T.C. Memo. 2009-202
UNITED STATES TAX COURT
SONNY G. LEWIS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 29685-07L. Filed September 9, 2009.
Sonny G. Lewis, pro se.
Alisha M. Harper, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
RUWE, Judge: Pursuant to sections 6320 and 6330(d),1
petitioner seeks review of respondent’s determination to sustain
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
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the notice of Federal tax lien filing for tax years 2001 and
2003. We must decide whether respondent’s Appeals Office
correctly upheld the filing of a notice of Federal tax lien with
respect to petitioner’s 2001 and 2003 Federal income tax
liabilities.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Kentucky at the time the petition was filed.
In or about 1974, while residing in Illinois, petitioner
attended a meeting where the attendees were told that they did
not have to pay Federal income tax. After this petitioner
stopped filing Federal income tax returns.
As was petitioner’s practice, he did not file income tax
returns for 2001 and 2003. On the basis of income information
reported to respondent on various Forms W-2, Wage and Tax
Statement, and a Form 1099-INT, Interest Income, from third-party
payors, respondent prepared and filed substitutes for returns for
petitioner for both years pursuant to section 6020(b) using a
filing status of single. Respondent calculated petitioner’s
income as $45,045 for 2001 and $50,915 for 2003.
Respondent sent to petitioner notices of deficiency, dated
October 17, 2005, for 2001 and 2003. The notices of deficiency
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were sent to an address in Romeoville, Illinois, which, according
to respondent’s records, was petitioner’s last known address.
In the notices of deficiency respondent determined deficiencies
in income tax and additions to tax as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654
1
2001 $6,957 $1,565.32 $1,391.40 $275.30
1
2003 7,588 1,707.30 607.04 195.79
1
The final amount of the addition to tax per sec.
6651(a)(2) could not be determined at the time the notice of
deficiency was issued, but an addition to tax of 0.5 percent
would be imposed for each month, or fraction thereof, of
nonpayment, up to 25 percent, based upon the liability shown or
the final determined liability, if less.
Petitioner did not petition this Court in response to the notices
of deficiency, and, on March 13, 2006, respondent assessed the
income tax deficiencies for 2001 and 2003.
On June 20, 2007, respondent sent to petitioner at his
current address in Kentucky a Letter 3172(DO), Notice of Federal
Tax Lien Filing and Your Right to a Hearing Under IRC 6320, for
petitioner’s 2001 and 2003 Federal income tax liabilities.
Petitioner timely requested a collection due process (CDP)
hearing to challenge the underlying tax liabilities.
On November 20, 2007, respondent’s settlement officer Julius
Hollowell (Settlement Officer Hollowell) conducted a telephone
conference with petitioner. During the telephone conference
petitioner told Settlement Officer Hollowell that the Internal
Revenue Service (IRS) broke the law by filing substitutes for
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returns on his behalf. Settlement Officer Hollowell asked
petitioner whether he was recording the conference and petitioner
replied: “yes-always.” Settlement Officer Hollowell then
advised petitioner that he would have to disconnect the call and
a determination would be made on the account, after which the
call was ended.
On December 3, 2007, respondent sent to petitioner at his
current address in Kentucky a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330. On December
26, 2007, petitioner filed a petition with the Court asserting
that: Respondent filed a lien on the basis of “faulty
procedures”; the notices of deficiency were not mailed to him; if
the notices of deficiency were mailed, they were not sent to his
last known address; and he had been denied a CDP hearing.
On April 4, 2008, respondent filed a motion for remand in
the light of respondent’s concession that the notices of
deficiency were not sent to petitioner’s current address and to
give petitioner an opportunity to challenge the underlying tax
liabilities. By order dated April 16, 2008, the Court granted
respondent’s motion for remand.
By letter dated June 24, 2008, respondent’s Appeals
collection specialist advised petitioner that if he disagreed
with the substitutes for returns respondent prepared, then he
should send to respondent copies of his 2001 and 2003 returns.
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In the letter the Appeals collection specialist also requested
that petitioner file Federal income tax returns for 2002, 2004,
2005, 2006, and 2007.
On August 11, 2008, respondent’s settlement officer Suzanne
L. Magee (Settlement Officer Magee) was assigned to petitioner’s
case. The following day Settlement Officer Magee spoke with
petitioner and scheduled a supplemental CDP hearing in the form
of a face-to-face conference on August 19, 2008. On August 13,
2008, Settlement Officer Magee sent a letter to petitioner,
wherein she: Confirmed the face-to-face conference; requested
original Forms 1040, U.S. Individual Income Tax Return, for 2001
and 2003; and advised petitioner that in order to discuss
collection alternatives petitioner had to file Federal income tax
returns for 2002, 2004, 2005, 2006, and 2007 and provide a
completed Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals.
During the August 19, 2008, supplemental CDP hearing
petitioner was given the opportunity to challenge the underlying
tax liabilities for 2001 and 2003. Petitioner stated to
Settlement Officer Magee that he had received the notices of
deficiency; nevertheless, additional copies of the notices of
deficiency and other account transcripts were provided to
petitioner. Instead of challenging the underlying tax
liabilities on any substantive ground, petitioner continued to
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question whether the substitutes for returns were legal.
Settlement Officer Magee explained to petitioner that he needed
to decide whether to accept the liabilities as determined or
provide original returns. Settlement Officer Magee further
advised petitioner that she would hold the case for a week to
give him time to decide whether to file original returns.
Petitioner stated that he would not be filing any returns, and he
did not do so. Petitioner did not submit a completed Form 433-A
nor offer any collection alternatives. Settlement Officer Magee
verified that the requirements of any applicable law or
administrative procedure had been met, including that the notices
of deficiency had been sent to petitioner’s last known address on
October 17, 2005. Consequently, on September 8, 2008, respondent
issued a Supplemental Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 sustaining
the filing of the notice of Federal tax lien for 2001 and 2003.
OPINION
Collection Review Procedure
Where a taxpayer fails to pay any Federal income tax
liability after notice and demand, section 6321 imposes a lien in
favor of the United States on all the property of the delinquent
taxpayer and section 6323(f) authorizes the IRS to file notice of
the lien.
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Section 6320(a)(1) provides that the Commissioner shall
notify in writing any person liable to pay tax (the taxpayer) of
the filing of a tax lien upon the taxpayer’s property. The
notice must inform the taxpayer of the right to request a hearing
in the Commissioner’s Appeals Office. Sec. 6320(a)(3)(B),
(b)(1). Section 6330(c), (d), and (e) governs the conduct of a
hearing requested under section 6320. Sec. 6320(c).
At the hearing the taxpayer may raise any relevant issues
relating to the unpaid tax, including appropriate spousal
defenses, challenges to the appropriateness of the collection
action, and offers of collection alternatives. Sec.
6330(c)(2)(A). The taxpayer may also challenge the existence or
amount of the underlying tax liability, but only if he did not
receive a notice of deficiency or otherwise have an opportunity
to dispute the liability. Sec. 6330(c)(2)(B). In addition to
considering issues raised by the taxpayer under section
6330(c)(2), the Appeals officer must also verify that the
requirements of any applicable law or administrative procedure
have been met. Sec. 6330(c)(1), (3).
Standard of Review
Where the validity of the underlying tax liability is
properly at issue, the Court will review the matter de novo.
Davis v. Commissioner, 115 T.C. 35, 39 (2000). Where the
underlying tax liability is not properly at issue, the Court will
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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).
By order dated April 16, 2008, the Court remanded this case
to respondent’s Appeals Office for the purpose of conducting a
supplemental hearing to consider petitioner’s challenge to the
underlying liabilities for 2001 and 2003. Consequently,
petitioner was afforded the opportunity to challenge the
underlying tax liabilities during the supplemental CDP hearing.
Substitutes for Returns
Section 6020(b) authorizes the Commissioner to prepare a
return on behalf of a taxpayer who fails to file a return.
Millsap v. Commissioner, 91 T.C. 926, 931 (1988). More
specifically, section 6020(b)(1) provides:
SEC. 6020. RETURNS PREPARED FOR OR EXECUTED BY
SECRETARY.
(b) Execution of Return by Secretary.--
(1) Authority of secretary to execute
return.--If any person fails to make any
return required by any internal revenue law
or regulation made thereunder at the time
prescribed therefor * * * the Secretary shall
make such return from his own knowledge and
from such information as he can obtain
through testimony or otherwise.
Section 6020(b)(2) provides: “Any return so made and subscribed
by the Secretary shall be prima facie good and sufficient for all
legal purposes.”
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The Notices of Deficiency
“The Commissioner must send a notice of deficiency to the
taxpayer before he may assess, collect, or reduce to judgment
most income tax liabilities.” Clayton v. Commissioner, T.C.
Memo. 2009-114 (citing United States v. Zolla, 724 F.2d 808, 810
(9th Cir. 1984)). Under section 6212(b)(1), a notice of
deficiency mailed to a taxpayer’s last known address is valid
even if it is never received. Wiley v. United States, 20 F.3d
222, 224 (6th Cir. 1994); Frieling v. Commissioner, 81 T.C. 42,
52 (1983).
Section 301.6212-2(a), Proced. & Admin. Regs., defines a
taxpayer’s last known address as “the address that appears on the
taxpayer’s most recently filed and properly processed Federal tax
return, unless the * * * (IRS) is given clear and concise
notification[2] of a different address.” Moreover, the burden
falls on the taxpayer to give clear and concise notification to
the Commissioner of an address change. Broomfield v.
Commissioner, T.C. Memo. 2005-148.
In or about 1974 petitioner stopped filing Federal income
tax returns. At the time respondent mailed the notices of
deficiency petitioner’s address in respondent’s records was in
2
Clear and concise notification of an address change may be
provided to the IRS either orally or in writing. See Westphal v.
Commissioner, T.C. Memo. 1992-599; see also Rev. Proc. 2001-18,
sec. 4.05, 2001-1 C.B. 708, 708-709.
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Romeoville, Illinois. The notices of deficiency were prepared
and sent in due course to the Romeoville, Illinois, address.
Petitioner has neither testified nor proffered any documentary
evidence to establish that he had given respondent any
notification of an address change. Furthermore, petitioner has
not denied having resided at the Romeoville, Illinois, address.
Accordingly, we hold that the address to which respondent sent
the notices of deficiency, i.e., the Romeoville, Illinois,
address, was petitioner’s last known address at the time the
notices of deficiency were sent.
We are satisfied that the Appeals officer properly verified
that the requirements of any applicable law or administrative
procedure were met, that petitioner offered no viable collection
alternatives, and that the Appeals officer did not abuse her
discretion in sustaining the notice of lien filing.
Underlying Tax Liability
Petitioner testified that respondent did not have all the
necessary information to assess the correct tax liability,
namely, his correct filing status and “other interest
deductions”, but provided no evidence on these points.
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With respect to a taxpayer’s filing status, this Court has
held:
[I]n situations where deficiency procedures are availed
of and a taxpayer has not filed a return, the taxpayer
may file a return and contest respondent’s filing
status determination, even though respondent has
“filed” a substitute return under section 6020(b), in
which filing status has been “elected” by respondent.
* * * [Millsap v. Commissioner, supra at 937.]
The circumstances in this case reflect that petitioner did
not file a return for either 2001 or 2003. Petitioner was
afforded an opportunity to challenge the underlying tax liability
during the supplemental CDP hearing. Petitioner was also given
an opportunity to provide original returns for 2001 and 2003, but
he failed to do so. Furthermore, Settlement Officer Magee held
the case for an additional week to allow petitioner an added
opportunity to file returns for 2001 and 2003. Petitioner,
however, did not file any returns.
With respect to petitioner’s claimed “other interest
deductions”, deductions are a matter of legislative grace, and
the taxpayer bears the burden of proving his entitlement to a
deduction. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 84 (1992). Petitioner has not produced any testimonial or
documentary evidence to establish his eligibility for “other
interest deductions.”
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Accordingly, we uphold respondent’s determination to sustain
the notice of lien filing. In reaching our holding, we have
considered all arguments made, and, to the extent not mentioned,
we conclude that they are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.