Mattie Marie Mason v. Commissioner , 132 T.C. No. 14 ( 2009 )


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    132 T.C. No. 14
    UNITED STATES TAX COURT
    MATTIE MARIE MASON, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent
    Docket No. 4908-07.                Filed May 6, 2009.
    P is majority owner and principal officer of C,
    which failed to pay employment taxes. R mailed a
    notice of intent to assess sec. 6672, I.R.C., trust
    fund penalties to P at P’s last known address. P did
    not receive R’s notice and the penalties were assessed.
    R notified P of the intent to file a notice of Federal
    tax lien with respect to the penalties. P
    administratively appealed and also filed a request to
    abate the penalties. After administrative review of
    R’s decision to file a lien, R determined to proceed
    with the lien filing. P’s abatement request was also
    denied. P appealed both decisions to R’s Appeals
    Office. During the hearing, an Appeals officer
    simultaneously considered R’s intent to file a lien and
    denial of P’s abatement request. The Appeals officer
    determined that P was not entitled to contest the
    penalties as part of the hearing as it related to the
    lien filing. During the same hearing the Appeals
    officer did consider the merits of the penalties as it
    related to review of P’s abatement request.
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    The questions presented are: (1) Whether
    pursuant to sec. 6330(c)(2)(B), I.R.C, a taxpayer
    has “otherwise [had] an opportunity to dispute” a
    sec. 6672, I.R.C., penalty and therefore is
    precluded from challenging the merits of that
    penalty at a collection due process hearing where
    the taxpayer never received a notice of intent to
    assess the penalty; (2) whether at any juncture
    during the administrative proceedings P “otherwise
    [had] an opportunity to dispute” the sec. 6672,
    I.R.C., penalties, thereby precluding P from
    challenging the merits of the penalties at P’s
    collection due process hearing, and if not,
    whether P’s underlying liabilities are before the
    Court for de novo review; (3) whether, for
    purposes of sec. 6672, I.R.C., the validity of R’s
    notice of intent to assess trust fund recovery
    penalties depends upon a taxpayer’s receipt of
    that notice; (4) whether P is liable for sec.
    6672, I.R.C., penalties because P is a
    “responsible person” who willfully failed to pay
    over C’s employment taxes; and (5) whether R’s
    decision to uphold the lien filing was an abuse of
    discretion.
    1. Held: A taxpayer must receive a sec.
    6672, I.R.C., notice of intent to assess a trust
    fund recovery penalty to have “otherwise [had] an
    opportunity to dispute” that tax liability under
    sec. 6330(c)(2)(B), I.R.C. P did not receive R’s
    notice of intent to assess sec. 6672, I.R.C.,
    penalties and did not “otherwise have an
    opportunity to dispute” the underlying tax
    liability.
    2. Held, further, P did not “otherwise have
    an opportunity to dispute” P’s underlying tax
    liability at any time during the administrative
    proceedings. Held, further, P raised P’s
    liability for the sec. 6672, I.R.C., penalties at
    P’s collection due process hearing. P’s liability
    for the trust fund recovery penalties is,
    therefore, before this Court for de novo review.
    3. Held, further, a    notice of intent to
    assess sec. 6672, I.R.C.,   penalties is valid for
    purposes of assessing the   penalties even where a
    taxpayer does not receive   the notice.
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    Consequently, even though P did not receive R’s
    notice, R validly assessed trust fund penalties.
    4. Held, further, P is a “responsible
    person” who willfully failed to pay over C’s
    withholding taxes and P is liable for the trust
    fund penalties.
    5. Held, further, R’s decision to uphold the
    lien filing was not an abuse of discretion.
    Mattie Marie Mason, pro se.
    Susan K. Greene, for respondent.
    OPINION
    GERBER, Judge:   This case arises from a petition for
    judicial review filed in response to a Notice of Determination
    Concerning Collection Actions(s) Under Section 6320 and/or 6330
    (notice of determination) issued to petitioner Mattie Marie
    Mason.1   The overall question is whether respondent may proceed
    with the collection action.   The answer depends upon whether
    petitioner is liable for trust fund penalties assessed against
    her as a responsible person for failure to collect and pay over
    withholding taxes of New Life Perinatal Health Care Services Inc.
    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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    (New Life), for tax periods ended December 31, 2001, March 31,
    June 30, and September 30, 2002, and September 30, 2003.2
    Background3
    Petitioner resided in Texas at the time her petition was
    filed.4   She earned a bachelor of science degree in nursing in
    1978 and thereupon commenced a 30-year career as a registered
    nurse.    The focus of that career has been on providing services
    to pregnant and parenting women, especially teenagers.    In 1989
    petitioner incorporated New Life under the laws of the State of
    Texas.    Corporate shares of New Life have at all relevant times
    been held 75 percent by petitioner and 25 percent by her husband
    Phillip Mason (Mr. Mason).    Petitioner served as president and
    treasurer of New Life, while Mr. Mason served as vice president
    and secretary.   New Life elected to be treated as an S
    corporation for Federal tax purposes.
    New Life was licensed in the State of Texas as a home health
    agency.   Through New Life, petitioner engaged in her primary
    2
    The notice of determination reflects zero liability for the
    period ended Sept. 30, 2001. Petitioner paid the liability for
    this period, and she now seeks a refund. We do not have
    jurisdiction to review that period. See Greene-Thapedi v.
    Commissioner, 
    126 T.C. 1
    , 11 (2006).
    3
    The parties’ stipulation of facts and the attached exhibits
    are incorporated herein by this reference.
    4
    At the time this case was petitioned, petitioner had
    elected the small tax case procedures. Before the commencement
    of the trial, with the agreement of the parties, the Court
    removed this case from small tax case status.
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    business activities of providing services to pregnant and
    parenting women, especially teenagers.   New Life’s mission
    included, among other things, home health care services, case
    management services for public and private third-party entities,
    health care education and consulting services and programs (e.g.,
    programs aimed at prevention of pregnancy, school dropout, and
    illicit drug use among at-risk youth).
    Case management programs accounted for the majority of New
    Life’s business and revenues.   In conducting that portion of the
    business, New Life would enter into contracts with entities such
    as school districts or hospitals to administer the provision of
    services to targeted high-risk groups.   New Life, in turn, would
    hire independent contractors with backgrounds as registered
    nurses or social workers to serve as “case managers” providing
    care services to the particular patients or “clients” referred
    through the entities.   Because the clients were principally high-
    risk pregnant and parenting women, especially teenagers, much of
    the revenue earned by New Life for their care was obtained
    through the Medicaid programs of the Texas Department of Health.
    As New Life grew throughout the 1990s, petitioner assembled
    an administrative staff of approximately seven employees to
    manage the business and perform clerical support functions.
    Petitioner used a team management approach in conducting New
    Life’s day-to-day operations.   She delegated substantial
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    authority to staff members so that they could independently
    handle their administrative portion of New Life’s operation.
    Key members of that team during the late 1990s to early
    2000s included petitioner, Walterene Reed (Ms. Reed), Shelly
    Morton (Ms. Morton), and Mabel Hatton (Ms. Hatton).   Petitioner
    served as administrator overseeing management and was responsible
    for hiring and firing staff and establishing and maintaining
    business contracts.   Ms. Reed was employed as New Life’s office
    manager to oversee the activities of case managers, the referrals
    of patients/clients, and the billing process.   Ms. Morton was a
    billing specialist responsible for handling Medicaid claims.
    Ms. Hatton served as New Life’s internal accountant.
    Petitioner delegated to her full authority for the financial,
    tax, and accounting matters of the business, including oversight
    of accounts payable and receivable, payment of bills and
    compensation, bank deposits, and preparation and filing of
    Federal employment tax returns.   Although petitioner and
    Mr. Mason were the sole signatories on New Life’s corporate bank
    account, it was petitioner’s practice to sign blank checks for
    Ms. Hatton to complete and use in performing her duties.
    Petitioner likewise relied on Ms. Hatton’s expertise in handling
    financial affairs, and she signed employment tax returns prepared
    by Ms. Hatton relying completely on Ms. Hatton’s expertise.
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    By late 2000 and early 2001 the business of New Life reached
    its apex.   With approximately 2,000 clients and 10 case managers,
    the corporation income approached $1 million.    During spring 2001
    New Life began to experience internal and external problems.      In
    particular, New Life experienced difficulties with respect to the
    management staff, the independent contractors serving as case
    managers, and the receipt of payments from Government agencies
    and from other programs.
    During March 2001 Ms. Reed became unable to continue working
    for New Life because of a serious illness that resulted in her
    death before the end of the year.    A replacement for Ms. Reed was
    hired but proved to be incapable of handling the office manager’s
    duties.   In addition, other departures of administrative staff
    exacerbated New Life’s problems.    The loss of Ms. Reed left a
    significant gap in the operations of New Life and led to problems
    with, among other things, billing processes.     Mounting unbilled
    or incorrectly billed claims in many instances foreclosed
    expected payments from Government programs, particularly
    Medicaid.   Compounding these problems, some of the case managers
    began to use New Life’s client base to start their own
    businesses, effectively taking New Life’s clients and
    corresponding ability to generate revenue.
    During this period petitioner was consumed with efforts to
    save the business; i.e., handling duties formerly covered by Ms.
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    Reed and personally serving clients on account of the reduced
    number of case managers.   Ms. Hatton continued to be responsible
    for accounting and financial matters, paying creditors to the
    extent funds allowed and filing Federal employment tax returns
    without remitting payment.   The failure to pay employment taxes
    began with the tax return for the quarter ending September 30,
    2001, and continued into the first three quarters of 2002 and
    again for the quarter ended September 30, 2003.     It was not until
    March 2002 that petitioner became aware that New Life’s Federal
    employment taxes were not being paid.
    On July 8, 2002, the collection of New Life’s delinquent
    taxes was assigned to Revenue Officer Elvina Davis (RO Davis) of
    the Internal Revenue Service (IRS).      RO Davis first contacted New
    Life by leaving a telephone message on July 16, 2002.     On August
    8, 2002, RO Davis reached Ms. Hatton and told her that she would
    need to obtain a power of attorney from petitioner in order for
    RO Davis to deal directly with Ms. Hatton.     Near the end of
    August RO Davis received the power of attorney and began initial
    conversations with Ms. Hatton.    It was not until November of 2002
    that petitioner engaged in personal interaction with RO Davis.
    She also completed and provided RO Davis with a Form 4180, Report
    of Interview with Individual Relative to Trust Fund Recovery
    Penalty or Personal Liability for Excise Tax, signed and
    - 9 -
    dated November 5, 2002.   Form 4180 contained details of
    petitioner’s relationship to and oversight of New Life.
    Throughout the fall of 2002 and during 2003 investigation
    and collection activities continued in the form of conversations,
    meetings, requests for records, lien filing, etc.   On February
    12, 2003, RO Davis advised petitioner about options to settle New
    Life’s debt and the potential for assessment of trust fund
    penalties against petitioner personally.
    During September 2003, the State of Texas instituted massive
    changes to the case management program and concomitant Medicaid
    payment processes, which caused a substantial reduction of New
    Life’s revenue stream.    In response, petitioner laid off the New
    Life administrative staff and worked with volunteers to keep the
    business afloat and restructure for the new environment.   In
    addition to those reductions, petitioner returned to work as a
    nurse in a local hospital to generate funds.
    On January 23, 2004, petitioner submitted an offer-in-
    compromise for New Life’s employment tax liabilities.   That
    offer, however, could not be processed because New Life was not
    in compliance with return filing and payment obligations at that
    time.   RO Davis contacted petitioner on that date to so inform
    her, and the two discussed how to proceed.   RO Davis calculated
    an arrangement under which New Life could pay $1,150 per month
    through an installment agreement until an offer-in-compromise
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    could be processed, to which petitioner agreed.   In addition, RO
    Davis advised petitioner that if she signed a waiver extending
    the period of limitations for assessment of trust fund penalties,
    made timely payments under the installment agreement, filed
    timely Federal tax returns, and made timely tax deposits,
    then the IRS would forbear from assessing trust fund penalties
    against petitioner.
    Early in March 2004 an installment agreement was approved
    for the liabilities of New Life that provided for payments of
    $1,150 on the 28th of each month.    The installment agreement was
    assigned to Revenue Officer Avis Smith (RO Smith), a case
    processor who monitors accounts and payments for respondent.
    Petitioner made installment payments under the agreement on April
    27, 2004 ($1,150), May 28, 2004 ($1,150), September 10, 2004
    ($1,150), November 19, 2004 ($1,100), December 28, 2004 ($1,150),
    January 28, 2005 ($1,150), March 4, 2005 ($550), March 10, 2005
    ($600), and May 25, 2005 ($1,150), after which payments ceased.
    Payments made under the agreement were personally delivered by
    petitioner to respondent’s office.
    Throughout the entire period, petitioner, on repeated
    occasions, communicated with RO Smith and/or RO Davis regarding
    financial problems and difficulty in making payments.   Petitioner
    also raised the possibility of decreasing the monthly payment to
    $500, but she did not formally pursue a reduction, opting instead
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    to proceed with preparation of a second offer-in-compromise.    On
    December 17, 2004, petitioner submitted the second offer-in-
    compromise.   However, like the first offer, the second was not
    processed because an employment tax return for New Life had not
    been filed.   Petitioner, however, continued her effort to perfect
    an offer.
    Sometime during March 2005 the installment agreement was
    deemed in default on account of missed payments.   On April 14,
    2005, petitioner contacted RO Smith in an attempt to perfect an
    offer-in-compromise.   During that conversation, although
    petitioner was advised of the installment agreement default, she
    did not fully comprehend what was being explained.   Accordingly,
    the default was again explained to petitioner when she spoke to
    respondent’s personnel in June.   New Life did not receive formal,
    written notification of the default, apparently because of
    confusion regarding a change of the corporation’s address.   After
    the April 14, 2005, conversation with RO Smith, New Life’s case
    was transferred to RO Davis on account of the default, but
    petitioner did not learn of the case transfer until some time
    later.   Sometime during June 2005 petitioner’s frustrations in
    her attempts to deal with various IRS personnel led her to
    contact the Taxpayer Advocate Service, thereby adding an
    additional layer of complexity to petitioner’s involvement and
    communications with respondent.
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    On August 8, 2005, petitioner hand-delivered a third offer-
    in-compromise of New Life’s tax debt, along with a $150 filing
    fee, to RO Davis.    RO Davis forwarded the offer materials, first
    to her manager for approval and then, on August 15, 2005, to the
    IRS Service Center in Memphis, Tennessee, responsible for
    processing offers.   Thereafter, the offer materials were returned
    to petitioner, absent the $150 cashier’s check, with a form
    letter dated September 12, 2005, advising, without further
    explanation, that the “offer is closed”.   The return of the
    offer-in-compromise was caused by an error on the part of the IRS
    when it misapplied the $150 filing fee to payment of outstanding
    New Life liabilities.   Petitioner at that juncture began to make
    inquiries regarding what had transpired with regard to the offer,
    and on September 21, 2005, she faxed a copy of the $150 cashier’s
    check to the Memphis Service Center.
    It was not until December 2005 that New Life finally
    received respondent’s written notification concerning the earlier
    return of the August 8, 2005, offer-in-compromise.   A brief form
    letter advised that a Form 433-A, Collection Information
    Statement for Wage Earners and Self-Employed Individuals, had not
    been included and that the $150 application fee had not been
    paid.
    Meanwhile in early September 2005 a determination was made
    by the IRS to commence proceedings against petitioner personally
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    with respect to New Life’s employment tax liabilities.   RO Davis
    prepared a Letter 1153, Trust Funds Recovery Penalty Letter,
    proposing assessment of section 6672 trust fund penalties against
    petitioner as a person required to collect, account for, and pay
    over withheld taxes of the business for the unpaid liabilities.
    That letter further informed petitioner that if she did not
    agree, she could contact the individual identified therein (RO
    Davis) within 10 days of the date of the letter or could submit a
    written appeal within 60 days.
    The Letter 1153 was mailed on September 2, 2005, hand-
    addressed to petitioner at what was then her address of record.
    Although a certified mail label and return receipt were affixed
    to the envelope, postage was placed thereon with a private
    postage meter and the letter was posted without being presented
    to a U.S. Postal Service (USPS) employee.   As a result, no USPS
    postmark was date-stamped on the envelope, nor was the item
    number on the certified label entered into the USPS certified
    mail tracking system.   Notations made on the envelope by the USPS
    indicate that delivery was attempted and notice was left for
    petitioner on September 3, 2005; that a second notice was left on
    September 8, 2005; and that the document was returned to the IRS
    marked “UNCLAIMED” on September 18, 2005.   The unopened envelope,
    return receipt still attached, was received by the IRS on
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    September 29, 2005.   Petitioner did not receive the Letter 1153
    or notification of its attempted delivery.
    On December 19, 2005, trust fund penalties were assessed
    against petitioner for the trust fund portion of New Life’s
    outstanding employment tax liabilities, and notices of balance
    due were issued to her.    Petitioner, surprised by the turn of
    events, began to investigate by contacting various individuals at
    the IRS.   Her inquiries also led to internal inquiries by several
    of respondent’s offices.    It was discovered that the $150 filing
    fee petitioner submitted with the August 8, 2005, offer-in-
    compromise had been misapplied as a payment toward New Life’s
    taxes for the period ended September 30, 2001.
    A meeting was held on February 16, 2006, among, inter alia,
    petitioner, RO Davis, and RO Davis’s supervisor.    The
    participants discussed the mailing of the Letter 1153 and
    assessment of the trust fund penalties, petitioner’s desire to
    appeal the assessments, and the procedures for such an appeal and
    for the continued pursuit of an offer-in-compromise.      Shortly
    thereafter, RO Davis faxed to petitioner a copy of the envelope
    in which the Letter 1153 had been returned to the IRS.
    Petitioner took that information to the post office and spoke to
    USPS employees in an attempt to track the item as a certified
    letter.    Such efforts, however, were unsuccessful on account of
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    the mailing procedures that had been used by respondent’s
    personnel.
    During the period March to May 2006, in addition to
    continuing work to perfect an offer-in-compromise, petitioner
    submitted various forms and letters in an attempt to forestall
    the filing of a Federal tax lien against her.    To address the
    assessment of the trust fund penalties, petitioner needed to file
    a Form 843, Claim for Refund and Request for Abatement,
    disputing that she was a responsible person within the meaning of
    the employment tax statutes.   Her early attempts to file could
    not be processed.   For example, in March she sent a letter of
    appeal to RO Davis, rather than submitting a Form 843.     Later,
    her initial Form 843, submitted in April and assigned to Revenue
    Officer Advisor Ken McNeil (ROA McNeil) in the IRS Technical
    Services Advisory, was returned to petitioner for failure to
    submit the requisite payment therewith of the amount of tax
    attributable to one individual for each tax period included in
    the claim; i.e., $2,927.
    Meanwhile, on April 12, 2006, petitioner was given notice
    that the IRS was proposing and preparing to file liens against
    her for the assessed trust fund tax penalties.    Petitioner was
    also advised that in order to dispute that proposal, she needed
    to file with the IRS a Form 9423, Collection Appeal Request.      On
    April 13, 2006, petitioner submitted a Form 9423, thereby
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    initiating her participation in the IRS Collection Appeal Program
    (CAP) for prefiling challenge of the lien proposal.
    The CAP appeal was assigned to Settlement Officer Liana
    White (SO White) of the IRS Office of Appeals.   SO White held a
    face-to-face conference with petitioner on April 26, 2006.
    During that conference and followup telephone calls, petitioner
    alleged that she had never received the Letter 1153 proposing
    assessment of the trust fund penalties, and she argued that if
    the installment agreement for New Life had been renegotiated to
    an affordable amount, then assessment of the penalties would not
    have been necessary and no filing of a notice of lien would be
    needed.   SO White explained the distinction between the corporate
    and individual proceedings and that the trust fund penalties can
    be assessed and liens filed regardless of whether the underlying
    corporation is under an installment agreement.   SO White also
    communicated with ROA McNeil regarding the Form 843 abatement
    request and its rejection for lack of payment, and further
    explained those issues, and the steps to perfect the Form 843
    claim, to petitioner.
    SO White concluded the CAP process by means of a closing
    letter dated May 1, 2006.   Because petitioner’s Form 843 could
    not be processed at that time, SO White sustained the proposed
    lien filing but recommended that the filing be delayed until
    petitioner had been afforded an opportunity to perfect a Form 843
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    and then, if perfected, until a decision on the claim, including
    any attendant appeals, was made by the IRS.    Because she was
    considering only petitioner’s challenge to the proposed lien
    filing, SO White was willing to postpone her recommendations
    pending the outcome of ROA McNeil’s investigation into
    petitioner’s liability for the trust fund penalties.     Petitioner
    was given until May 24, 2006, to perfect the claim for abatement
    of the penalties by providing ROA McNeil with a proper Form 843
    accompanied by a payment.    If that was not done, the closing
    letter directed that the IRS compliance function would file the
    notice of tax lien.   Upon closure of the CAP process with the
    issuance of the May 1, 2006, letter, petitioner’s case was
    returned to RO Davis for monitoring, and the letter advised that
    petitioner should contact RO Davis with any questions.
    In late May 2006 petitioner telephoned ROA McNeil concerning
    financial hardship she was encountering in securing payment to
    perfect her Form 843 claim.    She indicated that she could remit
    payment by June 1, 2006.    ROA McNeil responded that petitioner
    could resubmit the Form 843 abatement request with payment at any
    time and that there existed no deadline for submission of such a
    claim.   Petitioner believed that ROA McNeil spoke for
    respondent’s organization and that the CAP recommendations would
    be extended as well, even though ROA McNeil advised she should
    also speak with other of respondent’s employees, because she
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    believed that respondent coordinated all activities concerning
    New Life’s and her trust fund tax liabilities.   Petitioner did
    contact SO White who, because the CAP matter had been closed,
    informed petitioner that she needed to speak to RO Davis.
    Petitioner, in her confusion over who had authority over her
    case, did not do so.
    On May 30, 2006, RO Davis inquired of ROA McNeil whether
    petitioner had submitted a perfected Form 843 claim.   ROA McNeil
    answered in the negative.   On June 1, 2006, RO Davis, acting on
    the CAP recommendations and without further inquiry of
    petitioner, prepared and filed notices of Federal tax lien
    against petitioner for the unpaid trust fund   penalties.   Also on
    that date, petitioner called ROA McNeil again and told him that
    she was sending the completed Form 843 and payment.    That claim
    and payment were received by the IRS on June 2, 2006, and handled
    by ROA McNeil.   After receiving petitioner’s Form 843 abatement
    request, ROA McNeil reviewed it, along with information
    petitioner supplied when she completed the Form 4180, New Life’s
    employment tax returns for the periods at issue, and canceled
    checks she had signed on behalf of New Life.   On June 22, 2006,
    ROA McNeil issued his decision on petitioner’s claim and
    disallowed petitioner’s request for abatement of the trust fund
    penalties.   He also informed her of her right to appeal his
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    determination with the IRS Office of Appeals or file suit in
    either a U.S. District Court or the U.S. Court of Federal Claims.
    While petitioner’s Form 843 abatement request was being
    reviewed and ultimately denied by ROA McNeil, the IRS, on June 7,
    2006, mailed petitioner a Letter 3172, Notice of Federal Tax Lien
    Filing and Your Right to a Hearing under IRC 6320, informing her
    that notices of Federal tax liens were filed for the unpaid trust
    fund penalties assessed against her for the tax periods ended
    September 30 and December 31, 2001, March 31, June 30, and
    September 30, 2002, and September 30, 2003.   The Letter 3172
    informed petitioner of her right to appeal the lien filing by
    submitting a Form 12153, Request for a Collection Due Process
    Hearing.   On July 10, 2006, respondent received petitioner’s
    completed Form 12153 disputing the lien filing.   Her collection
    due process (CDP) lien appeal was assigned to Settlement Officer
    Bart A. Hill (SO Hill) in the IRS Office of Appeals.
    On July 20, 2006, respondent received a letter from
    petitioner stating she did not agree with ROA McNeil’s decision
    to disallow her Form 843 abatement request for the trust fund
    penalties and requesting review by IRS Office of Appeals.    Her
    trust fund penalty abatement appeal was also assigned to SO Hill.
    In a letter dated November 1, 2006, petitioner was instructed
    that at her CDP hearing she could raise collection alternatives,
    challenge the appropriateness of the lien filing, challenge the
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    underlying tax liability if she had not otherwise had a prior
    opportunity to do so, and raise spousal defenses.   She was also
    informed in that letter that SO Hill was responsible for
    considering her appeal of her denied Form 843 abatement request.
    After filing her appeals requests, on August 22, 2006,
    petitioner filed an amended offer-in-compromise on behalf of New
    Life for its unpaid employment tax liabilities.   The corporation
    offered to pay $33,660 at a rate of $330 a month over 102 months,
    which was the period remaining by statute for the IRS to collect.
    On or around September 20, 2006, the IRS accepted New Life’s
    August 22, 2006, offer-in-compromise.   However, respondent also
    informed petitioner that she was still personally responsible for
    the trust fund penalties that had been assessed against her.
    On December 5, 2006, SO Hill held a telephone conference
    with petitioner to discuss the appeal of the lien filing.     SO
    Hill notified her that she was not permitted to discuss her
    liability for the trust fund penalties at her CDP hearing.
    However, during the CDP conference, petitioner asserted that the
    trust fund penalty assessment was invalid.   She raised other
    concerns pertaining to the lien filing with SO Hill, specifically
    that she had reached an agreement with ROA McNeil to extend the
    time for perfecting her Form 843, and more generally that the IRS
    did not follow proper procedures when it failed to send New Life
    a formal default letter and when it improperly returned New
    - 21 -
    Life’s August 8, 2005, offer-in-compromise.   Finally, she made a
    general claim that the notice of Federal tax lien for the trust
    fund penalties should be released.
    At the same time, SO Hill also held, concurrent with
    petitioner’s CDP hearing, a conference with petitioner to discuss
    her Form 843 abatement request appeal.   During the conference SO
    Hill considered the validity of petitioner’s liability for the
    assessed trust fund penalties.   His consideration consisted of a
    full review of her status as a responsible person who willfully
    failed to pay over employment taxes.
    On January 30, 2007, SO Hill issued his determination
    sustaining the denial of petitioner’s Form 843 abatement request
    for trust fund penalties.   He based his determination upon a
    finding that petitioner was a responsible person who willfully
    failed to pay over trust fund taxes.
    On February 2, 2007, SO Hill issued his determination in
    which the filing of the Federal tax liens for the trust fund
    penalties was sustained.    Finding that petitioner had had a prior
    opportunity to dispute her underlying liability for the trust
    fund penalties, SO Hill declined to consider petitioner’s
    underlying liability as part of that determination.   His finding
    that she had had a prior opportunity to dispute the liability was
    based on the IRS’s attempted delivery of the Letter 1153 and his
    consideration of her Form 843 Appeal.    He also determined through
    - 22 -
    discussions with SO White and ROA McNeil that neither had granted
    petitioner an extension of the May 24, 2006, deadline to perfect
    her Form 843 abatement request.    In that regard, petitioner
    provided SO Hill with permission to conduct ex parte
    communications with ROA McNeil and SO White.    SO Hill did not
    consider petitioner’s concerns with the IRS’s mishandling of New
    Life’s offer-in-compromise or respondent’s failure to provide
    formal notice when New Life defaulted on its installment
    agreement, citing his lack of jurisdiction over matters
    pertaining to the corporation.    Instead, he noted that after
    accepting a long-term payment offer from the corporation it was
    appropriate for respondent to file trust fund recovery penalty
    liens because respondent needed to “protect the government’s
    interest in the taxpayer’s assets in case the corporate offer
    defaults.”   SO Hill also considered whether any reason existed to
    release the lien but found no reason to do so and recommended
    against release.
    Finally, SO Hill noted that petitioner had neither supplied
    him with a collection information statement nor proposed any
    collection alternatives for her trust fund penalties.    He
    reviewed the procedures followed to file the notice of lien and
    concluded they were proper.   He determined that the notice of
    lien filing “balances the need for efficient collection of taxes
    - 23 -
    with the taxpayer’s legitimate concern the action is no more
    intrusive than necessary.”
    In response to the notice of determination, petitioner
    timely filed a petition with this Court challenging the decision
    to sustain the notice of tax lien filing and the denial of her
    refund claim.
    Discussion5
    Petitioner’s corporation incurred an employment tax
    liability.   Petitioner, an educated and intelligent person, had
    great difficulty navigating the administrative process to arrange
    for payment.    While she was in the process of dealing with the
    corporate liability, an assessment was made against her for trust
    fund tax.    Notices of lien were filed with respect to the trust
    fund assessment, though she argues an agreement to delay had been
    made.    One major reason for petitioner’s difficulty was that she
    had to deal with a different person for each type of procedure
    concerning the employment tax liability.   At one point in the
    process she was dealing with as many as five of respondent’s
    representatives regarding different aspects of the same
    underlying tax liability; i.e., offers, installment payments,
    claim for refund, etc.   Respondent’s balkanized approach to
    collection procedures was also detrimental to respondent, because
    5
    Neither party has raised any question concerning the burden
    or proof or burden of production in this case. See sec. 7491.
    - 24 -
    important dates and events were not being internally coordinated.
    For petitioner, it presented Kafkaesque circumstances and
    confusion.    The administrative record in this case is complex and
    convoluted.    Ultimately, we have sorted out the underlying
    circumstances and we must decide whether petitioner is entitled
    to relief from the Appeals officer’s determination.
    Respondent filed notices of Federal tax lien with respect to
    petitioner’s trust fund tax assessments.    See secs. 6321, 6322,
    and 6323.    Section 6320 provides that the Secretary shall furnish
    taxpayers with written notice of the filing of a notice of lien
    under section 6323.    This notice must be provided not more than
    5 business days after the date the notice of lien is filed and
    must advise the taxpayer of the opportunity for administrative
    review in the form of a hearing.    Sec. 6320(a)(2) and (3).
    Petitioner has not shown or asserted any omission in the
    procedures with respect to the filing, or notice with respect to
    the filing, and none is disclosed in the record.
    Section 6320(b) provides taxpayers with the right to request
    a “Fair Hearing” before an “Impartial” Appeals officer.    The
    hearing generally shall be conducted consistent with the
    procedures set forth in section 6330(c), (d), and (e).    Sec.
    6320(c).    Section 6330(c)(1) requires the Appeals officer to
    obtain verification that the requirements of any applicable law
    or administrative procedure have been met.    Under section
    - 25 -
    6330(c)(2)(A) a taxpayer may raise any relevant issue at the
    hearing including challenges to “the appropriateness of
    collection actions” and may make “offers of collection
    alternatives, which may include the posting of a bond, the
    substitution of other assets, an installment agreement, or an
    offer-in-compromise.”   The taxpayer may also challenge the
    existence and amount of the underlying tax liability if no notice
    of deficiency was received or the taxpayer did not otherwise have
    an opportunity to dispute such tax liability.    Sec.
    6330(c)(2)(B).
    Section 6330(c)(3) provides that a determination of the
    Appeals officer shall take into consideration the verification
    under section 6330(c)(1), the issues raised by the taxpayer, and
    whether the proposed collection action balances the need for the
    efficient collection of taxes with the legitimate concern of the
    person that any collection action be no more intrusive than
    necessary.   Section 6330(d)(1) allows the taxpayer to appeal a
    determination to the Tax Court.
    Where the underlying tax liability is properly at issue in
    the hearing, we review that issue on a de novo basis.       Goza v.
    Commissioner, 
    114 T.C. 176
    , 181-182 (2000).     However, where the
    underlying tax liability is not at issue, we review the
    determination for an abuse of discretion.     Nicklaus v.
    Commissioner, 
    117 T.C. 117
    , 120 (2001).
    - 26 -
    I.   Scope and Standard of Review
    The Tax Court recently acquired exclusive jurisdiction to
    review appeals from the Commissioner’s lien and levy
    determinations made after October 16, 2006, irrespective of the
    type of tax making up the underlying liability.   See Ginsberg v.
    Commissioner, 
    130 T.C. 88
     (2008); Callahan v. Commissioner, 
    130 T.C. 44
     (2008); McClure v. Commissioner, 
    T.C. Memo. 2008-136
    .      A
    taxpayer’s “underlying tax liability” includes all “amounts a
    taxpayer owes pursuant to the tax laws that are the subject of
    the Commissioner’s collection activities.”    Callahan v.
    Commissioner, 
    supra at 49
    .    Because respondent’s determination
    sustaining the filing of notices of Federal tax lien for unpaid
    trust fund penalties was issued on February 2, 2007, we are
    authorized to review the trust fund penalties assessed against
    petitioner unless precluded by section 6330(c)(2)(B).
    Generally, a taxpayer must raise an issue at a collection
    due process hearing to preserve it for this Court’s
    consideration.   Perkins v. Commissioner, 
    129 T.C. 58
    , 63 (2007)
    (de novo review); Magana v. Commissioner, 
    118 T.C. 488
    , 493
    (2002) (abuse of discretion review); sec. 301.6330-1(f)(2), Q&A-
    F5, Proced. & Admin. Regs.6   At her hearing, held in conjunction
    6
    We recently held that a matter the Appeals officer should
    have considered under sec. 6330(c)(1) was before us for review
    regardless of whether the taxpayer raised it with the Appeals
    officer. Hoyle v. Commissioner, 131 T.C.     (2008).
    - 27 -
    with the conference concerning the trust fund penalties,
    petitioner disputed that she received the Letter 1153 and also
    contended that she did not willfully fail to pay over the trust
    fund taxes.7   The Appeals officer testified that these
    conferences were held simultaneously and that petitioner
    contested her liability for the penalties.   In these
    circumstances there is no reason to draw an invisible curtain
    between issues that have been administratively merged by
    respondent.    As far as petitioner was concerned, her CDP hearing
    and Form 843 abatement request were being addressed by the same
    Appeals officer within one proceeding.   Moreover, the Appeals
    officer’s explanation of the hearing at trial reflects that he
    handled both of petitioner’s claims concurrently.8   Petitioner
    challenged her liability for the trust fund penalties at her
    hearing.   Accordingly, we may consider the merits of that
    7
    In Giamelli v. Commissioner, 
    129 T.C. 107
    , 114 n.5 (2007),
    we noted that we need not address “whether a taxpayer, having
    raised one issue with respect to his or her underlying liability
    in a collection review hearing, may then raise new and different
    issues with respect to the underlying liability for the first
    time on appeal of respondent’s determination before this Court.”
    Because we have found that petitioner raised all the issues
    before us at her CDP hearing, we need not address this issue.
    8
    At trial SO Hill attempted to explain how he addressed
    petitioner’s claims simultaneously, yet separately. At best, his
    testimony was confused and convoluted as to how he denied
    petitioner the opportunity to raise her underlying liability
    while, at the same time, reviewing her challenge to the trust
    fund penalty assessments.
    - 28 -
    assessment provided she was not statutorily precluded from
    raising it during her CDP appeal.
    A taxpayer cannot challenge an underlying liability in a CDP
    hearing, and therefore this Court cannot review that liability,
    if the taxpayer received a notice of deficiency or otherwise had
    an opportunity to dispute the underlying liability.     Sec.
    6330(c)(2)(B).   Because the assessments against petitioner were
    trust fund penalties, respondent would not have issued and mailed
    a notice of deficiency.   See sec. 6212(a).    The question is
    whether petitioner “otherwise [had] an opportunity to dispute”
    the trust fund penalty assessments.     The Appeals officer
    concluded that petitioner had such an opportunity when respondent
    mailed a Letter 1153 to her.   Similarly, respondent argues that
    the Letter 1153 was sent by certified mail to petitioner’s last
    known address and that petitioner did not avail herself of her
    opportunity to contest the proposed assessment within the time
    prescribed by the letter.   On these facts, respondent asserts
    that petitioner was barred from challenging her underlying
    liability before the Appeals officer.
    A section 6672(b)(1) notice provides a taxpayer with the
    means for protesting a proposed trust fund penalty assessment
    administratively with the Commissioner.     It follows that where a
    taxpayer has not received a section 6672(b)(1) notice, then that
    taxpayer has missed an opportunity to dispute the underlying tax
    - 29 -
    liability.9    Documentary evidence of mailing may suffice as proof
    that a notice of deficiency was properly mailed to a taxpayer.
    Coleman v. Commissioner, 
    94 T.C. 82
    , 90-91 (1990).    When a Letter
    1153 is mailed, the Commissioner must follow the same mailing
    procedures that are provided for notices of deficiency in section
    6212(b).   Sec. 6672(b)(1).   It follows that the same evidence
    that establishes that the Commissioner mailed a notice of
    deficiency to a taxpayer’s last known address should be
    sufficient to establish that the Commissioner properly sent a
    Letter 1153.    See Hickey v. Commissioner, 
    T.C. Memo. 2009-2
    .
    Respondent has established that a Letter 1153 was mailed, by
    certified mail, to petitioner’s last known address, as required
    by section 6672(b)(1).10
    9
    This result is compatible with the law involving notices of
    deficiency. To be effective, a notice of deficiency need not be
    received by a taxpayer; instead, it must be shown that the
    Commissioner sent it to a taxpayer’s last known address. Sec.
    6212(a) and (b); Weber v. Commissioner, 
    122 T.C. 258
    , 263 (2004);
    Pietanza v. Commissioner, 
    92 T.C. 729
    , 735-736 (1989), affd.
    without published opinion 
    935 F.2d 1282
     (3d Cir. 1991). In
    contrast, when Congress enacted the collection due process
    statute, it determined that a higher standard should apply and
    that taxpayers had to receive a notice of deficiency before they
    would be precluded from raising their underlying liability at
    their CDP hearing. Sec. 6330(c)(2)(B). Therefore, our
    conclusion that a taxpayer must receive a Letter 1153 fits within
    the intent of Congress’s collection due process laws.
    10
    While respondent did not present a U.S. Postal Service
    Form 3877, there is sufficient evidence in the record that
    respondent sent a Letter 1153 by certified mail to petitioner’s
    last known address.
    - 30 -
    The record also reflects that the letter was returned to
    respondent undelivered and marked “unclaimed”.   Petitioner’s
    circumstances are therefore distinguishable from those of the
    taxpayers in McClure v. Commissioner, 
    T.C. Memo. 2008-136
    , and
    Pelliccio v. United States, 
    253 F. Supp. 2d 258
     (D. Conn. 2003).
    The taxpayer in McClure received a Letter 1153 and contested his
    liability in response.   This Court held that that was his
    opportunity to dispute the trust fund penalty assessment.
    Likewise, in Pelliccio the taxpayer received a Letter 1153 before
    each assessment, and the District Court concluded that the
    taxpayer had the requisite opportunity.   We conclude that a
    section 6672(b)(1) notice that was not received, but not
    deliberately refused, by a taxpayer does not constitute an
    opportunity to dispute that taxpayer’s liability.
    We note that during the prolonged course of her dealings
    with respondent, petitioner received numerous notices and
    documents from respondent, some by certified mail.   She not only
    received them, but unlike the taxpayer in Sego v. Commissioner,
    
    114 T.C. 604
     (2000), she responded or took other appropriate
    action in response to them.11   The Letter 1153 was the sole
    instance where petitioner made no response nor took other action.
    11
    For instance, petitioner hand-delivered payments to
    respondent. In her dealings with respondent she attended
    meetings that either she or respondent scheduled. She never
    raised frivolous arguments or employed tactics solely for delay.
    - 31 -
    Further, respondent has neither argued nor presented any evidence
    that petitioner refused delivery of the Letter 1153.
    We recently addressed what it means to “otherwise have an
    opportunity to dispute” a tax liability in the context of section
    6330(c)(2)(B).   See Perkins v. Commissioner, 
    129 T.C. 58
     (2007);
    Lewis v. Commissioner, 
    128 T.C. 48
     (2007).    Neither the Internal
    Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub.
    L. 105-206, sec. 3401, 
    112 Stat. 746
    , nor the Internal Revenue
    Code defines what Congress intended by the phrase “otherwise have
    an opportunity to dispute” a tax liability.    The Commissioner has
    defined this phrase to some extent by promulgating a regulation
    indicating that an opportunity “includes a prior opportunity for
    a conference with Appeals”.    Sec. 301.6330-1(e)(3), Q&A-E2,
    Proced. & Admin. Regs. (emphasis added).
    The Commissioner’s limited definition leaves open the
    opportunity for deciding what other circumstances do or do not
    constitute an “opportunity”.    Lewis v. Commissioner, supra at 55.
    Regarding this subject, this Court has explained:
    As we see it, if Congress had intended to preclude only
    those taxpayers who previously enjoyed the opportunity
    for judicial review of the underlying liability from
    raising the underlying liability again in a collection
    review proceeding, the statute would have been drafted
    to clearly so provide. The fact that Congress chose
    not to use such explicit language leads us to believe
    that Congress also intended to preclude taxpayers who
    were previously afforded a conference with the Appeals
    Office from raising the underlying liabilities again in
    a collection review hearing and before this Court.
    - 32 -
    Id. at 61.   We concluded our analysis by holding that “A
    conference with the Appeals Office provides a taxpayer a
    meaningful opportunity to dispute an underlying tax liability.”
    Id.
    In his determination sustaining the filing of the notice of
    tax liens, the Appeals officer decided that petitioner had had an
    opportunity to dispute her liability for the trust fund
    penalties when he reviewed her Form 843 abatement request.        We
    find the Appeals officer’s conclusion unsupportable.   As
    explained in Perkins v. Commissioner, supra at 65, section
    6330(c)(2)(B) “utilizes the past tense in reference to the
    opportunity to dispute, indicating that Congress contemplated
    that the dispute opportunity would have already transpired when
    the hearing under section 6330 occurred.”   It was also noted that
    the Commissioner’s regulation specifies that a prior conference
    with Appeals is an opportunity to dispute a liability.      Id.    The
    analysis and reasoning we applied in Perkins is equally
    applicable to petitioner’s situation.   Petitioner’s concurrent
    appeal of the denial of her abatement request was not an
    “opportunity” as contemplated by section 6330(c)(2)(B).     To hold
    otherwise would unduly limit judicial review.   Accordingly, a
    simultaneous collection due process appeal and underlying tax
    liability appeal is not an “opportunity” to contest the
    - 33 -
    underlying tax liability within the meaning of section
    6330(c)(2)(B).
    To challenge the propriety of the proposed lien filing,
    petitioner filed an appeal with respondent’s CAP.    The CAP
    Settlement Officer, an Appeals officer, was fully aware of
    petitioner’s pending Form 843 abatement request.    The CAP
    Settlement Officer did not consider petitioner’s underlying tax
    liability and instead focused her review solely on the propriety
    of the proposed notice of lien filing.12   Petitioner’s CAP
    prelien filing hearing did not rise to the level of an
    “opportunity to dispute” her underlying tax liability where the
    Appeals officer limited her review to the propriety of filing the
    notice of liens.
    Where a taxpayer has not received a notice of deficiency or
    had an opportunity to contest her liability and raises her
    underlying liability at her CDP hearing, we review the underlying
    liability.   Sec. 6330(c)(2)(B); see, e.g., Bach v. Commissioner,
    
    T.C. Memo. 2008-202
    , affd. without published opinion 103 AFTR 2d
    1340, 2009-1 USTC par. 50,286 (4th Cir. 2009).   Where a taxpayer
    is incorrectly advised at a CDP hearing that she had a prior
    opportunity to contest her underlying liability, we consider the
    12
    It is clear from the record that petitioner raised her
    concern that she did not receive the Letter 1153, but that SO
    White solely focused petitioner’s CAP hearing on the propriety
    of the proposed notice of lien filing.
    - 34 -
    underlying liability.      Petitioner raised the underlying
    liability, and it was reviewed and considered in her abatement
    hearing.   The Appeals officer conducting petitioner’s CDP hearing
    mistakenly believed she had had a prior opportunity to raise her
    underlying tax liability.      We find that petitioner did not have
    an opportunity to dispute her liability for the trust fund
    penalty assessments before her CDP hearing with SO Hill.
    Petitioner’s liability for the trust fund penalties is
    accordingly before this Court for de novo review.
    II.   Trust Fund Penalty
    Section 6672 imposes a penalty for the willful failure to
    collect, account for, and pay over income and employment taxes of
    employees.   Income and employment tax withholding is commonly
    referred to as “trust fund tax” because the Internal Revenue Code
    characterizes such withholding as a “special fund in trust for
    the United States.”     Sec. 7501(a).     As set forth in section 6671,
    penalties for the failure to collect, account for, and pay over
    trust fund taxes are assessed and collected in the same manner as
    tax against a person including “an officer or employee of a
    corporation, or a member or employee of a partnership, who as
    such officer, employee, or member is under a duty to perform” the
    duties referred to in section 6672.       Sec. 6671(b).   Such persons
    are referred to as “responsible persons” and the term may be
    broadly applied.   See generally Logal v. United States, 195 F.3d
    - 35 -
    229, 232 (5th Cir. 1999); Barnett v. IRS, 
    988 F.2d 1449
    , 1454
    (5th Cir. 1993).
    A trust fund   penalty may be assessed against any
    responsible person and is separate from the employer’s liability
    for the unpaid income and employment taxes.    Sec. 6672(a); Howard
    v. United States, 
    711 F.2d 729
    , 733 (5th Cir. 1983).      While there
    is no requirement that the Commissioner pursue collection of the
    taxes from the employer before assessing the penalty against a
    responsible person, as a matter of policy the Commissioner does
    not pursue collection of the penalty where the employer pays its
    liability.   Hornsby v. IRS, 
    588 F.2d 952
    , 954 (5th Cir. 1979).13
    A.   Preliminary Notice
    Generally, before a section 6672 penalty may be assessed,
    the Commissioner must mail a Letter 1153 to the responsible
    person’s last known address advising that a trust fund penalty
    will be assessed.   Sec. 6672(b)(1).14   While we determined
    petitioner did not have an opportunity to contest her liability
    for the penalties because she did not receive the Letter 1153, we
    13
    According to the Service’s Policy Statement P-5-14, “The
    withheld income and employment taxes or collected excise taxes
    will be collected only once, whether from the business, or from
    one or more of its responsible persons.” 1 Administration,
    Internal Revenue Manual (IRM) (CCH), pt. 1.2.14.1.3(2), at 2404
    (June 9, 2003).
    14
    The exception is where the Commissioner determines that
    collection of the penalty is in jeopardy. Sec. 6672(b)(4).
    Respondent does not assert that the penalty was in jeopardy of
    collection; therefore, this exception does not apply.
    - 36 -
    arrived at that determination by applying the standard
    established in section 6330(c)(2)(B).   Whether the Government
    must ensure that a taxpayer actually receives a Letter 1153 or
    whether it is sufficient for the Government to show it timely
    mailed the notice to a taxpayer’s last known address in order for
    the assessment to be valid is a question recently addressed by
    this Court.   We concluded that the mailing of section 6672
    notification to a taxpayer’s “last known address” would be
    sufficient to advise a responsible officer of the assertion of a
    trust fund penalty.   See Hickey v. Commissioner, T.C. Memo. 2009-
    2.   In Hickey we held that where the notice has been mailed to
    the taxpayer’s last known address, it is not necessary for the
    taxpayer to receive the notice before the Commissioner can assess
    the trust fund penalty.   A bankruptcy court reached the same
    conclusion in In re Chabrand, 301 Bankr. 468, 476-477 (Bankr.
    S.D. Tex. 2003).
    The other means of providing notice to a taxpayer pursuant
    to section 6672(b)(1) is by personal service.   This option was
    added to the statute in 1998 with the enactment of RRA sec. 3307,
    
    112 Stat. 744
    .   A Senate Finance Committee report explains the
    addition to the statute and states, in a parenthetical to the
    explanation, that “In some cases, personal delivery may better
    assure that the recipient actually receives notice.”     S. Rept.
    105-174, at 66 (1998) 1998-
    3 C.B. 537
    , 602.   The Committee’s
    - 37 -
    explanation implies that Congress added personal delivery as an
    option for the Commissioner that would “better assure” receipt of
    the notice, thereby acknowledging that mailing notice to the
    taxpayer’s last known address does not guarantee receipt.     The
    delivery methods are alternatives, and the statute permits the
    Commissioner to choose which method to use; thus, we have
    concluded that Congress did not require the Commissioner to
    ensure that a taxpayer actually receive the notice.
    Accordingly, proper mailing of a preliminary notice to the
    last known address is sufficient to comply with section
    6672(b)(1).   In this case the notice requirement of the statute
    was satisfied by respondent’s certified mailing of a Letter 1153
    to petitioner’s last known address.
    B.   Burden of Proof
    The parties have not raised the issue of who bears the
    burden of proof in this proceeding.     Generally, the burden of
    proof is upon the taxpayer.   Sec. 7453; Rule 142(a).    Section
    7491(a), providing for a shift to the Commissioner of the burden
    of proof in certain circumstances, is inapplicable to trust fund
    penalty cases.15   In any event we find on a preponderance of the
    evidence that employment taxes were not paid, that petitioner was
    15
    Sec. 7491(a)(1) provides that the burden of proof may be
    shifted to the Commissioner, provided that certain requirements
    are met, for “any tax imposed by subtitle A or B”. The sec. 6672
    trust fund penalty is imposed by subtit. F of the Internal
    Revenue Code.
    - 38 -
    a responsible person, and that she willfully failed to pay over
    those taxes.
    C.    Responsible Person
    Liability is imposed upon all persons responsible for
    collecting, accounting for, or paying over employment withholding
    taxes.16   The Court of Appeals for the Fifth Circuit, to which
    this case is appealable, “generally takes a broad view of who”
    qualifies as a “responsible person under § 6672.”    Gustin v.
    United States, 
    876 F.2d 485
    , 491 (5th Cir. 1989).    It is one’s
    duties, status, and authority that define him as a responsible
    person.    Turnbull v. United States, 
    929 F.2d 173
    , 178 (5th Cir.
    1991); Gustin v. United States, supra at 491.    A delegation of
    that duty to others does not necessarily change that person’s
    status as a responsible person.    Turnbull v. United States, supra
    at 178.    Further, an individual may be a responsible person even
    though he did not know that withholding taxes were not being paid
    over to the Government.    Barnett v. IRS, 
    988 F.2d at 1454
    .
    The Court of Appeals for the Fifth Circuit considers the
    following to be indicia of a responsible person:    (i) Holding the
    position of officer or member of the board of directors; (ii)
    16
    The U.S. Supreme Court explained that responsibility for
    collecting, truthfully accounting for, and paying over employment
    taxes must be read disjunctively because Congress did not intend
    to limit liability for trust fund taxes “to those persons in a
    position to perform all three of the enumerated duties”. Slodov
    v. United States, 
    436 U.S. 238
    , 250 (1978).
    - 39 -
    substantial ownership of the business; (iii) possessing the
    authority to hire and fire employees; (iv) managing the day-to-
    day operations of the business; (v) deciding how to disburse
    funds and pay creditors; and (vi) possessing the authority to
    sign checks for the business.     Id. at 1455.     “No single factor is
    dispositive.”   Id.    In applying these indicia, there may be, and
    often are, more than one responsible person within each business.
    Id.   However, for purposes of imposing liability for trust fund
    penalties, it does not matter how many responsible persons there
    are, or who is the most responsible, because the statute applies
    equally to all responsible persons.      Id.    Therefore, we must
    determine only whether petitioner is a responsible person.
    During the periods at issue petitioner was the president,
    treasurer, and an employee of New Life.        She was also the
    majority (75 percent) shareholder of the corporation.        She admits
    she had the ability to and did exercise her right to hire and
    terminate employees.    Petitioner was a signatory on New Life’s
    checking account.     There is considerable evidence that she signed
    most of the checks for New Life.    There is evidence she was
    involved in managing the corporation although that responsibility
    was shared with others.    She concedes that she had “overall
    management” responsibilities for the corporation.        Finally,
    petitioner admits that she had the authority to direct the
    - 40 -
    payment of corporate funds, and there is ample evidence she
    exercised that authority.
    It is clear on the basis of her admissions that petitioner
    possessed, albeit in varying degrees, all six of the indicia of
    a responsible person.   There is ample evidence to support the
    conclusion that petitioner was a responsible person, for purposes
    of section 6672.
    D.   Willfulness
    A responsible person will be held liable for the penalty
    only where that failure to pay over withholding tax was willful.
    The Court of Appeals for the Fifth Circuit has determined that
    “willful”, in the context of section 6672, does not mean the
    responsible person must have a “criminal or other bad motive * *
    *, but simply a voluntary, conscious and intentional failure to
    collect, truthfully account for, and pay over the taxes withheld
    from the employees.”    Newsome v. United States, 
    431 F.2d 742
    , 745
    (5th Cir. 1970).   To establish willfulness, there is no
    requirement that the responsible person have intended to deprive
    the Government of the withholding tax.    
    Id. at 747
    .   However,
    willfulness is established where the “responsible person acts
    with a reckless disregard of a known or obvious risk that trust
    funds may not be remitted to the Government”.    Mazo v. United
    States, 
    591 F.2d 1151
    , 1154 (5th Cir. 1979).    While willfulness
    is typically proven by evidence that a responsible person paid
    - 41 -
    other creditors when withholding tax was due to the Government,
    mere negligence is not sufficient to establish willfulness.
    Gustin v. United States, supra at 492.
    Delegation of the responsibility to handle trust fund taxes
    appropriately is not proof that the responsible person was not
    willful.   Hornsby v. IRS, 
    588 F.2d at 953
    .    “Responsible persons
    owe a fiduciary obligation to care properly for the funds that
    are temporarily entrusted to them for the ultimate use of the
    United States.”    
    Id.
       A responsible person’s fiduciary duty
    remains with him even where he has delegated responsibility for
    discharging that duty to a subordinate.     
    Id.
    Petitioner admits that as early as March 2002 she became
    aware that New Life had not been paying over its trust funds to
    the Government.    Petitioner employed a bookkeeper who was
    responsible for preparing New Life’s Form 941, Employer’s
    Quarterly Federal Tax Return, and remitting payment along with
    these returns.    For all periods at issue petitioner signed the
    quarterly employment tax returns reflecting an unpaid liability
    for employment taxes.    She does not recall whether at the time
    she signed these returns they were blank or had been completed by
    the bookkeeper.    There is evidence petitioner signed checks
    paying for the corporation’s rent and insurance, as well as an
    “advance” payable to herself.    These payments were made
    - 42 -
    before and after she became aware of the corporation’s unpaid
    employment tax liability.
    Petitioner’s delegation of the duty to prepare and remit the
    employment tax returns and payments does not insulate her from
    liability.    Her defense is that she was unaware of the
    bookkeeper’s failure to remit the employment taxes.    Petitioner
    did, however, become aware during March 2002, if not sooner, that
    the corporation had not been paying over these taxes.      Other
    creditors were paid despite New Life’s liability to respondent
    and its failure to remit employment taxes continued for the
    quarters ended March 31, June 30, and September 30, 2002, and
    September 30, 2003.    Petitioner’s authorization of payment to
    other New Life creditors after becoming aware that employment
    taxes were unpaid is indicative that as a responsible person her
    “conduct was willful as a matter of law.”    See Mazo v.
    Commissioner, supra at 1157.
    Even though petitioner was distracted and pressured by
    business problems and responsibilities, her failure to discharge
    the outstanding obligations to the Government is not thereby
    excused.     We can draw only one conclusion from these facts:
    Petitioner’s failure to pay over employment taxes was “willful”.
    E.    Reasonable Cause
    Finally, the Court of Appeals for the Fifth Circuit
    recognizes that a taxpayer may avoid liability for a trust fund
    - 43 -
    penalty by showing reasonable cause for a failure to collect,
    account for, or pay over trust fund taxes.    Newsome v. United
    States, supra at 746-747; Frazier v. United States, 
    304 F.2d 528
    ,
    530 (5th Cir. 1962).    It is a very limited exception to a finding
    of willfulness.    Logal v. United States, 195 F.3d at 233; Bowen
    v. United States, 
    836 F.2d 965
     (5th Cir. 1988); Newsome v. United
    States, supra at 747.    While reasonable cause is a defense,
    conceptually, the Court of Appeals has stated that “no taxpayer
    has * * * carried that pail up the hill.”    Id.   Further,
    reasonable cause is not a defense where a responsible person
    “knew that the withholding taxes were due, but * * * made a
    conscious decision to use corporate funds to pay creditors other
    than the government.”    Logal v. United States, 195 F.3d at 233.
    While petitioner does not assert the reasonable cause
    exception applies to her, we consider its applicability.
    Petitioner concedes that she knew withholding taxes for New Life
    were due.    Additionally, the record contains considerable
    evidence she paid other creditors after becoming aware of the
    corporation’s unpaid liability for employment taxes.    Thus, we
    find that a defense of reasonable cause is not available to
    petitioner.
    III.    Collection Due Process Appeal
    Having found petitioner liable for the trust fund
    penalties, we turn to other aspects of respondent’s notice of
    - 44 -
    determination upholding the filing of the notices of lien against
    petitioner.   A section 6330 hearing is to be conducted by an
    officer or employee of the Commissioner’s Appeals Office who has
    had no prior involvement with respect to the tax in controversy.
    Sec. 6330(b)(1), (3).   The Appeals officer or employee is
    required to verify that the requirements of any applicable law or
    administrative procedure have been met.   Sec. 6330(c)(1).    At the
    hearing, the taxpayer may raise “any relevant issue relating to
    the unpaid tax”.   Sec. 6330(c)(2)(A).   At the conclusion of the
    hearing, the Appeals officer must determine whether and how to
    proceed with collection and shall take into account:   (i) The
    verification that the requirements of any applicable law or
    administrative procedure have been met; (ii) the relevant issues
    raised by the taxpayer; (iii) challenges to the underlying tax
    liability by the taxpayer, where permitted; and (iv) whether any
    proposed collection action balances the need for the efficient
    collection of taxes with the legitimate concern of the taxpayer
    that the collection action be no more intrusive than necessary.
    Sec. 6330(c)(3).
    In regard to matters other than the tax liability, our
    standard for review of an Appeals officer’s determination
    concerning a collection due process hearing is generally whether
    there has been an abuse of discretion, a standard which the Court
    of Appeals for the Fifth Circuit also applies when it reviews
    - 45 -
    such aspects of collection due process cases.    Christopher Cross,
    Inc. v. United States, 
    461 F.3d 610
    , 612 (5th Cir. 2006).      This
    Court will find an abuse of discretion has occurred in collection
    due process cases where the exercise of discretion is without
    sound basis in fact or law.   See Freije v. Commissioner, 
    125 T.C. 14
    , 23 (2005); Ansley-Sheppard-Burgess Co. v. Commissioner, 
    104 T.C. 367
    , 371 (1995).   The Court of Appeals for the Fifth Circuit
    has adopted a similar test for whether an abuse of discretion has
    occurred.   Christopher Cross, Inc. v. United States, supra at 612
    (defining an abuse of discretion as “clear taxpayer abuse and
    unfairness by the IRS”); see Burnett v. Commissioner, 
    227 Fed. Appx. 342
    , 343   (5th Cir. 2007) (citing Cross and stating that
    the court is “applying the same abuse-of-discretion standard as
    the Tax Court” (emphasis added).   We, therefore, proceed by
    considering whether respondent’s determination, insofar as
    related to matters other then petitioner’s challenge to her
    underlying liabilities, was an abuse of discretion.
    Petitioner challenged the propriety of the Appeals officer’s
    determination on three grounds:    (1) Respondent never mailed her
    the Letter 1153; (2) notification was not sent to New Life
    advising it had defaulted on an installment agreement with
    respondent for payment of the employment tax liability; and (3)
    a notice of lien was filed against petitioner despite an
    agreement not to file the notice within a certain period and
    - 46 -
    despite petitioner’s having informed respondent that the $2,927
    payment needed to institute the refund abatement could not be
    made until 1 week after the agreed time.
    We held that petitioner did not receive the Letter 1153, and
    we reviewed her underlying liability.    Our finding that
    petitioner did not receive the Letter 1153 did not invalidate the
    trust fund penalty assessment.    Petitioner has not raised any
    other issue with respect to respondent’s determination to assess
    the trust fund penalty, and nothing in the record would cause us
    to invalidate the assessment.
    Petitioner next contends that the decision to proceed with
    filing a notice of lien was in error because she was not advised
    that New Life had defaulted on its installment agreement.17   At
    her CDP hearing and at trial petitioner also raised her concern
    that New Life’s offers-in-compromise had been inappropriately
    rejected.   As we understand petitioner’s argument, she is
    asserting that respondent’s mishandling of these administrative
    17
    On Mar. 3, 2004, New Life and respondent entered into an
    installment agreement for payment of its employment tax
    liabilities. Respondent admits that an employee agreed not to
    pursue the trust fund penalties against petitioner as long as
    certain conditions were met, including New Life’s timely payment
    of the amounts agreed to under the installment agreement.
    Petitioner does not contend that the installment payments were
    made; instead, she asserts that respondent should have notified
    her of the default and failed to do so.
    - 47 -
    tasks led respondent to pursue trust fund penalties against
    her.18
    Respondent’s handling of the installment agreement default
    or of the offers-in-compromise with New Life has no direct
    bearing on petitioner’s case.     Whether or not New Life was paying
    a portion of its liability under an offer-in-compromise or
    installment agreement, respondent had discretion to collect the
    unpaid trust fund tax by pursuing a penalty against petitioner as
    a responsible person.19    Because the pursuit of the trust fund
    penalties against petitioner was within respondent’s discretion,
    18
    As previously noted, petitioner was impeded by the fact
    that respondent had as many as five different employees dealing
    with her regarding the employment tax and trust fund penalties
    for the same tax periods. These circumstances do not constitute
    an abuse of discretion. It is possible, however, that petitioner
    would have encountered less confusion and there might have been
    an administrative resolution of this case if she had been able to
    deal with a single point of contact concerning the employment
    tax.
    19
    It is the Service’s policy that the amount offered to
    compromise a liability subject to assertion of the TFRP
    will represent what can be collected from the employer.
    If the Service enters into a compromise with an employer
    for a portion of the trust fund tax liability, the
    remainder of the trust fund taxes may still be collected
    from a responsible person pursuant to Section 6672 of the
    Internal Revenue Code.
    1 Administration, IRM (CCH), pt. 5.8.4.13.2(2), at 16.349-11
    (Sept. 23, 2008); see also Hult v. Commissioner, T.C. Memo. 2007-
    302; sec. 301.6159-1(d)(3), Proced. & Admin. Regs. (stating the
    Commissioner may file a lien while a taxpayer has an installment
    agreement in place as long as the terms of the agreement do not
    provide otherwise).
    - 48 -
    we cannot, on that basis, conclude respondent abused his
    discretion.
    Petitioner’s final argument is that respondent should not
    have filed the liens once she submitted the necessary payment
    with her Form 843 abatement request.    The CAP officer gave
    petitioner until May 24, 2006, to perfect her Form 843 abatement
    request and agreed not to file the notice of lien until a
    decision was reached on her abatement request.    Petitioner,
    however, did not submit the payment to perfect her abatement
    request until June 2, 2006.   Petitioner and respondent disagree
    as to whether petitioner was given the impression that the lien
    filing would be held in abeyance even though she missed the May
    24 deadline.   Whether petitioner was or was not granted
    additional time to perfect her abatement request has no bearing
    on the appropriateness of respondent’s decision to file notices
    of tax lien.   The Commissioner may proceed with filing a tax lien
    after a tax has been assessed, notice and demand has been given,
    and a taxpayer has refused or neglected to pay.    Sec. 6321.
    There is no legal prohibition to filing a notice of Federal tax
    lien while a taxpayer is seeking administrative review of the
    underlying liability.20   Respondent’s decision to proceed with
    20
    Unlike notice of lien filings, the Commissioner is
    prohibited from pursuing a levy where a taxpayer satisfies the
    requirements of sec. 6672(c). Included in the list of
    requirements is that the taxpayer file a refund/abatement
    (continued...)
    - 49 -
    filing the lien was well within the bounds of respondent’s
    discretion.
    The Appeals officer verified that respondent had complied
    with all legal and procedural requirements pertaining to the
    proposed lien.   Petitioner did not challenge the appropriateness
    alternative.   Also, petitioner did not raise any other defenses
    to collection.   Finally, as explained in the notice of
    determination, the Appeals officer took into account whether any
    proposed collection action balanced the need for the efficient
    collection of taxes with the legitimate concern of petitioner
    that the collection action be no more intrusive than necessary.
    See sec. 6330(c)(3).    Consequently, the Appeals officer
    determined the filing of a notice of lien was legally and
    procedurally correct.
    The Appeals officer’s determination to uphold the lien is
    sustained.
    To reflect the foregoing,
    Decision will be entered
    for respondent.
    20
    (...continued)
    request. Sec. 6672(c)(1)(B); 1 Administration, IRM (CCH), pt.
    5.7.7.6.2(1), at 16,216 (Apr. 13, 2006).