T.C. Memo. 2002-221

UNITED STATES TAX COURT

MICHAEL J. ROBERTS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9831-00L. Filed September 4, 2002.

P filed a petition for judicial review pursuant to

sec. 6330, I.R.C., in response to a determination by R

to proceed with collection by levy of assessed tax

liabilities for 1989, 1990, and 1991.

Held: Because P received a notice of deficiency

for 1989, 1990, and 1991 and failed to seek

redetermination in this Court, P’s underlying tax

liabilities are not properly at issue in this

collection proceeding.

Held, further, because the record does not

establish any abuse of discretion, R’s determination to

proceed with collection action is sustained.

Michael J. Roberts, pro se.

Karen Nicholson Sommers, for respondent.
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MEMORANDUM FINDINGS OF FACT AND OPINION

NIMS, Judge: 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”. The issue

for decision is whether respondent may proceed with collection

action as so determined. Unless otherwise indicated, section

references are to sections of the Internal Revenue Code, as

amended.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. 

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference. At the time the petition

was filed in this case, petitioner resided in Rancho Santa

Margarita, California.

Petitioner did not timely file Forms 1040, U.S. Individual

Income Tax Return, for taxable year 1989, 1990, or 1991. On May

19, 1994, respondent by certified mail sent a statutory notice of

deficiency to petitioner for the 1989, 1990, and 1991 years. The

notice was addressed to petitioner at “109 23RD STREET, UNIT 1,

NEWPORT BEACH, CA 92663-4309”, and nothing in respondent’s

administrative files indicates that it was returned as

undeliverable or unclaimed. Respondent in the notice determined

the deficiencies and additions to tax set forth below:
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Taxable Income Tax Additions to Tax

Year Deficiency Sec. 6651(a)(1) Sec. 6654

1989 $8,964.00 $2,241.00 $604.00

1990 7,867.00 1,966.75 516.00

1991 8,190.00 2,047.50 470.00

Respondent’s determinations were based in large part upon Forms

1099 filed by various third-party payors, which forms respondent

alleges indicated that petitioner operated a drywall installation

business. Respondent also determined that petitioner received

additional income for each year not reported on Forms 1099

through application of tables produced by the U.S. Department of

Labor, Bureau of Labor Statistics. These adjustments were

explained in the notice as follows:

Based on statistical information from the U.S.

Department of Labor, we have established amounts of

personal living expenses and amounts of income needed

to pay for those expenses. Since your income was not

sufficient to pay for all of your personal living

expenses, we have adjusted your income accordingly.

Petitioner thereafter on July 29, 1994, filed delinquent

Forms 1040 for 1989 through 1991. These returns each reflected

the same Newport Beach address to which the notice of deficiency

had been sent and included a Schedule C, Profit or Loss From

Business, for “Drywall Installation”, “DRYWALL INSTALLER”, or

“DRYWALL CONTRACTOR”. The Forms 1040 and Schedules C showed

gross receipts, interest, and a State income tax refund in

amounts identical to those shown in the Forms 1099 received by
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respondent from third-party payors and used in calculating the

determined deficiencies. The Schedules C also contained

deductions claimed by petitioner for various business

expenditures, such as for car and truck expenses, travel, meals

and entertainment, and small tools.

Petitioner did not file a petition with this Court for a

redetermination of the tax liabilities asserted in the statutory

notice. The record in this case does, however, include a copy of

a letter dated September 29, 1994, contained in respondent’s

administrative files and addressed to petitioner at the Newport

Beach location. This letter indicates that it was sent in

response to petitioner’s inquiry regarding the notice of

deficiency dated May 19, 1994, and informs petitioner that the

date for filing a petition with the Tax Court had expired. 

Respondent made assessments based on the amounts shown in the

notice, plus statutory interest, on December 5, 1994, and issued

to petitioner a notice of balance due on the same date (as well

as on three subsequent occasions).

On May 26, 1999, respondent issued to petitioner a letter

entitled “FINAL NOTICE--NOTICE OF INTENT TO LEVY AND NOTICE OF

YOUR RIGHT TO A HEARING” with respect to the unpaid tax

liabilities for 1989, 1990, and 1991. Thereafter, on June 25,

1999, respondent received a Form 12153, Request for a Collection

Due Process Hearing, submitted on behalf of petitioner. 
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1 Petitioner in the Form 12153 also made a very similar

statement registering disagreement with a “Filed Notice of

Federal Tax Lien”. However, a notice of Federal tax lien filing

was not issued to petitioner because the relevant lien was filed

in 1996, prior to enactment of sec. 6320 and the corresponding

requirement for notice to taxpayers of such agency action.

Petitioner in the Form 12153 provided the following explanation

of his disagreement with the notice of levy: “IRS USED ‘GUESSES’

FOR TAXPAYER’S TAX LIABILITIES FOR 12-31-89, 12-31-90, 12-31-91. 

IRS IS REQUIRED TO PROVE INCOME. REQUEST HEARING OR ABATEMENT OF

TAXES, PENALTIES, INTEREST & CHARGES.” 1

After a period of correspondence between the parties, a

letter dated July 12, 2000, from Appeals Officer Steve Millang to

petitioner’s representative extended an invitation for a face-toface conference:

If you wish to have an Appeals hearing at my

office, you can meet with me on:

Monday - July 31, 2000 @ 9:30 a.m.

If this time and date are inconvenient, please

contact me to reschedule a mutually convenient Appeals

conference.

Ultimately, however, it appears that the hearing was conducted

solely through telephone contact and written correspondence. 

Copies of letters in the record reveal that petitioner asserted

he did not receive sufficient income during the 1989 to 1991

period to necessitate the filing of returns or the paying of 
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Federal income taxes. Respondent then issued to petitioner on

August 14, 2000, the aforementioned “NOTICE OF DETERMINATION

CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330”. 

The notice states:

Applicable Law & Procedures - 

With the best information available, the requirements

of the various applicable law or administrative

procedures have been met.

* * * * * * *

Relevant Issues Presented by the Taxpayer - 

1. Your only argument is that assessments were made on

guesses. You state that the IRS has the burden of

proof for income.

The underlying tax liability argument was not

addressed at the Appeals level. Since you had a

previous chance to contest this issue at U.S. Tax

Court and did not pursue that chance, the

underlying tax liability will not be an issue that

you can raise in this proceeding. You raised no

other issues relating to the unpaid taxes and made

no proposals regarding collection alternatives.

Balancing Efficient Collection and Intrusiveness -

There appears to be no other viable method to pay the

liability other than a levy. You have not given us any

other alternatives to settle your account. Therefore,

the determination is that the IRS may proceed with the

proposed levy action.

Petitioner’s petition disputing this notice was filed with

the Tax Court on September 18, 2000. Petitioner therein disputes

respondent’s determination on the following grounds:

a) The Commissioner has erroneously and wrongfully

included taxable income for 1989, 1990, 1991 when the

Petitioner did not have taxable income. The Petitioner
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did not meet the income requirements to file an income

tax return and the Commissioner has assessed an

incorrect tax, penalties and interest.

b) The Commissioner has erroneously and wrongfully

ignored issuing a 30 day appeal to the Petitioner. The

Commissioner has erroneously and wrongfully ignored and

failed to allow Petitioner rights to appeal.

c) Although the Commissioner has issued a Notice of

Deficiency, the Notice was never received by the

Petitioner. The Commissioner has denied requests from

Petitioner to obtain copies from the Commissioner of

the Notice.

d) The Commissioner erroneously and wrongfully charged

an income tax wherein no taxable income was received

during the 1989, 1990, 1991 tax years. The

Commissioner has erroneously and wrongfully charged the

Petitioner with the burden of proof and demanded the

Petitioner prove Petitioner has no taxable income for

the 1989, 1990, 1991 tax years.

OPINION

I. General Rules

Section 6331(a) authorizes the Commissioner to levy upon all

property and rights to property of a taxpayer who fails to pay

any tax liability within 10 days after notice and demand for

payment. Sections 6331(d) and 6330 then set forth procedures

generally applicable to afford protections for taxpayers in such

levy situations. Section 6331(d) establishes the requirement

that a person be provided with at least 30 days’ prior written

notice of the Commissioner’s intent to levy before collection may

proceed. Section 6331(d) also indicates that this notification

should include a statement of available administrative appeals. 

Section 6330(a) expands in several respects upon the premise of
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section 6331(d), forbidding collection by levy until the taxpayer

has received notice of the opportunity for administrative review

of the matter in the form of an Appeals Office hearing. Section

6330(b) grants a taxpayer who so requests the right to a fair

hearing before an impartial Appeals officer.

Section 6330(c) addresses the matters to be considered at

the hearing:

SEC. 6330(c). In the case of any hearing

conducted under this section--

(1) Requirement of investigation.--The

appeals officer shall at the hearing obtain

verification from the Secretary that the

requirements of any applicable law or

administrative procedure have been met.

(2) Issues at hearing.--

(A) In general.--The person may raise at

the hearing any relevant issue relating to

the unpaid tax or the proposed levy,

including--

(i) appropriate spousal defenses;

(ii) challenges to the

appropriateness of collection actions;

and

(iii) 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.

(B) Underlying liability.--The person

may also raise at the hearing challenges to

the existence or amount of the underlying tax

liability for any tax period if the person 
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did not receive any statutory notice of deficiency

for such tax liability or did not otherwise have

an opportunity to dispute such tax liability.

Once the Appeals officer has issued a determination

regarding the disputed collection action, section 6330(d) allows

the taxpayer to seek judicial review in the Tax Court or a

District Court. In considering whether taxpayers are entitled to

any relief from the Commissioner’s determination, this Court has

established the following standard of review:

where the validity of the underlying tax liability is

properly at issue, the Court will review the matter on

a de novo basis. However, where the validity of the

underlying tax liability is not properly at issue, the

Court will review the Commissioner’s administrative

determination for abuse of discretion. [Sego v.

Commissioner, 114 T.C. 604, 610 (2000).]

II. Review of Underlying Tax Liabilities

With respect to the case at bar, the initial inquiry is

whether petitioner received the notice of deficiency sent on May

19, 1994. If petitioner did receive such notice, he was

previously afforded an opportunity to challenge his underlying

tax liabilities and failed to do so. Consequently, his

underlying tax liabilities would not properly be at issue in this

proceeding. See Sego v. Commissioner, supra at 609-610; Goza v.

Commissioner, 114 T.C. 176, 180-183 (2000).

In his petition, petitioner contends that he never received

the statutory notice. His trial memorandum, however, contains

the recitation set forth below:
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In May of 1994 the Respondent sent a Notice to the

Petitioner who tried to come up with extra monies to

hire experts to help with the demands of the

Respondent. By July 1994, two different experts

assisted the Petitioner in preparing answers to the

Respondent’s demand. The information used by the

experts in preparing the Petitioner’s U.S. Individual

Income Tax Returns for the three years in dispute, came

from the IRS’s own Income Tax Examination Changes. The

experts advised the Petitioner of deductions that the

Petitioner should claim and the experts assisted the

Petitioner in estimating deductions which were reported

on Schedule C for each of the years in dispute. The

Petitioner hired tax preparers who advised to claim

that the Petitioner did work “. . . just to get the IRS

off his back.” They scared teh [sic] Petitioner into

filing these returns.

At trial, petitioner was questioned on several occasions

regarding this issue. An early exchange went as follows:

MR. ROBERTS: What I’m challenging is they said

that I had a business. I never had any business. And

they based my income on my address, which I live in a

very low-income place. Just because it happened to be

in Newport Beach didn’t--you know, which I don’t think

they ever checked out or anything. And these are the

things I’m disputing.

So they gave me like forty some thousand dollars

extra income, which--

THE COURT: Well, I know--I hear what you’re

saying. The trouble is when Congress passed this law

in ’98 to--to make it possible to come in and challenge

the propriety of liens and levies, they put in that law

you can’t attack the underlying tax if you’ve already

had a chance to do so and you didn’t do it, and that’s-

-that’s where your case falls down here. You got a

deficiency notice. You didn’t respond to it.

MR. ROBERTS: I’m not sure--excuse me. I’m not

sure if I ever got one because--I mean, not that I

recall. I mean, this is back in ’94, I believe.

Later a similar discussion ensued:
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MR. ROBERTS: * * * What I’ve argued is, you

know, these added monies that they’ve put in for like

having a business, which I never had any business.

THE COURT: I know, but your time to do that was

when you got the certified letter, and you should have

filed a petition in the Tax Court to challenge it, but

you didn’t do that. That’s the problem here, which I

keep--I’m trying to explain to you.

MR. ROBERTS: Okay. I understand. But I’m not

sure if I ever got this--what they’re saying, and

that’s why I asked them if they had some, you know--me

sign something or whatever, that type--’cause I

honestly don’t think I ever got one.

Finally, petitioner was asked directly to explain his

allegations of nonreceipt:

THE COURT: Why do you say you never got the

notice of deficiency?

MR. ROBERTS: I don’t honestly remember ever

getting it. And there was a--

THE COURT: You just don’t remember getting it, or

are you saying positively you didn’t get it? Which is

it?

MR. ROBERTS: I’m pretty sure or positively, I

guess, that I didn’t get it ’cause there was a fire at

that--it’s like a fourplex. So for--you know, I never

lived there all the time and stuff, you know, ’cause I

lived with other friends and stuff and that was kind of

like a mailing address, kind of.

THE COURT: But that was your address, though--I

mean, mailing address?

MR. ROBERTS: Yeah, one of ’em. But then I moved-

-you know, I lived in a lot of different places down on

the beach area.

THE COURT: Well, you used that address when you

filed those delinquent returns. Is there any

particular reason why you did that?
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MR. ROBERTS: I couldn’t give an answer to that. 

I mean, that’s I don’t know how may years ago. I--you

know,--

At the outset, we observe that the foregoing testimony is

hardly an emphatic declaration on petitioner’s part. 

Consequently, when other evidence betokening receipt is weighed

against this equivocation, the former presents the more

compelling picture. The notice of deficiency was sent by

certified mail to the address petitioner himself used on his

delinquent Forms 1040 only 2 months later. Nothing in

respondent’s files indicates return of the notice as

undeliverable or unclaimed. The fact that the late returns

substantially mirror the content of the notice, as to both stated

amounts and type of business activity, also marks an improbable

coincidence in light of petitioner’s averments that he never

earned the income or operated the business so reflected.

There is additionally the September 29, 1994, letter in

respondent’s files that references an inquiry from petitioner

regarding the May 19, 1994, notice. We likewise are mindful of

petitioner’s seeming concession in his trial memorandum that

mentions a May 1994 notice and the subsequent July returns

intended “to get the IRS off his back.”

Given this record, we are satisfied that petitioner received

the notice of deficiency for the tax years 1989, 1990, and 1991

in time to file a petition with this Court and failed to do so. 
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See sec. 6213(a). He thus is barred from challenging the

underlying tax liabilities in this collection proceeding. 

Accordingly, his contentions regarding lack of taxable income, as

well as the burden of proof with respect thereto, are not

properly at issue and will not be considered. We therefore

review respondent’s section 6330 determination solely for abuse

of discretion.

III. Review for Abuse of Discretion

In addressing whether the circumstances of this case reveal

any abuse of discretion, we first deal with the allegation in the

petition that respondent “wrongfully ignored issuing a 30 day

appeal to the Petitioner.” To the extent that this statement

might refer to the preliminary 30-day letter and associated

Appeals hearing that, as a matter of administrative practice,

typically precede issuance of a notice of deficiency (or 90-day

letter), any such argument has been repeatedly rejected. See,

e.g., Smith v. United States, 478 F.2d 398, 400 (5th Cir. 1973);

Rosenberg v. Commissioner, 450 F.2d 529, 531-533 (10th Cir.

1971), affg. T.C. Memo. 1970-201; Bromberg v. Ingling, 300 F.2d

859, 861 (9th Cir. 1962); Montgomery v. Commissioner, 65 T.C.

511, 522 (1975); Edwards v. Commissioner, T.C. Memo. 2002-169. 

As this Court recently summarized:

The Internal Revenue Code and the regulations do

not require the Commissioner to send a preliminary 30-

day letter or to hold an administrative Appeals hearing

before issuing a notice of deficiency. A 30-day letter
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and an opportunity for an Appeals hearing is a matter

of administrative practice and procedure and not a

requirement of law. * * * [Edwards v. Commissioner,

supra.]

In addition, to the extent that petitioner might be claiming

that respondent declined to afford the requisite notice and

opportunity for hearing under sections 6330 and 6331 before

enforcing collection by levy, we initially note that our

jurisdiction in this case does not depend on whether the Appeals

Office offered or conducted an appropriate hearing. Lunsford v.

Commissioner, 117 T.C. 159, 164-165 (2001). Furthermore, the

record fails to show any impropriety in the collection procedures

followed by respondent.

By letter dated May 26, 1999, petitioner was provided with a

final notice of intent to levy and his right to a hearing. His

Form 12153 was received by the Internal Revenue Service on June

25, 1999. After a period of correspondence between the parties,

a letter dated July 12, 2000, was sent by Appeals Officer Millang

inviting petitioner to participate in a hearing on July 31, 2000. 

Numerous letters were exchanged, and the eventual notice of

determination concerning collection action addresses petitioner’s

arguments as reflected in such transmittals. We cannot find that

petitioner was improperly denied any germane “30 day appeal”.

Turning to the remaining issues specifically enumerated in

section 6330(c)(2)(A) and reviewed under the abuse of discretion

standard, petitioner has at no time raised a spousal defense,
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identified any other valid challenge to the appropriateness of

the intended collection action, or offered an alternative means

of collection. Since petitioner has failed to establish grounds

for enjoining respondent from proceeding with collection by levy,

we sustain respondent’s determination.

To reflect the foregoing,

Decision will be entered

for respondent.