T.C. Summary Opinion 2004-158
UNITED STATES TAX COURT
FAY B. EDWARDS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11097-03S. Filed November 15, 2004.
Fay Bergfeld Edwards, pro se.
Adam L. Flick, for respondent.
WOLFE, Special Trial Judge: This case was heard pursuant to
the provisions of sections 6330(d) and 7463 of the Internal
Revenue Code in effect when the petition was filed. Unless
otherwise indicated, all subsequent section references are to the
Internal Revenue Code in effect at relevant times. The decision
to be entered is not reviewable by any other court, and this
opinion should not be cited as authority.
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Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated by this reference. When she filed her petition,
petitioner was a resident of Dallas, Texas.
Background
Respondent seeks to collect petitioner’s unpaid tax
liabilities from taxable years 1996, 1997, 1998, 2000, and 2001,
as follows:
Year Deficiency Additions to Tax Accrued Interest
1996 $2,633.27 $526.86 $969.31
1997 3,751.69 786.38 1,086.20
1998 2,122.82 525.00 832.77
2000 230.90 43.78 34.38
2001 1,702.39 336.40 151.95
The amounts, set forth in the chart above, are from respondent’s
MRFTA-Y transcript of account, dated April 2004, and reflect
various adjustments, so they do not correspond exactly to
deficiencies initially determined. Interest and additions to tax
are accrued through April 2004.
For taxable year 1996, petitioner received a statutory
notice of deficiency and timely filed a petition with this Court.
She signed a stipulation for decision on June 14, 1999, and
agreed to a deficiency of $2,794. This Court’s decision with
respect to her 1996 taxes was entered on June 14, 1999.
For taxable year 1997, respondent issued to petitioner a
statutory notice of deficiency in which respondent determined a
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deficiency of $3,137 for the year. Petitioner attempted to
challenge respondent’s determination, but her petition was not
timely filed, and her case was dismissed by this Court.
For taxable year 1998, petitioner’s tax liability resulted
from a computational error she made on her return. For 2000 and
2001, petitioner failed to pay the taxes she had properly
reported on her returns. Respondent did not issue to petitioner
statutory notices of deficiency for 1998, 2000, or 2001.
Respondent filed a Notice of Federal Tax Lien (NFTL) with
respect to petitioner’s tax liabilities for 1996, 1997, 1998,
2000, and 2001. Petitioner filed requests for an administrative
hearing with respect to the filing of a Federal tax lien under
section 6320.
In addition, respondent issued to petitioner a Final Notice-
-Notice of Intent to Levy and Notice of Your Right to a Hearing
with respect to her 2000 and 2001 tax liabilities. On September
19, 2002, pursuant to section 6330 petitioner filed a request for
a hearing with respect to respondent’s proposed levy actions for
2000 and 2001.
On May 21, 2003, petitioner met with an officer from
respondent’s Appeals Office to discuss the filing of the Federal
tax lien and the proposed levy actions.
With respect to the NFTL, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
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and/or 6330 on June 19, 2003 (notice of determination).
Respondent stated, in part:
For years 1996 and 1997, statutory notices of
deficiency were mailed to taxpayer at the appropriate
address. Accordingly, the underlying liability cannot
be considered under CDP proceedings for these years.
For tax years 1998, 2000, and 2001 the taxpayer did not
present evidence to substantiate her position that the
underlying liability was not appropriate as assessed.
The filing of the Notice of Federal Tax Lien is
appropriate. The liability is valid and outstanding.
With respect to the proposed levy action for 2000 and 2001,
respondent issued a separate notice of determination on June 19,
2003. Respondent sustained the proposed levy, stating in part:
Taxpayer did not present evidence to substantiate her
position that the underlying liability was not
appropriate as assessed. The liability is valid and
outstanding.
Taxpayer did not propose any collection alternatives.
Upon receiving the notices of determination, petitioner
filed a petition with this Court. In addition, petitioner
contacted respondent in an effort to arrange for a collection
alternative. On June 26, 2003, petitioner sent respondent a
package of documents purporting to be an offer in compromise
(OIC). Petitioner did not provide specific information regarding
her financial situation. She explained generally that she had
limited resources and no relatives to help her, that she had lost
her employment, that she lived very modestly, and that she
anticipated incurring significant medical and long-term care
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expenses in the future. Petitioner requested that respondent
dismiss or forgive her unpaid tax liability.
By letter dated April 6, 2004, respondent contacted
petitioner to discuss the stipulation of facts for petitioner’s
trial, scheduled for April 26, 2004. Respondent wrote: “I have
also not ruled out the possibility of an offer in compromise, but
I will need more information. I have enclosed an IRS form 433-
A.1 I would like you to fill this out as soon as possible.”
On April 8, 2004, petitioner faxed to respondent a completed
Form 433-A. On the Form 433-A, petitioner listed personal assets
including a bank account with a balance of $134,198, other
security investments including “United States HHH Bonds”, and a
home that she owns clear of any encumbrances.
Discussion
Section 6321 imposes a lien in favor of the United States
upon all property and rights to property of a taxpayer who fails
to pay any tax liability after demand for payment. The lien
arises when the assessment is made, but is not valid against any
purchaser, holder of a security interest, mechanic’s lienor, or
1
A Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, is used by the Internal
Revenue Service to access a taxpayer’s financial situation for
purposes of collecting unpaid tax liabilities. In completing
this form the taxpayer is required to provide information about
his or her financial assets and monthly income and expenses.
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judgment lien creditor until the Secretary files a notice of lien
with the appropriate public officials. Secs. 6322 and 6323.
Section 6320(a)(1) provides that the Secretary must notify
the taxpayer in writing of the filing of a notice of lien. The
notice required by section 6320(a)(1) must be sent not more than
5 business days after the notice of tax lien is filed and must
advise the taxpayer of his or her right to request an
administrative hearing. Sec. 6320(a)(2) and (3). The hearing
shall generally be conducted in accordance with the procedures
described in section 6330(c), (d), and (e). Sec. 6320(c).
Section 6330 entitles a taxpayer to notice and an
opportunity for a hearing before certain levy actions are taken
by the Commissioner in the process of collecting unpaid Federal
taxes. Upon request, a taxpayer is entitled to a “fair hearing”
conducted by an impartial officer from the Office of Appeals.
Sec. 6330(b)(1), (3). At the hearing, the officer is required
to: (1) Obtain verification from the Secretary that the
requirements of applicable law and administrative procedure have
been met; (2) consider any relevant issue raised by the taxpayer
related to the unpaid tax or proposed levy, including appropriate
spousal defenses, challenges to the appropriateness of collection
actions, and offers of collection alternatives; and (3) consider
whether any proposed collection action balances the need for the
efficient collection of taxes with the legitimate concern of the
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taxpayer that any collection action be no more intrusive than
necessary. Sec. 6330(c). If a taxpayer received a statutory
notice of deficiency for the underlying tax liability or
otherwise had an opportunity to dispute the underlying tax
liability, he or she is precluded from challenging the existence
or amount of the underlying tax liability. Sec. 6330(c)(2)(B).
To the extent possible, a section 6320 hearing will be held
in conjunction with a section 6330 hearing. Sec. 301.6320-
1(d)(1), Q&A-D3, Proced. & Admin. Regs.
This Court has jurisdiction to review the Commissioner’s
administrative determination under section 6330(d). If the
underlying tax liability is properly at issue, we review that
issue de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000);
Goza v. Commissioner, 114 T.C. 176, 181 (2000). If the validity
of the underlying tax liability is not at issue, we review the
determination for abuse of discretion. Sego v. Commissioner,
supra at 610. An abuse of discretion occurs when an Appeals
officer takes action that is arbitrary, capricious, or without
sound basis in fact or law. See Woodral v. Commissioner, 112
T.C. 19, 23 (1999).
At trial, petitioner failed to provide any evidence that
any of the underlying liabilities was incorrect. She did not
dispute the amount of any of those liabilities. Accordingly, we
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sustain the underlying tax liabilities for 1996, 1997, 1998,
2000, and 2001.
Petitioner submitted her financial information only a few
weeks prior to trial.2 Petitioner’s total tax liability,
including penalties and interest accrued as of April 2004, is
approximately $15,734.10. In her financial information she
disclosed assets significantly greater than the total tax
liability, including a bank account in excess of $100,000 and a
home that she owns free of encumbrances. Her financial
information indicates that petitioner is able to pay her tax
liability in full.
We are not persuaded by petitioner’s arguments that she
needs money to make expensive repairs to her home or that she
anticipates having significant medical and long-term health care
costs in the future. We are sympathetic to petitioner because of
her present and anticipated future problems. She has explained
that her house is 100 years old, needs a new roof, and does not
even have central heating. But she does not dispute that the
house has some value, and there is no evidence as to the amount
of the value. Petitioner was almost 82 years of age at the time
of the hearing, and we have no reason to doubt that like many
2
It appears that settlement negotiations regarding a
collection alternative between the parties failed. Petitioner
stated: “I notice here I have in my notes that unfortunately the
information [that I provided] confirmed that * * * I am not
eligible to compromise the amount of taxes that I owe.”
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people her age, she faces the possibility of medical expenses in
the future. Nevertheless, the record shows that petitioner has
sufficient assets to pay the amounts respondent seeks to collect,
even though petitioner might prefer to retain those assets for
other purposes.
Accordingly, we sustain respondent’s determination not to
release the notice of Federal tax lien due to tax liabilities
from 1996, 1997, 1998, 2000, and 2001. We also sustain
respondent’s determination to proceed with levy action for 2000
and 2001. The Appeals officer clearly did not abuse her
discretion, and the amounts of the liabilities for all years are
undisputed.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.