T.C. Memo. 2004-124
UNITED STATES TAX COURT
MICHAEL STEIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10970-01L. Filed May 24, 2004.
Michael Stein, pro se.
John Aletta, for respondent.
MEMORANDUM OPINION
BEGHE, Judge: Petitioner failed to file timely Federal
income tax returns for 1992, 1993, and 1994. Respondent filed
“substitutes for return”1 (SFRs) for those years, mailed
1
The Commissioner has previously represented to this Court
that the term “substitute for return” (SFR) is a term used by the
Commissioner for returns or partial returns prepared by the
(continued...)
- 2 -
petitioner statutory notices of deficiency to which he never
responded, and thereafter assessed income tax liabilities against
petitioner for those years.
As of March 8, 1999, petitioner’s total unpaid tax
liabilities for the above-mentioned years, including the unpaid
assessed income tax liabilities, and additions to tax and
interest, were as follows:
Unpaid Additions to Tax Total Unpaid
Year Assessments and/or Interest Liabilities
1992 $1,344.17 $1,068.95 $2,413.12
1993 5,505.15 1,910.12 7,415.27
1994 197,079.49 63,903.26 260,982.75
On February 23, 2000, respondent filed a notice of Federal
tax lien (NFTL) against petitioner’s real property with respect
to $203,928.81, the then-unpaid balance of petitioner’s 1992
through 1994 tax liabilities. On July 26, 2001, respondent
issued petitioner a notice of determination concerning collection
1
(...continued)
Commissioner where the taxpayer did not file a return. See
Swanson v. Commissioner, 121 T.C. 111, 112 n.1 (2003). The term
“SFR” has also been used to describe a return prepared by the
Commissioner under sec. 6020(b). There is no record evidence to
prove or disprove respondent’s assertion in his brief that the
substitutes for return in this case meet the requirements of sec.
6020(b). For convenience, we refer to the returns prepared by
respondent as SFRs.
- 3 -
action(s) under section 6320 and/or 6330,2 which upheld
respondent’s NFTL.3
The issues for decision presented by petitioner’s timely
filed petition with this Court are:
1. Whether petitioner is liable for the deficiencies
assessed by respondent. We hold petitioner is liable for the
deficiencies because petitioner has not satisfied the conditions
that would entitle him in this proceeding to contest respondent’s
deficiency determinations or assessments; and
2. whether respondent abused his discretion in sustaining
the filing of the Federal tax lien against petitioner’s property
to secure petitioner’s outstanding income tax liabilities for tax
years 1992 through 1994. We hold respondent did not abuse his
discretion in so doing.
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
3
On Mar. 8, 1999, respondent sent petitioner a final notice
of intent to levy and notice of the right to a hearing with
respect to his total unpaid tax liabilities; petitioner did not
file a timely request for a sec. 6330 hearing. After an
equivalent hearing, respondent upheld the proposed levy. We do
not have jurisdiction to consider the proposed levy. See infra
p. 16. However, because petitioner has conflated the lien and
levy issues and made some of the same arguments with respect to
both of them, we sometimes refer to the proposed levy in
considering petitioner’s arguments against the lien.
- 4 -
Procedural Background
This case was tried in Hartford, Connecticut, on January 6,
2003. Respondent’s opening brief was due April 7, 2003, and
petitioner’s answering brief was due June 5, 2003. On April 7,
2003, respondent filed his brief with the Court.
Petitioner filed five motions for extension of time to file
his answering brief. These motions included three requests for
extensions to obtain and review the trial transcript, a fourth
request for extension because he did not receive notice of the
granting of the request for the third extension until 2 days
before the third extended due date, and a fifth request for
extension pending adjudication of certain motions that petitioner
stated “are concurrently being submitted to the Court in separate
envelopes” but have never been received by the Court. The Court
granted the first four of these motions, thereby extending the
due date of petitioner’s brief from June 5 to November 20, 2003.
The Court’s order of November 5, 2003, denying petitioner’s
fifth motion filed November 3, 2003, was served by certified mail
on petitioner at his specified mailing address, P.O. Box 210,
Greenwich, Connecticut (the post office box address), and was
returned unclaimed on November 28, 2003. Petitioner did not
notify the Court of any change of his mailing address. On
January 20, 2004, the Court ordered that a copy of the
- 5 -
November 5, 2003, order be served on petitioner at the post
office box address by certified mail and regular mail.
On March 10, 2004, the Court ordered petitioner and
respondent to file, on or before March 22, 2004, a joint status
report or separate status reports indicating whether and when
petitioner filed Federal income tax returns for 1992 through
1994, and, if so, whether, notwithstanding the outstanding
assessments and the lien controversy in the case at hand,
respondent was examining those returns. Respondent’s status
report, filed March 19, 2004, indicated that petitioner had not
filed the returns, and that, therefore, respondent was not in the
process of examining them.
On April 6, 2004, petitioner filed a status report
requesting an extension to file his brief and the motions he
intended to file with his last extension request (but which he
claimed to have failed by inadvertence to file). In this status
report, petitioner asserted that “severe health problems” and his
preoccupation with separate litigation as “a pro se defendant”
had caused the delays in filing his brief and the motions.
According to petitioner, the separate litigation involved “a
dispute over fines imposed on petitioner by a condominium
association” that had led to foreclosure litigation “involving
the same condominium property that the Respondent has placed a
lien on in the instant case.” Petitioner stated he had not yet
- 6 -
filed signed Federal income tax returns for the 1992 through 1994
tax years, but he was working with respondent’s revenue officer
to submit information to complete those returns. The Court
denied petitioner’s request for another extension of time to file
his brief and notified petitioner that the Court would decide the
case on the record and arguments previously submitted.
Factual Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference.
Petitioner testified that “for purposes of the trial” and
when he filed the petition in this case, he resided at One
Strawberry Hill Court, Unit 11-C, Stamford, Connecticut (the
Strawberry Hill address). Petitioner testified he is a resident
of Nevada for State income tax purposes.
Petitioner testified he is a self-employed engineer who
travels up to 3 months at a time more than once a year. In Form
433-A, Collection Information Statement for Individuals, filed
with the Internal Revenue Service (IRS) on November 11, 1998,
petitioner said he was a “volunteer” and “not employed.”
Petitioner does not receive wages or salary from which tax
is withheld. During the tax years at issue, petitioner paid
estimated taxes, and petitioner held accounts with financial
- 7 -
institutions that withheld taxes from his interest and dividend
income.
As of July 26, 2001, petitioner had failed to file Federal
income tax returns for his tax years 1988 through 2000.4 There
is no record information or other evidence that petitioner has
filed returns for his 1992 through 1994 tax years.
Petitioner “[dropped] everything” in 1988 when both his
elderly parents were ill with cancer. Petitioner’s parents died
in 1990. Since 1988, petitioner has had a “combination of health
problems (including * * * surgery)”.
Petitioner could not locate his 1987 return among his
papers and other personal possessions that were packed in boxes
as a result of residential moves. Petitioner eventually found a
copy of his 1987 return before trial but made no effort to have
it admitted into evidence. Petitioner asserted his 1987 return
shows a capital loss carryover of $187,000 and an overpayment of
tax exceeding $12,000, and he had unspecified losses in
subsequent years, including 1988 through 1993.
During 1996, petitioner used his address at 25 West Elm
Street, Greenwich, Connecticut (the Elm Street address), to
receive Forms 1099-B, Proceeds From Broker and Barter Exchange
4
As of Jan. 6, 2003, petitioner had filed returns for his
1995 and 1996 tax years.
- 8 -
Transactions, and Forms 1099-Div, Dividends and Distributions,
from financial institutions that paid investment income to him.
On December 12, 1996, after having prepared SFRs for
petitioner’s tax years at issue, respondent mailed three notices
of deficiency to petitioner determining income tax deficiencies
of $15,812, $10,210, and $153,787 for petitioner’s 1992, 1993,
and 1994 tax years, respectively, failure to file additions to
tax under section 6651(a)(1) of $211 for 1992 and $24,758 for
1994, and additions to tax under section 6654 of $689 for 1992
and $7,352 for 1994 for failure to pay estimated tax.5
Respondent sent the notices of deficiency by certified mail to
the Elm Street address.
On January 8, 1997, the U.S. Postal Service returned to
respondent the notices of deficiency and the covering envelopes
stamped “unclaimed”. The envelopes displayed no indication that
petitioner was no longer using the Elm Street address or that
this address was invalid.
Petitioner did not file petitions with the Court disputing
the determinations set forth in the statutory notices.
On May 5, 1997, respondent assessed income tax liabilities
against petitioner for the tax years at issue on the basis of the
5
Respondent did not determine penalties for petitioner’s
1993 tax year.
- 9 -
SFRs and petitioner’s failure to petition the Court to dispute
the deficiencies determined in the statutory notices.
On or about December 28, 1997, respondent’s revenue officer
Ronald Mele (Revenue Officer Mele) confirmed with postal
employees that petitioner’s previous mailing address was the Elm
Street address. On January 28, 1998, Revenue Officer Mele
confirmed with postal employees that petitioner was using his
Strawberry Hill address as his mailing address and updated
respondent’s computer records accordingly.
During a telephone conversation sometime in 1998, petitioner
instructed Revenue Officer Mele to use the post office box
address as his mailing address rather than the Strawberry Hill
address.
Respondent’s Proposed Levy
On March 8, 1999, respondent sent petitioner by certified
mail addressed to petitioner at his post office box address a
final notice of intent to levy and notice of right to a hearing.
On May 14, 1999, respondent received petitioner’s untimely Form
12153, Request for a Collection Due Process Hearing. On June 7,
1999, respondent granted petitioner a so-called equivalent
hearing under section 301.6330-1T(i), Temporary Proced. & Admin.
Regs., 64 Fed. Reg. 3413 (Jan. 22, 1999), because petitioner’s
request was untimely. On September 13, 1999, respondent’s
- 10 -
Appeals Office issued petitioner a decision letter upholding the
proposed levy.
In a letter dated October 22, 1999, Revenue Officer Mele
informed petitioner that respondent would begin levying on his
income sources and assets on November 5, 1999.
On or about November 8, 1999, petitioner submitted a Form
9423, Collection Appeal Request, in which he attributed the
delays in filing his returns to respondent’s failure to follow
through on petitioner’s request for capital loss carryover
information from 1987 that he needed to file his returns for the
tax years at issue. Petitioner’s Form 9423 states that Revenue
Officer Mele was unable to obtain petitioner’s 1987 return.
On or about December 7, 1999, petitioner submitted to
Revenue Officer Mele a request to enter into an installment
agreement to pay his tax liabilities for 1992 through 1994. On
January 11, 2000, Revenue Officer Mele sent a letter to
petitioner’s post office box address denying petitioner’s request
for an installment agreement because petitioner had not filed
income tax returns for 1992 through 1999. The January 11, 2000,
letter specifically instructed petitioner to send an appeal
request to Revenue Officer Mele at his office address on or
before February 11, 2000, if petitioner wished to appeal the
denial of his installment agreement request. Petitioner did not
appeal the denial of his installment agreement request.
- 11 -
Lien Proceeding
On January 31, 2000, Revenue Officer Donald Angotta (Revenue
Officer Angotta) replaced Revenue Officer Mele for purposes of
collecting petitioner’s 1992 through 1994 tax liabilities.
On February 23, 2000, respondent filed an NFTL with respect
to petitioner’s 1992 through 1994 tax liabilities against
petitioner’s real property at the land record office in Stamford,
Connecticut. The lien attached to the condominium unit
petitioner owned at the Strawberry Hill address.
On February 23, 2000, respondent’s lien unit office mailed
petitioner Letter 3172, Notice of Federal Tax Lien Filing and
Your Right to a Hearing Under IRC 6320, to the Strawberry Hill
address, with a copy of the NFTL and a Form 12153.
On March 15, 2000, respondent received from petitioner a
Form 12153 with an attached letter to Revenue Officer Angotta and
an attached memorandum (the attached memorandum). On the Form
12153, petitioner listed his telephone number and instructed the
IRS to write to petitioner’s post office box address, which he
said he checked twice a month, if the IRS was unable to reach him
by telephone. Petitioner placed the words “See Attachment”,
apparently referring to the attached memorandum, under both
notations on the Form 12153 that allowed him to appeal either a
“Filed Notice of Federal Tax Lien” or a “Notice of Levy”.
- 12 -
In the attached memorandum, petitioner asserted he would
complete his delinquent returns within 60-90 days to prove that
he did not owe the tax liabilities determined by respondent.
In the attached memorandum, petitioner also stated he was
appealing Revenue Officer Angotta’s “levy warning letter” dated
February 14, 2000, which, according to petitioner, stated:
“Enforced collection may include placing a levy on your bank
accounts, wages, receivables, commissions, etc.”6 In the
attached memorandum, petitioner asserted: “Mr Angotta informed
me over the telephone that I have until March 15, 2000 to appeal
this action.”
In the attached memorandum, petitioner also said Revenue
Officer Angotta failed to respond to petitioner’s messages left
on Revenue Officer Angotta’s answering machine before February
11, 2000, in which petitioner stated that he was ready to
personally meet with Revenue Officer Angotta to hand in his
appeal.
In a letter dated June 22, 2000, Appeals Officer William A.
Hirsch (Appeals Officer Hirsch) informed petitioner that
respondent’s NFTL had been assigned to him for consideration.
After repeated failed attempts by Appeals Officer Hirsch and
petitioner to get in touch with each other, Appeals Officer
Hirsch, in a letter dated July 26, 2000, informed petitioner that
6
The Feb. 14, 2000, letter was not part of the record.
- 13 -
he needed to file his delinquent returns by August 31, 2000, as a
condition to discussing collection alternatives such as an
installment agreement or an offer in compromise.
On October 3, 2000, Appeals Officer Hirsch telephoned
petitioner and attempted to conduct a section 6320 hearing, at
which time petitioner requested an extension of time to review
his notes. During this conversation, Appeals Officer Hirsch
granted petitioner’s request for an extension to file his
delinquent returns until November 30, 2000. Petitioner agreed to
conduct the hearing by telephone rather than in person within 1
week of submitting his delinquent returns.
On October 4, 2000, Appeals Officer Hirsch sent petitioner a
letter scheduling a telephone hearing for December 8, 2000.
On December 8, 2000, Appeals Officer Hirsch telephoned
petitioner and conducted petitioner’s section 6320 hearing, even
though petitioner had not yet filed his delinquent returns.
There is no evidence in the record that petitioner at any time
either requested that the hearing be held in person or objected
to the holding of a hearing by telephone.
On July 26, 2001, respondent’s Appeals Office issued a
notice of determination concerning collection actions informing
petitioner of the determination not to withdraw the NFTL. As of
that date, petitioner had not appealed the rejection of his
installment agreement request.
- 14 -
On August 27, 2001, petitioner timely mailed his petition
with the Court in response to the July 26, 2001, notice of
determination; the Court received and filed the petition on
September 4, 2001.7
Discussion
As a preliminary matter, we note that petitioner’s mail and
living arrangements, which have created and continue to create
difficulties in contacting him, and his repeated failures to
comply with deadlines, have impeded and delayed respondent’s
collection efforts and the efforts of the Court to resolve these
matters.
We note that petitioner has uttered contradictory testimony
and arguments and has failed to provide respondent and the Court
with reliable information and documents to resolve this matter.
Petitioner bears the risk of loss and the responsibility arising
from failure to prepare and file returns and to preserve and
locate his cost records and copies of prior returns for use in
substantiating items required to be reported on his returns for
the years in issue.
7
Petitioner’s mailing of the petition was a timely filing on
the last day of the 30-day period specified by secs. 6320(c) and
6330(d), as extended by Rule 25. Aug. 25 and 26, 2001, were a
Saturday and Sunday, respectively, and petitioner mailed the
petition on Monday, Aug. 27, 2001. See Guerrier v. Commissioner,
T.C. Memo. 2002-3.
- 15 -
Petitioner’s place of residence and employment status are
uncertain insofar as the record in this case is concerned because
he has given confusing, contradictory, and untrustworthy
testimony on these issues. Petitioner testified that he is a
resident of Nevada for State income tax purposes, although Nevada
has no income tax. See Nev. Rev. Stat. Ann. secs. 360-377A
(Michie 1999 & Supp. 2001). Perhaps he means he is a Nevada
resident for the purpose of avoiding State income taxes.
Petitioner’s testimony that he is a self-employed engineer
who travels away from home for up to 3 months at a time more than
once a year contradicts his claim that when he uses or has used
the post office box address as his mailing address, he checks his
mail twice a month. In Form 433-A, filed on November 11, 1998,
petitioner said he was a “volunteer” and “not employed.”
Petitioner has used the illness of his parents from cancer
in 1988 and thereafter as a continued excuse for failing to file
returns right up to the present, even though he also testified in
another connection that his parents died in 1990.
On more than one occasion, petitioner defined what
respondent had to do before petitioner would take action.
Petitioner then did nothing because respondent’s officials did
not exactly follow petitioner’s requirements as he defined and
sought to impose them. Petitioner has failed to file returns
with respect to more than 10 tax years, failed to timely appeal
- 16 -
the denial of his installment agreement request, failed, after
repeated extensions, to file his brief, and failed to file
certain motions that he claimed he was filing before submitting
his brief.
Petitioner repeatedly made legal arguments orally during the
trial, even though we instructed petitioner to present his legal
arguments in his brief. Although we could reject petitioner’s
contentions and declare him in default, and dismiss his case for
failure to file his brief, see Rules 123, 151; Stringer v.
Commissioner, 84 T.C. 693 (1985), affd. without published opinion
789 F.2d 917 (4th Cir. 1986); Horn v. Commissioner, T.C. Memo.
2002-207, we choose instead to address the merits of respondent’s
determination to file a lien on petitioner’s property, see Horn
v. Commissioner, supra; Comey v. Commissioner, T.C. Memo. 2001-
275.
Petitioner contests the filing of the NFTL. Petitioner
failed to file a timely request for hearing with respect to
respondent’s proposed levy. We therefore have no jurisdiction to
consider the levy. See Moorhous v. Commissioner, 116 T.C. 263,
269 (2001); Kennedy v. Commissioner, 116 T.C. 255, 261-262
(2001).8
8
Petitioner referred to respondent’s alleged levies that
occurred in January 1998 that were not part of the record. To
the extent that petitioner refers to respondent’s collection
activities before July 22, 1998, we have no jurisdiction to
(continued...)
- 17 -
We have jurisdiction to review respondent’s determination of
the validity of the Federal tax lien on petitioner’s property
under section 6320. See secs. 6211(a), 6213(a), 6214(a); Parker
v. Commissioner, 117 T.C. 63, 65 (2001); Van Es v. Commissioner,
115 T.C. 324, 327 (2000).
Where the validity of the underlying tax liability is
properly at issue, the Court will review the matter de novo.
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. Goza v.
Commissioner, 114 T.C. 176, 181-182 (2000). A taxpayer’s
underlying tax liability may be at issue if he did not receive
any statutory notice of deficiency for such tax liability or did
not otherwise have an opportunity to dispute such tax liability.
See secs. 6320(c), 6330(c)(2)(B).
Petitioner claims he did not file petitions with this Court
contesting the determinations in the three notices of deficiency
because he did not receive the notices of deficiency.
The notices of deficiency were properly mailed on December
12, 1996, to petitioner’s last known address, which, at the time,
8
(...continued)
review them. See Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746
(which created new sec. 6330 and provided for an effective date
of 180 days after July 22, 1998); see also Van Es v.
Commissioner, 115 T.C. 324, 327-328 (2000).
- 18 -
was the Elm Street address. There is no record evidence
petitioner notified respondent before December 12, 1996, that the
Elm Street address was no longer his mailing address. Respondent
performed a thorough investigation to determine petitioner’s
address by contacting the U.S. Postal Service and using the
numerous Forms 1099 petitioner received in 1996.
On January 8, 1997, the U.S. Postal Service returned to
respondent the notices of deficiency and the covering envelopes
stamped “unclaimed”. The envelopes displayed no indication that
petitioner was no longer using the Elm Street address or that
this address was invalid. In the absence of clear evidence to
the contrary, the presumptions of official regularity and
delivery justify the conclusion that respondent sent the
statutory notices, and the U.S. Postal Service properly attempted
to deliver the notices. See United States v. Zolla, 724 F.2d 808
(9th Cir. 1984); United States v. Ahrens, 530 F.2d 781 (8th Cir.
1976); Sego v. Commissioner, 114 T.C. 604, 611 (2000). The facts
and circumstances of this case, including petitioner’s failure to
claim mail sent by the Court and the difficulties in contacting
him, lead us to conclude that petitioner’s conduct constituted
deliberate refusal of delivery of the statutory notices. He
thereby forfeited his opportunity to contest the underlying
deficiencies in a proceeding in this Court under section 6330(d).
- 19 -
See Goza v. Commissioner, supra at 183; Sego v. Commissioner,
supra; Carey v. Commissioner, T.C. Memo. 2002-209.
Because the underlying tax liabilities are not properly at
issue, we review respondent’s determination for abuse of
discretion. See Goza v. Commissioner, supra; Sego v.
Commissioner, supra at 610; Hodgson v. Commissioner, T.C. Memo.
1998-70, affd. 18 Fed. Appx. 571 (9th Cir. 2001). We must decide
whether respondent exercised his discretion arbitrarily,
capriciously, or without sound basis in fact or law. See
Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Fargo v.
Commissioner, T.C. Memo. 2004-13.
Petitioner argues he is not liable for the deficiencies
assessed by respondent. Petitioner also argues respondent’s
Appeals Office abused its discretion in sustaining the filing of
the lien because: (1) Respondent did not comply with the notice
requirements of section 6320(a); (2) respondent failed to comply
with petitioner’s request to conduct the section 6320 hearing in
person rather than by telephone; and (3) respondent is precluded
from filing the NFTL before petitioner appeals the rejection of
his installment agreement request.
As explained below, we hold petitioner is liable for the
deficiencies. We hold respondent’s Appeals Office did not abuse
its discretion by upholding respondent’s filing of the lien.
- 20 -
Issue 1. Petitioner’s Liability for the Assessed
Deficiencies
Petitioner has stated that he wishes to contest the
underlying liabilities for his tax years at issue. Petitioner
argues that respondent’s determination of the amounts of the
assessed income tax liabilities is incorrect because petitioner
would have little or no capital gains tax liability if
respondent’s SFRs had used the actual cost bases, instead of
zero-cost bases, to determine his income from the sale of
securities, and if the SFRs had accounted for a capital loss
carryover from 1987.
Petitioner is liable for the assessed deficiencies because
the conditions have not been satisfied that would entitle him to
contest the deficiencies in this proceeding.
Petitioner was entitled at the hearing with the Appeals
officer to challenge the existence or amount of the underlying
tax liabilities for the periods in issue only if he did not
receive a statutory notice of deficiency or did not otherwise
have an opportunity to dispute the liabilities. See sec.
6330(c)(2)(B).
Petitioner forfeited his opportunity to contest the
underlying deficiencies in a proceeding in this Court under
section 6330(d) because of his deliberate refusal of delivery of
the statutory notices. See supra pp. 18-19.
- 21 -
In any event, petitioner was not ready at trial to prove
that the assessments overstated his tax liabilities. Taxpayers
bear the burden of proving their entitlement to deductions. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). The
Commissioner is required only to prepare the substitute for
return “from his own knowledge and from such information as he
can obtain through testimony or otherwise.” Sec. 6020(b); see
Andary-Stern v. Commissioner, T.C. Memo. 2002-212. Petitioner
did not offer into evidence any records, not even the 1987
return, that would tend to prove his contentions that he had cost
bases greater than zero for purposes of determining gains and
losses on the sale of his securities, or that he had a capital
loss carryover from 1987. See Poindexter v. Commissioner, 122
T.C. 280 (2004); Horn v. Commissioner, T.C. Memo. 2002-207; Smith
v. Commissioner, T.C. Memo. 2002-59. Respondent is not obligated
to accept any late-filed returns unless petitioner can
substantiate his claimed capital loss carryover or any other
losses. See sec. 6001; Rules 142(a), 149(b); Horn v.
Commissioner, supra; Smith v. Commissioner, supra; sec.
1.6001-1(a), (e), Income Tax Regs.
We do not accept petitioner’s excuse that he intends to file
returns for 1992 through 1994. Petitioner has procrastinated and
has failed to file the returns more than 1 year after finding his
1987 return in 2002. See, e.g., Montgomery v. Commissioner, 122
- 22 -
T.C. 1, 19 (2004) (Marvel, J., concurring) (“A taxpayer who
procrastinates and seeks to rely solely on his announced
intention to file an amended return as a defense to a proposed
levy or lien * * * proceeds at his peril as his undocumented
intention is not likely to be viewed as a credible challenge to
the underlying tax liability.”). So much more so with respect to
petitioner, who has never even filed original returns for the
years in issue.
Issue 2. Respondent’s Exercise of Discretion in Sustaining
the Lien
a. Overview of Lien Proceedings
The Federal Government obtains a lien against “all property
and rights to property, whether real or personal” of any person
liable for Federal taxes upon demand for payment and failure to
pay. See sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293
(2004). The lien arises automatically on the date of the
assessment and continues until the tax liability is satisfied or
the statute of limitations bars enforcement of the lien. Sec.
6322; Iannone v. Commissioner, supra. If the taxpayer fails to
pay, the IRS usually files an NFTL with the appropriate State
office in order to validate the lien against any purchaser,
holder of a security interest, mechanic’s lienor, or judgment
lien creditor. See sec. 6323(a); Lindsay v. Commissioner, T.C.
Memo. 2001-285.
- 23 -
The Commissioner must provide the taxpayer with written
notice of the filing of an NFTL not more than 5 business days
after filing and must advise the taxpayer of the right to a
hearing before the IRS Appeals Office. Sec. 6320(a)(1), (2) and
(3).
If the taxpayer requests a hearing, the IRS Appeals officer
conducting the hearing must verify that the requirements of any
applicable law or administrative procedure have been met. Secs.
6320(c), 6330(c)(1). The Appeals officer must also determine
whether any 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. Secs. 6320(c), 6330(c)(3).
The IRS may withdraw an NFTL if the taxpayer has entered
into an installment agreement to satisfy the liability for which
the lien was imposed (and the installment agreement does not
specify that the lien will not be withdrawn). Sec. 6323(j)(1).
b. Abuse of Discretion
(i) Section 6320(a) Notice Requirements
We reject petitioner’s argument that respondent should not
have sustained the filing of the Federal tax lien because
respondent failed to mail Letter 3172 and the accompanying NFTL
to petitioner’s last known address.
- 24 -
Notice of the lien filing may be given to the taxpayer in
person, left at the taxpayer’s dwelling, or sent by certified or
registered mail to the taxpayer’s last known address. Sec.
6320(a)(2).
On February 23, 2000, respondent timely mailed to
petitioner’s Strawberry Hill address, Letter 3172, with a copy of
the NFTL.
Petitioner sent a Form 12153 that was received by respondent
on March 15, 2000, within 30 days of respondent’s filing of the
NFTL and the mailing of the Letter 3172. Petitioner sent the
Form 12153 to appeal the February 14, 2000, “levy warning letter”
he claims was issued by Revenue Officer Angotta.
On December 8, 2000, respondent provided petitioner with a
section 6320 hearing to contest the filing of the NFTL. Because
the hearing had been timely requested within the prescribed 30-
day period, petitioner’s claims that respondent did not send
Letter 3172 to petitioner’s last known address and that
petitioner never received it are beside the point. Even though,
in the Form 12153, petitioner appealed an alleged “levy warning
letter”, Appeals Officer Hirsch’s letters sent to petitioner
before the section 6320 hearing clearly indicated that the
section 6320 hearing would deal with the NFTL.
- 25 -
(ii) Section 6320 Hearing in Person
Petitioner argued Appeals Officer Hirsch did not properly
conduct the section 6320 hearing in person.
Section 6320(c) requires that the section 6320 hearing be
conducted under the provisions of section 6330(c), (d), and (e).
The hearing under section 6330 need not be conducted face to
face. See sec. 301.6320-1(d)(2), Q&A-D6 and D7, Proced. & Admin.
Regs; see also Lunsford v. Commissioner, 117 T.C. 183 (2001);
Day v. Commissioner, T.C. Memo. 2004-30; Armstrong v.
Commissioner, T.C. Memo. 2002-224.
Respondent was not required to provide petitioner with a
face-to-face section 6320 hearing. There is no evidence in the
record petitioner requested such a hearing. Petitioner agreed
the telephone hearing constituted his section 6320 hearing and
did not object to the holding of the hearing by telephone.
On the basis of the entire record and applicable law, we
conclude that the Appeals officer properly conducted petitioner’s
section 6320 hearing under section 6320(c).
(iii) Appeal of Rejection of Installment Agreement
Petitioner argues that Revenue Officer Angotta prevented him
from filing an administrative appeal of the denial of his
installment agreement request, and that respondent’s
consideration of the appeal would have precluded respondent from
filing the NFTL or levying against his property.
- 26 -
Respondent would not have been required to withdraw the NFTL
even if petitioner had entered into an installment agreement to
satisfy the liability for which the lien was imposed. See sec.
6323(j)(1); sec. 301.6323(j)-1(c), Proced. & Admin. Regs. IRS
Publication 594, What You Should Know About the IRS Collection
Process, cited by petitioner, specifically states that the
Commissioner may file a tax lien even if an installment agreement
is in effect. IRS Publication 594 at 6; see, e.g., Beery v.
Commissioner, 122 T.C. 184, 189-190 (2004) (section 6015(e)(1)(B)
does not preclude the Commissioner from filing a Federal tax lien
against an individual making an election under section 6015).9
We hold respondent was not precluded from filing the NFTL against
petitioner’s property.
Conclusion
Respondent’s Appeals Office did not abuse its discretion in
upholding respondent’s filing of a Federal tax lien against
petitioner’s property to collect outstanding income tax
liabilities for petitioner’s 1992 through 1994 tax years. As
required by section 6330(c)(1), the Appeals officer verified that
the requirements of applicable laws and administrative procedures
9
In his petition and during trial, petitioner conflated the
lien and levy issues. We do not have jurisdiction to consider
any of petitioner’s arguments with respect to respondent’s
proposed levy including petitioner’s argument that his appeal of
the rejection of his installment agreement request would preclude
respondent’s proposed levy. See supra p. 16.
- 27 -
had been met. The Appeals officer also determined that the
filing of the tax lien balanced the need for efficient collection
of taxes with petitioner’s legitimate concerns that any
collection action be no more intrusive than necessary. Although
this case does not involve a jeopardy assessment under section
6861, respondent’s security interest in petitioner’s property
will be jeopardized if respondent’s security interest is
subordinated to those of other creditors, such as the party or
parties involved in the foreclosure litigation with respect to
petitioner’s condominium against which respondent filed the NFTL.
See sec. 6323(a); Lindsay v. Commissioner, T.C. Memo. 2001-285;
see also Iannone v. Commissioner, 122 T.C. at 293 (Federal tax
liens are not extinguished by personal discharge in bankruptcy).
Petitioner’s latest status report indicates petitioner is
working with a revenue officer to attempt to reach agreement with
respondent on his outstanding tax liabilities. If that is so, we
commend respondent for displaying extraordinary patience and
forbearance in attempting to continue to work with petitioner.
See, e.g., Montgomery v. Commissioner, 122 T.C. at 10 (the
substantive and procedural protections contained in sections 6320
and 6330 reflect congressional intent that the Commissioner
collect the correct amount of tax, and do so by observing all
applicable laws and administrative procedures).
In the meantime, we have sustained respondent’s lien;
- 28 -
respondent has complied with all requirements for its validity.
In any event, we do not intend to subject respondent’s ability to
collect petitioner’s tax liabilities to further jeopardy.
To reflect the foregoing,
Decision will be entered
for respondent.