Court Opinion

ID: 4336506
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:53:16.810491+00
Date Added: 2024-06-11T13:29:08.107277
License: Public Domain

T.C. Memo. 2007-137

                      UNITED STATES TAX COURT

                   EDWARD FONG, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 18124-05L.             Filed May 31, 2007.

     Edward Fong, pro se.

     Laura Buckley and Mary Schewatz, for respondent.

                        MEMORANDUM OPINION

     MARVEL, Judge:   This matter is before the Court on

respondent’s motion to dismiss for lack of jurisdiction.

Respondent alleges that we do not have jurisdiction under section
                                - 2 -

6330(d)(1)1 to review respondent’s decision to proceed with a

levy action to collect petitioner’s unpaid tax liability for

2001.    Petitioner filed a response in opposition to the motion.

                             Background

     Petitioner resided in Newark, California, when the petition

in this case was filed.

     Petitioner failed to file a Federal income tax return for

2001.    As a result, on October 20, 2003, respondent prepared a

substitute return under section 6020(b).    Based on petitioner’s

substitute return, respondent determined a deficiency for 2001,

and on July 5, 2004, respondent assessed additional tax,

interest, and penalties owed by petitioner.

     Respondent attempted unsuccessfully to collect petitioner’s

unpaid 2001 tax liability.    On October 23, 2004, respondent

mailed to petitioner a Letter 1058, Final Notice of Intent to

Levy and Your Right to Request a Hearing Under Section 6330

(final notice).    On January 24, 2005, the final notice was

returned to respondent as undeliverable.    On April 10, 2005,

respondent received from petitioner a Form 12153, Request for a

Collection Due Process Hearing (section 6330 hearing request).

The Internal Revenue Service Appeals Office (Appeals Office)

determined that petitioner’s section 6330 hearing request was not

     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 3 -

submitted timely under section 6330(a)(3)(B) because petitioner

failed to file the request within 30 days after the date of the

final notice.   Consequently, the Appeals Office held an

“equivalent hearing” under section 301.6330-1(i), Proced. &

Admin. Regs., instead of a regular section 6330 hearing, and on

September 1, 2005, the Appeals Office issued to petitioner a

Decision Letter Concerning Equivalent Hearing Under Section 6320

and/or 6330 of the Internal Revenue Code (decision letter).    In

the decision letter, the Appeals officer found that all legal and

administrative requirements had been met, petitioner had not

proposed an acceptable collection alternative and had not

cooperated with the collection of tax, and the Commissioner could

proceed with the levy action to collect petitioner’s unpaid tax

liability for 2001.

     On September 26, 2005, the petition in this case was filed.2

On June 15, 2006, petitioner filed an amended petition in which

he argued, among other things, that respondent improperly denied

him a valid section 6330 hearing.

     2
       Petitioner’s original petition did not conform to the
Rules of this Court, and petitioner was ordered to file a
properly amended petition on or before Nov. 14, 2005. Petitioner
received two extensions to file an amended petition but did not
file an amended petition within the prescribed time limits. On
Mar. 30, 2006, petitioner’s case was dismissed for lack of
jurisdiction. On June 13, 2006, petitioner’s motion to file
motion to vacate order of dismissal for lack of jurisdiction was
filed. Petitioner’s motion was granted on June 15, 2006, and his
motion to vacate the order dismissing his case for lack of
jurisdiction was filed and granted on that date.
                               - 4 -

      On December 11, 2006, respondent filed a motion to dismiss

for lack of jurisdiction.   On January 3, 2007, petitioner filed a

response opposing respondent’s motion.     On February 5, 2007, this

case was called for hearing on respondent’s motion.      There was no

appearance by or on behalf of petitioner.3

                            Discussion

A.   Notice of Determination and Section 6330(d) Review

      The Secretary is authorized to collect a taxpayer’s unpaid

tax liability by way of a levy upon the person's property if the

person neglects or refuses to pay the tax owed within 10 days

after notice and demand for payment.     Sec. 6331(a).   Section

6330(a) provides that no levy may be made on any property or

right to property of any person unless the Secretary has notified

such person in writing (section 6330(a) notice) of the right to a

hearing (section 6330 hearing) before the levy is made.4     The

section 6330(a) notice must be given in person, left at the

person's dwelling or usual place of business, or sent by

certified or registered mail, return receipt requested, to the

person's last known address.   Sec. 6330(a)(2); sec.

301.6330-1(a), Proced. & Admin. Regs.

      3
       After the hearing, respondent filed a motion to dismiss
for lack of prosecution. Because we hold that we do not have
jurisdiction to hear petitioner’s case under sec. 6330(d), the
motion to dismiss for lack of prosecution will be denied.
      4
       Under sec. 6331(d), the Secretary is also required to give
notice of intent to levy before a levy may proceed.
                               - 5 -

     A section 6330 hearing will be conducted if the taxpayer

submits a timely written request in response to the section

6330(a) notice.   Sec. 6330(b) and (c).   The taxpayer must request

the section 6330 hearing within the 30-day period commencing on

the day after the date of the section 6330(a) notice.    Sec.

6330(a)(3)(B); sec. 301.6330-1(b)(1), Proced. & Admin. Regs.    If

a taxpayer makes a timely request for a section 6330 hearing, a

hearing shall be held before an impartial officer or employee of

the Appeals Office.5   Sec. 6330(b)(1), (3).   Following a section

6330 hearing, an Appeals officer will issue a notice of

determination indicating whether the proposed levy action may

proceed.6   Sec. 301.6330-1(e)(3), Q&A-E8, Proced. & Admin. Regs.

Under section 6330(d)(1), the taxpayer may petition this Court to

     5
       At the sec. 6330 hearing, a taxpayer may raise any
relevant issue, including appropriate spousal defenses,
challenges to the appropriateness of the collection action, and
collection alternatives. Sec. 6330(c)(2)(A). Taxpayers are
precluded from contesting the existence or amount of the
underlying tax liability unless the taxpayer failed to receive a
notice of deficiency for the tax in question or did not otherwise
have an earlier opportunity to dispute the tax liability. Sec.
6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609
(2000).
     6
       In making its determination, the Appeals Office is
required to take into consideration: (1) The verification
presented by the Secretary that the requirements of applicable
law and administrative procedures have been met; (2) the relevant
issues raised by the taxpayer; and (3) whether the proposed levy
action appropriately balances the need for efficient collection
of taxes with a taxpayer’s concerns regarding the intrusiveness
of the proposed levy action. Sec. 6330(c)(3).
                               - 6 -

review the determination made by the Appeals officer.   See sec.

301.6330-1(f)(1), Proced. & Admin. Regs.

     A taxpayer who makes an untimely request for a section 6330

hearing is not entitled to a section 6330 hearing but will

instead receive an “equivalent hearing” under section

301.6330-1(i)(1), Proced. & Admin. Regs.   An equivalent hearing

is held by the Appeals Office and generally is conducted in the

same manner as a section 6330 hearing.   Sec. 301.6330-1(i)(1),

Proced. & Admin. Regs.   However, the result of an equivalent

hearing is a decision letter, not a notice of determination. Id.

The decision letter generally contains the same information as a

notice of determination.   Sec. 301.6330-1(i)(2), Q&A-I4, Proced.

& Admin. Regs.   However, a decision letter issued by the Appeals

Office is not subject to judicial review under section 6330(d).
Id., Q&A-I5; see also Moorhous v. Commissioner, 116 T.C. 263,

270-271 (2001); Kennedy v. Commissioner, 116 T.C. 255, 263

(2001).

     The Tax Court is a court of limited jurisdiction, and we may

exercise that jurisdiction only to the extent authorized by

Congress.   Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

This Court’s jurisdiction under section 6330(d) is dependent upon

the issuance of a valid notice of determination by the Appeals

Office following the completion of a section 6330 hearing.      See

Orum v. Commissioner, 123 T.C. 1 (2004), affd. 412 F.3d 819 (7th
                                - 7 -

Cir. 2005); Sarrell v. Commissioner, 117 T.C. 122, 125 (2001);

Moorhous v. Commissioner, supra at 269; Offiler v. Commissioner,

114 T.C. 492, 498 (2000); see also Rule 330(b).

      In this case, the record clearly reflects that respondent

did not issue a notice of determination to petitioner under

section 6330.   Consequently, we do not have jurisdiction under

section 6330(d) to review respondent’s decision to proceed with

the proposed levy action.7    However, because the basis for

dismissal may affect whether respondent can proceed with

collection and/or may otherwise affect petitioner’s rights, we

must determine the proper ground for dismissal.    We must

therefore decide whether respondent’s failure to issue a notice

of determination was proper.    See Kennedy v. Commissioner, supra

at 261.

B.   Section 6330(a) Notice

      As discussed above, before a levy may proceed, section

6330(a) requires the Secretary to notify the taxpayer in writing

of his right to a section 6330 hearing.    Respondent argues that

he satisfied the requirements of section 6330(a)(2)(C) because he

sent the final notice by certified mail, return receipt

requested, to petitioner’s last known address.    Respondent

      7
       If an Appeals officer has held an equivalent hearing and
issued a decision letter (rather than a notice of determination)
in error, because he or she has concluded mistakenly that the
hearing request was untimely, we may exercise jurisdiction after
all. Craig v. Commissioner, 119 T.C. 252 (2002).
                               - 8 -

asserts that petitioner’s section 6330 hearing request was not

received timely, and as a result, petitioner was not entitled to

a section 6330 hearing.   Respondent contends that because a

section 6330 hearing was not conducted, respondent properly did

not issue a notice of determination, and therefore, the Tax Court

lacks jurisdiction under section 6330(d) to review respondent’s

decision to proceed with the proposed levy.

     In his response, petitioner contends that no section 6330(a)

notice was issued or mailed by respondent.     More specifically,

petitioner alleges that respondent never mailed the October 23,

2004, final notice to petitioner.8     In support of his argument,

petitioner claims that the United States Postal Service (USPS)

has no record of the certified mail number offered by respondent

in connection with the final notice.     Petitioner asserts that he

attempted to verify the certified mail number through the track

and confirm feature on the USPS Web site, but no record of the

number was found.   Petitioner also claims that a USPS

representative he contacted by phone stated that the USPS had no

record of the certified mail number.     Petitioner concludes that

he was improperly denied a section 6330 hearing because he was

precluded from submitting a timely section 6330 hearing request.

     8
       Petitioner concedes that the address to which the final
notice was allegedly sent is petitioner’s last known address.
                               - 9 -

     Respondent bears the burden of proving by competent and

persuasive evidence that the final notice was properly mailed.9

Coleman v. Commissioner, 94 T.C. 82, 90 (1990).   As proof that

the final notice was mailed to petitioner, respondent produced

the Cincinnati Internal Revenue Service Support Center’s

automated collection service certified mail list for October 23,

2004.10   The certified mail list contains a date stamp of October

23, 2004, from the Covington, Kentucky, USPS.   The certified list

shows petitioner's name, taxpayer identification number, the

Newark, California, address, the tax form and period to which the

notice relates, and the certified mail number of the final

notice.   Respondent also submitted the Internal Revenue Service

account transcript for petitioner which contains an entry

indicating that the final notice was mailed to petitioner on

October 23, 2004.

     Petitioner failed to appear on February 5, 2007, when his

case was called, and therefore did not introduce any evidence to

     9
       Because a statutory notice of deficiency, like a sec. 6330
notice, requires the Commissioner to mail the notice by way of
certified or registered mail to the taxpayer’s last known
address, we apply the principles enunciated in notice of
deficiency caselaw to determine whether respondent properly
discharged his duty under sec. 6330(a)(2). See sec. 6212.
     10
       The certified mail list does not contain any indication
of the number of items received by the USPS, nor is it signed or
initialed by a USPS employee. The certified mail list offered by
respondent is thus insufficient to create a presumption of proper
mailing. See Bobbs v. Commissioner, T.C. Memo. 2005-272.
                               - 10 -

contradict respondent’s evidence that a final notice of

determination was mailed to petitioner on October 23, 2004.

Moreover, the claims made by petitioner are refuted by USPS

published policies.   The USPS maintains certified mail records

for a period of 2 years before they are purged from the USPS

system.11   See http://www.usps.com.    Petitioner asserts that he

checked the certified mail number through the USPS online track

and confirm system and that he spoke by telephone with a USPS

representative on December 27, 2006.     If the final notice were

mailed, as respondent asserts, on October 23, 2004, more than 2

years before petitioner’s inquiries, any record of the final

notice’s certified mail number would have already been purged

from the USPS system.

     Respondent has offered evidence showing that respondent

mailed the final notice to petitioner on October 23, 2004.

Petitioner has offered no evidence to contradict that evidence.

     Petitioner was required to respond to the final notice by

requesting a section 6330 hearing within the 30-day period

permitted by section 6330(a)(3)(B).     Respondent sent petitioner

the final notice on October 23, 2004.     Petitioner’s section 6330

hearing request needed to be postmarked by November 22, 2004, to

be timely mailed; petitioner did not mail his request until April

     11
       Delivery information for certified mail is accessible on
the USPS Web site for 60 days, after which the information is
archived and moved to offline storage. See http://www.usps.com.
                              - 11 -

6, 2005.   Therefore, respondent properly granted petitioner an

equivalent hearing and issued a decision letter.    For this

reason, this case will be dismissed for lack of jurisdiction.

     To reflect the foregoing,

                                      An order of dismissal for lack

                                 of jurisdiction will be entered.