114 T.C. No. 12
UNITED STATES TAX COURT
HOWARD GOZA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15444-99L. Filed March 17, 2000.
R issued a notice of deficiency to P for the
taxable years 1994, 1995, and 1996. P returned the
notice of deficiency to R marked "I hereby refute and
invalidate this unsigned Presentment without dishonor.
I do not owe this or any amount of money. All rights
reserved, without prejudice, UCCI-207." P did not file
a petition for redetermination with the Court. R
subsequently issued a notice of intent to levy to P
indicating that R intended to collect the taxes due for
the taxable years 1994, 1995, and 1996. P requested
and received an administrative review of the proposed
collection action. R issued a notice of determination
to P stating that all applicable laws and
administrative procedures had been met and that
collection would proceed. R further advised P that
challenges to the underlying liability would not be
considered since P received a notice of deficiency. P
filed a timely petition for review with the Court
contesting the notice of determination on the ground
that he is not liable for the underlying tax
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deficiencies, and, therefore, there is no basis for
assessment and collection of the tax. R moved to
dismiss for failure to state a claim upon which relief
can be granted.
Held: The Tax Court has jurisdiction to review a
determination pursuant to sec. 6330(c) and (d), I.R.C.
Held, further, where P timely received a statutory
notice of deficiency, yet he failed to file a petition
for redetermination with the Court, P was precluded
from contesting the issue of the underlying tax
liability during Appeals Office consideration pursuant
to sec. 6330(c)(2)(B), I.R.C. Held, further, P's
petition for review of R's administrative determination
to proceed with collection fails to state a claim upon
which relief can be granted. See sec. 6330(d), I.R.C.;
Rule 331(b)(4) and (5), Tax Court Rules of Practice and
Procedure.
Howard Goza, pro se.
Ashton P. Trice and Richard Goldman, for respondent.
OPINION
COHEN, Chief Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to the provisions of
section 7443A(b)(4) and Rules 180, 181, and 183. 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. The Court agrees with
and adopts the opinion of the Special Trial Judge, which is set
forth below.
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OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent's motion to dismiss for failure to state
a claim upon which relief can be granted. As discussed in detail
below, we shall grant respondent's motion.
Background
On December 17, 1997, respondent issued a notice of
deficiency to petitioner determining deficiencies in and
additions to his Federal income taxes for the years and in the
amounts as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654
1994 $12,588 $3,147 $649
1995 12,893 3,223 703
1996 13,357 3,339 718
Respondent reconstructed petitioner's income for the years in
issue by relying on information produced by the Bureau of Labor
Statistics.
On February 9, 1998, petitioner mailed the notice of
deficiency back to respondent with the following handwritten
statement appearing on the first page of the notice: "I hereby
refute and invalidate this unsigned Presentment without dishonor.
I do not owe this or any amount of money. All rights reserved,
without prejudice, UCCI-207." The notice was accompanied by a
15-page "NOTICE OF DEFENSE" in which petitioner asserted that he
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is not liable for the taxes in question based on a number of
frivolous constitutional arguments.
On February 17, 1999, respondent mailed a final notice of
intent to levy to petitioner pursuant to section 6331. The
notice stated that petitioner owed taxes, penalties, and interest
totaling $23,816.20, $22,653.89, and $21,658.74, for the taxable
years 1994, 1995, and 1996, respectively, and that respondent was
preparing to collect these amounts. The notice stated that
petitioner could request a "Collection Due Process Hearing" with
respondent's Appeals Office.
On March 9, 1999, petitioner returned the notice of intent
to levy to respondent with the same handwritten statement
appearing on the notice of deficiency. On August 24, 1999,
respondent's Atlanta Appeals Office issued a notice of
determination to petitioner which stated in pertinent part:
We have reviewed the proposed collection action for the
periods [1994, 1995, and 1996]. This letter is your
legal Notice of Determination as required by law. * * *
* * * * * * *
Summary of Determination:
It has been determined that the requirements of all
applicable laws and administrative procedures have been
met.
As you were advised in our letter dated July 6, 1999,
challenges to the underlying liability may only be
raised as an issue if you did not receive a statutory
notice of deficiency or did not otherwise have an
opportunity to dispute the liability. You did receive
a statutory notice of deficiency in this case. You
were also informed that a hearing is not available for
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constitutional issues such as those referenced in your
reply to the final notice, and you failed to raise any
issues that could be considered in a due process
hearing pursuant to IRC section 6330.
It is therefore deemed that the proposed collection
action balances the need for efficient collection of
the taxes with the concern that the collection action
be no more intrusive than necessary.
On September 24, 1999, petitioner timely filed with the
Court a petition for review of respondent's determination letter.
The petition states in pertinent part that petitioner "requests a
Redetermination of income taxes allegedly owed to Respondent".
The petition includes allegations that it is unclear: (1)
Whether the income tax is a direct or indirect tax, (2) what
income is subject to taxation, and (3) who is subject to the
Internal Revenue Code. Petitioner concludes, among other things,
in his petition:
Respondent is attempting to collect a tax on
income not subject to the present income tax system,
absent a willingness on the part of Petitioner to
voluntarily self-assess himself on such income--which
is clearly not the case.
Petitioner reserves all rights under the federal
Constitution and common law, the filing of this
petition is not intended as a waiver of any of those
rights.
As indicated, respondent filed a motion to dismiss asserting
that the petition for review fails to state a claim for
relief in this collection review proceeding. Respondent
maintains that, because petitioner received a notice of
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deficiency for the years in issue (and therefore was presented
with an earlier opportunity to contest his tax liability in this
Court) the question of petitioner's liability for the underlying
taxes is not an issue that is subject to dispute in this
proceeding.
This matter subsequently was called for hearing at the
Court's motions session in Washington, D.C. Counsel for
respondent appeared at the hearing and presented argument in
support of the motion to dismiss. No appearance was made by or
on behalf of petitioner at the hearing.
Discussion
Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy upon 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 on the taxpayer's property.
In the Internal Revenue Service Restructuring and Reform Act
of 1998 (RRA 1998), Pub. L. 105-206, sec. 3401, 112 Stat. 685,
746, Congress enacted new sections 6320 (pertaining to liens) and
6330 (pertaining to levies) to provide due process protections
for taxpayers in tax collection matters. Section 6330 generally
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provides that the Commissioner cannot proceed with the collection
of taxes by way of a levy on a taxpayer's property until the
taxpayer has been given notice of and the opportunity for an
administrative review of the matter (in the form of an Appeals
Office due process hearing), and if dissatisfied, with judicial
review of the administrative determination. Section 6330(e)
generally provides for the suspension of the period of
limitations on collection during the period that administrative
and judicial proceedings are pending and for 90 days thereafter.
Section 6330 is effective with respect to collection actions
initiated more than 180 days after July 22, 1998 (January 19,
1999). See RRA 1998 sec. 3401(d), 112 Stat. 750.
Section 6330(c) prescribes the matters that may be raised by
a taxpayer at an Appeals Office due process hearing in pertinent
part as follows:
SEC. 6330(c). Matters Considered at Hearing.--In
the case of any hearing conducted under this section--
(1) Requirement of investigation.-–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.
(2) Issues at hearing.--
(A) In general.-–The person may raise at the
hearing any relevant issue relating to the unpaid
tax or the proposed levy, including–-
(i) appropriate spousal defenses;
(ii) challenges to the appropriateness
of collection actions; and
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(iii) offers of collection alternatives,
which may include the posting of a bond, the
substitution of other assets, an installment
agreement, or an offer-in-compromise.
(B) Underlying liability.-–The person may
also raise at the hearing challenges to the
existence or amount of the underlying tax
liability for any tax period if the person did not
receive any statutory notice of deficiency for such
tax liability or did not otherwise have an
opportunity to dispute such tax liability.
(3) Basis for the determination.-–The
determination by an appeals officer under this
subsection shall take into consideration–-
(A) the verification presented under
paragraph (1);
(B) the issues raised under paragraph (2);
and
(C) whether any proposed collection action
balances the need for the efficient collection of
taxes with the legitimate concern of the person
that any collection action be no more intrusive
than necessary.
In sum, section 6330(c) provides for an Appeals Office due
process hearing to address collection issues such as spousal
defenses, the appropriateness of the Commissioner's intended
collection action, and possible alternative means of collection.
Section 6330(c)(2)(B) provides that the existence and amount of
the underlying tax liability can only be contested at an Appeals
Office due process hearing if the taxpayer did not receive a
notice of deficiency for the taxes in question or did not
otherwise have an earlier opportunity to dispute such tax
liability.
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Section 6330(d) provides for judicial review of the
Commissioner's administrative determination in pertinent part as
follows:
SEC. 6330(d). Proceeding After Hearing.--
(1) Judicial review of determination.-–The person
may, within 30 days of a determination under this
section, appeal such determination–-
(A) to the Tax Court (and the Tax Court shall
have jurisdiction to hear such matter); or
(B) if the Tax Court does not have
jurisdiction of the underlying tax liability, to a
district court of the United States.
If a court determines that the appeal was to an incorrect
court, a person shall have 30 days after the court
determination to file such appeal with the correct court.
Thus, section 6330(d) provides that a taxpayer may file a
petition for review of the Commissioner's administrative
determination with the Tax Court where the underlying tax is of a
type over which the Court normally has deficiency jurisdiction.
See Moore v. Commissioner, 114 T.C. ___ (2000) (dismissing
petition for review of collection action on the ground that the
underlying trust fund taxes were not of a type over which the
Court normally has jurisdiction).
Although section 6330 does not prescribe the standard of
review that the Court is to apply in reviewing the Commissioner's
administrative determinations, the subject is addressed in detail
in the legislative history of the provision. In particular, H.
Conf. Rept. 105-599, at 266 (1998), states in pertinent part:
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Judicial review
The conferees expect the appeals officer will
prepare a written determination addressing the issues
presented by the taxpayer and considered at the
hearing. * * * Where the validity of the tax liability
was properly at issue in the hearing, and where the
determination with regard to the tax liability is part
of the appeal, no levy may take place during the
pendency of the appeal. The amount of the tax
liability will in such cases be reviewed by the
appropriate court on a de novo basis. Where the
validity of the tax liability is not properly part of
the appeal, the taxpayer may challenge the
determination of the appeals officer for abuse of
discretion. * * *
Accordingly, where the validity of the underlying tax liability
is properly at issue, the Court will review the matter on a de
novo basis. However, where the validity of the underlying tax
liability is not properly at issue, the Court will review the
Commissioner's administrative determination for abuse of
discretion.
Jurisdiction
The Court's jurisdiction under section 6330 is contingent on
the issuance of a valid notice of determination and a timely
petition for review. Further, a taxpayer may only file a
petition for review with this Court where the administrative
determination concerns a tax over which the Court generally has
jurisdiction. See Moore v. Commissioner, supra.
In the present case, respondent issued a determination
letter to petitioner, and petitioner filed a timely petition for
review with the Court. In addition, the taxes that respondent
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seeks to collect are income taxes over which the Court normally
has jurisdiction. See secs. 6211, 6213. Thus, despite the fact
that petitioner failed to invoke the Court's deficiency
jurisdiction by filing a petition for redetermination contesting
the notice of deficiency for 1994, 1995, and 1996, we hold that
section 6330(d) vests the Court with jurisdiction to review
respondent's administrative determination to proceed with a levy
to effect the collection of the taxes due from petitioner for
those years.
Sufficiency of the Petition for Review
Section 6330(c)(2)(A) prescribes the issues that may be
raised by a taxpayer in an Appeals Office due process hearing,
including spousal defenses to collection, challenges to the
appropriateness of the Commissioner's intended collection action,
and offers of alternative means of collection. Section
6330(c)(2)(B) provides that the Appeals Office due process
hearing is not a forum for the taxpayer to contest the existence
or amount of the underlying taxes unless the taxpayer did not
receive a notice of deficiency for the taxes in question or did
not otherwise have an earlier opportunity to dispute such tax
liability.
Although petitioner received a notice of deficiency for the
taxable years 1994, 1995, and 1996, he did not avail himself of
the opportunity to file a petition for redetermination with the
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Court pursuant to section 6213(a). Consistent with section
6330(c)(2)(B), petitioner therefore was precluded from contesting
his liability for the underlying taxes before the Appeals Office.
Respondent's determination letter states that respondent
explained the effect of section 6330(c)(2)(B) to petitioner in a
letter dated July 6, 1999. Nevertheless, petitioner persisted in
arguing before the Appeals Office that he was not liable for the
underlying taxes on constitutional grounds.
While ignoring the proscription of section 6330(c)(2)(B),
petitioner likewise failed to assert before the Appeals Office
any of the claims enumerated under section 6330(c)(2)(A). In
particular, petitioner did not challenge the appropriateness of
the intended method of collection, offer an alternative means of
collection, or raise a spousal defense to collection as directed
under section 6330(c)(2)(A). Nor has he raised any such issue
before the Court.
Rule 331(b)(4) states that a petition for review of an
administrative determination filed pursuant to section 6330 shall
contain clear and concise assignments of each and every error
which the petitioner alleges to have been committed in the levy
determination and any issue not raised in the assignments of
error shall be deemed to be conceded. Rule 331(b)(5) states that
such a petition shall contain clear and concise lettered
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statements of the facts on which the taxpayer bases each
assignment of error.
Petitioner failed to raise a valid challenge to respondent's
proposed levy before the Appeals Office. Petitioner continued to
assert the same frivolous constitutional claims in his petition
for review filed with the Court.
The validity of petitioner's underlying tax liability is not
properly at issue in this proceeding. Moreover, the petition
does not assert (nor is there any basis in the administrative
record for the Court to conclude) that respondent abused his
discretion with respect to spousal defenses or collection
matters. See sec. 6330(c)(2)(A). In the absence of a
justiciable claim for relief in the petition for review filed
herein, we shall grant respondent's motion to dismiss for failure
to state a claim upon which relief can be granted.
We note that the decision in this case will indicate that we
sustain respondent's administrative determination to proceed with
collection against petitioner. Our decision does not serve as a
review of respondent's determination as to petitioner's
underlying tax liability for 1994, 1995, or 1996.
To reflect the foregoing,
An appropriate order and
decision will be entered.