James R. Kennedy v. Commissioner ( 2001 )

116 T.C. No. 19UNITED STATES TAX COURT
JAMES R. KENNEDY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9544-00L. Filed April 23, 2001.
On Sept. 10, 1999, R mailed to P a notice required
by sec. 6320(a), I.R.C., concerning P’s unpaid tax
liabilities for the years 1984 through 1988. R
concedes that such notice was not mailed to P at his
last known address. On Oct. 25, 1999, R mailed to P a
final notice of intent to levy concerning P’s unpaid
tax liabilities for the years 1984 through 1988.
Although the notice of intent to levy was mailed to P
at his last known address, P failed to file a request
for an administrative hearing with the Internal Revenue
Service Office of Appeals (Appeals Office) within the
30-day period prescribed in sec. 6330, I.R.C.
Despite P’s failure to file a timely request for
an Appeals Office hearing, R granted P a so-called
equivalent hearing. On Aug. 17, 2000, R issued a
“decision letter” to P stating that R would proceed
with collection by way of levy. On Sept. 11, 2000, P
filed a petition for review with the Court.
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Held: insofar as the petition filed herein
purports to be a petition for review of a notice of the
filing of a notice of lien pursuant to sec. 6320,
I.R.C., the Court lacks jurisdiction on the ground that
R did not make a determination pursuant to that section
because R failed to send the written notice prescribed
by sec. 6320(a), I.R.C., to P at his last known
address.
Held, further, insofar as the petition filed
herein purports to be a petition for review of a notice
of intent to levy pursuant to sec. 6330(d), I.R.C., the
Court lacks jurisdiction on the ground that R did not
make a determination pursuant to sec. 6330, I.R.C.,
because P failed to file a timely request for an
Appeals Office hearing under sec. 6330(a)(2) and (3)(B)
and (b), I.R.C.
Held, further, R’s decision to conduct a so-called
equivalent hearing did not result in a waiver by R of the
time restrictions imposed on P for requesting an Appeals
Office hearing pursuant to sec. 6330, I.R.C.
James R. Kennedy, pro se.
Susan Watson and Wendy S. Harris, for respondent.
OPINION
RUWE, Judge: This case was assigned to Special Trial Judge
Robert N. Armen, Jr., pursuant to the provisions of section
7443A(b)(4) and Rules 180, 181, and 183.1 The Court agrees with
and adopts the Opinion of the Special Trial Judge, which is set
forth below.
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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OPINION OF THE SPECIAL TRIAL JUDGE
ARMEN, Special Trial Judge: This matter is before the Court
on respondent’s Motion to Dismiss for Lack of Jurisdiction.
Respondent contends that the Court lacks jurisdiction over the
petition on the ground that respondent did not issue a
determination letter to petitioner pursuant to section 6320 or
6330. As explained in detail below, insofar as petitioner seeks
review of a notice of the filing of a notice of lien pursuant to
section 6320, we will dismiss this case for lack of jurisdiction
on the ground that respondent failed to mail the notice required
by section 6320(a) to petitioner at his last known address and,
therefore, petitioner had no opportunity to request an
administrative hearing. Further, insofar as petitioner seeks
review of a notice of intent to levy pursuant to section 6330, we
will dismiss this case for lack of jurisdiction on the ground
that petitioner failed to make a timely request for an
administrative hearing and, therefore, respondent was not obliged
to (and did not) issue a determination letter to petitioner.
Background
On or about September 10, 1999, respondent mailed to
petitioner a Notice Of Federal Tax Lien Filing And Your Right To
A Hearing Under IRC 6320 (the notice required by section 6320(a))
concerning petitioner’s unpaid tax liabilities for the years 1984
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through 1988.2 Respondent concedes that the notice required by
section 6320(a) was not mailed to petitioner at his last known
address and that such notice was therefore invalid. See sec.
6320(a)(2)(C). In any event, petitioner did not request an
administrative hearing with the Internal Revenue Service Office
of Appeals (Appeals Office) in respect of the notice required by
section 6320(a), nor did the Appeals Office either conduct an
administrative hearing or issue a determination letter regarding
the notice required by section 6320(a).
On or about October 25, 1999, respondent mailed to
petitioner a Final Notice Of Intent To Levy And Notice Of Your
Right To A Hearing (notice of intent to levy) concerning
petitioner’s unpaid tax liabilities for the years 1984 through
1988.3 The notice of intent to levy was mailed to petitioner at
his last known address. See sec. 6330(a)(2)(C). Petitioner
actually received the notice of intent to levy on October 27,
1999, as reflected by the U.S. Postal Service Form 3811, Domestic
Return Receipt, that was signed at the time that the notice was
2
The notice required by sec. 6320(a) listed petitioner’s
tax liabilities as $19,372.79, $715.29, $15,010, $1,618.23, and
$2,189.94 for the years 1984, 1985, 1986, 1987, and 1988,
respectively.
3
The notice of intent to levy stated that petitioner owed
amounts from prior notices, additional penalties, and interest
totaling $24,198.16, $886.24, $18,939.59, $2,053.57, and
$2,797.52 for the years 1984, 1985, 1986, 1987, and 1988,
respectively.
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delivered. The notice of intent to levy stated in pertinent
part: “If you don’t pay the amount you owe, make alternative
arrangements to pay, or request Appeals consideration within 30
days from the date of this letter, we may take your property”.
On December 1, 1999, the Appeals Office received a Form
12153, Request for a Collection Due Process Hearing, from
petitioner. Petitioner’s request arrived at the Appeals Office
in an envelope bearing a U.S. Postal Service postmark date of
November 30, 1999.
Although the Appeals Office concluded that petitioner had
failed to file his request for a hearing within the time
prescribed in section 6230 or 6330, the Appeals Office granted
petitioner a so-called equivalent hearing. See sec. 301.6330-
1T(i), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3413 (Jan.
22, 1999). Petitioner attended the equivalent hearing, which was
conducted on July 24, 2000. On August 17, 2000, the Appeals
Office issued a “decision letter” to petitioner stating that
respondent would proceed with collection by way of levy.
Respondent’s decision letter states in pertinent part:
Your due process hearing request was not filed within
the time prescribed under Section 6320 and/or 6330.
However, you received a hearing equivalent to a due
process hearing except that there is no right to
dispute a decision by the Appeals Office in court under
IRC Sections 6320 and/or 6330.
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On September 11, 2000, despite the above-quoted statement in
respondent’s decision letter, petitioner filed with the Court a
Petition For Lien Or Levy Action Under Code Sections 6320(c) Or
6330(d). In response to the petition, respondent filed a Motion
to Dismiss for Lack of Jurisdiction, asserting that the petition
should be dismissed on the ground that the decision letter that
respondent issued to petitioner does not constitute a
determination letter sufficient to invoke the Court’s
jurisdiction pursuant to section 6330(d). Petitioner filed an
objection to respondent’s motion to dismiss, asserting that
respondent failed: (1) To mail the notice required by section
6320(a) to him at his last known address; and (2) to conduct a
proper collection hearing.
This matter was called for hearing at the Court’s motions
session in Washington, D.C. Although no appearance was made by
or on behalf of petitioner at the hearing, petitioner did file a
written statement with the Court pursuant to Rule 50(c). Counsel
for respondent appeared at the hearing and informed the Court
that petitioner had recently filed a bankruptcy petition. As a
result, the Court issued an order staying all proceedings in this
case pursuant to 11 U.S.C. section 362(a)(8) (1994).
Shortly thereafter, respondent filed a status report with
the Court stating that petitioner’s bankruptcy case had been
dismissed. The Court subsequently issued an order lifting the
automatic stay.
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This matter was called for further hearing at the Court’s
motions session in Washington, D.C. Although no appearance was
made by or on behalf of petitioner at the hearing, petitioner did
file a written statement with the Court pursuant to Rule 50(c).
Counsel for respondent appeared at the hearing and offered
argument in support of respondent’s motion to dismiss. Counsel
for respondent informed the Court that on or about March 6, 2001,
respondent had issued a “substitute” notice required by section
6320(a) to petitioner concerning his unpaid tax liabilities for
the years 1984 through 1988.
Discussion
Section 6321 provides that if any person liable to pay any
tax neglects or refuses to pay the same after demand, the unpaid
tax shall be a lien in favor of the United States upon all
property and rights to property belonging to that person.
Section 6322 provides that the lien imposed under section 6321
generally arises at the time of assessment. However, section
6323 provides that the lien shall not be valid against any
purchaser, holder of a security interest, mechanic’s lienor, or
judgment lien creditor until the Secretary files a notice of lien
with the appropriate public officials. Section 6320(a) provides
that the Secretary shall provide the person described in section
6321 with written notice of the filing of a notice of lien under
section 6323, including notice of the administrative appeals
available to the person.
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Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to pay the tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect the tax by levy upon the person’s property. Section
6331(d) provides that, at least 30 days before enforcing
collection by way of a levy on the person’s property, the
Secretary is obliged to provide the person with a final notice of
intent to levy, including notice of the administrative appeals
available to the person.
In the Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress
enacted new sections 6320 (pertaining to liens) and 6330
(pertaining to levies) to provide protections for taxpayers in
tax collection matters. Sections 6320 and 6330 generally provide
that the Commissioner cannot proceed with collection until the
taxpayer has been given notice of and the opportunity for an
administrative review of the matter (in the form of an Appeals
Office hearing), and if dissatisfied, the taxpayer may seek
judicial review of the administrative determination. See Davis
v. Commissioner, 115 T.C. 35, 37 (2000); Goza v. Commissioner,
114 T.C. 176, 179 (2000).
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Sections 6320(a) and 6330(a) provide in pertinent part that
the Secretary shall notify a person in writing of his or her
right to an Appeals Office hearing regarding the Secretary’s
filing of a notice of lien under section 6323 or the Secretary’s
intent to levy, respectively, by mailing the notice required by
section 6320(a) or section 6330(a), as the case may be, by
certified or registered mail to such person at his or her last
known address.4
Section 6320(a)(2) provides that the prescribed notice shall
be provided not more than 5 business days after the day on which
the notice of lien under section 6323 is filed. Further, section
6320(a)(3)(B) provides that the prescribed notice shall explain
that the person has the right to request an Appeals Office
hearing during the 30-day period beginning on the day after the
5-day period described in paragraph (2).
Section 6330(a)(2) provides that the prescribed notice shall
be provided not less than 30 days before the day of the first
levy with respect to the amount of the unpaid tax for the taxable
period. Further, section 6330(a)(3)(B) provides that the
prescribed notice shall explain that the person has the right to
4
Although the term “last known address” is not defined in
the Internal Revenue Code or in the regulations thereunder, we
have held that a taxpayer’s last known address (as the term is
used in sec. 6213 regarding the proper mailing of a notice of
deficiency) is the address shown on the taxpayer’s most recently
filed return, absent clear and concise notice of a change of
address. See, e.g., Abeles v. Commissioner, 91 T.C. 1019, 1035
(1988).
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request an Appeals Office hearing during the 30-day period under
paragraph (2).
Section 6330(c) prescribes the matters that may be raised by
a taxpayer at an Appeals Office hearing. In sum, section 6330(c)
provides that a taxpayer may raise collection issues such as
spousal defenses, the appropriateness of the Commissioner’s
intended collection action, and possible alternative means of
collection. Section 6330(c)(2)(B) provides that the existence
and amount of the underlying tax liability can be contested at an
Appeals Office hearing only if the taxpayer did not receive a
notice of deficiency for the taxes in question or did not
otherwise have an earlier opportunity to dispute the tax
liability. See Sego v. Commissioner, 114 T.C. 604, 609 (2000);
Goza v. Commissioner, supra.
Where the Appeals Office issues a determination letter to
the taxpayer following an administrative hearing regarding a lien
or levy action, sections 6320(c) (by way of cross-reference) and
6330(d)(1) provide that the taxpayer will have 30 days following
the issuance of the determination letter to file a petition for
review with the Tax Court or a Federal District Court. See
Offiler v. Commissioner, 114 T.C. 492, 498 (2000). We have held
that the Court’s jurisdiction under sections 6320 and 6330
depends upon the issuance of a valid determination letter and the
filing of a timely petition for review. See Meyer v.
Commissioner, 115 T.C. 417, 421 (2000); Offiler v. Commissioner,
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supra at 498.
As discussed below, we conclude that respondent did not
issue a determination letter to petitioner pursuant to section
6320 or 6330. We therefore lack jurisdiction over the petition.
However, as was the case in Meyer v. Commissioner, supra at 422,
because the basis for dismissal may affect whether respondent can
proceed with collection and/or may otherwise affect petitioner’s
rights, we are obliged to determine the proper ground for
dismissal.
Notice of the Filing of A Notice of Lien
As indicated, respondent concedes that he failed to mail the
notice required by section 6320(a) to petitioner at his last
known address as required under section 6320(a)(2)(C) and that
such notice is therefore invalid. Respondent does not contend
that petitioner actually received the notice required by section
6320(a). Under the circumstances, petitioner was denied the
opportunity to make a timely request for an Appeals Office
hearing because of the misaddressed notice. Accordingly, insofar
as the petition filed herein purports to be a petition for review
pursuant to section 6320, we will dismiss the petition for lack
of jurisdiction on the ground that respondent did not make a
determination under section 6320 because respondent failed to
send the written notice prescribed by section 6320(a)5 to
5
Petitioner may yet have the opportunity to obtain an
(continued...)
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petitioner at his last known address.
Notice of Intent To Levy
1. Petitioner’s Failure To Make a Timely Request for
Hearing
The notice of intent to levy, which was dated October 25,
1999, was mailed to petitioner at his last known address no later
than October 26, 1999. Petitioner received the notice of levy on
October 27, 1999. The notice informed petitioner that he had 30
days from the date of the notice to file a request for an Appeals
Office hearing.
On December 1, 1999, the Appeals Office received by mail
petitioner’s request for a hearing. The request arrived at the
Appeals Office in an envelope bearing a U.S. Postal Service
postmark date of November 30, 1999. Because the 30-day time
period prescribed in section 6330(a)(2) and (3)(B) and (b) for
filing a timely request for an Appeals Office hearing expired no
later than November 25, 1999, it follows that petitioner’s
request was untimely. As a consequence of petitioner’s failure
to make a timely request for an Appeals Office hearing, the
Appeals Office was not obliged to conduct the administrative
hearing contemplated under section 6330(b).
5
(...continued)
Appeals Office hearing with respect to the notice required by
sec. 6320(a) inasmuch as respondent purportedly issued a
“substitute” notice to petitioner on or about Mar. 6, 2001.
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2. Equivalent Hearing
In lieu of a hearing under section 6330(b), the Appeals
Office granted petitioner a so-called equivalent hearing. During
the motions hearing in this case, the Court raised the question
whether the equivalent hearing might be considered a waiver by
respondent of the 30-day filing period in which a taxpayer must
file a request for an Appeals Office hearing under section
6330(a)(2) and (3)(B) and (b). Respondent argued that there was
no such waiver. We agree.
We note that section 6330 does not authorize the
Commissioner to waive the time restrictions imposed therein.
Equally important, in Offiler v. Commissioner, supra, we
indicated that, where the taxpayer failed to file a timely
request for an Appeals Office hearing in respect of a notice of
intent to levy, an Appeals Office review of the taxpayer’s case
pursuant to the Collection Appeals Program did not result in a
determination within the meaning of section 6320 or 6330. Upon
reflection, we are satisfied that the decision to grant
petitioner an equivalent hearing in this case simply reflects
respondent’s good faith effort to further a fundamental policy
underlying section 6330; i.e., to provide a taxpayer with a final
opportunity for administrative review before proceeding with
enforced collection. Consistent with the foregoing, we hold that
the decision to conduct an equivalent hearing did not result in a
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waiver by respondent of the time restrictions within which
petitioner was required to request an Appeals Office hearing
under section 6330.
3. Decision Letter
On August 17, 2000, following the equivalent hearing, the
Appeals Office issued a decision letter to petitioner stating
that respondent would proceed with collection. Petitioner
contends that the decision letter is tantamount to a valid
determination letter under section 6330(d).
Petitioner’s position ignores the unambiguous statement in
the decision letter that the equivalent hearing was not intended
to serve as an Appeals Office hearing within the meaning of
section 6320 or 6330. As previously discussed, because
petitioner failed to file a timely request for an Appeals Office
hearing, the Appeals Office was not obliged to conduct such a
hearing. In this regard, the decision letter was not, and did
not purport to be, a determination letter pursuant to section
6320 or section 6330. See Offiler v. Commissioner, supra at 495.
In sum, we hold that respondent did not issue a
determination letter to petitioner sufficient to invoke the
Court’s jurisdiction to review the notice of intent to levy.
Insofar as the petition filed herein purports to be a petition
for review pursuant to section 6330(d), we will dismiss the
petition for lack of jurisdiction on the ground that respondent
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did not make a determination pursuant to section 6330 because
petitioner failed to file a timely request for an Appeals Office
hearing pursuant to section 6330(a)(2) and (3)(B) and (b).
To reflect the foregoing,
An appropriate order of
dismissal for lack of jurisdiction
will be entered.