T.C. Memo. 2010-215
UNITED STATES TAX COURT
CURTIS F. ZASTROW, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2994-09L. Filed October 5, 2010.
Curtis F. Zastrow, pro se.
Alicia A. Mazurek and Alexandra E. Nicholaides, for
respondent.
MEMORANDUM OPINION
PARIS, Judge: On December 24, 2008, respondent mailed to
petitioner a Notice of Determination Concerning Collection
Action(s) which sustained the filing of a notice of Federal tax
lien (NFTL) with respect to petitioner’s assessed income tax
liability for tax years 2000, 2001, and 2004. Petitioner alleges
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that he never received a notice of deficiency for those tax years
and was denied an opportunity to contest the underlying tax
liabilities.
The issues for decision are (1) whether petitioner was
provided the opportunity to challenge the assessed tax liability
for tax years 2000, 2001, and 2004, and (2) whether respondent’s
determination to sustain the filing of the NFTL was an abuse of
discretion.
Background
Some of the facts and exhibits have been stipulated and are
incorporated herein by reference. At the time the petition was
filed and during the tax years 2005, 2006, and 2007, petitioner
resided and received his mail at Midland, Michigan.
Petitioner is employed as a consultant for nonprofit
organizations. Petitioner failed to file income tax returns for
tax years 2000, 2001, and 2004. Pursuant to section 6020(b)(1),1
respondent filed for each of those years a substitute for return
using third-party reporting of income paid to Curtis Zastrow of
Midland, Michigan. Respondent sent petitioner notices of
deficiency for tax years 2000 and 2001 on February 13, 2006, and
January 10, 2005, respectively. Petitioner failed to file a
petition contesting either notice of deficiency, and the tax was
1
All section references are to the Internal Revenue Code of
1986, as amended.
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assessed. Respondent sent petitioner a notice of intent to levy
pursuant to section 6330 in May 2007. Petitioner timely
requested and was granted a collection due process (CDP) levy
hearing in May of 2008 for tax years 2000 and 2001 where he was
advised that he was ineligible for any collection alternative
unless and until he filed his delinquent tax returns for tax
years 2000 and 2001. Petitioner never filed those returns, and
respondent ultimately issued a notice of determination sustaining
the levy.2 Respondent mailed petitioner a notice of deficiency
for tax year 2004 on June 11, 2007. Yet again, petitioner did
not file a petition with this Court.
On June 24, 2008, respondent filed a NFTL against
petitioner for unpaid income taxes for tax years 2000, 2001, and
2004. Subsequently, petitioner filed a timely request with
respondent for a CDP hearing. Petitioner was assigned an Appeals
account resolution specialist (AAR specialist) who corresponded
with petitioner and informed him that to qualify for collection
alternatives, he would need to file his income tax returns for
2006 and 2007 and submit a Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, to
assist respondent in determining feasible collection
2
The levy is not at issue, and the Court notes the
proceedings therein for purposes of establishing the chronology
of events leading to the NFTL and that petitioner has had one or
more opportunities to dispute the underlying tax liabilities for
tax years 2000 and 2001.
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alternatives. Petitioner neither filed income tax returns for
tax years 2006 and 2007 nor provided the AAR specialist with the
collection information statement.
The AAR specialist scheduled a telephone CDP hearing with
petitioner for November 18, 2008. However, petitioner did not
participate in the scheduled hearing. The AAR specialist then
rescheduled the CDP hearing for December 3, 2008, and requested
that petitioner provide further information for consideration.
Petitioner did not take part in the rescheduled hearing but
requested a face-to-face hearing. The AAR specialist denied this
request and subsequently sent to petitioner a notice of
determination sustaining the NFTL for tax years 2000, 2001, and
2004. Petitioner then filed a timely petition with this Court.3
Discussion
Petitioner argues that he did not receive a notice of
deficiency for tax year 2000, 2001, or 2004, that respondent’s
AAR specialist abused her discretion by denying him a face-to-
face hearing, and that respondent’s AAR specialist abused her
discretion when she sustained the filing of the NFTL. This Court
holds that the validity of the underlying liability is not
properly before the Court and that respondent’s AAR specialist
3
Trial was held on Oct. 22, 2009, with posttrial briefs due
on Jan. 5, 2010. Petitioner failed to file a timely brief. On
Feb. 23, 2010, this Court granted petitioner’s motion for an
extension of time to file his brief. To date, petitioner has
failed to file the brief.
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did not abuse her discretion when she denied petitioner a face-
to-face hearing or when she sustained the filing of the NFTL for
tax years 2000, 2001, and 2004.
A. Standard of Review
Under section 6321, if a person liable to pay any tax
neglects or refuses to pay the same after demand, the amount
shall be a lien in favor of the United States upon all property
and rights to property belonging to such person. A taxpayer may
appeal the filing of a NFTL to the Internal Revenue Service under
section 6320 by requesting an administrative hearing. If the
hearing culminates in an adverse determination, the taxpayer is
afforded the opportunity for judicial review of the determination
in the Tax Court pursuant to section 6330(d). Petitioner seeks
review of respondent’s determination. 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 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).
The Court has described the standard by which the
Commissioner’s determinations in CDP cases are reviewed for
“abuse of discretion”, as entailing an inquiry whether the
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determination is “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). When a taxpayer seeks judicial review of a notice of
determination, the Court has authority to consider a section
6330(c)(2) issue only if it was properly raised in the CDP
hearing. Giamelli v. Commissioner, 129 T.C. 107, 115 (2007);
sec. 301.6320-1(f)(2), Q&A-F3, Proced. & Admin. Regs. An issue
is not properly raised if the taxpayer fails to present Appeals
any evidence with respect to that issue after being given a
reasonable opportunity to do so.
Section 6330(c)(2)(B) provides that at a CDP hearing, a
person may challenge the existence or amount of the underlying
tax liability “if the person did not receive any statutory notice
of deficiency for such tax liability or did not otherwise have an
opportunity to dispute such tax liability.” Petitioner argues
that he did not receive a notice of deficiency for tax year 2000,
2001, or 2004, and therefore he can challenge the underlying
liabilities. The Court disagrees. Respondent presented evidence
that the notices of deficiency were mailed to petitioner’s last
known address, and the record reflects that petitioner continues
to reside at the same address. Petitioner failed to provide any
evidence other than his own uncorroborated testimony to prove
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that he did not receive those notices. On the basis of the
evidence respondent provided, the Court is satisfied that those
notices were sent to the proper address and received by
petitioner. Therefore, the Court determines that petitioner
cannot challenge the underlying liabilities for tax years 2000,
2001, and 2004 because he has received a notice of deficiency for
each year at issue and had a prior opportunity to challenge the
tax liability for each year. Furthermore, petitioner had a
previous opportunity to challenge his underlying tax liabilities
for the tax years 2000 and 2001. A due process hearing on the
notice of intent to levy constitutes a prior opportunity to raise
and challenge an underlying tax liability within the meaning of
section 6330 and the regulations. Bell v. Commissioner, 126 T.C.
356 (2006).
B. Face-to-Face Hearings
Petitioner contends that his hearing was not fair and
impartial because he was denied a face-to-face hearing. The
Court disagrees. Petitioner was not improperly deprived of a
face-to-face CDP hearing. See Lindberg v. Commissioner, T.C.
Memo. 2010-67; Granger v. Commissioner, T.C. Memo. 2009-258
(citing O’Meara v. Waters, 464 F. Supp. 2d 474, 479-480 (D. Md.
2006), and Turner v. United States, 372 F. Supp. 2d 1053, 1058
(S.D. Ohio 2005)).
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Generally, there is no abuse of discretion in the IRS’
refusal of a face-to-face hearing when a taxpayer fails to
present nonfrivolous arguments, file past-due returns, and submit
financial statements as a prerequisite to a collection
alternative. See Moline v. Commissioner, 363 Fed. Appx. 675
(10th Cir. 2010), affg. T.C. Memo. 2009-110; Rice v.
Commissioner, T.C. Memo. 2009-169; Summers v. Commissioner, T.C.
Memo. 2006-219. The AAR specialist considered the information
offered by petitioner and gave him the opportunity to provide the
appropriate information in order to qualify for a face-to-face
hearing. Petitioner neither provided the requested information
nor filed past-due returns as was also requested. Consequently,
the AAR specialist did not abuse her discretion when she denied
petitioner a face-to-face hearing.
C. Filing of the NFTL
Because petitioner was not in compliance with his tax
obligations, respondent’s filing of a tax lien was appropriate.
It is not an abuse of discretion for Appeals to reject collection
alternatives where a taxpayer has not complied with current tax
obligations. Giamelli v. Commissioner, supra at 111-112. Other
than the CDP request form, and despite being provided with two
opportunities to do so, petitioner presented no evidence to the
AAR specialist to support any of his claims. The AAR specialist
based her review on the case file and transcripts of prior
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correspondence with petitioner and found that petitioner failed
to file delinquent tax returns, failed to provide a requested
collection information statement, and did not qualify for any
collection alternatives. Therefore, the Court finds that the AAR
specialist did not abuse her discretion when she sustained the
filing of the NFTL.
On the basis of the record, the Court finds that petitioner
was given the opportunity to challenge the underlying tax
liabilities and that the AAR specialist did not abuse her
discretion in determining that the NFTL filing was appropriate.
To reflect the foregoing,
Decision will be entered
for respondent.