T.C. Summary Opinion 2005-162
UNITED STATES TAX COURT
DANIEL CHARLES McDERMOTT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19830-04S. Filed November 8, 2005.
Daniel Charles McDermott, pro se.
Michael W. Lloyd, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code as in
effect at the time the petition was filed. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code of 1986, as amended. 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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The petition in this case was filed in response to a Notice
of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330. Pursuant to sections 6320(c) and 6330(d),
petitioner seeks review of respondent's filing of a Notice of
Federal Tax Lien for his 1991, 1992, 1993, and 1994 tax
liabilities. The issue for decision is whether respondent abused
his discretion by filing the notice of Federal tax lien as a
method of collecting petitioner’s tax liabilities.
Background
The stipulated facts and exhibits received into evidence are
incorporated herein by reference. At the time the petition in
this case was filed, petitioner resided in Colorado.
Petitioner failed to file tax returns for any of the years
1991 through 1994. Petitioner’s Federal income tax returns were
examined by respondent beginning in February of 1995. As part of
the audit, petitioner appeared at the office of the Internal
Revenue Service (IRS). Respondent proposed a determination that
petitioner, despite earning substantial income, failed to file
Federal income tax returns for all the years under examination.
When asked, petitioner admitted to not filing tax returns but
objected to the proposed deficiency, asserting that respondent’s
proposed action was unconstitutional.
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Petitioner advised the examining agent of his then current
address, stating that he was “staying with friends”. A statutory
notice of deficiency was mailed by certified mail and a duplicate
notice was sent by regular mail to petitioner.1 The duplicate
notice was returned with the envelope marked “insufficient
address”. The certified mailing of the notice of deficiency was
not returned.
Discussion
Section 6320 entitles a taxpayer to notice of his right to
request a hearing with the IRS Office of Appeals after a notice
of lien is filed by the Commissioner in furtherance of the
collection of unpaid Federal taxes. The taxpayer requesting the
hearing may raise any relevant issue with regard to the
Commissioner’s intended collection activities, including spousal
defenses, challenges to the appropriateness of the Commissioner’s
intended collection action, and alternative means of collection.
Secs. 6320(b) and (c), 6330(c); see Sego v. Commissioner, 114
T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 180
(2000).
The taxpayer may raise challenges “to the existence or
amount of the underlying tax liability”, however, only if he “did
not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
1
The record does not reveal why or to what address the
duplicate notice of deficiency was sent. But respondent
represents in his trial memorandum that the duplicate notice was
sent to an alternate address thought to be an additional address
of petitioner.
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such tax liability.” Sec. 6330(c)(2)(B).
Where the validity of the tax liability is not properly part
of the appeal, the taxpayer may challenge the determination of
the Appeals officer for abuse of discretion. Sego v.
Commissioner, supra at 609-610; Goza v. Commissioner, supra at
181-182.
Questions about the appropriateness of the collection action
include whether it is proper for the Commissioner to proceed with
the collection action as determined in the notice of
determination, and whether the type and/or method of collection
chosen by the Commissioner is appropriate. See, e.g., Swanson v.
Commissioner, 121 T.C. 111, 119 (2003) (challenge to
appropriateness of collection reviewed for abuse of discretion).
In order for petitioner to prevail under the abuse of
discretion standard, it is not enough for the Court to conclude
that the Court would not have authorized collection; the Court
must conclude that, in authorizing collection, the Appeals
officer has exercised discretion arbitrarily, capriciously, or
without sound basis in fact. Estate of Jung v. Commissioner, 101
T.C. 412, 449 (1993); accord Mailman v. Commissioner, 91 T.C.
1079, 1084 (1988).
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The sum total of petitioner’s evidence is his testimony at
trial that “Well, my case is simply that I don’t owe the IRS
money.”
The Court finds petitioner’s “evidence” to be insufficient
to cast doubt on either the validity and amount of the underlying
tax liability, or the appropriateness of the collection action.
The Court finds that respondent did not abuse his discretion
in issuing his determination in this case.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.