T.C. Memo. 2009-108
UNITED STATES TAX COURT
NOEL NELSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13212-05L. Filed May 20, 2009.
Noel Nelson, pro se.
Bradley C. Plovan, for respondent.
MEMORANDUM OPINION
GOEKE, Judge: This case is before the Court for review of a
lien action with respect to petitioner’s unpaid tax liabilities
for 1996 and 2000. The issue for decision is whether the
settlement officer abused his discretion in sustaining the lien.
We hold that the settlement officer did not abuse his discretion.
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Background
Some of the facts have been stipulated. The stipulation of
facts and the accompanying exhibits are incorporated by this
reference. Petitioner resided in Maryland at the time of filing
his petition.
Petitioner did not file income tax returns for 1996 and
2000. Respondent prepared substitutes for returns for petitioner
for both years pursuant to section 6020(b).1 Respondent mailed
notices of deficiency for 1996 and 2000 to petitioner’s last
known address, which has been petitioner’s address since at least
1995. Petitioner denies receiving the notices. A copy of the
2000 deficiency notice sent by certified mail was returned to
respondent because petitioner did not claim it timely.
Petitioner did not petition this Court in response to the
notices, and respondent assessed the income tax deficiencies for
1996 and 2000. Thereafter respondent issued to petitioner
notices of intent to levy for 1996 and 2000. Petitioner did not
request a collection due process hearing (CDP hearing) in
response to either levy notice. Respondent began to levy upon
petitioner’s monthly Social Security benefits.
On December 17, 2004, respondent issued to petitioner a
notice of Federal tax lien for 1996 and 2000. Petitioner timely
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code.
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requested a CDP hearing. The Appeals Office gave petitioner
approximately 2 weeks to submit Form 433-A, Collection
Information Statement for Wage Earners and Self-Employed
Individuals (collection information statement). Petitioner
requested additional time. In a letter dated April 11, 2005, the
settlement officer assigned to petitioner’s case again requested
a collection information statement, advised petitioner that he
had to file all delinquent tax returns before the Appeals Office
could consider an offer-in-compromise, and specifically pointed
out that petitioner had not filed returns for 1997, 1999, 2002,
2003, and 2004. The settlement officer also set a date for a
telephone conference. Petitioner requested a face-to-face
hearing. The settlement officer responded that petitioner would
have a face-to-face hearing if he provided the requested
collection information statement before the scheduled date for
the telephone conference. Petitioner responded by reiterating
his request for a face-to-face hearing and sought additional time
to provide the requested collection information statement.
On the scheduled date for the telephone conference, the
settlement officer called petitioner’s representative and left a
message that he was closing the case because petitioner had not
provided the collection information statement and had not
responded to the scheduled telephone conference. Throughout this
time petitioner’s representative was hospitalized following an
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accident that left him a quadriplegic. On June 17, 2005,
respondent issued a notice of determination sustaining the filing
of a tax lien for 1996 and 2000. Petitioner timely filed a
petition with this Court seeking review. Upon respondent’s
motion, the Court remanded the case to the Appeals Office for a
face-to-face hearing.
In a letter dated November 21, 2005, the settlement officer
again requested petitioner to provide a collection information
statement, advised petitioner that he had to file all delinquent
tax returns before the Appeals Office could consider an offer-in-
compromise, and specifically identified the years for which
petitioner had not filed returns. During a hearing on January
18, 2006, petitioner requested an offer-in-compromise based on
both doubt as to collectibility and doubt as to liability.
Petitioner also stated that he had not received the notices of
deficiency for 1996 and 2000. The settlement officer stated that
the notices were mailed to petitioner’s last known address, which
is petitioner’s current address and has been his address since
1995. The settlement officer explained that petitioner had to
file all delinquent tax returns to qualify for an offer-in-
compromise. The settlement officer informed petitioner that he
could pursue an offer-in-compromise with respondent’s Compliance
Division once he had filed his delinquent returns and provided a
collection information statement. On February 10, 2006,
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respondent issued a supplemental notice of determination
sustaining the lien for 1996 and 2000.
Discussion
Section 6321 imposes a lien on all property and property
rights of a taxpayer liable for taxes where a demand for the
payment of the taxes has been made and the taxpayer has failed to
pay. Upon request the taxpayer is entitled to an administrative
hearing before an impartial officer or employee of the Appeals
Office. Sec. 6320(b). At the hearing a taxpayer may raise any
relevant issue regarding the collection action including possible
collection alternatives such as an offer-in-compromise. Sec.
6330(c)(2)(A). The taxpayer may also contest the existence or
amount of the underlying tax liability if the taxpayer did not
receive a notice of deficiency for the tax liability or otherwise
have an opportunity to dispute the tax liability. Sec.
6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000).
Following the hearing, the Appeals officer must determine
whether the collection action should proceed. The Appeals
officer must consider: (1) Whether the requirements of
applicable law and administrative procedure have been met, (2)
any issues the taxpayer raised, and (3) whether the collection
action balances the need for efficient collection of taxes with
the taxpayer’s legitimate concern that any collection action be
no more intrusive than necessary. Sec. 6330(c)(3).
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Where the validity of the underlying tax liability is
properly at issue, the Court reviews the tax liability de novo.
Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the
underlying tax liability is not properly at issue, we review
determinations regarding collection actions for abuse of
discretion. Id. at 182. The abuse of discretion standard
requires the Court to decide whether the Appeals officer’s
determination was arbitrary, capricious, or without sound basis
in fact or law. Mailman v. Commissioner, 91 T.C. 1079, 1084
(1988).
Petitioner’s underlying tax liabilities for 1996 and 2000
are not at issue because petitioner previously had an opportunity
to dispute them. The parties stipulated that respondent issued
notices of deficiency for 1996 and 2000. Petitioner testified
that he did not receive either notice, and the settlement officer
acknowledged that the 2000 notice was returned to respondent. A
taxpayer’s ability to contest the underlying tax liability
depends on whether the taxpayer received a notice of deficiency
or otherwise had an opportunity to dispute the tax liability.
Sec. 6330(c)(2)(B). Petitioner had such an opportunity with
respect to the 1996 and 2000 tax liabilities because respondent
also sent notices of intent to levy for both years to petitioner
at his last known address before issuing the lien notice at
issue. Petitioner did not dispute that he received the levy
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notices. Because petitioner had an opportunity to dispute the
underlying tax liabilities in response to the levy notices,
petitioner is precluded from raising his tax liabilities in this
case. See Bell v. Commissioner, 126 T.C. 356, 358-359 (2006);
sec. 301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs. Moreover,
petitioner did not present any records relating to his 1996 or
2000 taxable income at either the CDP hearing or the trial.
The settlement officer’s determination to sustain the lien
was reasonable in view of petitioner’s repeated failure to
provide the requested collection information statement and to
file his delinquent returns. Petitioner did not raise any
appropriate defenses to the lien or any possible collection
alternatives. Although petitioner requested an offer-in-
compromise at the CDP hearing, he had not prepared one. In
addition, he did not provide the necessary collection information
statement or file the delinquent returns. Rather, he sought
additional time to prepare the collection information statement
and the returns.
Petitioner stated that he did not know that he was required
to file the delinquent returns to qualify for an offer-in-
compromise. However, the settlement officer had previously
advised petitioner in two separate letters that he had to file
all delinquent returns to qualify for an offer-in-compromise and
specifically identified 5 years for which petitioner had failed
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to file in addition to the 2 years at issue. At the hearing the
settlement officer advised petitioner to prepare the delinquent
returns and pursue an offer-in-compromise with respondent’s
Compliance Division. Since the hearing petitioner has taken
steps to resolve his tax liabilities, has retained a new
accountant, and has started to prepare his delinquent returns.
We hold that respondent did not abuse his discretion in
sustaining the lien on the basis of petitioner’s failure to
submit the requested collection information statement and the
delinquent returns. See Giamelli v. Commissioner, 129 T.C. 107,
111-112 (2007); Cavazos v. Commissioner, T.C. Memo. 2008-257;
Gazi v. Commissioner, T.C. Memo. 2007-342; Prater v.
Commissioner, T.C. Memo. 2007-241; Roman v. Commissioner, T.C.
Memo. 2004-20; Rodriguez v. Commissioner, T.C. Memo. 2003-153.
To reflect the foregoing,
Decision will be entered
for respondent.