates that the

purpose of withholding taxes was in part to reduce the

likelihood that the IRS will need to resort to levy. United

States v. Am. Friends Serv. Comm., 419 U.S. 7, 10 n.6 (1974).

At its core, Cleveland’s action fails to fall within the

ambit of the process for Tax Court review of a proposed

collection by levy. What Cleveland really argues—quoting

his brief—is that a lock-in without “at least some sort of

administrative hearing or substantial due process” is
6 No. 09-2952

unfair, and what he really seeks from the Tax Court is

an injunction commanding the IRS to stop invalidating

his Form W-4s and cease efforts to withhold tax from

his pay. But that relief is forbidden by the Anti-Injunction

Act, see 26 U.S.C. § 7421(a); Am. Friends Serv. Comm., 419

U.S. at 10; Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 770

(9th Cir. 1986); Stonecipher v. Bray, 653 F.2d 398, 400-01

(9th Cir. 1981), and because the Tax Court does not have

equitable jurisdiction to entertain Cleveland’s theory

that withholding in his situation is unfair. See Boyd, 451

F.3d at 11; see also Kelley v. Comm’r, 45 F.3d 348, 351 (9th

Cir. 1995). Furthermore, Cleveland is mistaken when

he asserts that a lock-in comes without a remedy for

the taxpayer who disagrees with it. The taxpayer may

substantiate the withholding status he claimed on his

Form W-4, see 26 C.F.R. § 31.3402(f)(2)-1(g)(2)(ii); I.R.M.

¶ 5.19.11.3.5 (2009), and if he still is not satisfied with the

IRS’s decision, he may file a return, claim the amount

withheld as a credit against his tax liability, and request

a refund, see Bennett v. United States, 361 F. Supp. 2d

510, 517 (W.D. Va. 2005); MICHAEL I. SALTZMAN & LESLIE

BOOK, IRS PRACTICE AND PROCEDURE ¶ 11.01 (2009). The

IRS is not required, as a matter of due process, to give

an aggrieved taxpayer “a hearing before determining

that he was not entitled to claim exemption from federal

income tax.” Stonecipher, 653 F.2d at 403; see Campbell

v. Amax Coal Co., 610 F.2d 701, 702 (10th Cir. 1979).

AFFIRMED.

3-31-10