2. Court lacks jurisdiction over Plaintiff's claims for compensatory relief

Plaintiff seeks reimbursement from the Government for his costs in bringing this action. Presumably, Plaintiff relies on the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §1346(b)(1), to bring this claim. The FTCA permits civil actions against the United States for money "for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." However, this provision is limited by 28 U.S.C. §2680, which states that §1346(b) "shall not apply to . . . (c) Any claim arising in respect of the assessment or collection of any tax." See also Carlyle v. United States Dep't of the Army, 674 F.2d 554, 556 (6th Cir. 1982) (finding that §2680 limits the jurisdiction of federal courts and prohibits pleading matters that clearly fall within its exceptions). Since Plaintiff's claim relates to possible assessment and collection of taxes, it falls within the exceptions of §2680 and this Court does not have jurisdiction to hear it.

B. IRS Did Not Abuse Its Discretion

1. Standard of Review

In reviewing the Notice of Determination the Court applies an abuse of discretion standard. The standard of review is dependent on whether the merits of the underlying tax liability were properly at issue in the CDP Hearing. Where the underlying tax liability is at issue, the Court reviews the Commissioner's determination de novo, otherwise the Court reviews for abuse of discretion. MRCA Info. v. United States [2000-2 USTC ¶50,683 ], 145 F.Supp.2d 194, 199 (D. Conn. 2000) ("In the instant case, the validity of the underlying tax liability is not at issue. Accordingly, the court concludes that an abuse of discretion standard of review is appropriate when a district court reviews a determination of an IRS appeals officer's determination pursuant to 26 U.S.C. §6330."); Geller v. United States [2001-2 USTC ¶50,703 ], 2001 WL 1346669, *2 (S.D. Ohio Sept. 26, 2001); Goza v. Commissioner [CCH Dec. 53,803 ], 114 T.C. 176, 181-182 (2000). Although Plaintiff could have addressed the merits of the underlying tax liability at the CDP Hearing, he did not. ³ Therefore, the Court reviews the Appeals Officer's determination for an abuse of discretion. Because Plaintiff did not raise the issue of his underlying tax liability at the CDP Hearing, he cannot raise that issue on appeal. 26 C.F.R. §301.6330-1(f).

2. Adequacy of Procedure Followed by IRS

Plaintiff challenges the form of the notice before levy which he received as not adhering to statutory requirements. 26 U.S.C. §6330 requires notice by the Secretary of a person's right to a hearing before a levy on any property is made. The notice must contain, in simple and nontechnical terms, the amount of the unpaid tax, the right of the person to request a hearing within thirty days, the proposed action by the Secretary, and the rights of the person with respect to such action. 26 U.S.C. §6330(a)(3). More than one court has held that the form of the notice does not matter as long as the required contents are contained within the notice. Hoffman v. United States [2002-2 USTC ¶50,499 ], 209 F.Supp.2d 1089, 1094 (W.D. Wash. 2000 [2002]) (citing Hughes v. United States [92-1 USTC ¶50,086 ], 953 F.2d 531, 536 (9th Cir. 1992); Kelly v. United States [2002-2 USTC ¶50,615 ], 209 F.Supp.2d 981, 991 (E.D. Mo. 2002) (citing United States v. Roccio, 981 F.2d 587, 591 (1st Cir. 1992); Carroll v. United States [2002-2 USTC ¶50,500 ], 2002 WL 1962944 (W.D. Tenn. May 29, 2002 ). It appears from the submitted documents that Plaintiff's notice was adequate and contained all of the requisite information.

Plaintiff also complains that the notice was not signed by the Secretary, but by the Chief of the Automated Collection Branch. Section 6330 requires notification by the Secretary, which in this case means the Secretary or his delegate. 26 U.S.C. §7701(a)(11)(B). An employee of the IRS is an appropriate delegate of the Secretary with the authority to sign a notice to levy. Id. at (12)(A)(i). Plaintiff's Notice of Levy was signed by the Chief of the Automation Branch, an IRS employee, which satisfies the requirements of §6330(a)(1). Nestor v. Comm'r of Internal Revenue [CCH Dec. 54,655 ], 118 T.C. 162, 165 (2002).

Plaintiff complains that the CDP Hearing was not conducted in accordance with §6330(c) because he raised relevant issues that the Appeals Officer ignored. According to §6330(c), Plaintiff may raise "any relevant issue relating to the unpaid tax or the proposed levy." Section 6330 lists "appropriate spousal defenses; challenges to the appropriateness of collections actions; and offers of collection alternatives" as relevant issues to raise at the CDP Hearing. As mentioned above, the existence or amount of the underlying tax liability may be addressed if the person did not receive a notice of deficiency or otherwise have an opportunity to dispute the tax liability previously. Plaintiff did not raise any of these issues. Rather, the only issues Plaintiff raised were those considered outside the scope of a CDP Hearing, such as the statutory authority establishing Plaintiff's liability for taxes, the Appeals Offficer's access to verification that all applicable statutory and regulatory requirements had been met and verification that she had the authority to hold the hearing and impose the penalty. These questions were frivolous and irrelevant to imposition of the penalty, which was the subject of the CDP Hearing. Plaintiff's tax forms were frivolous under the statute and therefore subject to a penalty. Nelson v. United States [86-2 USTC ¶9545 ], 796 F.2d 164, 167 (6th Cir. 1986) (stating that person of ordinary common sense could understand what is prohibited by §6702); Heitman v. United States [85-1 USTC ¶9174 ], 753 F.2d 33, 34 (6th Cir. 1984) (finding that failure to provide financial information on tax forms warranted fine for frivolous filing). Imposition of the penalty has nothing to do with whether Plaintiff has any tax liability. Plaintiff's failure to raise relevant issues at the CDP Hearing does not translate into an invalid proceeding.

With respect to Plaintiff's complaint that the Appeals Officer did not provide verification from the Secretary that the requirements of any applicable law or administrative procedure have been met pursuant to §6330(c)(1), the Court finds it is sufficient that the Appeals Officer attested to satisfaction of all applicable law and administrative procedure. 26 U.S.C. §6330(3)(A); 26 C.F.R. §301.6330-1(e)(1); Hoffman [2002-2 USTC ¶50,499 ], 209 F.Supp.2d at 1095; Kelly [2002-2 USTC ¶50,615 ], 209 F.Supp.2d at 988-89. The record shows that Plaintiff received the proper notice, was given a CDP Hearing upon his request, and was allowed to raise any relevant issues at the Hearing. Plaintiff received a Notice of Determination and was adequately informed of his right to appeal. The Court finds that the IRS complied with all requirements of §6330 and its related regulations.

The Government argues that Plaintiff's other requests for documentation are requests for legal research and beyond the scope of the Freedom of Information Act ("FOIA"). FOIA does not require agencies to provide explanations or answers in response to questions disguised as FOIA requests or to create documents or opinions in response to an individual's request for information. Hudgins v. Internal Revenue Service [85-2 USTC ¶9736 ], 620 F.Supp. 19, 21 (D. D.C. 1985). FOIA also does not require agencies to do parties' legal research. Yon v. Internal Revenue Service [87-2 USTC ¶9543 ], 671 F.Supp. 1344, 1347 (S.D. Fla. 1987). Even if the Court considered Plaintiff's requests to be discovery motions, the IRS would not be required to respond. There is no right to discovery at a CDP Hearing. Kelly [2002-2 USTC ¶50,615 ], 209 F.Supp.2d at 988-89. Additionally, the materials Plaintiff requested are either irrelevant or readily available to the public. Id. Therefore, whether considered FOIA requests or discovery requests, the IRS was not wrong in failing to provide Plaintiff with the materials he requested.

The Court finds there is no legal foundation for Plaintiff's claim that the hearing should be held invalid because the Appeals Officer failed to provide documentation authorizing imposition of a penalty. Plaintiff was sent two notices notifying him of his failure to pay his taxes, his liability for a penalty under 26 U.S.C. §6702, and the amount of that penalty, as well as his right to request a CDP Hearing. This information satisfies the requirements of 26 U.S.C. §6751(b), which requires notice of a penalty to include the name of the penalty, the source of the penalty, and the amount of the penalty. No approval of the assessment by an immediate supervisor is required because this is an automatic penalty for a fixed amount. 26 U.S.C. §§6751(b)(2)(B) and 6702. Furthermore, the notification Plaintiff received is sufficient proof of the adequacy and propriety of the assessment. "Certificates of assessments and payments are generally regarded as being sufficient proof, in the absence of evidence to the contrary, of the adequacy and propriety of notices and assessments that have been made." Gentry v. United States [92-1 USTC ¶50,225 ], 962 F.2d 555, 557 (6th Cir. 1992). The parties who signed the documents Plaintiff received were appropriate delegates of the Secretary with authority to impose the penalty pursuant to §7401 and §7701. Herip v. United States [2002-2 USTC ¶50,646 ], 2002 WL 31002855, *6 (N.D. Ohio July 25, 2002 ).

Plaintiff argues that the IRS did not comply with the requirements of §6331. However, §6331 does not apply since no collection occurred and the CDP Hearing was not about Plaintiff's failure to pay taxes. Plaintiff also claims that the Appeals Officer ignored his collection alternative. Section 6330 suggests the following as collection alternatives: posting bond; substitution of other assets; an installment agreement; or an offer in compromise. Plaintiff did not offer a valid collection alternative but rather a challenge to the Appeals Officer which she did not need to address. Plaintiff offered to write a check if the Appeals Officer could show him the regulation allowing the Officer to impose the penalty. This is not a collection alternative as that term is used in §6330. The Appeals Officer's refusal to entertain that offer was not an abuse of discretion.

C. No Abuse of Discretion by IRS Appeals Office With Respect to Determination Letter

Pursuant to §6330(c)(3), the determination by the Appeals Officer after the CDP Hearing should consider verification that all requirements of any applicable law or regulation have been met; any issues raised at the hearing; and whether "the 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." As indicated above, there was adequate verification of compliance with applicable laws and regulations in the Notice of Determination. Plaintiff did not raise any relevant issues at the CDP Hearing which the Appeals Officer had to consider. Plaintiff does not dispute that he was permitted to raise issues at the CDP Hearing. It was his choice to raise matters irrelevant to the proceeding. The Appeals Officer correctly balanced the competing interests in finding the Notice of Levy appropriate. Plaintiff received due process and adequate information. This Court finds the IRS Appeals Office did not abuse its discretion in issuing the Notice of Determination as it did.

IV. Conclusion

Therefore, the Court will grant Defendant's Motion. A judgment consistent with this opinion will be entered.

JUDGMENT

In accordance with an Opinion filed this day,

IT IS HEREBY ORDERED that Defendant United States' Motion for Summary Judgment (Dkt. No. 9) is GRANTED.

¹ The IRS acted pursuant to 26 U.S.C. §6702 which states:

a civil penalty will be imposed If--

(1) any individual files what purports to be a return of the tax imposed by subtitle A but which--

(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or

(B) contains information that on its face indicates that the selfassessment is substantially incorrect; and

(2) the conduct referred to in paragraph (1) is due to--

(A) a position which is frivolous, or

(B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws,

then such individual shall pay a penalty of $500.

² The Court notes that, while Plaintiff does not challenge the IRS's determination that his submissions for 1999 and 2000 were frivolous, the Sixth Circuit Court of Appeals has held that filings similar to Plaintiff's are frivolous. Schoffner v. C.I.R. [87-1 USTC ¶9198 ], 812 F.2d 292, 293 (6th Cir. 1987).

³ Because the IRS did not issue a Notice of Deficiency regarding the frivolous return penalties, Plaintiff was not given a separate opportunity to dispute the underlying tax liabilities. Therefore, under §6330(c)(2)(B), Plaintiff could have challenged the existence or amount of the underlying tax liability.

[2003-2 USTC ¶50,716]Naman Abu-Awad, d/b/a Stat Physical Therapy, Plaintiff v. United States of America , Defendant.

U.S. District Court, So. Dist. Texas ; Civ. H-02-2068, August 14, 2003 .

[ Code Sec. 6330]

Collection Due Process: Notice of determination: Exhaustion of administrative remedies: Judicial review: Liens and levies: Liability for penalties: Failure to appear at hearing. --

An individual who failed to timely pay employment taxes owed by his sole proprietorship unsuccessfully challenged a Collection Due Process (CDP) determination upholding an IRS tax lien and the underlying assessment of penalties. The taxpayer failed to prove that he did not receive notification letters from the IRS or that any irregularity existed in the IRS's assessment or collection procedures. Moreover, he raised no challenges to the propriety of the penalties, the lien, or the levy during the CDP process because he failed to attend the scheduled hearings. His failure to exhaust available administrative remedies barred him from obtaining judicial review. No showing was made that the Appeals officer abused his discretion or reached an erroneous conclusion regarding the propriety of the lien and proposed levy.

MEMORANDUM AND ORDER

I. Introduction

CRONE, Magistrate Judge: Pending before the court is Defendant United States of America 's (" United States ") Motion to Dismiss or for Summary Judgment (#12). The United States , on behalf of the Commissioner of the Internal Revenue Service ("IRS"), seeks summary judgment on the complaint of Plaintiff Naman Abu-Awad ("Awad"), doing business as Stat Physical Therapy ("Stat"), challenging a federal tax lien and underlying assessment of penalties by the IRS. Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that summary judgment is warranted.

II. Background

Stat is a sole proprietorship owned by Awad. During the fourth quarter of 2000 and first quarter of 2001, Stat underpaid its employment taxes. By virtue of assessments made March 12, March 19, and June 4, 2001, the IRS determined that Stat owed the United States the sum of $42,205.06 in delinquent taxes, penalties, and interest. Shortly after accruing these taxes and penalties, Stat's administrator, Catherine ("Herridge"), requested the IRS's Compliance Division to abate the penalties. By letter dated September 12, 2001, the Compliance Division denied the request for a penalty adjustment because Herridge did not provide requested documentation and repeatedly missed scheduled appointments with IRS representatives.

Upon Stat's failure to pay the taxes and penalties assessed, the IRS filed a Notice of Federal Tax Lien against Awad on November 13, 2001, and sent Awad a Notice of Federal Tax Lien Filing on November 16, 2001. This notice informed Awad of his right to request a Collection Due Process ("CDP") Hearing before the IRS Appeals Office to appeal the IRS's proposed collection action and to discuss payment method options. On December 18, 2001, Awad requested a CDP hearing via a form signed by Patricia Mead ("Mead"), a certified public accountant. Neither Mead nor Awad, however, submitted a Form 2848, Declaration of Representation, or other separate written consent to permit her to receive taxpayer information concerning Awad. See 26 U.S.C §6103(a), (c); 26 C.F.R. §301.6103(c). An attachment to the Request for a CDP Hearing outlines four general issues in connection with the lien: (1) all taxes related to the lien have been paid and a hearing to review the penalties assessed is requested; (2) there are "extenuating problems which created the penalties related to the lien;" (3) "dramatic changes" to Stat's method of making payroll tax deposits have been made; and (4) the filing of the lien would have "extremely adverse affects [sic]" on Stat's banking relationships. The attachment requests a meeting to review Stat's payment schedule and to discuss how Awad could best handle the balance due without lien filings. The attachment, however, does not explain these contentions or provide a factual basis for any of the allegations; there is no identification or description of the "extenuating problems," the "dramatic changes," or the "extremely adverse [e]ffects."

On February 12, 2002, the IRS Appeals Office accepted the case and sent a letter directly to Awad (the only address reflected on the Request for a CDP Hearing), signed by Christopher B. Darling ("Darling"), Settlement Officer. The letter notified Awad of a conference scheduled for March 6, 2002, at which time he would have an opportunity to present facts, arguments, and legal authority to support his position. Furthermore, the letter requested that Awad notify Darling which of his four listed Power of Attorney representatives would be handling the case. Awad did not respond to the letter or attend the conference on March 6, 2002. On March 13, 2002, Darling mailed Awad a second letter, noting that Awad had failed to appear on March 6 and rescheduling the conference for April 1, 2002. The letter further stated that if the time selected was inconvenient, Darling would arrange another time. The letter reminded Awad that any representative he selected would be required to submit a Form 2848 Declaration of Representative, power of attorney, or similar written authorization. Awad did not attend the second conference, nor did he submit a Form 2848 or power of attorney designating a representative to attend on his behalf.

On May 2, 2002, after verifying that the IRS Compliance Division had met all procedural and legal requirements, the IRS Appeals Office issued its "Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330," sustaining the tax lien and approving the proposed collection action. The Notice of Determination notes that the tax liability was self-assessed and was not in dispute. The notice addresses the issues raised by Awad, as follows:

1. All of the taxes have been paid and all that remains on these periods is penalties and interest and we want a conference to review these penalties.

The penalties related to these periods were reviewed and nothing seems to be out of the ordinary regarding these assessments.

2. There are extenuating circumstances which created the problems related to these penalties. We want to speak to an officer about a payment schedule without lien filings.

It appears that you and the revenue officer have discussed the penalties and a denial of abatement was issued by the Compliance Division. You were informed that your arguements [sic] did not meet `reasonable cause' and you could pursue penalty abatement through Appeals.

The case history also shows that you have been negotiating the terms of an installment agreement with the Compliance Division but have not come to terms.

3. The filing of a lien would adversely affect our relationship with our bank which could result in the business being shut down.

The lien filed November 16, 2001 was not the first lien to be filed and the business is still operating.

Unfortunately, we will not be able to address any of these issues since you did not appear for the hearings I set for March 6, 2002 at 9:00 am or April 1, 2002 at 1:00 pm .

The notice further observes that "[n]o collection alternatives were raised since no conferences took place."

On May 10, 2002 , in response to a facsimile dated May 9, 2002 , Darling wrote to Awad's current counsel, John H. Polk ("Polk"), advising him of the reasons for the Notice of Determination. In his letter, Darling states in pertinent part:

Your client never responded to repeated attempts to contact them [sic] to hold a hearing to hear their [sic] appeal. After two missed appointments, the case was closed based on the information contained in the file.

The offer in compromise filed on behalf of your client never reached my desk and I was never informed of its existence. The Due Process Appeal was completed and sent because a lien had been filed. While the filing of an offer in compromise will not affect the status of the lien, it can be considered a collection alternative. The offer in compromise will be considered independently of the CDP request.

It should be noted that your client has four (4) forms 2848, Power of Attorney, filed for the periods listed on the form 12153, Request for Collection Due Process. Three of the P.O.A. forms were received on the same day and a fourth was filed a few days earlier. Instead of guessing who was going to represent the taxpayer, I sent all communications to your client and let them [sic] choose who they [sic] wished to represent them [sic]. I will not carry on five conversations at the same time regarding the same issues. When no response came, I decided to send copies of the final letter to all listed P.O.As.

According to the affidavit of Radha Thiagarajan ("Thiagarajan"), an attorney employed by Polk, she spoke with Darling on May 14, 2002 , and requested another hearing due to the filing of an offer in compromise. Darling responded that the Request for a CDP Hearing was filed by an unregistered agent whom he could not contact and that he would not give Awad another hearing. Thiagarajan further states in her affidavit that when she spoke with Darling again on May 30, 2002 , he stated he could not revoke the IRS determination letter. In addition, Thiagarajan indicates that Darling stated that "at court, Plaintiffs could raise the issues written in their collection due process hearing request according to the Internal Revenue Service manual." On May 31, 2002 , Awad instituted this action seeking judicial review of the Notice of Determination. In his complaint, Awad requests relief in the form of a determination that the federal tax lien is improper, the removal of the federal tax lien, and an abatement of the penalties assessed.

III. Analysis

A. Summary Judgment Standard

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Colson v. Grohman, 174 F.3d 498, 506 (5th Cir. 1999); Marshall v. East Carroll Parish Hosp. Serv. Dist., 134 F.3d 319, 321 (5th Cir. 1998); Wenner v. Texas Lottery Comm'n, 123 F.3d 321, 324 (5th Cir. 1997), cert. denied, 523 U.S. 1073 (1998). "A fact is ` material ` if it ` might affect the outcome of the suit under governing law."' Bazan v. Hidalgo County, 246 F.3d 481, 489 (5th Cir. 2001) (emphasis in original) (quoting Anderson , 477 U.S. at 248); see Burgos v. Southwestern Bell Tel. Co., 20 F.3d 633, 635 (5th Cir. 1994). "An issue is ` genuine ` if it is real and substantial, as opposed to merely formal, pretended, or a sham." Bazan, 246 F.3d at 489 (emphasis in original). Thus, a genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. The moving party, however, need not negate the elements of the nonmovant's case. See Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).

Once a proper motion has been made, the nonmoving party may not rest upon mere allegations or denials in the pleadings but must present affirmative evidence, setting forth specific facts, to show the existence of a genuine issue for trial. See Celotex Corp., 477 U.S. at 322-23; Anderson, 477 U.S. at 257; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986); Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999), cert. denied, 528 U.S. 1160 (2000); Colson, 174 F.3d at 506; Marshall, 134 F.3d at 321-22; Wallace, 80 F.3d at 1047; Little, 37 F.3d at 1075. "[T]he court must review the record `taken as a whole."' Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000) (quoting Matsushita Elec. Indus. Co., 475 U.S. at 587). All the evidence must be construed "in the light most favorable to the non-moving party without weighing the evidence, assessing its probative value, or resolving any factual disputes." Williams v. Time Warner Operation, Inc., 98 F.3d 179, 181 (5th Cir. 1996) (citing Lindsey v. Prive Corp., 987 F.2d 324, 327 n.14 (5th Cir. 1993)); see Reeves, 530 U.S. at 150; Colson, 174 F.3d at 506; Marshall, 134 F.3d at 321; Messer v. Meno, 130 F.3d 130, 134 (5th Cir. 1997), cert. denied, 525 U.S. 1067 (1999); Hart v. O'Brien, 127 F.3d 424, 435 (5th Cir. 1997), cert. denied, 525 U.S. 1103 (1999). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255; Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49 n.5 (1990); see Christopher Vill. Ltd. P'ship v. Retsinas, 190 F.3d 310, 314 (5th Cir. 1999); Samuel v. Holmes, 138 F.3d 173, 176 (5th Cir. 1998); Marshall , 134 F.3d at 321. The evidence is construed "in favor of the nonmoving party, however, only when an actual controversy exists, that is, when both parties have submitted evidence of contradictory facts." Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir. 1999); accord Little, 37 F.3d at 1075 ("[w]e do not ... in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts. " (emphasis in original) (citing Lujan v. National Wildlife Fed'n, 497 U.S. 871, 888 (1990)).

Furthermore, "`only reasonable inferences can be drawn from the evidence in favor of the nonmoving party."' Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 469 n.14 (1992) (emphasis in original) (quoting H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1012 (2d Cir. 1989)). "If the [nonmoving party's] theory is ... senseless, no reasonable jury could find in its favor, and summary judgment should be granted." Id. at 468-69. The nonmovant's burden is not satisfied by "some metaphysical doubt as to material facts," conclusory allegations, unsubstantiated assertions, speculation, the mere existence of some alleged factual dispute, or "only a scintilla of evidence." Little, 37 F.3d at 1075; see Hart, 127 F.3d at 435; Wallace, 80 F.3d at 1047; Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (citing Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994)); State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990) (citing Anderson, 477 U.S. at 247-48). Summary judgment is mandated if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to his case on which he bears the burden of proof at trial. See Nebraska v. Wyoming , 507 U.S. 584, 590 (1993); Celotex Corp., 477 U.S. at 322; Wenner, 123 F.3d at 324. "In such a situation, there can be `no genuine issue as to any material fact' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23.

B. Collection Due Process Review Procedure

"Section 6321 of Title 26 of the United States Code provides that, `[i]f any person liable to pay any tax neglects or refuses to pay the same after demand, the amount ... shall be a lien in favor of the United States.' Similarly, if a person neglects or refuses to pay such tax within ten days after notice and demand for payment, the Secretary may collect such tax by levy upon property belonging to the taxpayer." Roberts v. Commissioner of Internal Revenue [ 2003-1 USTC ¶50,359], 329 F.3d 1224, 1227 (11th Cir. 2003) (citing 26 U.S.C. §6331). In the Internal Revenue Service Restructuring and Reform Act of 1998, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide due process protections for taxpayers involved in tax collection matters. See 26 U.S.C. §§6320, 6330; Gregory v. United States [ 2003-1 USTC ¶50,256], No. CIV A 1:02-CV-889-CC, 2003 WL 701218, at *1 (N.D. Ga. Jan. 15, 2003); Fabricius v. United States [ 2002-2 USTC ¶50,772], No. CV-F-02-5597 REC/DLB, 2002 WL 31662301, at *2 (E.D. Cal. Oct. 18, 2002); Rennie v. Internal Revenue Serv. [ 2002-2 USTC ¶50,548], 216 F.Supp.2d 1078, 1079 (E.D. Cal. 2002). Section 6330 generally provides that the IRS 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 and the opportunity for an administrative review of the matter in the form of an Appeals Office due process hearing, and, if dissatisfied, with judicial review of the administrative decision. See Roberts [ 2003-1 USTC ¶50,359], 329 F.3d at 1227; Gregory [ 2003-1 USTC ¶50,256], 2003 WL 701218, at *1; Fabricius [ 2002-2 USTC ¶50,772], 2002 WL 31662301, at *2; Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1079; Davis v. Commissioner of Internal Revenue [ CCH Dec. 53,969], 115 T.C. 35, 37 (2000); Goza v. Commissioner of Internal Revenue [ CCH Dec. 53,803], 114 T.C. 176, 179-80 (2000). Under §6330(a), a taxpayer receiving a Notice of Intent to Levy has thirty days in which to request an administrative CDP hearing. See Fabricius [ 2002-2 USTC ¶50,772], 2002 WL 31662301, at *2; Mesa Oil, Inc. v. United States [ 2001-1 USTC ¶50,130], No. Civ. A. 00-B-851, 2000 WL 1745280, at *3 (D. Colo. Nov. 21, 2000). On January 18, 2002, regulations were enacted outlining the CDP hearing process, which apply to all levy actions commencing on or after January 19, 1999. See 67 Fed. Reg. 2549 (Jan. 18, 2002).

At the hearing, "[t]he appeals officer shall ... obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." 26 U.S.C. §6330(c)(1); see Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Mesa Oil, Inc. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *3. With regard to the issues that may be raised at the hearing, the statute provides:

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

26 U.S.C. §6330(c)(2).

Hence, the validity of the underlying tax liability may be raised at the CDP hearing 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." 26 U.S.C. §6330(c)(2)(B); see Tornichio v. United States [ 2003-1 USTC ¶50,285], 263 F.Supp.2d 1090, 1095 (N.D. Ohio 2002); Lemieux v. United States [ 2002-2 USTC ¶50,720], 230 F.Supp.2d 1143, 1145 (D. Nev. 2002); Walker v. United States [ 2003-1 USTC ¶50,157], No. 01-CV-2058m, 2002 WL 31476653, at *2-4 (S.D. Cal. Aug. 12, 2002); Loofbourrow v. Commissioner of Internal Revenue Serv. [ 2002-1 USTC ¶50,465], 208 F.Supp.2d 698, 706 (S.D. Tex. 2002); Konkel v. Commissioner of Internal Revenue [ 2001-2 USTC ¶50,520], No. 6:99-CV-1026-ORL-31C, 2000 WL 1819417, at *3-4 (M.D. Fla. Nov. 6, 2000). "A `notice of deficiency' is only required in situations where there is a deficiency ( e.g. the amount of tax imposed by the IRS exceeds the amount of tax shown by the taxpayer on his return) and not in situations where, as here, a taxpayer fails to pay the amount of tax shown on the returns." Jones v. Commissioner of Internal Revenue [ 2003-2 USTC ¶50,584], --F.3d --, No. 02-60964, 2003 WL 21555540, at *2 (5th Cir. July 25, 2003); accord Perez v. United States [ 2002-2 USTC ¶50,795], 312 F.3d 191, 196-97 (5th Cir. 2002). "An opportunity to dispute a liability includes a prior opportunity for a conference with Appeals that was offered either before or after the assessment of the liability." 26 C.F.R. §301.6330-1(e)(A-E2).

Pursuant to 26 U.S.C. §6330(c)(3), the determination by the Appeals Officer at the conclusion of the administrative review process must take into consideration the following factors: "`(A) the verification [that the requirements of any applicable law or administrative procedure have been met]; (B) the issues raised [by the taxpayer]; and (C) 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."' Mesa Oil, Inc. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *3 (quoting 26 U.S.C. §6330(c)(3)); accord Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Compucel Serv. Corp. v. Commissioner of Internal Revenue [ 2002-1 USTC ¶50,284], No. MJG-00-1092, 2002 WL 442254, at *1 (D. Md. Feb. 15, 2002); see WILLIAM D. ELLIOT, FED. TAX COLLECT. LIENS & LEVIES ¶13.04[4][a] (2003). When a CDP hearing is requested, the proposed levy action is suspended while the hearing and any appeals are pending. See Compucel Serv. Corp. [ 2002-1 USTC ¶50,284], 2002 WL 442254, at *2; Mesa Oil, Inc. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *3.

The taxpayer may obtain judicial review of an adverse determination at the administrative level by appealing within thirty days of the decision to the Tax Court or to the district court (in the event the Tax Court does not have jurisdiction of the underlying tax liability). See 26 U.S.C. §6330(d)(1); Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Mesa Oil, Inc. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *3. Because the Tax Court does not have jurisdiction with respect to employment tax liability, the district court is the proper court in which to file a complaint contesting the assessment of employment taxes. See Moore v. Commissioner of Internal Revenue [ CCH Dec. 53,802], 114 T.C. 171, 175 (2000). Proceedings under 26 U.S.C. §6330(d) are in the nature of an appeal. See The Inner Office, Inc. v. United States [ 2003-1 USTC ¶50,185], No. CIV. A. 3:00-CV-2576-L, 2002 WL 356749, at *2 (N.D. Tex. Feb. 28, 2002). "[J]udicial review is limited to those issues properly raised during the collection due process hearing." Konkel [ 2001-2 USTC ¶50,520], 2000 WL 1819417, at *3 (emphasis in original) (citing Temp. Treas. Reg. §301.6330-1T(f)(Q-F5 (1999)); accord Braggs v. United States [ 2003-1 USTC ¶50,401], No. CIV-02-0609-HE, 2003 WL 1950060, at *2 (W.D. Okla. Mar. 17, 2003); Martinec v. United States [ 2002-2 USTC ¶50,602], No. CV-S-01-1207-RLH LRL, 2002 WL 1987734, at *2 (D. Nev. July 10, 2002); Loofbourrow [ 2002-1 USTC ¶50,465], 208 F.Supp.2d at 706; The Inner Office, Inc. [ 2003-1 USTC ¶50,185], 2002 WL 356749, at *3; Magana v. Commissioner of Internal Revenue [ CCH Dec. 54,765], 118 T.C. 488, 493 (2002); Miller v. Commissioner of Internal Revenue [ CCH Dec. 54,164], 115 T.C. 582, 589 n.2 (2000), aff'd [ 2001-2 USTC ¶50,713], 21 Fed.Appx. 160, 2001 WL 1295315 (4th Cir. Oct. 25, 2001).

Although §6330(d) provides for judicial review of the IRS's administrative determination, it is silent as to the standard of review a district court should apply when a taxpayer appeals a Notice of Determination by the IRS Appeals Office. See Tornichio [ 2003-1 USTC ¶50,285], 263 F.Supp.2d at 1095; Lemieux [ 2002-2 USTC ¶50,720], 230 F.Supp.2d at 1146; Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Mesa Oil Co. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *2. The legislative history indicates, however, that if the validity of the underlying tax liability was properly at issue at the administrative hearing, then the review is de novo. See H. Conf. Rep. 105-599, 266 (1998); U.S. Code Cong. & Admin. News 288 (1998); Tornichio [ 2003-1 USTC ¶50,285], 263 F.Supp.2d at 1095; Lemieux [ 2002-2 USTC ¶50,720], 230 F.Supp.2d at 1146; Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Mesa Oil Co. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *2; Konkel [ 2001-2 USTC ¶50,520], 2000 WL 1819417, at *3; MRCA Info. Servs. v. United States [ 2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 198-99 (D. Conn. 2000); Sego v. Commissioner of Internal Revenue [ CCH Dec. 53,938], 114 T.C. 604, 609-10 (2000). When the validity of the underlying tax assessment was not properly at issue at the CDP hearing, but another issue within the scope of the administrative appeal process was raised and determined, the administrative determination is reviewed for an abuse of discretion. See Tornichio [ 2003-1 USTC ¶50,285], 263 F.Supp.2d at 1095; Rennie [ 2002-2 USTC ¶50,548], 216 F.Supp.2d at 1080; Sillavan v. United States [ 2002-1 USTC ¶50,236], No. 01CV803, 2002 WL 400804, at *3 (N.D. Ala. Jan. 11, 2002); Mesa Oil Co. [ 2001-1 USTC ¶50,130], 2000 WL 1745280, at *2; Konkel [ 2001-2 USTC ¶50,520], 2000 WL 1819417, at *3; MRCA Info. Servs. [ 2000-2 USTC ¶50,683, 145 F.Supp.2d at 198-99; see also Davis [ CCH Dec. 53,969], 115 T.C. at 39; Sego [ CCH Dec. 53,938], 114 T.C. at 609-10; Goza [ CCH Dec. 53,803], 114 T.C. at 180.

C. Exhaustion of Administrative Remedies

In the case at bar, the United States contends that Awad did not exhaust his administrative remedies by repeatedly failing to attend scheduled IRS Appeals hearings, thereby waiving his right to judicial review. Judicial review generally is not available when a taxpayer fails to exhaust the administrative remedies available to him. See True v. United States [ 99-2 USTC ¶50,872], 190 F.3d 1165, 1171 (10th Cir. 1999) ("if the taxpayer does not adequately raise an issue at the administrative level, the courts have no jurisdiction to consider the issue in a later suit"); Ahee v. United States, No. CV-S-01-0211-KJD LRL, 2002 WL 1023165, at *1 (D. Nev. Dec. 27, 2001); Devore v. United States [ 2001-2 USTC ¶50,675], No. CV-N-99-466-ECT(PHA), 2000 WL 1141604, at *1 (D. Nev. June 19, 2000). When a taxpayer does not avail himself of a CDP hearing under 26 U.S.C. §6330, administrative procedures have not been exhausted. See In re Parker, 279 B.R. 596, 606 (S.D. Ala. 2002); see also Fabricius [ 2002-2 USTC ¶50,772], 2002 WL 31662301, at *2-3. Where a taxpayer receives notice of a tax liability and has been afforded an opportunity to dispute such tax liability at the administrative level, he may not subsequently raise a judicial challenge to the underlying liability pursuant to 26 U.S.C. §6330(d)(1). See Fossen v. Commissioner of Internal Revenue [ 2001-1 USTC ¶50,263], No. 00-70933, 4 Fed.Appx. 526, 526, 2001 WL 180503, at * 1 (9th Cir. Feb. 23, 2001); Wald v. United States [ 2002-1 USTC ¶50,278], No. 01-7507-CV, 2002 WL 442262, at *2-3 (S.D. Fla. Feb. 12, 2002); Sillavan [ 2002-1 USTC ¶50,236], 2002 WL 400804, at *3.

Awad claims that he did not exhaust the administrative review process because he was "not afforded notice or an opportunity to challenge the assessment." This assertion is belied by the record, as his Request for a CDP Hearing makes it clear that he had been notified of his underlying tax liability, which, in this instance, is the penalties and interest assessed against him. See 26 U.S.C. §6671. The attachment to the request reads, in pertinent part:

We understand there are penalties related to late payment of taxes and penalties for not filing electronically. The schedule we have prepared shows that all taxes related to the lien have been paid.

Because substantially all of the amount related to the lien is penalty related we would request a hearing to review the penalties assessed.

Moreover, it is apparent from the letters sent to Awad dated September 12, 2001 , authored by Karen Lee ("Lee"), IRS Revenue Officer, that Awad had requested an abatement or adjustment of penalties, but the IRS had determined that he had not shown reasonable cause for such an action. In the second of these letters, Lee explains the reasons for the penalty adjustment denial. Among other points, Lee states:

During most of our conversations when I advised you of the delinquent balances owed, both you and Ms. Herridge would respond stating that all taxes had been paid and that you were current with all federal tax deposit payments. The decision to abate penalties is determined by several factors including reasonable cause and prior history. According to our records, no estimated tax payments have been paid on your Form 1040, Personal Income Tax returns for 1999, 2000, or 2001. In addition, we have no record of the Form 1120, Corporate Income Tax returns being filed for American Nurses for Nurses, Inc[.] since 1997.

Yet, although Awad had been apprised of the penalties assessed and had requested a CDP hearing, he failed to appear at conferences scheduled by Darling for March 6, 2002, and April 1, 2002. Awad was notified of these meetings by letters dated February 12, 2002, and March 13, 2002, which were sent to the address listed on the Request for a CDP Hearing. Awad does not assert and provides no evidence that he did not receive the notification letters. In the absence of clear evidence to the contrary, the presumption of official regularity and of delivery justify the conclusion that the statutory notices were sent and delivered. See United States v. Zolla [ 84-1 USTC ¶9175], 724 F.2d 808, 810 (9th Cir.), cert. denied, 469 U.S. 830 (1984); United States v. Ahrens [ 76-1 USTC ¶9241], 530 F.2d 781, 784-85 (8th Cir. 1976).

Awad maintains, however, that he assumed that his representative, Mead, would also be notified of the meetings. He states, "Plaintiffs presumed the Service would notice Plaintiffs' POA regarding any and all Appeals Hearings." Under the circumstances, this assertion appears disingenuous, at best, and does not serve to relieve Awad of his obligation to see that his business is in full compliance with the tax laws. In fact, Mead was prohibited by law from receiving the notice because neither Mead nor Awad had submitted a Form 2848, Declaration of Representation, or other separate written consent to permit her to receive taxpayer information concerning Awad. See 26 U.S.C. §6103(a), (c); 26 C.F.R. §301.6103(c). Moreover, it should have been apparent from Darling's letter of February 12, 2002, that he did not know which representative to notice. Darling wrote, "My records indicate that you have four forms 2848, Power of Attorney, filed for these tax periods. Please let me know which one of these representatives you would like me to meet with." Awad, however, made no effort to advise Darling of the identity of his selected representative.

Finally, Awad should have been under no misapprehension that his representative attended the first conference on his behalf when he received the second letter noting his failure to appear at the first meeting. In his letter of March 13, 2002, Darling wrote, "I scheduled a conference with you on March 6, 2002 but you failed to appear. I have rescheduled our conference for the date and time shown above [April 1, 2002 at 1:00 p.m.]." Thus, it was incumbent upon Awad to attend the second meeting, arrange for a representative to do so, or reschedule the conference. He did none of these things, nor did he notify Darling that he would not be in attendance. Although he now seeks to shift the blame to the IRS, contending that it did riot follow normal notice procedures, it is Awad who is responsible for failing to avail himself of the administrative remedies offered by the IRS. Indeed, his disregard of IRS procedures is consistent with his and his administrator's prior failures to appear for appointments with the Compliance Division. Thus, as the result of Awad's failure to exhaust his administrative remedies, judicial review of this matter is foreclosed.

In any event, because Awad did not appear or participate in a CDP hearing, there are no issues before the court for review. Awad did not properly raise any challenges to the propriety of the penalties, the lien, or the levy during the CDP process because he failed to attend either of the scheduled hearings. As noted above, judicial review is limited to issues that were properly raised during a CDP hearing. See Braggs [ 2003-1 USTC ¶50,401], 2003 WL 1950060, at *2; Martinec [ 2002-2 USTC ¶50,602], 2002 WL 1987734, at *2; Loofbourrow [ 2002-1 USTC ¶50,465], 208 F.Supp.2d at 706; The Inner Office, Inc. [ 2003-1 USTC ¶50,185], 2002 WL 356749, at *3; Magana [ CCH Dec. 54,765], 118 T.C. at 493; Konkel [ 2001-2 USTC ¶50,520], 2000 WL 1819417, at *3; Miller [ CCH Dec. 54,164], 115 T.C. at 589 n.2. Treasury regulations state that taxpayers "can only request that the court consider an issue that was raised in the taxpayer's CDP hearing." 26 C.F.R. §301.6320-1(f)(2)(Q & A-F5). The United States Tax Court has applied this regulation to preclude judicial review, holding that it would "consider only arguments, issues, and other matter[s] that were raised at the collection hearing or otherwise brought to the attention of the Appeals Office." Magana [ CCH Dec. 54,765], 118 T.C. at 493. Likewise, judicial review of the determination in this case would be improper because the court can only review those arguments considered at the CDP hearing, which, in this instance, never occurred.

Although there is no requirement that a taxpayer be afforded a face-to-face meeting for the CDP process to be satisfied, the information provided the IRS must be adequate to permit a meaningful review of the issues. See generally Loofbourrow [ 2002-1 USTC ¶50,465], 208 F.Supp.2d at 707; Konkel [ 2001-2 USTC ¶50,520], 2000 WL 1819417, at *4; Katz v. Commissioner of Internal Revenue [ CCH Dec. 54,081], 115 T.C. 329, 337 (2000); Davis [ CCH Dec. 53,969], 115 T.C. at 41-42. While the record contains one communication from Awad's representative to the Appeals Office, the Request for a CDP Hearing, this one document does not take the place of a hearing. It does not adequately detail the factual bases for any of Awad's allegations so as to permit substantive analysis of his contentions. See True [ 99-2 USTC ¶50,872], 190 F.3d at 1171-72. The IRS must be apprised "of the nature of the claim and the underlying facts, so that it can make a thorough administrative investigation and determination, correct any errors, and "`limit the scope of any ensuing litigation to those issues which have been examined and which [it] is willing to defend."' Id. at 1172 (quoting Stelco Holding Co. v. United States [ 98-2 USTC ¶50,771], 42 Fed.Cl. 101, 108 (1998) (quoting Union Pac. R.R. Co. v. United States [ 68-1 USTC ¶9173], 389 F.2d 437, 442 (Ct. Cl. 1968))); see also McKart v. United States, 395 U.S. 185, 194-95 (1969) (generally addressing administrative exhaustion requirements to promote the practical notions of judicial efficiency, administrative autonomy, and effective agency procedures). As the United States argues, "an IRS Appeals representative cannot be expected to conduct a meaningful review without receiving a more detailed explanation. Even if the request was more detailed, a hearing might still have been required." In short, the IRS is not required to "ferret out possible grounds for relief which a taxpayer might assert." Herrington v. United States [ 69-2 USTC ¶9650], 416 F.2d 1029, 1032 (10th Cir. 1969).

Hence, in the absence of a CDP hearing, no issues are before the court for review with regard to the propriety of the penalties and interest assessed against Awad or the appropriateness of the lien and proposed levy.

D. Judicial Review

Assuming, arguendo, that the attachment to the Request for a CDP Hearing sufficed to satisfy the exhaustion requirement and to permit judicial review, the analysis and determination by the Appeals Officer remain sound. Upon Awad's failure to appear for two scheduled CDP hearings, the Appeals Officer made a determination after reviewing all account transcripts and case file history. He verified that all statutory, regulatory, and administrative requirements for the proposed collection action had been met. See 26 U.S.C. 6330(c). The Appeals Officer utilized Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, attached to the United States' motion, to satisfy the investigation requirement of §6330(c)(1). Courts have routinely upheld the use of Form 4340 for such purpose. See, e.g., Jones [ 2003-2 USTC ¶50,584], 2003 WL 21555540, at *2; Roberts [ 2003-1 USTC ¶50,359], 329 F.3d at 1228; Perez [ 2002-2 USTC ¶50,795], 312 F.3d at 195; Huff v. United States [ 93-2 USTC ¶50,633], 10 F.3d 1440, 1446-47 (9th Cir. 1993), cert. denied, 512 U.S. 1219 (1994); Furr [Farr] v. United States [ 93-1 USTC ¶50,229], 990 F.2d 451, 454 (9th Cir. 1993); Hughes v. United States [ 92-1 USTC ¶50,086], 953 F.2d 531, 538-40 (9th Cir. 1992); Lemieux [ 2002-2 USTC ¶50,720], 230 F.Supp.2d at 1146; Davis [ CCH Dec. 53,969], 115 T.C. at 41. "IRS Form 4340 constitutes valid evidence of a taxpayer's assessed liabilities and the IRS's notice thereof." Perez [ 2002-2 USTC ¶50,795], 312 F.3d at 195 (citing McCarty v. United States [ 92-1 USTC ¶50,222], 929 F.2d 1085, 1089 (5th Cir. 1991)). Awad did not present any evidence to the contrary to the Appeals Office, nor has he submitted any controverting evidence to this court.

In the determination, the Appeals Officer lists the issues generally outlined in Awad's Request for a CDP Hearing and addresses and counters each issue to the extent information was available. Because Awad did not explain the "dramatic changes" allegedly made in the method of making payroll tax deposits, the "extenuating problems" which purportedly created the penalties, or the "extremely adverse [e]ffects" on Stat's banking relationship which assertedly could have resulted in business shutdown, the Appeals Officer was limited as to the extent of consideration or analysis he could accord each allegation. Recognizing that these issues were not properly raised at a CDP hearing, however, the Appeals Officer adds, "Unfortunately, we will not be able to address any of these issues since you did not appear for the hearing I set for March 6, 2002 at 9:00 am or April 1, 2002 at 1:00 p.m." He also observes that "[n]o collection alternatives were raised since no conferences took place," acknowledging that Awad and the "revenue officer were exploring terms of an installment agreement but had not come to terms."

Finally, the Appeals Officer addresses whether the proposed collection action balanced the need for the efficient collection of taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary. He finds that "[t]he filing of a lien was the least intrusive method of protecting the Government's interest," noting that a lien had been filed against Awad in the past and the business is still operating. Awad has not shown that any irregularity existed in the IRS's assessment or collection procedures. He also "made no proposal to the Appeals Officer that would have required, or even justified a deferral of collection by levy," nor has he "suggested to this Court a reasonable basis for delaying collection by levy." Compucel Serv. Corp. [ 2002-1 USTC ¶50,284], 2002 WL 442254, at *3. The proposal to "discuss how we can best handle the balance due without lien filings" does not suffice as a request to enter into an extended installment payment in lieu of a levy. While Awad now contends that he has made an offer of compromise to the IRS, he does not divulge the terms of any such offer to the court or submit evidence disclosing its parameters. Moreover, although Awad complains that the Appeals Officer's refusal to reopen the hearing in light of his alleged offer of compromise was an abuse of discretion, "[m]atters raised after a hearing do not reflect on whether the determinations that are the basis of this petition were an abuse of discretion." Sego [ CCH Dec. 53,938], 114 T.C. at 612; accord Magana [ CCH Dec. 54,765], 118 T.C. at 494.

Similarly, Darling's alleged statements to Thiagarajan regarding the scope of judicial review provide no basis for relief. "`[A] private individual asserting estoppel against the government has a very heavy burden to bear."' FDIC v. Royal Park No. 14, Ltd., 2 F.3d 637, 641 (5th Cir. 1993) (quoting Jones v. Department of Health & Human Servs., 843 F.2d 851, 853 (5th Cir. 1988)); accord Duthu v. Sullivan, 886 F.2d 97, 99 (5th Cir. 1989), cert. denied, 496 U.S. 936 (1990) (citing Heckler v. Community Health Servs. of Crawford County, Inc., 467 U.S. 51, 60 (1984)). The Fifth Circuit has noted that "to state a cause of action for estoppel against the government, a private party must allege more than mere negligence, delay, inaction, or failure to follow an internal agency guideline." Fano v. O'Neill, 806 F.2d 1262, 1265 (5th Cir. 1987); see Moosa v. INS, 171 F.3d 994, 1003 (5th Cir. 1999); REW Enters., Inc. v. Premier Bank, N.A., 49 F.3d 163, 169-70 (5th Cir. 1995). Absent affirmative misconduct, "`the government cannot be bound by unauthorized or incorrect statements of its agents."' Triplett v. Heckler, 767 F.2d 210, 213 (5th Cir. 1985), cert. denied, 474 U.S. 1104 (1986) (quoting United States v. Thompson, 749 F.2d 189, 193 (5th Cir. 1984)). Here, because Awad has made no showing of affirmative misconduct on the part of Darling, the United States is not bound by his alleged statements regarding the issues that could be raised in court.

Thus, in the absence of countervailing evidence and in view of Awad's failure to appear for two scheduled CDP hearings, as well as his history of recalcitrance with regard to the payment of employment taxes, the Appeals Officer made a reasonable determination that the lien will remain in place. Without regard to whether an abuse of discretion or de novo standard of review applies in this situation, the determination must stand, as Awad has not demonstrated that the Appeals Officer abused his discretion or reached an erroneous conclusion regarding the propriety of the lien and proposed levy. The Fifth Circuit equates the phrase "abuse of discretion" with "arbitrary and capricious." See Matassarin v. Lynch, 174 F.3d 549, 563 (5th Cir. 1999), cert. denied, 528 U.S. 1116 (2000); Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 601 (5th Cir. 1994). "An abuse of discretion necessarily occurs where an act can only be described as clearly improper." Beall v. United States [ 2003-2 USTC ¶50,551], 336 F.3d 419, No. 0141471, 2003 WL 21480638, at *5 (5th Cir. June 27, 2003) (citing United States v. O'Neil, 709 F.2d 361, 372 n.11 (5th Cir. 1983)).

The issues to which Awad briefly alludes in the Attachment to his Request for a CDP Hearing are conclusory in nature and without factual support. Because he attended neither of the scheduled hearings, Awad did not raise any viable challenges to his underlying tax liability or demonstrate the propriety of an abatement of the penalties during the administrative process. In light of Awad's failure to raise any cognizable issues during the administrative review procedure, "it would be anomalous and improper for [the court] to conclude that respondent's Appeals Office abused its discretion under section 6330(c)(3) in failing to grant relief, or in failing to consider arguments, issues, or other matter not raised by taxpayers or not otherwise brought to the attention of respondent's Appeal Office." Magana [ CCH Dec. 54,765], 118 T.C. at 493. The court "cannot find an abuse of discretion where there is no evidence that the Commissioner exercised any discretion at all." McCoy Enters., Inc. v. Commissioner of Internal Revenue [ 95-2 USTC ¶50,332], 58 F.3d 557, 563 (10th Cir. 1995); accord Magana [ CCH Dec. 54,765], 118 T.C. at 493-94; see Chimblo v. Commissioner of Internal Revenue [ 99-1 USTC ¶50,540], 177 F.3d 119, 126 (2d Cir. 1999), cert. denied, 528 U.S. 1154 (2000). In the court's view, the Appeals Officer's refusal to ascribe merit to Awad's conclusory allegations was not arbitrary or capricious and does not constitute an abuse of discretion.

Even under a de novo standard of review, the Appeals Officer's determination that the underpayment penalties and tax lien are valid must be sustained. The record reflects that Awad self-assessed Stat's employment taxes on his tax returns but failed to pay those taxes on a timely basis, in effect conceding that he underpaid the applicable taxes. The Form 4340's attached to the United States ' motion provide at least presumptive evidence that all legal and procedural requirements were met and that the taxes, penalties, and interest were validly assessed. See Jones [ 2003-2 USTC ¶50,584], 2003 WL 21555540, at *2; Roberts [ 2003-1 USTC ¶50,359], 329 F.3d at 1228; Perez [ 2002-2 USTC ¶50,795], 312 F.3d at 195; Huff [ 93-2 USTC ¶50,633], 10 F.3d at 1446-47; Furr [Farr] [ 93-1 USTC ¶50,229], 990 F.2d at 454; Hughes [ 92-1 USTC ¶50,086], 953 F.2d at 538-40; Lemieux [ 2002-2 USTC ¶50,720], 230 F.Supp.2d at 1146; Davis [ CCH Dec. 53,969], 115 T.C. at 41. Awad has adduced no evidence to rebut such presumption. Furthermore, he presented no evidence to the IRS Appeals Office, the IRS Compliance Division, or this court indicating that the penalties should be abated for reasonable cause. "In sum, [Awad] has not made a showing justifying any further delay in IRS collection efforts." Compucel Serv. Corp. [ 2002-1 USTC ¶50,284], 2002 WL 442254, at *4. Therefore, the Appeals Office did not err in determining that Awad is liable for penalties and interest arising from his underpayment of employment taxes and that the resulting lien and proposed levy are valid.


IV. Conclusion

Awad has failed to present a claim that would entitle him to relief with respect to the determination of the IRS Appeals Office regarding his liability for penalties and interest resulting from his underpayment of Stat's employment taxes. There are no outstanding issues of material fact, and the United States is entitled to judgment as a matter of law.

Accordingly, the United States ' Motion to Dismiss or for Summary Judgment is granted, and the determination made by the IRS Appeals Office is affirmed.

IT IS SO ORDERED.

[2003-2 USTC ¶50,721] Melvin D. Johnson, Plaintiff v. United States of America , Defendant.

U.S. District Court, No. Dist. Ga. , Atlanta Div.; CIV. 1:03-cv-0475-GET, October 3, 2003 .

[ Code Sec. 6330]

Collection Due Process: Hearing: Procedures: Issues raised at hearing. --

The government was granted summary judgment dismissing an individual's challenge to an adverse Collection Due Process (CDP) determination to collect a penalty for the taxpayer's failure to pay employment taxes by levying upon his property. The taxpayer was not permitted to challenge his underlying tax liability during the CDP hearing because he had a previous opportunity to challenge the assessment and failed to do so. Specifically, the taxpayer signed Form 2751 acknowledging the IRS's assessment, and agreeing to waive the privilege of filing a claim for abatement after assessment. Moreover, during a bankruptcy proceeding the taxpayer failed to object to a proof of claim filed by the IRS in connection with the unpaid employment tax penalty

ORDER

TIDWELL, District Judge: The above-styled matter is presently before the court on:

(1) defendant's motion to dismiss counts I and III of the complaint [docket no. 7-1], or alternatively

(2) defendant's motion for summary judgment on counts I and III of the complaint [docket no. 7-2].

Background

On February 20, 2003 , pursuant to 26 U.S.C. §6330(d)(1), plaintiff filed the instant action for judicial review of the Internal Revenue Service ("IRS")'s determination to collect a tax penalty for unpaid employment taxes by levy on plaintiff's property. Count I of plaintiff's complaint asserts that the IRS incorrectly determined and assessed the tax penalty against plaintiff. Count II alleges that the amount of the tax penalty is incorrect. Count III of the complaint alleges that the IRS did not provide plaintiff with due process at a collections due process hearing. On May 30, 2003 , defendant moved to dismiss counts I and III, or alternatively for summary judgment.

Motion to Dismiss

Defendant has filed a motion to dismiss counts I and III of the complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). "If on a motion ... to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented and not excluded by the court, the motion shall be treated as one for summary judgment." Fed. R. Civ. P. 12(b).

In support of its motion, defendant presented, and the court considered, two declarations from IRS employees as well as copies of the claims register and docket sheet from In re Melvin D. Johnson and Sandra J. Johnson, No. N95-12178-WHD (Bankr. N.D. Ga. ). Therefore, the court will consider defendant's motion as one for summary judgment. Accordingly, defendant's motion to dismiss counts I and III [docket no. 7-1] is DENIED.

Motion for Summary Judgment

Defendant has also moved for summary judgment as to counts I and III of plaintiff's complaint. On June 2, 2003 , the Clerk of Court sent plaintiff notice of defendant's motion for summary judgment. Plaintiff filed a response on July 1, 2003 .

Standard

Courts should grant summary judgment when "there is no genuine issue as to any material fact ... and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party must "always bear the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). That burden is "discharged by `showing' --that is, pointing out to the district court --that there is an absence of evidence to support the nonmoving party's case." Id. at 325; see also U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir. 1991).

Once the movant has met this burden, the opposing party must then present evidence establishing that there is a genuine issue of material fact. Celotex, 477 U.S. at 325. The nonmoving party must go beyond the pleadings and submit evidence such as affidavits, depositions and admissions that are sufficient to demonstrate that if allowed to proceed to trial, a jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). If he does so, there is a genuine issue of fact that requires a trial. In making a determination of whether there is a material issue of fact, the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Id. at 255; Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir. 1987). However, an issue is not genuine if it is unsupported by evidence or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248. Thus, to create a genuine issue of material fact for trial, the party opposing the summary judgment must come forward with specific evidence of every element essential to his case with respect to which (1) he has the burden of proof, and (2) the summary judgment movant has made a plausible showing of the absence of evidence of the necessary element. Celotex, 477 U.S. at 323.

Facts

In light of the foregoing standard, the court finds the following facts for the purpose of resolving defendant's motion for summary judgment only. PCT Services, Inc. failed to pay fully income and social security taxes for its employees for all of 1993, 1994, and the first calendar quarter of 1995. Plaintiff was the employee who collected, accounted for, and paid taxes on behalf of PCT Services, Inc. Pursuant to 26 U.S.C. §6672, the IRS assessed a penalty against plaintiff in the amount of $1,504,201.31. Plaintiff signed the IRS's form 2751 acknowledging the assessment.

After the penalty was assessed, plaintiff filed for bankruptcy. The IRS filed a "proof of claim," and plaintiff did not object or challenge the claim. The bankruptcy court confirmed plaintiff's plan of reorganization; however, plaintiff defaulted on his payments. Subsequently, the IRS proceeded to collect the full amount due of the assessment.

The IRS initiated collection of the penalty by levy. Pursuant to 26 U.S.C. 6330(a), the IRS sent plaintiff a "notice of intent to levy" that included information regarding plaintiff's rights to a "collection due process hearing." In his request for a hearing, plaintiff asserted that he had "the capability of performing under the [bankruptcy] Plan & respectfully request that the Service allow Debtors to resume payments under the Plan." In addition, plaintiff stated that the IRS had not "correctly computed the amount owed under the terms of the proposed levy."

In a July 22, 2002 letter, an IRS hearing officer asked plaintiff to propose optional procedures to enable the IRS to collect plaintiff's tax penalty. Plaintiff did not respond to the letter and the hearing officer upheld the IRS's decision to collect the penalty by levy.

Discussion

"If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice of demand, it shall be lawful for the [IRS] to collect such tax ... by levy." 26 U.S.C. §6331(a). Before a levy can be assessed, the IRS must notify the taxpayer of his right to a hearing. See 26 U.S.C. §6330(a). At the hearing, the taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy, including appropriate spousal defenses; challenges to the appropriateness of the collection actions; and offers of collection alternatives." 26 U.S.C. §6330(c)(2).

The taxpayer may challenge the "existence or amount of the underlying tax liability" only if the taxpayer "did not otherwise have an opportunity to dispute such tax liability." 26 U.S.C. §6330(c)(2)(B). "An issue may not be raised at the hearing if the issue was raised ... in any other previous administrative or judicial proceeding; and the person seeking to raise the issue participated meaningfully in such hearing or proceeding." 26 U.S.C. §6330(c)(4)(A)-(B).

Where "the amount of tax liability is part of the appeal," courts review the determination on a de novo basis. MRCA Info. Servs. v. United States [ 2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 199 (D. Conn. 2000) (emphasis in original). "Where the validity of the tax liability is not properly part of the appeal, ... the appeals' officer's determination as to the appropriateness of the collection activity will be reviewed under an abuse of discretion standard of review. " Id.

In the instant action, the IRS sent plaintiff a letter on June 1, 1995 that outlined the proposed penalty and appeals process. On July 3, 1995, plaintiff sent the IRS a signed statement where plaintiff agreed with the assessment and "waive[d] the privilege of filing a claim for abatement after assessment." Therefore, plaintiff relinquished the opportunity to challenge his responsibility for the assessment or the amount of the assessment. Accordingly, 26 U.S.C. 6330(c) bars plaintiff from challenging his tax liability at the collection due process hearing. See Maton v. Commissioner [ 2003-1 USTC ¶50,406], 2003 WL 1860514 (N.D. Ill. 2003).

In addition, as part of plaintiff's bankruptcy proceeding, the IRS filed a proof of claim to which plaintiff never objected. A taxpayer cannot challenge the amount of his liability where he "had an opportunity, in [his] bankruptcy proceeding, to question the validity of the tax liability" because he "acknowledged the existence of [his] tax liability and the amount of the assessment by entering into a bankruptcy plan." Triad Microsystems, Inc. v. United States [ 2003-1 USTC ¶50,106], 2002 WL 31777585, *3 (E.D. Va. 2002).

Finally, as to plaintiff's claim that the IRS did not provide due process, the IRS appeals officer sent plaintiff a letter asking him to "please contact [the IRS] ... so that we may discuss any collection alternatives you would like [the IRS] to consider." Plaintiff failed to respond. Therefore, the appeals officer did not abuse her discretion when upholding the agency's decision to collect plaintiff's tax penalty by levying on his property. Accordingly, defendant's motion for summary judgment as to counts I and III of the complaint [docket no. 7-2] is GRANTED.

Summary

(1) defendant's motion to dismiss counts I and III of the complaint [docket no. 7-1] is DENIED.

(2) defendant's motion for summary judgment on counts I and III of the complaint [docket no 7-2] is GRANTED.

SO ORDERED.

[Dec. 55,377(M)] Bharat S. Parikh v. Commissioner.

Docket No. 14666-02L , TC Memo. 2003-341, 86 TCM 720, Filed December 16, 2003 . [Appealable, barring stipulation to the contrary, to CA-4.]


[Code Sec. 6330]

Internal Revenue Service: Collection Due Process: Hearing procedures. --

The IRS was entitled to proceed with the collection of an individual's unpaid taxes, penalties and interest following a Collection Due Process hearing. The taxpayer's claim that he was entitled to remand his case to the Appeals Office for further proceedings because the Appeals officer failed to complete the hearing process or take into consideration his request for abatement of interest and penalties was dismissed. Regardless of whether the taxpayer was accorded his right to a hearing pursuant to Code Sec. 6330(b), he was not prejudiced, and it was neither necessary nor productive to remand his case.

Bharat S. Parikh, pro se. William J. Gregg and Warren P. Simonsen, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

FOLEY, Judge: The issue for decision is whether respondent may proceed with collection relating to petitioner's 1988 and 1992 tax liabilities.

FINDINGS OF FACT

Petitioner failed to file a 1988 Federal income tax return. Respondent filed a substitute return relating to that year and sent petitioner a notice of deficiency. In response, petitioner initiated a proceeding, Parikh v. Commissioner, Docket No. 13843-91, which this Court dismissed for lack of jurisdiction.

On April 14, 1993 , petitioner filed his 1992 return but did not pay the self-assessed $1,429 tax due. On May 24, 1993 , respondent assessed this deficiency.

On November 30, 2001 , respondent sent petitioner a Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing, relating to 1988 and 1992. Petitioner, on December 27, 2001 , sent respondent Form 12153, Request for a Collection Due Process Hearing, relating to those years.

On May 15, 2002 , the Appeals officer sent petitioner a letter proposing a section 6330¹ hearing (hearing) on July 9, 2002 . On May 29, 2002 , the Appeals officer held a telephone hearing with petitioner, but petitioner insisted on keeping the July 9, 2002 , scheduled hearing. During the May 29, 2002 , hearing, the Appeals officer discussed with petitioner the notice relating to 1988 and petitioner's self-assessed return relating to 1992.

On August 6, 2002 , respondent sent petitioner a Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330 relating to 1988 and 1992. In response, on September 10, 2002 , petitioner, while residing in Gaithersburg , Maryland , filed his petition with this Court.

OPINION

Petitioner seeks a remand to the Appeals Office for further proceedings because he contends that the Appeals officer failed to complete the hearing process or take into consideration his request for an abatement of interest and penalties.²

We agree with petitioner that his hearing was not completed and that respondent failed to consider his request for an abatement of interest and penalties. We, however, consider petitioner's contentions and conclude that they lack merit and are legally insufficient to forestall collection. Petitioner did not pay his 1988 and 1992 tax liabilities. As a result, section 6404(e) does not permit an abatement of the interest that accrued on the unpaid tax before respondent contacted petitioner in writing relating to petitioner's 1988 and 1992 tax liabilities. Downing v. Commissioner [Dec. 54,604], 118 T.C. 22, 31 (2002). In addition, interest accrued after respondent contacted petitioner may not be abated because there is no evidence that the accrual of such interest was attributable to respondent's error or delay in performing a ministerial act. Sec. 6404(e)(1); Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 341 (2000). Furthermore, petitioner has not identified what, if any, penalties he wants us to consider. Therefore, regardless of whether petitioner was accorded his right to a hearing pursuant to section 6330(b), he has not been prejudiced, and it is neither necessary nor productive to remand this case to the Appeals Office to consider petitioner's contentions. See Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 167 (2002); Lunsford v. Commissioner [Dec. 54,553], 17 T.C. 183, 189 (2001). Respondent's determinations are sustained.

Contentions we have not addressed are irrelevant, moot, or meritless.

To reflect the foregoing,

Decision will be entered for respondent.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue.

² The record does not disclose the nature of the penalties for which respondent contends petitioner is liable.

[Dec. 55,507(M)] Michael Cipolla v. Commissioner.

Docket No. 7131-02L . T.C. Memo. 2004-6. Filed January 5, 2004 . [Appealable, barring stipulation to the contrary, to CA-2.]


[Code Sec. 6330]

Internal Revenue Service: Collection Due Process: Hearing procedures. --

An IRS Appeals officer's Collection Due Process (CDP) determination upholding the imposition of a delay penalty was sustained, absent proof that the IRS failed to follow proper procedures during the CDP hearing. --CCH.

Michael Cipolla, pro se. Theresa G. McQueeney, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HALPERN, Judge: Pursuant to section 6330(d), petitioner seeks review of respondent's determination to proceed with collection of his 1997 income tax.¹ On December 2, 2002 , respondent orally moved to have the Court impose against petitioner a penalty pursuant to section 6673.

FINDINGS OF FACT

Some of the facts have been stipulated and are found accordingly. The stipulation of facts, with attached exhibits, is incorporated herein by this reference.

At the time he filed his petition, petitioner resided in Brooklyn , New York .

Petitioner's Form 1040 for 1997

On or about April 15, 1998 , petitioner submitted to respondent a Form 1040, U.S. Individual Income Tax Return, for 1997. Petitioner did not describe his occupation on the Form 1040, although he did attach a Form W-2, Wage and Tax Statement, identifying him as an employee.

Petitioner entered zeros on all lines of the income portion of his Form 1040, specifically including line 7, for wages, line 9, for dividends, line 11, for alimony received, line 22, for total income, and lines 32 and 33, for adjusted gross income. He also indicated his taxable income to be zero. Petitioner entered a zero on line 39 for tax. Petitioner then claimed a refund in the amount of $6,988.40, which was equal to the amount of Federal income tax that had been withheld from his wages by his employer.

The Form W-2 attached to the above Form 1040 disclosed the payment of wages to petitioner during 1997. The Form W-2 was from New York Telephone Company; it disclosed the payment of $60,833.32 of wages to petitioner and the withholding of Federal income tax in the amount of $6,988.40.

Petitioner also attached to his Form 1040 a two-page typewritten statement that stated, in part:

I, Michael Cipolla, am submitting this as part of my 1997 income tax return.

Even though I know that no section of the Internal Revenue Code:

1) establishes an income tax "liability" * * *;

2) provides that income taxes "have to be paid on the basis of a return" * * *;

3) In addition to the above, I am filing even though the "Privacy Act Notice" as contained in a 1040 booklet clearly informs me that I am not required to file. It does so in at least two places.

a) In one place it states that I need only file a return for "any tax" I may be liable for. Since no Code section makes me "liable" for income taxes, this provision notifies me that I do not have to file an income tax return;

* * * * * * *

7) It should also be noted that I had "zero" income according to the Supreme Court's definition of income (See note #1) * * *

8) Please note that my 1997 return also constitutes a claim for refund pursuant to Code Section 6402.

9) I am also putting the I.R.S. on notice that my 1997 tax return and claim for refund does not constitute a "frivolous" return pursuant to Code section 6702.

* * *

11) In addition, don't notify me that the I.R.S. is "changing" my return, since there is no statute that allows the I.R.S. to do that. You might prepare a return (pursuant to Code section 6020b) where no return is filed, but where, as in this case, a return has been filed, no statute authorizes I.R.S. personnel to "change" that return.

* * * * * * *

Note #1: The word "income" is not defined in the Internal Revenue Code. * * * But, as stated above, it can only be a derivative of corporate activity. * * *

Respondent's Notice of Deficiency

On February 23, 2000 , respondent (acting through Carol M. Landy, Director of the Brookhaven Customer Service Center in Holtsville , New York ) issued a notice of deficiency to petitioner for 1997. In the notice of deficiency, respondent determined a deficiency of $12,113 in Federal income tax.² Respondent determined that petitioner failed to report wages of $60,833, as well as dividends of $20, a gross distribution of $222, interest of $33, and a prior year refund of $341.

Petitioner received the notice of deficiency. Petitioner did not file a petition for redetermination with the Tax Court.

On September 11, 2000 , respondent assessed the determined deficiency, plus statutory interest. On that same date, respondent sent petitioner a notice of balance due. Petitioner failed to pay the amount owing.

Respondent's Notice of Intent To Levy and Petitioner's Response

On January 18, 2001 , respondent sent petitioner a notice entitled: "Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing."

On January 29, 2001 , petitioner submitted to respondent Form 12153, Request for a Collection Due Process Hearing. In the request, petitioner stated that he would explain all his reasons for opposing the proposed levy at the hearing.

The Appeals Office Hearing

In communications and correspondence between petitioner and respondent's Appeals Office from June 5, 2001 , through December 4, 2001 , petitioner raised several tax protestor arguments regarding his 1997 tax liability.

By letter dated December 5, 2001 , Appeals Officer Phyllis Cayenne (the Appeals officer) scheduled an administrative hearing with petitioner at respondent's Manhattan Appeals Office in New York City . In her letter to petitioner, the Appeals officer continued and stated, in part:

Our jurisdiction in * * * [this case] is limited to hearing relevant issues relating to unpaid tax, including appropriate spousal defenses, challenges to the appropriateness of collection actions, offer[s] of collection alternatives and challenges to the underlying tax liability, if you did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the liability. Your letter dated 6/5/2001 to * * * [respondent's Appeals Office] only provided constitutional arguments and did not include relevant issues that we may consider.

* * * * * * *

The arguments raised in your letter of 6/5/2001 are frivolous and your positions have no basis in law. Arguments such as yours have been considered and rejected repeatedly as being without merit by Federal courts, including the Supreme Court of the United States . Pursuing them in a Federal court could lead to monetary sanctions being imposed against you. * * *

On or about December 7, 2001 , petitioner sent a letter to the Appeals officer, responding to her December 5 letter. That response by petitioner included, inter alia, a challenge to the underlying tax liability for 1997, as well as allegations including: (1) Petitioner never received a "valid" notice of deficiency; (2) no valid assessment of an income tax liability for 1997 had been made against petitioner; and (3) petitioner had not been issued a notice and demand for payment as required under section 6303. Petitioner also requested verification from the Secretary that all applicable laws and administrative procedures were followed with respect to the 1997 tax liability.

On December 20, 2001 , petitioner attended an administrative hearing in New York City conducted by the Appeals officer. At the hearing, the Appeals officer provided petitioner with a literal transcript of petitioner's account for 1997.

Respondent's Notice of Determination

On March 14, 2002 , respondent's Appeals Office issued petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, determining that the proposed levy against him for 1997 should be sustained.

Petitioner's Petition and Respondent's Motion To Have a Penalty Imposed Against Petitioner Pursuant to Section 6673

On April 8, 2002 , petitioner filed with the Tax Court his petition seeking review of respondent's notice of determination. The petition included allegations that: (1) The Appeals officer failed to obtain verification from the Secretary that the requirements of any applicable law or administrative procedure were met as required under section 6330(c)(1); (2) the Appeals officer failed to identify the statutes making petitioner liable for Federal income tax; (3) petitioner never received a "proper" notice of deficiency; (4) petitioner was not lawfully assessed a tax liability for 1997; (5) petitioner never received a notice and demand for payment; and (6) petitioner was denied the opportunity to challenge the existence or the amount of the underlying tax liability for 1997.

On December 2, 2002 , at the trial in this case, respondent orally moved to have this Court impose against petitioner a penalty pursuant to section 6673 in the amount of $25,000.

OPINION

If any person neglects or refuses to make payment of any assessed Federal tax liability within 10 days of notice and demand, the Secretary is authorized to collect the assessed tax by levy on that person's property. Sec. 6331(a). As a general rule, at least 30 days before taking such action, the Secretary must provide the person with a written final notice of intent to levy that describes, among other things, the administrative appeals available to the person. Sec. 6331(d)(1), (4).

Upon request, the person is entitled to an administrative review hearing before respondent's Appeals Office. Sec. 6330(b)(1). If dissatisfied with the Appeals Office determination, the person may seek judicial review in the Tax Court or a Federal District Court , as appropriate. Sec. 6330(d). Generally, action on the proposed levy is suspended during the pendency of the administrative review hearing and any judicial review proceeding. Sec. 6330(e)(1).

Section 6330(c) prescribes the relevant matters that a person may raise at an Appeals Office hearing, including spousal defenses, the appropriateness of respondent's proposed collection action, and possible alternative means of collection. A taxpayer may contest the existence or amount of the underlying tax liability at an Appeals Office hearing only if the taxpayer did not receive a statutory notice of deficiency with respect to the underlying tax liability or did not otherwise have an opportunity to dispute that liability. Sec. 6330(c)(2)(B).

Where the underlying tax liability is not at issue, we generally review determinations made by the Appeals Office for an abuse of discretion. E.g., Magana v. Commissioner [Dec. 54,765], 118 T.C. 488, 493 (2002).

Notice of Deficiency

Petitioner received a notice of deficiency for 1997. He is, therefore, not entitled to challenge the underlying tax liability at the hearing conducted under section 6330. Sec. 6330(c)(2)(B). Nonetheless, he argues that the notice of deficiency was not signed by someone in authority and was invalid. This position is frivolous and groundless. Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 165-166 (2002) (noting that Directors of Service Centers have been delegated the authority to issue notices of deficiency); Koenig v. Commissioner [Dec. 55,046(M)], T.C. Memo. 2003-40 n.4; see Schmith v. Commissioner [Dec. 54,897(M)], T.C. Memo. 2002-252 (taxpayer's denial of receiving "valid" notice of deficiency did not mean the taxpayer failed to receive notice of deficiency).

Verification Requirement

We likewise reject petitioner's argument that the Appeals officer failed to obtain verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required by section 6330(c)(1). The record shows that the Appeals officer obtained and reviewed a literal transcript of petitioner's account for 1997, and that she provided this transcript of account to petitioner at his Appeals hearing. The information in this transcript is also contained in the Form 4340, Certificate of Assessments, Payments and Other Specified Matters, that the parties stipulated in evidence. Section 6330(c)(1) does not require the Commissioner to rely on a particular document (e.g., the summary record itself rather than a transcript of account) to satisfy the verification requirement imposed therein. See Roberts v. Commissioner [Dec. 54,733], 118 T.C. 365, 371 n.10, and cases cited thereat; Standifird v. Commissioner [Dec. 54,889(M)], T.C. Memo. 2002-245, affd. [2003-2 USTC ¶50,652] 72 Fed. Appx. 729 (9th Cir. 2003); Weishan v. Commissioner [Dec. 54,704(M)], T.C. Memo. 2002-88. In this regard we note that the transcript provided all the information prescribed in section 301.6203-1, Proced. & Admin. Regs. See Weishan v. Commissioner, supra; Lindsey v. Commissioner [Dec. 54,703(M)], T.C. Memo. 2002-87, affd. [2003-1 USTC ¶50,294] 56 Fed. Appx. 802 (9th Cir. 2003).³

Petitioner has not raised any irregularity in the assessment procedure that would raise a legitimate question about the validity of the assessment or the information contained in the transcript and the Form 4340. Accordingly, we conclude that the Appeals officer here satisfied the verification requirement of section 6330(c)(1).

Notice and Demand

We similarly reject petitioner's argument that he never received a notice and demand for payment of his unpaid tax liability for 1997. The Form 4340 shows that respondent sent petitioner a notice of balance due on the date that respondent assessed the tax and interest for 1997. A notice of balance due constitutes 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); Schaper v. Commissioner [Dec. 54,843(M)], T.C. Memo. 2002-203; Weishan v. Commissioner, supra. The notice of balance due was sufficient to constitute notice and demand within the meaning of section 6303(a) because it informed petitioner of the amount owed and requested payment. Standifird v. Commissioner, supra; see Elias v. Connett [90-2 USTC ¶50,397], 908 F.2d 521, 525 (9th Cir. 1990) ("The form on which a notice of assessment and demand for payment is made is irrelevant as long as it provides the taxpayer with all the information required under 26 U.S.C. section 6303(a).")

Conclusion

Based upon our examination of the record before us, we find that respondent did not abuse his discretion in determining to proceed with the collection action as determined in the notice of determination with respect to petitioner's unpaid income tax liability for taxable year 1997. In making that finding, we have considered all arguments made by petitioner, and to the extent not mentioned above, conclude them to be irrelevant or without merit.

In respondent's motion, respondent requests that the Court impose against petitioner a penalty pursuant to section 6673 in the amount of $25,000. In pertinent part, section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court that a proceeding before it was instituted or maintained primarily for delay, sec. 6673(a)(1)(A), or that the taxpayer's position in such a proceeding is frivolous or groundless, sec. 6673(a)(1)(B).

As evidenced by the petition and petitioner's subsequent arguments, petitioner's legal arguments are frivolous and he has no grounds justifying his claim that the Appeals officer erred in any manner. We can see no reason for the petition but to delay the collection of the 1997 income tax owing from petitioner. Petitioner has not only wasted his time, but he has wasted the time of respondent's agents, officers, and counsel, not to mention the waste of the Court's time in disposing of this case. We shall not penalize petitioner in the amount, $25,000, requested by respondent, but we do believe that petitioner deserves a significant section 6673 penalty. We shall therefore require petitioner pursuant to section 6673(a)(1) to pay to the United States a penalty in the amount of $7,500.

To reflect the foregoing,

An appropriate order and decision will be entered.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code as amended.

² Respondent determined the deficiency without taking into account the tax withheld from petitioner's wages, as a statutory notice of deficiency does not take such withheld amount into account. See secs. 31(a), 6211(b)(1). However, insofar as petitioner's ultimate tax liability is concerned, respondent gives petitioner credit for the amount withheld from his wages.

³ As indicated above, the Appeals officer provided petitioner at his Appeals hearing with the literal transcript of his account that she reviewed. Sec. 6330(c)(1) does not even require an Appeals officer, at or prior to a collection due process hearing, to give the taxpayer a copy of the verification that the requirements of any applicable law or administrative procedure have been met. Sec. 301.6330-1(e)(1), Proced. & Admin. Regs., requires that the Appeals officer obtain verification before issuing the determination, not that he or she provide it to the taxpayer. Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166-167 (2002).

[Dec. 55,558(M)] Donald R. Cooley and Cathy A. Cooley v. Commissioner.

Docket No. 7464-00 , 9452-00L .¹ . T.C. Memo. 2004-49. Filed March 5, 2004 . [Appealable, barring stipulation to the contrary, to CA-8.]


[Code Sec. 6330]

Collection Due Process: Issues raised at hearing: Tax overpayment: Substantiation. --

An IRS Appeals officer erred in failing to credit a married couple's tax overpayment for one year against their liabilities. The taxpayers were entitled to challenge the existence or amount of their underlying tax liability at the Collection Due Process proceeding. The case was remanded to the Appeals officer for the appropriate credit. However, with respect to a second tax year, the couple failed to substantiate their overpayment and refund claims.

[Code Sec. 6663]

Penalties, civil: Fraud: Admissions by taxpayer: Failure to maintain adequate records: Criminal conviction. --

Fraud penalties were imposed against an attorney who admitted to having understated taxable income from his law practice by overstating business expenses. He understated large amounts of income over a number of years and failed to maintain adequate records. Moreover, his professional experiences provided him with knowledge that the pattern of underreporting income was unlawful and that he had a legal obligation to accurately report his income. Finally, with respect to one tax year, he was collaterally estopped from challenging the IRS's determination of a fraud penalty because he had pleaded guilty to tax evasion charges.

Donald R. Cooley and Cathy A. Cooley, pro sese. Kevin M. Brown, Martin B. Kaye, Michael W. Bitner, and James A. Kutten, for the respondent.

MEMORANDUM OPINION

WELLS, Chief Judge: In the case at Docket No. 7464-00, respondent determined deficiencies and penalties in income taxes as follows:

  Liability of Donald R. Cooley                                        

     Year                 Deficiency             Sec. 6663(a)    

                                               Penalties       

    1989                  $2,982.63           $24,584.96

    1990                   2,617.74            28,705.73

    1991                     171.92            14,035.44

    1992                      -0-              21,045.16

    1993                   3,007.91            18,888.44

 Liability of Cathy A. Cooley                                         

     Year                 Deficiency             Sec. 6663(a)    

                                                 Penalties       

     1989                 $2,982.63                     -0-

     1990                  2,617.74                     -0-

     1991                    171.92                     -0-

     1992                     -0-                       -0-

     1993                  3,007.91                     -0-

After concessions, the remaining issue to be decided in Docket No. 7464-00 is whether petitioner Donald R. Cooley (hereinafter referred to individually as petitioner) is liable for section 6663(a) penalties for fraud with respect to his 1989, 1990, 1991, 1992, and 1993 taxable years. Respondent did not determine section 6663(a) penalties against petitioner Cathy A. Cooley. In the case at Docket No. 9452-00L, we must decide whether respondent's determination to proceed with the collection of Federal income taxes assessed against petitioners for their 1989, 1990, 1991, 1992, 1993, and 1996 taxable years was appropriate. All section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.

Background

The parties submitted the instant case, fully stipulated, without trial, pursuant to Rule 122. The parties' stipulations of fact are hereby incorporated by this reference and are found as facts in the instant case.

Petitioners are husband and wife, filed joint Federal income tax returns for their 1989, 1990, 1991, 1992, and 1993 taxable years, and were residents of Springfield , Missouri , when they filed their petitions. During the years in issue, petitioner was a self-employed criminal defense lawyer. Prior to private practice, petitioner served as an Assistant United States Attorney. Petitioner maintained the records for both his personal and law firm accounts. Petitioners employed the cash method of accounting in determining the income and expenses reported on their joint Federal income tax returns for the years in issue.

Petitioners filed original and amended Federal individual income tax returns, Forms 1040 and 1040X, as follows:

  Year                Description              Date Filed     

  1989                 Tax return              
4/15/1990

  1989               1st amended return        
1/30/1995

  1989               2nd amended return        
2/15/1995

  1989               3rd amended return        
7/22/1996

  1990                 Tax return              
4/15/1991

  1990              1st amended return         
8/8/1994

  1990              2nd amended return         
1/24/1995

  1990              3rd amended return         
7/22/1996

  1991                 Tax return              
4/15/1992

  1991               1st amended return        
7/8/1994

  1991               2nd amended return        
1/23/1995

  1991               3rd amended return        
7/22/1996

  1992                 Tax return              
4/15/1993

  1992               1st amended return        
7/8/1994

  1992               2nd amended return        
2/2/1995

  1992               3rd amended return        
7/22/1996

  1993                 Tax return              
4/15/1994

  1993               1st amended return        
7/11/1994

  1993               2nd amended return        
2/1/1995

  1993               3rd amended return        
7/22/1996

Petitioners reported their total income and Schedule C gross receipts on their tax returns for the years in issue, as follows:

           Year                Total Income          Schedule C Gross  

                                                        Receipts1       

1989 Tax return                 $87,508.67             $146,865.99

  1st amended return            168,578.07              206,576.31

  2nd amended return            173,691.86              212,534.90

  3rd amended return            186,846.86                     -0-

1990 Tax return                  77,398.10              160,472.48

  1st amended return            159,052.72              201,668.98

  2nd amended return            176,100.86                     -0-

  3rd amended return            197,600.86                     -0-

1991 Tax return                  49,747.09               98,469.85

  1st amended return             92,458.05              119,761.49

  2nd amended return             92,997.98                     -0-

  3rd amended return            114,947.98                     -0-

1992 Tax return                  62,042.31              114,996.02

  1st amended return            134,320.67              158,193.84

  2nd amended return            142,882.18                     -0-

  3rd amended return            162,232.18                     -0-

1993 Tax return                  80,189.01              133,856.54

  1st amended return            120,617.78              169,580.03

  2nd amended return            126,808.73                     -0-

  3rd amended return            150,708.73                     -0-

Petitioners reported expenses from petitioner's law practice, as follows:

        Year             Schedule C Expense 1/

1989 Tax return                $68,300.46      

  1st amended return            46,941.38      

  2nd amended return            47,961.27      

  3rd amended return                -0-         

1990 Tax return                 92,195.19      

  1st amended return            52,797.01      

  2nd amended return                -0-         

  3rd amended return                -0-         

1991 Tax return                 54,033.76      

  1st amended return            34,967.03      

  2nd amended return                -0-         

  3rd amended return                -0-         

1992 Tax return                 58,116.57      

  1st amended return            34,846.96      

  2nd amended return                -0-         

  3rd amended return                -0-         

1993 Tax return                 60,627.80      

  1st amended return            44,071.96      

  2nd amended return                -0-         

  3rd amended return                -0-         

  1 For the entries marked "-0-", petitioners did

 not attach a separate Schedule C to the amended  

 return.                                          

Petitioners' Federal income tax returns for 1989, 1990, 1991, 1992, and 1993 understated net income from petitioner's law practice by overstating business expenses. Petitioner's understatements of net income due to overstated business expenses were $20,339.19 for taxable year 1989, $39,398.18 for taxable year 1990, $19,066.73 for taxable year 1991, $23,269.61 for taxable year 1992, and $16,555.64 for taxable year 1993.

Petitioners' original 1989 Federal income tax return reported a tax of $18,473.30. In their final amended 1989 Federal income tax return, petitioners reported that their total tax liability was $53,270.62 of which $51,913.76 had been paid and $1,356.86 was still due. Petitioners' original 1990 Federal income tax return reported a tax of $16,937.90. In their final amended 1990 Federal income tax return, petitioners reported that their total tax liability was $52,594.07 of which $47,564.02 had been paid and $5,030.05 was still due. Petitioners' original 1991 Federal income tax return reported a tax due of $8,607.61. In their final amended 1991 Federal income tax return, petitioners reported that their total tax liability was $26,959.52 of which $20,513.52 had been paid and $6,446 was still due. Petitioners' original 1992 Federal income tax return reported a tax due of $11,895.81. In their final amended 1992 return, petitioners reported that their total tax liability was $42,715.22 of which $36,715.80 had been paid and $5,999.42 was still due. Petitioners' original 1993 Federal income tax return reported a tax due of $14,210.40. In their final amended 1993 tax return, petitioner reported that their total tax liability was $38,072.22 of which $30,897.80 had been paid and $7,184.42 was still due.

On January 21, 1997 , the United States Department of Justice (Department of Justice) filed an information against petitioner in the United States District Court for the Western District of Missouri, alleging that he was guilty of one count of an attempt to evade or defeat tax, pursuant to section 7201. The information alleged:

That on or about the 15th day of April, 1991, in the Western District of Missouri, DONALD R. COOLEY, a resident of Springfield, Missouri, did willfully attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America for the calendar year 1990, by filing and causing to be filed with the Director, the Internal Revenue Service Center, at Kansas City, Missouri, a false and fraudulent U.S. Individual Income Tax Return, Form 1040, wherein he stated that his taxable income for the calendar year 1990, was the sum of $47,520.36, and that the amount of tax due and owing thereon was the sum of $16,937.90, whereas, as he then and there well knew and believed, his taxable income for said calendar year was the sum of $167,723.12, upon which said taxable income there was owing to the United States of America an income tax of $55,058.43.

In violation of Title 26, United States Code, Section 7201.

On January 21, 1997 , petitioner, represented by James R. Hobbs, Esq., entered into a plea agreement (plea agreement) with the Department of Justice, pleading guilty to a one count information of an attempt to evade or defeat tax in violation of section 7201. In section A-3 of the plea agreement, petitioner acknowledged that for his 1990 tax year, he attempted to evade or defeat a tax, that additional taxes were due and owing, and that his actions were willful. In section A-7, as part of the plea agreement, the Department of Justice agreed not to charge petitioner with any other Federal criminal offenses relating to his 1988 through 1994 taxable years. Moreover, in section A-9 of the plea agreement, petitioner agreed to:

pay all taxes, interest and penalties found to be lawfully owed and due to the Internal Revenue Service for the years 1987 through and including 1995, and to cooperate with, and provide to, the Internal Revenue Service, any documentation necessary for a correct computation of all taxes due and owing for those years, and further agrees that the Court may make this term a condition of any sentence of probation or supervised release.

Section B-7 of the plea agreement provided:

The defendant further acknowledges defendant's understanding of the nature of the offense or offenses to which defendant is pleading guilty, and the elements thereof, including the penalties provided by law, and defendant's complete satisfaction with the representation and advice received from defendant's undersigned counsel.

Section B-8 of the plea agreement provided:

Defendant is pleading guilty because defendant is in fact guilty. The defendant certifies that defendant does hereby admit that the facts set forth below are true, and were this case to go to trial, the United States would be able to prove those facts beyond a reasonable doubt.

On April 30, 1997 , Judge Fernando J. Gaitan, Jr., of the United States District Court, Western District of Missouri, entered a judgment against petitioner pursuant to section 7201, and sentenced him to 4 months' incarceration at the Alpha House, a halfway house located in Springfield, Missouri, followed by 2 years of supervised release.

On April 4, 2000 , petitioners received their notice of deficiency for their 1989, 1990, 1991, 1992, and 1993 taxable years.

On June 27, 1999 , respondent issued a Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing, for petitioners' 1989, 1990, 1992, 1993, and 1996 taxable years. The account summary of the final notice indicated that respondent was trying to collect the following amounts:

Year            Assessed         Statutory           Total     

                Balance 1          Additions                      

1989            $9,664.88           $0.00           $ 9,664.88

1990             8,129.85        1,895.48            10,025.33

1992             1,968.42          396.69             2,365.11

1993                 0.00        2,016.71             2,016.71

1996             2,203.02          332.19             2,535.21

  1 The assessed balances for 1989, 1990, 1992, and 1993 consists      

 entirely of accrued interest. The assessed balance for 1996 includes   

 some of the original tax liability, penalties, and interest.           

On July 23, 1999 , petitioners filed a Request for a Collection Due Process Hearing (request), for their 1989, 1990, 1992, 1993, and 1996 taxable years. In their request petitioners contended: "The tax liability figures are still incorrect based on inaccurate figuring of tax amounts paid and failure to credit excess tax payments towards amounts owed on other tax years." Petitioners also raised a section 6015 defense with respect to petitioner Cathy A. Cooley's tax liabilities.

On March 9, 2000 , respondent issued to petitioners a Final Notice of Intent to Levy and Notice of Your Right to A Hearing, for their 1991 taxable year. The account summary in the final notice indicated that respondent was trying to collect an assessed balance of $2,493.93 and additional penalties and interest of $1,084.03 for a total of $3,577.96.

On March 23, 2000 , petitioners filed a Request for a Collection Due Process Hearing, relating to the final notice for their 1991 taxable year. In a letter attached to their request for a section 6330 hearing, petitioners contended that the period of limitations under section 6501(a) had expired, that respondent had not issued them a notice of deficiency, and that the amount of their tax liability had not been determined.

On July 5, 2000 , petitioners petitioned this Court with respect to the April 4, 2000 , notice of deficiency. That case was filed as docket No. 7464-00.

On August 8, 2000 , petitioners were sent a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 for their 1989, 1990, 1992, 1993, and 1996 taxable years. The notice of determination provided: "Our decision is that the proposed levy action on 1989, 1990, 1992, 1993, and 1996 was appropriate." The notice of determination further indicated that "These outstanding balances owed are from your voluntarily filed tax returns Form 1040 and Form 1040X." Additionally, the notice of determination indicated that: "The Service has already considered and issued a separate determination letter on the Innocent Spouse issue."

Attachment 3193, attached to the notice of determination, provided:

Issues Relating to the Unpaid Liabilities:

The unpaid liabilities shown on the Notice of Intent to Levy (L-1058/LT-11) dated 06/27/1999 are from voluntarily filed original tax returns, Form 1040, or amended returns, Form 1040X.

l Review of your account for the years 1989, 1990, 1992, and 1993 shows that the outstanding balances owed were for accrued interest on your amended returns.

l Review of your account for the 1996 year shows that the outstanding balance owed included some of your original tax liability, penalty, and accrued interest.

* * * * * * *

The Notice of Intent to Levy dated 6/27/1999 did not include and [sic] amounts from the pending audit adjustments for 1989, 1990, 1992, or 1993. The proposed audit adjustments were considered separately by the Appeals office. A separate Statutory Notice of Deficiency was issued by the Appeals Office on April 4, 2000 , and gave you the right to petition to the Tax Court. Those issues are not part of this Collection Due Process Hearing. Your claim for Innocent Spouse relief has also been considered separately by the Appeals Office and a separate determination letter was issued. That issue is not part of this Collection Due Process hearing.

Respondent's Appeals officer issued a statement in support of the notice of determination for petitioners' 1989, 1990, 1992, 1993, and 1996 taxable years. The history of account section of the Appeals officer's supporting statement said: the "IDRS shows that these CDP account balances are for outstanding balances owed on their voluntarily filed original and amended returns. Generally, the taxpayer full [sic] paid the tax, but has not paid the interest." Section three of the Appeals officer's supporting statement provided:

Balancing the Need for Efficient Collection with Any Legitimate Concern that the Proposed Collection Action is more Intrusive than Necessary:

The representative states that the taxpayer is not in agreement with the final amended return filed on each period. It was only a protective action taken by the taxpayer. The taxpayer is pursuing that action to contest that - including it in his petition to the Tax Court on the unassessed audit adjustments and also pursuing interest abatement.

The representative has reviewed transcripts of the taxpayer's account and matched their payments - they have no argument with any payments.

On August 8, 2000 , respondent issued petitioners a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (Determination), for petitioners' 1991 taxable year, which determined that the tax liabilities reported in the final notice for 1991 were appropriate. The notice of determination provided:

Summary of Determination:

* * * * * * * *

The outstanding balance owed and shown on the L-1058 dated 03/09/2000 was based on assessments from your voluntarily filed tax returns Form 1040 and Form 1040X. The balance included accrued interest.

* * * * * * *

You raised the issue that no notice of deficiency had been issued. However, the outstanding balance owed as shown in the L-1058 dated 03/09/2000 was based on your voluntarily filed original and amended tax returns.

You raised the issue that the amount due had not been determined. However, the outstanding balance owed as shown in the L-1058 dated 03/09/2000 was based on your voluntarily filed original and amended tax returns.

The Service has already considered and issued a separate determination letter on the Innocent Spouse issue.

Attachment 3193, attached to the notice of determination for 1991, provided:

Issue Relating to the Unpaid Liabilities:

You raised the issue "whether the statute of limitations under IRC 6501(a) had expired prior to the assessment".

While the three year statute had expired, two of the amended returns you had filed for 1991 had not yet been processed by the Service.

The Service determined that those amended returns could be processed since tax may be assessed at any time under IRC sec. 6501(c).

You raised the issue that "no notice of deficiency had been issued".

The unpaid liability shown on Notice of Intent to Levy (L-1058) dated 03/09/2000 was from your voluntarily filed tax returns, Form 1040 or Form 1040X.

The Notice of Intent to Levy dated 03/09/2000 did not include amounts from the proposed audit adjustments for 1991 - since that assessment had not been made. You had exercised your appeal rights and the proposed audit adjustments were considered separately by the Appeals office. A separate Statutory Notice of Deficiency was issued by the Appeals Office on April 4, 2000 , and gave you the right to petition to the Tax Court. Those issues are not part of this Collection Due Process hearing.

You raised the issue that "the amount due had not been determined".

The unpaid tax liability shown on the Notice of Intent to Levy (L-1058) dated 03/09/2000 was from your voluntarily filed tax returns, Form 1040 or 1040X.

Review of your account for 1991 shows that the outstanding balance owed was for accrued interest on your amended return.

Your claim for Innocent Spouse relief has also been considered separately by the Appeals Office and a separate determination letter was issued. The Innocent Spouse determination is not part of this Collection Due Process hearing.

Respondent's Appeals officer issued a statement in support of the 1991 notice of determination. The 1991 Appeals officer's supporting statement said: "IDRS shows that these CDP account balances are for outstanding balances owed on their voluntarily filed original and amended returns. Generally, the taxpayer full paid the tax but has not paid the interest." Moreover, the Appeals officer's supporting statement responded to petitioners' assertion that no notice of deficiency for 1991 had been issued:

2. Relevant Issues Presented by the Taxpayer

* * * * * * *

The CDP Appeals officer reviewed the IDRS transcripts. The outstanding balance owed and shown on L-1058 that was issued by COLLECTION on 03/09/2000 is from interest assessed and accrued on the voluntarily filed original and amended returns.

The CDP Appeals Officer informed the representative that the proposed audit adjustments shown in the Statutory Notice of Deficiency issued on April 4, 2000 , are not part of this balance owed. This balance owed shown on the L-1058 was as of 03/09/2000 and was from the taxpayers' voluntarily filed original and amended returns that had been processed by the Service.

As to petitioners' contention that the amount due had not been determined, the Appeals officer said: "The amount due, as shown on the L-1058 dated 03/09/2000 , had been determined from their voluntarily filed original and amended returns."

On July 5, 2000 , after receiving the notice of deficiency, petitioners filed a petition in this Court which was filed as Docket No. 7464-00. In their petition, petitioners contended:

The tax assessed by the Internal Revenue Service is incorrect and overstated. Taxpayer believes that the records generated by the investigation of the Internal Revenue Service would reveal that said assessment is premised upon an overstatement of income in taxpayers amended returns. Further, taxpayer does not believe that the civil penalties assessed him under IRC Section 6663(a) are applicable to all of the additional reported income in the years proposed.

On September 7, 2000 , after receiving the notices of determination, petitioners filed a petition in this Court, which was filed as Docket No. 9452-00L. In their petition, petitioners contended: "The [taxpayers] have petitioned the [T]ax [C]ourt for the above listed tax years to determine the correct tax liability, IRS has examined the years in question. Prior to the start of collection action, the correct liability should be determined."

Discussion

The Deficiency Case at Docket No. 7464-00

The only issue we must decide in the case at Docket No. 7464-00² is whether petitioner is liable for penalties for fraud under section 6663(a)³ for the taxable years in issue.⁴ Respondent has the burden of proving by clear and convincing evidence that petitioner (1) underpaid his tax each year in issue, and (2) that some part of his underpayment was due to fraud. Sec. 6663(a); see Parks v. Commissioner [Dec. 46,545], 94 T.C. 654, 660-661 (1990).

Regarding whether an underpayment of tax exists for the years in issue, petitioners stipulated that they understated taxable income from petitioner's law practice by overstating business expenses for his 1989, 1990, 1991, 1992, and 1993 taxable years. Indeed, for the years in issue, petitioners' final amended returns reported far more tax than reported on their original returns.

Each amended Federal income tax return which reports more income than the originally filed return is an admission of underpayment of tax on the original return. See Badaracco v. Commissioner [84-1 USTC ¶9150], 464 U.S. 386, 399 (1984); Delvecchio v. Commissioner [Dec. 54,358(M)], T.C. Memo. 2001-130; see also Tandon v. Commissioner [Dec. 52,576(M)], T.C. Memo. 1998-66; Kalo v. Commissioner [Dec. 51,621(M)], T.C. Memo. 1996-482, affd. without published opinion [98-2 USTC ¶50,514] 149 F.3d 1183 (6th Cir. 1998); Katerelos v. Commissioner [Dec. 51,467(M)], T.C. Memo. 1996-340. Petitioner's amended returns, for the years in issue, are admissions of underpayments because the amended returns reported far more income than reported on the original returns.

We next decide whether petitioner's underpayments of tax for the years in issue were due to fraud, which is a question of fact that must be considered based on an examination of the entire record and petitioner's entire course of conduct. Petzoldt v. Commissioner [Dec. 45,566], 92 T.C. 661, 699 (1989); Recklitis v. Commissioner [Dec. 45,154], 91 T.C. 874, 910 (1988); see also Rowlee v. Commissioner [Dec. 40,228], 80 T.C. 1111, 1123 (1983). Fraud is never presumed and must be established by independent evidence of fraudulent intent. See Petzoldt v. Commissioner, supra at 699; Recklitis v. Commissioner, supra at 910. Fraud may be proven by circumstantial evidence, and reasonable inferences may be drawn from the facts because direct evidence is rarely available. Delvecchio v. Commissioner, supra; see DiLeo v. Commissioner [Dec. 47,423], 96 T.C. 858, 874 (1991), affd. [92-1 USTC ¶50,197] 959 F.2d 16 (2d Cir. 1992); see also Petzoldt v. Commissioner, supra at 699.

Circumstantial evidence that may give rise to a finding of fraud includes: (1) Understatement of income; (2) inadequate records; (3) failure to file tax returns; (4) providing implausible or inconsistent explanations of behavior; (5) concealment of assets; (6) failure to cooperate with taxing authorities; (7) filing false Forms W-4, Employee's Withholding Allowance Certificate; (8) failure to make estimated tax payments; (9) dealing in cash; (10) engaging in illegal activity; (11) attempting to conceal illegal activity; (12) engaging in a pattern of behavior that indicates an intent to mislead; and (13) filing false documents. Bradford v. Commissioner [86-2 USTC ¶9602], 796 F.2d 303, 307 (9th Cir. 1986), affg. [Dec. 41,615(M)] T.C. Memo. 1984-601; see Christians v. Commissioner [Dec. 55,141(M)], T.C. Memo. 2003-130; see also Niedringhaus v. Commissioner [Dec. 48,411], 99 T.C. 202, 211 (1992). These "badges of fraud" are not exclusive. Niedringhaus v. Commissioner, supra at 211; see Miller v. Commissioner [Dec. 46,435], 94 T.C. 316, 334 (1990). Additionally, the taxpayer's background may be examined to establish fraud. Spies v. United States [43-1 USTC ¶9243], 317 U.S. 492, 497 (1943); Niedringhaus v. Commissioner; supra at 211; Walters v. Commissioner [Dec. 51,002(M)], T.C. Memo. 1995-543.

A consistent pattern of understating large amounts of income may be strong evidence of fraud. Camien v. Commissioner [70-1 USTC ¶9179], 420 F.2d 283, 287 (8th Cir. 1970), affg. [Dec. 28,818(M)] T.C. Memo. 1968-12; see Delvecchio v. Commissioner, supra (citing Holland v. United States [54-2 USTC ¶9714], 348 U.S. 121, 137 (1954)); see also Roth v. Commissioner [Dec. 52,532(M)], T.C. Memo. 1998-28; Williams v. Commissioner [Dec. 48,074(M)], T.C. Memo. 1992-153 ("petitioner has consistently and substantially understated his income, a fact that even, `standing alone, is persuasive evidence of fraudulent intent to evade taxes.' " (quoting Estate of Beck v. Commissioner [Dec. 30,776], 56 T.C. 297, 364 (1971)), affd. [93-2 USTC ¶50,404] 999 F.2d 760 (4th Cir. 1993); Hughes v. Commissioner [Dec. 49,757(M)], T.C. Memo. 1994-139 (citing Rogers v. Commissioner [40-1 USTC ¶9459], 111 F.2d 987, 989 (6th Cir. 1940), affg. [Dec. 10,077] 38 B.T.A. 16 (1938)). It has been held that discrepancies of 100 percent or more between the correct net income and the reported net income for 3 successive years provide strong evidence of fraudulent intent. Hargis v. Godwin [55-1 USTC ¶940], 221 F.2d 486, 490 (8th Cir. 1955); see Rogers v. Commissioner, supra at 989; see also Williams v. Commissioner, supra; Adams v. Commissioner [Dec. 36,231(M)], T.C. Memo. 1979-305. Moreover, fraudulent understatement of income may be established by overstatement of Schedule C expenses. Drobny v. Commissioner [Dec. 43,140], 86 T.C. 1326, 1349 (1986); see Clark v. Commissioner [Dec. 47,460(M)], T.C. Memo. 1991-313; see also Buchbinder v. Commissioner [Dec. 43,409(M)], T.C. Memo. 1986-485.

Petitioners originally reported petitioner's taxable income for his 1989, 1990, 1991, 1992, and 1993 taxable years, respectively as $87,508.67, $77,398.10, $49,747.09, $62,042.31, and $80,189.01. On their final amended returns for petitioners' 1989, 1990, 1991, 1992, and 1993 taxable years, respectively, petitioners reported petitioner's taxable income as $186,846.86, $197,600.86, $114,947.98, $162,232.18, and $150,708.73. Petitioners' returns understated petitioner's taxable income for his 1989, 1990, 1991, 1992, and 1993 taxable years, respectively, by $99,338.19, $120,202.76, $65,200.89, $100,189.87, and $70,519.72. The discrepancies for the years in issue were 114 percent,⁵ 155 percent, 131 percent, 161 percent, and 88 percent, respectively.⁶ We conclude from the foregoing understatements of income that petitioner engaged in a pattern of consistently understating his gross receipts and overstating his business expenses for the years in issue and that petitioner's consistent pattern of substantially understating income is a strong indicator of fraud.

Petitioner failed to maintain adequate records, although he indicated that he maintained his own records for both his business and personal accounts. In their amended Federal income tax returns, petitioners admitted that petitioner kept inadequate records which resulted in understatements of income.⁷ Cf. Badarraco v. Commissioner [84-1 USTC ¶9150], 464 U.S. 386 (1984). Petitioner claimed that the understatements during the years in issue were due to: Inaccurate calculations of income, some of which were from a trust account, double counting and miscalculating deductions, and failure to properly account for certain stock transfers. We conclude that the admissions on petitioners' amended returns indicate that petitioner did not keep adequate business records and that his inadequate record keeping constitutes an indicium of fraud. Niedringhaus v. Commissioner [Dec. 48,411], 99 T.C. at 211 (1992).

"The sophistication, education, and intelligence of the taxpayer are relevant to determining fraudulent intent." Sadler v. Commissioner [Dec. 53,476], 113 T.C. 99, 104 (1999); see Niedringhaus v. Commissioner, supra at 211; see Scallen v. Commissioner [Dec. 44,131(M)], T.C. Memo. 1987-412, affd. [ 89-1 USTC ¶9369] 877 F.2d 1364 (8th Cir. 1989). Throughout the years in issue, petitioner was an attorney, and we may consider this fact in deciding whether petitioner acted with fraudulent intent. Petitioner began his legal career as an Assistant United States Attorney, charged with the duty to enforce the laws of the United States . After serving as an Assistant United States Attorney, petitioner engaged in private practice as a criminal defense lawyer. We conclude that petitioner's professional experiences provided him with knowledge that engaging in a pattern of consistently failing to report significant amounts of income is unlawful and that he has a legal obligation to accurately report income.

Petitioner contends that a section 6663(a) penalty should not be levied against him for his 1990 taxable year. We conclude that petitioner's contention is without merit. Petitioner pleaded guilty to an attempt to evade or defeat tax pursuant to section 7201⁸ for 1990. As a former Federal prosecutor and criminal defense lawyer, he should have been aware of the implications of such a plea agreement. Moreover, because petitioner pleaded guilty to an attempt to evade or defeat tax pursuant to section 7201, he is collaterally estopped from challenging respondent's determination that there was an underpayment for his 1990 taxable year due to fraud under section 6663(a). See Kisting v. Commissioner [62-1 USTC ¶9209], 298 F.2d 264, 272 (8th Cir. 1962) (not reversible error for the Court to admit taxpayer's nolo contendere plea into evidence), affg. [Dec. 24,603(M)] T.C. Memo. 1961-3; DiLeo v. Commissioner [Dec. 47,423], 96 T.C. 858, 885-886; Stone v. Commissioner [Dec. 30,767], 56 T.C. 213, 221 (1971); Moore v. Commissioner [Dec. 54,291(M)], T.C. Memo. 2001-77; see also Knoff v. Commissioner [Dec. 48,598(M)], T.C. Memo. 1992-624.

Based on the foregoing, we hold that respondent has clearly and convincingly established that petitioner is liable for penalties for fraud under section 6663(a) for the taxable years in issue. Because section 6663(a) applies, we need not address respondent's alternative argument under section 6662(a). As noted, supra, petitioners do not contest respondent's nonfraud deficiency determinations.⁹ Additionally, petitioners contended in their petitions that several alleged overpayments and a refund should be applied against their liabilities in both their deficiency case and in their levy case. We address those contentions in the portion of this opinion addressing their levy case below.

The Levy Case at Docket No. 9452-00L

The issue we must decide in the case at Docket No. 9452-00L is whether respondent may proceed with the collection of petitioners' tax liabilities for the years in issue pursuant to section 6330.

The two notices of determination address self-reported liabilities, as well as accrued interest and statutory additions to tax, for petitioners' 1989, 1990, 1991, 1992, 1993, and 1996 taxable years. The two notices of determination do not address the deficiencies and penalties in the case at Docket No. 7464-00.

Petitioners contend that respondent should have credited an alleged refund and several alleged overpayments against the liabilities for the years in issue. Petitioners allege that there was an overpayment of Federal income tax for their 1992 taxable year of $3,126.40. Petitioners also allege that a $2,564 refund was due for their 2001 taxable year, and that respondent applied that refund against the deficiencies in the instant case. Petitioners further allege that respondent notified them in a letter, dated March 28, 2002 , that a $4,215 overpayment had been applied against the deficiencies in their 1991, 1992, and 1993 taxable years.

Respondent's notice of determination indicated that the liabilities shown on the final notice of intent to levy for petitioners' 1992 taxable year were based on their tax returns. Respondent's final notice of intent to levy showed that petitioners' liabilities for their 1992 taxable year totaled $2,365.11, which reflects an assessed balance of $1,968.42 and statutory additions of $396.69. The Appeals officer's supporting statement and the notice of determination indicate that those liabilities consisted of interest that had accrued on taxes reported on petitioners' original and amended returns. The Appeals officer also indicated that "Generally, the taxpayer full [sic] paid the tax but has not paid the interest." Petitioners reported a tax liability of $42,714.42 on their final amended 1992 tax return, and petitioners have paid at least that amount for their 1992 taxable year. However, the April 4, 2000 notice of deficiency indicates that the income tax for petitioners' 1992 taxable year was $39,498.02. Respondent did not determine a deficiency in income tax for that year.

Respondent issued the notice of deficiency on April 4, 2000 , and the two notices of determination on August 8, 2000 . When respondent issued the two notices of determination, respondent was aware that petitioners' income tax for their 1992 taxable year was $39,498.02. Respondent's records show that petitioners paid at least $42,714.42 for their 1992 taxable year, and, therefore, petitioners overpaid their taxes by $3,216.40 for their 1992 taxable year.

We conclude from our analysis of respondent's records that the Appeals officer did not properly consider petitioners' payments for the 1992 taxable year against their liabilities in issue which respondent seeks to collect. Petitioners may challenge the existence or amount of their underlying tax liability pursuant to section 6330(c)(2)(B),¹⁰ which includes their "self-assessed" liabilities reported on their amended returns. Montgomery v. Commissioner [Dec. 55,501], 122 T.C. __ (2004)(slip op. at 11-12). Consequently, we remand the instant case to the Appeals officer to credit petitioners' $3,216.40 payment against the liabilities in issue.

Petitioners additionally contend that the $2,564 refund claimed on their Form 1040 for their 2001 taxable year should be applied against their liabilities in the instant case. Petitioners also contend that an alleged overpayment of $4,215.41 should be applied against their tax liabilities. Petitioners attached a document to their brief, purportedly from the Internal Revenue Service, dated March 28, 2002 , which indicated that an overpayment of $4,215.41 was applied against the deficiencies in their 1991, 1992, and 1993 taxable years. The document does not indicate the year to which the alleged overpayment relates.

Petitioners' 2001 Form 1040 and the March 28, 2002 , letter are not part of the record in this fully stipulated case. See Rule 91(e). We shall not examine documents that are not part of the record. Accordingly, petitioners' overpayment and refund claims are unsubstantiated.

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

To reflect the foregoing,

Decision will be entered for respondent in Docket No. 7464-00.

An appropriate order will be issued in Docket No. 9452-00L.

¹ These cases are consolidated for trial, briefing, and opinion.

² Petitioners contend on brief that certain alleged overpayments and credits should be applied against the income tax deficiencies in the case at Docket No. 7464-00. Petitioners do not otherwise challenge the income tax deficiencies determined by respondent in the case at Docket No. 7464-00. We shall address those contentions in the case at Docket No. 9452-00L. In the petition for the case at Docket No. 7464-00, petitioners alleged that "said assessment is premised upon an overstatement of income in taxpayers amended returns." Petitioners contend on brief that certain alleged overpayments should be applied against the income tax deficiencies in the case at Docket No. 7464-00, including the deficiency of $2,982.63 in 1989, $2,617.74 in 1990, $171.92 in 1991, and $3,007.91 in 1993. Those deficiencies are distinct from the sec. 6663(a) fraud penalties for petitioner's 1989, 1990, 1991, 1992, and 1993 tax years.

³ Sec. 6663 provides:

SEC. 6663. IMPOSITION OF FRAUD PENALTY

(a) Imposition of Penalty.-If 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.

(b) Determination of Portion Attributable to Fraud.-If

the Secretary establishes that any portion of an underpayment is attributable to fraud, the entire underpayment shall be treated as attributable to fraud, except with respect to any portion of the underpayment which the taxpayer establishes (by a preponderance of the evidence) is not attributable to fraud.

(c) Special Rule for Joint Returns. --In the case of a joint return, this section shall not apply with respect to a spouse unless some part of the underpayment is due to the fraud of such spouse.

⁴ The Tax Reform Act of 1986, Pub. L. 99-514, sec. 1503(a), 100 Stat. 2085, 2742, amended sec. 6653(b) to increase the addition to tax for fraud from 50 percent to 75 percent. The Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721, 103 Stat. 2395, removed the addition to tax for fraud from sec. 6653(b) and replaced it with sec. 6663. We note that petitioner's 1989 Federal income tax was due after the effective date of sec. 6663(a), Dec. 31, 1989, and therefore all calculations are made pursuant to sec. 6663(a).

⁵ Rounding to the nearest percentage point.

⁶ These percentages are calculated by taking the excess of the income reported on the final amended return over the income reported on the original return, and dividing that amount by the amount reported on the original return. See, e.g., Williams v. Commissioner [Dec. 48,074(M)], T.C. Memo. 1992-153, affd. [93-2 USTC ¶50,404] 999 F.2d 760 (4th Cir. 1993).

⁷ The admissions were reported on petitioner's amended Federal income tax returns (Form 1040X) in the section entitled "Part II Explanation of Changes to Income, Deductions, and Credits".

⁸ SEC. 7201. ATTEMPT TO EVADE OR DEFEAT TAX.

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

⁹ We note that respondent made adjustments to petitioners' capital gain and dividend income in the notice of deficiency, reallocating income between those two categories. Petitioners did not contest this issue and it is deemed to be conceded. See Rule 34(b)(4); Nicklaus v. Commissioner [Dec. 54,477], 117 T.C. 117, 120 n.4 (2001).

¹⁰ Sec. 6330(c)(2)(B) provides:

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such liability.