T.C. Memo. 2002-267
UNITED STATES TAX COURT
CHARLES G. AND DAPHNE C. M. HALL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2906-02L. Filed October 21, 2002.
Charles G. and Daphne C. M. Hall, pro sese.
Alan J. Tomsic and Karen Lynne Baker, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent’s motion for summary judgment, filed
pursuant to Rule 121.1 Respondent contends that there is no
dispute as to any material fact with respect to this lien action,
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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and that respondent’s notice of determination dated January 3,
2002, should be sustained as a matter of law.
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(a) and (b); see
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.
17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,
754 (1988); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The
moving party bears the burden of proving that there is no genuine
issue of material fact, and factual inferences will be read in a
manner most favorable to the party opposing summary judgment.
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
As explained in detail below, there is no genuine issue as
to any material fact, and a decision may be rendered as a matter
of law. We shall grant respondent’s motion for summary judgment.
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Background
A. Petitioners’ Form 1040 for 1998
On or about August 19, 1999, petitioners submitted to
respondent a joint Form 1040, U.S. Individual Income Tax Return,
for the taxable year 1998. On the Form 1040, petitioners listed
their filing status as “Married filing joint return”.
Petitioners entered zeros on applicable lines of the income
portion of their Form 1040, specifically including line 7 for
wages, line 22 for total income, and lines 33 and 34 for adjusted
gross income. Petitioners also entered a zero on line 56 for
total tax. Petitioners claimed an overpayment of $2,333 related
to Federal income tax withholding. Petitioners attached to their
Form 1040 four Forms W-2, Wage and Tax Statement, issued to
petitioners by various employers.
B. Respondent’s Deficiency Notice and Petitioners’ Response
On May 26, 2000, respondent issued to petitioners a joint
notice of deficiency. In the notice, respondent determined a
deficiency of $4,736 in petitioners’ Federal income tax for 1998
and an accuracy-related penalty under section 6662(a) for
negligence or disregard of rules or regulations of $480.53. The
deficiency was based principally on respondent’s determination
that petitioners failed to report the wage income as reported to
respondent by third-party payors on Forms W-2.
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By letter dated June 26, 2000, petitioners wrote to
respondent’s District Director in Las Vegas, Nevada,
acknowledging receipt of the notice of deficiency dated May 26,
2000, and requesting that the notice be withdrawn or that
petitioners be granted an Appeals Office hearing. Petitioners
did not file a petition with the Court challenging the notice of
deficiency. Accordingly, on October 9, 2000, respondent assessed
the determined deficiency and accuracy-related penalty, as well
as statutory interest. On that same day, respondent sent
petitioners a notice of balance due, informing petitioners that
they had a liability for 1998 and requesting that they pay it.
Petitioners failed to do so.
C. Respondent’s Final Notice and Petitioners’ Response
On February 26, 2001, respondent sent petitioners a Notice
of Federal Tax Lien Filing and Your Right to a Hearing Under IRC
6320 (lien notice). The lien notice was issued in respect of
petitioners’ outstanding tax liability for 1998.
On March 13, 2001, petitioners submitted to respondent a
Form 12153, Request for a Collection Due Process Hearing.
Petitioners’ request stated that they were challenging the
validity of the assessments for 1998 on the grounds there is no
statute imposing tax liability upon them and they were not served
with a valid notice and demand for payment.
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D. The Appeals Office Hearing
On November 16, 2001, Appeals Officer Julie Peterson
conducted an Appeals Office hearing that petitioners attended.
During the hearing, the Appeals officer provided petitioners with
a Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters, regarding their account for the taxable year
1998. According to a purported transcript of the hearing
prepared by petitioners, petitioners declined to discuss
collection alternatives. Rather, petitioners stated that they
wished to challenge their underlying tax liability.
E. Respondent’s Notice of Determination
On January 3, 2002, respondent sent petitioners a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330. The notice stated that the Appeals Office had
determined that the lien filing was appropriate.
F. Petitioners’ Petition
On February 5, 2002, petitioners filed with the Court a
petition for lien or levy action seeking review of respondent’s
notice of determination.2 The petition includes allegations
that: (1) The Appeals officer failed to obtain verification from
the Secretary that the requirements of any applicable law or
2
At the time that the petition was filed, petitioners
resided in Las Vegas, Nevada. The envelope bearing the petition
contains a timely U.S. Postal Service postmark dated Jan. 31,
2002. See secs. 6330(d)(1), 7502.
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administrative procedure were met as required under section
6330(c)(1); (2) petitioners never received a notice and demand
for payment or valid notice of deficiency; and (3) petitioners
were denied the opportunity to raise “relevant issues”.
G. Respondent’s Motion for Summary Judgment
As indicated, respondent filed a motion for summary judgment
asserting that there is no dispute as to a material fact and that
respondent is entitled to judgment as a matter of law. In
particular, respondent contends that because petitioners received
the notice of deficiency dated May 26, 2000, they cannot
challenge the existence or amount of their underlying tax
liability for 1998 in this proceeding. Respondent further
contends that the Appeals officer’s review of Form 4340 with
regard to petitioners’ liability for 1998 satisfied the
verification requirement imposed under section 6330(c)(1) and
demonstrates that petitioners were issued a notice and demand for
payment.
Pursuant to notice, respondent’s motion was called for
hearing at the Court’s motions session in Washington, D.C.
Counsel for respondent appeared at the hearing and offered
argument in support of respondent’s motion. Although petitioners
did not appear at the hearing, they filed with the Court a
written statement pursuant to Rule 50(c).
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Discussion
A. Statutory Framework
Section 6321 imposes a lien in favor of the United States on
all property and rights to property of a person when a demand for
the payment of the person’s taxes has been made and the person
fails to pay those taxes. Such a lien arises when an assessment
is made. Sec. 6322. Section 6323(a) requires the Secretary to
file a notice of Federal tax lien if the lien is to be valid
against any purchaser, holder of a security interest, mechanic’s
lienor, or judgment lien creditor. Lindsay v. Commissioner, T.C.
Memo. 2001-285.
Section 6320 provides that the Secretary shall furnish the
person described in section 6321 with written notice of the
filing of a notice of lien under section 6323. The notice
required by section 6320 must be provided not more than 5
business days after the day of the filing of the notice of lien.
Sec. 6320(a)(2). Section 6320 further provides that the person
may request administrative review of the matter (in the form of
an Appeals Office hearing) within 30 days beginning on the day
after the 5-day period. Section 6320(c) provides that the
Appeals Office hearing generally shall be conducted consistent
with the procedures set forth in section 6330(c), (d), and (e).
Section 6330(c) prescribes the matters that a person may
raise at an Appeals Office hearing. In sum, section 6330(c)
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provides that a person may raise collection issues such as
spousal defenses, the appropriateness of the Commissioner's
intended collection action, and possible alternative means of
collection. Section 6330(c)(2)(B) provides that the existence
and amount of the underlying tax liability can be contested at an
Appeals Office hearing if the person did not receive a notice of
deficiency for the taxes in question or did not otherwise have an
earlier opportunity to dispute the tax liability. See Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114
T.C. 176, 179 (2000). Section 6330(d) provides for judicial
review of the administrative determination in the Tax Court or a
Federal District Court, as may be appropriate.
B. Summary Judgment
Petitioners challenge the assessments made against them on
the ground that the notice of deficiency dated May 26, 2000, is
invalid. However, the record shows that petitioners received the
notice of deficiency and disregarded the opportunity to file a
petition for redetermination with this Court. See sec. 6213(a).
It follows that section 6330(c)(2)(B) generally bars petitioners
from challenging the existence or amount of their underlying tax
liability in this collection review proceeding.
Even if petitioners were permitted to challenge the validity
of the notice of deficiency, petitioners’ arguments have no
merit. See Nestor v. Commissioner, 118 T.C. 162, 165 (2002);
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Goza v. Commissioner, supra. As the Court of Appeals for the
Fifth Circuit has remarked: “We perceive no need to refute these
arguments with somber reasoning and copious citation of
precedent; to do so might suggest that these arguments have some
colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417
(5th Cir. 1984). Suffice it to say that petitioners are
taxpayers subject to the Federal income tax, see secs. 1(a)(1),
7701(a)(1), (14), and that compensation for labor or services
rendered constitutes income subject to the Federal income tax,
sec. 61(a)(1); United States v. Romero, 640 F.2d 1014, 1016 (9th
Cir. 1981).
We likewise reject petitioners’ argument that the Appeals
officer failed to obtain verification from the Secretary that the
requirements of all applicable laws and administrative procedures
were met as required by section 6330(c)(1). The record shows
that the Appeals officer obtained and reviewed a Form 4340 with
regard to petitioners’ taxable year 1998.
Federal tax assessments are formally recorded on a record of
assessment. Sec. 6203. “The summary record, through supporting
records, shall provide identification of the taxpayer, the
character of the liability assessed, the taxable period, if
applicable, and the amount of the assessment.” Sec. 301.6203-1,
Proced. & Admin. Regs.
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Section 6330(c)(1) does not require the Commissioner to rely
on a particular document to satisfy the verification requirement
imposed therein. Roberts v. Commissioner, 118 T.C. 365, 371 n.10
(2002); Weishan v. Commissioner, T.C. Memo. 2002-88; Lindsey v.
Commissioner, T.C. Memo. 2002-87; Tolotti v. Commissioner, T.C.
Memo. 2002-86; Duffield v. Commissioner, T.C. Memo. 2002-53;
Kuglin v. Commissioner, T.C. Memo. 2002-51. In this regard, we
observe that a Form 4340 such as the one relied upon by the
Appeals officer in this case contains all the information
prescribed in section 301.6203-1, Proced. & Admin. Regs. See
Weishan v. Commissioner, supra; Lindsey v. Commissioner, supra;
Tolotti v. Commissioner, supra; Duffield v. Commissioner, supra;
Kuglin v. Commissioner, supra.
Petitioners have not alleged any irregularity in the
assessment procedure that would raise a question about the
validity of the assessments or the information contained in the
Form 4340. See Davis v. Commissioner, 115 T.C. 35, 41 (2000);
Mann v. Commissioner, T.C. Memo. 2002-48. Accordingly, we hold
that the Appeals officer satisfied the verification requirement
of section 6330(c)(1). See, e.g., Nicklaus v. Commissioner, 117
T.C. 117, 120-121 (2001).
Petitioners also contend that they never received a notice
and demand for payment for 1998. The requirement that the
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Secretary issue a notice and demand for payment is set forth in
section 6303(a), which provides in pertinent part:
SEC. 6303(a). General Rule.-–Where it is not
otherwise provided by this title, the Secretary shall,
as soon as practicable, and within 60 days, after the
making of an assessment of a tax pursuant to section
6203, give notice to each person liable for the unpaid
tax, stating the amount and demanding payment thereof.
* * *
The Form 4340 that the Appeals officer relied on during the
administrative process shows that respondent sent petitioners a
notice of balance due on the same date that respondent made
assessments against petitioners for the tax and accuracy-related
penalty determined in the notice of deficiency. A notice of
balance due constitutes a notice and demand for payment within
the meaning of section 6303(a). See, e.g., Hughes v. United
States, 953 F.2d 531, 536 (9th Cir. 1992); Weishan v.
Commissioner, supra; see also Hansen v. United States, 7 F.3d
137, 138 (9th Cir. 1993).
Petitioners have failed to raise a spousal defense, make a
valid challenge to the appropriateness of respondent’s intended
collection action, or offer alternative means of collection.
These issues are now deemed conceded. Rule 331(b)(4). Under the
circumstances, we conclude that respondent is entitled to
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judgment as a matter of law sustaining the notice of
determination dated January 3, 2002.
In order to give effect to the foregoing,
An appropriate order granting
respondent’s motion and decision
for respondent will be entered.