6321 Collection Due Process Hearings

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Donald A. Ramirez v. Commissioner.

Dkt. No. 22323-03L , TC Memo. 2005-179, July 21, 2005.

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

[Code Secs. 6321, 6330 and 6651]
Failure to file: Failure to pay: Additions to tax: Reasonable cause: Federal tax lien: Collection Due Process. --

An individual who filed his tax return two years late and who failed to pay the tax liability shown on the return when he did file, did not have reasonable cause for his failure to timely file. Although the taxpayer argued that he was unable to timely file his return because of his surgery and post-surgery illness, he was able to continue his legal practice, pay business expenses, manage two rental properties and care for two minor children during that time. Moreover, the taxpayer failed to show that the Appeals officer abused his discretion when he sustained the federal tax lien against him. The taxpayer had an outstanding balance due, and, although it had accepted an installment agreement, the IRS was not precluded from maintaining a tax lien while a balance was due.

Donald A. Ramirez, pro se; Rebecca Duewer-Grenville, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

 

HAINES, Judge: The petition in this case was filed in response to the Notices of Determination Concerning Collection Action Under Section 6320 (notices of determination) for 1996, 1997, and 1998.¹ Pursuant to section 6330(d), petitioner seeks review of respondent's determination sustaining a Federal tax lien. After concessions,² the issues for decision are: (1) Whether petitioner is liable for additions to tax under section 6651(a)(1) and (a)(2) for 1998; and (2) whether respondent abused his discretion in sustaining the Federal tax lien.

FINDINGS OF FACT

 

Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time the petition was filed, petitioner resided in San Bruno , California . Petitioner is a practicing attorney.

 

Petitioner had his gall bladder removed in 1996 and was off work for 4 months. After his recovery, petitioner was able to continue his legal practice, pay business expenses, manage two rental properties, and take care of two minor children.

 

On April 8, 2001, petitioner filed a Form 1040, U.S. Individual Income Tax Return, for 1998, showing a tax due of $8,122. Petitioner made no payments at the time of filing.

 

Upon receipt of the 1998 income tax return, respondent assessed the tax due of $8,122, an addition to tax for failure to timely file a return under section 6651(a)(1) of $1,827, an addition to tax for failure to timely pay the tax under section 6651(a)(2) of $1,015, and an addition to tax for failure to pay estimated tax under section 6654 of $257 against petitioner. Respondent did not issue a notice of deficiency to petitioner.

 

On April 9, 2003, respondent sent petitioner a Notice of Federal Tax Lien and Your Right to a Hearing Under IRC 6320 for 1998.

 

On May 5, 2003, respondent received petitioner's request for a section 6330 hearing. Theresa M. Amper (Ms. Amper), Appeals Collection Specialist, sent confirmation of receipt on July 31, 2003, and requested that petitioner complete a Form 433-A, Collection Information Statement for Individuals. Petitioner did not respond.

 

Ms. Amper sent a second letter on August 25, 2003, requesting petitioner complete a Form 433-A, and stating that if she did not hear from petitioner by September 9, 2003, his section 6330 hearing would consist of an administrative review of his file. Petitioner did not respond.

 

On September 24, 2003, Appeals Officer Gerry Melick (Ms. Melick) sent petitioner a letter requesting that petitioner contact her by phone to discuss petitioner's section 6330 hearing request. Petitioner did not respond. Ms. Melick sent a second letter on October 8, 2003, requesting that petitioner respond within 15 days. Petitioner did not respond.

 

Respondent conducted an administrative review of petitioner's file. On November 25, 2003, respondent sent petitioner notice of determination sustaining the filing of the Federal tax lien for 1998.

 

On December 23, 2003, petitioner timely filed a petition with the Court. Upon order of the Court, petitioner filed an amended petition on February 24, 2004, seeking review of the underlying tax liability and relief from the lien collection action under section 6320.

 

The parties have stipulated that, subsequent to petitioner's filing with this Court, an installment agreement has been entered into for petitioner's outstanding tax liability, and that any overpayments resulting from the allowance of petitioner's schedule A expense deduction for 1996 will be applied to the outstanding tax liability for 1998.

 

At trial, petitioner raised a reasonable cause defense to the section 6651 additions to tax, citing his 1996 surgery.

OPINION

 

Pursuant to section 6330(d)(1), within 30 days of the issuance of the notice of determination, the taxpayer may appeal the determination to this Court if we have jurisdiction over the underlying tax liability. Van Es v. Commissioner [Dec. 54,080], 115 T.C. 324, 328-329 (2000). This Court has interpreted "underlying tax liability" in section 6330(d)(1) to include any amounts owed by the taxpayer pursuant to the tax laws, including additions to tax. Katz v. Commissioner [Dec. 54,081], 115 T.C. 329, 339 (2000). Petitioner timely filed his petition with this Court pursuant to section 6330(d)(1), and, because he was not issued a notice of deficiency and did not otherwise have the opportunity to dispute the underlying tax liability, petitioner may challenge the additions to tax. See id.; sec. 6330(c)(2)(B); Montgomery v. Commissioner [Dec. 55,501], 122 T.C. 1, 8-10 (2004).

 

Where the validity of the underlying tax liability is properly at issue, the Court will review the matter de novo. Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000); Goza v. Commissioner [Dec. 53,803], 114 T.C. 176, 181 (2000). Where the validity of the underlying tax liability is not properly at issue, however, the Court will review the Commissioner's administrative determination for abuse of discretion. Sego v. Commissioner, supra; Goza v. Commissioner, supra.

 

We shall review de novo whether petitioner is liable for the additions to tax under section 6651. See Downing v. Commissioner [Dec. 54,604], 118 T.C. 22, 29 (2002); Goodwin v. Commissioner [Dec. 55,320(M)], T.C. Memo. 2003-289; Joye v. Commissioner [Dec. 54,616(M)], T.C. Memo. 2002-14. If we find that petitioner is liable for the additions to tax, we shall review respondent's administrative determination sustaining the Federal tax lien for abuse of discretion. See Downing v. Commissioner, supra; Goodwin v. Commissioner, supra; Joye v. Commissioner, supra.

Issue 1: De Novo Review of Section 6651 Additions to Tax

Respondent determined that petitioner is liable for additions to tax pursuant to section 6651(a)(1) and (2) for 1998. Section 6651(a)(1) imposes an addition to tax for failure to file a return by the date prescribed (determined with regard to any extension for time for filing). Section 6651(a)(2) imposes an addition to tax for failure to pay the amount shown as tax on a return by the date prescribed (determined with regard to any extension for time for filing). If petitioner establishes that the failure to timely file or pay is due to reasonable cause and not due to willful neglect, he can avoid the additions to tax. Sec. 6651(a)(1) and (2).

 

Section 7491(c) requires respondent to carry the burden of production with respect to any addition to tax for failure to file or pay. Higbee v. Commissioner [Dec. 54,356], 116 T.C. 438, 446-447 (2001). To meet his burden of production, respondent must come forward with sufficient evidence indicating that it is appropriate to impose the additions to tax. Id. Once respondent meets this burden, petitioner must come forward with evidence sufficient to persuade the Court that respondent's determination is incorrect. Id.

 

The parties stipulate that petitioner filed his 1998 tax return 2 years late. In addition, the parties stipulate that petitioner has not fully paid his 1998 tax liability. We find that, on these facts, respondent met his burden of production under section 7491(c). As a result, petitioner must come forward with evidence sufficient to persuade the Court that respondent's determination that petitioner is liable for the section 6651(a)(1) and (a)(2) additions to tax is incorrect.

 

A showing of reasonable cause requires the petitioner to demonstrate that he exercised ordinary business care and prudence, but nevertheless was unable to file or pay the tax within the prescribed time. Sec. 301.6651-1(c)(1), Proced. & Admin. Regs. For illness to constitute reasonable cause for failure to file, petitioner must show that it incapacitated him to such a degree that he could not file his returns. Williams v. Commissioner [Dec. 18,247], 16 T.C. 893, 905-906 (1951); see, e.g., Joseph v. Commissioner [Dec. 55,022(M)], T.C. Memo. 2003-19 ("Illness or incapacity may constitute reasonable cause if the taxpayer establishes that he was so ill he was unable to file."); Black v. Commissioner [Dec. 54,963(M)], T.C. Memo. 2002-307 ("[W]e are unpersuaded that illness is the cause of petitioners' continuing delinquency."), affd. 94 Fed. Appx. 968 (3d Cir. 2004); Watts v. Commissioner [Dec. 53,669(M)], T.C. Memo. 1999-416 ("[A] taxpayer's selective inability to perform his or her tax obligations, while performing their regular business, does not excuse failure to file."); Wright v. Commissioner [Dec. 52,754(M)], T.C. Memo. 1998-224 ("[T]he duration of the incapacity must approximate that of the failure to file."), affd. [99-1 USTC ¶50,548] 173 F.3d 848 (2d Cir. 1999).

 

Petitioner's argument that the delay in filing and payment was due to reasonable cause was based solely on his 1996 surgery, the accompanying illness, and his inability to work for 4 months. However, after his recovery, petitioner was able to continue his legal practice, pay business expenses, manage two rental properties, and take care of two minor children. Petitioner's health problems in 1996 do not explain his failure to timely file or pay for 1998, nor his repeated failures to contact respondent's Appeals Office in 2003. On the basis of the facts presented, we conclude that petitioner did not have reasonable cause for his delay in filing and paying taxes.

Issue 2: Abuse of Discretion Review of Respondent's Determination

Because petitioner is liable for the additions to tax, we shall review respondent's administrative determination sustaining the Federal tax lien for abuse of discretion. Section 6321 imposes a Federal tax lien in favor of the United States on all property and rights to property of any person when a demand for payment of an outstanding tax liability has been made and the person fails to pay those taxes.

 

Petitioner has offered no evidence indicating that respondent abused his discretion in sustaining the Federal tax lien. Petitioner has yet to pay his outstanding tax liability for 1998. While an installment agreement has been entered into for petitioner's outstanding tax liability, that agreement does not preclude respondent from maintaining a lien while taxes are still outstanding. Secs. 6322 and 6323(j); cf. sec. 301.6323(j)-1, Proced. & Admin. Regs. (Commissioner may withdraw a notice of Federal tax lien under certain conditions). On the basis of the facts presented, we hold that respondent did not abuse his discretion in upholding the Federal tax lien.

 

We have considered all of petitioner's contentions, arguments, and requests, and to the extent that they are not discussed herein, we conclude them to be moot, irrelevant, or without merit.

 

To reflect the foregoing,

 

An appropriate order of dismissal and decision will be entered.

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

² The parties disagreed over petitioner's Schedule A, Itemized Deductions, for 1996, but respondent now concedes that petitioner is entitled to the deduction. The parties have also stipulated that, subsequent to his filing with this Court, petitioner fully paid his 1996 and 1997 tax liabilities, including additions to tax pertaining to those years. Upon payment, the Federal tax liens for 1996 and 1997 were released. Only 1998 remains at issue.

 

 

Keith and Cherie Orum v. Commissioner.

Dkt. No. 18317-02L , 123 TC 1, No. 1, July 1, 2004.

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

[Code Sec. 6330]
Levy for taxes: Collection Due Process hearing: Equivalent hearing: Tax Court review: Jurisdiction: Notice of determination: Decision letter: CDP notice: Last known address: Multiple CDP notices: Collection alternatives: Abuse of discretion. --

The Tax Court lacked jurisdiction over an IRS decision letter sustaining a levy against married taxpayers. Since the taxpayers' request for a Collection Due Process (CDP) hearing was untimely, their decision letter could not be treated as a notice of determination over which the court had jurisdiction. M. Craig, Dec. 54,933 (2002), distinguished. Moreover, although the taxpayers claimed that they had not received their first CDP notice, IRS records showed that it was sent via certified mail to their last known address. The 30-day period to request a CDP hearing began on the date that notice was issued and was not affected by a second notice of intent to levy that the IRS issued several months later. Finally, the IRS did not abuse its discretion when it rejected the taxpayers' proposed installment agreement and offer in compromise relating to another tax year. They failed to respond to an IRS request for additional financial information, they had defaulted on a prior installment agreement, and it appeared that their assets and income were sufficient to pay their liabilities.

Keith Orum, pro se; Sean R. Gannon, for respondent.

 

Ps filed joint Federal income tax returns for 1998 and 1999 but did not make full payment of the tax liabilities. On June 23, 2000, R sent Ps by certified mail a Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998. Ps did not file a sec. 6330, I.R.C., hearing request in response to this notice. On Dec. 14, 2001, R sent Ps a Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998 and 1999. P sent R a sec. 6330, I.R.C., hearing request dated Dec. 31, 2001, for 1998 and 1999.

 

In February 2002, Ps submitted an offer-in-compromise. R rejected the request on the basis of financial information submitted by Ps.

 

R granted Ps an equivalent hearing for 1998 and a sec. 6330, I.R.C., hearing for 1999. During the hearings, R requested additional financial information from Ps by Aug. 9, 2002, to consider an installment agreement. Ps failed to timely provide the additional information. R issued a decision letter for 1998 and a notice of determination for 1999 which concluded that the proposed collection activities would be sustained.

 

Ps filed a petition to dispute the decision letter and the notice of determination. R filed a motion to dismiss for lack of jurisdiction with respect to 1998.

 

1. Held: The June 23, 2000, notice of intent to levy was sent to the last known address of Ps.

 

2. Held, further, R's motion to dismiss for lack of jurisdiction is granted. Ps did not file a sec. 6330, I.R.C., hearing request within 30 days of the June 23, 2000, notice of intent to levy. See sec. 6330(a)(3), I.R.C. The Dec. 14, 2001, notice of intent to levy did not entitle petitioners to a sec. 6330, I.R.C., hearing. Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs. The decision letter subsequently issued does not provide a basis for the Court's jurisdiction under sec. 6330(d)(1), I.R.C. See Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 270 (2001); Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 262 (2001).

 

3. Held, further, R did not abuse his discretion in issuing the notice of determination for 1999, and the proposed collection action is sustained.

OPINION

 

HAINES, Judge: Respondent sent petitioner Keith Orum (Mr. Orum) and petitioner Cherie Orum (Mrs. Orum) a Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330 (decision letter) for 1998 and a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) for 1999.

 

The issues for decision are: (1) Whether the Court lacks jurisdiction under section 6330(d)(1)¹ with regard to 1998; and (2) whether there was an abuse of discretion in the determination that the proposed collection action for 1999 should be sustained.

Background

 

Some of the facts have been stipulated. The stipulated facts and the attached exhibits are incorporated herein by this reference.

 

At the time of the filing of the petition, petitioners resided in La Grange Park, Illinois. Mr. Orum has lived at the same address his entire life. Mr. Orum is a patent attorney, and Mrs. Orum is a zookeeper.

 

Petitioners filed joint Federal income tax returns for 1998 and 1999 on November 29, 1999, and November 20, 2000, respectively, but did not make full payments of the tax liabilities when the returns were filed.

 

On November 29, 1999, respondent assessed tax liabilities of $63,683 plus additions to tax for 1998. Respondent issued petitioners three notices of demand for payment of the 1998 tax liabilities and additions to tax on November 29, 1999, January 3, 2000, and February 7, 2000.

 

On June 23, 2000, respondent sent petitioners, by certified mail, a Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, for 1998 (June 23, 2000, notice). The return receipt for the June 23, 2000, notice was signed on June 26, 2000.

 

On November 20, 2000, respondent assessed tax liabilities of $38,661 plus additions to tax for 1999. Respondent issued two notices of demand for payment of the 1999 tax liabilities and additions to tax on November 20 and December 11, 2000.

 

On January 5, 2001, petitioners entered into an installment agreement for the payment of the 1998 and 1999 tax liabilities. Petitioners did not make all of the monthly payments as required by the installment agreement schedule. By December 2001, the installment agreement was terminated.

 

On December 14, 2001, respondent sent petitioners a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing for 1998 and 1999 (December 14, 2001, notice). The taxes owed with statutory additions, as set forth in the final notice, were $41,435 and $44,345 for 1998 and 1999, respectively.

 

Mr. Orum sent respondent a Form 12153, Request for a Collection Due Process Hearing (hearing request), for 1998 and 1999, dated December 31, 2001. On the hearing request, petitioners stated: "Desires continuation of payment plan. Will contact IRS agent by phone to discuss. Have been working with agents in Chicago." Mr. Orum proposed to Settlement Officer Susan L. Vuicich (Ms. Vuicich) that petitioners be permitted to satisfy the 1998 and 1999 tax liabilities through another installment agreement.

 

On or about February 7, 2002, petitioners submitted a Form 656, Offer in Compromise, and Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals.

 

On June 20, 2002, respondent sent Mr. Orum a letter scheduling an equivalent hearing for 1998 and a section 6330 hearing for 1999 by telephone for July 23, 2002, and requesting Mrs. Orum's signature on the hearing request. The June 20, 2002, letter also stated:

 

You are not entitled to a Collection Due Process Hearing for 1998. According to our records a final notice was sent to you by certified mail for this year on June 22, 2000.² However, you are entitled to an equivalent hearing. I have enclosed Publication 1660, which explains an equivalent hearing.

 

You marked Form 12153 appealing the filed Notice of Federal Tax Lien. You are not entitled to a hearing on this issue as our records show no lien has been filed.

 

You subsequently submitted an offer in compromise under doubt as to collectibility and Effective Tax Administration. I have returned this offer to you under separate cover. You can resubmit your offer once you are current with filing your tax returns. However, let me explain why your offer would not be accepted. It appears that based upon the financial information you provided you have the ability to pay in full over the life of the collection statute, therefore there is no doubt as to collectibility. The explanation you provided for Effective Tax Administration does not meet the economic hardship criteria for consideration of your offer.

 

Our records show that you have not made any estimated payments for 2001 and 2002. You need to get current with your estimated tax payments for 2002 in order for me to consider any collection alternatives, such as an installment agreement to resolve your tax liabilities.

 

Please make your estimated tax payments for 2002 prior to the conference, so that we can discuss any alternatives to the proposed levy action.

 

On July 29, 2002, respondent received a facsimile of the completed hearing request containing the signatures of Mr. Orum and Mrs. Orum.

 

During the July 23, 2002, hearings, Ms. Vuicich requested from Mr. Orum additional financial information by August 9, 2002, for the Appeals Office to consider Mr. Orum's request for another installment agreement. Such requested information included an income and expense report on a cash basis for Mr. Orum's partnership for 2002, a copy of Mrs. Orum's pay statement, copies of the last 3 months of bank statements, copies of the most recent home equity loan and motorcycle loan, a breakdown of housing and transportation expenses, the amount of current State and local income taxes, the amount of life insurance premium, and the amount of out-of-pocket health care costs.

 

On July 25, 2002, Ms. Vuicich sent Mr. Orum computer-generated statements of account for 1998 and 1999.

 

On September 25, 2002, Ms. Vuicich reported in her Case Activity Record that petitioners had failed to provide the requested information. Ms. Vuicich also reported that Mr. Orum was not current with his estimated tax payments and the financial information she possessed was incomplete and unverified.

 

On October 17, 2002, respondent sent petitioners a decision letter for 1998. The decision letter stated in part:

 

Your due process hearing request was not filed within the time prescribed under Section 6320 and/or 6330. However, you received a hearing equivalent to a due process hearing except that there is no right to dispute a decision by the Appeals Office in court under IRC Sections 6320 and/or 6330.

 

* * * * * * *

 

It has been determined that no relief is to be granted and that the proposed enforcement action (levy) is sustained. You failed to provide the additional financial information as requested in order for us to consider your request for an installment agreement.

 

Further, the attachment to the decision letter stated:

 

You filed joint income tax returns for 1998 and 1999 with a balance due. You were sent a final notice of intent to levy by certified mail for 1998 on June 22, 2000. You entered into an installment agreement for $5,000 per month to pay taxes due for both 1998 and 1999. Your first payment was due March 5, 2001.

 

You did not make your monthly payments as required. A final notice was sent to you by certified mail on December 14, 2001 for 1998 and 1999. You submitted Form 12153, Request for a Collection Due Process Hearing, which was received on January 4, 2002. Your request was not received timely for 1998. You are entitled to an equivalent hearing only for the proposed levy action for this year. * * *

 

On October 17, 2002, respondent also sent petitioners a notice of determination for 1999. The "Summary of Determination" stated:

 

It has been determine [sic] that no relief is to be granted and that the proposed enforcement action (levy) is sustained. You failed to provide additional financial information as requested in order for us to consider your request for an installment agreement.

 

The attachment to the notice of determination stated:

 

On your Form 12153, you requested the continuation of a payment plan. You raised no other issues on your written protest.

 

Subsequent to making your request for a Collection Due Process Hearing, you submitted an Offer in Compromise, Form 656 under doubt as to collectibility effective tax administration. Your offer was received February 11, 2002. The Settlement Officer assigned to your case returned your offer because you were not in compliance with filing required tax returns. We had no record of your Form 1065 being filed for 1998 for Orum & Roth. The offer was returned with a letter dated June 20, 2002 explaining this.

 

Keith Orum contacted the Settlement Officer on July 17, 2002 to confirm the telephone conference and declined a face-to-face conference. The Settlement Officer reviewed her letter with Keith explaining the reasons why the offer would not be accepted. Those reason [sic] are as follows:

 

 The reason you provided for Effective Tax Administration does not meet the economic hardship criteria.

 

 Based upon the financial information you provided it appears you have the ability to pay the liabilities in full within the statutory period for collection

 

 You had not made any estimated tax payments for 2001 and 2002

 

Keith provided an adequate explanation why a Form 1065 for 1998 was not filed. The only other partner resigned prior to 1998. The partnership dissolved, but Keith continued to use the partnership federal employer's identification number (FEIN) for reporting employment tax returns. * * * Keith said he understood why an offer could not be considered and expressed an interest in an installment agreement.

 

* * * * * * *

 

A scheduled telephone conference was held on July 23, 2002 at 10:10 a.m. EST with Keith Orum. The Settlement Officer reviewed the information on Form 433A with him and identified additional information needed in order to determine an appropriate amount for an installment agreement. The additional financial information was to be provided by August 9, 2002.

 

* * * * * * *

 

We received an estimated tax payment for 2002 in the amount of $8,500 on September 6, 2002 however; we have not received the additional financial information nor heard from you.

BALANCING EFFICIENT COLLECTION AND INTRUSIVENESS

 

You have failed to provide by an agreed deadline the additional financial information requested. This information is necessary in order for us to consider an installment agreement. Absent your willingness to provide this information, alternatives to the proposed levy action such as an installment agreement could not be considered. * * *

 

On November 15, 2002, petitioners sent the Court a Petition for Lien or Levy Action Under Code Section 6320(c) or 6330(d) to dispute the decision letter for 1998 and the notice of determination for 1999. On January 21, 2003, petitioners sent the Court an amended petition pursuant to a Court order.

 

On July 30, 2003, respondent filed a motion to dismiss for lack of jurisdiction with respect to 1998. Petitioners filed an objection to respondent's motion.

 

The Court held a hearing on respondent's motion and trial for this case in Chicago, Illinois, on September 23, 2003, in which Mr. Orum appeared. Mr. Orum stated that he was not disputing the amounts of taxes owed for 1998 and 1999 but wanted to establish another installment agreement to satisfy those obligations.

Discussion

I. Respondent's Motion To Dismiss for Lack of Jurisdiction

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 before enforcing collection by way of a levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

 

Section 6330(a) provides that the Secretary shall notify a person in writing of his or her right to a section 6330 hearing with the Appeals Office regarding the proposed levy. The written notice must be given in person, left at the person's dwelling or usual place of business, or sent by certified or registered mail to the person's last known address. Sec. 6330(a)(2).

 

Section 6330(a)(2) provides that the prescribed notice (notice of intent to levy) 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 notice of intent to levy shall explain that the person has the right to request a section 6330 hearing during the 30-day period under section 6330(a)(2).

 

Where the Appeals Office issues a notice of determination to the taxpayer following a section 6330 hearing regarding a levy action, section 6330(d)(1) provides that the taxpayer will have 30 days following the issuance of such determination letter to file a petition for review with this Court or a Federal District Court, as may be appropriate. Offiler v. Commissioner [Dec. 53,912], 114 T.C. 492, 498 (2000). This Court's jurisdiction under section 6330 depends upon the issuance of a valid determination letter and the filing of a timely petition for review. Sec. 6330(d)(1); Lunsford v. Commissioner [Dec. 54,552], 117 T.C. 159, 164 (2001).

 

The parties dispute whether a valid determination letter was issued for 1998 to give the Court jurisdiction under section 6330(d)(1). Respondent argues that this Court should dismiss the case as to 1998 upon the grounds that the decision letter does not constitute a determination sufficient to invoke the Court's jurisdiction pursuant to section 6330(d)(1). In objecting to respondent's motion, petitioners argue that: (1) They did not receive the June 23, 2000, notice; and (2) the December 14, 2001, notice offered petitioners a section 6330 hearing for 1998 because it was titled a "Final Notice".

 

A. Was the June 23, 2000, Notice Sent to Petitioners' Last Known Address?

 

As noted above, the notice of intent to levy must be given in person, left at the person's dwelling or usual place of business, or sent by certified or registered mail to the person's last known address. Secs. 6330(a)(2) and 6331(d)(2); secs. 301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs. The regulations under sections 6330 and 6331 reference section 301.6212-2, Proced. & Admin. Regs., to define "last known address". Secs. 301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs. Under section 6212, in general, the Commissioner is entitled to treat the address on a taxpayer's most recent tax return as the taxpayer's last known address, unless the taxpayer has given "clear and concise notification of a different address." Kennedy v. Commissioner [Dec. 54,315], 116 T.C. 255, 260 n.4 (2001); Abeles v. Commissioner [Dec. 45,203], 91 T.C. 1019, 1035 (1988); sec. 301.6212-2(a), Proced. & Admin. Regs.

 

Although respondent did not enter the June 23, 2000, notice into the record, as proof of its mailing respondent provided petitioners' Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, for 1998, which reported that the notice of intent to levy was issued on June 23, 2000, and a return receipt was signed on June 26, 2000. That certificate is "generally regarded as being sufficient proof, in the absence of evidence to the contrary, of the adequacy and propriety of notices and assessments that have been made." Gentry v. United States [92-1 USTC ¶50,225], 962 F.2d 555, 557 (6th Cir. 1992); see Schroeder v. Commissioner [Dec. 54,829(M)], T.C. Memo. 2002-190; Kaeckell v. Commissioner [Dec. 54,737(M)], T.C. Memo. 2002-114. Further, respondent provided an ACS LT11 Certified Mail List for 1998 which reported that a Notice of Intent to Levy and Notice of Your Right to a Hearing was sent to petitioners by certified mail at "LaGrange Park, IL 60526-134603" on June 23, 2000. See Weber v. Commissioner [Dec. 55,588], 122 T.C. 258, 259 n.3 (2004).

 

We also note that the parties stipulated that petitioners filed a tax return for 1998 before the June 23, 2000, notice was issued, and Mr. Orum reported on his offer-in-compromise application that he had been "current" with his tax liabilities from 1981 until 1998. Mr. Orum stated on his Form 433-A that he has lived at the same address his entire life. On the basis of the record and the Commissioner's practice of using the address of a taxpayer's most recently filed tax return as the last known address, we find that the address used for the June 23, 2000, notice was petitioners' last known address.

 

The only evidence that petitioners presented is testimony from Mr. Orum that he and Mrs. Orum did not receive the June 23, 2000, notice.³ That testimony is inconsistent with the evidence on the record. After observing Mr. Orum's demeanor at trial, the Court found his testimony, on this point, not credible. Mr. Orum pointed to petitioners' address listed on Ms. Vuicich's Case Activity Report which incorrectly listed petitioners' ZIP Code. We note that: (1) the Case Activity Report was created after the June 23, 2000, notice was sent to petitioners; and (2) respondent's official certified mailing list that reported the mailing of the June 23, 2000, notice listed the correct ZIP Code. Therefore, we do not accept Mr. Orum's testimony on this point and find that the June 23, 2000, notice was sent to petitioners' last known address.

 

B. Does the Court Lack Jurisdiction Over 1998?

 

Petitioners argue that the December 14, 2001, notice offered them a section 6330 hearing for 1998 because it was titled a "Final Notice" and the Commissioner can send only one notice of intent to levy under section 6330(a)(1). We disagree.

 

Section 6330(a)(1) provides, in relevant part, that the notice before levy "shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates." Petitioners misinterpret this sentence. We interpret this sentence to mean that the Commissioner need send only one notice of intent to levy for a taxable period. The Commissioner may issue more than one notice of intent to levy to a taxpayer. See sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs. Although more than one notice may be issued, the taxpayer is still entitled to only one hearing for the relevant tax period. Sec. 6330(b)(2); sec. 301.6330-1(b)(1), Proced. & Admin. Regs.

 

This interpretation is buttressed by the regulations under section 6330, which provide:

 

Q-B2. Is the taxpayer entitled to a CDP hearing when the IRS, more than 30 days after issuance of a CDP Notice under section 6330 with respect to the unpaid tax and periods, provides subsequent notice to that taxpayer that the IRS intends to levy on property or rights to property of the taxpayer for the same tax and tax periods shown on the CDP Notice?

 

A-B2. No. Under section 6330, only the first pre-levy or post-levy CDP Notice with respect to the unpaid tax and tax periods entitles the taxpayer to request a CDP hearing. If the taxpayer does not timely request a CDP hearing with Appeals following that first notification, the taxpayer foregoes the right to a CDP hearing with Appeals and judicial review of Appeals' determination with respect to levies relating to that tax and tax period. The IRS generally provides additional notices or reminders (reminder notifications) to the taxpayer of its intent to levy when no collection action has occurred within 180 days of a proposed levy. Under such circumstances, a taxpayer may request an equivalent hearing as described in paragraph (i) of this section.

 

* * * * * * *

 

Q-B4. If the IRS sends a second CDP Notice under section 6330 (other than a substitute CDP Notice) for a tax period and with respect to an unpaid tax for which a CDP Notice under section 6330 was previously sent, is the taxpayer entitled to a section 6330 CDP hearing based on the second CDP Notice?

 

A-B4. No. The taxpayer is entitled to only one CDP hearing under section 6330 with respect to the tax and tax period. The taxpayer must request the CDP hearing within 30 days of the date of the first CDP Notice for that tax and tax period.

 

Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs.

 

On June 23, 2000, respondent sent petitioners a notice of intent to levy for 1998 at their last known address. Petitioners did not send a hearing request until December 31, 2001, which is beyond the 30-day filing period required by section 6330(a)(3). Section 6330 does not authorize the Commissioner to waive the time restrictions imposed therein. Kennedy v. Commissioner [Dec. 54,315], 116 T.C. at 262. The fact that respondent, after the termination of the intervening installment agreement, sent petitioners a second notice of intent to levy on December 14, 2001, did not entitle petitioners to a hearing as contemplated under section 6330(b). See sec. 301.6330-1(b)(2), Q&A-B2, Proced. & Admin. Regs.

 

Under the circumstances, respondent was not obliged to conduct a section 6330 hearing as contemplated under section 6330(b). See sec. 301.6330-1(i)(1), Proced. & Admin. Regs. In place of the section 6330 hearing, the Appeals Office granted petitioners an equivalent hearing for 1998. Id. Thereafter, the Appeals Office issued a decision letter to petitioners stating that the proposed collection action was sustained. Id. The decision letter does not constitute a notice of determination under section 6330(d)(1) which would provide a basis for petitioners to invoke the Court's jurisdiction for 1998. See Moorhous v. Commissioner [Dec. 54,316], 116 T.C. 263, 270 (2001); Kennedy v. Commissioner, supra at 263.

 

This case is distinguishable from Craig v. Commissioner [Dec. 54,933], 119 T.C. 252 (2002), in which we held that we had jurisdiction under section 6330(d)(1) when the Appeals Office issued a decision letter to the taxpayer. Id. at 259. In Craig, the Commissioner mailed to the taxpayer a notice of intent to levy on February 22, 2001. Id. at 254. On March 17, 2001, the taxpayer timely requested a section 6330 hearing by mailing the Commissioner a letter accompanied by unsigned Forms 12153. Id. at 255. On May 6, 2001, the Commissioner received signed Forms 12153 but granted the taxpayer only an equivalent hearing. Id. at 255-256. A decision letter was then issued to the taxpayer following the equivalent hearing. Id. at 256. The Court held that "where Appeals issued the decision letter to petitioner in response to his timely request for a Hearing, we conclude that the `decision' reflected in the decision letter issued to petitioner is a `determination' for purposes of section 6330(d)(1)." Id. at 259. In the instant case, petitioners did not timely request a section 6330 hearing in response to the June 23, 2000, notice. As a result, we do not conclude that the decision in the decision letter is a determination for purposes of section 6330(d)(1).

 

We will grant respondent's motion to dismiss for lack of jurisdiction as to 1998 because the petition was not filed in response to a notice of determination sufficient to confer jurisdiction on the Court under section 6330(d)(1).

II. Respondent's Determination for 1999

Petitioners argue that respondent abused his discretion in the determination to sustain the proposed collection action for 1999 because respondent refused to process petitioners' offer-in-compromise and rejected petitioners' request for an installment agreement.

 

As discussed above, before a levy may be made on any property or right to property, a taxpayer is entitled to notice of intent to levy and notice of the right to a fair hearing before an impartial officer of the Appeals Office. Secs. 6330(a) and (b) and 6331(d). If the taxpayer requests a section 6330 hearing, he may raise in that hearing any relevant issue relating to the unpaid tax or the proposed levy, including challenges to the appropriateness of the collection action and "offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise." Sec. 6330(c)(2)(A). A determination is then made which takes into consideration those issues, the verification that the requirements of applicable law and administrative procedures have been met, and "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 6330(c)(3).

 

Petitioners raise issues only as to collection alternatives, in that they dispute respondent's rejection of another installment agreement and rejection of an offer-in-compromise. We review the determination for an abuse of discretion because the underlying tax liability is not at issue. Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 185 (2001); Nicklaus v. Commissioner [Dec. 54,477], 117 T.C. 117, 120 (2001).

 

Respondent's rejection of another installment agreement for petitioners was not an abuse of discretion. Installment agreements are based upon the taxpayer's current financial condition. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.19.1.5.4.1, at 18,299-65. Respondent's determination was based on information petitioners provided to Ms. Vuicich. See Schulman v. Commissioner [Dec. 54,757(M)], T.C. Memo. 2002-129. At the section 6330 hearing, Ms. Vuicich requested from Mr. Orum additional financial information by August 9, 2002, for the Appeals Office to consider Mr. Orum's request for another installment agreement. Petitioners failed to timely respond to Ms. Vuicich's request. As discussed with Mr. Orum at the section 6330 hearing, Ms. Vuicich found the information provided on petitioners' Form 433A to be incomplete and unverified. We find that the Appeals officer could have reasonably rejected an installment agreement proposal by petitioners on the basis of petitioners' failure to make the required monthly payments on the initial January 5, 2001, installment agreement that was terminated, and petitioners' failure to timely provide the requested information to Ms. Vuicich in order for her to consider another installment agreement.

 

Additionally, respondent's determination not to enter into an offer-in-compromise agreement with petitioners was not an abuse of discretion. Section 7122(a) authorizes the Secretary to compromise any civil case arising under the internal revenue laws. The regulations set forth three grounds for the compromise of a liability: (1) Doubt as to liability; (2) doubt as to collectibility; or (3) promotion of effective tax administration. Sec. 301.7122-1T(b), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 39024 (July 21, 1999);⁴ see sec. 7122(c)(1). Doubt as to liability is not at issue in the instant case.

 

The Secretary may compromise a liability on the ground of doubt as to collectibility when "the taxpayer's assets and income are less than the full amount of the assessed liability." Sec. 301.7122-1T(b)(3)(i), Temporary Proced. & Admin. Regs., supra. Additionally, the Secretary may compromise a liability on the ground of "effective tax administration" when: (1) Collection of the full liability will create economic hardship; or (2) exceptional circumstances exist such that collection of the full liability will be detrimental to voluntary compliance by taxpayers; and (3) compromise of the liability will not undermine compliance by taxpayers with tax laws. Sec. 301.7122-1T(b)(4), Temporary Proced. & Admin. Regs., supra; see 2 Administration, Internal Revenue Service (CCH), sec. 5.8.11.2, at 16,385-15 (taxpayer's liability may be eligible for compromise to promote effective tax administration if not eligible for compromise based on doubt as to liability or doubt as to collectibility, and taxpayer has exceptional circumstances to merit the offer).

 

Ms. Vuicich reviewed petitioners' submitted financial information and determined that an offer-in-compromise was not appropriate on the basis of doubt as to collectibility and promotion of effective tax administration. Ms. Vuicich communicated her determination to Mr. Orum in the June 20, 2002, letter. In a later telephone conversation, Mr. Orum told Ms. Vuicich that he understood why an offer-in-compromise could not be considered. We received as an exhibit the financial information before Ms. Vuicich and find that she could have reasonably concluded that there are sufficient income and assets to satisfy the tax liability. On the basis of respondent's consideration of petitioners' information, we conclude that respondent's refusal to enter into an offer-in-compromise was not an abuse of discretion. See Crisan v. Commissioner [Dec. 55,350(M)], T.C. Memo. 2003-318 (held the Commissioner's refusal to enter into an offer-in-compromise was not an abuse of discretion on the basis of a review of the financial information submitted to the Appeals officer).

 

As a result, we hold that the determination to proceed with collection for 1999 was not an abuse of respondent's discretion, and the proposed collection action is sustained.

 

In reaching our holdings herein, we have considered all arguments made, and, to the extent not mentioned above, we conclude that they are moot, irrelevant, or without merit.

 

To reflect the foregoing,

 

An appropriate order and decision will be entered.

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

² We note that the Form 4340, Certificate of Assessments, Payments, And Other Specified Matters, and the ACS LT11 Certified Mail List report that this notice was sent on June 23, 2000.

³ Mrs. Orum did not appear at trial.

⁴ Final regulations under sec. 7122 were promulgated effective for offers-in-compromise pending on or submitted on or after July 18, 2002. Sec. 301.7122-1(k), Proced. & Admin. Regs.

 

 

Said M. Karara v. Commissioner.

Dkt. No. 7748-02L , TC Memo. 2004-133, June 2, 2004.

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

[Code Sec. 6330]
Collection Due Process hearing: Waiver: Notice of intent to levy. --

The IRS was granted summary judgment with respect to the sufficiency of a Collection Due Process (CDP) hearing for one year, but was denied summary judgment for another year. An individual had received timely written notice of intent to levy as well as notice of his right to request a CDP hearing with respect to a particular tax year. Furthermore, the IRS Appeals officer's determination to proceed with the collection of tax for that year was not an abuse of discretion; therefore, summary judgment was appropriate. Although the taxpayer had orally consented to include another tax year in the hearing, no levy could be made without proper notice to the taxpayer. His agreement to include that year in a hearing could not substitute for the explicit notice requirements of Code Sec. 6330(a)(2). Summary judgment could not be granted with respect to this year, as the IRS had not produced sufficient evidence to show that it had issued proper notice.

Said M. Karara, pro se; D'Aun E. Clark, for respondent.

MEMORANDUM OPINION

 

GERBER, Chief Judge: Respondent moved for summary judgment on the question of whether he may proceed with the collection of petitioner's 1993 and 1994 tax liabilities. Respondent contends that all section 6330¹ prerequisites have been met and that he should be allowed to proceed with collection. Petitioner filed a cross-motion for summary judgment, raising several arguments as to why respondent should not be permitted to proceed with collection. A hearing on the summary judgment motions was held at Miami, Florida.

Background

Petitioner resided in Naples, Florida, at the time his petition was filed. Petitioner's 1993 and 1994 tax returns were examined, and respondent determined an income tax deficiency for each year. Petitioner petitioned this Court with respect to both years, and on July 29, 1999, this Court filed a memorandum opinion in Karara v. Commissioner [Dec. 53,480(M)], T.C. Memo. 1999-253, sustaining respondent's determinations. A decision was entered, and petitioner filed an appeal to the Court of Appeals for the Eleventh Circuit.

 

On December 12, 1999, because of petitioner's failure to file a bond while the appeal was pending, respondent assessed the 1993 and 1994 income tax deficiencies. Approximately 5 months later on May 5, 2000, the Court of Appeals for the Eleventh Circuit affirmed this Court's decision without published opinion. Karara v. Commissioner [2000-1 USTC ¶50,477], 214 F.3d 1358 (11th Cir. 2000). On July 10, 2000, the Court of Appeals denied rehearing.

 

On July 29, 2000, about 2 weeks following the Court of Appeals' denial of rehearing, respondent mailed to petitioner a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing for the 1994 tax year. Four days later, on August 2, 2000, the Court of Appeals stayed issuance of the mandate pending petitioner's petition for writ of certiorari to the U.S. Supreme Court. On August 8, 2000, petitioner timely requested a hearing for his 1994 tax year by submitting Form 12153, Request for a Collection Due Process Hearing. During subsequent conversations with respondent, petitioner consented to the inclusion of his 1993 tax year, in addition to his 1994 tax year, for purposes of the section 6330 hearing.

 

On October 6, 2000, petitioner filed a petition for writ of certiorari with the Supreme Court. Respondent had the option to file a response to the petition, but declined to do so. Therefore, in accordance with Supreme Court rules, the Solicitor General timely filed a waiver of the right to respond on behalf of respondent. Approximately 3 weeks later, on November 6, 2000, the Supreme Court denied petitioner's petition for writ of certiorari. Karara v. Commissioner, 531 U.S. 980 (2000).

 

On September 24, 2001, respondent applied an overpayment of tax by petitioner in the amount of $300 toward his 1993 tax liability.

 

Petitioner and the Appeals officer engaged in telephone conferences on September 5 and October 4 and 5, 2001. During these conferences, respondent notified petitioner that the assessments were valid and subject to collection because of petitioner's failure to post a bond while his appeals were in progress. See sec. 7485. In response, petitioner raised the argument that respondent, in waiving the right to respond to the petition for writ of certiorari, had also waived opposition to the issues presented in the petition. Petitioner also argued that because of respondent's waiver petitioner is entitled to a $300 refund.

 

On April 17, 2002, respondent issued a Notice of Determination Concerning Collection Actions(s) Under Section 6320 and/or 6330 determining to proceed with collection of petitioner's 1993 and 1994 tax liabilities.

Discussion

Respondent moved for summary judgment on the question of whether he may proceed to collect petitioner's 1993 and 1994 income tax liabilities. Summary judgment is intended to expedite litigation and avoid unnecessary trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689], 90 T.C. 678, 681 (1988). A motion for summary judgment may be granted if there is no genuine issue as to any material fact. See Rule 121(b); Elec. Arts, Inc. v. Commissioner [Dec. 54,680], 118 T.C. 226, 238 (2002). The moving party bears the burden of showing 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. Bond v. Commissioner [Dec. 48,822], 100 T.C. 32, 36 (1993); Dahlstrom v. Commissioner [Dec. 42,486], 85 T.C. 812, 821 (1985). This case is ripe for summary judgment with respect to petitioner's 1994 tax year. Genuine issues of material fact exist, however, with respect to petitioner's 1993 tax year.

 

I. Section 6330 Hearing Prerequisites

 

If a taxpayer neglects or refuses to pay a Federal tax liability within 10 days of notice and demand, the Secretary is authorized to collect such liability by levy on the taxpayer's property. Sec. 6331(a). Pursuant to section 6330(b), a taxpayer has a right to a hearing before the Commissioner may levy. We first address whether respondent met the hearing prerequisites of section 6330 with respect to petitioner's 1993 and 1994 tax years.

 

Section 6330(b) provides that administrative hearings be held by an impartial officer of the Internal Revenue Service Office of Appeals. If dissatisfied with the Appeals Office determination, a taxpayer may seek judicial review of the decision in this Court or a District Court of the United States as applicable. Sec. 6330(d).

 

The matters to be considered at the hearing are specified by section 6330(c), which provides: (1) The Appeals officer shall obtain verification that the requirements of applicable law and administrative procedure have been met; (2) certain issues may be heard, including spousal defenses, appropriateness of collection activities, and collection alternatives; and (3) a challenge to the underlying liability may be raised if the taxpayer did not receive a statutory notice of deficiency or otherwise receive an opportunity to dispute the liability. Sec. 6330(c).

 

Petitioner and an impartial Appeals officer conducted an administrative hearing comprising three separate telephone calls. For purposes of the hearing, petitioner and respondent agreed to place petitioner's 1993 and 1994 tax years at issue. Because this Court had previously entered a decision, the merits of petitioner's underlying tax liability were not at issue at the administrative hearing and are not at issue here. Therefore, we review respondent's administrative determination to proceed with collection for an abuse of discretion. Sec. 6330(c)(2)(B); Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000). Because petitioner was not entitled to question the underlying tax liability, his administrative hearing was limited to collection issues, including spousal defenses, the appropriateness of respondent's intended collection action, and collection alternatives. Petitioner raises two issues with respect to the appropriateness of respondent's collection actions.²

 

Respondent assessed petitioner's 1993 and 1994 tax liabilities on December 12, 1999. On July 29, 2000, respondent issued to petitioner a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing for his 1994 tax year. On brief and at the summary judgment hearing, petitioner argued that during an August 7, 2000, telephone conversation, he and a Department of Justice attorney agreed to stay further collection activity with respect to petitioner's 1993 and 1994 tax liabilities until the decision of the Tax Court in his deficiency suit became final. Petitioner further contends that he raised this issue at the administrative hearing and that it was an abuse of discretion that the Appeals officer did not consider it. Respondent acknowledges the agreement to stay collection and maintains that there was compliance with its terms.

 

Section 6330(e)(1) precludes the Commissioner from proceeding with a proposed levy that is the subject of a hearing while the hearing and any related appeals are pending. See Craig v. Commissioner [Dec. 54,933], 119 T.C. 252, 258 (2002). Therefore, as of August 14, 2000, the date that respondent received petitioner's request for a hearing, respondent was precluded from proceeding with levy actions pending the outcome of this appeal. See Boyd v. Commissioner [Dec. 54,495], 117 T.C. 127, 130-131 (2001). In that respect, respondent has not pursued enforced collection since issuing the Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing on July 29, 2000. Accordingly and irrespective of the agreement to stay collection, since August 14, 2000, respondent has otherwise been precluded from proceeding with levy activity.

 

There is no indication in the summary judgment documents as to whether petitioner raised the collection stay agreement issue in the administrative hearing. Moreover, it appears that respondent complied with its terms. The Supreme Court's denial of the petition for writ of certiorari on November 6, 2000, finalized the decisions of the Tax Court and the Court of Appeals for the Eleventh Circuit. In accordance with the agreement, respondent did not resume any collection activity until approximately 10 months after the Supreme Court's denial of petitioner's petition for writ of certiorari.³

 

Petitioner makes a second argument as to why respondent should be precluded from proceeding with collection. The essence of petitioner's argument is that respondent failed or waived the right to respond to petitioner's petition for writ of certiorari. Petitioner further contends that the waiver of the right to respond constitutes a waiver or bar to respondent with respect to petitioner's position that he owes no tax for 1993 and 1994.

 

Petitioner bases his position on rule 15 of the Rules of the Supreme Court, which, among other provisions, sets forth procedures for waiver of the right to respond to a petition for writ of certiorari. Specifically, petitioner contends that the waiver of the right to respond foreclosed respondent from taking collection action against petitioner. Petitioner's reliance on rule 15 of the Rules of the Supreme Court is misplaced and without substance. The rule's purpose relates solely to procedural requirements for filing briefs in opposition, reply briefs, and supplemental briefs with respect to petitions for writs of certiorari. The rule has no bearing on petitioner's underlying tax liability or on whether respondent may proceed with collection activity.⁴ Respondent's waiver was not a concession with respect to petitioner's tax liabilities.

 

Respondent provided petitioner with an opportunity for a hearing pursuant to section 6330(b). The Appeals officer properly considered and met the section 6330 hearing requirements with respect to petitioner's 1993 and 1994 tax years.

 

II. Section 6330 Notice Requirements

 

The next issue we consider is whether respondent met the notice requirements of section 6330(a) for petitioner's 1993 and 1994 tax years. Before proceeding with a levy, the Secretary must meet several notice requirements. Section 6330(a)(1) provides that no levy may be made on any property of a taxpayer unless the Secretary, before proceeding with the levy, has notified the person in writing of the right to a hearing. Section 6330(a)(2) specifies that such notice be: (1) Given in person; (2) left at the taxpayer's dwelling or usual place of business; or (3) sent by certified or registered mail to the taxpayer's last known address. Further, such notice must be furnished at least 30 days before the first levy action. See sec. 6330(a)(2).

 

Petitioner received timely written notice of respondent's intent to levy and petitioner's right to request a hearing for his 1994 tax year. However, the record does not reflect, one way or the other, whether a notice of intent to levy was issued with respect to petitioner's 1993 tax year. Petitioner raised this issue with respondent before his administrative hearing. For simplicity, petitioner and respondent agreed to and held a hearing with respect to both the 1993 and 1994 tax liabilities. However, the plain meaning of section 6330(a)(1) is that no levy may be made without proper notice to a taxpayer. Petitioner's agreement to include his 1993 tax year cannot substitute for the explicit notice requirements of section 6330(a)(2). Respondent may not proceed with a levy with respect to petitioner's 1993 tax liability without satisfying these requirements.

 

Sufficient evidence was not produced for us to ascertain whether respondent issued to petitioner a Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing for his 1993 tax year. This is a genuine issue of material fact, and accordingly, the cross-motions for summary judgment with respect to this issue are denied. Apart from this single flaw, respondent met all of the section 6330 prerequisites with respect to petitioner's 1993 and 1994 tax years. The Appeals officer verified that respondent had complied with all legal and procedural requirements pertaining to the proposed levy. In addition, the Appeals officer balanced the need to efficiently collect tax with concerns that the means of collection be no more intrusive than necessary. Finally, because of a lack of viable collection alternatives, the Appeals officer concluded that the proposed levy was legally and procedurally correct.

 

Accordingly, we hold that respondent's determination to proceed with collection of petitioner's 1994 tax liability was not an abuse of discretion.

 

To reflect the foregoing,

 

An order will be issued granting in part and denying in part respondent's motion for summary judgment and denying petitioner's cross-motion.

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

² Petitioner does not challenge his underlying tax liability, but rather challenges respondent's ability to collect. Petitioner contends that there was a waiver or some form of estoppel connected with respondent's waiver of respondent's right to respond to petitioner's petition for writ of certiorari.

³ Respondent's resumed collection activity, offsetting against petitioner's 1993 liability an overpayment from another period, was unrelated to a levy on petitioner's property.

⁴ On brief, in addition to taking the rule completely out of context, petitioner distorted its text by omitting relevant phrases and adding language.

 

 

Donna Jean Barnett, Plaintiff v. United States Government, Defendant.

U.S. District Court, Mid. Dist. Fla., Fort Myers Div.; 2:01-cv-526-FtM-29SPC, July 15, 2003.

[ Code Sec. 6702]

Penalties, civil: Frivolous return: Wages or salary omitted. --

A frivolous return penalty was imposed against an individual who filed a zero-income return but received unreported wages in the tax year at issue. Because the Eleventh Circuit has held that claims asserting that wages are not income are "patently frivolous", the government was entitled to summary judgment dismissing the taxpayer's action.

[ Code Sec. 6330]

Collection Due Process: Hearing: Notice. --

The IRS provided proper notice and demand to an individual of her tax liability before levy and, as a result, was entitled to dismissal of the taxpayer's suit. The taxpayer attached a copy of the notice and demand for payment she received by the IRS to her complaint. The court rejected her argument that the notice was not valid because it was computer generated and did not contain the proper form number.

[ Code Sec. 6330]

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

The district court dismissed an individual's challenge to an adverse Collection Due Process determination where evidence established that the IRS followed proper hearing procedures. The Appeals officer was not required to provide the taxpayer with a copy of the verification that the requirements of applicable law and administrative procedure had been met. The taxpayer was appropriately prohibited from disputing her underlying tax liability because she received a notice of deficiency and did not contest the liability at that time. Moreover, the Appeals officer was not required to produce documentation of a delegation of authority to impose or collect the frivolous return penalty. Finally, the taxpayer unsuccessfully argued that the IRS improperly denied her a collection alternative after she challenged the Appeals officer to produce a statute or code regulation authorizing the imposition of the frivolous return penalty.

REPORT AND RECOMMENDATION

TO THE UNITED STATES DISTRICT COURT

CHAPPELL, Magistrate Judge: This matter comes before the Court on Defendant's Motion for Summary Judgment (Doc. #25) as to the Federal Income Tax penalty assessed under 26 U.S.C. §6702 against the Plaintiff for filing a frivolous tax return for the year 1997.

STANDARD OF REVIEW

Summary judgment is appropriate only when the Court is satisfied that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). An issue is "genuine" if there is sufficient evidence such that a reasonable jury could return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if it may affect the outcome of the suit under governing law. Id. "Conclusory allegations based on subjective beliefs are insufficient to create a genuine issue of material fact. Johnson v. U.S. [ 2003-1 USTC ¶50,297], 2002 WL 32003906 (N.D. Fla.). In deciding a motion for summary judgment the record and all reasonable inferences drawn from the record must be viewed in the light most favorable to the non-moving party. Whatley v. CNA Ins. Co., 189 F.3d 1310,1313 (11th Cir. 1999). In reviewing appeals from Collection Due Process (CDP) hearing determinations, the Court reviews the validity of the tax de novo and all other determinations for abuse of discretion. Johnson [ 2003-1 USTC ¶50,297], 2002 WL 3200396 at 2. Defendant's argue that summary judgment is due to be granted because there are no material facts as to which there is a genuine issue, and therefore summary judgment should be granted as a matter of law. (Doc. #26).

FACTS

The Plaintiff filed a form 1040 tax return with the Internal Revenue Service (IRS) on May 7, 1998 for the tax year 1997. The Plaintiff's tax return reported zero earned income and zero taxable income even though the Plaintiff earned a combined total of $26,761.00 income from her employment with the State of Florida and the federal government's Office of Personnel Management. On October 26, 1998, under 26 U.S.C. §6702, the IRS assessed a $500.00 penalty against the Plaintiff for filing a frivolous return and on the same day sent the Plaintiff a demand for payment. The IRS followed up the payment demand with two notices of intent to levy to collect the penalty. The first notice of intent to levy to collect was sent on December 21, 1998 and the second notice was sent on June 13, 2000.

The Plaintiff filed for a Collection Due Process (CDP) hearing on July 14, 2000 and the hearing was held on May 23, 2001. After the hearing, the IRS issued a determination that the Plaintiff's 1997 tax return was indeed frivolous and, therefore, the penalty was properly assessed. In response to the IRS's determination that the penalty was properly assessed, the Plaintiff filed a complaint with this Court on September 24, 2001 requesting that the IRS's determination be invalidated. The Government (Defendant) filed a motion to dismiss ¹ which was denied by United States District Judge Steele on October 25, 2002 (Doc. #14). As a result of its motion to dismiss being denied, the Defendant now files this Motion for Summary Judgment.

 

 

 

DISCUSSION

The Court must consider whether there are any genuine issues of material fact remaining before rendering a decision on the Defendant's Motion for Summary Judgment. The genuine issues of material fact that this Court must take into account are: (1) whether the Plaintiff's 1997 tax return was frivolous; (2) whether the Plaintiff received proper notice of the IRS's intent to levy to collect the penalty; and (3) whether the Plaintiff's CDP hearing conformed to the requirements of 26 U.S.C. §6330.

(1) Whether the Plaintiff's 1997 Tax Return was Frivolous

26 U.S.C. §6702(a)(1)(B) states that a tax return is frivolous if the return contains information that is "substantially incorrect." The Plaintiff recorded her income as zero on her 1997 tax return. (Doc. #13 exhibit J). The recording of her wages for 1997 as zero is a "substantially incorrect" statement. Her wages for 1997 were $26,701.00. (Doc. #27 ¶2). In Biermann v. Comm'r of Internal Revenue, the Eleventh Circuit Court of Appeals held that arguments asserting that wages are not considered income are "patently frivolous." [ 85-2 USTC ¶9632], 769 F.2d 707, 707 (11th Cir. 1985). Therefore, it is clearly established that an individual's wages are income subject to federal income tax. Hyslep v. U.S. [ 85-2 USTC ¶9553], 765 F.2d 1083, 1084 (11th Cir 1985). More to the point, Courts have routinely upheld frivolous filing penalties where the taxable income line item was simply zeroed out by the tax payer. Johnson [ 2003-1 USTC ¶50,297], 2002 WL 32003906 at 5. Consequently, the Plaintiff's 1997 tax return clearly falls within the scope of a frivolous tax return under section 6702.

Therefore, no genuine issue of material fact exists that would cause a jury to decide that the Plaintiff's 1997 tax return was anything but frivolous.

(2) Whether the Plaintiff Received Proper Notice of the IRS's Intent to Levy to Collect

26 U.S.C. §6330(a)(1) requires the Secretary to give notice to and demand payment from any person liable to pay any tax before a levy may be brought against that person's property. On October 26, 1998, the Plaintiff was sent a notice of penalty charged from the IRS. (Doc. #1 exhibit D). The Plaintiff contends that the above stated notice failed to give her proper notice and demand for her tax liability. The Plaintiff relies heavily on U.S. v. Coson a Ninth Circuit Court of Appeals decision holding that notice must be given to a person before a levy is valid. [ 61-1 USTC ¶9219], 286 F.2d 453 (9th Cir. 1961). The facts in Coson are clearly distinguishable from the instant case. In Coson, the IRS claimed notice had been given to Coson because notice had been given to members of a partnership with which the IRS claimed Coson was affiliated. Coson [ 61-1 USTC ¶9219], 286 F.2d at 461. The Court held that Coson was not a member of the partnership and therefore not liable for any part of the partnership's tax liability. Id. at 461-462.

Here, the Plaintiff contends the form failed to meet the statutory requirements of a proper notice and demand because the form was a computer printout and it did not contain the proper form number. (Doc. #28 at 2). The Plaintiff does not deny receiving this notice only that the notice was "computer generated" and that it therefore did not meet the statutory requirements. Id. In fact, Plaintiff included a copy of the IRS's notice and demand for payment in her original complaint. (Doc. #1 exhibit D). Furthermore, to demonstrate the Plaintiff received actual notice, the Plaintiff applied for and received a CPD hearing based upon the penalty assessed in that notice. (Doc. #1 exhibit B).

After careful review of the notice and demand, the Court finds that the notice and demand included all of the relevant information required by 26 U.S.C. §6330(a)(3). The Plaintiff was informed of the reason for the penalty, the code section that authorized the penalty, the amount of the penalty, and finally, the Plaintiff was informed of the necessary steps to appeal the penalty. (Doc. #1 exhibit D).

Furthermore, it is not necessary for the Plaintiff to actually receive the notice, but only that the IRS actually send the notice. U.S. v. Chila [ 89-1 USTC ¶9299], 871 F.2d 1015, 1018-1019 (11th Cir. 1989); U.S. v. Dixon [ 87-2 USTC ¶9485], 672 F.Supp. 503, 506 (M.D. Ala. 1987) (citing Wilson v. Comm'r. [ 78-1 USTC ¶9148], 564 F.2d 1317 (9th Cir. 1977). The rationale behind the ruling lies in "the presumption of regularity" that public officers perform official acts in a proper manner. Id.; See also Johnson [ 2003-1 USTC ¶50,297], 2002 WL 32003906 at 5 (holding that [t]ax assessments are presumptively valid). The burden falls upon the Plaintiff to establish that the IRS failed to send her notice of demand for payment and in this case the Plaintiff failed to provide any proof the IRS failed to send notice of and demand for payment. Id. Conversely, the IRS record shows that a notice was mailed on June 13, 2000 to the Plaintiff and a returned receipt was signed on June 14, 2000. (Doc. #29 attachment). Thus, it was clearly established that the IRS fulfilled its obligation of providing notice to the Plaintiff. Chila [ 89-1 USTC ¶9299], 871 F.2d at 1018-1019.

As noted in the Standard of Review section, a subjective belief that the notice is not valid is not sufficient to create a genuine issue of material fact. Johnson [ 2003-1 USTC ¶50,297], 2002 WL 32003906 at 2. The Court finds the Plaintiff did receive proper notice and demand for payment. Thus, the Court can find no genuine issue of material fact concerning Plaintiff's contention that no notice and demand was sent to her.

(3) Whether the Plaintiff's CDP Hearing Conformed to the Statutory Requirements

"The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." 26 U.S.C. §6330(c)(1). The Statute only requires the hearing officer to obtain the verification from the Secretary that the applicable law or administrative procedures have been met. Gregory v. U.S. [ 2003-1 USTC ¶50,256], 2003 WL 701218 (N.D. Ga.). No where does the statute, nor for that matter the IRS regulations, require the hearing officer to provide the Plaintiff with a copy of the verification. Id. "The alleged failure to send to Plaintiff verification from the IRS office collecting the tax prior to the issuance of the determination is not a violation of the statute." Id. (internal quotations omitted). Since the hearing officer was not required, by the statute, to provide the Plaintiff with verification of the applicable law or administrative procedures, no genuine issue of material fact exist concerning the Plaintiff's complaint that no one provided her a copy of the verification.

The statute further provides the Plaintiff has the right to raise any relevant issue "relating to the unpaid tax" as well as challenge "any existence or amount of the underlying tax liability for any tax period if the [Plaintiff] did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." 26 U.S.C. §6330(c)(2)(A)-B). The Court determined previously that the Plaintiff received proper statutory notice of the tax deficiency. ( supra at 3). However, the Plaintiff contends that she was not allowed the opportunity to dispute the underlying tax liability. (Doc. #28 at 7). Here the Plaintiff confuses the tax liability for her 1997 return with the penalty being charged by the IRS. The purpose of the hearing on May 23, 2001 was not to determine the liability for the Plaintiff's 1997 tax return, but to provide the Plaintiff an opportunity to discuss and or settle the disputed penalty imposed by the IRS under 26 U.S.C. §6702. By the Plaintiff's own account, she was allowed to discuss the penalty imposed under 6702. (Doc. #1 exhibit C). Therefore, no genuine issue of material fact exists concerning the Plaintiff's right to discuss the underlying tax liability at her CDP hearing.

Plaintiff contends that her CDP hearing was unlawful because the hearing officer did not produce any documentation signed by the Secretary or other employee authorizing the delegation of authority to impose or collect the frivolous penalty. (Doc. #28 at 5). "The Secretary has the power to collect taxes and that such power can be delegated to local IRS agents." Gregory [ 2003-1 USTC ¶50,256], 2003 WL 701218 at 2. "The delegation of authority down the chain of command, from the Secretary, to the Commissioner of Internal Revenue to local IRS employees constitutes a valid delegation by the Secretary to the Commissioner, and a [re-delegation] by the Commissioner to the delegated officers and employees." Id. The IRS is not required to provide the tax payer with a copy of the delegated authority nor a copy of the statute or regulations relating to the imposed penalty. Johnson [ 2003-1 USTC ¶50,297], WL 32003906 at 4.

Since it is well established that the hearing officer was not required to produce any signed or unsigned documents, statutes or regulations authorizing the imposition and collection of the frivolous penalty, there exists no genuine issue of material fact in regards to the production of documents at the CDP hearing.

Finally, the Plaintiff argued the CDP hearing was unlawful because the hearing officer would not accept the Plaintiff's collection alternative to pay the $500.00 penalty if the hearing officer would produce the statute or code regulation that established the Plaintiff's underlying liability. (Doc. #28 at 7). Plaintiff claimed that no code regulation or statute allowed for the imposition of the penalty. Id. Plaintiff even threw a code book on the table in front of the hearing officer and challenged the officer to find the code giving her the authority to collect the penalty. Id.

"These allegations do not state a claim." Gregory [ 2003-1 USTC ¶50,256], 2003 WL 701218 at 3. The purpose of the collection alternative laid out in sections 6330(c)(2)(A) and 6330(c)(3)(C) is to provide a method of payment for the underlying tax liability. Id. Plaintiff's allegations propose a condition to making the payment and not a method to satisfy the liability. Id. Thus, Plaintiff's allegations do not state a claim "upon which relief can be granted." and consequently no genuine issue of material fact exists. Id.

CONCLUSION

Based on the foregoing Plaintiff failed to provide a genuine issue of material fact. Plaintiff's arguments are based on the same old tired and failed arguments used by tax protesters and rejected by all levels of the judiciary for years. Plaintiff's tax return for 1997 was clearly frivolous and therefore subject to the penalty imposed under section 6702. In addition, Plaintiff received proper notice regarding the CDP hearing held May 23, 2000. And finally, Plaintiff's CDP hearing was in accord with the requirements of 26 U.S.C. §6330(c)(1-2). Furthermore, the Plaintiff should take note that the Fifth Circuit Court of Appeals held that such frivolous contentions are and should be subject to sanctions. Hyslep [ 85-2 USTC ¶9553], 765 F.2d at 1084.

Accordingly it is hereby RECOMMENDED:

The Defendant's Motion for Summary Judgment should be GRANTED.

Failure to file written objections to the proposed findings and recommendations contained in this report within ten (10) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.

ORDER

This matter comes before the Court on Plaintiff's Motion for Reconsideration (Doc. #35) filed on July 7, 2003, as to this Court's order denying Plaintiff's Motion to Compel Discovery.

Whether or not a motion to compel discovery is granted or denied is committed to the discretion of the trial court. Commercial Union Insurance Co. v. Westrope, 730 F.2d 729, 731 (11th Cir. 1984). Plaintiff request that this Court to reconsider her Motion to Compel based upon the Plaintiff's assertion that she did not receive a lawful Collection Due Process hearing (CDP). After reviewing the record and relevant statutory requirements, this Court finds that Plaintiff's CDP hearing was in accord with the requirements of 26 U.S.C §6330(c). As a result, the Court stands behind its order of June 27, 2003 denying the Plaintiff's Motion to Compel Discovery.

Accordingly, it is now

ORDERED:

Plaintiff's Motion to Reconsider this Court's denial of Plaintiff's Motion to Compel Discovery is DENIED.

¹ The Defendant claimed in its Motion to Dismiss that the Plaintiff failed to state a claim upon which a relief could be granted.

 

 

 

Clinton K. Allington, Plaintiff v. Internal Revenue Service, Defendant.

U.S. District Court, Dist. Kan.; 02-1153-MLB, January 8, 2003.

[ Code Sec. 6330]

Collection Due Process hearing: Judicial review: Notice before levy: Equivalency hearing. --

The district court denied the government's motion to dismiss an individual's appeal of an IRS Collection Due Process (CDP) determination for lack of jurisdiction. Although the taxpayer allegedly failed to file his request for a CDP hearing within the required 30 days, he was afforded an equivalency hearing to address his claims. The government argued that the taxpayer was not entitled to a judicial review of the CDP determination because the taxpayer's request for a hearing was not timely. However, the government failed to present evidence that the taxpayer received the proper notice triggering the 30 day deadline and, as a result, its motion was denied without prejudice.

MEMORANDUM AND ORDER

BELOT, District Judge: Before the court are the following:

1. United States' motion to dismiss (Doc. 4);

 

2. Plaintiff's response (Doc. 6); and

 

3. United States' reply (Doc. 7).

Plaintiff filed this action pro se, styling it as an "appeal of determination of collection due process hearing pursuant to 26 U.S.C. §6320." Section 6320 and its companion, §6330, provide for notice and opportunity for hearing upon filing of notice of lien and before levy, respectively. Both statutes permit the taxpayer to request a hearing before an IRS appeals officer within a 30-day period. The starting dates of the 30-day periods are set forth in the statutes.

The following dates appear in the court file. The United States has provided an affidavit of an Internal Revenue Service officer which states, in pertinent part:

On or about January 12, 2001, notices of federal tax lien were filed against plaintiff and or about January 18, 2001 a form 3172, "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320", was generated and sent to plaintiff. The IRS does not retain a copy of the Form 3172 but a facsimile copy can be retrieved from the computer system. A facsimile copy of the notice is attached hereto as Exhibit 1. The notice was mailed by certified mail to plaintiff's last known address.

 

On or about August 2, 2001, a Form 1058, "Final Notice --Notice of Intent to Levy and Notice of Your Right to a Hearing" was generated and sent to plaintiff. A copy of the Form 1058 is not retained by the IRS and is not kept on the computer system. However, a copy of a blank Form 1058 is attached hereto as Exhibit 2. On or about August 2, 2001, the notice was mailed by certified mail to plaintiff's last known address.

(Doc. 4, Affidavit of Richard Turner).

According to the allegations of plaintiff's complaint and Exhibit B, attached thereto, plaintiff made a written request for a collection due process hearing on November 16, 2001, which was stamped "received" by the IRS on the same day. The IRS scheduled a hearing for February 5, 2002 but, at plaintiff's request, the hearing was continued until February 12. A transcript of that hearing is attached to plaintiff's complaint (Doc. 1, Ex. D.).

At the outset of the hearing, the hearing officer informed plaintiff that the hearing was being "afforded" pursuant to §§6320 and 6330 but that because plaintiff had not filed his request for a hearing within 30 days, the hearing "is an equivalency hearing to the collection due process hearing" and that plaintiff had no right to judicial review. (Doc. 1, Ex. D. at 5-6). An "equivalency hearing" apparently is authorized by sec. 301.6330-1T(i), Temporary Procd. & Admin. Regs., 64 Fed. Reg. 3413 (Jan. 22, 1999). Plaintiff, who despite his pro se status seemed to be familiar with tax laws and regulations, told the hearing officer that he did not receive a "statutory notice and demand for payment" (form 1058). The hearing officer responded, with considerable logic, that plaintiff must have received the form 1058 because it contained form 12153, which plaintiff used to request "this hearing." (Doc. 1, Ex. D at 10-11). Plaintiff and the hearing officer spent most of the hearing discussing matters which are not relevant to any issue before this court but at the end of the hearing, plaintiff maintained his position that he had never received statutory notice and demand for payment which he then described as "form 17A." ( Id. at 24). The difference, if any, between forms 1058 and 17A is not explained in the parties' submissions.

26 U.S.C. §6330(d) provides, in pertinent part:

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 "determination" referred to in §6330(d) was made in an IRS "decision letter" dated April 5, 2002 (Doc. 1, Ex. A). Plaintiff filed this action on May 6, 2002.

Despite the provisions of §6330(d), which raise the possibility that plaintiff's case in this court was either untimely filed and/or filed in the wrong court, the United States has moved to dismiss on a completely different ground. Citing a trio of Tax Court cases, ¹ the United States contends that this case must be dismissed for lack of jurisdiction because plaintiff failed to request a collection due process hearing within the 30-day periods set forth in §§6320 and/or 6330.

In Kennedy v. Commissioner of Internal Revenue, the Tax Court (which presumably knows far more about tax law and regulations than this court) ruled that judicial review is precluded when the taxpayer fails to comply with the 30-day notice of appeal requirements of §6320 and/or 6330, even though the IRS subsequently grants the taxpayer an "equivalency hearing" and even though (presumably) a complaint seeking judicial review is timely filed after issuance of the IRS's decision letter. The Tax Court found that it had no jurisdiction and dismissed the case.

At this juncture, this court need not decide whether the Tax Court's decisions cited by the United States are correct. The immediate problem with its motion, and the reason this court cannot grant it on the present record, is that the United States has not provided sufficient evidence that plaintiff received the notice (or notices) which purportedly triggered the 30-day deadline (or deadlines) which plaintiff allegedly missed. In his affidavit, Officer Tucker states that form 1058 was mailed by certified mail to plaintiff's last known address on October 2, 2001, yet he does not provide evidence of the certified mailing or plaintiff's receipt of the notice. Although plaintiff's protestation that he did not receive the notice seems highly suspect in light of the fact that he requested a hearing in November 2001, the court is not prepared to rule at this time that it lacks jurisdiction based on the only ground raised by the United States.

Accordingly, the court will deny the United States' motion to dismiss, but without prejudice. If the motion is renewed, the parties should review Davoll v. Webb, 194 F.3d 1116 (10th Cir. 1999) and United States v. Rodriquez Aguirre, 264 F.3d 1195 (10th Cir. 2001), which discuss the important distinction between motions to dismiss for lack of subject matter jurisdiction and for failure to state a claim. The parties' attention also is directed to True v. Commissioner of Internal Revenue [ 2000-2 USTC ¶50,634], 108 F.Supp.2d 1361 (M.D. Fla. 2000) and McCandless v. United States [ 2002-2 USTC ¶50,771], No. C-02-2573-EDL, 2002 WL 31487885 (N.D. Cal. Nov. 1, 2002), which may support the proposition that this case should be before the Tax Court.

Accordingly, the United States' motion to dismiss (Doc. 4) is denied, without prejudice. If the motion is renewed, it shall be filed on or before January 31, 2003.

IT IS SO ORDERED.

¹ Johnson v. Commissioner [ 2000-2 USTC ¶50,591], 86 A.F.T.R.2d 2000-5225 (D. Or. 2000); Kennedy v. Commissioner [ CCH Dec. 54,315], 116 T.C. 255 (2001); Moorhous v. Commissioner [ CCH Dec. 54,316], 116 T.C. 263 (2002)