T.C. Memo. 2009-258
UNITED STATES TAX COURT
WILLIAM R. GRANGER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4195-08L. Filed November 10, 2009.
William R. Granger, pro se.
Aaron D. Gregory, for respondent.
MEMORANDUM OPINION
PARIS, Judge: On January 15, 2008, respondent mailed to
petitioner a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 63301 (notice of
determination) for tax years 2002 and 2003. In response to that
1
Section references are to the Internal Revenue Code of
1986, as amended.
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notice and pursuant to section 6330(d), petitioner timely
petitioned this Court for review of respondent’s determination
that petitioner was not entitled to a face-to-face collection due
process (CDP) hearing.
The issue for decision is whether the Appeals Office abused
its discretion in failing to grant petitioner a face-to-face CDP
hearing.
Background
On October 26, 2005, respondent mailed to petitioner a
notice of deficiency setting forth respondent’s determination of
petitioner’s income tax deficiency for tax year 2003. Petitioner
failed to petition the Tax Court with respect to the determined
deficiency within the 90-day period prescribed under section
6213. As such, respondent assessed the tax liability on April
24, 2006. Respondent also assessed a section 6702 civil penalty
against petitioner for tax year 2002 on December 12, 2005.
On April 28, 2007, respondent sent to petitioner a Notice of
Intent to Levy and Notice of Your Right to a Hearing advising
petitioner that respondent intended to levy on petitioner’s
assets to collect the unpaid liability for tax year 2003 along
with the section 6702 penalty for tax year 2002. The notice also
advised that petitioner could request a hearing with respondent’s
Office of Appeals. On May 24, 2007, petitioner timely submitted
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a Form 12153, Request for a Collection Due Process or Equivalent
Hearing, in which he requested a face-to-face CDP hearing.
Respondent sent petitioner a letter dated June 23, 2007,
acknowledging respondent’s receipt of petitioner’s request for a
CDP hearing. In addition, respondent’s Office of Appeals sent
two letters to petitioner, each dated July 23, 2007,
acknowledging that Appeals had received the CDP case regarding
each tax year’s liability for consideration.
On September 24, 2007, Settlement Officer Minnie Banks
(Settlement Officer Banks) sent petitioner a letter notifying him
that she had scheduled a telephone conference for October 23,
2007, to allow petitioner to discuss with her any relevant
challenges to the proposed levy action. This letter, in part,
also explained to petitioner that he was not entitled to a face-
to-face CDP hearing because he was not in income tax return
filing compliance for tax year 2004. As such, the letter
requested that petitioner provide Settlement Officer Banks with a
signed tax return for 2004 along with a Form 433-A, Collection
Information Statement for Wage Earners and Self-Employed
Individuals, on or before October 16, 2007. The letter further
explained that collection alternatives could not be considered
without all requested information.
Petitioner sent Settlement Officer Banks a letter dated
October 12, 2007, along with attachments including a signed copy
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of a Form 1040, U.S. Individual Income Tax Return, for tax year
2004. However, the letter did not include a completed Form 433-
A. During tax year 2004 petitioner worked for an entity known as
Titan Corporation. Although reflecting income tax withholdings
of $6,392.48, the signed copy of the 2004 Form 1040 reported zero
wages earned and zero adjusted gross income.
On October 23, 2007, Settlement Officer Banks sent
petitioner a letter indicating that petitioner had failed to call
her at the scheduled time for the telephone CDP hearing as
requested in her prior letter.2 This letter also explained that
the previously requested Form 433-A financial information was not
provided and that petitioner should provide any and all financial
information to Settlement Officer Banks for consideration on or
before November 6, 2007.
On November 1, 2007, petitioner sent Settlement Officer
Banks a fax transmission where he, in part, “[restated] his
demand for a face-to-face hearing.” On December 9, 2007,
petitioner sent Settlement Officer Banks two separate fax
transmissions with attached documents including both a copy of
the letter he previously sent on November 1, 2007, along with the
signed Form 1040 for 2004 he previously provided. Petitioner
never provided the Form 433-A.
2
Settlement Officer Banks further noted that petitioner had
not called to indicate that the CDP hearing conference was
scheduled at an inconvenient date or time.
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On January 15, 2008, respondent’s Office of Appeals issued
to petitioner a notice of determination notifying petitioner that
the proposed levy action was sustained. On February 19, 2008,
petitioner, then residing in the Commonwealth of Virginia, filed
his petition with this Court.
Discussion
Jurisdiction To Review Frivolous Return Penalties
The Pension Protection Act of 2006 (PPA), Pub. L. 109-280,
sec. 855(a), 120 Stat. 1019, amended section 6330(d)(1), which
provides the Tax Court’s jurisdiction to review notices of
determination issued pursuant to section 6330, and gave the Tax
Court jurisdiction to review notices of determination issued
under section 6330 where the underlying tax liability consists of
section 6702 frivolous return penalties.3 Previously this
jurisdiction lay exclusively with the U.S. District Courts. See,
e.g., Johnson v. Commissioner, 117 T.C. 204, 208 (2001). The PPA
is effective for all determinations made after October 16, 2006.
PPA sec. 855, 120 Stat. 1019. Even though a civil penalty for
tax year 2002 was first assessed on December 12, 2005,
respondent’s Office of Appeals issued to petitioner a final
notice of determination that included the penalty on January 15,
3
The sec. 6702 frivolous return penalty is assessed without
a notice of deficiency first being sent to the taxpayer, thus
generally depriving this Court of jurisdiction over the penalty.
Sec. 6703(b).
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2008; thus, this Court has jurisdiction to review respondent’s
determination on the section 6702 penalty.
Collection Due Process Hearings
Under section 6331(a), if a person liable for a tax fails to
pay it within 10 days after notice and demand, it is lawful for
the Secretary to “collect such tax * * * by levy upon all
property and rights to property * * * belonging to such person”.
A taxpayer may appeal the filing of a notice of tax levy to the
Internal Revenue Service under section 6330 by requesting an
administrative hearing. The taxpayer is additionally afforded
the opportunity for judicial review of a determination sustaining
the notice of intent to levy in the Tax Court pursuant to section
6330(d). Petitioner seeks judicial review of respondent’s
determination.
Petitioner never raised any issue regarding his underlying
tax liability during the Appeals process either for his 2002 or
2003 tax years, nor was there any evidence that petitioner
questioned the civil penalty assessed under section 6702 for tax
year 2002; thus, the Court may only review the determination to
see whether there has been an abuse of discretion by respondent’s
Appeals Office in the determination.4 See Lunsford v.
4
Under sec. 6330(c)(2)(B), a taxpayer may raise challenges
to the existence or amount of the underlying tax liability only
if the taxpayer did not receive any statutory notice of
deficiency for the tax liability, or did not otherwise have an
(continued...)
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Commissioner, 117 T.C. 183, 185 (2001) (citing Nicklaus v.
Commissioner, 117 T.C. 117, 120 (2001)). The Court has described
the standard by which respondent’s determinations are reviewed as
an “abuse of discretion”, meaning “arbitrary, capricious, clearly
unlawful, or without sound basis in fact or law.” Ewing v.
Commissioner, 122 T.C. 32, 39 (2004), revd. on other grounds 439
F.3d 1009 (9th Cir. 2006); see also Woodral v. Commissioner, 112
T.C. 19, 23 (1999).
Petitioner contends that respondent erred in refusing to
grant him a “face-to-face” CDP hearing. However, under section
301.6330-1(d)(2), A-D6, Proced. & Admin. Regs., CDP hearings are
“informal in nature and do not require the Appeals officer or
employee and the taxpayer, or the taxpayer’s representative, to
hold a face-to-face meeting. A CDP hearing may, but is not
required to, consist of a face-to-face meeting”. Courts that
have considered the issue have found that a taxpayer does not
have a right to a face-to-face hearing. See O’Meara v. Waters,
464 F. Supp. 2d 474, 479–480 (D. Md. 2006) (holding that taxpayer
had received due process because he was given the opportunity to
participate in a telephone conference in which he discussed the
substance of his case with an Appeals officer); Turner v. United
4
(...continued)
opportunity to dispute the tax liability. Petitioner did not
challenge the existence or amount of either his 2002 or 2003 tax
liabilities; therefore, the Court may only analyze whether the
Appeals officer abused his discretion.
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States, 372 F. Supp. 2d 1053, 1058 (S.D. Ohio 2005) (holding that
the Appeals Office did not violate the taxpayer’s right to a fair
hearing when it declined the taxpayer’s request for a face-to-
face hearing because it offered him a telephone conference or the
opportunity to submit his arguments in writing).
Furthermore, respondent’s Appeals Office adequately
explained to petitioner that his request for a face-to-face
hearing was denied as a result of his not being in compliance
with his 2004 income tax return filing requirements. Section
301.6330-1(d)(2), A-D8, Proced. & Admin. Regs., states that
a face-to-face CDP conference concerning a collection
alternative * * * will not be granted unless other taxpayers
would be eligible for the alternative in similar
circumstances. For example, because the IRS does not
consider offers to compromise from taxpayers who have not
filed required returns * * * no face-to-face conference will
be granted to a taxpayer who wishes to make an offer to
compromise but has not fulfilled [this obligation].* * *
Despite showing employment by an entity known as Titan Corp.
and Federal withholdings of $6,392.48, petitioner’s 2004 tax
return reported zero wages and zero adjusted gross income. It is
settled law that “any document which purports to be a federal
income-tax return * * * and which attempts to reduce one’s tax-
liability by excluding wages or salary from taxable-income * * *
is frivolous within the meaning of * * * [section] 6702(a)”.
Beckelhimer v. United States, 623 F. Supp. 115, 116 (M.D. Tenn.
1985); see also Cabirac v. Commissioner, 120 T.C. 163, 169 (2003)
(noting that “The majority of courts, including this Court, have
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held that, generally, a return that contains only zeros is not a
valid return”).
Using the aforementioned standard of review, this Court does
not find that respondent’s Appeals Office abused its discretion.
Respondent fully complied with the requirements of section 6330
by offering petitioner a telephone CDP hearing. Furthermore,
petitioner failed to produce the requested documents necessary
for respondent to consider collection alternatives in a face-to-
face CDP hearing.
Conclusion
Based on the record, the Court holds that the Appeals Office
did not abuse its discretion in determining that petitioner was
not entitled to a face-to-face CDP hearing.
Finally, in reaching the conclusions described herein, the
Court has considered all arguments made, and to the extent not
mentioned above, concludes they are moot, irrelevant, or without
merit.
To reflect the foregoing,
Decision will be entered
for respondent.