T.C. Summary Opinion 2004-67
UNITED STATES TAX COURT
LAURA G. COOK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17532-02S. Filed May 17, 2004.
Laura G. Cook, pro se.
Scott Thomas Welch, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 of the Internal Revenue Code in effect
at the time the petition was filed.1 The decision to be entered
is not reviewable by any other court, and this opinion should not
be cited as authority. Petitioner seeks a review under section
1
Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
years at issue.
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6330(d) of respondent’s decision to proceed with collection of
petitioner’s Federal income tax liabilities for 1993 and 1994.
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are made part hereof.
Petitioner’s legal residence was Reserve, Louisiana, at the time
the petition was filed.
Petitioner filed Federal income tax returns for the years
1993 and 1994 reporting head-of-household filing status and
claiming deductions for a personal exemption for herself and five
dependency exemptions for her sister and four “foster” children.
The latter were children of petitioner’s friend, Joann Louise
Kleibert.
Upon examination of the returns, respondent disallowed the
five claimed dependency exemption deductions and determined that
petitioner’s filing status was married filing separately instead
of head-of-household. Respondent also determined that petitioner
was liable for income taxes on unreported community property
income. A notice of deficiency was issued to petitioner for the
years 1993 and 1994 in which the following determinations were
made:
Year Deficiency Sec. 6662(a) Penalty
1993 $1,447 $289
1994 1,297 259
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On October 26, 1995, petitioner signed Form 5564, Notice of
Deficiency Waiver, consenting to the immediate assessment of the
deficiencies and penalties.2 No petition was ever filed by
petitioner in this Court or in any other court challenging her
1993 and 1994 tax liabilities.
Respondent assessed petitioner for the amounts determined in
the notice of deficiency on December 4, 1995. Thereafter, in
1997, petitioner filed amended returns claiming refunds for 1993
and 1994. The refund claims were based on the exemptions and
filing status that petitioner had claimed on her original returns
that were disallowed in the notice of deficiency and assessed.
She based her position on the advice of her cousin, Chester J.
Victor, Sr., who claimed to have expertise in this area.3
Respondent denied the refund requests on October 12, 1998.
On December 17, 2001, respondent issued to petitioner a
Final Notice of Intent to Levy and Notice of Your Right to a
Hearing in connection with the assessed balance of income taxes
2
Also on Oct. 26, 1995, petitioner offered to pay the
deficiencies through an installment agreement by signing a Form
9465, Installment Agreement Request. However, because she was
not current in filing her 1999 through 2001 Federal income tax
returns at the time of her collection due process hearing,
petitioner was not eligible for an installment agreement.
3
Mr. Victor later assisted petitioner by signing as her
authorized representative Form 12153, Request for a Collection
Due Process Hearing, signing her petitions, and testifying at
trial.
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and statutory additions. Petitioner received the notice. On
January 13, 2002, on Form 12153, Request for a Collection Due
Process Hearing, she requested a hearing with respondent’s
Appeals Office for the years 1993 through 1998.4 The request
asserted that the respondent's findings were incorrect. No
spousal defenses or collection alternatives were alleged.
In due course, an Appeals Office hearing was held with
petitioner by telephone on September 10, 2002. Respondent
thereafter denied relief and issued a Notice of Determination
Concerning Collection Actions Under Section 6320 and/or 6330 on
October 15, 2002. The notice summarized the determination as
follows: “Our determination is that the proposed levy action is
appropriate.” An attachment to the notice, Relevant Issues
Presented by the Taxpayer, addressed petitioner’s position as
follows:
The sole issue you raised was that you disagree with
the IRS audit assessments.
You had a previous opportunity for an Appeals
conference after your administrative claims were denied.
Because you had a previous opportunity for an Appeals
conference concerning both liabilities, § 6330 precludes you
from challenging the underlying tax liabilities in this
case.
4
The petition challenges only the 1993 and 1994 tax
liabilities. The record does not reflect the status of the other
years for which petitioner requested a hearing.
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You raised no other issues and spousal defenses are not
applicable.
The attachment also stated that an Appeals officer who had no
prior involvement with the tax liabilities conducted the hearing
and verified that all applicable legal and administrative
procedures were properly followed in issuing the notice of intent
to levy.
Petitioner contends that she was entitled to head-of-
household filing status, the claimed dependency exemption
deductions, and was not subject to the community property law
because she and her husband were living separate and apart during
the 2 years in question; that she provided more than 80 percent
of the support of the dependents claimed on the returns; and that
she occupied her own place of residence from which she provided a
household for the claimed dependents.
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 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 is
required to provide the person with a final notice of intent to
levy, including notice of the administrative appeals available to
the person.
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Section 6330 generally provides that the Commissioner cannot
proceed with collection by levy 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. See Davis v. Commissioner, 115 T.C. 35, 37
(2000); Goza v. Commissioner, 114 T.C. 176, 179-180 (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.
Section 6330(c) prescribes what an affected taxpayer may
assert or claim at an Appeals Office hearing. Section
6330(c)(2)(A) 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. Sego v. Commissioner, 114 T.C.
604, 609 (2000); Goza v. Commissioner, supra. In addition,
section 6330(c)(2)(B) sets out the circumstances where a taxpayer
may challenge the existence or amount of the underlying tax
liability. In general, this is allowable only if the taxpayer
“did not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability.” Sec. 6330(c)(2)(B); see also sec. 301.6330-
1(e), Proced. & Admin. Regs. The term “underlying tax liability”
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includes additions to tax and statutory interest that are the
subject of the Commissioner’s collection activities. Katz v.
Commissioner, 115 T.C. 329, 339 (2000). If the underlying tax
liability is at issue, the Court reviews that taxpayer’s
liability de novo. The Court reviews other administrative
determinations based on whether or not there was an abuse of
discretion by respondent. Sego v. Commissioner, supra at 610.
Petitioner primarily contends that respondent erred by not
allowing her to challenge the merits of the underlying tax
liability. She claims that she did not know what the notice of
deficiency waiver was when she signed it. However, petitioner
did not allege or establish that she was incompetent to sign the
Form 5564, cf. Horn v. Commissioner, T.C. Memo. 2002-207, or that
respondent perpetrated fraud, duress, or misrepresentation in
garnering her signature, cf. Whitman v. Commissioner, T.C. Memo.
1985-537.
The Court finds that petitioner’s waiver is valid and
effective. The act of signing the consent to immediate
assessment constituted her assent to the contents of that form
even if she may have been confused by its terms, a conclusion the
Court declines to reach. Kronish v. Commissioner, 90 T.C. 684
(1988). Moreover, it is clear to the Court that petitioner had
ample opportunity to dispute her underlying tax liability. She
admitted receiving the notice of deficiency; she did not litigate
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or judicially challenge the determinations therein; she even
offered to pay the tax liabilities under the installment method.
Petitioner, therefore, fully understood the consent to the
assessment. The Court lacks jurisdiction to consider the
underlying tax liability under section 6330(d)(1). The only
issue is whether respondent committed an abuse of discretion in
determining that collection of petitioner’s 1993 and 1994 tax
liabilities should proceed. There is an abuse of discretion
where respondent’s action is arbitrary, capricious, or without
sound basis in fact or law. Woodral v. Commissioner, 112 T.C.
19, 23 (1999).
Petitioner’s sole contention was that she does not owe the
taxes at issue. She did not, at the hearing, offer any
collection alternatives and asserted no spousal defenses. She
received an appropriate hearing for purposes of section
6330(b)(1). Day v. Commissioner, T.C. Memo. 2004-30; Leineweber
v. Commissioner, T.C. Memo. 2004-17; Dorra v. Commissioner, T.C.
Memo. 2004-16; sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin.
Regs. Respondent properly verified that the requirements of
applicable law and administrative procedures were met, and
respondent balanced the need for efficient collection of taxes
with the legitimate concern of petitioner that the collection
action be no more intrusive than necessary. On this record, the
Court holds that there was no abuse of discretion in sustaining
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the notice of intent to levy. Respondent, therefore, is
sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
An appropriate order and
decision will be entered.