T.C. Memo. 2004-209
UNITED STATES TAX COURT
ALBERT M. KUN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16979-02L. Filed September 20, 2004.
Albert M. Kun, pro se.
Rebecca S. Duewer and Paul R. Zamolo, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
MARVEL, Judge: Pursuant to section 6330(d),1 petitioner
seeks review of respondent’s determination to proceed with the
collection of petitioner’s 1995, 1996, 1997, 1998, and 1999
Federal income tax liabilities.
1
All section references are to the Internal Revenue Code in
effect at all relevant times.
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FINDINGS OF FACT
Some of the facts have been stipulated. We incorporate the
stipulated facts and the accompanying exhibits into our findings
by this reference. Petitioner resided in San Francisco,
California, when he filed the petition.
Petitioner timely filed tax returns for 1995 through 1999
but failed to pay the amounts shown as due on the returns. On
May 3, 2001, respondent sent to petitioner a Notice of Federal
Tax Lien Filing and Your Right to a Hearing Under IRC 6320 for
1995 through 1999. On June 4, 2001, petitioner mailed to
respondent Form 12153, Request for a Collection Due Process
Hearing, requesting a hearing with respect to all 5 taxable
years. Petitioner’s Form 12153 stated: “I believe this bill is
incorrect. These taxes were never assessed. I am requesting a
minimum of 60 days extension.”
On April 22, 2002, petitioner and petitioner’s
representative, Hector Vasquez, attended a hearing with Appeals
Officer Serena Wong. At the hearing, petitioner contended that
respondent had not assessed the income tax liabilities.
Petitioner also submitted an offer-in-compromise of $1,000 on the
basis of doubt as to collectibility. Petitioner’s offer-in-
compromise covered his income tax liabilities for 1985 through
2001, which then exceeded $180,000.
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In addition to Form 656, Offer in Compromise, petitioner
submitted the following completed forms at the hearing: (1) Form
433-A, Collection Information Statement for Wage Earners and
Self-Employed Individuals, and (2) Form 433-B, Collection
Information Statement for Businesses. On the Form 433-A,
petitioner indicated that he was an unmarried, self-employed
attorney and had total monthly income and expenses of $2,707 and
$3,302, respectively. On the Form 433-B, petitioner stated that
he had total monthly business income and expenses of $6,131 and
$3,424, respectively.
On October 11, 2002, the Appeals Office sent to petitioner a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination). In the
notice of determination, the Appeals Office determined the
following:
1. All legal and procedural requirements for filing the
notice of Federal tax lien had been met.
2. Petitioner’s income tax liabilities were timely
assessed, and the assessments were “properly based on established
law, policy and procedure.”
3. Petitioner’s offer-in-compromise was properly rejected,
because petitioner was noncompliant in the payment of both his
income tax liabilities and estimated tax payments, petitioner was
capable of paying more than the amount offered, no exceptional
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circumstances were present “such that collection of the full
liability will be detrimental to voluntary compliance”, and there
was no evidence that a compromise would encourage future
compliance and promote effective tax administration.
4. Petitioner declined to consider an installment
agreement.
5. The notice of Federal tax lien filing balanced the need
for efficient collection of taxes with the legitimate concern of
the taxpayer that the collection action be no more intrusive than
necessary.
On October 30, 2002, petitioner filed a timely petition
contesting respondent’s determination. Petitioner alleged that
“the Internal Revenue Service abused its discretion in making the
findings and conclusions it did and abused its discretion in
rejecting petitioner’s offer in compromise.”
OPINION
All property and rights to property of a taxpayer become
subject to a lien in favor of the United States on the date a tax
liability is assessed against the taxpayer if the taxpayer fails
to meet the Commissioner’s demand for payment of the tax
liability. Secs. 6321 and 6322. Until a notice of Federal tax
lien is filed, a lien is without validity and priority against
certain persons such as judgment lien creditors of the taxpayer.
Sec. 6323(a). After the Secretary files the notice of Federal
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tax lien, the Secretary must provide the taxpayer with written
notice of the filing, informing the taxpayer of the right to
request an administrative hearing on the matter. Sec.
6320(a)(1), (3)(B). Section 6320(c) requires that the
administrative hearing be conducted pursuant to section 6330(c),
(d), and (e).
At the hearing, a taxpayer may raise any relevant issue,
including appropriate spousal defenses, challenges to the
appropriateness of the collection action, and collection
alternatives, such as an offer-in-compromise. Sec.
6330(c)(2)(A). Additionally, at the hearing, a taxpayer may
contest the existence and amount of the underlying tax liability
if the taxpayer did not receive a notice of deficiency for the
tax in question or did not otherwise have an opportunity to
dispute the tax liability. Sec. 6330(c)(2)(B); see also Sego v.
Commissioner, 114 T.C. 604, 609 (2000).
Following the hearing, the Appeals Office is required to
issue a notice of determination regarding the disputed notice of
Federal tax lien. In so doing, the Appeals Office is required to
take into consideration the verification presented by the
Secretary, the issues raised by the taxpayer, and whether the
proposed collection action appropriately balances the need for
efficient collection of taxes with the taxpayer’s concerns
regarding the intrusiveness of the proposed collection action.
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Sec. 6330(c)(3). The taxpayer may petition the Tax Court or, in
limited cases, a Federal District Court for judicial review of
the Appeals Office’s determination. Sec. 6330(d).
If the taxpayer files a timely petition for judicial review,
the applicable standard of review depends on whether the
underlying tax liability is at issue. Where the underlying tax
liability is properly at issue, the Court reviews any
determination regarding the underlying tax liability de novo.
Sego v. Commissioner, supra at 610. The Court reviews other
administrative determinations regarding the notice of Federal tax
lien for abuse of discretion. Id.
In the present case, petitioner has not received a notice of
deficiency or otherwise had an opportunity to dispute his income
tax liabilities for 1995 through 1999. Consequently,
petitioner’s underlying tax liabilities are properly at issue,
and we review any challenge to the underlying tax liabilities de
novo. See sec. 6330(c)(2)(B); Montgomery v. Commissioner, 122
T.C. 1, 9 (2004).
A. Petitioner’s Challenge to the Underlying Tax Liabilities
In challenging the underlying tax liabilities, petitioner
solely contends that “The taxes in question were not due because
they were never assessed.” Petitioner does not allege any
specific irregularity in the assessment procedure.
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An Appeals officer may rely on a computer transcript or Form
4340, Certificate of Assessments, Payments, and Other Specified
Matters, to verify that a valid assessment was made. Nestor v.
Commissioner, 118 T.C. 162, 166 (2002); Schaper v. Commissioner,
T.C. Memo. 2002-203; Schroeder v. Commissioner, T.C. Memo. 2002-
190. After reviewing the computer transcripts of petitioner’s
account, Appeals Officer Wong concluded that “Assessments for all
years appear correct and based on established law, policy and
procedure.” The record contains no credible evidence to
contradict Appeals Officer Wong’s conclusion. Accordingly, we
conclude that respondent properly assessed petitioner’s income
tax liabilities.
B. Petitioner’s Challenge to Respondent’s Determination To
Proceed With the Collection Action
1. Copies of Form 4340
Petitioner asserts that, at the hearing, Appeals Officer
Wong should have made available to petitioner a copy of Form
4340, Certificate of Assessments, for each of the taxable years
at issue and should have discussed the Forms 4340 with him. We
disagree. Although section 6203 provides that “Upon request of
the taxpayer, the Secretary shall furnish the taxpayer a copy of
the record of the assessment”, section 6330(c)(1) does not
require that the Appeals officer give to the taxpayer a copy of
the record of assessment at or before the hearing. See Nestor v.
Commissioner, supra at 166-167. Even if petitioner had requested
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copies of the Forms 4340,2 Appeals Officer Wong’s failure to give
them to petitioner at the hearing is not an abuse of her
discretion. See id.
2. Petitioner’s Offer-in-Compromise
Petitioner further asserts that it was an abuse of
discretion for Appeals Officer Wong to reject his offer-in-
compromise. According to petitioner, Appeals Officer Wong (1)
failed to apply Internal Revenue Manual section “5.15.1.4.3" for
evaluating petitioner’s Forms 433-A and 433-B and (2) failed “to
make a finding of net income” for purposes of an installment
agreement.
In his filings with the Court, petitioner did not explain
his contention regarding the Internal Revenue Manual and offered
no evidence in support of his position that Appeals Officer Wong
did not properly evaluate his collection information. Upon
review of the record, it is clear that Appeals Officer Wong
carefully considered petitioner’s collection information and, on
the basis of that information, determined that petitioner’s
2
There is no evidence, and petitioner did not allege, that
he ever requested copies of the Forms 4340 from the Appeals
officer at or before the hearing.
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offer-in-compromise should be rejected for several reasons3 in
addition to petitioner’s ability to pay.
In arguing that the rejection of his offer-in-compromise was
an abuse of discretion, petitioner also contends that Appeals
Officer Wong failed to make a finding of net income for purposes
of an installment agreement. Petitioner has not directed us to,
and we are not aware of, any such requirement for purposes of
rejecting an offer-in-compromise. Moreover, when Appeals Officer
Wong presented to petitioner the opportunity to consider an
installment agreement, petitioner declined to do so. Appeals
Officer Wong’s rejection of petitioner’s offer-in-compromise was
not an abuse of discretion.
C. Conclusion
We have considered the remaining arguments of both parties
for results contrary to those discussed herein and, to the extent
not discussed above, conclude those arguments are irrelevant,
moot, or without merit.4 We shall sustain respondent’s
3
In addition to determining that the amount of petitioner’s
offer-in-compromise was inadequate, Appeals Officer Wong rejected
petitioner’s offer-in-compromise because petitioner had a 17-year
history of noncompliance with the Federal income tax laws; had
not paid his 2000, 2001, or 2002 Federal income tax liability;
and had not made required estimated tax payments as of the date
of his hearing. See Londono v. Commissioner, T.C. Memo. 2003-99
(taxpayer’s history of noncompliance was basis for rejecting
offer-in-compromise).
4
In his posttrial memorandum of law, petitioner argued that
he was denied due process when this Court granted respondent’s
(continued...)
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determination that the notice of Federal tax lien filing was an
appropriate enforcement action with respect to petitioner’s 1995,
1996, 1997, 1998, and 1999 income tax liabilities.
To reflect the foregoing,
Decision will be entered
for respondent.
4
(...continued)
two motions to quash subpoenas and denied petitioner’s motion for
a continuance, but petitioner did not file any motion for
reconsideration. We decline to reconsider our rulings on the
motions, which were explained in detail on the record before
trial.