T.C. Memo. 2007-235
UNITED STATES TAX COURT
MICHAEL C. HOLLEN & JOAN L. HOLLEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21915-05L. Filed August 16, 2007.
Michael C. Hollen and Joan L. Hollen, pro sese.
Lisa K. Hunter, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: This case is before the Court on respon-
dent’s motion for summary judgment (respondent’s motion). We
shall grant respondent’s motion.
Background
The record establishes and/or the parties do not dispute the
following.
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Petitioners resided in Waterloo, Iowa, at the time they
filed the petition in this case.
Petitioners jointly filed a Federal income tax (tax) return
for their taxable year 1988.
On December 18, 1996, respondent issued to petitioners a
notice of deficiency (notice) with respect to their taxable year
1988. Petitioners filed a petition with the Court with respect
to that notice and commenced the case at docket No. 5586-97. (We
shall refer to the case at docket No. 5586-97 as petitioners’ Tax
Court case.)
On January 9, 2001, the Court entered a decision in peti-
tioners’ Tax Court case (Tax Court decision). That decision
provided in pertinent part:
Pursuant to the opinion of the Court filed March
24, 2000, and incorporating herein the facts recited in
respondent’s computation as the findings of the Court,
it is
ORDERED AND DECIDED: That there is a deficiency in
income tax due from petitioners for the taxable year
1988 in the amount of $55,550;
That there is an addition to tax due from peti-
tioners for the taxable year 1988, under the provisions
of I.R.C. section 6653(a), in the amount of $2,777.50;
and
That there is an addition to tax due from peti-
tioners for the taxable year 1988, under the provisions
of I.R.C. section 6661, in the amount of $13,887.50.
On a date not disclosed by the record, petitioners filed a
notice of appeal with the United States Court of Appeals for the
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Eighth Circuit (Court of Appeals for the Eighth Circuit) with
respect to the Tax Court decision. On January 16, 2002, that
Court affirmed the Tax Court decision. Hollen v. Commissioner,
25 Fed. Appx. 484 (8th Cir. 2002).
On June 5, 2001, respondent assessed tax of $55,550, addi-
tions to tax under sections 6653(a)1 and 6661 of $67,978.11 and
$13,887.50, respectively, and interest as provided by law for
petitioners’ taxable year 1988. On February 25, 2002, respondent
assessed additional interest as provided by law. (We shall refer
to any unpaid assessed amounts with respect to petitioners’
taxable year 1988, as well as interest as provided by law accrued
after February 25, 2002, as petitioners’ unpaid 1988 liability.)
Respondent issued to petitioners the notice and demand for
payment required by section 6303(a) with respect to petitioners’
unpaid 1988 liability.
On December 15, 2004, respondent issued to petitioners a
notice of intent to levy and notice of your right to a hearing
(notice of intent to levy) with respect to their taxable year
1988.
On December 28, 2004, respondent filed a notice of Federal
tax lien (tax lien filing) with respect to petitioners for their
taxable year 1988.
1
All section references are to the Internal Revenue Code in
effect at all relevant times. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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On December 29, 2004, respondent issued to petitioners a
notice of Federal tax lien filing and your right to a hearing
(notice of tax lien) with respect to their taxable year 1988.
On January 5, 2005, in response to the notice of intent to
levy, petitioners mailed to respondent Form 12153, Request for a
Collection Due Process Hearing (Form 12153), and requested a
hearing with respondent’s Appeals Office (Appeals Office).
On January 18, 2005, in response to the notice of tax lien,
petitioners mailed to respondent Form 12153 and requested a
hearing with the Appeals Office.
In Forms 12153 that petitioners submitted with respect to
the notice of intent to levy and the notice of tax lien, respec-
tively, petitioners stated:
Income from a partnership was reported on the 1988 Form
1120 filed by Michael C. Hollen, D.D.S., P.C. That
same income is alleged by the I.R.S. to be reported by
Dr. and Mrs. Hollen. That constitutes double taxation.
That issue was addressed by the Supreme Court in U.S.
v. Supple-Biddle Hardware Co., 265 U.S. 189, “Such a
duplication, even in an exigent war tax measure is to
be avoided.” [Reproduced literally.]
On May 6, 2005, a settlement officer with the Appeals Office
(settlement officer) held a telephonic conference (May 6, 2005
conference) with petitioner Michael C. Hollen (Mr. Hollen) with
respect to the notice of intent to levy and the notice of tax
lien. During that conference, Mr. Hollen raised the following
five issues with respect to petitioners’ taxable year 1988:
(1) The correctness of the underlying tax liability, (2) the
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liability of petitioner Joan L. Hollen (Ms. Hollen) for the tax,
(3) the propriety of filing a tax lien against Ms. Hollen,
(4) the timing of the tax lien filing, and (5) the possibility
that a “slander of title action” might be pursued against the
Internal Revenue Service (IRS) under Iowa law because the tax
lien filing was filed against Ms. Hollen.
During the May 6, 2005 conference, the settlement officer
addressed each of the issues that Mr. Hollen raised during that
conference. With respect to Mr. Hollen’s claim that Ms. Hollen
is not liable for the tax, the settlement officer advised Mr.
Hollen that if Ms. Hollen believed that she was not liable for
petitioners’ unpaid 1988 liability, she should file Form 8857,
Request for Innocent Spouse Relief (And Separation of Liability
and Equitable Relief) (Form 8857).
On May 16, 2005, the settlement officer received Form 8857
from Ms. Hollen (Ms. Hollen’s Form 8857). The settlement officer
forwarded Ms. Hollen’s Form 8857 to the IRS innocent spouse unit.
On October 18, 2005, the IRS innocent spouse unit notified the
settlement officer that it had concluded that Ms. Hollen was not
entitled to relief under section 6015. Thereafter, the settle-
ment officer began to prepare her determination with respect to
the notice of intent to levy and the notice of tax lien.
On October 20, 2005, the settlement officer called (October
20, 2005 call) Ms. Hollen and informed her that Ms. Hollen’s
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request for relief under section 6015 would be denied, that the
Appeals Office would issue to Ms. Hollen a notice of determina-
tion denying that request, and that Ms. Hollen would have the
opportunity to petition the Tax Court for review of that determi-
nation. During the October 20, 2005 call, the settlement officer
asked to speak with Mr. Hollen, but Ms. Hollen indicated that he
was at work. During that call, the settlement officer also
indicated that Mr. Hollen and Ms. Hollen would each receive a
notice of determination with respect to the notice of intent to
levy and the notice of tax lien.
On October 28, 2005, the Appeals Office issued to Ms. Hollen
a “Notice of Determination Concerning Your Request for Relief
from Joint and Several Liability under Section 6015” (notice of
determination under section 6015) with respect to Ms. Hollen’s
Form 8857 in which the Appeals Office denied Ms. Hollen’s request
for relief under section 6015. On October 28, 2005, the Appeals
Office sent a letter to Mr. Hollen notifying him that it had made
a determination to deny that request.
On October 28, 2005, the Appeals Office issued to each
petitioner a notice of determination concerning collection
action(s) under section 6320 and/or 6330 (notice of determination
under sections 6320 and 6330) with respect to petitioners’
taxable year 1988. Those notices were identical and stated in
pertinent part:
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Summary of Determination
The Notice of Intent to Levy and the Notice of Federal
Tax Lien were issued properly.
An attachment to the notice of determination under sections 6320
and 6330 issued to each petitioner stated in pertinent part:
SUMMARY AND RECOMMENDATION
The issuance of the Notice of Intent to Levy was appro-
priate. The filing of the Notice of Federal Tax Lien
was also appropriate.
BRIEF BACKGROUND
The Notice of Intent to Levy (“Letter 1058”) was issued
12/15/2004. Internal Revenue Code 6330 provides for a
Collection Due Process hearing for requests made within
30 days of the issuance of the Notice of Intent to
Levy. Your request for a hearing was received on
1/5/2005 and is considered timely.
A Notice of Federal Tax Lien Filing (“NTFL”) and Your
Right to a Hearing under IRC 6320 was mailed to you by
certified mail on 12/29/2004. This letter notified you
that you had until 2/4/2005 to make a timely request
for a hearing. Your request for a hearing was received
on 1/18/2005 and is considered timely.
You had the opportunity to raise any relevant issues
relating to the unpaid tax, the Letter 1058 and the
NFTL at a Collection Due Process hearing. Appeals
Settlement Officer * * * conducted your requested
hearing on 5/6/2005, via telephone. You were offered
an opportunity to meet in person. * * * [The settle-
ment officer] had no prior involvement with the tax
liability at issue.
Basis for the Tax Liability
The liability is based upon a tax court decision.
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DISCUSSION AND ANALYSIS
Matters considered pursuant to IRC § 6320
Verification of Legal and Procedural Requirements
Prior to filing a NFTL, IRS must issue a notice and
demand for tax for each liability to be listed on the
notice. If the tax is not paid within 10 days of such
notice and demand, a statutory lien arises on the 11th
day. Notice of the statutory lien may be filed any
time on or after the 11th day. Finally, IRS must no-
tify the taxpayer of the filing of the NFTL and his/her
right to a hearing within 5 business days of such
filing.
Administrative procedures require the Revenue Officer
to make a reasonable effort to contact the taxpayer to
advise that a NFTL may be filed if payment is not made
so that the taxpayer has an opportunity to make payment
or other security arrangements. The Revenue Officer
must also explain the effect of the NFTL filing on
normal business operations and/or the taxpayer’s credit
rating. Administrative procedures in place at the time
IRS requested the NFTL to be filed indicate that such
action should not be taken if the taxpayer is working
with IRS to resolve tax matters.
Transcripts of your account show the notice of tax and
demand for payment was issued on 7/2/2001. Letter 1058
was sent 12/15/2004. The NFTL was filed on 12/28/2004.
Letter 3172 was mailed on 12/29/2004.
The NFTL was filed more than 10 days after the notice
of tax and demand for payment was mailed (date of
assessment), and that Letter 3172, Notice of Federal
Tax Lien Filing and Your Right to a Hearing Under IRC
§6320, was mailed within 5 business days of the date of
filing.
Administratively, the case file shows the Revenue
Officer was in direct contact with your prior to filing
the NFTL.
Based upon the best available information, it appears
as though all applicable legal and administrative
procedures were followed in filing the NFTL and were
appropriate under the circumstances.
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Matters considered pursuant to IRC § 6330
Verification of Legal and Procedural Requirements
The legal requirements prior to taking general enforce-
ment action are issuance of notice and demand for tax,
notice of intent to levy and notice of the taxpayer’s
right to a hearing. In addition to the legal require-
ments, current administrative procedures governing
Letter 1058 issuance require the Revenue Officer to
have knowledge of a potential levy source and plan levy
as the next intended action.
Transcripts of account show the notice of tax and
demand for payment was issued 7/2/2001 and Letter 1058
was issued 12/15/2004. Administratively, the Revenue
Officer had knowledge of a usable levy source and levy
appears to have been the next intended action because
you had not made any proposals to resolve your tax
debt.
Based upon the best available information, it appears
as though all applicable legal and administrative
procedures were properly followed in issuing Letter
1058 and were appropriate under the circumstances.
Relevant Issues Presented by the Taxpayer
In your written request for a hearing you indicate you
disagree with the liability. During the CDP hearing
you raised issues concerning the tax liability. * * *
[The settlement officer] advised you since you previ-
ously had the underlying tax liability considered by
Appeals, you were precluded from having this matter
considered again at the CDP hearing. Since you previ-
ously had the underlying tax liability considered by
Appeals, you are precluded from having the liability
considered again under Collection Due Process.
Joan [Ms. Hollen] filed a request for innocent spouse
relief, Form 8857, received 5/16/2005. The request has
been denied. An innocent spouse final determination
letter has been sent to Joan denying her claim.
Challenges made by the taxpayer to the appropriateness
of the collection action
You raised the issue that the NFTL was filed too
quickly. As noted above, the notice of tax and demand
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for payment was issued on 7/2/2001. Letter 1058 was
sent 12/15/2005. The NFTL was filed on 12/28/2004.
The Revenue Officer followed all administrative proce-
dures in determining the NFTL should be filed.
You raised no issues concerning IRS’ compliance with
its procedures in filing in issuing the Letter 1058.
You offered no collection alternatives.
Balancing Efficient Collection With Intrusiveness of
Proposed Action
IRC §6320 and IRC § 6330 requires the Appeals Officer
to consider whether any collection action balances the
need for efficient collection of the unpaid taxes with
the legitimate concern that such action be no more
intrusive than necessary. It is my judgment that the
filing of the NFTL and the proposed levy action appear
to be no more intrusive than necessary for the effi-
cient collection of the unpaid tax. IRS is justified
in proceeding with the proposed levy action as it sees
fit. [Reproduced literally.]
Petitioners filed a petition with the Court with respect to
the notice of determination under sections 6320 and 6330.2 In
that petition, petitioners alleged:
4. The determination that the Notice of Intent to
Levy and the Notice of Federal Tax Lien were issued
properly is based upon the following errors:
a. Error in concluding that the underly-
ing tax liability had previously been
considered by appeals thereby precluding
Petitioners from having the liability
considered again.
5. The law and facts upon which the Petitioners
rely, as the basis of their case are as follows:
2
Ms. Hollen did not file a petition with the Court with
respect to the notice of determination under section 6015.
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a. The United States Tax Court, as af-
firmed by the United States Court of
Appeals for the Eighth Circuit ruled
that certain income was taxable to Peti-
tioners for 1988 based upon a Revenue
Agents report. That same income had
been reported by Petitioners’ corpora-
tion its 1998 income tax return. Peti-
tioners filed Form 1040X, Amended U.S.
Individual Income Tax Return in order to
correct the duplication. The U.S. Su-
preme Court, in U.S. v. Supplee-Biddle
Hardware Co., 265 U.S. 189, ruled that
“Such duplication even in an exigent war
tax measure is to be avoided.” Respon-
dent has not responded to nor taken any
action respecting Form 1040X.
Petitioner had requested that this issue
be considered at the Collection Due
Process Hearing. [Reproduced
literally.]
Upon reviewing respondent’s administrative record with
respect to petitioners’ taxable year 1988, respondent’s counsel
discovered that the $67,978.11 addition to tax under section
6653(a) that respondent assessed on June 5, 2001, exceeded the
amount of the addition to tax under section 6653(a) in the Tax
Court decision, which was $2,777.50. Upon the request of respon-
dent’s counsel, the settlement officer reviewed the assessments
that respondent made with respect to petitioners’ taxable year
1988 and took the action necessary to have the addition to tax
under section 6653(a) and interest thereon abated to the extent
they exceeded the addition to tax under section 6653(a) in the
Tax Court decision and interest thereon.
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Discussion
The Court may grant summary judgment where there is no
genuine issue of material fact and a decision may be rendered as
a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner,
98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). We
conclude that there are no genuine issues of material fact
regarding the questions raised in respondent’s motion.
A taxpayer may raise challenges to the existence or the
amount of the taxpayer’s underlying tax liability if the taxpayer
did not receive a notice of deficiency or did not otherwise have
an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).
Respondent issued a notice of deficiency to petitioners with
respect to their taxable year 1988. Petitioners filed a petition
with the Court with respect to that notice. On January 9, 2001,
the Court entered a decision in petitioners’ Tax Court case,
which was affirmed by the Court of Appeals for the Eighth Cir-
cuit. The Tax Court decision provided, inter alia, that for
petitioners’ taxable year 1988 there were a deficiency of $55,550
in petitioners’ tax and additions to that tax under sections
6653(a) and 6661 of $2,777.50 and $13,887.50, respectively. On
the instant record, we find that petitioners may not challenge
the existence or the amount of the underlying tax liability for
their taxable year 1988.
Where, as is the case here, the validity of the underlying
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tax liability is not properly placed at issue, the Court will
review the determination of the Commissioner of Internal Revenue
for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610
(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
Based upon our examination of the entire record before us,
we find that, except for the determinations relating to respon-
dent’s assessment for petitioners’ taxable year 1988 of excessive
amounts of the addition to tax under section 6653(a) and interest
thereon that respondent conceded,3 respondent did not abuse
respondent’s discretion in making the determinations in the
notice of determination under sections 6320 and 6330 with respect
to petitioners’ taxable year 1988.
We have considered all of the contentions and arguments of
the parties that are not discussed herein, and we find them to be
without merit, irrelevant, and/or moot.
On the record before us, we shall grant respondent’s motion.
To reflect the foregoing,
An order granting respondent’s
motion and an appropriate decision
for respondent will be entered.
3
In respondent’s motion, respondent states: “Respondent has
taken the necessary steps to abate the [$67,978.11] excess
penalty (i.e., to the extent that it exceeds $2,777.50) and
interest thereon.”