T.C. Memo. 2004-38
UNITED STATES TAX COURT
LESLIE M. HILTZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14804-02L. Filed February 17, 2004.
Leslie M. Hiltz, pro se.
Jennifer S. McGinty, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
THORNTON, Judge: Pursuant to sections 6320(c) and 6330(d),
petitioner seeks review of respondent’s determination sustaining
the filing of a Federal tax lien with respect to petitioner’s
1987 income tax.1
1
Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended. Rule references are to the
Tax Court Rules of Practice and Procedure.
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FINDINGS OF FACT
The parties have stipulated most of the facts, which we
incorporate herein by this reference. When petitioner filed his
petition, he resided in Bergen, New York.
A. 1987 Notice of Deficiency
Petitioner and his wife, Carole E. Hiltz (Carole), timely
filed a joint 1987 Federal income tax return. By notice of
deficiency dated December 6, 1993, respondent determined a $5,358
deficiency and a $1,340 section 6661 addition to tax with respect
to petitioner and Carole’s 1987 joint tax.2 Petitioner received
the notice of deficiency but did not petition the Tax Court.
B. Bankruptcy Proceedings
On August 12, 1992, petitioner and Carole filed a petition
for chapter 11 bankruptcy in the U.S. Bankruptcy Court in the
Western District of New York. On January 11, 1994, the
bankruptcy court entered a final decree dismissing the chapter 11
bankruptcy case. Petitioner and Carole’s 1987 tax liability was
not discharged in the chapter 11 bankruptcy case.
On March 21, 1995, Carole (alone) filed a petition for
chapter 7 bankruptcy. On July 7, 1995, in the chapter 7
2
The deficiency resulted from the disallowance of a claimed
loss that petitioner and Carole attempted to carry back from 1990
to 1987.
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proceeding, the bankruptcy court discharged Carole’s 1987 tax
liability.
C. Notice of Federal Tax Lien
On September 8, 2000, respondent mailed to petitioner and
Carole a Notice of Federal Tax Lien Filing and Your Right to a
Hearing Under I.R.C. § 6320 regarding the 1987 tax liability.
D. Appeals Office Hearings
On September 25, 2000, petitioner and Carole timely filed a
Form 12153, Request for a Collection Due Process Hearing. On
January 25 and March 19, 2002, petitioner met with Appeals
Officer Ronald Szalkowski (AO Szalkowski) and discussed the 1987
tax liability and the possibility of entering into an installment
agreement. AO Szalkowski subsequently prepared an installment
agreement and forwarded it to petitioner, who rejected it because
it reflected a greater balance due than he had anticipated.
E. Notice of Determination
In a Notice of Determination Concerning Collection Action(s)
Under Section 6320 and/or 6330, dated August 16, 2002, respondent
determined that the legal, administrative, and procedural
requirements for proceeding with collection by lien of
petitioner’s and Carole’s 1987 income tax had been met.
On September 17, 2002, petitioner and Carole timely filed a
petition in this Court. Respondent moved to dismiss this case as
to Carole because her underlying tax liability had been
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discharged in her chapter 7 bankruptcy proceeding. After a
hearing, this Court granted respondent’s motion.3
OPINION
A. Statutory Framework
Section 6321 imposes a lien in favor of the United States on
all property and property rights of a person who is liable for
and fails to pay taxes after demand for payment has been made.
The lien arises when assessment is made and continues until the
assessed liability is paid. Sec. 6322. For the lien to be valid
against certain third parties, the Secretary must file a notice
of Federal tax lien and, within 5 business days thereafter,
provide written notice to the taxpayer. Secs. 6320(a), 6323(a).
The taxpayer may then request an administrative hearing before an
Appeals officer. Sec. 6320(b)(1). Once the Appeals officer
issues a determination, the taxpayer may seek judicial review in
the Tax Court or a district court, as appropriate. Secs.
6320(c), 6330(d)(1).
Section 6330(c)(2) prescribes the matters that a person may
raise at an Appeals Office hearing, including spousal defenses,
challenges to the appropriateness of the Commissioner’s intended
collection action, and possible alternative means of collection.
The existence or amount of the underlying tax liability may be
contested at an Appeals Office hearing only if the taxpayer did
3
Respondent has released the Federal tax lien as to Carole.
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not receive a notice of deficiency or did not otherwise have an
opportunity to dispute that tax liability. Sec. 6330(c)(2)(B);
see Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v.
Commissioner, 114 T.C. 176, 180-181 (2000).
If the validity of the underlying tax liability is properly
at issue, we review that issue de novo. See Sego v.
Commissioner, supra at 609-610. Other issues we review for abuse
of discretion. Id.
B. Petitioner’s Contentions
1. Underlying Tax Liability
In his petition, petitioner challenges his underlying 1987
tax liability. Because petitioner received a notice of
deficiency for the 1987 tax year, he is not entitled to challenge
the existence or amount of his 1987 tax liability in this
collection proceeding. See secs. 6320(c), 6330(c)(2)(B); Sego v.
Commissioner, supra at 609; Goza v. Commissioner, supra at
180-181.4
2. Installment Agreement
AO Szalkowski considered alternative means of collection and
prepared an installment agreement, which petitioner ultimately
4
AO Szalkowski reviewed the underlying 1987 tax liability
despite petitioner’s receipt of the 1987 notice of deficiency.
This action does not constitute a waiver of the statutory bar and
does not empower this Court to review petitioner’s challenge to
his underlying tax liability. See Behling v. Commissioner, 118
T.C. 572, 577-579 (2002); sec. 301.6320-1(e)(3), Q&A-E11, Proced.
& Admin. Regs.
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rejected on the ground that he thought the total installment
payments required were excessive. The record provides no basis
for concluding that the balance due, as reflected in the
installment agreement, exceeded petitioner’s then-current balance
for the 1987 tax, penalties, and interest. To the contrary, the
limited evidence in the record suggests that the difference
between what petitioner believed his 1987 tax liability to be and
the amount shown on the proposed installment agreement was
attributable to the running of interest (which is running yet,
see section 6601(a)). On this record, we conclude that AO
Szalkowski did not abuse his discretion in determining that
collection action may proceed against petitioner.
C. Conclusion
Petitioner has raised no spousal defense and made no valid
challenge to the appropriateness of respondent’s intended
collection action. These issues are now deemed conceded. See
Rule 331(b)(4). We hold that respondent did not abuse his
discretion in sustaining the filing of a Federal tax lien with
respect to petitioner’s 1987 income tax.
To reflect the foregoing,
Decision will be
entered for respondent.