Perez v. Comm'r

T.C. Memo. 2002-274

UNITED STATES TAX COURT

JOSE A. PEREZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5937-01L. Filed October 30, 2002.

Jose A. Perez, pro se.

T. Richard Sealy III and Catherine S. Tyson, for respondent.

MEMORANDUM OPINION

GALE, Judge: This case arises from a petition for review

under section 6330(d)1 of respondent’s determination to proceed

with a proposed levy to collect petitioner’s 1984, 1985, 1986,

and 1987 Federal income tax liabilities. The issue for decision

1
Unless otherwise noted, section references are to the
Internal Revenue Code as amended.
 - 2 -

is whether respondent may proceed with the proposed levy. We

hold that he may.

Background

Many of the facts have been stipulated and are so found.

The parties’ stipulations of fact and the accompanying exhibits

are incorporated herein by this reference.

At the time the petition was filed, petitioner resided in El

Paso, Texas.

Petitioner filed his Federal income tax returns for 1984,

1985, and 1986 on April 5, 1988, and for 1987 on April 15, 1988.

Petitioner did not submit payment of any of the amounts shown as

due on the returns, and respondent assessed the amounts shown on

each return as due on June 6, 1988, including late filing

penalties and interest. These assessments will hereinafter be

referred to as the “return assessments”.

On June 6, 1988, respondent sent petitioner notice and

demand for payment with respect to the return assessments.

On April 17, 1989, respondent placed a lien on certain

property of petitioner’s with respect to the return assessments.

Upon examination of petitioner’s returns, respondent

concluded that petitioner’s filing status should be changed from

head of household to married filing separately, resulting in

additional tax liabilities and penalties for 1984, 1985, 1986,

and 1987. Petitioner consented to the immediate assessment of
 - 3 -

the foregoing additional tax liabilities and penalties by signing

a Form 4549, Income Tax Examination Changes, for 1984 and 1985 on

July 26, 1989; a Form 4549 for 1986 on an unknown date;2 and a

CP-2000, Notice of Proposed Changes, for 1987 on March 5, 1990.

Respondent assessed the additional tax and penalties for 1984,

1985, and 1986 on September 11, 1989, and for 1987 on June 11,

1990. The foregoing assessments will hereinafter be referred to

as the “examination assessments”. Respondent sent petitioner

notices of intent to levy on March 18, 1991, and June 19, 1995,

with respect to the examination assessments.

On May 14, 1997, petitioner signed a Form 900, Tax

Collection Waiver, extending the period of limitations on

collection activities for, inter alia, 1984, 1985, 1986, and

1987, to December 31, 2000. On March 3, 2000, respondent mailed

petitioner a Letter 1058, Final Notice of Intent to Levy and Your

Right to a Hearing, covering unpaid taxes for the years 1984

through 1987. On March 7, 2000, petitioner submitted a Form

12153, Request for a Collection Due Process (CDP) Hearing,

2
Respondent was unable to produce at trial a signed Form
4549 covering 1986. However, the Form 4340, Certificate of
Assessments, Payments, and Other Specified Matters, for 1986
indicates that the examination assessment for 1986 was made at
the same time as those for 1984 and 1985. Based on the timing of
this assessment, and on the testimony of one of respondent’s
employees with knowledge of respondent’s certified transcripts of
taxpayers’ master files, we conclude that petitioner signed a
Form 4549 for 1986 at some date prior to respondent’s Sept. 11,
1989, assessment of petitioner’s additional liabilities resulting
from examination for 1986.
 - 4 -

covering the years 1984 through 1987, which listed as the

taxpayer both himself and his spouse. In an addendum to the Form

12153, petitioner alleged four errors with respect to

respondent’s proposed collection actions: (1) That he had not

received Forms 23C for the years 1984 through 1987; (2) that he

had not received notices of deficiency for the years 1984 through

1987; (3) that the Form 900 executed by him was invalid; and (4)

that the IRS had failed to publish pertinent data concerning Form

900 in the Federal Register. Petitioner did not raise any

spousal defenses or offer any collection alternatives.

Petitioner, but not his spouse, signed the Form 12153.

Petitioner’s hearing was conducted by an Appeals officer of

respondent. A face-to-face meeting between petitioner and the

Appeals officer was held. At the hearing, petitioner raised an

additional issue to the effect that a levy served on his employer

on or about March 18, 1997, was invalid due to lack of proper

notice.

During the meeting with petitioner, the Appeals officer

provided petitioner with a MFTRA-X version of his transcript of

account. Relying on the codes contained in the MFTRA-X

transcript, the Appeals officer determined that the respondent

had properly assessed petitioner’s tax liabilities for 1984,

1985, 1986, and 1987.
 - 5 -

On September 7, 2000, the Appeals officer issued petitioner

a Notice of Determination Concerning Collection Action Under

Section 6320 and/or 6330. Therein, the Appeals officer

determined that the requirements of all applicable laws and

administrative procedures were met. With respect to the issues

raised by petitioner, the Appeals officer determined that: (1)

The validity of the assessments of petitioner’s taxes for 1984

through 1987 need not be established by a Form 23C, but may

instead be shown by means of a Form 4340; (2) that notices of

deficiency were unnecessary with respect to the years in issue

because petitioner had consented to assessment by executing Forms

4549;3 (3) that the Form 900 signed by petitioner was a valid

extension of the period of limitations on collections; and (4)

that petitioner’s transcript indicated the levy issued to his

employer on March 18, 1997, was preceded by three notices. In

addition, the Appeals officer determined that consideration of

alternative means of collection was prevented by petitioner’s

continued challenges to the validity of the assessments. The

determination concluded that enforced collection was appropriate.

On October 7, 2000, petitioner filed suit in the U.S.

District Court for the Western District of Texas, El Paso

3
The Appeals officer examined Forms 4549 executed by
petitioner for 1984 and 1985 and, while not retrieving such forms
for 1986 and 1987, noted that the latter 2 years involved the
same adjustment to filing status as the earlier years and were
audited and closed at the same time.
 - 6 -

Division (District Court case). In the District Court case,

petitioner sought review under section 6330(d) of the Appeals

officer’s determination, and also sought to quiet title to his

property that was subject to the lien placed in April 1989 with

respect to his tax liabilities for the years 1984 through 1987.

On April 16, 2001, the District Court dismissed the request for

review under 6330(d) for lack of jurisdiction but retained

jurisdiction over the quiet title action pursuant to 28 U.S.C.

sec. 2410(a).

On May 7, 2001, petitioner filed his petition in the instant

case.

In the District Court case, petitioner argued that the lien

at issue was invalid because: (1) Respondent had not properly

assessed his tax liabilities for 1984, 1985, 1986, and 1987; (2)

even if the assessments had been made, he did not receive notice

thereof; (3) no notices of deficiency were issued for 1984, 1985,

1986, and 1987; and (4) the period of limitations on collections

for 1984, 1985, 1986, and 1987 had expired.

On October 11, 2001, the District Court granted summary

judgment in favor of the United States. Perez v. United States,

89 AFTR 2d 2002-1884, 2001-2 USTC par. 50735 (W.D. Tex. 2001).

In so ruling, the District Court held that: (1) Respondent had

properly assessed petitioner’s tax liabilities for the years

1984, 1985, 1986, and 1987 on June 6, 1988 (i.e., the return
 - 7 -

assessments); (2) respondent had given petitioner notice of the

return assessments as required by section 6303; (3) that notices

of deficiency were not required with respect to the return

assessments for 1984 through 1987 because the assessments covered

amounts reported as due on petitioner’s returns; and (4) that the

Form 900 executed by petitioner was valid, extending the period

of limitations for collection for the years 1984 through 1987 to

December 31, 2000.

In his petition in the instant case, petitioner asserts:

(1) That the proposed collection is time-barred; (2) that

respondent failed to properly assess his tax liabilities or

notify him of the assessments for the years 1984 through 1987;

(3) that he did not receive notices of deficiency for the years

in issue; and (4) that respondent failed to conduct a fair

hearing (a) by refusing to explain how the proposed levy was

balanced with petitioner’s interests; (b) by directing the

Appeals officer not to address the “23C Summary Record of

Assessment” issue, (c) by refusing to grant a hearing to

petitioner’s spouse; and (d) by refusing to explain why Form 4340

was given “evidentiary precedence” over petitioner’s individual

master file.

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
 - 8 -

notice and demand, the Secretary may collect such tax by levy on

the person’s property. Section 6331(d) provides that at least 30

days before enforcing collection by levy on the person’s

property, the Secretary must provide the person with a final

notice of intent to levy, including notice of the administrative

appeals available to the person.

Section 6330 generally provides that the Secretary cannot

proceed with collection by levy on any property of any person

until the person has been given notice and the opportunity for an

administrative review of the matter (in the form of an Appeals

Office hearing) and, if dissatisfied, with judicial review of the

administrative determination. Davis v. Commissioner, 115 T.C.

35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).

Where the underlying tax liability is not at issue, the Court

will review the Appeals officer’s determination for abuse of

discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000).

Collateral Estoppel

In an effort to show that respondent’s determination to

proceed with collection was an abuse of discretion, petitioner

raises several contentions, namely, that with respect to the 1984

through 1987 taxes for which collection is sought, no proper

assessment of the taxes occurred; that even if assessment

occurred, petitioner received no notice thereof; that no notices

of deficiency were issued; and that petitioner’s extension of the
 - 9 -

period of limitations for collection was invalid and such period

has therefore expired. It is respondent’s contention that

petitioner is collaterally estopped from raising the issues of

the validity of the assessments, the sufficiency of the notice of

the assessments, the requirement of notices of deficiency, and

the expiration of the period on limitation on collections.

With respect to the return assessments, we agree with

respondent. The foregoing issues as raised by petitioner in the

instant case, insofar as they relate to the return assessments,

are identical to those raised by him in the District Court case,

the controlling facts and applicable legal rules are the same,

and, except with respect to the examination assessments (as more

fully discussed below), the issues were litigated, essential to

the prior decision, and finally determined in the District Court

case. See Peck v. Commissioner, 90 T.C. 162, 166-167 (1988),

affd. 904 F.2d 525 (9th Cir. 1990). The District Court

concluded, with respect to the return assessments, that they were

validly entered, adequately noticed, and not dependent upon the

prior issuance of notices of deficiency (because the assessments

covered amounts reported on petitioner’s returns). The District

Court likewise concluded that petitioner’s May 14, 1997,

execution of the Form 900 was a valid extension of the period of

limitations on collection to December 31, 2000. We hold that

petitioner is collaterally estopped from further litigating these
 - 10 -

issues in the instant section 6330 proceeding with respect to the

return assessments.

Excepting the issue of the period of limitations on

collection,4 we disagree with respondent concerning the

application of collateral estoppel with respect to the

examination assessments. Those assessments were not the subject

of petitioner’s claim to quiet title in the District Court case.

The District Court considered assessments made on June 6, 1988,

the date of the return assessments, and not assessments made on

September 11, 1989, and June 11, 1990, the dates on which the

examination assessments were made, in reaching its determination.

The District Court’s conclusion that no notices of deficiency

were required was premised on the fact that the amounts assessed

had been reported on petitioner’s returns, a condition not

present in the case of the examination assessments. Thus,

petitioner is not collaterally estopped from contesting the

validity of, adequacy of notice concerning, or requirement of

notices of deficiency preceding, the examination assessments,

because the conditions for collateral estoppel do not exist for

those issues.

4
Since petitioner is collaterally estopped from asserting
the invalidity of the Form 900 extending the period of
limitations on collections for the 1984 through 1987 tax years to
Dec. 31, 2000, and respondent’s notice to petitioner of his
hearing rights under section 6330 and petitioner’s request for a
hearing occurred before that date, the period of limitations for
collection of those years remains open. See sec. 6330(e)(1).
 - 11 -

Examination Assessments

While petitioner is not foreclosed from contesting the

examination assessments,5 his arguments are unavailing.

Petitioner argues herein that the assessments were invalid

because the Appeals officer did not rely on or provide to him a

Form 23C, Summary Record of Assessment, for purposes of verifying

that the assessments were valid. This argument is without merit.

The Appeals officer used an MFTRA-X transcript, a copy of which

she provided to petitioner at the hearing, to verify that the

assessments petitioner challenges, including the examination

assessments, were validly made. Absent some showing of

irregularity in respondent’s assessment procedures that raises a

question about the validity of respondent’s assessments of

petitioner’s tax liabilities, which petitioner has not made, it

is not an abuse of discretion for an Appeals officer to verify an

assessment by means of an MFTRA-X transcript. Standifird v.

Commissioner, T.C. Memo. 2002-245; Holliday v. Commissioner, T.C.

Memo. 2002-67. The MFTRA-X transcripts contain all information

necessary to the recordation of an assessment under respondent’s

regulations, including the identification of the taxpayer, the

character of the liability assessed, the taxable period, and the

5
Certain of the issues raised by petitioner in the instant
proceedings under sec. 6330(d) were not raised by him in his
request for a hearing or at the hearing. Since all such issues
lack merit, we need not decide whether petitioner is entitled to
raise them in the instant proceedings.
 - 12 -

amount of the assessment.6 See sec. 301.6203-1, Proced. & Admin.

Regs. The MFTRA-X transcripts further indicate that the

examination assessments were made on September 11, 1989, with

respect to 1984, 1985, and 1986, and June 11, 1990, as to 1987.

Petitioner next contends that even if the assessments were

properly made, he was not given notice thereof as required by

section 6303. He also claims he was not given proper notice of

intent to levy as required by section 6331. Both claims are

meritless. Forms 4340 for each of the years at issue are in the

record and show that petitioner was sent “Statutory Notices of

Intent to Levy” on March 18, 1991, and June 19, 1995. Either of

these notices is sufficient to satisfy the notice requirement of

section 6331. In addition, a notice of intent to levy can

satisfy the notice requirement of section 6303. Hughes v. United

States, 953 F.2d 531, 536 (9th Cir. 1992); Standifird v.

Commissioner, supra. Petitioner’s contentions concerning his

notice under sections 6303 and 6331 demonstrate no abuse of

discretion.

Petitioner’s contention that he did not receive notices of

deficiency with respect to the examination assessments likewise

has no merit. By signing Forms 4549 and CP-2000, petitioner

consented to the immediate assessment of the tax liabilities set

6
The MFTRA-X transcripts for 1985 and 1986 introduced as
exhibits are illegible in some respects, but legible copies are
contained elsewhere in the record.
 - 13 -

forth therein, plus penalties and interest. See Aguirre v.

Commissioner, 117 T.C. 324 (2001).

Additional Issues

1. Impartiality of the Appeals Officer

Petitioner raises other issues not considered in the

District Court case, including a claim that section 6330(b)(3)

and (c)(2)(A) was violated because the Appeals officer was

instructed not to consider his claims concerning the failure of a

Form 23C to be provided or considered. As previously noted, a

Form 23C is not necessary to establish the validity of the

assessments. Accordingly, an instruction to the Appeals officer

to refuse to consider petitioner’s “Form 23C” arguments, which

are based solely on the premise that a Form 23C is indispensable

to a valid assessment, does not violate petitioner’s right to

raise “any relevant issue” relating to the proposed levy under

section 6330(c)(2)(A). Similarly, the instruction did not cause

the Appeals officer not to be “impartial” within the meaning of

section 6330(b)(3). The operative terms of section 6330(b)(3)

indicate that “impartial” as used in the heading of that

provision concerns the Appeals officer’s prior involvement with

respect to the unpaid tax before the hearing.7 In sum, neither

7
Sec. 6330(b)(3) provides as follows:

SEC. 6330(b). Right to Fair Hearing.

(continued...)
 - 14 -

the instructions to the Appeals officer concerning, nor her

refusal to consider, petitioner’s arguments based on Form 23C

constituted an abuse of discretion.

2. Consideration and Balancing of Collection Alternatives

Petitioner next contends that the Appeals officer failed to

comply with section 6330(c)(3)(C), which requires the officer to

consider whether the proposed collection action balances the need

for the efficient collection of taxes with the legitimate concern

of the taxpayer that any collection action be no more intrusive

than necessary. This requirement was addressed in the Notice of

Determination which states: “The proposed levy action is

intrusive. However, where the taxpayer continues to challenge

the validity of the assessments there is no room to search for

alternative collection measures to alleviate the intrusiveness of

a levy action.” Neither in his request for a hearing nor at the

hearing did petitioner challenge the appropriateness of or offer

an alternative to the proposed levy. In these circumstances, we

7
(...continued)
* * * * * * *
(3) Impartial officer.--The
hearing under this subsection shall
be conducted by an officer or
employee who has had no prior
involvement with respect to the
unpaid tax specified in subsection
(a)(3)(A) before the first hearing
under this section or section 6320.
A taxpayer may waive the
requirement of this paragraph.
 - 15 -

find no abuse of discretion in the Appeals officer’s

determination concerning the requirements of section

6330(c)(3)(C). See Magana v. Commissioner, 118 T.C. 488 (2002).

3. Conduct of Discovery

Petitioner alleges that it was error for the Appeals officer

to fail to allow petitioner the opportunity to conduct discovery

in connection with the hearing. At the outset, we note that

there does not appear to be anything in the record to indicate

that petitioner ever attempted to conduct discovery, or that the

Appeals officer refused a request to do so. In any event, the

hearing process contemplated in section 6330 is informal and does

not require the compulsory production of documents. See Davis v.

Commissioner, 115 T.C. at 41-42; Lindsay v. Commissioner, T.C.

Memo. 2001-285; Wylie v. Commissioner, T.C. Memo. 2001-65. Any

refusal to afford petitioner the opportunity for formal discovery

was not an abuse of discretion.

4. Spouse’s Hearing Rights

Petitioner argues that it was error for the Appeals officer

not to allow his spouse to participate in the hearing. We infer

from petitioner’s various submissions that he believes his spouse

was entitled to a hearing under section 6330 because she holds a

community property interest in any property of his that might be

subject to the proposed levy.
 - 16 -

Section 6330(a)(1) provides that “No levy may be made on any

property or right to property of any person unless the Secretary

has notified such person in writing of their right to a hearing”.

(Emphasis added.) Section 6330(b)(2) provides: “A person shall

be entitled to only one hearing under this section with respect

to the taxable period to which the unpaid tax * * * relates.”

(Emphasis added.) Regulations issued by respondent clarify that

the “person” described in section 6330(a)(1) is the same person

described in section 6331(a); namely, the person liable to pay

the tax due after notice and demand who has refused or neglected

to pay. Sec. 301.6330-1(a)(2), Q&A-1, Proced. & Admin. Regs.8

Since petitioner and his spouse did not file joint returns

for 1984 through 1987, his spouse is not liable for the unpaid

taxes that are the subject of the instant collection action.

8
Q&A-1 of sec. 301.6330-1(a)(3), Proced. & Admin. Regs.,
provides as follow:

Q-1. Who is the person to be notified under section
6330?

A-1. Under section 6330(a)(1), a pre-levy or
post-levy CDP Notice is required to be given only to
the person whose property or right to property is
intended to be levied upon, or, in the case of a levy
made on a state tax refund or a jeopardy levy, the
person whose property or right to property was levied
upon. The person described in section 6330(a)(1) is
the same person described in section 6331(a)--i.e., the
person liable to pay the tax due after notice and
demand who refuses or neglects to pay (referred to here
as the taxpayer). A pre-levy or post-levy CDP Notice
therefore will be given only to the taxpayer.
 - 17 -

Therefore, she is not the “person” referred to in section

6330(a)(1); accordingly, section 6330 confers no hearing rights

upon her and respondent issued no notice to her, under section

6330(a). Although petitioner’s spouse is listed as a taxpayer on

the Form 12153 by which petitioner requested a hearing under

section 6330, she did not sign the document, and it in any event

confers no rights on her that do not exist under the statute.

Accordingly, the Appeals officer’s refusal to allow petitioner’s

spouse to participate in the hearing was not an abuse of

discretion.9

Conclusion

Having considered each of petitioner’s allegations of error,

we conclude that there was no abuse of discretion by the Appeals

officer. We hold that respondent may proceed with the proposed

levy. To reflect the foregoing,

Decision will be entered for

respondent.

9
In a separate order, we previously denied petitioner’s
spouse’s motion to join as a party to the proceedings before this
Court, on the grounds that she had failed to show that any
interests in property that she sought to protect were
inadequately protected by petitioner or would be impaired absent
joinder or intervention.