[Code Sec. 6330 ]

Notice of determination: Validity of notice of determination.--A pro se individual whose untimely petition challenging his notice of determination was dismissed for lack of jurisdiction contended that his notice of determination was improperly issued without an administrative hearing. However, the Tax Court noted that it is not required to look behind a notice to consider whether an administrative hearing has been held. Thus, the taxpayer's notice was valid.--CCH.

Franklin A. Ogden, pro se. Gerald W. Douglas, Karen Baker, and Peter Reilly, for the respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge:

This collection review case is before the Court on respondent's motion to dismiss for lack of jurisdiction. As explained in detail below, we shall grant respondent's motion to dismiss. ¹

Background

On July 8, 1999 , respondent mailed to petitioner a Final Notice Of Intent to Levy and Notice of Your Right To A Hearing requesting that petitioner pay his delinquent income taxes for the taxable year 1984. Petitioner responded by filing with the Internal Revenue Service Office of Appeals (Appeals Office) a request for an administrative hearing.

By letter dated January 31, 2000 , Appeals Officer Jose Gonzales directed petitioner to contact him by February 14, 2000 , for the purpose of scheduling an administrative hearing. On February 7, 2000 , Appeals Officer Gonzales received a letter from Gary Arthur DeMott (Mr. DeMott), identified in the letter as petitioner's representative, stating that petitioner intended to challenge his underlying tax liability for 1984. By letter dated February 14, 2000 , Appeals Officer Gonzales informed petitioner that he had received a letter from Mr. DeMott, that Mr. DeMott was not duly authorized to represent petitioner, and that "If I do not hear from you and you do not provide additional evidence or make arrangements to pay the tax for 1984 before February 24, 2000 , I will send you a determination letter providing your judicial rights."

On April 19, 2000 , the Appeals Office issued to petitioner a Notice of Determination Concerning Collection Actions Under Section 6320 and/or 6330 (notice of determination) concerning his 1984 tax liability. The determination letter informed petitioner that he would have 30 days to contest the matter by filing a petition with the Tax Court.

On May 17, 2000 , petitioner filed a "Petition for Judicial Review" in the U.S. District Court for the District of Idaho, assigned docket No. CV00-266-N-EJL, challenging the notice of determination. On December 20, 2000 , the District Court issued an order dismissing the case for lack of jurisdiction. The order stated that petitioner would have 30 days to file a petition for review with the Tax Court.

On January 23, 2001 , petitioner instituted a second action in the District Court by filing a "Complaint And Request For Judicial Review Of Administrative Action", assigned docket No. CV01-35-N-EJL, again challenging the notice of determination. On February 8, 2001 , the District Court issued an order dismissing the case for lack of jurisdiction. The order again stated that petitioner would have 30 days to file a petition for review with the Tax Court.

On March 14, 2001 , the Court received and filed a Petition For Lien Or Levy Action Under Code Sections 6320(c) Or 6330(d) challenging the notice of determination. ² The petition arrived in an envelope bearing a U.S. Postal Service postmark dated March 9, 2001 . In response to the petition, respondent filed a motion to dismiss for lack of jurisdiction asserting that the petition was not filed with the Court within 30 days of the District Court's order of dismissal issued December 20, 2000 .

Petitioner filed an objection to respondent's motion to dismiss asserting that: (1) His petition was filed with the Court within 30 days of the District Court's order of dismissal issued February 8, 2001 ; and (2) respondent failed to conduct an administrative hearing in this case.

This matter was called for hearing at the Court's motions session held in Washington , D.C. Counsel for respondent appeared at the hearing and offered argument in support of respondent's motion to dismiss. Although no appearance was entered by or on behalf of petitioner at the hearing, petitioner filed with the Court a written statement and a supplemental written statement pursuant to Rule 50(c). ³ Petitioner repeated his argument that his petition was timely filed, and, in the alternative, requested that the Court direct respondent to provide him an administrative hearing.

Discussion

Section 6331(a) provides that, if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by levy upon the person's property. Section 6331(d) provides that, at least 30 days before enforcing collection by way of a levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

In the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide protections for persons in tax collection matters. Sections 6320 and 6330 generally provide that the Commissioner cannot proceed with collection by way of a lien or levy action until the person has been given notice and the opportunity for an administrative review of the matter (in the form of an Appeals Office hearing), and if dissatisfied, with judicial review of the administrative determination. See Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 37 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179 (2000).

Section 6330(c) prescribes the matters a person may raise at an Appeals Office hearing. In sum, section 6330(c) provides that a person may raise collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. Section 6330(c)(2)(B) provides that the existence and amount of the underlying tax liability can be contested at an Appeals Office hearing only if the person did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute the tax liability. See Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 609 (2000); Goza v. Commissioner, supra.

Where the Appeals Office issues a determination letter to the person following an administrative hearing regarding a lien or levy action, sections 6320(c) (by way of cross-reference) and 6330(d)(1) provide that the person will have 30 days following the issuance of the determination letter to file a petition for review with the Tax Court or a Federal District Court. See Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000). Section 6330(d)(1) provides:

SEC. 6330(d). Proceeding After Hearing.--

(1) Judicial review of determination.--The person may, within 30 days of a determination under this section, appeal such determination--

(A) to the Tax Court (and the Tax Court shall have jurisdiction to hear such matter); or

(B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States .

If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court.

See McCune v. Commissioner [Dec. 53,988], 115 T.C. 114 (2000) (dismissing a petition for lack of jurisdiction where the taxpayer failed to file his initial petition for review with the Federal District Court within the 30-day period).

We have held that the Court's jurisdiction under sections 6320 and 6330 depends upon the issuance of a determination letter and the filing of a timely petition for review. See Sarrell v. Commissioner [Dec. 54,494], 117 T.C. 122, 125 (2001); Offiler v. Commissioner, supra at 498.

In the instant case, petitioner erroneously filed his initial petition with the District Court. On December 20, 2000 , the District Court issued an order dismissing the petition for lack of jurisdiction and informing petitioner that he would have 30 days from the date of the order to file a petition with the Tax Court. Petitioner again failed to file a petition for review with this Court and instead filed a second action in the District Court. Petitioner mailed a petition for review to this Court within 30 days after the District Court issued its order dismissing the second action for lack of jurisdiction.

Section 6330(d)(1) provides in unambiguous terms that "If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court." The 30-day period within which petitioner had to file a petition for review with the Court began to run on December 20, 2000 --the date the District Court issued its order dismissing petitioner's initial action for lack of jurisdiction. Petitioner's position that the 30-day period should be measured from the date the District Court issued its order dismissing his second action would thwart the plain language of the statute and Congress's intent that collection review proceedings be instituted within a fixed and relatively limited time. In this connection, we have stated on numerous occasions that the Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. See sec. 7442; Judge v. Commissioner [Dec. 43,902], 88 T.C. 1175, 1180-1181 (1987); Naftel v. Commissioner [Dec. 42,414], 85 T.C. 527, 529 (1985). We have held that the statutory periods set forth in section 6330 are jurisdictional and cannot be extended. See McCune v. Commissioner, supra at 117; cf. Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 262 (2001) (holding that the Commissioner may not waive the time restrictions imposed in section 6330).

On the basis of the foregoing, we hold that we lack jurisdiction inasmuch as the petition was not timely filed with the Court. Accordingly, we shall grant respondent's motion to dismiss for lack of jurisdiction.

Petitioner also contends that the Appeals Office issued the notice of determination without conducting an administrative hearing. In Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001), we recently held that we shall not look behind a notice of determination to consider whether the Appeals Office conducted an administrative hearing. Consistent with our holding in Lunsford we hold that the notice of determination issued to petitioner is valid.

We have considered petitioner's remaining arguments and find them to be meritless.

To reflect the foregoing,

An order of dismissal for lack of jurisdiction will be entered.

¹ Unless otherwise indicated, section references are to sections of the Internal Revenue Code, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure. This case was assigned pursuant to sec. 7443A(b)(4).

² At the time the petition was filed, petitioner resided in Sagle , Idaho .

³ Before the hearing, the Court summarily denied petitioner's motion for hearing to determine real parties in interest. The motion was replete with frivolous arguments and, among other things, asserted:

Natural person petitioner, Franklin A. Ogden therefore requests a hearing wherein respondent must declare via a sworn statement, subject to the penalty of perjury under the laws of the United States, whether it is the legal fiction FRANKLIN A. OGDEN, respondent is asserting a tax liability for the 1984 tax year, or is respondent asserting that natural person Franklin A. Ogden has a tax liability for the 1984 tax year.

[Dec. 54,805(M)] Roger Stoewer v. Commissioner.

Docket No. 2674-01L , T.C. Memo. 2002-167, 84 TCM 13, Filed July 8, 2002 . [Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6330]

Collection due process: Hearing before levy: Jurisdiction.

The Tax Court determined that it had jurisdiction to review the IRS's decision to proceed with collection by way of levy of a delinquent individual's tax liability. The IRS notice of determination, which expressed the judgment on the part of the IRS Appeals officer that collection could proceed was valid on its face. Moreover, the taxpayer timely filed his Tax Court petition. Because the jurisdictional prerequisites were met, it was not necessary for the Court to look behind the notice of determination to evaluate whether a proper hearing opportunity was provided to decide the validity of the notice.

[Code Sec. 6330]

Hearing before levy: Jurisdiction: Penalties, civil: Frivolous return. --

An individual's claim seeking a redetermination of a frivolous return penalty assessed against him was dismissed. The Tax Court lacks jurisdiction over the assessment of such penalties.

Roger Stoewer, pro se. Wendy S. Harris, for the respondent.

MEMORANDUM OPINION

PAJAK, Special Trial Judge: This case is before the Court on petitioner's Motion To Dismiss For Lack Of Jurisdiction and on respondent's Motion To Dismiss For Lack Of Jurisdiction And To Strike With Respect To The Assessed Frivolous Return Penalty. Section references are to the Internal Revenue Code as amended.

At the time the Petition for Lien or Levy Action Under Section 6320(c) or 6330(d) was filed, petitioner resided in Las Vegas , Nevada .

On April 15, 1997 , petitioner filed his 1996 Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents. Petitioner's 1996 return listed his address as 5125 Gray Lane , Apartment C, Las Vegas , Nevada , 89119 ( Gray Lane address). On his 1996 return, petitioner reported wages and salaries of zero. Petitioner also reported that his adjusted gross income and taxable income on his 1996 return was zero. In a two-page document attached to his 1996 return, petitioner stated in part:

It should also be noted that I had "zero" income according to the Supreme Court's definition of income (See Note #1), since in Merchant's Loan & Trust Co v. Smietanka [1USTC¶42], 225 U.S. 509, (at pages 518 & 519) that Court held that "The word (income) must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act (of 1909)." Therefore, since I had no earnings in 1996 that would have been taxable under the Corporation Excise Tax Act of 1909 as "income," I can only swear to having "zero" income in 1996. ***

On April 15, 1998 , petitioner filed his 1997 Form 1040EZ. Petitioner's 1997 return reflected his Gray Lane address. Again, petitioner reported wages and salaries of zero on his 1997 return. Petitioner also reported that his 1997 adjusted gross income and taxable income was zero. Petitioner attached a two-page document to his 1997 return which was essentially identical to the two-page document attached to his 1996 return.

On December 4, 1998 , respondent mailed to petitioner at his Gray Lane address two separate notices of deficiency related to petitioner's 1996 and 1997 taxable years, respectively. In one notice of deficiency, respondent determined an income tax deficiency of $3,775 and an accuracy-related penalty under section 6662(a) of $465 with respect to petitioner's 1996 taxable year. In the other notice of deficiency, respondent determined an income tax deficiency of $4,069 and an accuracy-related penalty under section 6662(a) of $813.80 with respect to petitioner's 1997 taxable year. Each notice of deficiency stated that the deficiencies could be contested by petitioner's filing a petition with the Tax Court 90 days from the date of the notices of deficiency.

On or about January 12, 1999 , petitioner sent two virtually identical letters to respondent, one for each taxable year at issue, which contested the authority of the notices of deficiency. Petitioner did not file a petition with the Tax Court with respect to the notices of deficiencies.

On May 24, 1999 , respondent assessed the income tax deficiencies and accuracy-related penalties against petitioner with respect to his 1996 and 1997 taxable years.

On June 14, 1999 , respondent assessed a section 6702 frivolous return penalty with respect to each of petitioner's taxable years at issue.

On April 10, 2000 , respondent filed a Notice of Federal Tax Lien equal to the amount of taxes and penalties assessed by respondent with respect to petitioner's 1996 and 1997 taxable years.

On April 13, 2000 , respondent issued to petitioner a Notice Of Federal Tax Lien Filing And Your Right To A Hearing Under IRC 6320 with respect to petitioner's 1996 and 1997 taxable years.

On or about May 11, 2000 , petitioner timely filed a Form 12153, Request For A Collection Due Process Hearing (Appeals Office hearing request), in response to the notice of lien.

On October 25, 2000 , in response to petitioner's Appeals Office hearing request, an Appeals officer sent a letter to petitioner in which he provided additional information regarding the validity of the tax and penalty assessments against petitioner. The Appeals officer informed petitioner that the statutory notices of deficiency were sent to his last known address, that he failed to act upon the statutory notices, and therefore that he was precluded from further challenging the underlying tax liabilities. The Appeals officer also informed petitioner that he would schedule an Appeals Office hearing.

On January 12, 2001 , the Appeals officer conducted the Appeals Office hearing with petitioner and his representative at the Las Vegas office of the Internal Revenue Service. At the hearing, the Appeals officer provided petitioner with two Forms 4340, Certificate Of Assessments, Payments, And Other Specified Matters, certified transcripts which detailed the assessment of the income tax deficiencies and accuracy-related penalties with respect to petitioner's 1996 and 1997 taxable years. Forms 4340 were also provided to petitioner with respect to the frivolous return penalties assessed for each of his taxable years at issue. The Appeals officer terminated the hearing after petitioner declined to discuss any collection alternatives.

On January 25, 2001 , respondent's Appeals Office sent petitioner two separate "NOTICES OF DETERMINATION CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330" stating respondent's intention to proceed with collection with respect to petitioner's 1996 and 1997 taxable years. One notice of determination related to the income taxes and accuracy-related penalties assessed against petitioner and informed him that he would have 30 days to contest the determination by filing a petition with the Tax Court. The notice of determination included findings that all applicable statutory and administrative procedures were met, that petitioner failed to present any collection alternatives, and that the proposed lien was appropriate.

The other notice of determination related to the frivolous return penalty assessments and informed petitioner that he would have 30 days to contest the determination by filing a petition with the appropriate United States District Court.

On February 27, 2001 , petitioner filed one petition with this Court for review of both of respondent's notices of determination.

On February 27, 2001 , petitioner's motion to dismiss was filed. On May 21, 2001 , respondent's motion with respect to the frivolous return penalty was filed.

Section 6321 imposes a lien in favor of the United States on all property and rights to property of a person liable for taxes when a demand for the payment of such taxes has been made and the person fails to pay those taxes. Such a lien arises when an assessment is made. Sec. 6322. Section 6323(a) requires the Secretary to file notice of Federal tax lien if such lien is to be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. Lindsay v. Commissioner [Dec. 54,529(M)], T.C. Memo. 2001-285.

Section 6320 provides that the Secretary shall furnish the person described in section 6321 with written notice of the filing of a notice of lien under section 6323. The notice required by section 6320 must be provided not more than 5 business days after the day of the filing of the notice of lien. Sec. 6320(a)(2). Section 6320 further provides that the person may request administrative review of the matter (in the form of an Appeals Office hearing) within 30 days beginning on the day after the 5-day period described above. Section 6320(c) provides that the Appeals Office hearing generally shall be conducted consistent with the procedures set forth in sections 6330(c), (d), and (e).

Section 6330(c)(2) prescribes the matters a person may raise at an Appeals Office hearing. Section 6330(c)(2)(A) provides that a person may raise collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 609 (2000). Section 6330(c)(2)(B) provides that the existence and amount of the underlying tax liability can be contested at an Appeals Office hearing only if the person did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute the tax liability. Id. ; Goza v. Commissioner [Dec. 53,803], 114 T.C. 176 (2000).

Pursuant to section 6330(d)(1)(A), within 30 days of the issuance of the notice of determination, the taxpayer may appeal the determination to the Tax Court. If the Tax Court does not have jurisdiction of the underlying tax liability, the taxpayer may appeal to a U.S. District Court. Sec. 6330(d)(1)(B).

Initially, we address respondent's motion. In respondent's motion, respondent contends that this Court does not have jurisdiction over the section 6702(a) frivolous return penalty. Respondent further asks this Court to strike the portion of the petition with respect to the frivolous return penalty.

The Court's deficiency jurisdiction is generally limited to the redetermination of income, estate, and gift taxes. Moore v. Commissioner [Dec. 53,802], 114 T.C. 171, 175 (2000). The Court interpreted section 6330(d)(1)(A) and (B) as not expanding the Court's jurisdiction beyond the types of taxes over which the Court generally has jurisdiction. Id. The Court has held that we do not have jurisdiction to review the Commissioner's determination to assess the frivolous return penalty under section 6702. Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 328-329 (2000). In that situation, section 6330(d)(1) provides that "If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court."

Accordingly, we shall grant respondent's motion to dismiss for lack of jurisdiction and to strike with respect to the frivolous return penalty.

In petitioner's motion, petitioner asks the Court to dismiss this case for lack of jurisdiction on the ground that the Appeals officer failed to verify that the requirements of all applicable law and administrative procedure were met as required by section 6330(c)(1).

Because we lack jurisdiction to review the determination with regard to the frivolous return penalty, we shall not decide whether the hearing requirement under section 6330(b) was met with respect to that determination. Johnson v. Commissioner [Dec. 54,554], 117 T.C. 204, 208-209 (2001). Thus, the remaining issue before the Court is whether this Court has jurisdiction to review the other determination in this case which relates to petitioner's liability for income taxes and accuracy-related penalties.

The Court recently held that, for purposes of determining the validity of a notice of determination for jurisdictional purposes, we shall not look behind a notice of determination to consider whether the Appeals Office conducted an appropriate hearing. Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159 (2001). Our holding in Lunsford overrules Meyer v. Commissioner [Dec. 54,109], 115 T.C. 417 (2001), to the extent it required the Court to look behind a notice of determination to discern whether a proper hearing opportunity was given in order to decide whether such a notice was valid. Lunsford v. Commissioner, supra at 164.

In the instant case, this Court is not required to look behind the relevant notice of determination which relates to petitioner's liability for income taxes and accuracy-related penalties in order to determine the validity of this notice. There is nothing in that notice of determination which leads us to conclude that the determination was invalid. As in Lunsford, the notice of determination clearly embodies the Appeals officer's determination that collection by way of lien may proceed. Consistent with our holding in Lunsford, we hold the relevant notice of determination was valid for purposes of invoking the Court's jurisdiction and a timely petition was filed. Accordingly, we hold that this Court has jurisdiction to review the determination in this case and that petitioner's motion to dismiss must be denied.

We have considered all of petitioner's remaining arguments and find them to be without merit and/or irrelevant.

To reflect the foregoing,

An appropriate Order denying petitioner's motion and granting respondent's motion will be issued.

Chief Counsel Advice 200213007, November 28, 2001
CCH IRS Letter Rulings Report No. 1309, 04-03-02
IRS REF: Symbol: CC:PA:CBS:Br1

Uniform Issue List Information:

UIL No. 6330.00-00

Notice and opportunity for hearing before levy

UIL No. 9999.98-00

Miscellaneous issues

- Not able to identify under present list

[Code Secs. 6330 and 6871 ]

MEMORANDUM FOR *****

FROM: Mitchel S. Hyman, Senior Technician Reviewer, Branch 1 (Collection, Bankruptcy & Summonses), CC:PA:CBS:Br1

SUBJECT: Tax Court Jurisdiction in a Collection Due Process Case to Determine Dischargeability of Taxes

This memorandum responds to your request for advice dated August 31, 2001 . In accordance with I.R.C. §6110(k)(3) , this Chief Counsel Advice should not be cited as precedent. This writing may contain privileged information. Any unauthorized disclosure of this writing may have an adverse effect on privileges, such as the attorney client privilege. If disclosure becomes necessary, please contact this office for our views.

QUESTIONS PRESENTED

I. Whether the Tax Court has jurisdiction in a collection due process case to decide whether the taxpayers' tax liability was excepted from discharge under the fraud exception of Bankruptcy Code §523(a)(1)(C).

II. If the Tax Court has jurisdiction, whether the correct burden of proof for determining that the fraud exception applies is a preponderance of the evidence or clear and convincing evidence.

CONCLUSIONS

I. In the context of collection due process litigation, we take the position that the Tax Court has jurisdiction to determine whether a tax liability was dischargeable in a prior bankruptcy court proceeding.

II. The standard of proof for establishing before the Tax Court in a collection due process case that a tax liability was excepted from discharge under 11 U.S.C. 523(a)(1)(C) is a preponderance of the evidence.

FACTS

The taxpayers filed a petition under Chapter 7 of the Bankruptcy Code on *****, and received a discharge. The taxpayers have unpaid tax liabilities for ***** and *****, of approximately $ ***** total.

The Service issued a Notice of Intent to Levy and Notice of Right to a Collection Due Process Hearing with regard to the taxpayers' liability. The taxpayers timely filed a request for a collection due process hearing during which they claimed that their income tax liabilities were discharged in the Chapter 7 proceeding.

The Appeals Officer who conducted the collection due process hearing issued a Notice of Determination finding that the taxpayers' tax liability was excepted from discharge under the fraud exception of section 523(a)(1)(C). The taxpayers petitioned the Tax Court for a review of the Notice of Determination.

ANALYSIS

I. Tax Court Jurisdiction

I.R.C. §6330 generally provides that the Commissioner cannot proceed with the collection of taxes by way of a levy on a taxpayer's property until the taxpayer has been given notice of the matter and the opportunity for administrative review in the form of an Appeals Office due process hearing. If dissatisfied with the hearing results, the taxpayers can seek judicial review of the administrative determination. I.R.C. §6330(d) .

In a collection due process hearing, a taxpayer can raise any relevant issue relating to the unpaid tax or the proposed levy I.R.C. §6330(c)(2) ; Treas. Reg. §301.6330- 1T, Q&A E1. In a judicial proceeding to review the Service's determination after a collection due process hearing, the taxpayer can raise any issue that was properly raised during the hearing. Treas. Reg. §301.6330-1T, Q&A, F5.

A discharge order in bankruptcy court relieves a debtor from personal obligations and creates an injunction barring creditors from collecting discharged obligations. 11 U.S.C. §524(a)(1) and (2).

The Tax Court is a court of limited jurisdiction. I.R.C. §7442 ; Judge v. Commissioner, 88 T.C. 1175, 1180-1181 (1987) [CCH Dec. 43,902 ]; Naftel v. Commissioner, 85 T.C. 527, 529 (1985) [CCH Dec. 42,414 ]. The Tax Court holds that it lacks subject matter jurisdiction in deficiency proceedings to determine whether or not a tax was discharged in bankruptcy. Neilson v. Commissioner, 94 T.C. 1, 16 (1990) [CCH Dec. 46,301 ]; Moody v. Commissioner, 95 T.C. 655, 658 (1990) [CCH Dec. 47,100 ]; Graham v. Commissioner, 75 T.C. 389, 399 (1980) [CCH Dec. 37,460 ]; Swanson v. Commissioner, 65 T.C. 1180, 1184 (1976) [CCH Dec. 33,742 ]; Fotochrome, Inc. v. Commissioner, 57 T.C. 842, 847 (1972) [CCH Dec. 31,311 ]. Generally, a taxpayer who wishes a ruling on dischargeability must seek the jurisdiction of the bankruptcy court. Neilson, supra.

I.R.C. §6330(d)(1) , however, provides for judicial review of an Appeals Officer's collection due process determination and confers jurisdiction on the Tax Court to hear the matter if the Tax Court has jurisdiction over the underlying tax. The Tax Court has jurisdiction to determine deficiencies in income tax. I.R.C. §§6211 , 6213(a) , 6214(a) ; Goza v. Commissioner, 114 T.C. 176, 182 (2000) [CCH Dec. 53,803]. The Tax Court, therefore, has jurisdiction to hear a taxpayer's challenge to the Service's determination to pursue collection of unpaid income taxes.

I.R.C. §6630(c)(2) provides a listing of matters that a taxpayer can raise in a collection due process hearing: spousal defenses; challenges to the appropriateness of collection actions; and offers of collection alternatives. The listing is not all- inclusive.

Whether the Service is barred by law from collecting a tax because it was discharged is relevant to the unpaid tax, and more specifically, to the proposed levy. Moreover, dischargeability of the tax calls into question the appropriateness of collection action as well.

Discharge in bankruptcy, like innocent spouse relief, relieves a taxpayer of the obligation to pay the tax notwithstanding the validity of the underlying assessment; both measures effectively forestall the Service from collecting the liability from the taxpayer. The Tax Court can hear an appeal with respect to a collection due process determination of innocent spouse relief. I.R.C. §6330(c)(2)(A) ; see, also King v. Commissioner, 115 T.C. 118 (2000) [CCH Dec. 53,994].

In addition, state and federal courts may determine dischargeability in post- bankruptcy litigation. See Murphy v. Wheatley, 360 F.2d 180, 182 (5th Cir. 1966); In re Zitzmann, 46 F.Supp. 314, 315 (E.D.N.Y. 1942); Unemployment Compensation Fund v. Peters, 18 Pa. Commw. 448, 452 (1975); Erspan v. Badgett, 647 F.2d 550, 556 (5th Cir. 1981), cert. denied, 455 U.S. 945 (1982).

Ideally, collection due process resolves in one administrative and judicial proceeding all matters with respect to collection of the tax in question. Legal issues that bear directly on the collectibility of tax should, therefore, be addressed as part of the process.

The taxpayers properly raised the discharge of their taxes in their collection due process hearing. Accordingly, we conclude that for collection due process purposes the Tax Court has jurisdiction to determine whether the tax debt was excepted from discharge.¹

II. Burden of Proof

Except as provided in 11 U.S.C. §523, 11 U.S.C. §727 provides for a discharge for individual debtors from all debts that arose before the date of the order for relief in Chapter 7 proceedings. Section 523(a)(1)(C) excepts from discharge any tax when the taxpayers either made a fraudulent return with respect to the tax or willfully attempted to evade or defeat the tax.

The burden is on the creditor to prove by a preponderance of the evidence that a debt is nondischargeable under section 523(a). Grogan v. Garner, 498 U.S. 279 (1991); see also United States v. Fegeley, 118 F.3d 979, 983 (3d Cir. 1997) [97-2 USTC ¶50,544 ]. This burden of proof places upon the party who bears it the duty to show that that which it alleges to be true is more probably true than not. In re Winship, 397 U.S. 358, 371 (1970) (Harlan, J., concurring).

The Grogan Court rejected a requirement that a party seeking to establish that a debt was not dischargeable because of fraud prove its case by clear and convincing evidence. The Court reasoned that because the preponderance of evidence standard results in a roughly equal allocation of the risk of error between litigants, "[W]e presume that this standard is applicable in civil actions between private litigants unless 'particularly important individual interests or rights are at stake.' Herman & MacLean v. Huddleston, 459 U.S. 375, 389-390." Grogan, 498 U.S. at 285.

Accordingly, to prove in bankruptcy court that taxes are not dischargeable under section 523(a)(1)(C), the Service must prove by a preponderance of the evidence that the taxpayer filed a fraudulent return or willfully evaded taxes.

I.R.C. §6663 provides that "[i]f any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud." In Tax Court, the Service must prove fraud under I.R.C. §6663 by clear and convincing evidence. I.R.C. §7454(a) ; Sadler v. Commissioner, 113 T.C. 99, 102 (1999) [CCH Dec. 53,476]; T.C. Rule 142(b). Clear and convincing evidence requires a showing of more than a preponderance of the evidence. Kellett v. Commissioner, 5 T.C. 608, 616 (1954) [CCH Dec. 14,712 ].

The issue of nondischargeability, however, is a matter of federal law governed by the terms of the Bankruptcy Code. Brown v. Felsen, 442 U.S. 127, 129-130 (1979). The Service in the instant case does not to seek to impose the fraud penalty under I.R.C. §6663 ; fraud under the tax law is not at issue. Rather, the Service must prove that the taxpayers' liability was not discharged under bankruptcy law. In brief, it is bankruptcy law, not tax law, that governs dischargeability.

Where the validity of the underlying tax liability is properly at issue in a collection due process case, a court reviews the Service's determination de novo; where the validity of the underlying tax liability is not properly at issue, the general rule is that the standard is abuse of discretion. H. REP. NO. 105-599, at 266 (1998); Goza v. Commissioner, 114 T.C. 176 (2000) [CCH Dec. 53,803]. Although the validity of the underlying taxes is not at issue in this case, however, we do not believe that the proper standard of review is abuse of discretion.

In general, abuse of discretion is the proper standard where the court is reviewing an administrative action. 5 U.S.C. §706(a)(2)(A) . The collection due process determination that the taxpayers' taxes were excepted from discharge, however, entails a conclusion of law. As in cases where a court decision on a question of law is under review by a higher court, we believe that the determination that the taxpayers' taxes were excepted form discharge merits de novo review. See, e.g., Agathos v. Starlight Motel, 977 F.2d 1500, 1504 (3d Cir. 1992).

Given the Supreme Court's holding in Grogan, that one standard of proof-a preponderance of the evidence-applies to exceptions to discharge, we take the position that the Tax Court must use that standard when determining de novo whether taxes were dischargeable.

Please call the attorney assigned to this case at 202-622-3610 with any questions.

¹ We note that if the Tax Court were to find that it lacks jurisdiction over the dischargeability of the taxes in this case, as it does in deficiency proceedings, the taxpayers would not be left without remedy. They could either reopen their case in bankruptcy court to determine the dischargeability of their tax debt or bring a contempt proceeding for violation of the discharge order in the bankruptcy court that issued it.

[ec. 54,974] Joseph W. Dorn v. Commissioner

Docket No. 6240-00L , 119 TC 356, No. 22, Filed December 30, 2002

[Appealable, barring stipulation to the contrary, to CA-11]

[Code Sec. 6330]

[Hearing before levy: Jeopardy levy: Jurisdiction: Judicial review.]

To collect petitioner's (P) unpaid income tax liabilities for 1987-89, respondent (R) issued a notice of levy to a fund in which petitioner maintained accounts and issued to P a notice of jeopardy levy and right to appeal. See sec. 6330(f), I.R.C. P requested and R held a hearing under sec. 6330(b), I.R.C. After the hearing, R determined that imposition of a jeopardy levy was appropriate. P filed a petition under sec. 6330(d), I.R.C., seeking judicial review of that determination.

Held: The Tax Court has jurisdiction under sec. 6330(d), I.R.C., to review R's determination that R's use of a jeopardy levy was appropriate.

David M. Berman and Paul F. Berman, for petitioner. Timothy R. Maher, for respondent.

COLVIN, Judge:

Petitioner filed the petition in this case under section 6330(d) seeking our review of respondent's determination that use of a jeopardy levy was appropriate. The sole issue for decision in this Opinion is whether the Tax Court has jurisdiction to review respondent's determination that a jeopardy levy was appropriate. We hold that we do.

Section references are to the Internal Revenue Code as amended.

FINDINGS OF FACT

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

Petitioner resided in Naples , Florida , when he filed his petition.

Petitioner maintained various accounts in a fund known as Evergreen Funds (not otherwise identified in the record). On November 29, 1999 , respondent issued a notice of levy to Evergreen Funds in an effort to collect petitioner's unpaid income tax liabilities for 1987-89. Also on that day, respondent issued a notice of jeopardy levy and right of appeal to petitioner relating to those tax liabilities.

Petitioner filed a timely Form 12153, Request for a Collection Due Process Hearing. On May 1, 2000 , respondent's Appeals officer conducted a hearing in petitioner's case for tax years 1987-89. On May 22, 2000 , respondent sent petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, in which respondent determined that the jeopardy levy with respect to petitioner's tax years 1987-89 was appropriate.

OPINION

A. Background

Petitioner filed a petition seeking our review of respondent's determination that use of a jeopardy levy was appropriate. The issue presented is whether our jurisdiction under section 6330(d) to review section 6330 determinations includes jurisdiction to review jeopardy levy determinations under section 6330(f). We hold that it does.

The parties agreed that the Court had jurisdiction to review respondent's determination that the jeopardy levy was appropriate. However, jurisdiction cannot be conferred upon the Court by agreement, Neely v. Commissioner [Dec. 54,241], 115 T.C. 287, 291 (2000); Naftel v. Commissioner [Dec. 42,414], 85 T.C. 527, 530 (1985), and the Court, sua sponte, can question jurisdiction at any time, Raymond v. Commissioner [Dec. 54,978(M)], 119 T.C. 191, 193 (2002); Neely v. Commissioner, supra at 290; Romann v. Commissioner [Dec. 52,939], 111 T.C. 273, 280 (1998).

Section 6330 was enacted in 1998 to permit taxpayers to obtain administrative and judicial review of collection actions by the Commissioner. Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746; H. Conf. Rept. 105-599, at 265-266 (1998), 1998-3 C.B. 755, 1019-1020. Section 6330(a)(1) requires the Secretary to notify the taxpayer of the right to a hearing before the Secretary levies on any property. Section 6330(a)(2) provides specific rules for the required notice. Section 6330(b) contains rules relating to the hearing, and section 6330(c) lists issues which taxpayers may raise at a section 6330(b) hearing.


B. Judicial Review of Section 6330 Determinations

Section 6330(d) provides for judicial review of determinations under section 6330. Section 6330(d)(1) provides that a taxpayer "may, within 30 days of a determination under this section, appeal such determination" to the Tax Court. Subsection (f) is contained in section 6330; thus, the phrase "this section" in section 6330(d)(1) applies to subsection (f). See Butler v. Commissioner [Dec. 53,869], 114 T.C. 276, 290 (2000) (the words "'the Tax Court shall have jurisdiction *** to determine the appropriate relief *** under this section'" in section 6015(e)(1)(A) include jurisdiction to review the Commissioner's decision to deny the taxpayer relief under section 6015(f)); Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 22-23 (1999) (the words in section 6404(g) providing our jurisdiction to review determinations "'under this section'" apply to determinations under section 6404(a)).

C. Jeopardy Levies Under Section 6330(f)

Section 6330(f) provides that "this section" shall not apply in the case of a jeopardy levy. We next consider whether that language restricts the grant of jurisdiction under section 6330(d) to review determinations under section 6330.

Respondent made a jeopardy levy under section 6330(f) before providing a hearing to petitioner under section 6330(b).

Section 6330(f) provides:

SEC. 6330(f). Jeopardy and State Refund Collection. If --

(1) the Secretary has made a finding under the last sentence of section 6331(a) that the collection of tax is in jeopardy; or

(2) the Secretary has served a levy on a State to collect a Federal tax liability from a State tax refund,

this section shall not apply, except that the taxpayer shall be given the opportunity for the hearing described in this section within a reasonable period of time after the levy.

Under the flush language in section 6330(f), the levy may precede the hearing provided by section 6330(b). The legislative history shows that the flush language was not intended to restrict the grant of jurisdiction provided by section 6330(d) to review the Commissioner's determination under section 6330(f). The conference report accompanying enactment of the RRA 1998, which created section 6330, stated in pertinent part as follows:

Judicial review

The conferees expect the appeals officer will prepare a written determination addressing the issues presented by the taxpayer and considered at the hearing. The determination of the appeals officer may be appealed to the Tax Court ***

*******

An exception to the general rule prohibiting levies during the 30-day period would apply in the case of state tax offset procedures, and in the case of jeopardy or termination assessments.

H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 747, 1020. Thus, Congress intended to permit taxpayers to appeal determinations made under section 6330 to this Court. Id. Congress also intended the section 6330(a) requirement that a taxpayer be given prelevy notice not to apply to a jeopardy levy or levy of a State tax refund. Id. There is no suggestion in the conference report that a taxpayer's right to judicial review under section 6330(d) is not recognized in the case of a jeopardy levy. Id. at 265-266, 1998-3 C.B. at 1019-1020.

D. Conclusion

Courts must interpret a statute to "'fit, if possible, all parts into an harmonious whole'". FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (quoting FTC v. Mandel Bros., Inc., 359 U.S. 385, 389 (1959)). We do not believe the flush language of section 6330(f) conflicts with section 6330(d) or bars judicial review of a jeopardy levy determination; that interpretation of the flush language would be at odds with the overall purpose of section 6330 of providing procedural protections in collection disputes. Thus, we conclude that we have jurisdiction under section 6330(d) to review respondent's determination under section 6330(f) that use of a jeopardy levy was appropriate.

To reflect the foregoing,

An appropriate order will be issued.]

[ec. 55,033(M)] Mary Lou and Allen E. Jones v. Commissioner.

Docket No. 3965-02L , T.C. Memo. 2003-29, 85 TCM 812, Filed February 6, 2003 . [Appealable, barring stipulation to the contrary, to CA-6]

[Code Sec. 6330]

[Notice of determination: Judicial review: Tax Court jurisdiction: Statute of limitations.]

On Dec. 18, 2001 , R mailed to Ps separate, identical Notices of Determination Concerning Collection Action(s) Under Sec. 6320 and/or 6330, I.R.C. In addition to the Dec. 18, 2001 , date stamped next to the word "Date", each notice was stamped "FEB 16 2002", in the immediate proximity of the words "in re: Due Process Appeal (Tax Court)". More than 30 days after the Dec. 18, 2001 , mailing date of the notices, Ps filed a petition with the Tax Court seeking judicial review of the determination. R moved to dismiss the petition for lack of jurisdiction on the ground that the petition was not filed within the 30-day period prescribed in sec. 6330(d)(1)(A), I.R.C.

Held: Because Ps failed to file their petition within 30 days of the notices of adverse determination, the petition is dismissed for lack of jurisdiction.

Allen E. Jones, for the petitioners. A. Gary Begun, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HALPERN, Judge: This case is before the Court on respondent's motion to dismiss for lack of jurisdiction (the motion). Petitioners object. Respondent's grounds are that the petition was not filed within the time prescribed by section 6330(d)(1)(A). An evidentiary hearing was held in Detroit , Michigan , on June 10, 2002 , at which testimony was taken and other evidence was received. On the basis of the evidence, and for the reasons that follow, we shall grant the motion.

Unless otherwise indicated, all section references are to the Internal Revenue Code presently in effect, and all Rule references are to the Tax Court Rules of Practice and Procedure.

FINDINGS OF FACT

At the time the petition was filed, petitioners, husband and wife, resided in Deckerville , Michigan .

On December 18, 2001 , the Internal Revenue Service Appeals Office in Detroit, Michigan, mailed to each petitioner a "Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330", which notices (the notices) are identical except for name and salutation. The notices concern petitioners' unpaid joint Federal income tax liabilities for 1995 and 1996. The notices were sent to petitioners by certified mail, and petitioner wife signed for each on December 20, 2001 .

Each notice was date stamped "DEC 18 2001" in the upper left hand corner next to the word "Date". Vertically listed in the upper right hand corner of each notice were various items of information, including information regarding the person to contact at the Internal Revenue Service and a telephone number to call. The last item was the subject matter of the notice: "In Re: Due Process Appeal (Tax Court)". Each notice bore a second date stamp, "FEB 16 2002", immediately under or next to that last information item. Each notice also contained the following sentence (comprising a separate paragraph) in the body of the notice:

If you want to dispute this determination in court, you must file a petition with the United States Tax Court for a redetermination within 30 days from the date of this letter.

Each notice also contained the following language:

The time limit for filing your petition is fixed by law. The courts cannot consider your case if you file late. ***

Petitioners waited until January 23, 2002 , to inquire about the significance of the two dates stamped on the notices. On that date, petitioner husband inquired of Appeals Officer Dianne Villa about such significance. Ms. Villa informed him that he had only 30 days from the date of the notices to appeal to the Tax Court and that the February 16 date was probably an internal follow up date inadvertently placed on the notices by respondent's records unit (which fact Ms. Villa later confirmed).

On February 19, 2002 , the Court received and filed a petition dated February 15, 2002 , in which petitioners seek review of respondent's determination, which they identify in the petition as "the Notice of Determination dated 2-16-2002 ".

OPINION

I. Introduction

Section 6330 accords taxpayers the right to notice and the opportunity for a hearing before the Commissioner can proceed with the collection of taxes by way of a levy on property or rights to property. Sec. 6330(a). The hearing is to be held by the Internal Revenue Service Appeals Office. Sec. 6330(b)(1). When the Appeals Office issues a determination letter to the taxpayer following the required hearing, section 6330(d)(1) provides that the taxpayer has 30 days following the issuance of such determination letter to file a petition for review with the Tax Court or, if the Tax Court lacks jurisdiction over the underlying tax liability, with a Federal District Court. This Court's jurisdiction under section 6330(d) is dependent upon the issuance of a valid determination letter and the filing of a timely petition for review. Rule 330(b); Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000).

There is no question that the petition was not filed within the 30-day period prescribed by section 6330(d)(1) for requesting judicial review of an adverse determination made under section 6330. On that basis, respondent asks that we grant the motion. Petitioners object, and they ask us to deny the motion on the basis that they "justifiably relied upon the [February 16] date clearly marked on Respondent's Notice of Determination". In support of their objection, petitioners argue that the February 16 date is "located in the same general area and format as other letters and notices issued by Respondent". To illustrate their point, they attach to their brief a copy of a notice of deficiency where, in the upper right hand corner, a date appears under the words "Last Date to Petition Tax Court".

II. Discussion

While we question our authority to lengthen the period fixed by section 6330(d)(1), see discussion infra, we first address petitioners' claim that the equities of the situation favor them.

The notices were mailed and clearly dated December 18, 2001 , and were received by petitioners on December 20, 2001 . Moreover, the notices specifically warned that any petition for a redetermination must be filed "within 30 days from the date of this letter" and that "[t]he courts cannot consider your case if you file late." Although, on a notice of deficiency, a second date (in addition to the "Letter Date") appears under the words "Last Date to Petition the Tax Court", here the second date appeared in close proximity to the words "In Re: Due Process Appeal (Tax Court)". A determination letter triggering a taxpayer's right to appeal to the Tax Court pursuant to section 6330(d)(1), unlike a notice of deficiency triggering a taxpayer's right to petition the Tax Court to redetermine a deficiency pursuant to section 6213(a), need not show the last day on which the taxpayer may file an appeal. Cf. Rochelle v. Commissioner [Dec. 54,348], 116 T.C. 356 (2001), affd. [2002-1 USTC ¶50,447] 293 F.3d 740 (5th Cir. 2002). Although the appearance of the February 16 date may have been confusing to the petitioners, we disagree with their characterization of such date as demonstrating that "[t]he Notice on its face clearly states that the Due Process Appeal to the Tax Court is [due] February 16, 2002 ." The Notices do no such thing, particularly in light of their clear admonition that, to be effective, the petition must be filed with the Tax Court within 30 days "from the date of this letter."

When they received the notices, on December 20, 2001 , petitioners had 28 days in which to either clarify that the 30-day period ran from December 18, or file a protective petition with this Court pending later clarification of the due date. Instead, they waited until January 23, 6 days after the 30-day period had expired, to seek clarification. Under the circumstances, the equities of the situation do not favor them. We agree with respondent that "petitioners' allegations that they relied upon the second date stamp of 'February 16, 2002' are self-serving and lack merit when viewed under the totality of circumstances".

Moreover, statutory periods are jurisdictional and cannot be extended. McCune v. Commissioner [Dec. 53,988], 115 T.C. 114, 117 (2002); Joannou v. Commissioner [Dec. 24,042], 33 T.C. 868, 869 (1960). See also In re Smith v. United States [96-2 USTC ¶50,560], 96 F.3d 800, 802 (6th Cir. 1996), in which the Court of Appeals for the Sixth Circuit (the court to which an appeal from this decision would lie) noted that it has been "rather consistent in denying 'equitable' pleas to disregard the strict timing rules of the Tax *** [Code]", and United States v. Brockamp [97-1 USTC ¶50,216; 97-1 USTC ¶60,259], 519 U.S. 347 (1997), in which the Supreme Court refused to permit equitable tolling of the limitations period on income tax refund claims. Here, there is no basis to even consider whether equitable relief might be appropriate. The notices were clearly dated December 18, 2001 , and were received by petitioners on December 20, 2001 . Petitioners could have resolved any confusion that might have been caused by the February 16, 2002 , date stamp simply by contacting the Internal Revenue Service upon their receipt of the notices, or during the ensuing 28-day period, at the contact telephone number provided on the notices themselves. Their failure to do so has resulted in an untimely petition and a resulting inability to invoke the jurisdiction of this Court under section 6330(d).

III. Conclusion

Because of petitioners' failure timely to file a petition, we have no jurisdiction to review the notices.

To reflect the foregoing,

An appropriate order of dismissal for lack of jurisdiction will be entered.

[Dec. 55,072] Howard and Everlina Washington v. Commissioner.

Docket No. 11152-01L , 120 TC 114, No. 8, Filed March 6, 2003 . [Appealable, barring stipulation to the contrary, to CA-2]

[Code Secs. 6213, 6330, 6402, 6404, and 6871]

[Bankruptcy: Tax Court jurisdiction: Lien proceeding: Collection Due Process: Abatement of interest and penalties: Discharge of debt: Statute of limitations: Application of overpayment: Unpaid tax liability.]

Held: The Court has jurisdiction to determine whether the U.S. Bankruptcy Court discharged petitioners from their respective unpaid Federal income tax (tax) liabilities for their taxable years 1994 and 1995. Held, further, The U.S. Bankruptcy Court did not discharge petitioners from such liabilities.

Held, further, Respondent's application of petitioners' overpayment for their taxable year 1997 as a credit against their unpaid tax liability for their taxable year 1990, and not 1998, was proper. See sec. 6402(a), I.R.C.

Held, further, Respondent may proceed with the collection action as determined in the notice of determination with respect to each of petitioners' taxable years 1994, 1995, and 1998.

Howard Washington and Everlina Washington, pro sese. Marie E. Small, for the respondent.

CHIECHI, Judge: The petition in this case was filed in response to a notice of determination concerning collection action(s) under section 6320 and/or 6330¹ (notice of determination).

FINDINGS OF FACT

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

At the time petitioners filed the petition in this case, they resided in New York , New York .

On December 12, 1996 , petitioners jointly filed late Form 1040, U.S. Individual Income Tax Return (Form 1040), for each of their taxable years 1994 (1994 return) and 1995 (1995 return).² In their 1994 return, petitioners reported that they owed $6,680 in tax. In their 1995 return, petitioners reported that they owed $8,874 in tax. When petitioners filed Forms 1040 for their taxable years 1994 and 1995, they did not pay the respective amounts of tax that they owed for those years.

On February 3, 1997 , respondent assessed petitioners' tax, as well as any penalties and interest as provided by law, for each of their taxable years 1994 and 1995.

In April 1998, petitioners jointly filed Form 1040 for their taxable year 1997 (1997 return). In their 1997 return, petitioners claimed a refund of $1,741 (petitioners' 1997 overpayment).

On April 15, 1998 , when petitioners' 1997 return was due, petitioners' unpaid tax liability for 1990 (petitioners' unpaid 1990 liability) exceeded $1,741, the amount of petitioners' 1997 overpayment. On a date after April 15, 1998 , and before June 8, 1998 , that is not disclosed by the record, respondent applied petitioners' 1997 overpayment as a credit against petitioners' unpaid 1990 liability; i.e., respondent used that overpayment to offset part of that liability.³

On May 18, 1998 ,⁴ petitioners filed a petition (bankruptcy petition) in the U.S. Bankruptcy Court for the Southern District of New York, thereby commencing a bankruptcy proceeding under Chapter 7 of Title 11 of the United States Code. Attached to petitioners' bankruptcy petition was a document entitled "Schedule E --Creditors Holding Unsecured Priority Claims" (petitioners' bankruptcy Schedule E). Petitioners' bankruptcy Schedule E listed the Internal Revenue Service as a creditor with respect to a claim totaling $20,000 relating to petitioners' "TAXES FOR 1991, 1992, 1993, 1994, 1995, & 1996."⁵

On September 25, 1998 , the U.S. Bankruptcy Court for the Southern District of New York entered a "DISCHARGE OF DEBTOR, ORDER OF FINAL DECREE" (September 25, 1998 discharge order). The September 25, 1998 discharge order provided in pertinent part:

IT IS ORDERED THAT:

1. The Debtor is released from all dischargeable debts.

2. Any judgment not obtained in this court is null and void as to the personal liability of the Debtor(s) regarding the following:

(a) debts dischargeable under 11 U.S.C. §523(a);

(b) debts alleged to be excepted from discharge under 11 U.S.C. §523(a)(2), (4), (6) or (15) unless determined by this court to be nondischargeable;

(c) debts determined by this court to be discharged.

On April 15, 1999 , petitioners jointly filed Form 1040 for their taxable year 1998 (1998 return). In their 1998 return, petitioners (1) reported a total tax of $3,390.24, (2) reduced that amount by (a) $399.96, which represented tax previously withheld, and (b) $1,741, which represented petitioners' 1997 overpayment,⁶ and (3) reported that they owed $1,249.28 in tax for their taxable year 1998. When petitioners filed Form 1040 for their taxable year 1998, they did not pay the amount of tax that they owed for that year.

On June 21, 1999 , respondent assessed petitioners' tax, as well as any penalties and interest as provided by law, for their taxable year 1998.

On January 26, 2001 , respondent filed a notice of Federal tax lien in New York County , New York , with respect to petitioners' taxable years 1994, 1995, and 1998. That notice showed in pertinent part:

                                                      Unpaid Balance of

  Taxable Year                                           Assessment     

  1994 ............................................    $9,850.51

  1995 ............................................    11,938.14

  1998 ............................................     1,568.62

(We shall refer to the foregoing unpaid balance of assessment for each of petitioners' taxable years 1994, 1995, and 1998, as well as any accrued interest thereon not yet assessed, as petitioners' unpaid liability for each of those years.)

On January 31, 2001 , respondent mailed to petitioners a notice informing them that respondent had filed a Federal tax lien with respect to petitioners' unpaid liability for each of their taxable years 1994, 1995, and 1998 and that they had a right to a hearing (Appeals Office hearing) with respect to that lien.

On February 8, 2001 , petitioners filed Form 12153, Request for a Collection Due Process Hearing (Form 12153). In an attachment to Form 12153, petitioners stated in pertinent part:

First, may we state for the record that your intent to enact a lien against any assets, jobs, or personal property or finances that we may have is a grave error. We insist that you cease from any impending actions to avert any embarrassment or possible legal consequences, which can thus be avoided. We trust that you will fax us a statement immediately of your intent to suspend action as outlined in your (collection appeals rights).

Second, we are eager to finally put closure to this outstanding tax matter for the years indicated, and we trust that you will work fairly and cooperatively with us in reaching a mutual resolution. We feel our position of not owing the outstanding balance for which payment is being requested is based on the bankruptcy court decree under case number (98-43339) AJG, dated September 25, 1998 . (see attached copy).

The tax years 1994 and 1995 were part of this charge off through bankruptcy and were granted along with other years that have already been resolved. The IRS was well informed of our intent to charge off the aforementioned years, and had ample time to question, refute, or object to our intent to charge off said years. A period of 4 months passed without objection either in writing or in person prior to the final decree being rendered on 9/25/98 by the Honorable Judge Arthur J. Gonzalez. Therefore, once the charge off was finalized, we were under the complete understanding that these tax years were no longer an issue and that the entire matter had been acceptably resolved.

On June 17, 1999 , a hand written communiqué; was sent to our attention by a customer service representative *** instructing us to send you a copy of our discharge papers to the IRS ***. We were left with the understanding that once we complied with this request, the necessary adjustment to our accounts would be made and this matter would no longer be an issue.

Well, we complied with this request and to no avail; we are still dealing with this matter almost two years later. So, let me make our position very clear, we do not wish to battle with you over what seems to be a major misunderstanding. If in fact the amounts in question have been legally charged off for the years 1994 and 1995, then a letter of acknowledgement indicating that the charge is acceptable will satisfy our request for resolution. If in fact you do not agree with the charge off and you wish to discuss this with us in person, we will comply with a prearranged visit in order to reach an amicable resolve that both sides can live with. However, it must be understood upon receipt of this letter that all actions to implement a lien, garnishment of income, seizure of assets or any other punitive actions are immediately suspended without prejudice, and a notice acknowledging such will be forthcoming to abate any undue concern.

With regard to tax year 1998, this year was not part of the bankruptcy charge off, however, the amount in question arises from a deduction taken from a refund due us that was used to pay for taxes for one of the years that was charged off. When we filed our taxes for 1998, the refund due us from 1997 that was applied to a year charged off, was reclaimed as a deduction in 1998. Evidently your account specialist did not agree with our accountant's reclaiming that refund, so arose the outstanding tax debt. [Reproduced literally.]

On May 14, 2001 , respondent held a telephonic Appeals Office hearing with petitioners. On August 9, 2001 , the Appeals Office mailed to petitioners a notice of determination regarding the Federal tax lien that respondent had filed with respect to petitioners' unpaid liability for each of their taxable years 1994, 1995, and 1998. That notice stated in pertinent part:

Summary of Determination

You protested the filing of the Notice of Federal Tax Lien (NFTL) because you believed 1994 and 1995 tax years had been discharged in a bankruptcy proceeding. The 1998 tax liability is also in dispute.

You are incorrect in your assumption that 1994 and 1995 were discharged in bankruptcy. They did not qualify as dischargeable debts and survived the bankruptcy. The liability for 1998 arose from a disallowed deduction and is considered a valid liability.

*******

Relevant Issues Presented by the Taxpayer:

You believe the 1994 and 1995 liabilities were discharged under the bankruptcy proceeding docketed as 98-43339. The bankruptcy petition was filed on 05/08/1998 and listed these and prior years. The discharge was dated 09/28/1998 . Thus, the lien for these two years would be erroneous.

You further believe that a refund due to you for tax year 1997 was improperly applied to the liability for 1990, a year that was discharged. When you filed your 1998 return you claimed the amount of the refund as a deduction. This claim was disallowed and the liability arose. It is your contention that the refund is due to you and there should be no liability for 1998 and therefore, no reason to file the lien.

Balancing Efficient Collection and Intrusiveness:

It is necessary to balance the need to efficiently collect the outstanding liability against the taxpayers' legitimate concerns that collection activity is not overly intrusive.

In this case, you are mistaken in your belief that the 1994 and 1995 liabilities were discharged. Under bankruptcy law 11 USC Sec. 523(a)(1)(B)(ii), the debt in respect to a tax is not discharged if the return was filed after two years before the date of the filing of the petition. The returns for 1994 and 1995 were filed 02/03/1997 . To be dischargeable they had to be filed no later than 05/08/1996 . Therefore, by statute, they were not dischargeable.

The refund you expected for 1997 became part of the bankruptcy estate when you filed the petition for Chapter 7. This is a liquidation of assets and provides the mechanism for taking control of the property of the debtor. You no longer had an interest in the property of the bankruptcy estate therefore you lack standing to challenge the treatment of the refund. See In re Gucci, 126 F.3d 380, 388 (2d Cir. 1997). The disallowance of the deduction of the amount of the refund was the correct action and the liability created by the disallowance is due and owing.

All legal and procedural guidelines were met prior to the filing of the NFTL. The years in question are based on valid assessments. The lien is considered to be the least intrusive method of protecting the Government's interest in the collection of the debt.

The determination *** to file the lien is sustained.

OPINION

In support of their position that respondent may not proceed with collection with respect to their taxable years 1994 and 1995, petitioners contend that the U.S. Bankruptcy Court for the Southern District of New York discharged them from their respective unpaid liabilities for such years. Respondent does not dispute that if we find that that court discharged petitioners from such unpaid liabilities, respondent may not proceed with the collection action as determined in the notice of determination with respect to petitioners' taxable years 1994 and 1995. However, respondent disagrees with petitioners' contention that the U.S. Bankruptcy Court for the Southern District of New York discharged petitioners from their respective unpaid liabilities for those years. We must first determine whether we have jurisdiction to resolve the parties' dispute over whether that court discharged petitioners from such unpaid liabilities.⁷ It is the position of the parties that the Court has that jurisdiction.

Where the Court has jurisdiction over the underlying tax liability, the Court has jurisdiction to review a determination by the Appeals Office to proceed by lien with respect to any such unpaid liability. See sec. 6330(d)(1).⁸ In the instant case, the Appeals Office determined in the notice of determination, inter alia, that the U.S. Bankruptcy Court for the Southern District of New York did not discharge petitioners from their respective unpaid liabilities for their taxable years 1994 and 1995 and that respondent may proceed by lien with respect to such liabilities.

We have held in deficiency proceedings commenced in the Court under section 6213 that we do not have jurisdiction to determine whether a U.S. Bankruptcy Court has discharged a taxpayer from an unpaid tax liability in a bankruptcy proceeding instituted by such taxpayer. Neilson v. Commissioner [Dec. 46,301], 94 T.C. 1, 9 (1990); Graham v. Commissioner [Dec. 37,460], 75 T.C. 389, 399 (1980). In so holding, we relied on Swanson v. Commissioner [Dec. 33,742], 65 T.C. 1180, 1184 (1976), in which we observed that an action brought for redetermination of a deficiency "has nothing to do with collection of the tax nor any similarity to an action for collection of a debt".

In contrast to a deficiency proceeding, a lien proceeding commenced in the Court under section 6330(d)(1), such as the instant lien proceeding, is closely related to and has everything to do with collection of a taxpayer's unpaid liability for a taxable year. We must determine in the instant lien proceeding whether respondent may proceed with the collection action as determined in the notice of determination with respect to, inter alia, petitioners' taxable years 1994 and 1995. Whether the U.S. Bankruptcy Court for the Southern District of New York discharged petitioners from their respective unpaid liabilities for those years is an issue that has a direct bearing on whether respondent may proceed with the lien at issue.⁹ We hold that in the instant lien proceeding commenced under section 6330(d)(1) the Court has jurisdiction to determine whether the U.S. Bankruptcy Court for the Southern District of New York discharged petitioners from such unpaid liabilities.

Having held that we have jurisdiction to resolve the dispute between the parties over whether the U.S. Bankruptcy Court for the Southern District of New York discharged petitioners from their respective unpaid liabilities for their taxable years 1994 and 1995, we now address that dispute.

An individual debtor is not to be discharged in a bankruptcy proceeding from certain specified categories of debts. 11 U.S.C. sec. 523(a) (2000). The first such category is described in pertinent part in 11 U.S.C. sec. 523(a)(1) as follows:

§523. Exceptions to discharge

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title [title 11] does not discharge an individual debtor from any debt --

(1) for a tax or a customs duty --

(A) of the kind and for the periods specified in section 507(a)(2) or 507(a)(8) of this title, whether or not a claim for such tax was filed or allowed;

(B) with respect to which a return, if required --

(i) was not filed; or

(ii) was filed after the date on which such return was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; ***

Petitioners argue that their respective unpaid liabilities for their taxable years 1994 and 1995 do not fit within the exception to discharge set forth in 11 U.S.C. sec. 523(a)(1)(B)(ii). According to petitioners,

only if the taxes were filed after 2 years before the date of filing of the petition would the years in question be non dischargeable [sic]. The tax years in question were filed 17 months before the date of the petition and not after 2 years before the date of the petition.

The above-quoted argument of petitioners misconstrues and misapplies 11 U.S.C. sec. 523(a)(1)(B)(ii). An individual debtor is not discharged in a bankruptcy proceeding from a debt for tax with respect to which a return is filed after the date on which such return was last due and after 2 years before the date of the filing of the bankruptcy petition. 11 U.S.C. sec. 523(a)(1)(B)(ii). In other words, an individual debtor is not discharged in a bankruptcy proceeding from a debt for tax with respect to which a return is filed late and within the 2-year period immediately preceding the filing of the bankruptcy petition. E.g., Young v. United States [2002-1 USTC ¶50,257], 535 U.S. 43, 48-49 (2002).

The September 25, 1998 discharge order of the U.S. Bankruptcy Court for the Southern District of New York provided in pertinent part that petitioners were "released from all dischargeable debts." In the instant case, petitioners' 1994 return and petitioners' 1995 return both were filed late on December 12, 1996 . Petitioners filed their bankruptcy petition on May 18, 1998 . On the record before us, we find that petitioners filed their 1994 return and their 1995 return after the respective dates on which such returns were last due and after 2 years before the date on which they filed their bankruptcy petition. See 11 U.S.C. sec. 523(a)(1)(B)(ii); see also Young v. United States, supra. We further find on that record that pursuant to 11 U.S.C. sec. 523(a)(1)(B)(ii) the U.S. Bankruptcy Court for the Southern District of New York did not discharge petitioners from their respective unpaid liabilities for their taxable years 1994 and 1995.

We now consider petitioners' unpaid liability for 1998. It is petitioners' position that respondent should have applied petitioners' 1997 overpayment to offset part of their unpaid liability for 1998, and not their unpaid liability for 1990. Respondent argues that pursuant to section 6402(a) respondent's application of petitioners' 1997 overpayment as a credit against petitioners' unpaid 1990 liability was proper. Petitioners do not address that argument.¹⁰

Section 6402(a) provides in pertinent part:

In the case of any overpayment, the Secretary *** may credit the amount of such overpayment *** against any liability in respect of an internal revenue tax on the part of the person who made the overpayment ***.

When petitioners filed their 1997 return in April 1998, they had an unpaid liability with respect to their taxable year 1990 that exceeded the amount of petitioners' 1997 overpayment shown in that return. We hold that section 6402(a) authorized respondent to credit petitioners' 1997 overpayment against their unpaid 1990 liability.

We now address what we understand to be petitioners' position that the Court should review respondent's failure to abate any penalties and interest under section 6404 with respect to their taxable years 1994, 1995, and 1998 and should abate any such penalties and interest. We turn first to petitioners' position regarding respondent's failure to abate interest under section 6404. The record does not establish that petitioners raised at their Appeals Office hearing respondent's failure to abate interest under section 6404.¹¹ Consequently, we shall not consider that matter.¹² See Magana v. Commissioner [Dec. 54,765], 118 T.C. 488, 493-494 (2002); Miller v. Commissioner [Dec. 54,164], 115 T.C. 582, 589 n.2 (2000); see also sec. 301.6320-1(f)(2), Q&A-F5, Proced. & Admin. Regs.

We turn next to petitioners' position regarding respondent's failure to abate penalties under section 6404.¹³ The record does not establish that petitioners raised at their Appeals Office hearing respondent's failure to abate penalties under section 6404.¹⁴ Consequently, we shall not consider that matter.¹⁵ See Magana v. Commissioner, supra; Miller v. Commissioner, supra; see also sec. 301.6320-1(f)(2), Q&A-F5, Proced. & Admin. Regs.

Based upon our examination of the entire record before us, we find that respondent may proceed with the collection action as determined in the notice of determination with respect to each of petitioners' taxable years 1994, 1995, and 1998.

We have considered all of petitioners' arguments and contentions that are not discussed herein, and we find them to be without merit and/or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.

Reviewed by the Court.

COHEN, SWIFT, COLVIN, BEGHE, FOLEY, THORNTON , and MARVEL, JJ., agree with this majority opinion.

CONCURRING

WELLS, C.J., concurring: I respectfully concur in this Court's decision to exercise jurisdiction in the instant case to decide whether a tax liability has been discharged in bankruptcy. I write to note, however, that our opinion does not necessarily preclude taxpayers from seeking review in an appropriate Bankruptcy Court after they have petitioned this Court. Although the issue to be decided in the instant case is relatively straightforward, it is possible that taxpayers will present this Court with more difficult questions that may be better suited for consideration by a Bankruptcy Court. Under such circumstances, this Court may defer to a Bankruptcy Court to decide the matter. Such deference would not be premised upon any concerns that we lack jurisdictional capacity to consider the issue. Rather, it would be based upon considerations of comity and judicial efficiency, combined with our recognition that this Court does not deal with bankruptcy matters with the expertise that a Bankruptcy Court possesses. See Kluger v. Commissioner [Dec. 41,480], 83 T.C. 309, 320 (1984).

GERBER, BEGHE, and FOLEY, JJ., agree with this concurring opinion.

HALPERN, J., concurring:

I. Introduction

I concur with the conclusion of the majority that respondent may proceed with the collection action as determined in the notice of determination with respect to each of petitioner's taxable years 1994, 1995, and 1998. I write separately principally to add some observations concerning what we have characterized as the "standard of review" (described infra) applicable to our jurisdiction under section 6330(d)(1) to review a section 6330 determination.

II. Section 6330

Section 6330 entitles a taxpayer to notice and an opportunity for a hearing before certain lien and levy actions are taken by the Commissioner in furtherance of the collection from the taxpayer of unpaid Federal taxes. At such required hearing (the section 6330 hearing), the Appeals officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. Sec. 6330(c)(1). The taxpayer requesting the section 6330 hearing may raise "any relevant issue relating to the unpaid tax or the proposed levy". Sec. 6330(c)(2)(A). The taxpayer may also raise challenges to the existence or amount of the underlying tax liability "if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." Sec. 6330(c)(2)(B). Following the section 6330 hearing, the Appeals officer must determine whether the collection action is to proceed, taking into account the verification the Appeals officer has made, the issues raised by the person requesting the hearing, and "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 6330(c)(3). We have jurisdiction to review such determinations where we have jurisdiction of the underlying tax liability. Sec. 6330(d)(1)(A).

III. The Nature of the Hearing Before Us

In Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000), we discussed the standard of review that a court is to apply in reviewing a section 6330 determination. After reviewing a portion of the legislative history relevant to the enactment of section 6330, we stated:

[W]here 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.

See also Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181-183 (2000) (the same). Perhaps a more instructive way to describe the process involved when we review a section 6330 determination would be to distinguish between situations in which the taxpayer must rely on the record made before the Appeals officer and situations in which he is entitled to make a new record. In reviewing administrative determinations, a court ordinarily is limited to consideration of the decision of the agency involved and of the evidence on which it was based. United States v. Bianchi & Co., 373 U.S. 709, 714-715 (1963). Nevertheless, we have concluded that, in section 6330, Congress intended an exception to that general rule in situations where the existence or amount of the underlying tax liability was properly before the Appeals officer under section 6330(c)(2)(B) and the Appeals officer's determination in that respect is presented to a court for review. In such situations, the court must accord the taxpayer a hearing de novo on the existence or amount of the underlying tax liability. The taxpayer may make a new record, and he is not restricted to arguing from the record made before the Appeals officer.

IV. Determining the Applicability of Section 6330(c)(2)(B)

In order to determine which matters are properly raised by a taxpayer under section 6330(c)(2)(B) (i.e., those matters with respect to which the reviewing court must accord the taxpayer a hearing de novo), it is necessary to review some basic provisions of Chapters 63 (Assessment) and 64 (Collection) of the Internal Revenue Code. Section 6201(a) provides that the Secretary "is authorized and required to make *** assessments of all taxes *** imposed by this title". Such authority extends to "all taxes determined by the taxpayer or by the Secretary" for which a return is required. Sec. 6201(a)(1). A preliminary step is required, however, in the case of income, estate, gift, and certain excise taxes. With respect to those types of taxes, if the tax imposed exceeds the amount shown (if any) as the tax by the taxpayer on the required return, the Commissioner (acting for the Secretary) generally may not assess such deficiency without first issuing a notice of deficiency to the taxpayer and allowing the taxpayer to petition this Court for a redetermination of such deficiency. Secs. 6201(e), 6211(a), 6212, 6213(a), 6214(a), and 6215(a). On the collection side, section 6303(a) provides generally that the Secretary "shall *** after the making of an assessment of a tax *** give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof."

When section 6330(c)(2) is read against the backdrop of the statutory provisions discussed in the preceding paragraph, it becomes apparent that the term "underlying tax liability", as used in section 6330(c)(2)(B), means the tax (which may or may not be the correct tax) on which the Commissioner based his assessment (whether such tax is the tax shown on the taxpayer's return or the tax determined as a result of an examination by the Commissioner), whereas the term "unpaid tax", as used in section 6330(c)(2)(A), refers to the unpaid portion of the assessed tax (a fixed amount) that is the subject of the notice of lien or proposed levy that is part of the Commissioner's collection function. That interpretation is consistent with the proviso in section 6330(c)(2)(B) that a petitioner may challenge "the existence or amount of the underlying tax liability" only if the taxpayer "did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." That is, a taxpayer may dispute the determination of the tax that formed the basis of the Commissioner's assessment only if he did not have such an opportunity prior to assessment.

To summarize, the only issues that a taxpayer may properly raise under section 6330(c)(2)(B), and therefore the only issues with respect to which the reviewing court must accord the taxpayer a hearing de novo, are issues relating to a redetermination of the tax on which the Commissioner based his assessment, provided that the petitioner did not have an opportunity to seek such a redetermination prior to assessment. All other challenges to the proposed collection action are properly raised under section 6330(c)(2)(A), and a taxpayer seeking judicial review of the Appeals officer's disposition of any such challenge is restricted to arguing from the record made before the Appeals officer.

V. The Discharge in Bankruptcy Issue

Petitioners' claim that the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) discharged them from their respective unpaid liabilities for 1994 and 1995 is not a challenge to the preassessment determination of the tax but, rather, is in the nature of an affirmative defense that petitioners could raise in any postassessment action to collect the unpaid portion of the assessed tax from them. See, e.g., First Natl. Bank v. Haymes, 268 N.Y.S.2d 820, 827 (City Civ. Ct. 1996), stating: "[W]here the bankrupt is sued upon a debt[,] a discharge in bankruptcy is a defense which must be affirmatively pleaded by him." Such a defense is relevant to collection of the unpaid portion of the assessed tax and, thus, is appropriately raised under section 6330(c)(2)(A) (but not under section 6330(c)(2)(B)).

VI. Standard of Review

Where, upon appeal from a section 6330 determination, a challenge to the existence or amount of the taxpayer's underlying tax liability (i.e., a challenge to the determination of the tax on which the Commissioner based his assessment) is properly before us, the taxpayer is entitled to a hearing de novo and may make a record, and we should decide that challenge in the same manner as we would redetermine a deficiency pursuant to section 6214. In most other instances where we are asked to review a section 6330 determination, the taxpayer will be asking us to review some exercise of discretion by the Appeals officer, such as his determination that the proposed collection action balances the need for efficient collection against the intrusiveness of the collection action. Such a review of discretionary action necessarily involves a question of what was before the Appeals officer, and we determine whether the Appeals officer abused his discretion by considering the record before him. The standard of review in such instances may, thus, be characterized as an "abuse of discretion" standard. Of course, we may be asked to review whether the Appeals officer correctly applied the law, e.g., whether he correctly interpreted some provision of section 6015, which provides relief from joint and several liability on joint returns. Whether characterized as a review for abuse of discretion or as a consideration "de novo" (of a question of law), we must reject erroneous views of the law. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).¹ Finally, if we are asked to review whether the Appeals officer satisfied his obligation under section 6330(c)(1) to obtain verification that all legal and administrative requirements have been met, we are not presented with a matter of discretion. At the two extremes, we are presented either with a purely factual question (whether the Appeals officer did it) or a purely legal question (whether his actions were legally sufficient).

VII. Conclusion

In the case before us, the Appeals officer had before him the Bankruptcy Court's discharge order (the discharge order), which, in pertinent part, provided that "the Debtor is released from all dischargeable debts." The Appeals officer examined the pertinent provisions of the bankruptcy law (in particular, 11 U.S.C. sec. 523(a)(1)(2000)) and determined that petitioners' 1994 and 1995 Federal income tax liabilities had not been discharged. The Appeals officer did not abuse his discretion in determining that the discharge order did not discharge petitioners' 1994 and 1995 tax liabilities.

GERBER, BEGHE, and GALE, JJ., agree with this concurring opinion.

BEGHE, J., concurring: I write separately to address concerns expressed by Judge Vasquez and other concerns, and to attempt to provide explanations of matters left to implication by the majority opinion.

On the initial question of the Court's jurisdiction to address the bankruptcy discharge issue, I would flesh out the majority opinion's conclusion that the Tax Court has jurisdiction to address the issue under its statutory mandate, to observe that the Bankruptcy Act, 28 U.S.C. section 1334(a) and (b) (2000), does not deprive the Tax Court of jurisdiction.¹ Although subsection (a) provides that "the district courts shall have original and exclusive jurisdiction of all cases under title 11", the case at hand appears to be a situation described in subsection (b) "arising under title 11, or arising in or related to cases under title 11" in which the district courts have original but not exclusive jurisdiction. The corollary proposition is that the case at hand is one in which other courts, including the Tax Court, have concurrent jurisdiction with the district courts to decide various bankruptcy discharge issues.²

The second paragraph of Judge Vasquez's concurring opinion indicates some uncertainty about what aspect of respondent's determination with respect to 1994 and 1995 we are reviewing. The Court is reviewing (1) respondent's ultimate determination that "The determination *** to file the lien is sustained" and (2) the determination in support of that ultimate determination that the Bankruptcy Court did not discharge petitioners from their unpaid tax liabilities for the taxable years 1994 and 1995.

Judge Vasquez states in his third paragraph that a challenge to the appropriateness of collection action under section 6330(c)(2)(A)(ii) appears to him to be more about the type and/or method of collection chosen by the IRS rather than being about whether petitioners' taxes were discharged in bankruptcy. In my view, a question about the appropriateness of the collection action includes whether it is proper for the IRS to proceed with the collection action as determined in the notice of determination. I would conclude, and the parties agree, that if the Bankruptcy Court discharged petitioners from their unpaid tax liabilities for 1994 and 1995, any collection action for those years would be inappropriate, and therefore respondent could not proceed. In any event, a challenge to the appropriateness of collection action under section 6330(c)(2)(A)(ii) is illustrative of the type of "any relevant issue relating to the unpaid tax" the taxpayer may raise under section 6330(c)(2)(A).

Judge Vasquez goes on to state in his fourth paragraph that "Whether petitioners' taxes have been discharged in bankruptcy appears to be a challenge to the existence or amount of their underlying tax liability under section 6330(c)(2)(B)."

Preliminarily, I note that whether there is an issue under section 6330(c)(2)(B) is not crucial to resolving (1) whether we have jurisdiction to decide whether petitioners were discharged from their unpaid tax liabilities for 1994 and 1995 and (2) if we do have such jurisdiction, whether they were so discharged. Whether there is an issue under section 6330(c)(2)(B) is relevant only for the purpose of determining whether we are deciding this case under a de novo standard of review or an abuse-of-discretion standard of review.

This leads to Judge Vasquez's comments regarding the standard of review. Judge Vasquez indicates that, assuming we have jurisdiction, it is unclear what standard of review to apply in resolving the bankruptcy discharge issue. Although, the majority opinion does not explicitly state what that standard is, the opinion clearly and properly applies a de novo standard and holds that the Bankruptcy Court did not discharge petitioners from their unpaid tax liabilities for 1994 and 1995. A fortiori, respondent did not abuse respondent's discretion in determining to sustain the lien with respect to 1994 and 1995 on the ground that the Bankruptcy Court did not discharge petitioners from those liabilities. Regardless of the standard of review, petitioners have not satisfied that standard. In other words, resolution of the bankruptcy discharge issue does not depend on the standard of review. I therefore see no harm in the majority opinion's not explicitly stating the standard of review.

I now return to Judge Vasquez's statement that "Whether petitioners' taxes have been discharged in bankruptcy appears to be a challenge to the existence or amount of their underlying tax liability under section 6330(c)(2)(B)." While that is not an unreasonable position, I believe the better view is that the bankruptcy discharge issue in the case at hand does not relate to the existence or amount of the underlying tax liability. That is because the so-called discharge in bankruptcy does not discharge a tax debt; it discharges the individual debtor from the tax debt. As pertinent here, 11 U.S.C. section 523(a)(1)(B) provides that a discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of title 11 does not "discharge an individual debtor from any debt" for a tax with respect to which a return was filed late and within the two-year period immediately preceding the date of the filing of the bankruptcy petition. In my view, a discharge in bankruptcy of a tax debt does not vitiate the existence or the amount of that debt. Rather, the discharge discharges the individual debtor from paying the tax debt that exists.

The question might be asked, if the Bankruptcy Court should have expressly determined that a taxpayer was discharged from a tax debt, whether we would be at liberty to reach a different result, and vice versa. Judge Vasquez answered that question for the Court in Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 340 (2000). In Katz, the Court held, because the Bankruptcy Court had considered and rejected the taxpayer's claim that he was discharged from a tax liability for the year in question, we would not address that question. That was the correct result under the rule of res judicata or claim preclusion. Similarly, if the Tax Court were to hold that a taxpayer was or was not discharged from a particular tax debt, the Bankruptcy Court would be bound by our holding. See Erspan v. Badgett, 647 F.2d 550, 556 (5th Cir. 1981). In this connection, Rule 4007(a) of the Federal Rules of Bankruptcy Procedure provides that either a debtor or a creditor may file a complaint in the Bankruptcy Court to obtain a determination whether a debtor was discharged from a particular debt. However, the Bankruptcy Court's jurisdiction to resolve the dischargeability issue involving most debts, including tax debts, is not exclusive,³ but is concurrent with other courts.⁴

There may be concern whether, as a matter of comity and discretion, we should refrain from deciding the discharge issue and instead remit petitioners to the Bankruptcy Court, which has expertise and authority to construe and apply its own order of discharge. Of course, this Court has decided myriad cases in which, in order to resolve the tax issues, we decided issues of law, both Federal and State, outside our primary expertise. We have not hesitated to do so before, and we properly do so in the case at hand.

It should be noted that if we declined to resolve the bankruptcy dischargeability issue, we could not force petitioners to return to the Bankruptcy Court to have that court resolve that question. What would we do if petitioners should refuse to go to the Bankruptcy Court and insist that we decide the bankruptcy dischargeability issue? We would have an obligation and a responsibility to enter a decision sustaining or rejecting in whole or in part the collection action set forth in the notice of determination. We would not be fulfilling that obligation and that responsibility if we were to request the taxpayer to ask the Bankruptcy Court to resolve a question over which we have concurrent jurisdiction.

Our request to that effect would be inconsistent with the goals of judicial and party economy embodied in the slogan "onestop shopping". If we have jurisdiction to resolve the bankruptcy dischargeability issue, we should not ask the taxpayer who raises that issue at an Appeals Office hearing and in this Court to go to another court to resolve that issue and then return to this Court so we can decide, at the end of what will by then have become a very long figurative day, whether respondent may proceed with the collection action as determined in the notice of determination.

Even if the taxpayer were willing to go back to the Bankruptcy Court, it would be a waste of time and money to try to force or allow them to do so. The money would consist not only of additional legal fees but also of additional interest accruing while the liability remains unpaid. And if the taxpayers are willing, for purposes of delay, to take these extra steps and to incur the additional costs, the IRS should not be impeded further in the collection of tax debts that are due and owing if they have not been discharged in bankruptcy.

Having decided we have jurisdiction, there is only one question we must address in the lien proceeding at hand in order to decide whether to sustain or reject in whole or in part the collection action in respondent's notice of determination. That one question is whether petitioners were discharged under 11 U.S.C. section 523(a)(1)(B)(ii) from their unpaid tax liabilities for the taxable years 1994 and 1995. This Court, not the Bankruptcy Court, should resolve that question in the lien proceeding at hand, and the Court has properly done so.

A final note: The bankruptcy discharge issue in the case at hand is a slam dunk for respondent. Petitioners' argument on the merits of this issue borders on being frivolous. The majority opinion properly shows no hesitation in deciding the issue. Nothing the Court does today will prevent us from revisiting, in subsequent collection cases in which other bankruptcy discharge issues are raised, whether, as a matter of comity and discretion, we should defer to the Bankruptcy Court's expertise and authority to construe and apply its own order of discharge.

GERBER, J., agrees with this concurring opinion.

VASQUEZ, J., concurring: I concur with the majority that we have jurisdiction to review respondent's determination in this case. I write separately, however, because the majority opinion fails to address what standard of review we should apply.

Section 6330(c)(3) provides that the Commissioner's determination shall take into consideration: The verification presented under section 6330(c)(1), the issues raised under section 6330(c)(2), and whether the proposed collection action balances the need for efficient collection with the collection action's being no more intrusive than necessary. Section 6330(c)(2) provides that at the section 6330 hearing a taxpayer may raise any relevant issue relating to the unpaid tax or proposed levy including appropriate spousal defenses, challenges to the appropriateness of the collection actions, and offers of collection alternatives. Sec. 6330(c)(2)(A). In appropriate circumstances, a taxpayer may also raise challenges to the existence or amount of the underlying tax liability. Sec. 6330(c)(2)(B).

Although the majority interprets petitioners' bankruptcy discharge argument as a challenge to the appropriateness of collection action under section 6330(c)(2)(A)(ii), majority op. p. 12 note 9, it is unclear to me how a challenge to the appropriateness of the collection action includes whether the bankruptcy court discharged the tax liability. A challenge to the appropriateness of the collection action appears to me to be more about the type and/or method of collection action chosen by the IRS.

Whether petitioners' taxes have been discharged in bankruptcy appears to be a challenge to the existence or amount of their underlying tax liability under section 6330(c)(2)(B). By claiming that the bankruptcy court discharged their tax liabilities, petitioners are claiming either that (1) as a result of the discharge their tax liability no longer exists or (2) regardless of the continuing existence of the debt, as a result of the discharge the amount of tax they are liable for is zero.

Whether a taxpayer is challenging the existence or amount of the underlying tax liability is relevant because it determines the standard of review we apply. If the validity of the underlying tax liability is properly at issue, the Court reviews the matter on a de novo basis; however, if the validity of the underlying tax liability is not properly at issue, the Court reviews the Commissioner's administrative determination for an abuse of discretion. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181-182 (2000). We adopted these standards of review based on the legislative history of section 6330:

Where the validity of the tax liability was properly at issue in the hearing, and where the determination with regard to the tax liability is part of the appeal, no levy may take place during the pendency of the appeal. The amount of the tax liability will in such cases be reviewed by the appropriate court on a de novo basis. Where the validity of the tax liability is not properly part of the appeal, the taxpayer may challenge the determination of the appeals officer for abuse of discretion. ***

H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 747, 1020; Sego v. Commissioner, supra at 609-610; Goza v. Commissioner, supra at 181. I see no reason to depart from our established case law.

The majority opinion does not explicitly state what standard of review it applies. After concluding that we have jurisdiction to determine whether the bankruptcy court discharged petitioners from their unpaid tax liabilities, the majority opinion analyzes the discharge order of the bankruptcy court, the bankruptcy code, and existing precedent and concludes that the bankruptcy court did not discharge petitioners from their unpaid tax liabilities. Majority op. pp. 12-15. This analysis appears to be a review of respondent's determination on a de novo basis. If we are not reviewing the existence or amount of the underlying tax liability a de novo review would be inappropriate.¹ Sego v. Commissioner, supra at 610; Goza v. Commissioner, supra at 181-182.

The resolution of this case may not depend on what standard of review we apply; even so, we should apply the correct standard of review in this and future cases.²

LARO, J., agrees with this concurring opinion.

¹ All section references are to the Internal Revenue Code in effect at all relevant times. All Rule references are to the Tax Court Rules of Practice and Procedure.

² Petitioners' 1995 return was due on Apr. 15, 1996. The record does not establish when petitioners' 1994 return was due. However, the maximum extension of time that respondent could have granted for the filing of petitioners' 1994 return was 6 months. Sec. 6081(a).

³ In a notice dated June 8, 1998 (June 8, 1998 notice) relating to petitioners' taxable year 1997, respondent informed petitioners that respondent had applied petitioners' 1997 overpayment to "OTHER FEDERAL TAXES" and that petitioners were not entitled to any refund for their taxable year 1997. Only the first page of the June 8, 1998 notice is part of the instant record. The portion of that notice which showed, inter alia, the "OTHER FEDERAL TAXES" to which respondent applied petitioners' 1997 overpayment is not part of the record in this case. However, the parties stipulated that respondent applied the 1997 overpayment as a credit against petitioners' unpaid 1990 liability.

⁴ The parties stipulated that petitioners filed their bankruptcy petition on May 8, 1998. That stipulation is clearly contrary to the date of May 18, 1998, that the U.S. Bankruptcy Court for the Southern District of New York stamped on that petition, and we shall disregard that stipulation. See Cal-Maine Foods, Inc. v. Commissioner [Dec. 45,918], 93 T.C. 181, 195 (1989). The record establishes, and we have found, that petitioners filed their bankruptcy petition on May 18, 1998.

⁵ The only other creditor listed in petitioners' bankruptcy Schedule E was the New York State Department of Taxation and Finance with respect to a claim totaling $7,000 relating to petitioners' "TAXES FOR 1991, 1992, 1993, 1994, 1995 & 1996."

⁶ Respondent did not apply petitioners' 1997 overpayment as a credit against the total tax reported in petitioners' 1998 return. That is because, as we found above, respondent had previously applied that overpayment as a credit against petitioners' unpaid 1990 liability.

⁷ Shortly after having received the parties' respective trial memoranda in this case, the Court advised the parties during a telephonic conference, inter alia, that an issue exists as to whether the Court has jurisdiction to resolve the dispute that they discussed in such memoranda over whether the U.S. Bankruptcy Court for the Southern District of New York discharged petitioners from their respective unpaid liabilities for their taxable years 1994 and 1995. At the beginning of the trial in this case, the Court reminded the parties about that jurisdictional issue. After that trial, the Court directed the parties to address in the posttrial briefs the jurisdictional issue that the Court had raised.

⁸ The instant case deals with a lien, which is subject to sec. 6320. Sec. 6320(c) provides that "subsections (c), (d) (other than paragraph (2)(B) thereof), and (e) of section 6330 [relating to proposed levies] shall apply."

⁹ Sec. 6330(c)(2) allowed petitioners to raise at their Appeals Office hearing any relevant issue with respect to their respective unpaid liabilities for their taxable years 1994, 1995, and 1998, including "(ii) challenges to the appropriateness of collection actions". Sec. 6330(c)(2)(A). Respondent does not dispute that petitioners' claim at their Appeals Office hearing that the U.S. Bankruptcy Court for the Southern District of New York discharged them from their respective unpaid liabilities for their taxable years 1994 and 1995, which are the subject of a lien, raised a relevant issue that challenges the appropriateness of such lien.

¹⁰ Instead, for the first time on brief, petitioners contend that respondent violated the automatic stay imposed by 11 U.S.C. sec. 362(a) (2000) when respondent applied petitioners' 1997 overpayment as a credit against their unpaid 1990 liability. We shall not consider that contention. The record does not establish that petitioners raised that contention at their Appeals Office hearing, see Magana v. Commissioner [Dec. 54,765], 118 T.C. 488, 493-494 (2002); Miller v. Commissioner [Dec. 54,164], 115 T.C. 582, 589 n.2 (2000); see also sec. 301.6320-1(f)(2), Q&A-F5, Proced. & Admin. Regs., or at trial, see Elrod v. Commissioner [Dec. 43,486], 87 T.C. 1046, 1070 (1986); Robertson v. Commissioner [Dec. 30,666], 55 T.C. 862, 865 (1971). In any event, we note that, as pertinent here, the automatic stay imposed by 11 U.S.C. sec. 362(a) was effective on May 18, 1998, the date on which petitioners filed their bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York. See 11 U.S.C. sec. 362(a). In April 1998, petitioners filed their 1997 return which showed petitioners' 1997 overpayment. The notice informing petitioners that respondent had applied petitioners' 1997 overpayment as a credit against another tax liability of petitioners was dated June 8, 1998. We find that the record does not establish that respondent applied petitioners' 1997 overpayment as a credit against petitioners' unpaid 1990 liability on or after May 18, 1998, the date on which petitioners filed their bankruptcy petition.

¹¹ In support of their contention that they raised at their Appeals Office hearing respondent's failure to abate interest under sec. 6404, petitioners rely on a document that they attached to their answering brief and that is not part of the instant record. The Court has disregarded that document. See Rule 143(b).

¹² Assuming arguendo (1) that the record before us had established that petitioners raised at their Appeals Office hearing respondent's failure to abate interest under sec. 6404 with respect to their taxable years 1994, 1995, and 1998 and (2) that we concluded that we have jurisdiction under sec. 6404 to consider petitioners' request that we review such failure, see Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 340-341 (2000), on the instant record, we find that petitioners have not shown that respondent abused respondent's discretion in failing to abate interest under sec. 6404 for any of their taxable years 1994, 1995, and 1998. See sec. 6404(h). In fact, we find on that record that petitioners have failed to establish any error or delay attributable to an officer or employee of respondent being erroneous or dilatory in performing (1) a ministerial act within the meaning of sec. 6404(e) requiring an abatement of interest with respect to their taxable years 1994 and 1995 and (2) a ministerial or managerial act within the meaning of sec. 6404(e) requiring an abatement of interest with respect to their taxable year 1998. See Katz v. Commissioner, supra at 341. In this connection, at trial petitioner Howard Washington (Mr. Washington) testified about several alleged acts of certain employees of the Internal Revenue Service, which petitioners contend require abatement of interest under sec. 6404. We find that none of the alleged acts about which Mr. Washington testified qualifies as a ministerial act or a managerial act within the meaning of sec. 6404(e). See sec. 301.6404-2(b)(1) and (2), Proced. & Admin. Regs.

¹³ The record does not disclose the nature of the penalties for which respondent contends petitioners are liable.

¹⁴ In support of their contention that they raised at their Appeals Office hearing respondent's failure to abate penalties under sec. 6404, petitioners rely on a document that they attached to their answering brief and that is not part of the instant record. The Court has disregarded that document. See Rule 143(b).

¹⁵ Assuming arguendo that the record before us had established that petitioners raised at their Appeals Office hearing respondent's failure to abate any penalties under sec. 6404 with respect to their taxable years 1994, 1995, and 1998, we hold that the Court does not have jurisdiction to review petitioners' request that we review any such failure. See sec. 6404(h); see also Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 21 n.4 (1999).

¹ As put by the Court of Appeals for the Second Circuit in the context of reviewing a discretionary action taken by the District Court for the Southern District of New York: "It is not inconsistent with the discretion standard for an appellate court to decline to honor a purported exercise of discretion which was infected by an error of law." Abrams v. Interco, Inc., 719 F.2d 23, 28 (2d Cir. 1983).

¹ 28 U.S.C. sec. 1334(a) and (b) provides as follows:

(a) Except as provided in subsection (b) of this section, the district courts shall have original and exclusive jurisdiction of all cases under title 11.

(b) Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.

² See text infra at notes 3 and 4 and authorities cited for the proposition that other courts have concurrent jurisdiction with the district courts sitting in bankruptcy (and bankruptcy courts under 28 U.S.C. sec. 157(a)) over all but certain specified bankruptcy discharge issues.

³ Bankruptcy Courts have exclusive jurisdiction only with respect to debts enumerated in 11 U.S.C. sec. 523(a)(2), (4), (6), and (15). See 11 U.S.C. sec. 523(c).

⁴ See, e.g., In re Zitzman, 46 F. Supp. 314, 315 (E.D.N.Y. 1942); In re Crawford, 183 Bankr. 103, 105 (Bankr. W.D. Va. 1995); In re Galbreath, 83 Bankr. 549, 551 (Bankr. S.D. Ill. 1988); Fed. R. Bankr. Proced. 4007 Advisory Committee's Note (1983) ("Jurisdiction over this issue on these debts is held concurrently by the Bankruptcy Court and any appropriate nonbankruptcy forum."); 4 Collier on Bankruptcy, par. 523.03, at 523-17 (15th ed. rev. 1996). Jurisdiction to determine bankruptcy dischargeability issues may be exercised by the Bankruptcy Court as well as other courts with respect to all debts enumerated in 11 U.S.C. sec. 523(a), including 11 U.S.C. sec. 523(a)(1) relating to tax debts, except 11 U.S.C. sec. 523(a)(2), (4), (6), and (15).

¹ It is my opinion, however, that we should be applying a de novo standard of review in this case because I believe petitioners are challenging the existence or amount of the underlying tax liability.

² Furthermore, applying a de novo standard of review where the validity of the underlying tax liability is not in issue raises questions about our holdings Sego v. Commissioner [Dec. 53,938], 114 T.C. 604 (2000), and Goza v. Commissioner [Dec. 53,803], 114 T.C. 176 (2000).

[2003-1 USTC ¶50,288] Perry Tschida, Appellant v. Commissioner of Internal Revenue, Appellee.

U.S. Court of Appeals, 8th District; 02-3861, 57 FedAppx 715, March 10, 2003 .

Affirming, per curiam, an unreported Tax Court decision.

[ Code Secs. 6330 and 7442]

Notice of levy and right to hearing: Judicial review: Tax Court jurisdiction. --

The Tax Court properly dismissed an individual's petition for lack of jurisdiction. The Tax Court had no jurisdiction over the taxpayer's untimely filing, and could consider its jurisdiction on its own motion.

Before: McMillian, Melloy and Smith, Circuit Judges.

PER CURIAM: Perry Tschida appeals the tax court's ¹ dismissal of his amended petition for a lien or levy action under I.R.C. §6320(c) or §6330(d). Our de novo review persuades us that Tschida's petition was untimely filed. See I.R.C. §§6330(d)(1), 7502; Bueford v. Resolution Trust Corp., 991 F.2d 481, 484 (8th Cir. 1993) (standard of review). Because the untimely filing deprived the tax court of jurisdiction, and because the court may consider its jurisdiction on its own motion, we conclude that the tax court properly dismissed the petition. See Commissioner v. McCoy [ 87-2 USTC ¶13,736], 484 U.S. 3, 7 (1987) ( per curiam); Bueford, 991 F.2d at 485; Raymond v. Commissioner [ CCH Dec. 54,915], No 2354-01L, 2002 U.S. Tax Ct. LEXIS 48 at *5 & n.3 (T. C. Oct. 22, 2002).

Accordingly, we affirm.

¹ The Honorable Thomas B. Wells, Chief Judge of the United States Tax Court.

[2003-1 USTC ¶50,294] Stephen Lindsey, et al., Petitioners-Appellants v. Commissioner of Internal Revenue, Respondent-Appellee.

U.S. Court of Appeals, 9th Circuit; 02-72161, 56 FedAppx 802, February 14, 2003 .

Unpublished opinion affirming a Tax Court decision, Dec. 54,703(M), 83 TCM 1440, TC Memo. 2002-87.

[ Code Secs. 6203 and 6330]

Collection Due Process: Verification requirements: Transcripts of account: Forms 4340. --

The IRS settlement officer who conducted married taxpayers' Collection Due Process hearing properly verified the validity of tax assessments made against them. The officer obtained and reviewed Integrated Data Retrieval System transcripts of account for the taxpayers for the years at issue, and those transcripts, together with Forms 4340 (Certificate of Assessments, Payments, and Other Specified Matters) contained all of the information necessary to verify that the applicable statutory and administrative procedure requirements were satisfied.

[ Code Sec. 6330]

Collection Due Process: Tax Court jurisdiction: Tax liabilities originating from unpaid taxes: Issues in dispute. --

The Tax Court properly exercised jurisdiction over married taxpayers' challenge to the validity of an adverse Collection Due Process determination. The court has jurisdiction over tax liabilities that originate from unpaid income taxes, regardless of whether the underlying tax liability is being disputed.

[ Tax Court Rule 121]

Collection Due Process: Tax Court Rules: Summary judgment: Consideration of supplemental documents. --

In a suit in which married taxpayers challenged the validity of an adverse Collection Due Process (CDP) determination, the Tax Court properly allowed the IRS to supplement its motion for summary judgment with additional forms that had not been presented at the CDP hearing.

Before: Leavy, Fernandez and Berzon, Circuit Judges. ^*

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

MEMORANDUM ^**

Taxpayers Stephen and Patricia Lindsey appeal pro se the United States Tax Court's grant of summary judgment in favor of the Commissioner of Internal Revenue ("Commissioner"), contesting the Commissioner's determination of tax deficiencies for tax years 1989-1993. We have jurisdiction pursuant to 26 U.S.C. §7482. We review de novo the grant of summary judgment, Talley Indus. Inc. v. Comm'r [ 97-1 USTC ¶50,486], 116 F.3d 382, 385 (9th Cir. 1997), and we affirm.

The tax court properly granted summary judgment because Form 4340 submitted by the Commissioner is an official document which establishes that tax assessments were made and petitioners have failed to present contrary evidence. See Hughes v. United States [ 92-1 USTC ¶50,086], 953 F.2d 531, 535-36 (9th Cir. 1992).

Contrary to petitioners' contention, the tax court properly exercised jurisdiction over petitioners' case because it has jurisdiction over tax liabilities that originate from unpaid income taxes, regardless of whether the underlying tax liability is in dispute. See 26 U.S.C. §6330.

Finally, we find unpersuasive petitioners' contention that the tax court erred by permitting the Commissioner to supplement his motion for summary judgment with additional forms not supplied during the collection due process hearing. See Connick v. Teachers Ins. & Annuity Ass'n, 784 F.2d 1018, 1020 (9th Cir. 1986) (holding that a court shall consider supplemental documents on a motion for summary judgment).

AFFIRMED.

^* This panel unanimously finds this case suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

^** This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

[Dec. 54,704(M)] Wayne A. and Marykay Weishan v. Commissioner

Docket No. 10025-01L, TC Memo. 2002-88, 83 TCM 1443, Filed April 4, 2002

[Appealable, barring stipulation to the contrary, to CA-4]

[Code Sec. 6330 ; Tax Court Rule 121 ]

Summary judgment: Collection due process: Untimely petition.--The IRS was entitled to summary judgment with respect to married taxpayers' Tax Court petition. The taxpayers had received a notice of deficiency for the tax year in issue but had failed to file a timely petition for redetermination. Thus, Code Sec. 6330 barred them from challenging their notice of deficiency and their underlying tax liability.

[Code Sec. 6330 ]

Collection due process hearing: Hearing procedures.--Married taxpayers' contention that the IRS Appeals officer failed to verify that all applicable laws and procedures were followed in their collection due process (CDP) hearing was rejected. A letter sent to the taxpayers served as notice and demand for payment within the meaning of Code Sec. 6303 . Furthermore, the taxpayers' unsuccessfully contended that the Appeals officer's reliance on a transcript of account was insufficient to satisfy verification requirements. They demonstrated no irregularity in the assessment procedure that would raise a question about the validity of the assessment or the information contained in the transcript of account.

[Code Sec. 6673 ]

Penalties, civil: Delay penalty: Penalty not imposed.--The delay penalty was not imposed upon married taxpayers who were barred from challenging their notice of deficiency and their underlaying tax liability by Code Sec. 6330 . However, they were admonished not to return with similar arguments in the future.

Wayne A. and Marykay Weishan, pro sese. Karen Lynne Baker, Alan C. Levine, and Wendy S. Harris, for the respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This matter is before the Court on respondent's motion to dismiss for failure to state a claim upon which relief may be granted and to impose a penalty under section 6673. ¹ Because respondent has presented matters outside of the pleadings, we treat respondent's motion to dismiss as a motion for summary judgment pursuant to Rule 121. See Rule 40.

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689 ], 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b); Sundstrand Corp. v. Commissioner [Dec. 48,191 ], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner [Dec. 44,714 ], 90 T.C. 753, 754 (1988); Naftel v. Commissioner [Dec. 42,414 ], 85 T.C. 527, 529 (1985). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences will be read in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner [Dec. 42,486 ], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278 ], 79 T.C. 340, 344 (1982).

We are satisfied that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. As explained in detail below, we shall grant respondent's motion for summary judgment, although we shall deny respondent's request for the imposition of a penalty under section 6673(a).

Background

On June 18, 1999 , respondent issued a notice of deficiency to petitioners determining a deficiency of $9,817 in their Federal income tax for 1997 and an accuracy-related penalty in the amount of $496.40. On July 26, 1999 , petitioners wrote a letter to respondent that stated in pertinent part: "Before I file, pay, or take action with respect to your 'Notice' I must first establish whether or not it was sent pursuant to law, whether or not it has the 'force and effect of law', and whether you have any authority to send me such 'Notice' in the first place." Petitioners did not file a petition for redetermination with the Court challenging the notice of deficiency.

On December 27, 1999 , respondent mailed a letter to petitioners informing them that their account for 1997 had been changed to reflect assessments for the adjustments set forth in the above-described notice of deficiency and the imposition of statutory interest of $425.92, reduced by a credit for withholding taxes of $7,335.18, leaving a balance due of $3,404.94. The letter included a request that petitioners pay the amount due by January 17, 2000 . On January 9, 2000 , petitioners wrote a letter to respondent challenging respondent's December 27, 1999 , letter as a "bootleg, fraudulent document".

On July 22, 2000 , respondent mailed to petitioners a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. The notice stated that petitioners owed taxes and statutory additions totaling $3,738.23 for 1997, and that respondent was preparing to collect the amount due by levy.

Petitioners filed with respondent a Request for a Collection Due Process Hearing that included allegations that respondent was barred from proceeding with collection because petitioners were not served with a valid notice of deficiency or notice and demand for payment. Petitioners also challenged the validity of the underlying assessment and requested that respondent provide them with a copy of a summary record of assessment.

On May 9, 2001 , the Appeals Office issued a letter to petitioners informing them that their administrative hearing was scheduled for June 11, 2001 . Along with the letter, the Appeals Office provided petitioners with a transcript of their account for 1997 that showed that a credit was posted to petitioners' account for withheld taxes of $7,335.18 on April 15, 1998 . The transcript of account also showed that petitioners filed their 1997 tax return reporting a tax liability of zero on September 7, 1998 , and three assessments were entered against petitioners for tax, penalties, and interest of $9,817.80, $496.40, and $425.92, respectively, on December 27, 1999 .

Petitioners attended the Appeals Office hearing conducted on June 11, 2001 . During the hearing, petitioners challenged the validity of the notice of deficiency dated June 18, 1999 , asserted that they did not receive a notice and demand for payment under section 6303(a), and argued that the transcript of account (described above) was insufficient to satisfy the verification requirement imposed upon the Appeals Office under section 6330(c)(1). On July 12, 2001 , respondent issued to petitioners a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 stating that respondent would proceed with collection.

On August 10, 2001 , petitioners filed with the Court a petition for review of respondent's notice of determination. The petition included the same allegations and arguments that petitioners raised at the Appeals Office hearing. In response to the petition, respondent filed a motion to dismiss for failure to state a claim upon which relief may be granted and to impose a penalty under section 6673. Respondent contends that, because the record shows that petitioners received the notice of deficiency dated June 18, 1999 , petitioners are barred under section 6330(c)(2)(B) from challenging the notice of deficiency and/or their underlying tax liability in this proceeding. Respondent further asserts that respondent's letter to petitioners dated December 27, 1999 , served as a notice and demand for payment under section 6303(a), and that the transcript of account provided to petitioners in advance of the Appeals Office hearing satisfied the verification requirement imposed under section 6330(c)(1).

This matter was called for hearing at the Court's motions session held in Washington , D.C. Counsel for respondent appeared at the hearing and presented argument in support of respondent's motion. Although no appearance was made by or on behalf of petitioners at the hearing, petitioners did file with the Court a written statement pursuant to Rule 50(c).

Discussion

Section 6330 generally provides that the Commissioner cannot proceed with the collection of taxes by way of a levy on a person's property until the person has been given notice of and the opportunity for an administrative review of the matter. Under section 6330(d), judicial review of the administrative determination may be obtained in either the Tax Court or Federal District Court .

In Goza v. Commissioner [Dec. 53,803 ], 114 T.C. 176 (2000), we explained that section 6330 provides for administrative and judicial review with respect to collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. Section 6330(c)(2)(B) provides that neither the existence nor the amount of the underlying tax liability can be contested at an Appeals Office hearing unless the taxpayer did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax liability. The taxpayer in Goza had received a notice of deficiency, yet failed to file a petition for redetermination with the Court. When the taxpayer subsequently attempted to use the Court's collection review procedure as a forum to assert frivolous and groundless constitutional arguments against the Federal income tax, the Court dismissed the petition for failure to state a claim upon which relief can be granted.

As was the case in Goza v. Commissioner, supra, petitioners received a notice of deficiency for the year in issue and failed to file a timely petition for redetermination with the Court. It follows that section 6330(c)(2)(B) bars petitioners from challenging the existence or amount of their underlying tax liability in this collection review proceeding. Even if petitioners were permitted to challenge their underlying tax liability, their argument that respondent cannot assess an amount in excess of that reported in their tax return is frivolous and groundless.

We likewise reject petitioners' assertion that the Appeals officer failed to verify that all applicable laws and procedures were complied with as required under section 6330(c)(1). First, the record shows that the letter that respondent issued to petitioners dated December 27, 1999 , served as a notice and demand for payment. In particular, the letter informed petitioners that changes had been made to their account for 1997 and requested that they pay the amount due by January 17, 2000 . The issuance of this letter corresponded with the date of assessment of tax, penalties, and interest as reflected in the transcript of account that respondent provided to petitioners before the Appeals Office hearing. We hold that the letter constituted a notice and demand for payment within the meaning of section 6303(a). See, e.g., Hughes v. United States [92-1 USTC ¶50,086], 953 F.2d 531, 536 (9th Cir. 1992).

We also reject petitioners' assertion that the Appeals officer's reliance on a transcript of account was insufficient verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required under section 6330(c)(1). Petitioners assert that they are entitled to a copy of a record of assessment.

Federal tax assessments are formally recorded on a summary record of assessment. Sec. 6203. The summary record of assessment must "provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment." Sec. 301.6203-1, Proced. & Admin. Regs.

Section 6330(c)(1) does not require the Commissioner to rely upon a particular document (i.e., the summary record itself rather than a transcript of account) to satisfy the verification requirement imposed therein. Kuglin v. Commissioner [Dec. 54,661(M) ], T.C. Memo. 2002-51. In this regard, we note that the transcript of account that the Appeals officer relied upon in this case contained all the information prescribed in section 301.6203-1, Proced. & Admin. Regs. Id.

Petitioners have not demonstrated any irregularity in the assessment procedure that would raise a question about the validity of the assessments or the information contained in the transcript of account. See Mann v. Commissioner [Dec. 54,658(M) ], T.C. Memo. 2002-48. Accordingly, we hold that the Appeals officer satisfied the verification requirement imposed under section 6330(c)(1).

Petitioners have failed to raise a spousal defense, make a valid challenge to the appropriateness of respondent's intended collection action, or offer alternative means of collection. These issues are now deemed conceded. Rule 331(b)(4). In the absence of a valid issue for review, and there being no dispute as to a material fact, it follows that respondent is entitled to judgment as a matter of law sustaining the notice of determination dated July 12, 2001 .

Section 6673(a)(1) authorizes the Tax Court to require a taxpayer to pay to the United States a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. The Court has indicated its willingness to impose such penalties in collection review cases. Pierson v. Commissioner [Dec. 54,152 ], 115 T.C. 576 (2000). Although we shall not impose a penalty upon petitioners pursuant to section 6673(a)(1), we admonish petitioners that the Court will consider imposing such a penalty should they return to the Court and advance similar arguments in the future.

To reflect the foregoing,

An order and decision will be entered granting respondent's motion for summary judgment and denying respondent's request for the imposition of a penalty pursuant to section 6673(a).

¹ Section references are to sections of the Internal Revenue Code, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure.