Winans v. Comm'r

T.C. Memo. 2005-271

UNITED STATES TAX COURT

HOMER W. AND NANCY L. WINANS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

HOMER W. WINANS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 13984-04L, 14242-04L.1 Filed November 21, 2005.

Homer W. and Nancy L. Winans, pro se.

Monica J. Miller and Robert W. Dillard for respondent.

1
These cases were consolidated for trial, briefing, and
opinion. Petitioner at docket No. 14242-04L is solely Homer W.
Winans.
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MEMORANDUM FINDINGS OF FACT AND OPINION

COLVIN, Judge: Respondent sent Notices of Determination

Concerning Collection Action(s) Under Section 63202 (Lien) and/or

6330 (Levy) to petitioners in which respondent determined that it

was appropriate to file liens with respect to petitioners’ unpaid

income taxes for 1996-2001 and that respondent may proceed with

proposed levies for the years 1999-2001.

We sustain respondent’s determinations to proceed with

collection of petitioners’ income tax liabilities for 1996-2001.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

A. Petitioners

Petitioners lived in Palm Coast, Florida, when the petitions

were filed. During the years in issue through the time of trial,

Homer W. Winans (petitioner) worked as a consultant to hospitals

and petitioner Nancy L. Winans (Mrs. Winans) worked as a nurse.

On a date not stated in the record, petitioner filed with his

employer a Form W-4, Employee Withholding Allowance Certificate,

in which he claimed that he was exempt from Federal income tax

withholding.

2
Unless otherwise provided, section references are to the
Internal Revenue Code as amended and in effect for the years in
issue.
 - 3 -

In 2000, petitioner received wages of $57,123.30 from

KForce.com, Inc., in Tampa, Florida, and Mrs. Winans received

wages of $25,540.96 from Flagler Hospital in St. Augustine,

Florida. Petitioner received wages of $86,743, $80,645, $57,019,

and $66,314 during the years 2001, 2002, 2003, and 2004,

respectively. Mrs. Winans received annual wages of about $30,000

during 2001-2004.

B. Petitioners’ Income Tax Returns and Respondent’s Notices of
Deficiency

Petitioners filed Forms 1040, U.S. Individual Income Tax

Return, for 1996-2001 in which they entered zeros for income,

tax, and amount owed. Petitioners attached to their Forms 1040

written statements consisting solely of tax-protestor rhetoric,

including: (1) No section of the Internal Revenue Code makes

them liable for income tax or requires that income taxes be paid

on the basis of a return; (2) the Privacy Act Notice indicates

that petitioners are not required to file income tax returns; (3)

no statute allows respondent to change petitioners’ return; and

(4) the word “income” is not defined in the Internal Revenue Code

and only applies to corporate activity.

In a letter to petitioners dated January 16, 2002,

respondent stated that their return for 2000 was frivolous and

that they should seek advice from competent tax counsel.

Respondent told petitioners the legal requirements for filing a
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Federal income tax return and gave petitioners the opportunity to

submit a corrected return.

Respondent determined that petitioners had unreported wage

and self-employment income based on third-party information

returns submitted to respondent for each of the years 1996-2001.

Respondent later mailed notices of deficiency to petitioners for

1996-2001. Petitioners timely received the notices of

deficiency. They did not file a petition for redetermination

with the Tax Court because they asserted that the notices were

invalid.

C. Respondent’s Collection Notices and Petitioners’ Requests
for an Administrative Hearing

Respondent assessed the taxes and additions to tax

determined in the notices of deficiency for 1996-2001.

On September 23, 2000, respondent mailed to petitioner a

Final Notice of Intent to Levy and Notice Of Your Right to a

Hearing Under Section 6330 for 1996-1998. Although petitioner

contends that he submitted to respondent a Form 12153, Request

for Collection Due Process Hearing, challenging the levy notice,

the record does not include a copy of the request. In November

2003, respondent began to collect petitioners’ unpaid taxes for

1996-1998 by levying on petitioner’s wages.

In December 2003, petitioners filed with the Taxpayer

Advocate Service (TAS) a Form 911, Application for Taxpayer

Assistance Order, for 1996-2000. Petitioners also submitted to
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the TAS a Form 433-A, Collection Information Statement for Wage

Earners and Self-Employed Individuals. In January 2004,

respondent’s collection division complied with a TAS request to

reduce the amount that it was collecting from petitioner’s wages

to $500 per week. At the time of trial, respondent continued to

collect approximately $500 per week from petitioner’s wages.

Respondent also mailed to petitioners Notices of Federal Tax

Lien Filing and Notice of Your Right to a Hearing Under Section

6320 for 1996-2001 and Notices of Intent to Levy and Notice Of

Your Right to a Hearing Under Section 6330 for 1999-2001.

Petitioners timely filed with respondent’s Office of Appeals

(Appeals Office) a Form 12153, Request for Collection Due Process

Hearing, in response to each of the collection notices.

Petitioners attached to each Form 12153 written statements

containing only tax-protestor rhetoric.

D. Events Leading to Respondent’s Collection Determinations

By letter to petitioners dated March 8, 2004, the Appeals

Office generally explained the administrative process and sent

Forms 4340, Certificate of Assessments, Payments, and Other

Specified Matters, for the years 1996-2001. By letter to

petitioners dated May 24, 2004, respondent’s settlement officer

said that he had reviewed and rejected their claims, and that he

had verified that the assessments were proper by reviewing Forms

4340 for the years in issue. He also said that petitioners would

have a brief period of time to present an alternative to the
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collection actions in question. He invited petitioners to

request a date and time for a hearing.

Although petitioner informed the Appeals Office that he

would write to schedule a hearing, he did not do so. Respondent

offered petitioners several opportunities to propose collection

alternatives or to provide other information. Petitioners did

not do so.

E. Respondent’s Notice of Determination

On July 6, 2004, respondent’s Appeals Office sent to

petitioners a joint Notice of Determination Concerning Collection

Action(s) for 1999. In the notice, the Appeals Office determined

that the lien for 1999 was properly filed and that respondent may

proceed to collect petitioners’ unpaid tax for 1999 by levy. On

July 8, 2004, respondent’s Appeals Office sent to petitioner a

Notice of Determination Concerning Collection Action(s) for the

years 1996, 1997, 1998, 2000, and 2001. In the notice, the

Appeals Office determined that the liens for each of those years

were properly filed and that respondent may proceed to collect

petitioner’s unpaid taxes for 2000 and 2001 by levy. Petitioners

filed timely petitions challenging the notices described above.

F. Mortgage Foreclosure

On January 20, 2005, Countrywide Home Loans, Inc.

(Countrywide) filed a complaint against petitioners in the

Circuit Court of the 7th Judicial Circuit for Flagler County,
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Florida, to foreclose a mortgage. Petitioners filed an answer

and counterclaim to Countrywide’s complaint.

OPINION

The issue for decision is whether respondent correctly

determined to proceed with collection of petitioners’ tax for

1996-2001.

A. Petitioners’ Contentions

Petitioners contend that respondent’s determinations to

proceed with collection should be overturned on the grounds that:

(1) They never received valid notices of deficiency; (2) no

section of the Internal Revenue Code makes them liable for

Federal income taxes; (3) respondent failed to give them a notice

and demand for payment of the taxes in question; (4) respondent

failed to give them verification that all applicable laws and

administrative procedures were followed in this matter; and (5)

collection of the taxes in question would impose an undue

hardship on them.

B. Discussion

1. Whether Petitioners Received Valid Notices of
Deficiency

Although petitioners stipulated that they received notices

of deficiency for 1996-2001, they contend that the notices were

invalid. Petitioners contend that they were improperly precluded

from challenging their underlying tax liability for tax years

1996-2001. They base this contention on their claim that the

notices of deficiency they received were not valid because the
 - 8 -

Secretary did not prepare or issue the notices of deficiency and

because petitioners did not receive a copy of the order

delegating authority from the Secretary to the Director of the

Service Center who prepared and issued the notices.

Petitioners’ contention lacks merit. The Secretary or his

or her delegate may issue notices of deficiency. Secs. 6212(a),

7701(a)(11)(B) and (12)(A)(i); see Nestor v. Commissioner, 118

T.C. 162, 165-166 (2002). The Secretary’s authority to issue

notices of deficiency was delegated to the District Director and

also to the Director of the Service Center who issued the notices

of deficiency in this case. See Nestor v. Commissioner, supra;

Stamos v. Commissioner, 95 T.C. 624, 630-631 (1990), affd.

without published opinion 956 F.2d 1168 (9th Cir. 1992); Kellogg

v. Commissioner, 88 T.C. 167, 172 (1987); Perlmutter v.

Commissioner, 44 T.C. 382, 385 (1965), affd. 373 F.2d 45 (10th

Cir. 1967); secs. 301.6212-1(a), 301.7701-9(b), Proced. & Admin.

Regs. A taxpayer may contest the existence or amount of his or

her underlying tax liability at a section 6330(b) hearing only if

the taxpayer did not receive a notice of deficiency for or

otherwise have an opportunity to dispute that tax liability.

Sec. 6330(c)(2)(B); Goza v. Commissioner, 114 T.C. 176, 182

(2000). Section 6330(c)(2)(B) bars petitioners from contesting

the existence or amount of their tax liabilities for 1996-2001 in
 - 9 -

this proceeding because they received notices of deficiency for

those years.3

2. Whether Respondent Is Required To Identify for
Petitioners Internal Revenue Code Sections Which Make
Them Liable for Federal Income Tax

Petitioners contend that respondent is required to tell them

which Internal Revenue Code sections make them liable for Federal

income tax. We disagree. Respondent is not required to identify

the Code sections which establish petitioners’ liability for tax,

additions to tax, or penalties. See Nestor v. Commissioner,

supra at 167.

3. Whether Respondent Issued a Valid Notice and Demand for
Payment for Each Year In Issue

Petitioners contend that respondent did not issue a valid

notice and demand for payment for each year in issue. We

disagree.

Section 6330(c)(1) does not require the Commissioner to use

any particular document to meet the notice and demand

requirement. Kaye v. Commissioner, T.C. Memo. 2003-74; Wagner v.

Commissioner, T.C. Memo. 2002-180; see also Roberts v.

Commissioner, 118 T.C. 365, 371 (2002). The form on which a

notice of assessment and demand for payment is made is irrelevant

3
Petitioners may not contend that they did not receive
self-employment income because they may not dispute the
underlying tax liability. Moreover, petitioners’ assertion that
no provision of the Internal Revenue Code makes them liable for
Federal income taxes is frivolous.
 - 10 -

as long as it gives the taxpayer the information required under

section 6303. Hughes v. United States, 953 F.2d 531, 536 (9th

Cir. 1992).

Respondent is required to show that the notices and demand

were sent to petitioners’ last known address, not that

petitioners received them. United States v. Chila, 871 F.2d

1015, 1019 (11th Cir. 1989); Pursifull v. United States, 849

F.Supp. 597, 601 (S.D. Ohio 1993), affd. 19 F.3d 19 (6th Cir.

1994); Kaye v. Commissioner, supra. Respondent may rely on Form

4340 to show that notice and demand was mailed to petitioners.

Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993); United

States v. Chila, supra.

The record includes a notice and demand for each year in

issue. The Forms 4340 show that respondent sent to petitioners

notices of balance due for the tax years involved, and

petitioners do not deny receiving these notices. A notice of

balance due constitutes a notice and demand for payment under

section 6303(a). Craig v. Commissioner, 119 T.C. 252, 262-263

(2002).

4. Whether Respondent Is Required To Provide to
Petitioners Documents From the Secretary Verifying That
All Legal and Procedural Requirements Were Met

Petitioners contend that respondent is required to give them

documents from the Secretary verifying that all legal and

procedural requirements were met. We disagree.
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Internal revenue laws and regulations do not require the

Appeals officer to give the taxpayer a copy of the delegation of

authority from the Secretary to the person (other than the

Secretary) who signed the verification required under section

6330(c)(1). Nestor v. Commissioner, supra at 166-167.

Similarly, the Appeals officer is not required to give the

taxpayer a copy of the verification that the requirements of any

applicable law or administrative procedure have been met. Id. at

166; sec. 6330(c)(1). Sections 301.6320-1(e)(1) and 301.6330-

1(e)(1), Proced. & Admin. Regs., require that the Appeals officer

obtain verification before issuing the determination, not that he

or she provide it to the taxpayer.

Before the trial in this case, respondent gave petitioners

copies of Forms 4340 relating to their 1996-2001 tax years which

showed that the amounts at issue were properly assessed.

Generally, courts have held that Form 4340 provides at least

presumptive evidence that a tax has been validly assessed under

section 6203. See e.g., Huff v. United States, 10 F.3d 1440,

1445 (9th Cir. 1993); Hefti v. Internal Revenue Service, 8 F.3d

1169, 1172 (7th Cir. 1993); Geiselman v. United States, 961 F.2d

1, 5-6 (1st Cir. 1992); Rocovich v. United States, 933 F.2d 991,

994 (Fed. Cir. 1991); United States v. Chila, supra at 1017-1018;

United States v. Miller, 318 F.2d 637, 638-639 (7th Cir. 1963);

Davis v. Commissioner, 115 T.C. 35, 40-41 (2000).
 - 12 -

Respondent properly determined that the requirements of

applicable law or administrative procedures were met.

Petitioners did not show that there was any irregularity in the

assessment procedure that would raise a question about the

validity of the assessments.

5. Hardship

At trial, petitioners contended that respondent’s collection

activities will impose an undue hardship on them and the matter

should be remanded to respondent’s Appeals Office for further

consideration. We disagree.

Generally, this Court does not consider arguments, issues,

or other matter known to the taxpayer but not raised during the

collection hearing or otherwise brought to the attention of the

Appeals Office. Magana v. Commissioner, 118 T.C. 488, 493 (2002)

(taxpayer not permitted to raise in the judicial proceeding

illness and hardship as defenses to the Commissioner’s collection

action where those matters were known to but not raised by the

taxpayer during the administrative proceeding);4 see also sec.

301.6320-1(f)(2), Q & A-F5, Proced. & Admin. Regs. Like the

taxpayers in Magana, petitioners knew about their hardship claim

4
Other cases so holding include Zapara v. Commissioner,
124 T.C. 223, 243 (2005); Kendricks v. Commissioner, 124 T.C. 69,
79 (2005); Keene v. Commissioner, 121 T.C. 8, 18 (2003);
Washington v. Commissioner, 120 T.C. 114, 123-124 (2003); Miller
v. Commissioner, 115 T.C. 582, 589 n.2 (2000), affd. 21 Fed.
Appx. 160 (4th Cir. 2001).
 - 13 -

during the administrative process and could have but did not

raise it.

The settlement officer assigned to petitioners’ case offered

petitioners several opportunities to propose collection

alternatives or to provide other pertinent information. However,

petitioners responded with nothing but frivolous arguments.

Petitioners did not make an offer in compromise, offer to pay

their delinquent taxes under an installment plan, or tell the

settlement officer that petitioner had requested assistance on

hardship grounds from the Taxpayer Advocate Service. Petitioners

did not give the Appeals Office the opportunity to conduct an

independent review of their financial circumstances. Other than

submitting a copy of the Countrywide complaint, petitioners

offered the Court no support for their hardship claim.

Petitioners are in their late 50s and have both been

gainfully employed in recent years. There is no indication (a)

how petitioners used the funds that should have been withheld

from petitioner’s wages, (b) that petitioners have dependents or

unusual financial demands, or (c) that the proposed collection

actions would cause petitioners to be unable to pay their

reasonable basic living expenses. See sec. 301.6343-1, Proced. &

Admin. Regs.
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7. Conclusion

Petitioners had the opportunity to present information

relating to financial hardship at the administrative and judicial

stages of this cases, but preferred to make frivolous arguments.

We sustain respondent’s determinations.

To reflect the foregoing,

Decisions will be

entered for respondent.