WHERRY, J., concurring: While I agree with the majority in concluding that our review is not limited to the administrative record, I write separately to emphasize the temporal requirement which, in my view, must be met to satisfy the evidentiary burden.

The majority holds:

that, when reviewing for abuse of discretion under section 6330(d), we are not limited by the Administrative Procedure Act (APA) and our review is not limited to the administrative record. The evidence in this case pertains to issues raised at the hearing. The [new] evidence in this case is relevant and admissible. [Majority op. p. 17.]

This conclusion should not be construed as sanctioning the dilatory introduction at trial of new facts or documents previously withheld and not produced at the Appeals hearing in order to justify reversal or remand of the Appeals or settlement officer's determination. "It is the responsibility of the taxpayer to raise all relevant issues at the time of the pre-levy hearing." H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 747, 1020; see Magana v. Commissioner [Dec. 54,765], 118 T.C. 488, 493 (2002). "Taxpayers will be expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing." Sec. 301.6330-1(e)(1), Proced. & Admin. Regs.

Nevertheless, pursuant to section 6330(d)(2), the Internal Revenue Service Office of Appeals retains jurisdiction of the collection action after the determination is made and a taxpayer may "apply for consideration of new information, make an offer-in-compromise, request an installment agreement, or raise other considerations at any time, before, during, or after the Notice of Intent to Levy hearing." H. Conf. Rept. 105-599, supra at 266, 1998-3 C.B. at 1020. This Court should consider the entire record of the actions taken by the Appeals Office at the time it conducts its judicial review.

Consequently, where the Appeals officer has invited or requested relevant facts or documents from the taxpayer, before or at the collection hearing, and those facts or documents are not provided within a reasonable time, their attempted introduction as new evidence at trial may not establish an abuse of discretion. This could be the result because of the temporal requirement, even though an abuse of discretion might have been demonstrated had the documentation been timely produced before or at the collection hearing.

In the instant case, the Appeals officer's failure to fairly consider evidence available at the hearing and to request and consider possible corroborating evidence (where petitioner's and his accountant's credibility was, in the Appeals officer's mind, at issue), coupled with the failure to ascertain whether a material breach of the existing offer-in-compromise had occurred, constituted an abuse of discretion.

COHEN, LARO, GALE, THORNTON, HAINES, and GOEKE, JJ., agree with this concurring opinion.

HALPERN and HOLMES, JJ., dissenting:¹ Petitioner admittedly owed almost $1 million in back taxes and additions to tax. Respondent agreed to forgo collection of almost 90 percent of that amount in exchange for petitioner's promise to pay the balance of $100,000 in 60 days and pay additional amounts if his future income exceeded certain levels.² Respondent expressly conditioned his forbearance on petitioner's timely compliance with tax filing and payment requirements over the next 5 years. The majority essentially concludes that, notwithstanding petitioner's failures to (1) comply with the timely filing condition and (2) respond to at least three written requests demanding compliance, respondent may not declare petitioner in default and proceed to collect the compromised amount in accordance with the terms of the offer-in-compromise (OIC). Along the way, the majority (1) eviscerates the Court's holding in Magana v. Commissioner [Dec. 54,765], 118 T.C. 488 (2002), regarding the matters we may properly address in a collection due process case, and (2) unwisely extends Ewing v. Commissioner [Dec. 55,519], 122 T.C. 32 (2004), which involved the evidence we may consider in a proceeding involving section 6015(f) ("equitable" innocent spouse relief). Respectfully, we dissent.

I. Issues Regarding the Scope of Our Review

Before we address the substantive aspect of the majority opinion, we turn our attention to our concerns regarding procedure.

A. "Topical" Scope of Review

As the majority recognizes, majority op. p. 27, we held in Magana v. Commissioner, supra at 493, that, in reviewing determinations of the Commissioner under section 6330(d)(1) for abuse of discretion, "generally we consider only arguments, issues, and other matter that were raised at the collection hearing or otherwise brought to the attention of the Appeals Office." See also sec. 301.6330-1(f)(2), Q&A-F5, Proced. & Admin. Regs. (taxpayer appealing the Commissioner's determination may ask the court to consider only issues that were raised at the administrative hearing). The majority distinguishes Magana on the ground that "petitioner is not raising a new issue in his petition." Majority op. p. 29. As far as it goes, that is a true statement: Neither in the petition nor, previously, in his dealings with the Appeals Office did petitioner raise the issue of "material breach" (the majority does that on its own). The majority overcomes that obstacle by broadly framing the issue as "compliance with the terms of the offer-in-compromise", id., which, by implication, encompasses both actual (strict) compliance (petitioner's position) and deemed (substantial) compliance (the majority's position).

The majority's expansive characterization of the contract issue in this case is simply another way of saying that there is more than one possible argument in support of petitioner's claim that the OIC remained in force. Petitioner argued to the Appeals officer that the OIC remained in force because he had timely filed his 1998 return. He did not present to the Appeals officer the argument underlying the majority's conclusion; viz., that the OIC remained in force because petitioner's untimely filing of his 1998 return was not a material breach. As we stated in Magana v. Commissioner, supra at 493: "[G]enerally it would be anomalous and improper for us 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 Appeals Office." It is indeed anomalous and improper for the majority to conclude that respondent's Appeals Office abused its discretion in this case for failing to consider an argument not brought to its attention.

B. Evidentiary Scope of Review

1. Unwarranted Extension of Ewing v. Commissioner

In Ewing v. Commissioner, supra (a report reviewed by the Court pursuant to section 7460(b)), the Court held that, in determining whether the Commissioner has abused his discretion in denying "equitable" innocent spouse relief under section 6015(f), the Court is not limited to a review of the administrative record; i.e., the petitioning taxpayer is entitled to a trial de novo. The Commissioner had argued that we are so limited "pursuant to the Administrative Procedure Act (APA), 5 U.S.C. secs. 551-559, 701-706 (2000) and cases decided thereunder".³ Id. at 35.

Although the Court disagreed with the Commissioner's APA argument, id. at 36, it based its holding largely on the language and structure of section 6015. Specifically, the Court focused on the similar language in section 6015(e)(1)(A) (jurisdiction to "determine" the appropriate relief under section 6015) and sections 6213 and 6214(a) (jurisdiction to "redetermine" deficiencies asserted by the Commissioner, which proceedings unquestionably are conducted on a de novo basis). Id. at 38-39. The Court also reasoned that, inasmuch as a section 6015(f) claim (1) does not necessarily involve the review of discretionary action on the part of the Commissioner, see sec. 6015(e)(1)(A)(i)(II), (2) may be raised as an affirmative defense in an otherwise de novo deficiency proceeding, see, e.g., Butler v. Commissioner [Dec. 53,869], 114 T.C. 276, 287-288 (2000), and (3) may involve the intervention of a third party (i.e., the nonrequesting spouse) who may not have participated in the administrative proceeding, see sec. 6015(e)(4), Congress likely intended a uniform, de novo scope of review to apply to such claims. See Ewing v. Commissioner, supra at 42-43.

In the instant case, despite the lack of any reference to the APA in respondent's opening brief, the majority frames the issue regarding the appropriate scope of review as follows: "Applicability of the APA Judicial Review Provisions to Tax Court Proceedings Commenced Under Section 6330(d) ". Majority op. p. 17. The ensuing discussion in the majority opinion is based primarily on Judge Thornton's concurring opinion in Ewing v. Commissioner, supra at 50-56, which focuses exclusively on the APA issue. The majority loses sight of the fact that, in Ewing , a substantial portion of the Court's analysis, as discussed above, was based on the unique aspects of section 6015. The majority's extension of Ewing to section 6330 cases is both unwarranted and uncritical.

2. Additional Criticism of the Majority's Scope of Review Analysis

In our dissenting opinion in Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 56-67 (Halpern and Holmes, JJ., dissenting), we discussed at some length our view that, in the context of our "review" jurisdiction, see id. at 56 n.1 and accompanying text, the appropriate evidentiary scope of review is the administrative record. See, e.g., Camp v. Pitts, 411 U.S. 138, 142 (1973) (in reviewing agency action for abuse of discretion, "the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court"); United States v. Carlo Bianchi & Co., 373 U.S. 709, 715 (1963) (the terms "arbitrary" and "capricious" "have frequently been used by Congress and have consistently been associated with a review limited to the administrative record"). While we see no need to repeat here our entire analysis in support of that view,⁴ we do address certain difficulties with the majority's scope of review analysis in this case.

a. Prior Section 6330 Cases in This Court

The majority cites five Memorandum Opinions of this Court in support of the statement that "[a]t trials under section 6330 when reviewing for abuse of discretion, the Court has received into evidence testimony and exhibits that were not included in the administrative record." Majority op. pp. 17-18. None of those opinions addresses the issue in this case; i.e., whether it is appropriate for the Court to go beyond the administrative record in a section 6330 case. The majority also cites three additional Memorandum Opinions of this Court in which "we * * * noted the taxpayer's failure to present evidence at trial." Majority op. p. 19 n.4. Again, none of those opinions addresses the issue of whether it is appropriate for the Court to consider matters beyond the administrative record in a section 6330 case.

The majority also cites and quotes an unpublished opinion of the Court of Appeals for the Ninth Circuit affirming one of the aforementioned cases. Majority op. pp. 18-19; see Holliday v. Commissioner, 91 AFTR 2d 2003-1338, 2003-1 USTC par. 50,358 (9th Cir. 2003), affg. [Dec. 54,678(M)] T.C. Memo. 2002-67. That court did devote two sentences to the "scope of review" issue. Specifically, the Court of Appeals stated that the "record review" provisions of the APA do not apply to the Tax Court.⁵ The Court of Appeals provided the following citation in support of that statement: "See 5 U.S.C. §504(a)(1) (APA does not apply where `a matter [is] subject to a subsequent trial of the law and the facts de novo in a court')." APA section 554, to which the Court of Appeals presumably was referring, provides rules governing agency adjudications "required by statute to be determined on the record after opportunity for an agency hearing" --i.e., formal agency adjudications. APA section 554(a)(1) simply provides that, notwithstanding the general scope of APA section 554, that section (as opposed to the entire APA) does not apply if the matter is subject to a subsequent trial de novo. In other words, the agency adjudication of such a matter need not conform to the "formal" procedural rules set forth in APA section 554. As section 6330 administrative adjudications are not "required by statute to be determined on the record", it follows that APA section 554, including the "de novo" exception of APA section 554(a)(1), is altogether inapplicable to section 6330 proceedings.

b. Analogy to Deficiency Proceedings

Distilled to its essence, this portion of the majority's analysis proceeds from two major premises and one minor premise. The major premises are: (1) Our de novo deficiency procedures were well established before the enactment of the APA in 1946; and (2) Congress did not intend to disturb those existing procedures when it enacted the APA. We have absolutely no quarrel with either of those premises. By definition, then, the judge-made record rule, which is generally applicable to judicial review of agency action, does not apply to deficiency proceedings in this Court. The majority's conclusion that the record rule is inapplicable to our section 6330 cases as well is based on the minor premise that section 6330, enacted in 1998, is "part and parcel" of the "specific statutory framework for reviewing determinations of the Commissioner" (i.e., our de novo deficiency procedures) that Congress did not intend to disturb in 1946. See majority op. p. 21. It is that minor premise that we are unable to accept. Cf. Ewing v. Commissioner, supra at 64 n.11, 65-66 (Halpern and Holmes, JJ., dissenting).

c. Section 6330 Hearings as Informal Adjudications

Here the majority seems to imply that only formal agency adjudications (i.e., those subject to the procedures set forth in APA sections 554, 556, and 557) are subject to the record rule. According to the Supreme Court, however, the record rule is no less applicable to judicial review of informal agency action. See, e.g., Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985). In the event the administrative record of such an informal proceeding is insufficiently developed, "the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation." Id. ; see also United States v. Carlo Bianchi & Co., 373 U.S. at 718 (remand "would certainly be justified where the department had failed to make adequate provision for a record that could be subjected to judicial scrutiny").

d. Other Instances Where the Court Reviews for Abuse of Discretion

The majority notes that the Court "`has a long tradition of providing trials when reviewing the Commissioner's determinations under an abuse of discretion standard.' " Majority op. p. 25 (quoting Judge Thornton's concurring opinion in Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 53). In our Ewing dissent, we suggested (on the basis of language in Estate of Gardner v. Commissioner [Dec. 41,293], 82 T.C. 989, 999, 1000 (1984)) that our application of an abuse of discretion standard is properly the subject of a trial de novo when the exercise of discretion at issue is relevant to the Commissioner's determination of the existence or amount of a deficiency in tax or an addition to tax that is subject to our deficiency jurisdiction. See Ewing v. Commissioner, supra at 65-66 (Halpern and Holmes, JJ., dissenting). We continue to adhere to that view.⁶

The majority cites a number of cases decided under the abuse of discretion standard, stating that "[i]n none of these types of cases have we held * * * that we are limited to the administrative record." Majority op. p. 26 (emphasis added). In three of the types of cases to which the majority alludes (involving section 482 reallocations, section 446 "clear reflection of income" determinations, and waivers of the former section 6659 addition to tax), the inapplicability of the record rule is consistent with the suggested approach discussed in the preceding paragraph. See Ewing v. Commissioner, supra at 65 (Halpern and Holmes, JJ., dissenting).

The other two types of cases cited by the majority involve declaratory judgments with respect to determinations of the Commissioner under section 7428 (tax-exempt status) and section 7476 (qualified status of retirement plans).⁷ De novo proceedings in those types of cases would be inconsistent with the approach we suggested in our Ewing dissent. Contrary to the majority's assertion, we have limited our review to the administrative record in those types of cases. See Houston Lawyer Referral Serv., Inc. v. Commissioner [Dec. 34,924], 69 T.C. 570, 577 (1978) ("To allow oral testimony * * * as to facts not otherwise in the administrative record to be introduced in evidence * * * in a section 7428 declaratory judgment proceeding would convert that proceeding from a judicial review of administrative action to a trial de novo" and "would permit an applicant [for tax-exempt status] to withhold information from the Internal Revenue Service and then to introduce it before the Court"); Tamko Asphalt Prods., Inc. v. Commissioner [Dec. 35,884], 71 T.C. 824, 837 (1979) (rejecting the argument of the taxpayer in a section 7476 proceeding "that it is entitled to a trial as in any other matter before this Court", the Court reasoned that "[t]o permit extrinsic evidence, other than that present in the administrative record, would convert a declaratory judgment proceeding from a judicial review of an administrative determination to a judicial trial de novo"), affd. [81-2 USTC ¶9648] 658 F.2d 735 (10th Cir. 1981).

e. Disregard of District Court Cases

The District Courts of the United States have jurisdiction to hear section 6330 appeals involving taxes over which the Tax Court does not have jurisdiction. Sec. 6330(d)(1)(B). As far as we can tell, those courts have uniformly limited their review for abuse of discretion in such cases to the administrative record. See Muller v. Rossotti, 93 AFTR 2d 2004-1782, 1786-1787, 2004-1 USTC par. 50,239, at 83,495 (M.D. Tenn. 2004) (quoting United States v. Carlo Bianchi & Co., 373 U.S. at 714); Living Care Alternatives, Inc. v. United States, 93 AFTR 2d 2004-761, 764 n.2, 2004-1 USTC par. 50,167, at 83,249 n.2 (S.D. Ohio 2003); Hart v. United States [2003-2 USTC ¶50,680], 291 F. Supp. 2d 635, 640 (N.D. Ohio 2003); Cmty. Residential Servs., Inc. v. United States, 91 AFTR 2d 2003-2190, 2190, 2003-1 USTC par. 50,458, at 88,339 (M.D.N.C. 2003) (citing Camp v. Pitts, 411 U.S. at 142-143); Dudley's Commercial & Indus. Coating, Inc. v. United States [2003-1 USTC ¶50,397], 292 F. Supp. 2d 976, 985 (M.D. Tenn. 2003) (citing Camp v. Pitts, supra at 142); Triad Microsys., Inc. v. United States, 90 AFTR 2d 2002-7332, 7334, 2003-1 USTC par. 50,106, at 87,030 (E.D. Va. 2002) (citing Camp v. Pitts, supra at 142); Carroll v. United States [2002-2 USTC ¶50,500], 217 F. Supp. 2d 852, 858 (W.D. Tenn. 2002) (citing United States v. Carlo Bianchi & Co., supra at 714); Remole v. United States, 89 AFTR 2d 2002-1202, 1208, 2002-1 USTC par. 50,224, at 83,429 (C.D. Ill. 2001); MRCA Info. Servs. v. United States [2000-2 USTC ¶50,683], 145 F. Supp. 2d 194, 198 (D. Conn. 2000) (quoting United States v. Carlo Bianchi & Co., supra at 714). The majority makes no mention of those cases. Are we to believe that Congress intended the appropriate scope of review in section 6330 cases to hinge on the type of tax involved? Certainly, the language of section 6330 suggests no such distinction.

II. The Contract Issue

The contract issue as framed by the majority (i.e., whether the OIC remained in effect despite petitioner's failure to timely file his 1998 return) is more nuanced than the majority opinion leads one to believe. The majority oversimplifies what respondent was bargaining for, disregards the significance of the fact that respondent repeatedly offered petitioner the opportunity to cure his default, and assumes, without analysis, that the concepts of materiality and substantial performance are dispositive of the contract issue.

A. Materiality of Timely Filing Requirement

The majority assumes that the only benefit the Commissioner seeks when accepting an OIC is the actual receipt of moneys owed under its terms: "Respondent suffered no monetary damage from petitioner's late filing of the 1998 return." Majority op. p. 41 (emphasis added). But collecting money is not the Commissioner's only purpose in agreeing to an OIC. The preamble to section 301.7122-1, Proced. & Admin. Regs., explicitly refers to the IRS's interest in promoting the voluntary compliance of taxpayers. T.D. 9007, 2002-2 C.B. 349, 350. Indeed, not only is this one of the policy underpinnings of the regulations; it can even be the basis by itself for accepting an OIC. The timely filing requirement is particularly important to the IRS as a monitoring device with respect to OICs, like the one here, which include future income level triggers that can result in additional payment obligations. See majority op. p. 4 n.3.

B. Opportunities To Cure

It is also important to emphasize how deliberate the IRS was before declaring the OIC in default. Respondent did not default petitioner's OIC as soon as he realized the 1998 return had not been timely filed. Following the guidance of 2 Administration, Internal Revenue Manual (CCH) (IRM), sec. 5.19.7.3.22.5, at 18,513, respondent first contacted petitioner to request the missing return and did so at least two more times thereafter. See majority op. p. 8. Those efforts by respondent were in keeping with the mandate of the IRM that in the event of potential default efforts "will be made to secure compliance". IRM sec. 5.8.9.4, at 16,382. Despite those efforts, petitioner did not provide the missing return until approximately 1 year after he was first requested to do so. That hardly qualifies as a "foot fault".

C. Doctrine of Express Conditions

Regardless of the nature of the breach and respondent's response thereto, we think that the most relevant doctrines of contract law are not "substantial performance" and "material breach."⁸ Petitioner's obligation to timely file all his returns for 5 years was an express condition and so, as a general rule, is subject to strict performance. See Calamari & Perillo, The Law of Contracts, sec. 11.9, at 403 (4th ed. 1998); 13 Williston on Contracts, sec. 38:6, at 384-385 (4th ed. 2000). The relevant question should be whether there is an "excuse of conditions" that may apply. Under that doctrine, petitioner would have to show that (1) strict compliance with the timely filing condition would result in an extreme forfeiture or penalty, and (2) timely filing was not an essential part of the bargain. See 2 Restatement, Contracts 2d, sec. 229 (1981); 1 Restatement, Contracts, sec. 302 (1932). If we are going to say that, as a matter of law, the Appeals officer should not have enforced the OIC in accordance with its terms, that is the line of inquiry we should pursue.⁹

D. United States v. Lane

Quite apart from any discussion of general contract law principles, we also disagree with the majority's treatment of the most similar case we have found, United States v. Lane [62-1 USTC ¶9467], 303 F.2d 1 (5th Cir. 1962). In Lane, the Court of Appeals rejected the taxpayer's argument that strict enforcement of his OIC would result in a forfeiture. As had petitioner, the taxpayer had entered into an OIC which required him to pay a specific amount, pay additional amounts if his annual income exceeded a floor, and make annual statements of his income "regardless of amount". The taxpayer paid the specific amount and then failed to make the annual statements of his income. The taxpayer's OIC provided, like petitioner's, that, in the event of default, the Commissioner could revive and collect the unpaid balance of the original debt. The District Court, ruling in favor of the taxpayer, had reasoned that "`the taxpayer can't be pushed back for years and years and after a settlement is made and have a forfeiture so to speak, of everything he paid in under that settlement agreement.' " Id. at 4.

The Court of Appeals for the Fifth Circuit reversed the District Court, holding that the OIC should be enforced as written. Id. at 5. It is worth considering the Court of Appeals' forceful language in that regard:

In the present case, the contracting parties expressed their mutual intention in clear and unmistakable terms. * * * [The OIC] expressly provided that the Commissioner, upon default by the taxpayer could terminate the compromise agreement and proceed to collect the unpaid balance of the original tax liability. This language is so precise, and the intention which it manifests is so evident, as to leave no doubt that the course of action taken by the Government here was fully authorized by the compromise agreement.

There was nothing illegal, immoral or inequitable in the compromise agreement. It did not provide for any "forfeiture". By express provision, the amounts to be paid under the compromise agreement * * * could not exceed the aggregate amount which the taxpayer conceded that he owed the Government from the start. By allowing the Government to revive the taxpayer's original liability, the taxpayer will not forfeit the amounts he has already paid, for those amounts will be applied to reduce the original liability. The agreement was precise, it was fair, and it was freely consented to by the taxpayer. There is no reason why it should not be enforced as written.

Id. at 4; see also Roberts v. United States [2002-1 USTC ¶50,173], 225 F. Supp. 2d 1138, 1149 (E.D. Mo. 2001) (quoting the latter paragraph in full).

III. Conclusion

We would sustain respondent's evidentiary objections on the basis of Magana v. Commissioner, [Dec. 54,765] 118 T.C. 488 (2002), and the record rule. We would also hold that, in light of petitioner's breach of an express condition of the OIC and his failure to cure that breach despite ample opportunity to do so, respondent's Appeals officer did not abuse his discretion in sustaining the proposed collection activity.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure. All amounts are rounded to the nearest dollar.

² The trust fund recovery penalties to be compromised under sec. 6672 were $102,030. By order dated Oct. 21, 2002, the Court granted respondent's motion to dismiss for lack of jurisdiction and to strike as to the trust fund penalties. The parties agree:

The doctrine of collateral estoppel will apply to prohibit the Respondent, as well as the Petitioner, from re-litigating the Petitioner's appeal of the Notice of Determination in the District Court if the Tax Court decides whether the Respondent abused his discretion in proceeding with collection of tax liabilities previously compromised prior to a decision of that issue by the District Court.

³ As additional consideration, petitioner signed a Form 2261, Collateral Agreement, in which he also agreed to pay 40 percent of his annual income in excess of $100,000 and not in excess of $130,000; 50 percent of annual income in excess of $130,000 and not in excess of $150,000; and 60 percent of annual income in excess of $150,000. Petitioner's annual income was less than $100,000 for 1995, 1996, 1997, 1998, and 1999. Accordingly, petitioner was not required to pay additional consideration.

⁴ Additionally, in numerous instances, we have noted the taxpayer's failure to present evidence at trial. This failure to present evidence supported our conclusion that the Appeals officer did not abuse his or her discretion. See, e.g., Dorn v. Commissioner [Dec. 55,209(M)], T.C. Memo. 2003-192 ("Petitioner did not offer sufficient evidence at his section 6330(b) hearing or before this Court to show he is entitled to prevail" when petitioner did not offer any evidence at trial related to the issues raised at his hearing); Maloney v. Commissioner [Dec. 55,158(M)], T.C. Memo. 2003-143 ("Petitioners did not present any evidence that their excess withholdings for 1984 exceeded [the stipulated amount of credits for increased Federal income tax withholdings, including FICA taxes]", and "they presented no evidence that they made deposits or that any FICA taxes were assessed after the applicable period of limitations had expired"), affd. 94 Fed. Appx. 969 (3d Cir. 2004); Schulman v. Commissioner [Dec. 54,757(M)], T.C. Memo. 2002-129 (settlement officer did not abuse her discretion where "petitioners presented no evidence at trial or on brief to otherwise substantiate their expenses" and where "petitioners did not introduce any evidence of any meaningful ties to Ozaukee County, other than the relative proximity of their residence"); Howard v. Commissioner [Dec. 54,697(M)], T.C. Memo. 2002-81 ("Petitioner also did not present any evidence at trial or otherwise show any irregularity in the assessment procedure.").

⁵ On remand, the U.S. District Court held that the taxpayer's failure to timely pay his 1995 taxes was a material breach of the offer-in-compromise. Further, the court held that "the doctrine of substantial performance has no relevance in this case as the Plaintiff completely failed to timely pay his 1995 federal income tax liability, and instead waited to pay it until April 10, 1997, so that he could offset his tax liability for 1995 with his losses in 1996." Roberts v. United States [2002-1 USTC ¶50,173], 225 F. Supp. 2d 1138, 1149 (E.D. Mo. 2001).

⁶ We note that by the terms of the offer-in-compromise, the offer-in-compromise did not apply to 2000.

¹ I do not mean to suggest, however, that respondent could not have considered contract law issues, as well as other facts and issues, as part of the balancing required under sec. 6330(c)(3)(C).

² By "hours-late" I mean hours after the "last collection" requirement of sec. 301.7502-1(c)(1)(iii)(B), Proced. & Admin. Regs.

³ I do not mean to imply that taxpayers are not required to comply with the technical requirements of the Internal Revenue Code and the regulations thereunder. However, respondent should have allowed petitioner to present evidence favoring petitioner's position despite petitioner's failure to comply with the last collection requirement of sec. 301.7502-1(c)(1)(iii)(B), Proced. & Admin. Regs.

¹ Although the Appeals officer's case activity records indicate that he telephoned a person in the National Office on at least two occasions regarding whether a defaulted offer-in-compromise could be reinstated, it does not appear from the records that formal guidance from the National Office was ever obtained.

¹ Seventeen judges voted in conference on Judge Vasquez's report in this case. Including Judge Vasquez, six judges agree fully with the report, while eight concur in the result but take exception to one or more of the report's particulars. Since we do not have a full exposition of the exceptions, we are unable to say exactly how strong the conference agreement is on any of the particulars of the report. We will assume, however, that a majority could be marshaled for each of the particulars we address here, and will refer to the "majority" in discussing those particulars.

² As part of the agreement, petitioner also waived the period of limitations on collection.

³ As we discussed in our dissenting opinion in Ewing v. Commissioner [Dec. 55,519], 122 T.C. 32, 57-59 (2004) (Halpern and Holmes, JJ., dissenting), the issue regarding the applicability of the APA is a red herring. The issue in Ewing was whether our review of the Commissioner's denial of sec. 6015(f) relief is subject to the record rule --the general rule of administrative law that a court can engage in judicial review of an agency action only on the basis of the record amassed by the agency. See id. at 56, 58. The record rule predates, and indeed is not codified in, the APA. Id. at 58 n.4.

⁴ We do note that, in our Ewing dissent, we addressed much of the authority relied on by the majority here in its scope of review analysis. See, e.g., Ewing v. Commissioner, supra at 60-61 (Halpern and Holmes, JJ., dissenting) (criticizing O'Dwyer v. Commissioner [59-1 USTC ¶9441], 266 F.2d 575 (4th Cir. 1959), affg. [Dec. 22,434] 28 T.C. 698 (1957)); id. at 60 n.7 (explaining the context of Nappi v. Commissioner [Dec. 31,384], 58 T.C. 282 (1972)); id. at 61 n.9 (explaining the context of Bowen v. Massachusetts, 487 U.S. 879, 903 (1988), and Beall v. United States [2003-2 USTC ¶50,551], 336 F.3d 419 (5th Cir. 2003)); id. at 64 n.11 (discussing APA sec. 559); id. at 65-66 (distinguishing Thor Power Tool v. Commissioner [79-1 USTC ¶9139], 439 U.S. 522 (1979), Bausch & Lomb, Inc. v. Commissioner [91-1 USTC ¶50,244], 933 F.2d 1084 (2d Cir. 1991), affg. [Dec. 45,547] 92 T.C. 525 (1989), and Krause v. Commissioner [Dec. 48,383], 99 T.C. 132 (1992), affd. sub nom. Hildebrand v. Commissioner [94-2 USTC ¶50,305], 28 F.3d 1024 (10th Cir. 1994)).

⁵ As noted earlier, see supra note 3, the record rule predates, and is not codified in, the APA. See also Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 60 n.8 and accompanying text (Halpern and Holmes, JJ., dissenting).

⁶ The fact that our application of an abuse of discretion standard may be the subject of a trial de novo does not necessarily mean that we are free to substitute our judgment for that of the Commissioner in such cases. See, e.g., Capitol Fed. Sav. & Loan Association v. Commissioner [Dec. 47,169], 96 T.C. 204, 209 (1991) (sec. 446); Bausch & Lomb, Inc. v. Commissioner [Dec. 45,547], 92 T.C. 525 (1989), affd. [91-1 USTC ¶50,244] 933 F.2d 1084 (2d Cir. 1991) (sec. 482).

⁷ Separately, the majority cites two Memorandum Opinions of this Court in support of the proposition that "[t]he Court has consistently conducted trials on the issue of whether the Commissioner's denial of a request to abate interest under section 6404 was an abuse of discretion." Majority op. pp. 25-26. In neither case did the Court address the issue of the appropriate scope of review. Although the issue is not before us today, we would conclude that, for the same reasons discussed herein and in our Ewing dissent, our review of the Commissioner's interest abatement determinations is not properly the subject of de novo proceedings. See Ewing v. Commissioner [Dec. 55,519], 122 T.C. at 65 n.12 (Halpern and Holmes, JJ., dissenting).

⁸ While the majority assumes that Arkansas law governs the contract issue, it is quite possible that, under principles set forth in Clearfield Trust Co. v. United States, 318 U.S. 363, 366-367 (1943), and United States v. Kimbell Foods, Inc., 440 U.S. 715, 727-729 (1979), the Federal common law of contracts is the appropriate choice of law. See Saltzman, IRS Practice and Procedure, par. 15.03[4][b], at 15-82 n.200 (rev. 2d ed. 2002).

⁹ We are aware of authority indicating that, in the context of an executory accord (which an offer-in-compromise resembles), enforcement of the original obligation is justified only if the obligee's noncompliance with the accord is material. See Frank Felix Associates, Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 286-289 (2d Cir. 1997) (reasoning at 287 that, under a rule requiring strict compliance with the accord, the obligee "could obtain payment of a contested debt and, due to a minor breach of the accord, receive the windfall entitlement to reassert its pre-settlement claims" (Emphasis added.)). We are not aware of any authority addressing the interplay between that line of reasoning and the doctrine of express conditions. Again, if we are going to undertake a substantive analysis of contract law, those are the types of issues we should be addressing.

[Dec. 55,704(M)] Tim W. Holliday v. Commissioner.

Dkt. No. 13020-02L , TC Memo. 2004-172, July 22, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Sec. 6330]
Liens and levies: Collection Due Process hearings: Issues raised at hearing: Appeals officer: Abuse of discretion: Form 4340.

An IRS Appeals officer's refusal to consider a taxpayer's meritless arguments with respect to the underlying tax liabilities or to permit the taxpayer to make an audio or other recording of the Collection Due Process (CDP) hearing was harmless error. The Appeals officer properly obtained verification that applicable law and administrative procedures were met but was not required to provide such verification to the taxpayer at the hearing. Forms 4340, Certificates of Assessment, were presumptive proof that notice and demand was mailed to the taxpayer absent some showing that the forms were irregular. The Appeals officer was not required to provide the taxpayer with the basis on which the taxpayer was subject to tax or interest as such inquiries were meritless.

[Code Sec. 6330]
Jurisdiction: Tax Court: Liens and levies: Collection Due Process: Delegation of authority.

The IRS was allowed to proceed with collection of a taxpayer's unpaid tax liability. Alleged defects in the hearing did not invalidate the notice of determination or deprive the Tax Court of jurisdiction. The taxpayer's claim that there was no delegation of authority pursuant to which the notice of determination could be issued was meritless.

[Code Sec. 6330]
Liens and levies: Collection Due Process hearings: Suspension of statute of limitations: Notice of determination.

The IRS was allowed to proceed with collection of a taxpayer's unpaid tax liability. The taxpayer's contention that the 10-year limitations period on collection had expired for one of the tax years at issue was rejected. The limitations period was suspended when the taxpayer requested a CDP hearing within the 10-year limitations period.

Tim W. Holliday, pro se; Laurel M. Costen, for respondent.

MEMORANDUM OPINION

GALE, Judge: This case arises from a petition for review under section 6330(d)¹ of respondent's determination to proceed with a proposed levy to collect petitioner's 1992, 1993, 1994, 1995, 1996, 1997, and 1998 Federal income tax liabilities. The issue for decision is whether respondent may proceed with the proposed levy. We hold that he may.

Background

Petitioner was a resident of American Canyon , California , when his petition was filed.

Petitioner timely filed a 1992 individual Federal income tax return reporting tax due of $716. After correcting the return for computational and clerical errors, respondent assessed the tax due thereon of $1,061 on June 7, 1993 .

Petitioner did not timely file a Federal income tax return for 1993 or 1995. On October 6, 1997 , respondent prepared a substitute for return for each year, and on May 18, 1998 , respondent assessed tax of $2,903 for 1993 and $6,138 for 1995.² Petitioner filed 1993 and 1995 individual Federal income tax returns on September 21 and 18, 1998, respectively. Respondent subsequently abated the assessment for each year to reflect the tax reported on petitioner's returns after correcting for computational and clerical errors.

Petitioner filed a 1994 individual Federal income tax return on September 21, 1998 ; an assessment of $2,974 was made with respect to that return.

Petitioner did not timely file a Federal income tax return for 1996. On September 14, 1998 , respondent prepared a substitute for return, and 3 days later petitioner submitted a return that was filed as an amended return. The return petitioner submitted reported $5,805 of tax due, which respondent assessed.

Petitioner timely filed 1997 and 1998 individual Federal income tax returns, reporting tax due of $7,037 and $7,842, respectively, which respondent assessed.

On September 21, 2000 , petitioner filed amended returns for 1993, 1994, 1995, 1996, and 1997 reporting the tax due on each amended return as zero. Respondent treated these amended returns as claims for refund and denied them.

On April 9, 2001 , respondent issued a Letter 1058, Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing, to petitioner for the unpaid balances of the aforementioned assessments for the tax years 1992, 1993, 1994, 1995, 1996, 1997, and 1998. On May 1, 2001 , petitioner submitted to respondent a Form 12153, Request for a Collection Due Process Hearing. In his request, petitioner advised that he would have a stenographer present at the hearing.

By letter dated May 3, 2002 , the Appeals officer advised petitioner that neither stenographic nor audio recording of the hearing would be permitted. A hearing was held on May 22, 2002 , during which petitioner was not permitted to make an audio or stenographic recording. The Appeals officer also refused to consider petitioner's arguments related to the underlying tax liabilities covered by the levy notice.

On July 11, 2002 , a notice of determination concerning collection action(s) under section 6320 and/or 6330 was mailed to petitioner in which the Appeals officer recommended proceeding with the levy. On August 12, 2002 , petitioner timely petitioned this Court for review of the determination.

Discussion

Section 6331(a) provides that, if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by levy upon property belonging to the taxpayer. Section 6331(d) provides that the Secretary is obliged to provide the taxpayer with notice, including notice of the administrative appeals available to the taxpayer, before proceeding with collection by levy.

Section 6330 generally provides that the Secretary 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 hearing) and, if dissatisfied, with judicial review of the administrative determination. See Davis v. Commissioner [Dec. 53,969], 115 T.C. 35, 37 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 179-180 (2000). Section 6330(c)(2) specifies issues that the taxpayer may raise at the hearing. The taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy" including spousal defenses, challenges to the appropriateness of collection actions, and alternatives to collection. Sec. 6330(c)(2)(A). The taxpayer also may challenge the underlying tax liability if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B). Section 6330(c)(3) provides that the determination of the Appeals officer shall take into consideration, inter alia, the issues raised by the taxpayer. We review the determination de novo when the underlying tax liability is in dispute, Goza v. Commissioner, supra at 181-182, and under an abuse of discretion standard when it is not, Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner, supra at 182.

Two of the principal arguments petitioner raises are that he did not receive the hearing to which he was entitled under section 6330 because he was not permitted to record the hearing and that the Appeals officer refused to consider arguments pertaining to the underlying tax liabilities (because petitioner reported those liabilities as due on his returns). The hearing in this case was conducted, and the determination issued, before our Opinions in Keene v. Commissioner [Dec. 55,213], 121 T.C. 8 (2003), and Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1 (2004), in which we held, respectively, that a taxpayer in a section 6330 hearing is entitled to make an audio recording thereof, and to dispute the underlying tax liability even where the taxpayer reported the liability as due on his return.³ At trial, we afforded petitioner the opportunity to raise any issue he considered relevant to the proposed levy or the underlying tax liabilities.⁴ We consider those arguments below.

Petitioner argues that the notice of determination was invalid, and we therefore lack jurisdiction, because the hearing he received was defective in several respects. We disagree. The defects in the hearing alleged by petitioner do not invalidate the notice and deprive us of jurisdiction. See Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001).

Petitioner next argues that his hearing was invalid and collection may not proceed because the Appeals officer refused to provide him with verification, and did not verify at the hearing, that the requirements of any applicable law or administrative procedure were met, as required under section 6330(c)(1). Petitioner admitted in his petition and at trial that, at the hearing, the Appeals officer would not allow petitioner to see the Appeals officer's copies of the transcripts of account. On the basis of the foregoing, we are satisfied that the Appeals officer obtained verification at the hearing; he was not required to provide any such verification to petitioner. See Nestor v. Commissioner [Dec. 54,655], 118 T.C. 162, 166-167 (2002).

Petitioner next claims that he did not receive notice and demand for payment (as required by section 6303(a)) with respect to the liabilities for any of the taxable years in question, and that the Appeals officer did not consider his contentions in this regard. Petitioner's claim of nonreceipt is belied by the certified copies of Forms 4340, Certificate of Assessments, Payments and Other Specified Matters, in evidence for each year, which show that statutory notices of balance due were issued for each year. Absent some showing of irregularity in the Forms 4340, which petitioner has not made, those records serve as presumptive evidence that notice and demand pursuant to section 6303(a) was mailed to petitioner. See Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993); United States v. Chila [89-1 USTC ¶9299], 871 F.2d 1015, 1019 (11th Cir. 1989); Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 261-262 (2002). Respondent also relies on the notice of intent to levy issued in this case as satisfying section 6303(a). See Hughes v. United States [92-1 USTC ¶50,086], 953 F.2d 531, 536 (9th Cir. 1992); 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). In light of the Appeals officer's review of the transcripts of account, we are satisfied that he obtained sufficient verification that the requirements of applicable laws and procedures had been met.

Petitioner also advanced a claim at trial that the period of limitations for collection of his 1992 liability had expired. The period for collection following assessment is 10 years. Sec. 6502(a). If a hearing is requested under section 6330(a)(3)(B), the running of the period of limitations for collection is suspended for the period during which the hearing, and appeals therein, are pending. Sec. 6330(e)(1); Boyd v. Commissioner [Dec. 54,495], 117 T.C. 127, 130-131 (2001). Further, the period for collection shall not expire before the 90th day after the day on which there is a final determination in the hearing. Sec. 6330(e)(1). Petitioner's 1992 liability was assessed on June 7, 1993 , and petitioner requested a hearing under section 6330(a)(3)(B) on May 1, 2001 ; i.e., within the 10-year period following the June 7, 1993 , assessment. Accordingly, the period of limitations for collection of petitioner's 1992 liability is suspended and has not expired.

Further, with respect to the underlying tax liabilities, petitioner contends that he asked the Appeals officer to tell him which Internal Revenue Code section makes him liable for tax and whether that section is within subtitle A. Petitioner further claims that he inquired as to what "legislative regulation" makes him liable for interest. In both instances, the Appeals officer apparently refused to consider these inquiries. These are frivolous issues that the Appeals officer might have responded to but was certainly not required to consider. Suffice it to say that petitioner reported wage income for each of the years in question and such income is taxable pursuant to sections 1(a)-(c), 61(a)(1), and 62. See also United States v. Romero [81-1 USTC ¶9276], 640 F.2d 1014, 1016 (9th Cir. 1981). As to petitioner's interest liability, section 6601 provides for the imposition of interest on unpaid tax liabilities, and section 6601(g) provides for the assessment and collection of that interest. See also sec. 301.6601-1, Proced. & Admin. Regs. In sum, the challenges to the existence or amount of the underlying tax liabilities that petitioner advanced either at his hearing or in the instant proceeding are meritless.

Finally, petitioner raised a frivolous argument to the effect that there had been no delegation of authority from the Secretary to issue the notice concerning his hearing under section 6330 or to conduct it, and accordingly his hearing was null and void for want of notice from, or its conduct by, the Secretary himself. For the purposes presented here, the Secretary has delegated the authority to issue a final notice of intent to levy to certain IRS employees. See Delegation Order 191 (Rev. 3), effective June 11, 2001 , Internal Revenue Manual, sec. 1.2.2.5.3; see also Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 263 (2002). The statute itself provides that the hearing is to be conducted by an officer or employee of the IRS Office of Appeals, not the Secretary. Sec. 6330(b)(1), (3).

Having considered all of petitioner's arguments and found them meritless, we conclude that the Appeals officer's failure to permit petitioner to make an audio or other recording of his hearing was harmless error. Similarly, since petitioner has raised only meritless arguments with respect to the underlying tax liabilities, the Appeals officer's refusal to consider arguments concerning the underlying tax liabilities was also harmless error. In these circumstances, we do not believe it is "either necessary or productive" to remand this case for a recorded hearing where an Appeals officer might consider petitioner's meritless arguments concerning his underlying tax liabilities. See Lunsford v. Commissioner [Dec. 54,552], 117 T.C. at 183, 189; see also Keene v. Commissioner [Dec. 55,213], 121 T.C. at 19-20; Kemper v. Commissioner [Dec. 55,214(M)], T.C. Memo. 2003-195. As petitioner has not raised a spousal defense, challenged the appropriateness of collection actions, or offered collection alternatives, and the arguments he has raised are meritless, we sustain respondent's determination to proceed with the levy at issue. To reflect the foregoing,

Decision will be entered for respondent.

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

² Respondent concedes that notices of deficiency for these years were not received by petitioner.

³ Certain portions of the underlying tax liabilities were attributable to adjustments respondent made pursuant to sec. 6213(b)(1). However, we do not consider whether, pursuant to sec. 6213(b)(2), petitioner previously had an "opportunity to dispute" these portions within the meaning of sec. 6330(c)(2)(B) because in this proceeding petitioner has, in any event, raised only meritless arguments with respect to his underlying tax liabilities.

⁴ In light of the fact that petitioner sought, but was denied, recordation of the hearing, we resolve all doubts in petitioner's favor, treating any issue or argument he raised at trial or in any written submission as having been raised at his hearing.

[Dec. 55,740(M)] George N. Gerakios, a.k.a. Jorge N. Gerakios v. Commissioner.

Dkt. No. 11125-02L , TC Memo. 2004-203, September 7, 2004 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6320 and 6330]
Levy and distraint: Lien for taxes: Tax Court jurisdiction.

An individual's case that sought to have the IRS reverse its levy action and remove a lien was dismissed as moot because the IRS had already released the lien and stated that it was no longer pursuing a levy. The parties agreed that there was no unpaid liability upon which a lien or levy could be based after the individual had paid in full his outstanding income taxes, penalties, and interest for several years. In addition, the Tax Court did not have jurisdiction over the individual's claims that the IRS's employees mistreated him and violated his civil rights and that his credit rating was adversely affected by the filing of the lien since he failed to cite or rely on any specific statute as a basis for the claims.

George N. Gerakios, pro se; John D. Faucher, for respondent.

MEMORANDUM OPINION

VASQUEZ, Judge: This case is before the Court on respondent's motion to dismiss on the ground of mootness (the motion). The issue for decision is whether petitioner's case is moot.¹

Background

On or about April 12, 2001 , respondent issued a "Final Notice of Intent to Levy and Notice of Your Right to a Hearing" to petitioner for his tax liabilities for 1989, 1993, 1994, and 1996. On or about May 2, 2001 ,² respondent issued a "Notice of Federal Tax Lien and Notice of Your Right to a Hearing" to petitioner for his tax liabilities for 1989, 1993, 1994, and 1996.

Pursuant to the aforementioned notices, petitioner requested a section 6330³ hearing. On June 4, 2002 , respondent issued a notice of determination concerning collection action(s) under section 6320 and/or 6330 sustaining the proposed collection action. On July 3, 2002 , petitioner filed a petition for lien or levy action under Code section 6320(c) or 6330(d).

On or about August 7, 2002 , in order to refinance his home, petitioner paid in full his then-outstanding income taxes, penalties, and interest with respect to 1989, 1993, 1994, and 1996. On or about August 30, 2002 , respondent released the lien against petitioner for 1989, 1993, 1994, and 1996. Respondent no longer intends to pursue any levy action against petitioner for any income taxes, penalties, or interest for 1989, 1993, 1994, and/or 1996 as they have been paid in full.

On November 4, 2003 , respondent filed the motion. On November 5, 2003 , the Court ordered petitioner to file any objection to the motion on or before November 19, 2003 . On November 18, 2003 , petitioner filed an objection to the motion. The Court heard argument on the motion.

Discussion

Our jurisdiction under section 6330 is generally limited to reviewing whether the proposed lien or levy action is proper. Chocallo v. Commissioner [Dec. 55,675(M)], T.C. Memo. 2004-152. Respondent released the lien and has stated that he is no longer pursuing the proposed levy. As the parties now agree that there is no unpaid liability for 1989, 1993, 1994, or 1996 upon which a lien or levy could be based, we agree with respondent that the case is moot. Id.

We note that petitioner claimed respondent's employees mistreated him, respondent's employees violated his civil rights, and that his credit rating was adversely affected by the filing of the lien. Petitioner did not cite or rely on any specific statute as a basis for these claims, and we generally have no jurisdiction over such matters. Id. If petitioner meant to make a section 7433 claim, which provides for up to $1 million in civil damages for certain unauthorized collection actions, we note that such claims must be brought in a District Court of the United States . Sec. 7433(a); Chocallo v. Commissioner, supra.

Petitioner has received all the relief to which he is entitled under sections 6320 and 6330. Accordingly, we shall grant the motion and shall dismiss this case as moot.

To reflect the foregoing,

An appropriate order of dismissal will be entered granting respondent's motion to dismiss on the ground of mootness.

¹ It is unclear whether at some point petitioner was raising a refund claim in this proceeding. At the hearing, however, petitioner eventually made it clear that the only remedy he was seeking from the Court was for the IRS to reverse the levy action and remove the lien that was filed --he was not requesting a refund in this proceeding. Additionally, petitioner did not dispute his underlying liabilities.

² In the attachment to the notice of determination it states that this notice was issued on Apr. 6, 2001. The date of this notice is not in issue as respondent concedes that petitioner timely filed his request for a sec. 6330 hearing.

³ Unless otherwise indicated, all section references are to the Internal Revenue Code.

[Dec. 55,823] Clara L. Prevo v. Commissioner.

Dkt. No. 5805-04L , 123 TC 326, No. 21, December 14, 2004 .

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

[Code Secs. 6320, 6330 and 6871]
Notice of determination: Judicial review: Tax Court jurisdiction: Bankruptcy: Automatic stay. --

The Tax Court lacked jurisdiction over a bankrupt individual's petition for redetermination because the petition was filed in violation of the automatic stay imposed under 11 U.S.C. §362(a)(8). After receiving the IRS notice of determination, the taxpayer filed a Chapter 13 bankruptcy petition. Before her bankruptcy petition was dismissed, she filed a petition for redetermination with the Tax Court, thus violating the automatic stay. Further, because there is no provision in Code Secs. 6320 or 6330 that tolls the statutory period for filing a petition for redetermination while the automatic stay prevents the taxpayer from filing such a petition, the 30-day period during which the taxpayer could file a petition expired while the automatic stay was in effect.

Clara L. Prevo, pro se; Brianna Basaraba Taylor, for respondent.

On Feb. 23, 2004 , R issued to P a Notice of Determination Concerning Collection Action(s) for the taxable years 1989, 1990, 1993, 1996, 1998, and 2000. On Mar. 1, 2004 , P filed a bankruptcy petition under ch. 13 of the Bankruptcy Code. On Mar. 29, 2004 , P filed a petition with the Court challenging R's notice of determination. On Mar. 31, 2004 , the bankruptcy court dismissed P's bankruptcy petition. On May 24, 2004 , P filed an amended petition. R filed a motion to dismiss for lack of jurisdiction in this case on the ground that the petition was filed in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(8) (2000).

Held: The Court lacks jurisdiction in this case on the ground the petition was filed in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(8). R's motion to dismiss for lack of jurisdiction will be granted.

OPINION

GERBER, Chief Judge: This matter is before the Court on respondent's motion to dismiss for lack of jurisdiction. Respondent's motion presents an issue of first impression regarding the application of the automatic stay imposed under 11 U.S.C. section 362(a)(8) (2000) in a collection review proceeding brought in this Court pursuant to section 6320.¹ As discussed in detail below, we shall grant respondent's motion to dismiss.

Background

On February 23, 2004 , respondent issued to petitioner a Notice of Determination Concerning Collection Action(s) for the taxable years 1989, 1990, 1993, 1996, 1998, and 2000. The notice of determination stated in pertinent part:

Summary of Determination

After discussion of the Notice of Federal Tax Lien filing at conference, verification that all legal and procedural requirements were met, review of the compliance case file and information submitted by the taxpayer, it was determined that the issuance of the Notice of Federal Tax Lien Filing was appropriate, and the action is sustained. The Lien was filed at the time the taxpayer's offer in compromise was being rejected. The Taxpayer's proposed offer in compromise was not an acceptable collection alternative. The taxpayer reports her current employment is a short term situation, and is unable to fund an offer or an installment agreement. The taxpayer's account was previously closed as currently not collectible under hardship provisions and should revert to that status.

The record does not include a copy of the notice of Federal tax lien that is referred to in the notice of determination.

On March 1, 2004 , petitioner filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Northern District of Georgia.

On March 29, 2004 , petitioner filed with this Court a petition for lien or levy action challenging respondent's notice of determination.² At the time the petition was filed, petitioner's bankruptcy case had not been closed or dismissed, nor had the bankruptcy court granted or denied petitioner a discharge. See 11 U.S.C. sec. 362(c)(2) (2000).

On March 31, 2004 , the bankruptcy court dismissed petitioner's bankruptcy case. On May 24, 2004 , petitioner filed an amended petition with the Court.

On August 4, 2004 , respondent filed a motion to dismiss for lack of jurisdiction. Respondent contends that the Court lacks jurisdiction because the petition was filed with the Court in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(8). On August 18, 2004 , petitioner filed a response in opposition to respondent's motion to dismiss.

Discussion

The Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. Naftel v. Commissioner [Dec. 42,414], 85 T.C. 527, 529 (1985). Our jurisdiction in a collection review proceeding brought pursuant to section 6320 generally depends upon the issuance of a valid notice of determination and a timely filed petition. See Sarrell v. Commissioner [Dec. 54,494], 117 T.C. 122, 125 (2001); Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000).

This case presents an issue of first impression, whether the bankruptcy automatic stay under 11 U.S.C. section 362 (2000) bars the commencement of a proceeding with the Court pursuant to the collection review procedures established under section 6320. Before proceeding with our analysis, we briefly review both the automatic stay provisions and the collection review procedures.


The Automatic Stay

Title 11 of the United States Code provides uniform procedures designed to promote the effective rehabilitation of the bankrupt debtor and, when necessary, the equitable distribution of the debtor's assets. See H. Rept. 95-595, at 340 (1977). One key to achieving these aims is the automatic stay, which generally operates to temporarily bar actions against or concerning the debtor or property of the debtor or the bankruptcy estate. See Allison v. Commissioner [Dec. 47,739], 97 T.C. 544, 545 (1991); Halpern v. Commissioner [Dec. 47,424], 96 T.C. 895, 897 (1991).

The automatic stay provisions are set forth in 11 U.S.C. section 362(a). Significantly, 11 U.S.C. section 362(a)(8) expressly bars "the commencement or continuation of a proceeding before the United States Tax Court concerning the debtor." Unless relief from the automatic stay is granted by order of the bankruptcy court, see 11 U.S.C. sec. 362(d), the automatic stay generally remains in effect until the earliest of the closing of the case, the dismissal of the case, or the grant or denial of a discharge, 11 U.S.C. sec. 362(c)(2); see Allison v. Commissioner, supra at 545; Smith v. Commissioner [Dec. 47,113], 96 T.C. 10, 14 (1991).

It is worth noting that the Commissioner is authorized, pursuant to the exception to the automatic stay set forth in 11 U.S.C. section 362(b)(9), to issue a notice of deficiency to a taxpayer in bankruptcy. See Kieu v. Commissioner [Dec. 51,046], 105 T.C. 387, 391 (1995). Even though, as previously discussed, such a taxpayer would be barred from filing a petition for redetermination with this Court so long as the automatic stay remained in effect, Congress established a procedure to permit such a taxpayer to invoke the Court's deficiency jurisdiction under section 6213(a) after the bankruptcy proceedings are completed. Specifically, section 6213(f) provides that the statutory period for filing a timely petition with the Court under section 6213(a) is suspended for the period during which the taxpayer is prohibited by reason of the automatic stay from filing a petition for redetermination and for 60 days thereafter. See Olson v. Commissioner [Dec. 43,137], 86 T.C. 1314, 1318-1319 (1986) (and cases cited therein). We observe that the benefits of section 6213(f) may apply whether a notice of deficiency is mailed before or after the filing of a bankruptcy petition. See McClamma v. Commissioner [Dec. 37,899], 76 T.C. 754 (1981).


Collection Review Procedures

Section 6321 imposes a lien in favor of the United States on all property and rights to property of a person liable for taxes when a demand for the payment of the person's taxes has been made and the person fails to pay those taxes. Such a lien arises when an assessment is made. Sec. 6322. Section 6323(a) requires the Secretary to file a notice of Federal tax lien if the lien is to be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. Lindsay v. Commissioner [Dec. 54,529(M)], T.C. Memo. 2001-285, affd. [2003-1 USTC ¶50,307] 56 Fed. Appx. 800 (9th Cir. 2003). From the taxpayer's perspective, the filing of such a lien may have the negative effects of creating a cloud on the taxpayer's title to property and impairing the taxpayer's creditworthiness. See, e.g., Magana v. Commissioner [Dec. 54,765], 118 T.C. 488 (2002).

In the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide specified protections for taxpayers in tax collection matters. Section 6320 provides that the Secretary shall furnish the person described in section 6321 with written notice of the filing of a notice of lien under section 6323. The notice required by section 6320 must be provided not more than 5 business days after the day of the filing of the notice of lien. Sec. 6320(a)(2). Section 6320 further provides that the person may request administrative review of the matter (in the form of an Appeals Office hearing) within 30 days beginning on the day after the 5-day period. Section 6320(c) provides that the Appeals Office hearing generally shall be conducted consistent with the procedures set forth in section 6330(c), (d), and (e).

Section 6330(d) provides for judicial review of the administrative determination in the Tax Court or a Federal District Court , as may be appropriate. To obtain judicial review, the person must file a petition with the appropriate court within 30 days of the mailing of the notice of determination. Sec. 6330(d)(1); Offiler v. Commissioner [Dec. 53,912], 114 T.C. at 498. Notably, there is no provision analogous to section 6213(f) in section 6320 or 6330 that tolls the statutory period for filing a timely petition for lien or levy action for the period during which the person is prohibited by reason of the automatic stay from filing such a petition.³

Analysis

Consistent with the plain language of 11 U.S.C. section 362(a)(8), which expressly bars "the commencement or continuation of a proceeding before the United States Tax Court concerning the debtor", we conclude that the petition for lien or levy action in this case was filed in violation of the automatic stay, and, therefore, we lack jurisdiction. In short, there is no exception to the automatic stay under 11 U.S.C. section 362(b) permitting the commencement of a proceeding in this Court, nor is there any suggestion in the record that the bankruptcy court granted petitioner relief from the automatic stay under 11 U.S.C. section 362(d). Under the circumstances, the automatic stay remained in effect until March 31, 2004 --the date that the bankruptcy court dismissed petitioner's bankruptcy case. See 11 U.S.C. sec. 362(c)(2).

Unfortunately here, where the petition in bankruptcy was voluntary, petitioner has fallen victim to a trap for the unwary. As the notice of determination was issued to petitioner on February 23, 2004, petitioner normally would have had 30 days --until March 24, 2004 --to file a timely petition for lien or levy action with the Court. However, upon the filing of the bankruptcy petition on March 1, 2004, the automatic stay was invoked, and petitioner was barred from commencing a proceeding in this Court.⁴ Further, the automatic stay remained in effect until March 31, 2004 --7 days after the 30-day statutory filing period under sections 6320(c) and 6330(d) expired. Thus, but for the provisions of section 11 U.S.C. section 362(a)(8) and the lack of a tolling provision analogous to section 6213(f), this Court would have jurisdiction over this case.⁵

We emphasize and note that Congress did not include in sections 6320 and 6330 a tolling provision comparable to section 6213(f) that would extend the period for petitioner to file a petition for lien or levy action with the Court. Although the outcome in this case appears harsh, the gap in the collection review procedures that this case highlights is not one that can be closed by judicial fiat. A remedy, if any, must originate with Congress. In the end, we are obliged to grant respondent's motion to dismiss for lack of jurisdiction.

To reflect the foregoing,

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

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

² At the time the petition was filed, petitioner resided in Austell , Ga. The envelope in which the petition was mailed was postmarked Mar. 24, 2004.

³ Sec. 6320 is effective with respect to collection actions initiated more than 180 days after July 22, 1998 (Jan. 19, 1999). See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401(d), 112 Stat. 750.

⁴ Had petitioner first filed a petition with this Court and then filed a bankruptcy petition, the proceeding before this Court would have been active and then stayed, thereby preserving petitioner's ability to contest respondent's determination.

⁵ See, however, sec. 6330(d), which provides in part: "If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court". We do not decide herein whether our determination in this opinion that we lacked jurisdiction over the petition filed during the pendency of petitioner's bankruptcy case means that we are or are not the "incorrect" court for purposes of the above-quoted flush language. If we were the "incorrect" court, petitioner would have 30 days from the date decision is entered in this case to refile in the "correct" court. That issue, however, is not currently before the Court and was not briefed by the parties.

[Dec. 55,921] David D. Smith v. Commissioner.

Dkt. Nos. 11109-04L , 11110-04L , 124 TC 36, No. 3, February 8, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6330 and 6871]
Notice of determination: Judicial review: Tax Court jurisdiction: Bankruptcy: Automatic stay. --

The Tax Court lacked jurisdiction over a bankrupt individual's petitions challenging notices of determination regarding his unpaid federal income taxes. The notices of determination underlying the petitions were issued to the taxpayer in violation of the automatic stay provision under 11 U.S.C. §362(a). Accordingly, the notices of determinations were void and of no effect.

Robert Alan Jones, for petitioner; Alan J. Tomsic, for respondent.

On Aug. 26, 2003 , R issued to P separate Final Notices of Intent to Levy and Notice of Your Right to a Hearing with regard to his unpaid Federal income taxes for the taxable years 1985 to 1995 and for the taxable years 1996 to 1999. P submitted to respondent timely requests for a hearing under sec. 6330, I.R.C.

On Mar. 3, 2004 , P filed a bankruptcy petition under ch. 7 of the Bankruptcy Code.

On May 25, 2004 , while P's bankruptcy case remained open, R issued to P separate Notices of Determination Concerning Collection Actions for the taxable years 1985 to 1995 and the taxable years 1996 to 1999. On June 28, 2004 , P filed with the Court petitions for lien or levy action challenging R's notices. R filed motions to dismiss for lack of jurisdiction on the ground the petitions were filed in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(8) (2000). P filed objections to R's motions.

Held: The notices of determination underlying the petitions were issued to petitioner in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a)(1) (2000), and, therefore, the Court lacks jurisdiction. Held, further, R's motions to dismiss for lack of jurisdiction shall be denied, and these cases shall be dismissed for lack of jurisdiction on the Court's own motions.

OPINION

GERBER, Chief Judge: These collection review cases are before the Court on respondent's motions to dismiss for lack of jurisdiction. Respondent contends that the Court lacks jurisdiction on the ground the petitions for lien or levy action were filed in violation of the automatic stay imposed under 11 U.S.C. section 362(a)(8) (2000) (the automatic stay).¹ As discussed in detail below, we conclude that we lack jurisdiction in these cases on the alternative ground that the notices of determination underlying the petitions were issued to petitioner in violation of the automatic stay imposed under 11 U.S.C. section 362(a)(1) (2000).

Background ²

On August 26, 2003 , respondent issued to petitioner separate Final Notices of Intent to Levy and Notice of Your Right to a Hearing with regard to his unpaid Federal income taxes for the taxable years 1985 to 1995 and for the taxable years 1996 to 1999. Petitioner submitted to respondent timely requests for a hearing under section 6330.

On March 3, 2004 , petitioner filed a bankruptcy petition under chapter 7 of the Bankruptcy Code with the U.S. Bankruptcy Court for the District of Nevada.

By letter dated April 12, 2004 , Christopher Gellner (Mr. Gellner), petitioner's bankruptcy attorney, informed Appeals Officer Anthony Aguiar that petitioner had filed the above-referenced bankruptcy petition and that petitioner was not in need of, and desired to withdraw, his request for a section 6330 hearing. On April 14, 2004 , Appeals Officer Aguiar sent to Mr. Gellner a Form 12256 (Withdrawal of Request for Collection Due Process Hearing).

However, by letter dated May 5, 2004 , Robert Alan Jones (Mr. Jones), petitioner's tax attorney, informed Appeals Officer Aguiar (1) That Mr. Gellner did not have the authority to represent petitioner with regard to tax matters; (2) that Mr. Jones was appointed as petitioner's attorney-in-fact for the years in issue; and (3) that, although petitioner did not want to withdraw his rights to a section 6330 hearing, the bankruptcy automatic stay barred further administrative proceedings at that time.

On May 25, 2004 , respondent's Office of Appeals issued to petitioner separate Notices of Determination Concerning Collection Actions for the taxable years 1985 to 1995 and for the taxable years 1996 to 1999. The notices stated that respondent determined that it was appropriate to proceed with the proposed levies. On June 28, 2004 , petitioner filed with the Court petitions for lien or levy action challenging respondent's notices.³ At the time the petitions were filed, petitioner resided in Las Vegas , Nevada .

On August 19, 2004 , respondent filed motions to dismiss for lack of jurisdiction on the ground the petitions were filed in violation of the automatic stay. On September 16, 2004 , petitioner filed objections to respondent's motions. Petitioner maintains that the Court should (1) conclude that petitioner properly invoked the Court's jurisdiction, and (2) stay any further proceedings pending the final disposition of petitioner's bankruptcy case. Petitioner did not aver that the bankruptcy court had granted relief from the automatic stay, or that the automatic stay otherwise was no longer in effect, on the date the petitions were filed.

Discussion

It is well settled that the Court's jurisdiction in a collection review case under section 6330 depends upon the issuance of a valid notice of determination and the filing of a timely petition for review. See Sarrell v. Commissioner [Dec. 54,494], 117 T.C. 122, 125 (2001); Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 269 (2001); see also Rule 330(b).

In a recent case, Prevo v. Commissioner [Dec. 55,823], 123 T.C. 326 (2004), we granted the Commissioner's motion to dismiss for lack of jurisdiction in a collection review case on the ground the petition for lien or levy action was filed with the Court in violation of the automatic stay imposed under 11 U.S.C. section 362(a)(8) (2000).⁴ In Prevo v. Commissioner, supra, the sequence of relevant events unfolded as follows: (1) The Commissioner issued to the taxpayer a notice of determination concerning collection actions; (2) the taxpayer filed a bankruptcy petition; and (3) the taxpayer filed with the Court a petition for lien or levy action. In granting the Commissioner's motion to dismiss for lack of jurisdiction, we noted that the taxpayer had fallen victim to a trap for the unwary in that the automatic stay that arose by operation of law upon the filing of her bankruptcy petition barred her from subsequently filing a petition with the Court. Moreover, in the absence of a tolling provision in the collection review provisions similar to that contained in section 6213(f),⁵ the taxpayer lost the opportunity to contest the Commissioner's notice of determination in this Court.

The facts in the present cases are materially different from those in Prevo v. Commissioner, supra. As previously described, these cases developed as follows: (1) Petitioner filed a bankruptcy petition; (2) the Commissioner issued to petitioner notices of determination concerning collection actions; and (3) petitioner filed with the Court petitions for lien or levy action.

Like the taxpayer in Prevo v. Commissioner, supra, petitioner filed his petitions for lien or levy action with the Court after filing his bankruptcy petition and while the automatic stay imposed under 11 U.S.C. section 362(a)(8) (2000) remained in effect. The fact that respondent issued the notices of determination in question after petitioner filed his bankruptcy petition presents a ground for dismissal that was not available in Prevo v. Commissioner, supra. Specifically, the question arises whether respondent was barred by the automatic stay from issuing the notices of determination to petitioner in the first instance. If so, it would follow that these cases should be dismissed on the ground that the notices of determination were void or invalid.

The Court can, sua sponte, question its jurisdiction at any time. Raymond v. Commissioner [Dec. 54,915], 119 T.C. 191, 193 (2002); Neely v. Commissioner [Dec. 54,062], 115 T.C. 287, 290 (2000); Romann v. Commissioner [Dec. 52,939], 111 T.C. 273, 280 (1998). Where the application of the automatic stay may act as an impediment to the Court's jurisdiction in a collection review proceeding, it is incumbent on the Court to determine the proper ground for dismissal. Cf., e.g., Pietanza v. Commissioner [Dec. 45,576], 92 T.C. 729, 735-736 (1989) (holding that, where appropriate, the Court will dismiss on the ground that the Commissioner failed to issue a valid notice of deficiency rather than for lack of a timely filed petition), affd. without published opinion 935 F.2d 1282 (3rd Cir. 1991). The Pietanza principle is particularly compelling in the present cases inasmuch as the Court is confronted with two alternative grounds for dismissal, one of which will have the effect of denying petitioner the opportunity to obtain judicial review of respondent's notices of determination in this Court. See Prevo v. Commissioner, supra.

Before proceeding with our analysis, we first review the pertinent portions of the automatic stay provisions set forth in 11 U.S.C. section 362 (2000) and the collection review procedures established under sections 6320 and 6330.

The Automatic Stay

Title 11 of the United States Code provides uniform procedures designed to promote the effective rehabilitation of the bankrupt debtor and, when necessary, the equitable distribution of his or her assets. See H. Rept. 95-595, at 340 (1977). One key to achieving these aims is the automatic stay, which generally operates to temporarily bar actions against or concerning the debtor or property of the debtor or the bankruptcy estate. See Allison v. Commissioner [Dec. 47,739], 97 T.C. 544, 545 (1991); Halpern v. Commissioner [Dec. 47,424], 96 T.C. 895, 897-898 (1991).

The automatic stay provisions are set forth in 11 U.S.C. section 362(a) (2000), which provides in pertinent part:

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, * * * operates as a stay, applicable to all entities, of --

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

* * * * * * *

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;

(4) any act to create, perfect, or enforce any lien against property of the estate;

(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title; * * *

Title 11 U.S.C. section 362(b) (2000), which establishes exceptions to the automatic stay described above, provides in pertinent part:

(b) The filing of a petition under section 301, 302, or 303 of this title, * * * does not operate as a stay --

 * * * * * *

(9) under subsection (a), of --

(A) an audit by a governmental unit to determine tax liability;

(B) the issuance to the debtor by a governmental unit of a notice of tax deficiency;

(C) a demand for tax returns; or

(D) the making of an assessment for any tax and issuance of a notice and demand for payment of such an assessment * * *.

The bankruptcy court may issue an order granting relief from the automatic stay. 11 U.S.C. sec. 362(d) (2000). Absent such an order, the automatic stay generally remains in effect until the earliest of the closing of the case, dismissal of the case, or the grant or denial of a discharge. 11 U.S.C. sec. 362(c)(2) (2000); see Allison v. Commissioner, supra at 545; Smith v. Commissioner [Dec. 47,113], 96 T.C. 10, 14 (1991); Neilson v. Commissioner [Dec. 46,301], 94 T.C. 1, 8 (1990).

Collection Review Procedures

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

Section 6330(a) provides in pertinent part that the Secretary shall notify a person in writing of his or her right to an Appeals Office hearing regarding a final notice of intent to levy by mailing such notice by certified or registered mail to such person at his or her last known address. Section 6330(a)(2) provides that the prescribed notice shall be provided not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period. Further, section 6330(a)(3)(B) provides that the prescribed notice shall explain that the person has the right to request an Appeals Office hearing during that 30-day period.

Where the taxpayer has timely requested an Appeals Office hearing and the Appeals Office has issued a notice of determination to the taxpayer regarding a proposed levy action, section 6330(d)(1) provides that the taxpayer will have 30 days following the issuance of such notice to file a petition for review with the Tax Court or Federal District Court, as may be appropriate. See Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000). Notably, there is no provision analogous to section 6213(f) in section 6330 that tolls the statutory period for filing a timely petition for lien or levy action for the period during which the person is prohibited by reason of the automatic stay from filing a petition.⁶

Analysis

The automatic stay under 11 U.S.C. section 362(a)(1) (2000) bars "the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title". In addition, 11 U.S.C. section 362(a)(6) bars any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the bankruptcy case.

We evaluate the applicability of the automatic stay provisions against the parties' specific actions in these cases. Although the record does not include transcripts of petitioner's account for the years in question, we assume that respondent entered assessments against petitioner and issued to petitioner notices and demand for payment of such assessments. When no payments were forthcoming, respondent issued to petitioner Notices of Intent to Levy and Notice of Your Right to a Hearing under section 6330. Such notices prompted petitioner to submit to respondent requests for a section 6330 hearing. Several months later, petitioner filed his bankruptcy petition. Thereafter, respondent issued to petitioner the notices of determination that led petitioner to attempt to invoke the Court's jurisdiction.

Against this backdrop, we are satisfied that the issuance of the final notices of intent to levy to petitioner constituted administrative collection actions taken against petitioner (before the commencement of the bankruptcy case) within the meaning of 11 U.S.C. section 362(a)(1) (2000). Consistent with the foregoing, it follows that the issuance to petitioner of the notices of determination constituted the continuation of administrative collection actions against petitioner (after the commencement of the bankruptcy case) within the meaning of 11 U.S.C. section 362(a)(1) (2000). Our conclusion that the levy notices and notices of determination constituted actions against petitioner (as opposed to an action initiated by petitioner) is bolstered by the nature and purpose of such notices. We observe that if petitioner had failed to request an administrative hearing within 30 days of the issuance of the final notices of intent to levy, he would have waived his right to administrative and judicial review of the proposed collection actions under section 6330, and respondent normally would have been free to proceed with the proposed levies. See Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 262 (2001). Giving due regard to the public policies underlying the automatic stay provisions, we conclude that the issuance of the notices of determination to petitioner violated the automatic stay.⁷

Our holding on this point is consistent with both bankruptcy caselaw and respondent's administrative guidance. See In re Parker, 279 Bankr. 596, 602-603 (Bankr. S.D. Ala. 2002) (The IRS conceded, and the bankruptcy court held, that the issuance of a final notice of intent to levy under section 6330 violated the automatic stay); In re Covington , 256 Bankr. 463, 465-466 (Bankr. D.S.C. 2000) (The bankruptcy court held that the issuance of a final notice of intent to levy under section 6330 violated the automatic stay); see also Chief Counsel Advisory 2000-18-005 (May 5, 2000) (A Final Notice of Intent to Levy issued to a debtor who had filed a bankruptcy petition violated the automatic stay and was void).

Collection activity undertaken in violation of the automatic stay generally is considered void and without effect. See 9B Am. Jur. 2d, Bankruptcy, sec. 1756, at 387 (1999). Accordingly, we conclude that the notices of determination issued to petitioner are void and of no effect. Our ruling in Lundsford v. Commissioner [Dec. 54,553], 117 T.C. 159, 165 (2001) (notice of determination issued without proper hearing held to be valid for purposes of Tax Court jurisdiction) does not preclude that result, as it is bankruptcy law, which is extrinsic to the procedures specified in section 6330, that leads to our conclusion. Given the invalidity of the notices of determination, we shall dismiss these cases for lack of jurisdiction on the Court's own motion.

To reflect the foregoing,

Orders of dismissal shall be entered denying respondent's motions to dismiss for lack of jurisdiction, and these cases shall be dismissed for lack of jurisdiction on the Court's own motion.

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

² The record establishes and/or the parties do not dispute the following background facts.

³ The petitions arrived at the Court in an envelope bearing a timely U.S. Postal Service postmark dated June 24, 2004. See sec. 7502(a).

⁴ 11 U.S.C. sec. 362(a)(8) (2000) expressly bars "the commencement or continuation of a proceeding before the United States Tax Court concerning the debtor."

⁵ Although 11 U.S.C. sec. 362(a)(8) (2000) bars the commencement or continuation of a proceeding before the Tax Court, by reason of sec. 6213(f) the period for filing a petition for redetermination of a deficiency with the Tax Court under sec. 6213(a) is suspended for the period during which the taxpayer is prohibited by reason of the automatic stay from filing a petition in this Court and for 60 days thereafter. See Olson v. Commissioner [Dec. 43,137], 86 T.C. 1314, 1318-1319 (1986), and cases cited therein.

⁶ Sec. 6330 is effective with respect to collection actions initiated more than 180 days after July 22, 1998 (Jan. 19, 1999). See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401(d), 112 Stat. 750.

⁷ Despite the express exception permitting the Commissioner to issue to a taxpayer a notice of deficiency under 11 U.S.C. sec. 362(b)(9)(B) (2000), there is no exception in 11 U.S.C. sec. 362(b) (2000) for the issuance of a notice of determination under sec. 6330. In addition, a notice of determination issued pursuant to sec. 6330 does not qualify as an audit, a request for a tax return, or an assessment or notice and demand for payment within the meaning of the applicable subparagraphs of 11 U.S.C. sec. 362(b)(9) (2000). See In re Covington , 256 Bankr. 463, 465-466 (Bankr. D.S.C. 2000).

[Dec. 55,929(M)] Richard and Mabel Kelby v. Commissioner.

Dkt. No. 13268-03L , TC Memo. 2005-25, February 16, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Sec. 6330]
Tax Court jurisdiction: Remanded case: Notice of determination.

The Tax Court retained jurisdiction over a case which it had remanded to the IRS Office of Appeals. The court has jurisdiction under Code Sec. 6330(d)(1)(A) when there is a written notice embodying a determination to proceed with the collection of taxes and a timely filed petition. Furthermore, retention of jurisdiction did not adversely affect the ability of the taxpayer to receive a fair hearing. The court also declined to invalidate the notice of determination which arose from a timely filed petition.

William E. Taggart, Jr., for petitioners; Rebecca Duewer-Grenville and Paul R. Zamolo, for respondent.

P appealed a sec. 6330,¹ I.R.C., determination from R's Appeals Office. R filed a motion for remand to Appeals and a motion for continuance of trial. The Court granted both of R's motions and retained jurisdiction over the case. P objected to the retention of jurisdiction by the Court and requested that the Notice of Determination be vacated.

Held: The Court may retain jurisdiction over the case while on remand.

Held, further, we shall not invalidate the Notice of Determination.

MEMORANDUM OPINION

VASQUEZ, Judge: The controversy before us arises out of petitioners' opposition to respondent's motion to remand the case to the Appeals Office.

Background

On July 30, 2002 , respondent issued a Notice of Federal Tax Lien filing to petitioners. The lien covered unpaid income tax for the taxable years 1989, 1993, 1995, 1996, and 1999. On September 9, 2002 , petitioners filed a Form 12153, Request for a Collection Due Process Hearing, in which they indicated that they did not believe they owed all of the assessed tax liabilities and they wanted to file an Offer in Compromise. A Notice of Determination was sent to petitioners by the Appeals Office which sustained the lien. On August 11, 2003 , petitioners filed a petition to the Tax Court.

On April 30, 2004 , respondent moved that the case be remanded to the Appeals Office to consider "Petitioners' Offer in Compromise and allegations that * * * [petitioners] do not owe a portion of the assessed tax liabilities." Respondent concurrently moved for continuance of trial, removal of the case from the scheduled trial session, and restoration of the case to the general trial docket.

On May 5, 2004 , the Court granted respondent's motion for continuance and motion for remand to the Appeals Office. Furthermore, jurisdiction was retained by this Division of the Court.

In numerous subsequent pleadings, petitioners objected to the retention of jurisdiction by the Court and requested that the Notice of Determination be vacated. Petitioners, however, did not object to remanding the case to the Appeals Office.

Discussion

The power of this Court to remand a case to the Appeals Office is well established. For example, if a taxpayer is not afforded a proper opportunity for a hearing under section 6330, the Court can remand the case to the Appeals Office to hold a hearing if we "believe that it is either necessary or productive". Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 189 (2001) (Lunsford II).

Petitioner, inter alia, argues that the Court cannot retain jurisdiction over the case upon remanding the case to the Appeals Office. We have jurisdiction to determine whether we have jurisdiction at any time, either before or after a final decision is entered. Brannon's of Shawnee, Inc. v. Commissioner [Dec. 35,500], 71 T.C. 108, 111-112 (1978). The jurisdiction of this Court under "section 6330(d)(1)(A) is established when there is a written notice that embodies a determination to proceed with the collection of the taxes in issue, and a timely filed petition." Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001) (Lunsford I). The Court may retain jurisdiction over the case upon remand to the Appeals Office.

The Court's retention of jurisdiction upon remand does not adversely affect the ability of the taxpayer to receive a fair section 6330 hearing. The Court may include instructions and explain the purpose of a remand to the Appeals Office. See, e.g., Keene v. Commissioner [Dec. 55,213], 121 T.C. 8, 19 (2003); Cooley v. Commissioner [Dec. 55,558(M)], T.C. Memo. 2004-49. Upon remand, the Appeals Office may further consider the taxpayer's arguments. See sec. 6330(d)(2); Lunsford II, supra at 189.

Petitioner also argues that the Notice of Determination should be vacated. We interpret petitioners' argument that the Notice should be vacated as a request to invalidate the Notice. Whether petitioner had:

an appropriate hearing opportunity, or whether the hearing was conducted properly, or whether the hearing was fair, or whether it was held by an impartial Appeals Officer, or whether any of the other nonjurisdictional provisions of section 6330 were properly followed, will all be factors that we must take into consideration under section 6330 in deciding such cases. But none of these factors should preclude us from exercising our jurisdiction under section 6330(d), in order to resolve the underlying dispute in a fair and expeditious manner.

Lunsford I, supra at 164. In this case the Notice of Determination embodies a determination to proceed with the collection of the taxes in issue, and the petition was timely. Accordingly, we shall not invalidate the Notice of Determination.

In reaching our holding herein, we have considered all arguments made, and to the extent not mentioned above, we conclude them to be moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate order will be issued.

¹ All section references are to the Internal Revenue Code in effect for the years in issue.

[Dec. 55,940(M)] Michael and Marion Balice v. Commissioner.

Dkt. No. 5437-04L , TC Memo. 2005-35, February 28, 2005 .

[Appealable, barring stipulation to the contrary, to CA-3]

[Code Secs. 6212 and 6330]
Notice of levy and right to hearing: Judicial review: Tax Court jurisdiction: Letter of determination: Return receipt.

The Tax Court lacked jurisdiction to review an IRS determination to proceed with a levy action because the taxpayer's petition was not timely filed. In the absence of any provision in Code Sec. 6330 requiring a notice of determination to be issued in a particular way, the notice was adquate because it complied with Code Sec. 6212, which does not have a return receipt requirement. Furthermore, if a notice of determination issued pursuant to Code Sec. 6330 is properly mailed to a taxpayer's last known address by certified mail, the date on which the taxpayer actually received the notice of determination is irrelevant when determining whether a petition to review that determination was filed within the 30-day period prescribed in Code Sec. 6330(d). The court could not extend the 30-day period for filing a petition in a levy action where a valid notice of determination was issued.

Frank J. Marcone (specially recognized), for petitioners; Kathleen Raup, for respondent.

MEMORANDUM OPINION

MARVEL, Judge: This matter is before the Court on respondent's motion to dismiss for lack of jurisdiction on the ground that the petition was not filed within the time prescribed by section 6330(d)(1)¹ or section 7502.

Background

Petitioners resided in Metuchen , New Jersey , when the petition in this case was filed.

Petitioners filed late Federal income tax returns for the taxable years 1989, 1990, 1992, and 1993. After examining petitioners' 1989 and 1990 returns, respondent determined deficiencies for those years. When petitioners failed to petition this Court within 90 days of the notices of deficiency issued for 1989 and 1990, respondent assessed the unpaid taxes, including penalties and interest. Respondent also assessed unpaid income tax liabilities shown on petitioners' 1992 and 1993 returns.

On July 30, 2002 , respondent issued a notice pursuant to section 6330(a) with respect to petitioners' 1989, 1990, 1992, and 1993 taxable years that informed petitioners of respondent's intent to levy and their right to a hearing. In response, petitioners submitted Form 12153, Request for a Collection Due Process Hearing (hereinafter section 6330 hearing), dated August 23, 2002 . On January 29, 2004 , respondent issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 sustaining the proposed levy action. The notice of determination stated, in relevant part, the following: "If you want to dispute this determination in court, you must file a petition with the United States Tax Court for a redetermination within 30 days from the date of this letter. * * * The time limit for filing your petition is fixed by law. The courts cannot consider your case if you file late."

On January 29, 2004 , respondent sent a copy of the notice of determination to each petitioner by certified mail addressed to 70 Maple Avenue , Metuchen , New Jersey 08840 . On January 30, 2004 , the U.S. Postal Service attempted to deliver both letters and left notices of the attempted delivery at the 70 Maple Avenue address. On January 31, 2004 , the copy of the notice of determination addressed to petitioner Michael Balice was delivered, but there is no indication that the copy addressed to petitioner Marion Balice was ever claimed at the post office or delivered.

On March 25, 2004 , we received and filed a petition for review of respondent's determination to proceed with the levy action. The envelope in which petitioners mailed the petition was postmarked March 20, 2004 . In the petition, petitioners listed the 70 Maple Avenue address as their current address.

On May 12, 2004 , we filed respondent's motion to dismiss for lack of jurisdiction, which alleged that the petition was not filed within the 30-day period prescribed in section 6330(d) or section 7502. In support of the motion, respondent attached a postmarked copy of the certified mail list bearing petitioners' names and address, the date on which the notice of determination was mailed to each petitioner, and the article tracking number of each letter.

On June 2, 2004 , we filed petitioners' objection to respondent's motion. Petitioners' objection contained affidavits stating under penalty of perjury that they did not receive the notice of determination until February 20, 2004 , and that it was not sent by certified mail. Petitioners contend that the petition was timely filed and that respondent should have produced a signed return receipt from the U.S. Postal Service to prove the date on which petitioners received the notice of determination. Petitioners further argue that "the IRS has already broken the law by denying Petitioners the CDP hearing mandated by law and there should be no time restraint imposed upon a victim who is denied due process mandated by statute."

Respondent filed a reply to petitioners' objection, asserting that because a notice of determination in a collection due process proceeding must be appealed within 30 days of its issuance in order for the Tax Court to have jurisdiction, the date on which petitioners claim to have received the notice of determination is irrelevant to whether the petition was timely filed. Respondent further argues that the notice of determination was complete and valid on its face and was sufficient to start the 30-day period within which petitioners could appeal the determination.

This matter was called for hearing at the Court's trial session in Philadelphia , Pennsylvania , on September 7, 2004 . Counsel for both parties appeared at the hearing and presented their positions on the motion to dismiss.

Discussion

Section 6330(a) provides that no levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of the right to a hearing before the levy is made. When the Appeals Office issues a notice of determination to a taxpayer following a section 6330 hearing, the taxpayer has 30 days following the issuance of the notice to file a petition for review of the determination with the Tax Court or, if the Tax Court lacks jurisdiction over the underlying tax liability, with a Federal District Court. Sec. 6330(d).

The procedures authorized by section 6212(a) and (b) for sending a notice of deficiency apply to the mailing of a notice of determination issued pursuant to section 6330. Weber v. Commissioner [Dec. 55,588], 122 T.C. 258, 261-262 (2004). Section 6212(a) and (b) provides that the Secretary may send a notice of deficiency by certified mail or registered mail to a taxpayer at the taxpayer's last known address. A notice of determination issued in a collection due process case that is mailed in accordance with section 6212(a) and (b) is sufficient to start the 30-day period within which a taxpayer may appeal the determination to the Tax Court under section 6330(d). Weber v. Commissioner, supra at 261-262.

During oral argument on the motion, counsel for petitioners admitted that petitioners resided at the 70 Maple Avenue address when respondent mailed the notice of determination, and petitioners listed it as their current address in their petition. Moreover, respondent's postal records establish that the notice of determination was mailed on January 29, 2004 , by certified mail, to the 70 Maple Avenue address. See id. at 259 & n.3 (postmarked copy of certified mail list sufficient to establish notice of determination was mailed for purposes of section 6212). We conclude, therefore, that the notice of determination was mailed in accordance with section 6212(a) and (b).

The 30-day period for filing an appeal of respondent's determination with this Court expired on Monday, March 1, 2004 . See sec. 7503. The petition in this case, however, was mailed to the Court on March 20, 2004 , and was received and filed on March 25, 2004 . Consequently, we conclude that the petition was not timely filed.

Petitioners' main contention, as we understand it, is that because the notice of determination was not mailed to them by certified or registered mail, return receipt requested, the notice of determination was insufficient to start the 30-day period for filing a petition. To support their contention, petitioners cite section 6330(a)(2), which provides in relevant part that the written notice informing a taxpayer of his right to a section 6330 hearing must be given in person, left at the dwelling or usual place of business of such person, or sent by certified or registered mail, return receipt requested, to the taxpayer's last known address.

Petitioners' reliance on section 6330(a)(2) is misplaced. The requirements of section 6330(a)(2) apply to a notice before levy, which is the notice that advises a taxpayer of his right to request a section 6330 hearing. Section 6330(a)(2) does not apply to a notice of determination issued by the Appeals Office after a section 6330 hearing. In the absence of any provision in section 6330 requiring a notice of determination to be issued in a particular way, the issuance of a notice of determination under section 6330 is adequate if it is done in accordance with section 6212, which contains no provision requiring a U.S. Postal Service return receipt. Section 6212 authorizes the Commissioner to mail a deficiency notice by certified mail or registered mail to the taxpayer's last known address. The record with respect to respondent's motion demonstrates that the section 6212 requirements were met. We conclude, therefore, that the notice of determination mailed to petitioners on January 29, 2004 , was sufficient to start the 30-day period for filing a petition in this Court.

We also reject petitioners' argument that the petition should be considered timely filed because they did not receive the notice of determination until February 20, 2004 . If a notice of determination issued pursuant to section 6330 is properly mailed to a taxpayer's last known address by certified mail, the date on which the taxpayer actually receives the notice of determination is irrelevant in determining whether a petition appealing that determination was filed within the 30-day period prescribed in section 6330(d). Weber v. Commissioner, supra at 263. Moreover, we note that petitioners actually received the notice by February 20, 2004 , approximately 10 days before the 30- day filing deadline. The notice advised petitioners of the time limit to file a timely petition, as required by section 6330(d), and they failed to meet it.

The Court's jurisdiction is statutorily mandated under section 6330, and we may not extend the 30-day period for filing a petition in a levy action where a valid notice of determination has been issued. Weber v. Commissioner, supra at 263. Because we lack jurisdiction to review respondent's determination to proceed with the proposed levy action, we do not address petitioners' argument that respondent failed to comply with the formal procedures, as set forth in section 6330(b) and (c), for conducting a section 6330 hearing.

In light of the foregoing, we shall grant respondent's motion to dismiss this case for lack of jurisdiction.

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

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at the time petitioners filed the petition.

[Dec. 55,946(M)] Catherine Beverly v. Commissioner.

Dkt. No. 10774-03L , TC Memo. 2005-41, March 7, 2005 .

[Appealable, barring stipulation to the contrary, to CA-7]

[Code Secs. 6331 and 6871]
Procedure and administration: Seizure of property: Levy and distraint: Bankruptcy: Automatic stay.

A final notice of intent to levy that the IRS issued to a taxpayer after she filed a bankruptcy petition violated an automatic stay in bankruptcy and was invalid. Consequently, the IRS abused its discretion in determining to proceed with a collection action. The final notice, which dealt with unpaid income taxes from more than five years earlier, violated the automatic stay under 11 U.S.C. section 362(a)(1) because the IRS could have issued it before the taxpayer filed her bankruptcy petition. In addition, the final notice constituted the commencement of an administrative proceeding covered by that provision. Finally, the taxpayer's failure to inform the IRS during the administrative proceedings that she had filed a bankruptcy petition did not estop her from arguing that the final notice violated the automatic stay. She was acting pro se, and the court presumed that she acted in good faith and was unaware that the final notice violated the automatic stay. In contrast, IRS guidance had concluded that issuing a final notice to a person with an open bankruptcy case would violate the automatic stay.

[Code Secs. 6330 and 7442]
Procedure and administration: Bankruptcy: Automatic stay: Tax Court jurisdiction. --

The Tax Court had jurisdiction over an individual's petition challenging an IRS notice of determination. The taxpayer had filed a bankruptcy petition, but the petition had been dismissed prior to the issuance of the notice of determination. Thus, the Tax Court distinguished D.D. Smith, Dec. 55,921, 124 TC --, No. 3, in which it held that it lacked jurisdiction where an invalid notice of determination under Code Sec. 6330 was issued while the automatic bankruptcy stay was in effect. In contrast, the IRS issued the notice of determination on which the present case was based well after the automatic stay was terminated; thus, the notice was valid on its face.

Catherine Beverly, pro se; Karen Baker and Michael W. Bitner, for respondent.

P filed a bankruptcy petition. R subsequently issued to P a Final Notice of Intent to Levy and Notice of Your Right to Hearing (final notice of intent to levy) under sec. 6330, I.R.C. After P's bankruptcy case was closed, R issued to P a Notice of Determination Concerning Collection Action(s). P filed with the Court a Petition for Lien or Levy Action. R filed a Motion for Summary Judgment, and a supplement thereto.

Held: The final notice of intent to levy was issued to P in violation of the automatic stay imposed under 11 U.S.C. sec. 362(a) (2000) and was invalid and of no effect. Held, further, R's Motion for Summary Judgment, as supplemented, is denied, and a decision will be entered that respondent may not proceed with the proposed collection action.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This collection review case is before the Court on respondent's Motion for Summary Judgment, as supplemented, filed pursuant to Rule 121.¹ Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689], 90 T.C. 678, 681 (1988); Naftel v. Commissioner [Dec. 42,414], 85 T.C. 527 (1985). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(b); Sundstrand Corp. v. Commissioner [Dec. 48,191], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner [Dec. 44,714], 90 T.C. 753, 754 (1988). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences will be read in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner [Dec. 42,486], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278], 79 T.C. 340, 344 (1982).

Based upon our review of the record, we are satisfied that there is no genuine issue as to any material fact and that judgment may be rendered as a matter of law. However, as discussed in detail below, we conclude that the law does not support respondent's position. We hold that the final notice of intent to levy was issued to petitioner in violation of the automatic stay arising from her case in bankruptcy and therefore is invalid. Accordingly, we shall deny respondent's Motion for Summary Judgment, as supplemented, and we shall enter a decision that respondent may not proceed with the proposed collection action.

Background ²

On November 2, 2001 , petitioner filed a voluntary petition for relief under chapter 13 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of Illinois. On November 26, 2001 , respondent issued to petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing Under Section 6330 (final notice of intent to levy) with regard to her unpaid Federal income taxes for 1985 to 1988 and 1994 and 1995. On November 27, 2001 , the bankruptcy court issued an order dismissing petitioner's bankruptcy case due to her failure to file required schedules. On December 6, 2001 , the bankruptcy court entered an order closing petitioner's case.

In the meantime, on December 5, 2001 , petitioner filed a second bankruptcy petition.

On December 19, 2001 , petitioner filed with respondent a Form 12153, Request for a Collection Due Process Hearing, challenging the proposed levy.

On May 17, 2002 , the bankruptcy court dismissed petitioner's second bankruptcy case.

On June 5, 2003 , respondent issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) which stated that respondent intended to proceed with the proposed levy. On July 7, 2003 , petitioner filed with the Court a Petition for Lien or Levy Action challenging respondent's notice of determination.³ At the time the petition was filed, petitioner resided in Collinsville , Illinois .

As indicated, respondent filed a Motion for Summary Judgment. Respondent contends that the Court should sustain the notice of determination on the ground that the Appeals officer did not abuse her discretion in rejecting petitioner's offer in compromise--the sole issue that petitioner purportedly raised during the administrative proceedings--because petitioner was not current in filing her tax returns at that time.

Respondent's motion was called for hearing at the Court's motions session held in Washington , D.C. During the hearing, counsel for respondent informed the Court that respondent had recently discovered that the final notice of intent to levy was issued to petitioner while petitioner's first bankruptcy case remained open. The Court subsequently directed respondent to file a supplement to his motion addressing the question whether the final notice of intent to levy was issued to petitioner in violation of the automatic stay imposed under 11 U.S.C. section 362(a)(2000). Respondent filed a supplement, as directed, and the matter was called for further hearing at the Court's motions session. Respondent maintains that while the issuance of the final notice of intent to levy may have violated the automatic stay, petitioner should nevertheless be estopped from arguing that the final notice of intent to levy was issued in violation of the automatic stay because she failed to inform respondent during the administrative proceedings that she had filed a bankruptcy petition.⁴

Discussion

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

Section 6330 generally provides that the Commissioner cannot proceed with the collection of taxes by way of a levy on a person's property until the person has been given notice of, and the opportunity for, an administrative review of the matter (in the form of an Appeals Office hearing), and if dissatisfied, with judicial review of the administrative determination.

Section 6330(d) provides for judicial review of the administrative determination in the Tax Court or a Federal District Court , as may be appropriate. To obtain judicial review, the person must file a petition with the appropriate court within 30 days of the mailing of the notice of determination. Sec. 6330(d)(1).⁵

There is no dispute in this case that respondent issued to petitioner a final notice of intent to levy after petitioner filed her bankruptcy petition and while the automatic stay remained in effect. Under the circumstances, we must evaluate respondent's position in light of the provisions governing the automatic stay.

Title 11 of the United States Code provides uniform procedures designed to promote the effective rehabilitation of the bankrupt debtor and, when necessary, the equitable distribution of his or her assets. See H. Rept. 95-595, at 340 (1977). One key to achieving these aims is the automatic stay which generally operates to temporarily bar actions against or concerning the debtor or property of the debtor or the bankruptcy estate. See Allison v. Commissioner [Dec. 47,739], 97 T.C. 544, 545 (1991); Halpern v. Commissioner [Dec. 47,424], 96 T.C. 895, 897-898 (1991).

The automatic stay provisions are set forth in 11 U.S.C. section 362(a) (2000), which provides in pertinent part:

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, * * * operates as a stay, applicable to all entities, of --

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

* * * * * * *

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;

* * * * * * *

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title; * * *

Unless relief from the automatic stay is granted by order of the bankruptcy court, see 11 U.S.C. sec. 362(d) (2000), the automatic stay generally remains in effect until the earliest of the closing of the case, dismissal of the case, or the grant or denial of a discharge, 11 U.S.C. sec. 362(c)(2); see Allison v. Commissioner, supra at 545; Smith v. Commissioner [Dec. 47,113], 96 T.C. 10, 14 (1991); Neilson v. Commissioner [Dec. 46,301], 94 T.C. 1, 8 (1990).

Analysis

As previously discussed, the automatic stay under 11 U.S.C. section 362(a)(1) bars "the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title". Based upon the plain language of 11 U.S.C. section 362(a)(1), we conclude that respondent violated the automatic stay when he issued to petitioner the final notice of intent to levy dated November 26, 2001. In particular, there is no dispute in this case that respondent could have issued a final notice of intent to levy to petitioner regarding her unpaid income taxes for 1985 to 1988, and 1994 and 1995 before petitioner filed her bankruptcy petition. Moreover, we are satisfied that the issuance of the final notice of intent to levy constituted the commencement of an administrative proceeding against petitioner within the meaning of 11 U.S.C. section 362(a)(1). See, e.g., Smith v. Commissioner [Dec. 55,921], 124 T.C. __ (2005) (holding that a notice of determination issued under section 6330 to a taxpayer/debtor in bankruptcy constituted the continuation of an administrative collection action against the debtor within the meaning of 11 U.S.C. section 362(a)(1)). In particular, when the Commissioner issues to a person a final notice of intent to levy, that person is entitled to invoke the administrative and judicial procedures prescribed under section 6330. Id. at __. Indeed, should such person fail to timely request an administrative hearing, the Commissioner generally is free to proceed with the proposed levy. Consistent with the foregoing, we conclude that 11 U.S.C. section 362(a)(1) barred respondent from issuing to petitioner the final notice of intent to levy dated November 26, 2001.⁶

Our holding that the issuance to petitioner of the final notice of intent to levy violated the automatic stay is consistent with both bankruptcy case law and respondent's administrative guidance. See In re Parker, 279 Bankr. 596, 602-603 (Bankr. S.D. Ala. 2002) (The Commissioner conceded, and the bankruptcy court held, that the issuance of a final notice of intent to levy under section 6330 violated the automatic stay.); In re Covington , 256 Bankr. 463, 465-466 (Bankr. D.S.C. 2000) (The bankruptcy court held that a final notice of intent to levy did not constitute a notice and demand for payment within the meaning of 11 U.S.C. section 362(b)(9)(D)) and that such notice was issued to the debtor in violation of the stay); see also Chief Counsel Adv. 00-18-005 (May 5, 2000) (A Final Notice of Intent to Levy issued to a person who had filed a bankruptcy petition violated the automatic stay and was void).

At this point, a brief comment regarding the Court's jurisdiction is warranted. We recently held in Smith v. Commissioner [Dec. 55,921], 124 T.C. __, that a notice of determination under section 6330 issued to a taxpayer/debtor while the automatic stay was in effect was invalid, and we dismissed the case for lack of jurisdiction on that ground. The facts in the present case are distinguishable from those in Smith v. Commissioner [Dec. 55,921], 124 T.C. __. Specifically, the notice of determination upon which this case is based was issued to petitioner well after the automatic stay was terminated. Because the petition was timely filed in response to a notice of determination that is valid on its face, we conclude that petitioner properly invoked our jurisdiction under section 6330. See Sarrell v. Commissioner [Dec. 54,494], 117 T.C. 122, 125 (2001); Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 269 (2001); Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000); see also Rule 330(b).

Respondent maintains that petitioner should be estopped from asserting that the final notice of intent to levy violated the automatic stay because she failed to inform respondent during the administrative proceedings that she had filed a bankruptcy petition. Respondent cites Matthews v. Rosene, 739 F.2d 249 (7th Cir. 1984), for the proposition that a debtor may be barred by the equitable doctrine of laches from challenging an action that arguably violated the automatic stay.

We are not persuaded by respondent's argument. The record suggests that petitioner was acting pro se throughout the administrative proceedings. Without more, we presume that petitioner acted in good faith and that she was unaware that respondent's issuance of the final notice of intent to levy violated the automatic stay. Respondent, on the other hand, had previously issued administrative guidance in the form of a Chief Counsel Advisory (cited above) concluding that the issuance of a final notice of intent to levy to a person with an open bankruptcy case would violate the automatic stay. Considering respondent's administrative guidance on this specific point, we disagree with respondent that petitioner should be estopped. Considering all the circumstances, we decline to apply an equitable principle to bar consideration of the validity of the final notice of intent to levy.

We recently noted that collection activity undertaken in violation of the automatic stay generally is considered void or invalid. See Smith v. Commissioner [Dec. 55,921], 124 T.C. __ (2005) (citing 9B Am. Jur. 2d, Bankruptcy, sec. 1756 (1999)). The U.S. Court of Appeals for the Seventh Circuit, the court to which an appeal in this case would lie, adheres to this view. See Middle Tenn. News Co. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1082 (7th Cir. 2001).

In sum, we conclude that the final notice of intent to levy was issued to petitioner in violation of the automatic stay, and therefore, it was invalid. It follows that respondent abused his discretion by concluding in the notice of determination that the proposed levy should proceed.

To reflect the foregoing,

An Order denying respondent's Motion for Summary Judgment, as supplemented, and a decision will be entered for petitioner.

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

² The record establishes and/or the parties do not dispute the following.

³ The petition arrived at the Court in an envelope bearing a timely U.S. Postal Service postmark dated July 1, 2003. See sec. 7502(a).

⁴ Upon questioning by the Court, respondent was hesitant to acknowledge that the final notice of intent to levy violated the automatic stay. In a footnote to his supplement to the motion for summary judgment, respondent states that "it is not clear whether the providing of a notice of right to a hearing under section 6330 is an `act to collect' in violation of the automatic stay". Respondent further states that the final notice of intent to levy required under sec. 6331(a) is in the same document as the notice of a right to hearing. Respondent concludes in the footnote that "Arguably, in contrast to the notice of intent to levy and the notice of levy, the mere notice of a right to a pre-levy hearing does not violate the stay."

⁵ Sec. 6330 is effective with respect to collection actions initiated more than 180 days after July 22, 1998 (Jan. 19, 1999). See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401(d), 112 Stat. 750.

⁶ Respondent does not contend that the final notice of intent to levy qualified under any of the exceptions to the automatic stay prescribed in 11 U.S.C. sec. 362(b)(2000).

[Dec. 55,947(M)] Mardi Rustam v. Commissioner.

Dkt. No. 3316-04L , TC Memo. 2005-42, March 7, 2005 .

[Appealable, barring stipulation to the contrary, to CA-9]

[Code Secs. 6330 and 6672]
Notice of lien: Notice of levy: Collection Due Process: Determinations: Tax Court: District Court: Jurisdiction.

The Tax Court lacked jurisdiction to determine the liability of an individual with respect to penalties imposed by Code Sec. 6672. The federal district court or the Court of Federal Claims have jurisdiction to determine a taxpayer's liability under that section. The Tax Court rejected the taxpayer's argument that the IRS had waived the jurisdictional issue by stating on the notice of determination sent to him that the proper method for disputing the determination was to file a petition with the Tax Court.

[Code Sec. 7430]
Notice of lien: Notice of levy: Collection Due Process: Determinations: Tax Court: District Court: Jurisdiction.

The individual was not entitled to reasonable litigation costs because he failed to prove that he substantially prevailed on an issue in controversy or that he satisfied the $2 million net worth limitation. Moreover, the IRS's position was substantially justified because it correctly argued that the Tax Court lacked jurisdiction to review its determination to collect the employment tax penalty from the taxpayer.

Stephen M. Lopez, for petitioner; John D. Faucher, for respondent.

MEMORANDUM OPINION

WELLS, Judge: This case is before the Court on respondent's motion to dismiss for lack of jurisdiction and petitioner's motion for award of reasonable litigation costs.¹ Unless otherwise noted, 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

At the time of filing his petition, petitioner resided in Toluca Lake , California .

On January 21, 2004 , respondent's Appeals Office issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, determining that a proposed levy to recover a section 6672 trust fund penalty liability with respect to petitioner's 1997 tax year was appropriate.² The first page of the notice of determination stated:

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

* * * * * * *

The time limit for filing your petition is fixed by law. The courts cannot consider your case if you file late. If the court determines that you made your petition to the wrong court, you will have 30 days after such determination to file with the correct Court. [Emphasis added.]

Petitioner subsequently petitioned this Court for review pursuant to section 6330(d). Petitioner contended that he was not liable for the underlying tax liability because he was not a "responsible person" for purposes of collecting, accounting for, and paying over taxes as required by sections 6671 and 6672.

Before answering the petition, respondent filed a motion to dismiss for lack of jurisdiction pursuant to section 6330(d)(1)(B) and Rule 53. In response, petitioner filed an opposition. Subsequently, petitioner filed a motion for award of reasonable litigation costs. On October 13, 2004 , the parties presented oral arguments before this Court with regard to respondent's motion to dismiss for lack of jurisdiction and petitioner's motion for award of reasonable litigation costs.

Discussion

Motion To Dismiss for Lack of Jurisdiction

Section 6330 provides persons liable for tax with the right to a hearing with the Commissioner's Appeals Office before the Secretary may levy upon the property of such persons.³ The determination of the Commissioner's Appeals Office is subject to judicial review, pursuant to section 6330(d)(1):

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

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

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

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

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

The jurisdiction of this Court to review administrative determinations with respect to levy actions, therefore, is limited to actions in which we have jurisdiction of the underlying tax liability. See sec. 6330(d)(1)(B).

Petitioner does not argue that this Court has jurisdiction over the underlying section 6672 liability that is the subject of respondent's collection action. Rather, petitioner contends that respondent waived the right to challenge this Court's jurisdiction by stating on the notice of determination that the proper method for disputing the determination was to file a petition with this Court.

Petitioner's contention is without merit. We previously have held that this Court lacks jurisdiction to determine the liability of taxpayers with respect to penalties imposed by section 6672. Moore v. Commissioner [Dec. 53,802], 114 T.C. 171, 175 (2000); Medeiros v. Commissioner [Dec. 38,485], 77 T.C. 1255, 1260 (1981); Wilt v. Commissioner [Dec. 32,151], 60 T.C. 977, 978 (1973). In Moore v. Commissioner, supra at 175, we stated: "Section 6672(c)(2) contemplates that the Federal District Court or the Court of Federal Claims shall have jurisdiction to determine a taxpayer's liability for a penalty imposed under that section. The Tax Court does not have jurisdiction".⁴

The right to question the jurisdiction of this Court cannot be waived by the actions or inactions of a party. David Dung Le, M.D., Inc. v. Commissioner [Dec. 53,859], 114 T.C. 268 (2000), affd. [2002-1 USTC ¶50,112] 22 Fed. Appx. 837 (9th Cir. 2001). Consequently, respondent did not waive the right to challenge our jurisdiction over the underlying tax liability by instructing petitioner that the proper method for disputing the determination was for petitioner to file a petition with this Court.

For the foregoing reasons, we conclude that this Court lacks jurisdiction over the underlying section 6672 penalty in the instant case and that respondent's motion to dismiss must be granted.⁵ Petitioner, however, is not necessarily without remedy. Pursuant to section 6330(d), petitioner has 30 days to file an appeal with the appropriate U.S. District Court.

Motion for Reasonable Litigation Costs

Section 7430(a) provides that the prevailing party in a court proceeding brought by or against the United States in connection with the determination or collection of a tax, interest, or penalty may recover reasonable litigation costs.⁶ Section 7430(c)(4)(A) defines "prevailing party" as follows:

(4) Prevailing Party. --

(A) In general. --The term "prevailing party" means any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved) --

(i) which --

(I) has substantially prevailed with respect to the amount in controversy, or

(II) has substantially prevailed with respect to the most significant issue or set of issues presented, and

(ii) which meets the requirements of the 1st sentence of section 2412(d)(1)(B) of title 28, United States Code (as in effect on October 22, 1986 ) except to the extent differing procedures are established by rule of court and meets the requirements of section 2412(d)(2)(B) of such title 28 (as so in effect).

Section 7430(c)(4)(A)(ii) effectively limits the award of litigation costs to parties with net worth of $2 million or less.⁷ Stieha v. Commissioner [Dec. 44,269], 89 T.C. 784, 790 (1987). Consequently, to qualify as the prevailing party pursuant to section 7430(c)(4), a party must, inter alia, (1) "substantially prevail" with respect to either the amount in controversy or the most significant issue or set of issues presented, and (2) satisfy the $2 million net worth limitation. The taxpayer bears the burden of proving that the foregoing two requirements have been satisfied. Rule 232(e); Minahan v. Commissioner [Dec. 43,746], 88 T.C. 492, 497 (1987).

Section 7430(c)(4)(B) provides the following exception to the definition of "prevailing party":

(B) Exception if United States establishes that its position was substantially justified. --

(i) General rule. --A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified.

Consequently, a party that satisfies the section 7430(c)(4)(A) definition of prevailing party is not treated as the prevailing party if the United States establishes that its position in the proceeding was substantially justified. Sec. 7430(c)(4)(B)(i).

"Reasonable litigation costs" include reasonable court costs and reasonable attorney's fees.⁸ Such costs and fees must be based on prevailing market rates. Sec. 7430(c)(1)(B). Attorney's fees, generally, are capped at $125 per hour, with an adjustment for inflation. Sec. 7430(c)(1).

We understand petitioner's position to be that he substantially prevailed with respect to the most significant issue or set of issues presented pursuant to section 7430(c)(4)(A)(i)(II). Without elaboration, petitioner contends that he prevailed with respect to respondent's motion to dismiss or with respect to petitioner's own motion for reasonable litigation costs. Petitioner makes no contention as to whether the position of respondent was substantially justified or whether petitioner satisfied the net worth requirements of section 7430(c)(4)(A)(ii). Petitioner requests litigation costs of $5,078.10, which represents 15.25 hours of service billed at $325 per hour, together with various miscellaneous costs.⁹ Petitioner does not contend, however, that special factors justify the payment of attorney's fees at a rate higher than that prescribed by section 7430(c)(1).

We will deny petitioner's motion. The only issue presented by respondent's motion to dismiss for lack of jurisdiction is whether this Court has jurisdiction over the collection of petitioner's section 6672 penalty liability.¹⁰ See sec. 7430(c)(7). As noted above, petitioner did not substantially prevail with respect to that issue.¹¹ Furthermore, petitioner failed to demonstrate that his net worth does not exceed $2 million, pursuant to section 7430(c)(4)(A)(ii). Consequently, petitioner is not the prevailing party in the proceeding before us.

Even if petitioner were the prevailing party, respondent's position in the motion to dismiss for lack of jurisdiction was substantially justified; as we held above, we lack jurisdiction with respect to respondent's attempt to collect the section 6672 penalty from petitioner. See Moore v. Commissioner [Dec. 53,802], 114 T.C. 171 (2000). Consequently, petitioner is not the prevailing party in the proceeding before us.

For the foregoing reasons, petitioner is not entitled to an award of reasonable litigation costs by this Court.¹²

Conclusion

We conclude that respondent's motion to dismiss must be granted because this Court lacks jurisdiction over respondent's collection of the underlying section 6672 liability from petitioner. We further conclude that petitioner's motion for costs must be denied because petitioner is not the prevailing party.¹³ We have considered all remaining arguments and, to the extent not addressed above, conclude that they are irrelevant or without merit.

To reflect the foregoing,

An order and order of dismissal for lack of jurisdiction will be entered, and petitioner's motion for award of litigation costs as amended will be denied.