T.C. Memo. 2008-202
UNITED STATES TAX COURT
DAVID BACH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23061-06L. Filed August 27, 2008.
David Bach, pro se.
Steven M. Webster, for respondent.
MEMORANDUM OPINION
WELLS, Judge: Petitioner seeks review, pursuant to section
6330,1 of respondent’s determination to proceed with the
collection of petitioner’s tax liability for the 1993 taxable
year. The issue we must decide is whether petitioner is liable
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended.
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for the underlying tax liability for taxable year 1993,2 and,
therefore, whether respondent may proceed with the collection of
that liability.
Background
Some of the facts and certain exhibits have been stipulated.
The parties’ stipulations of fact are incorporated in this
opinion by reference and are found as facts in the instant
case. At the time he filed his petition, petitioner resided
in South Carolina.
Petitioner did not file a return for taxable year 1993. On
March 29, 1996, respondent sent petitioner a notice of deficiency
for taxable year 1993 (notice of deficiency), but petitioner
failed to petition this Court. On the envelope containing the
notice of deficiency, the U.S. Postal Service noted “Return to
Sender - attempted, not known.” Respondent timely assessed the
income tax determined in the notice of deficiency.
On January 20, 2006, respondent sent petitioner a Letter
1058, Final Notice of Intent to Levy and Notice of Your Right to
a Hearing. Respondent’s Appeals officer received from petitioner
on February 15, 2006, a timely filed Form 12153, Request for a
Collection Due Process Hearing. In reviewing petitioner’s file,
respondent’s Appeals officer noted that petitioner did not
2
Respondent has conceded that petitioner did not receive
the notice of deficiency sent to him with respect to his income
taxes for taxable year 1993.
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receive the notice of deficiency and therefore did not have a
prior opportunity to challenge the underlying liability and that
petitioner therefore could raise relevant challenges to the
underlying tax liability at the hearing.
Petitioner submitted to respondent’s Appeals officer a
letter stating the following:
I disagree with the assessment in your Form Notice of
Levy on Wages, Salary, and other Income that you had
sent to my employer at Poinsette Tire & Auto, 208
Poinsette Hwy. Greenville, SC 29609 on February 08,
2006. I deny each and every part thereof and in
particular, I disagree with the false and malicious
accusations on the attached Form 668-W(ICS) in tax year
12-31-1993. Your assessment of additional taxes levy
is completely and totally wrong; the adjustments are
incorrect factually and as a matter of law. I neither
agree nor accept your findings. Your office normally
sends out an audit letter pertaining to the year in
question, but did not for me. I consider your approach
in this case to be harassment. I hereby request a
conference with one of your examiners so I might submit
additional information and evidence. Please schedule
an appointment that will be anyway possible convenient
with the taxpayer. Please send me several Power of
Attorney Forms, your audit, appeals publication and
other forms or materials that I may need.
Respondent’s Appeals officer sent petitioner a letter dated
June 5, 2006, offering a face-to-face conference and requesting
certain information. Petitioner replied that he wanted an audio
recording of the conference. In the interim, since telephone
conferences could not be recorded, respondent’s Appeals officer
decided to obtain information from petitioner by correspondence
in order to provide the written record of events that petitioner
desired.
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Petitioner sent respondent’s Appeals officer a letter dated
June 16, 2006, identifying relevant issues that he intended to
raise with respondent’s Appeals officer. On June 22, 2006,
respondent’s Appeals officer sent petitioner a letter requesting
many items that had been requested from petitioner in the June 5,
2006, letter.
On August 29, 2006, respondent’s Appeals officer sent
petitioner another letter scheduling a face-to-face hearing in
Charlotte, North Carolina, and advising petitioner of recording
requirements. Enclosed with the letter were Rev. Proc. 68-29,
1968-2 C.B. 913, Publication 216, Conference and Practice
Requirements, and Notice 89-51, 1989-1 C.B. 691, all of which
addressed issues surrounding the scheduled conference.
On September 19, 2006, respondent’s Appeals officer received
a letter from petitioner dated September 13, 2006, requesting
that the conference be conducted in Greenville or Anderson, South
Carolina. Respondent’s Appeals officer sent petitioner a letter
dated September 19, 2006, denying petitioner’s request for a
hearing at the requested locations and explaining that sections
301.6320-1(d)(2), Q&A-D7 and 301.6330-1(d)(2), Q&A-D7, Proced. &
Admin. Regs., allowed for a hearing at the Appeals Office closest
to the taxpayer’s residence and that there was not an Appeals
Office in either requested location.
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On September 24, 2006, petitioner sent respondent’s Appeals
officer a letter again stating that he could not come to
Charlotte because he was unemployed and had unreliable
transportation and limited funds. He requested a conference
“near where I live”. The closest Appeals Office to Greenville,
South Carolina, is either Columbia, South Carolina, or Charlotte,
North Carolina. Respondent’s Appeals officer determined that
petitioner’s address in Greenville, South Carolina, according to
Map Quest, is roughly of equal distance from Columbia, South
Carolina, and Charlotte, North Carolina. Inasmuch as
petitioner’s request for a hearing at another location was based
on his inability to travel because of limited funds, respondent’s
Appeals officer determined that there would be no benefit to
transferring the case to South Carolina and that the transfer
would serve only to delay the Appeals process.
Petitioner’s letter also asked for an explanation of a
correspondence conference. Respondent’s Appeals Office sent a
letter to petitioner dated September 27, 2006, explaining a
correspondence conference. Petitioner was again advised that his
conference was being conducted in the closest Appeals Office to
his home and that if he did not appear for the rescheduled
hearing, he should submit all relevant information for
consideration by October 11, 2006, or a determination would be
made on the basis of all information received up to that date.
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Petitioner responded with a letter dated October 6, 2006, stating
that he “wants to appeal the time and place”.
Respondent’s Appeals officer determined that petitioner had
been provided sufficient opportunity to submit information for
consideration. She based her determination upon the specific
issues petitioner raised in his correspondence.
Respondent's Appeals officer determined that, since
petitioner’s return was filed with “single” status, section 6015
did not apply. She also determined that while petitioner stated
he intended to dispute the underlying tax liability, he made no
specific challenge to that liability. Petitioner was provided
with Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters, detailing the tax information for the subject
period, and a literal transcript, which provides information
similar to that in Form 4340.
Because petitioner raised nonspecific issues surrounding the
underlying tax liability, respondent’s Appeals officer reviewed
the assessment package in general and determined that: (1)
Petitioner’s recorded tax liability was based on wages earned and
reported to the Internal Revenue Service (IRS) of $20,548, (2) a
single filing status was used in the computation of petitioner’s
tax liability, (3) petitioner was allotted one personal exemption
of $2,350 and a standard deduction of $3,700, (4) petitioner’s
taxable income was properly determined to be $14,498, according
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to the tax table for taxable year 1993 and petitioner’s filing
status, (5) petitioner’s tax was $2,171, (6) petitioner was given
a credit for withholding of $1,645, for a balance of tax due of
$526, (7) petitioner was liable for a failure to file penalty and
an estimated tax penalty, (8) no computational error was
discovered, and (9) the amounts shown on the notice of deficiency
are the same as those recorded on official transcripts.
Petitioner’s correspondence with respondent’s Appeals
officer stated that he believed the amount owed to be excessive
but did not specify why. Petitioner did not support his position
with facts or evidence. Petitioner also challenged the issuance
of Form 668-W(ICS), stating that the law requires the IRS to
notify a taxpayer at least 30 days before initiating any levy
action to give the taxpayer an opportunity to formally appeal the
proposed levy. Respondent’s Appeals officer conceded that the
IRS did not wait the required 30 days from issuance of Letter
1058 before issuing a wage levy, a clear violation of Internal
Revenue Code and Internal Revenue Manual guidelines.
Respondent’s Appeals officer determined, however, that on
February 23, 2006, the IRS released Form 668-W(ICS) in its
entirety and no funds were ever realized from the levy issuance.
Petitioner also questioned the statute of limitations in his
correspondence. The June 22, 2006, letter respondent’s Appeals
officer sent petitioner provided a detailed explanation regarding
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the statute of limitations. Respondent’s Appeals officer
determined that the tax was assessed September 2, 1996, and that
the 10-year period to collect the tax would have expired on
September 2, 2006, if petitioner had not submitted a timely
section 6330 Appeals hearing request. Respondent’s Appeals
officer determined that the period of limitations on collection
had not expired because petitioner timely submitted a hearing
request, which suspends collection during the time that
respondent’s Appeals Office considers the request and any
subsequent judicial review period.
Respondent’s Appeals officer determined that petitioner
had proposed no specific collection alternative, although the
written appeal request mentioned an installment agreement and an
offer-in-compromise. Respondent’s Appeals officer determined,
however, that petitioner had not filed an income tax return for
1999, 2000, 2001, 2002, 2003, 2004, or 2005 and therefore an
installment agreement could not be proposed, nor could an
offer-in-compromise be accepted. Moreover, petitioner did not
submit financial information for consideration, nor did he
formally present a collection alternative. Petitioner raised no
other relevant issues.
Respondent’s Appeals officer determined under section
6330(c)(3)(C) that, balancing the need for efficient collection
against petitioner's concern that it be no more intrusive than
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necessary, the issuance of the notice of intent to levy was
appropriate, given the facts and circumstances of the case.
She determined that, notwithstanding premature levy action, the
levy action was appropriate. She determined that with the best
information available, the requirements of various applicable
laws or administrative procedures had been met and that
petitioner had been afforded appeal rights in a timely manner.
Petitioner used the appeal process to raise issues which had been
addressed.
Discussion
The issue we must decide is whether petitioner is liable for
the underlying tax liability for taxable year 1993, and,
therefore, whether respondent may proceed with the collection of
that liability.
Section 6330 provides that no levy may be made on any
property or right to property of a person unless the Commissioner
first notifies the person in writing of the right to a hearing
before the Appeals Office. Section 6330(c)(1) provides that the
Appeals officer must verify at the hearing that the applicable
laws and administrative procedures have been followed. At the
hearing the person may raise any relevant issues relating to the
unpaid tax or the proposed levy, including appropriate spousal
defenses, challenges to the appropriateness of collection
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actions, and collection alternatives. Sec. 6330(c)(2)(A). The
person may challenge the existence or amount of the underlying
tax if the person did not receive any statutory notice of
deficiency for the tax liability or did not otherwise have an
opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).
Where the validity of the underlying tax liability is
properly in issue, the Court will review the matter de novo.
Where the validity of the underlying tax is not properly in
issue, however, the Court will review the Commissioner’s
administrative determination for abuse of discretion. Sego v.
Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114
T.C. 176, 181-182 (2000).
As noted above, respondent has conceded that petitioner did
not receive the notice of deficiency. We therefore review the
instant matter de novo. See Sego v. Commissioner, supra at 611;
Goza v. Commissioner, supra at 182. Neither at the hearing nor
at trial has petitioner raised any issue regarding the underlying
tax other than whether the period of limitations for assessment
has expired because the notice of deficiency allegedly was not
sent to petitioner’s last known address.3 As explained below, we
3
In his correspondence with respondent’s Appeals officer,
petitioner argued that the tax was excessive; however he did not
support that claim with sufficient specificity to preserve the
issue for our review. See Poindexter v. Commissioner, 122 T.C.
280, 284-286 (2004), affd. 132 Fed. Appx. 919 (2d Cir. 2005).
Petitioner has not raised any claim of eligibility for a
(continued...)
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agree with respondent that the notice of deficiency was mailed to
petitioner’s last known address and that neither the period of
limitations on assessment nor the period of limitations on
collection has expired.4
The record shows that respondent mailed the notice of
deficiency on March 29, 1996, to petitioner at P.O. Box 334,
Greenville, South Carolina 29602. The envelope bearing the
petition was returned to respondent with a notice from the U.S.
Postal Service “Return to Sender - attempted, not known.”
Petitioner contends his address was P.O. Box 2762, not P.O. Box
334, Greenville, South Carolina 29602.
If a notice of deficiency is mailed to the taxpayer at
the taxpayer's last known address, actual receipt of the notice
3
(...continued)
collection alternative, and, in any case, petitioner would not be
eligible for a collection alternative because of his failure to
file tax returns for 2000-05.
4
Because petitioner did not file a return for taxable year
1993, the assessment period would remain open indefinitely even
if the notice of deficiency were invalid. See sec. 6501(c)(3).
Had the notice of deficiency not been mailed to petitioner’s last
known address (and not received by him in time to file a petition
in this Court), the subsequent assessment of the deficiency on
Sept. 2, 1996, would have been defective (and the instant levy to
collect it would be defective as well), not because the
assessment was made after the applicable limitations period had
expired, but because it would have been made in violation of sec.
6213(a), which restricts the assessment of a deficiency unless
the assessment is duly preceded by the mailing of a deficiency
notice to the last known address. See Freije v. Commissioner,
125 T.C. 14, 34-37 (2005).
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is immaterial to its validity. King v. Commissioner, 857 F.2d
676, 679 (9th Cir. 1988), affg. 88 T.C. 1042 (1987); Yusko v.
Commissioner, 89 T.C. 806, 810 (1987); Frieling v. Commissioner,
81 T.C. 42, 52 (1983).
Although the phrase “last known address” is not defined in
the Internal Revenue Code or in the regulations, we have held
that a taxpayer's last known address is the address shown on the
taxpayer's most recently filed return, absent clear and concise
notice of a change of address. Abeles v. Commissioner, 91 T.C.
1019, 1035 (1988); see King v. Commissioner, supra at 681.5
At trial the Court remanded this case to respondent’s
Appeals Office to consider whether the notice of deficiency was
sent to petitioner’s last known address as required by section
6212(b).6 On remand, respondent’s Appeals officer offered
petitioner a hearing in Charlotte, North Carolina, or Columbia,
South Carolina. Citing the same reasons he did not attend the
5
The definition of the phrase “last known address” in sec.
301.6212-2(a), Proced. & Admin. Regs., is similar to the
definition found in Abeles v. Commissioner, 91 T.C. 1019, 1035
(1988), but the regulation was not effective until Jan. 29, 2001,
and therefore is inapplicable to the instant case.
6
Sec. 6212(a) expressly authorizes the Commissioner, after
determining a deficiency, to send a notice of deficiency to the
taxpayer by certified or registered mail. It is sufficient if
the Commissioner mails the notice of deficiency to the taxpayer's
“last known address”. Sec. 6212(b); Frieling v. Commissioner, 81
T.C. 42, 52 (1983).
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previous face-to-face section 6330 hearing offered to him,
petitioner refused to travel to Charlotte or Columbia.
Nonetheless, on remand respondent’s Appeals officer reviewed the
administrative file and considered the last known address issue,
noting that, at the time the notice of deficiency was issued, at
least five separate sources of information in respondent’s
possession showed petitioner’s last known address as P.O. Box
334, Greenville, South Carolina 29602.
The record shows that petitioner did not notify respondent
of any other address than the one respondent used on the notice
of deficiency. Petitioner did not file a return for 1993, and
the address respondent used on the notice of deficiency was the
address shown on the following records of respondent:
(1) A transcript dated 03/08/1995; (2) a different command code
showing current address information dated 08/23/1994; (3) wage
information reported to the IRS dated 06/25/1996; (4) command
code identifying audit data dated 08/22/1995; (5) Form 1099-G,
Certain Government Payments, information for tax year 1989
reported by the South Carolina Employment Security Commission.
In the absence of a return, the last known address is
the one which, in view of all relevant circumstances, the
Commissioner reasonably believed the taxpayer wished the IRS to
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use in sending mail to him or her. Lifter v. Commissioner, 59
T.C. 818, 821 (1973). We conclude that the IRS reasonably
believed that the address respondent used on the notice of
deficiency was the address petitioner wanted to be used for
mail sent to him.
Because petitioner did not, before the notice of deficiency
was mailed, communicate to respondent any address other than
P.O. Box 334, Greenville, South Carolina 29602, we hold that the
notice of deficiency, sent to petitioner at that address, was
sent to petitioner’s last known address.
On the basis of the record, we hold that neither the period
of limitations for assessment of the deficiency nor the period of
limitations for the collection of the tax has expired.7
In sum, we hold that respondent may proceed with the
proposed levy to collect the tax liability for the year in issue.
We have considered all the contentions raised by the
parties, and, to the extent they are not addressed in this
7
The limitations period for collection remains open
because, counting from the assessment date of Sept. 2, 1996, it
had yet to expire as of Feb. 15, 2006, the date on which the IRS
received from petitioner a request for a sec. 6330 hearing, and,
by reason of sec. 6330(e), the running of the period was
suspended and remains suspended pending the disposition of the
instant case. See Boyd v. Commissioner, 117 T.C. 127, 130-131
(2001).
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opinion, we conclude that they are irrelevant, immaterial, or
unnecessary to reach.
To reflect the foregoing,
Decision will be entered
for respondent.