Rodney P. Walker v. Commissioner , 2018 T.C. Memo. 22 ( 2018 )

T.C. Memo. 2018-22UNITED STATES TAX COURT
RODNEY P. WALKER,1 Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 16108-14L, 9435-15L. Filed February 26, 2018.
Both P and R have moved for summary judgment in these CDP
cases. We will deny P's motion and grant R's motion in part. We will
remand these cases to Appeals for supplemental determinations on
two issues.
Rodney P. Walker, pro se.
Nicole C. Beckley, for respondent.
1
We consolidated the cases at docket Nos. 16108-14L and 9435-15L for
trial, briefing, and opinion.
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[*2] MEMORANDUM OPINION
HALPERN, Judge: These consolidated cases are before us to review two
determinations by the Internal Revenue Service (IRS) Appeals Office (Appeals)
following two collection due process (CDP) hearings conducted pursuant to
sections 6320(b) and (c) and 6330(b) and (c).2 Respondent seeks to collect from
petitioner his unpaid Federal income tax for his 2001 through 2007 and 2009
taxable (calendar) years. Appeals' first determination was to sustain respondent's
notice of Federal tax lien (NFTL) with respect to petitioner's unpaid 2001 through
2007 tax, and its second determination was to sustain respondent's notice of intent
to levy (levy notice) with respect to petitioner's unpaid 2007 and 2009 tax.3
Petitioner assigns errors to those determinations; respondent denies any error. We
review the determinations pursuant to section 6330(d)(1). Each party has moved
for summary judgment in his favor (petitioner's motion and respondent's motion).
Each party objects to our granting the other's motion except that petitioner
concedes that we may grant respondent's motion as it pertains to 2001 and 2002.
2
Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986, as amended, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
3
As discussed infra, respondent had already notified petitioner of his intent
to collect by levy petitioner's unpaid 2001 through 2006 tax.
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[*3] We accept that concession and will not further address 2001 and 2002 in this
report. We will sometimes refer to the remaining years at issue (2003-07 and
2009) as the controversy years.
Summary judgment expedites litigation. It is intended to avoid unnecessary
and expensive trials. It is not, however, a substitute for trial and should not be
used to resolve genuine issues of material fact. E.g., Estate of Powell v.
Commissioner, 148 T.C. __, __ (slip op. at 10) (May 18, 2017). We may grant
summary judgment "if the pleadings, answers to interrogatories, depositions,
admissions, and any other acceptable materials, together with the affidavits or
declarations, if any, show that there is no genuine dispute as to any material fact
and that a decision may be rendered as a matter of law." Rule 121(b). The
moving party bears the burden of proving that no genuine dispute as to any
material fact exists, and we will draw any factual inferences in the light most
favorable to the nonmoving party. See, e.g., George v. Commissioner, 139 T.C.
508, 512 (2012).
In support of his motion and in opposition to petitioner's motion, respondent
relies on the pleadings, two declarations (along with attachments thereto), and
relevant documents from his administrative files. One declaration is by Settlement
Officer (SO) Wilhamina Hayes, the Appeals employee who was assigned to
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[*4] conduct petitioner's CDP hearing with respect to the NFTL and who
determined that the notice should stand. The second declaration is by Timothy G.
Kash, the then manager of Linda Reeve, who was the settlement officer assigned
to conduct petitioner's CDP hearing with respect to the levy notice and who
determined that the notice should stand. Apparently SO Reeve is unavailable to be
a declarant. Mr. Kash approved her determination to sustain the levy notice, and
attached to his declaration are SO Reeve's notes and the documents that she
reviewed in making her determination. Petitioner has provided us with no
affidavit or declaration to support either his motion or his opposition to
respondent's motion. He refers to, and appears to rely on, the declarations and file
documents provided by respondent.
We will deny petitioner's motion, grant respondent's motion in part, and
remand these cases to Appeals for supplemental determinations on two issues.
Background
We draw the following facts from the pleadings, the motions, the
declarations, and the documents provided by respondent from his administrative
files.
Petitioner's Residence
Petitioner resided in California when he filed the petitions.
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[*5] Notices of Deficiency and Certified Mail Logs
Petitioner did not file Federal income tax returns for the controversy years.
Because of that failure, respondent completed substitutes for returns for petitioner
pursuant to section 6020(b). On the basis of those substitutes, respondent
determined deficiencies in petitioner's tax liabilities for those years and prepared
statutory notices of deficiency (statutory notices or notices). The record contains
copies of those notices for the controversy years, which were obtained by SO
Hayes (2003 through 2007) and SO Reeve (2007 and 2009) in preparation for
petitioner's CDP hearings. Each notice is correctly addressed to petitioner, states
that there is a deficiency in tax for that year, and shows a particular United States
Postal Service certified mail number. The record also contains a copy of a
redacted certified mail log (mail log or log) obtained by SO Reeve that states that a
statutory notice for 2009 was sent to petitioner. The log is dated February 4, 2013,
and shows petitioner's name and address, a certified mail number matching the
number on the 2009 notice, a Postal Service employee's signature, and a postmark
of even date with the date of the log. Attached to respondent's motion are copies
of three other redacted mail logs.4 The first is dated July 9, 2007, states that
4
Respondent may introduce as evidence a mail log that is not in the
administrative record to refute petitioner's argument that he did not receive a
(continued...)
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[*6] statutory notices for 2003 and 2004 were sent to petitioner, and shows
petitioner's name and address, certified mail numbers matching the numbers on the
notices, a Postal Service employee's signature, and a postmark of even date with
the dates on the notices. The second mail log, dated October 20, 2008, is similar
except that it references statutory notices for 2005 and 2006. The third mail log,
dated December 22, 2009, is different in that, while it shows petitioner's name and
address, a certified mail number matching the number on the 2007 notice, a Postal
Service employee's signature, and a postmark of even date with the date of the
notice, it does not state, as do the other mail logs, that a statutory notice was
mailed to petitioner.
Respondent acknowledges that the four mail logs contain a "technical
defect" in that, while they show the total number of pieces of mail that
accompanied each log to the post office (more than just the mailings to petitioner),
they lack acknowledgment that any number of pieces was received by the post
office. The spaces on the logs to show that information are blank.
4
(...continued)
statutory notice on the ground that the record may be supplemented if it does not
adequately disclose the grounds for Appeals' determination. See Crain v.
Commissioner, T.C. Memo. 2012-97, 2012 WL 1083489, at *5.
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[*7] Respondent has also attached to his motion a copy of Form 4340, Certificate
of Assessments, Payments, and Other Specified Matters, for each of the
controversy years. Each form shows that a statutory notice was issued for the year
indicated and that, subsequently, assessment of tax was made.
NFTL Determination
Petitioner did not file petitions in response to any of the statutory notices,
and respondent's Forms 4340 show that, for each year, he assessed the tax,
interest, and penalties (without distinction, tax) due. Petitioner did not pay the
assessed amounts, and on November 20, 2012, respondent filed the NFTL and
notified petitioner of that filing and of his right to a CDP hearing. In response to
the notification, petitioner timely submitted to respondent a Form 12153, Request
for a Collection Due Process or Equivalent Hearing. Petitioner listed issues that
he wished to discuss:
! Verify whether or not the IRS followed all proper procedure as
required by law.
! I don't believe I am liable for the assessed tax.
! I should NOT be held responsible for the penalties accrued.
! To challenge this "liability" seeing that I NEVER had a chance
to challenge it before.
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[*8] ! If this liability is indeed a proper assessment and can be proven
that it is authentic and owed, I would like to discuss what
collection alternatives are available to me, including, but not
limited to, Offer in Compromise, Installment Agreements, and
any other payment arrangements that may be available to me.
In preparation for conferring with petitioner, SO Hayes reviewed various
documents from respondent's administrative files to determine respondent's
compliance with the law and administrative procedure. She reviewed transcripts
from respondent's integrated data retrieval system (IDRS) to verify that statutory
notices had been issued and that the assessments for each controversy year were
properly made. As stated, she obtained copies of the notices for 2003 through
2007 and noted that they had been sent to petitioner's address of record.
Following that preparation, she made two attempts to contact petitioner by letter to
arrange his CDP hearing, but petitioner responded to neither letter. Her first letter,
dated April 9, 2013, set forth the date and time for a telephone conference and
instructed petitioner that she could consider collection alternatives only if he filed
returns for 2008 through 2011 and returned to her a collection information
statement. The letter also informed him that he could not dispute his underlying
liabilities because he had had a prior opportunity to do so. The letter stated that he
had been sent deficiency notices for each of 2001 through 2007 and had failed to
file Tax Court petitions in response to any of them. She telephoned him at the
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[*9] time established for the telephone conference, but the phone number
petitioner had provided was no longer in service. Her second letter, dated May 7,
2013, invited petitioner to telephone her and informed him that he had until May
24, 2013, to provide the requested information and that, if he did not provide it,
Appeals would promptly make a determination with respect to his hearing request.
Petitioner did not provide the requested information, and, on June 6, 2013,
Appeals sent him notice of its determination to sustain the NFTL (NFTL
determination). In an attachment to the NFTL determination, SO Hayes stated the
following reasons for the determination. The requirements of any applicable law
or administrative procedure had been met. Petitioner could not raise his
underlying tax liabilities because he had had a prior opportunity to do so. Appeals
could not consider collection alternatives because petitioner had failed to file
returns and to provide the requested collection information. The NFTL was
appropriate under the circumstances: It balanced the need for the efficient
collection of taxes with petitioner's concern that the collection action be no more
intrusive than necessary.
Petitioner timely petitioned us for review of the NFTL determination.
Petitioner assigned the following errors to that determination. Respondent failed
to meet the requirements of applicable law and procedure during the CDP hearing.
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[*10] He did not allow petitioner the opportunity to challenge his liability for the
assessed tax. He did not allow petitioner to dispute discrepancies in the
assessment of the tax. He did not accord petitioner a fair and impartial hearing.
He did not provide petitioner with documents, files, and admissible evidence to
support respondent's claim of the assessed tax. He denied petitioner a face-to-face
hearing. He did not allow petitioner to make an audio recording of the hearing.
Levy-Notice Determination
In October 2013, respondent sent petitioner the levy notice. In response,
petitioner timely submitted another Form 12153, raising the same issues that he
had raised in response to the NFTL. What ensued is much the same as that which
ensued following petitioner's request for a CDP hearing with respect to the NFTL.
To determine respondent's compliance with the law and administrative procedure,
SO Reeve reviewed IDRS transcripts to verify that assessments for 2007 and 2009
were made, and she obtained copies of the statutory notice and mail log for 2009.
Her letter dated March 11, 2014, is similar to SO Hayes' first letter, including SO
Reeve's statement that petitioner could not dispute his liability during his CDP
hearing because respondent's records indicate that he had been sent statutory
notices. The letter set a telephone conference for April 1, 2014. Petitioner
responded to that letter by letter dated March 24, 2014 (March 24 letter). He did
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[*11] not by that letter provide any unfiled returns, nor did he provide the
requested collection information. He denied having had a prior opportunity to
dispute his underlying tax liability for either 2007 or 2009, arguing that he could
not have had a prior opportunity because he had "never" received a statutory
notice for either year. Subsequently, he did not answer the phone when, on April
1, 2014, SO Reeve called him for the scheduled telephone conference. On that
date, she again wrote petitioner, acknowledging his letter and reiterating her
request for unfiled tax returns and for collection information necessary for her to
consider any collection alternative. She invited petitioner to contact her and gave
him two weeks to provide the requested information. She stated that, without the
requested information, Appeals would promptly make a determination with respect
to his hearing request. Petitioner did not respond to the April 1 letter, and, on June
5, 2014, Appeals sent petitioner notice of its determination to sustain the levy
notice (levy-notice determination). Appeals summarized the levy-notice
determination as follows: "Appeals has determined that all legal and
administrative requirements for action taken have been met. The Notice of Intent
to Levy was appropriate and it balances the need for the efficient collection of
taxes with the legitimate concern of the taxpayer that any collection action is no
more intrusive than necessary." In an attachment to the levy-notice determination,
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[*12] SO Reeve added that she had not considered collection alternatives because
petitioner was not current in his tax return filing obligations and had not submitted
financial documentation. She could not consider challenges to his underlying
liabilities because he had had a prior opportunity to challenge them.
Petitioner timely petitioned us for review of the levy-notice determination,
assigning errors similar to those he assigned to the NFTL determination.
Discussion
I. Introduction
Sections 6320 and 6330 provide taxpayers the opportunity for notice and a
hearing upon the filing of an NFTL (section 6320) and before a levy to collect
unpaid tax (section 6330). If a taxpayer requests a CDP hearing, the Appeals
officer conducting the hearing must verify that the requirements of any applicable
law or administrative procedure have been met. Secs. 6320(c), 6330(c)(1). The
taxpayer may raise at a hearing any relevant issue relating to the unpaid tax or the
collection action, including challenges to the appropriateness of collection actions
and offers of collection alternatives. See sec. 6330(c)(2)(A). The taxpayer may
also raise at the hearing challenges to the existence or amount of the underlying
tax liability for any period if the person did not receive a statutory notice for such
liability or did not otherwise have an opportunity to dispute such liability. See
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[*13] sec. 6330(c)(2)(B). A taxpayer who may raise the underlying liability
during a CDP hearing must properly raise the merits of the underlying liability as
an issue during the hearing to preserve the issue for judicial review. See Giamelli
v. Commissioner, 129 T.C. 107, 112-116 (2007); secs. 301.6320-1(f)(2), Q&A-F3,
301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. The merits are not properly
raised if the taxpayer challenges the underlying tax liability but fails to present
Appeals with any evidence with respect to that liability after having been given
reasonable opportunity to present such evidence. See LG Kendrick, LLC v.
Commissioner, 146 T.C. 17, 34 (2016), aff'd, 684 F. App'x 744 (10th Cir. 2017);
secs. 301.6320-1(f)(2), Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. & Admin.
Regs.
Where the underlying tax liability is properly at issue, we review the
determination of liability de novo. E.g., Goza v. Commissioner, 114 T.C. 176,
181-182 (2000). To the extent the underlying tax liability is not at issue, we
review the determination for abuse of discretion. Id. at 182. In reviewing for
abuse of discretion, we must uphold the Appeals officer's determination unless it is
arbitrary, capricious, or without sound basis in fact or law. See Murphy v.
Commissioner, 125 T.C. 301, 308 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); see
also Keller v. Commissioner, 568 F.3d 710, 716-718 (9th Cir. 2009), aff'g in part
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[*14] T.C. Memo. 2006-166, and aff'g in part, vacating in part decisions in related
cases.
II. Motions and Responses
A. Petitioner's Motion
Petitioner asks that we summarily determine that respondent may not
proceed with collection of any unpaid tax for any of the controversy years. The
gravamen of his claim is that respondent may not proceed with collection because
he "failed to comply with the[] procedures" specified in the Internal Revenue
Manual (IRM) regarding the mailing of statutory notices.
At the times respondent claims to have mailed statutory notices for the
controversy years to petitioner, the mailing procedures in the IRM called for
delivery of statutory notices and a Postal Service Form 38775 to the post office,
where a Postal Service employee would "compare the count and [certified mail]
numbers used with the envelope notices." See IRM pt. 4.8.9.9.3(6) (Dec. 1, 2006).
Those mailing procedures further required the IRS employee delivering the
statutory notices to the post office to sign and date the Form 3877 to indicate
5
Postal Service Form 3877, Firm Mailing Book For Accountable Mail, is a
form for recording items delivered to and received by the post office and showing
the type of mail, e.g., certified mail, or the service requested, e.g., signature
confirmation.
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[*15] delivery of the notices to the post office. Id. (7). The Postal Service
employee was to insert a postmark on the form indicating receipt. Id.Petitioner observes that the mail logs respondent submitted to evidence the
mailing of statutory notices to him for the controversy years lack both the
signature of an IRS employee and acknowledgment by the Postal Service of the
number of items received. Petitioner argues: "Proper verification of the exact
number of envelopes the Postal Service received from the IRS is of vital
importance because it is the only way to verify that each piece of certified mail
intended for delivery by the Post Office was actually received into the Post Office
mail system."
Petitioner is unclear in drawing out the consequences of the defects in the
mail logs that respondent submitted. Most narrowly, he claims that those defects
deny respondent the benefit of a presumption of regularity to establish mailing.
Petitioner also argues that respondent's failure to comply with those procedures
means that the settlement officers did not fulfill their obligations under section
6330(c)(1) to verify that the assessments were made in compliance with any
applicable law and administrative procedure. Finally, and most broadly, petitioner
suggests that respondent's failure to comply strictly with his own standards for
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[*16] documenting the mailing of statutory notices means that the assessments
made on the basis of those notices were, as a matter of law, invalid.
B. Respondent's Response to Petitioner's Motion
Respondent objects to our granting petitioner's motion. Conceding that,
with regard to mailing of the statutory notices for the controversy years, he is not
entitled to a presumption of regularity in mailing, he argues that, nonetheless, SOs
Hayes' and Reeve's verifications of mailing were legally sufficient and the defects
in the mail logs were not fatal to either assessment or collection of the unpaid tax.
Moreover, he continues, even if verification was flawed or the defects in the mail
logs were legally significant, the remedy would be remand to Appeals or a trial,
not abatement of the tax due.
C. Respondent's Motion
Respondent moves for summary adjudication in his favor with respect to all
of the issues in these cases. In particular, he asks that we summarily determine
that petitioner's underlying tax liability is not at issue for any of the controversy
years. For 2003 through 2006, respondent argues that petitioner had had a prior
opportunity to raise the existence or amount of his underlying tax liabilities and
was, therefore, precluded from raising them during his CDP hearing in response to
the NFTL and is, likewise, precluded from raising them here. See Daniel v.
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[*17] Commissioner, T.C. Memo. 2009-28; sec. 301.6320-1(e)(3), Q&A-E7,
Proced. & Admin. Regs. For 2007 and 2009, respondent argues that petitioner did
not properly raise his underlying tax liabilities during the two CDP hearings at
issue (i.e., the NFTL hearing, with respect to 2007, and the levy-notice hearing,
with respect to 2007 and 2009). See Giamelli v. Commissioner, 129 T.C. at 112-
116; secs. 301.6320-1(f)(2), Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. &
Admin. Regs.
Respondent also asks that we determine that, in making their determinations
to proceed with collection, SOs Hayes and Reeve complied with the requirements
of sections 6320(c) and 6330(c)(3). Section 6330(c)(3) provides that an Appeals
officer's determination shall take into consideration not only her verification that
the requirements of any applicable law and administrative procedure have been
met but also (1) the issues raised by the taxpayer with respect to the unpaid tax or
the proposed collection actions and (2) that the proposed collection actions
balanced the need for efficient collection of taxes with the taxpayer's concern that
any collection action be no more intrusive than necessary. In particular,
respondent asks us to determine that SOs Hayes and Reeve (1) were fair and
impartial, (2) properly verified respondent's assessments of tax, and (3) did not
abuse their discretion in (A) denying petitioner a face-to-face hearing, (B) not
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[*18] permitting him to record the hearings, and (C) not considering collection
alternatives.
D. Petitioner's Response to Respondent's Motion
Petitioner objects to our granting respondent's motion. He claims a genuine
dispute as to material fact with respect to (1) whether the settlement officers
fulfilled their obligations under section 6330(c)(1) to verify that the requirements
of any applicable law and administrative procedure had been met (particularly
with respect to petitioner's claim that, in mailing the statutory notices to him,
respondent had failed to comply with mailing procedures specified in the IRM),
(2) whether the evidence of mailing of those statutory notices on which the
settlement officers relied is adequate to prove that the notices were mailed, (3)
whether he had had a prior opportunity to challenge the underlying tax liabilities
at issue, and (4) whether he had received statutory notices for the controversy
years. Petitioner also disputes, although he does not label it a dispute as to a
material fact, respondent's claim that he did not properly raise his underlying tax
liabilities during the two CDP hearings at issue.
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[*19] III. Discussion
A. Petitioner's Motion
1. Presumption of Regularity
While petitioner is of course correct that respondent is not entitled to a
presumption of regularity to establish mailing of the notices of deficiency,6 it does
not follow that respondent's assessments were invalid, SOs Hayes and Reeve
abused their discretion in deciding to the contrary, and, consequently, petitioner is
6
The "presumption of regularity in mailing" is a particular application of the
more general "presumption of regularity" (sometimes, presumption of official
regularity), which supports the proposition that, in the absence of evidence to the
contrary, public officers are presumed to have discharged their duties. See, e.g.,
United States v. Ahrens, 530 F.2d 781, 785 (8th Cir. 1976) ("In our view, the
presumption of official regularity controls the question of the validity of the notice
of deficiency. 'The presumption of regularity supports the official acts of public
officers and, in the absence of clear evidence to the contrary, courts presume that
they have properly discharged their official duties.' United States v. Chem.
Found., Inc., 272 U.S. 1, 14-15, * * * (1926)."). With respect to the mailing of a
statutory notice, we have said: "[W]here the existence of the notice of deficiency
is not disputed, a properly completed Form 3877 by itself is sufficient, absent
evidence to the contrary, to establish that the notice was properly mailed to a
taxpayer. * * * More specifically, exact compliance with the Form 3877 mailing
procedures raises a presumption of official regularity in favor of respondent."
Coleman v. Commissioner, 94 T.C. 82, 91 (1990). The failure of exact
compliance with the Form 3877 mailing instructions, however, does not mean that
the notice was not mailed; it means only that the evidence of an undisputed notice
and a Form 3877 in less than exact compliance do not, even absent evidence to the
contrary, establish as a matter of law that the notice was mailed to the taxpayer.
As we said in Coleman v. Commissioner, 94 T.C. at 91: "A failure to comply
precisely with the Form 3877 mailing procedures may not be fatal if the evidence
adduced is otherwise sufficient to prove mailing."
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[*20] entitled to summary judgment. Petitioner points to respondent's failure to
submit "corroborating evidence to evince proof of mailing such as habit evidence
as to * * * [his] mailing procedures." Petitioner is mistaken if he believes that
copies of a proper statutory notice and an imperfect mail log are necessarily
insufficient for an Appeals officer (or, indeed, any fact finder) to infer from that
evidence that the Commissioner, in fact, mailed the notice to the intended
recipient.7 See, e.g., O'Rourke v. United States, 587 F.3d 537, 541-542 (2d Cir.
2009) (holding that the Commissioner's evidence of a proper statutory notice and a
Form 3877 defective only in that (1) it did not state the number of pieces of mail
received by the Postal Service and (2) it lacked the signature or initials of a Postal
Service employee was, in the absence of a presumption of mailing, sufficient to
meet the Commissioner's burden of showing that the notice was mailed). As
discussed in the next section of this report, we think that neither SO Hayes nor SO
7
In the law of evidence, inferences differ from presumptions. An inference
is a permissible deduction that the fact finder may make without express direction
of the law to that effect. That is, the fact finder is permitted to deduce the
existence of fact B from fact A by ordinary rules of reasoning and logic. A
presumption is distinguished from an inference in that, if basic fact A is
established, then the fact finder must accept that the presumed fact B has also been
established unless the presumption is rebutted. See 1 Jack B. Weinstein &
Margaret A. Berger, Weinstein's Federal Evidence, sec. 301.02[1], at 301-6 (Mark
S. Brodin, ed.) (2d ed. 2017).
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[*21] Reeve abused her discretion in concluding that statutory notices for the
controversy years were mailed to petitioner.
2. Sufficiency of Settlement Officers' Verifications
As stated, if a taxpayer requests a CDP hearing, the Appeals officer
conducting the hearing must verify that the requirements of any applicable law or
administrative procedure have been met. Sec. 6330(c)(1). Petitioner appears to
challenge the adequacy of SO Hayes' and SO Reeve's reliance on computer
transcripts for verification that the requirements of any applicable law or
administrative procedure had been met. Respondent answers that section
6330(c)(1) does not mandate that Appeals rely upon a particular document to
satisfy the section's verification requirement. See, e.g., Craig v. Commissioner,
119 T.C. 252, 261-262 (2002); Jewell v. Commissioner, T.C. Memo. 2016-239, at
*10. Appeals may, indeed, rely on computer transcripts to satisfy the verification
requirement. See, e.g., Roberts v. Commissioner, 329 F.3d 1224, 1228 (11th Cir.
2003), aff'g 118 T.C. 365 (2002); Grace Found. v. Commissioner, T.C. Memo.
2014-229, at *14-*15. It may also rely on a mail log with minor defects (such as
the lack of both a Postal Service employee's signature and a count of the items
delivered to the post office) if supported by copies of the statutory notices in
question. See Cropper v. Commissioner, 826 F.3d 1280, 1286 (10th Cir. 2016),
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[*22] aff'g T.C. Memo. 2014-139; cf. O'Rourke, 587 F.3d at 541-542 (not a CDP
case). Respondent concludes: "In petitioner's cases, the SOs properly verified that
all legal and procedural requirements were met by using transcripts in all years,
and the CML [mail log] for 2009, to verify that assessments were proper."
We agree with respondent that verification was sufficient. Petitioner did not
during either CDP hearing bring to either settlement officer's attention the
technical defect in the mail logs that respondent now acknowledges (i.e., the
absence of entries for the number of pieces of mail received by the post office).
Indeed, petitioner did not claim any defect until he objected to our granting
respondent's motion. And because petitioner did not bring any defects to the
attention of SO Hayes, the settlement officer did not err or abuse her discretion in
relying on computer transcripts to make the necessary verifications for 2003
through 2007, the controversy years subject to the NFTL. See Grace Found. v.
Commissioner, at *15 ("An Appeals officer may rely on the IRS account transcript
to satisfy the section 6330(c)(1) verification requirement unless the taxpayer
alleges that a specific irregularity transpired during the assessment process and the
taxpayer provides evidence of such an irregularity.").
For 2007 (again) and for 2009, the years subject to the levy notice, however,
petitioner had by the March 24 letter notified SO Reeve of his belief that he had
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[*23] not received a statutory notice for either year. Petitioner had thus alleged an
irregularity in the assessment procedure for each year, and SO Reeve could not on
account of that allegation rely on computer transcripts alone for verification. See,
e.g., Crain v. Commissioner, T.C. Memo. 2012-97, 2012 WL 1083489, at *5 ("The
Commissioner must send a notice of deficiency to the taxpayer before he may
assess, collect, or reduce to judgment most income tax liabilities. * * * If the
taxpayer contests receipt of the notice of deficiency, the Commissioner must
introduce evidence of actual mailing."). For 2009, however, besides computer
transcripts, SO Reeve had the mail log listing the 2009 statutory notice, which,
although missing some information, was, together with a copy of the 2009 notice,
sufficient to establish that the 2009 notice had been mailed, as respondent claims.
See, e.g., Cropper v. Commissioner, 826 F.3d at 1286; O'Rourke, 587 F.3d at 541-
542. That is not necessarily the case for 2007, for the record does not establish
that SO Reeve had a copy of the mail log dated December 22, 2009, which shows
mail addressed to petitioner with a certified mail number matching the number on
the 2007 notice. And while we could remand the case at docket No. 16108-14L to
Appeals for it to clarify the record as to evidence on which SO Reeve relied in
concluding that the 2007 notice was properly mailed to petitioner, see Hoyle v.
Commissioner, 131 T.C. 197, 205 (2008); Noyes v. Commissioner, T.C. Memo.
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[*24] 2017-27, at *4, we do not think that is necessary. We have in the record a
copy of a mail log dated December 22, 2009, showing information with respect to
the 2007 notice similar enough to the information shown on the mail log on which
SO Reeve relied for 2009 that it would be inconsistent for her to reach a
conclusion with respect to whether the 2007 notice was mailed to petitioner
different from the one she reached with respect to whether the 2009 notice was
mailed to him. We are satisfied with SO Reeve's efforts, based on at least a
computer transcript for 2007 and on both a computer transcript and a mail log for
2009, to verify that statutory notices for both 2007 and 2009 had been mailed to
petitioner. She did not abuse her discretion in so concluding.8
3. Failure To Adhere to the IRM
Finally, petitioner claims that he is entitled to summary judgment simply
because of respondent's failure to comply with the standards described in the IRM
8
And while it remains an open question whether petitioner may challenge
the existence or amount of his underlying liabilities for 2007 and 2009, see infra,
sec. III.B.2.c., it does not follow that, just because that question is open, the
verification question for those years also is open. Even if SO Hayes (for 2007)
and SO Reeve (for both 2007 and 2009) abused their discretion in determining that
petitioner had had a prior opportunity to challenge his 2007 and 2009 underlying
liabilities (and so could not challenge them during his NFTL and levy-notice
hearings), it does not follow that they also abused their discretion in relying on
computer transcripts and mail logs to verify that the requirements of any
applicable law or administrative procedure had been met; such reliance, we have
concluded, was not an abuse of discretion.
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[*25] for documenting the mailing of statutory notices. Taken at face value, the
claim rests on the premise that, even if the statutory notices for the controversy
years were in fact sent (and, moreover, received), Appeals erred in upholding the
NFTL and the levy notice. That would be so only if, as a matter of law,
respondent's failure to strictly comply with the IRM mailing procedures rendered
invalid the assessments based on those notices. The short answer to petitioner's
claim is: "The IRM lacks the force of law and does not create rights for
taxpayers." Weiss v. Commissioner, 147 T.C. 179, 196 (2016). Appeals did not
solely on account of any failure by respondent to comply with the IRM mailing
procedures for statutory notices err in upholding the NFTL and the levy notice.
4. Conclusion
We will deny petitioner's motion.
B. Respondent's Motion
1. Dispute as to Material Fact
We will first address petitioner's claim that there are genuine disputes as to
material fact that preclude any summary adjudication in respondent's favor.
Petitioner's first two claims--that there are genuine disputes as to whether
(1) the settlement officers fulfilled their section 6330(c)(1) verification obligations
and (2) the evidence of mailing on which they relied is adequate to prove that
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[*26] statutory notices were, indeed, mailed--seem to collapse into one claim.
Petitioner does not assert any particular failures on the settlement officers' parts in
fulfilling that obligation. He seems to suggest, as he did in support of his own
motion, that the defects in the mail logs mean that the settlement officers cannot
have properly verified that the assessments were made in compliance with all legal
and administrative requirements. We have adequately addressed, and have
rejected, petitioner's first two claims and need not restate our reasons. We will
address petitioner's remaining claims as we proceed.
2. Prior Opportunity To Raise Existence or Amount of
Underlying Liability
a. 2003 through 2006
For 2003 through 2006, respondent argues that petitioner had a prior
opportunity to challenge the existence or amounts of his underlying liabilities and
was, therefore, precluded from challenging them during his CDP hearing in
response to the NFTL and is, likewise, precluded from challenging them here.
Respondent relies on a Notice of Determination Concerning Collection Actions(s)
Under Section 6320 and/or 6330 issued to petitioner on June 13, 2011 (prior
determination notice), that informed petitioner of Appeals' determination that
respondent's notice of levy with respect to petitioner's income tax liabilities for
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[*27] 2003 through 2006 would stand. A copy of the prior determination notice is
attached to respondent's motion. Petitioner does not dispute the authenticity of the
prior determination notice. The prior determination notice was issued in response
to petitioner's request for a CDP hearing made on August 10, 2010, following his
receipt of a levy notice for 2003 through 2006 dated July 7, 2010. The prior
determination notice recites that, although the assigned settlement officer offered
petitioner a hearing by telephone, no hearing was held because the settlement
officer could not reach petitioner by telephone at the time scheduled for the
hearing and petitioner did not respond to a subsequent letter from the settlement
officer. With respect to petitioner's challenge to his underlying liabilities, the prior
determination notice states that, because petitioner did not contact the settlement
officer, the issue of his underlying liabilities could not be discussed. Respondent
argues that, if a taxpayer previously received notice of his right to a CDP hearing
with respect to the same tax and tax period, he has had an opportunity to challenge
the existence and amount of the underlying tax liability and may not challenge the
existence and amount of that tax liability in a subsequent CDP hearing.
Respondent relies on sections 301.6320-1(e)(3), Q&A-E7, and 301.6330-1(e)(3),
Q&A-E7, Proced. & Admin. Regs., and Daniel v. Commissioner, T.C. Memo.
2009-28. Those authorities are consistent with respondent's argument but address
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[*28] a situation where the taxpayer did not request a CDP hearing in response to
the earlier CDP notice. That, of course, is not the case here because petitioner did
request a CDP hearing in response to the July 7, 2010, levy notice for 2003
through 2006. The question is whether the prior CDP notice and the settlement
officer's subsequent actions gave petitioner a meaningful opportunity to challenge
the existence or amount of his 2003 through 2006 underlying tax liabilities. We
believe that they did give him a meaningful opportunity, of which he did not take
advantage. See Lewis v. Commissioner, 128 T.C. 48, 61 (2007) ("A conference
with the Appeals Office provides a taxpayer a meaningful opportunity to dispute
an underlying tax liability."); secs. 301.6320-1(e)(3), Q&A-E2, 301.6330-1(e)(3),
Q&A-E2, Proced. & Admin. Regs. ("An opportunity to dispute the underlying
liability includes a prior opportunity for a conference with Appeals[.]").
Because we are not here considering an actual challenge to the existence or
amounts of petitioner's underlying liabilities for 2003 through 2006, but rather
whether SO Hayes erred in precluding petitioner from raising such a challenge
(because she had determined that he had had a prior opportunity to do so), we ask
only whether SO Hayes abused her discretion in so precluding petitioner, see Bell
v. Commissioner, 126 T.C. 356, 358-359 (2006), which, demonstrably, she did
not.
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[*29] b. 2007 and 2009
For 2007 and 2009, respondent argues that petitioner did not properly raise
his underlying liabilities during the two CDP hearings at issue here (i.e., the NFTL
hearing, with respect to 2007, and the levy-notice hearing, with respect to both
2007 and 2009). Referring to the two Forms 12153 that petitioner submitted
requesting those hearings and to the March 24 letter that petitioner sent to SO
Reeve (the sum and total of petitioner's communications to Appeals in response to
the NFTL and the levy notice), respondent claims that petitioner never stated what
he was challenging with respect to his underlying liabilities but only said that he
wanted to challenge those liabilities and should not be held responsible for
penalties. "Petitioner never presented any information or documents showing that
the underlying liabilities were incorrect." And because of that, argues respondent,
Appeals made no determination with respect to petitioner's underlying liabilities,
and there is nothing for us to review.
In their first letters to petitioner, both SO Hayes and SO Reeve notified him
that he could not challenge his underlying tax liabilities because he had been sent
statutory notices and, thus, he had had a prior opportunity to challenge his
liabilities. They repeated those explanations in the attachments that, respectively,
they wrote and that were attached to the NFTL and the levy-notice determinations.
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[*30] In his two petitions in these consolidated cases, petitioner makes it clear that
he believes that Appeals erred in failing to allow him to challenge his liability for
the assessed tax.9 It is true that, if petitioner had received statutory notices for
2007 and 2009, he could not during any CDP hearing concerning those years
challenge his underlying tax liabilities. See sec. 6330(c)(2)(B). If, however, he
had not received statutory notices for those years, then he was entitled to challenge
his underlying liabilities.
The record is not clear as to the bases on which SOs Hayes and Reeve
decided that petitioner had had a prior opportunity to challenge his 2007 liability
(both SO Hayes and SO Reeve) and his 2009 liability (only SO Reeve). It is
insufficient to deny him a challenge on the ground that a statutory notice had been
sent to him (which is the only reason either settlement officer recites) without also
concluding that he had received the notice. As for 2003 through 2006, we are not
now, in disposing of respondent's motion, considering an actual challenge to the
existence or amounts of petitioner's 2007 and 2009 underlying liabilities, but,
rather, we are considering whether either SO Hayes (for 2007) or SO Reeve (for
9
And while petitioner does not aver as to how his liability for either year is
any less than respondent assessed, we will read his complaint that he was not
allowed to challenge his liability for either 2007 or 2009 to imply that he has
grounds on which to challenge those liabilities.
- 31 -
[*31] both 2007 and 2009) abused her discretion in precluding petitioner from
raising such a challenge on the assumption that he had received a statutory notice.
Because the record is unclear, we will remand these cases for Appeals to clarify
the record as to the evidence (if any) on which Appeals relies to conclude that
petitioner may not for either 2007 or 2009 challenge his underlying tax liability. If
Appeals is unable to conclude that petitioner received the requisite statutory notice
or notices, we assume that Appeals will allow petitioner to raise a challenge to the
existence or amount of his underlying liability before these cases are returned to
us.
c. Conclusion
In sum, we agree with respondent that petitioner had a prior opportunity to
challenge his underlying liabilities for 2003 through 2006 and was, therefore,
precluded from challenging them during his CDP hearing in response to the NFTL
and is, likewise, precluded from challenging them here. We do not decide whether
petitioner is similarly precluded with respect to his underlying liabilities for 2007
and 2009 because the record is inadequate for us to determine whether, in
concluding that petitioner had had a prior opportunity, either settlement officer
abused her discretion. We will remand for clarification or other appropriate
action.
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[*32] 3. SOs Hayes' and Reeve's Compliance With the Requirements of
Section 6330(c)(3)
a. Introduction
Respondent points to the NFTL and levy-notice determinations (along with
the settlement-officer attachments) and the Hayes and Kash declarations as
evidence that, in determining to proceed with collection, Appeals (acting through
the settlement officers) took into consideration the verification and other
requirements specified in section 6330(c)(3). On that basis respondent argues that
Appeals did not abuse its discretion in determining to proceed with collection for
the controversy years. Except to the extent that we have previously discussed (i.e.,
with respect to mailing of the 2007 statutory notice and receipt of the 2007 and
2009 notices), we agree that Appeals complied with the requirements of section
6330(c)(3). We will address particular points raised by petitioner.
b. CDP Hearings Fair and Impartial
Petitioner contends the hearings were not fair and impartial. Sections
6320(b)(3) and 6330(b)(3) provide that the hearing shall be conducted by an
officer or employee who has had no prior involvement. Neither SO Hayes nor SO
Reeve had any prior involvement in petitioner's tax matters for the tax years at
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[*33] issue in the hearings. Both settlement officers were impartial within the
meaning of sections 6320(b)(3) and 6330(b)(3).
c. No Mandate for Appeals To Provide Taxpayer With
Written Confirmation That Requirements of Any Law or
Procedure Have Been Met
Petitioner contends that respondent did not provide him with any admissible
evidence to support the determinations. The short answer is that SOs Hayes and
Reeve did not have to provide petitioner with any written confirmation that the
requirements of any applicable law or administrative procedure had been met. As
we have said: "Section 6330(c)(1) does not require the Appeals officer to rely on
any particular document in satisfying the verification requirement and does not
require that the Appeals officer actually give the taxpayer a copy of the
verification upon which he or she relied." Shirley v. Commissioner, T.C. Memo.
2014-10, at *24-*25 (citing Craig v. Commissioner, 119 T.C. at 262; Nestor v.
Commissioner, 118 T.C. 162, 166 (2002)).
d. No Abuse of Discretion in Denying Petitioner a Face-To-
Face Hearing
Section 6330 does not mandate that a taxpayer be given a face-to-face
hearing. E.g., LaForge v. Commissioner, T.C. Memo. 2013-183, at *11. Because
SOs Hayes and Reeve determined that petitioner had not filed all necessary tax
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[*34] returns, and because petitioner had failed to return collection information
statements to SOs Hayes and Reeve, the settlement officers did not abuse their
discretion in determining that he was entitled to no face-to-face hearing and
denying him such a hearing. See id.; see also secs. 301.6320-1(d)(2), Q&A-D8,
301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs.
e. No Abuse of Discretion in Not Permitting Audio
Recording
Petitioner had no face-to-face hearing, and he did not answer telephone calls
from SOs Hayes and Reeve for scheduled telephone conferences. Section
7521(a)(1) accords taxpayers the right "in connection with any in-person interview
* * * upon advance request * * * to make an audio recording". We have held that
section 7521 applies to section 6330 face-to-face hearings, and a taxpayer
providing the IRS with advance notice is allowed to record his face-to-face
hearing. Keene v. Commissioner, 121 T.C. 8, 19 (2003). We have also held that
section 7521 is not applicable to telephone hearings and that a taxpayer is not
entitled to record his telephone hearing. Calafati v. Commissioner, 127 T.C. 219,
229 (2006). The short answer is that there were no spoken communications for
petitioner to record, and, even if there had been a telephone hearing (all that
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[*35] petitioner was offered), he had no right to record it. There was no abuse of
discretion.
f. No Abuse of Discretion in Not Considering Collection
Alternatives
SO Hayes and Reeve did not abuse their discretion in not considering
collection alternatives because they had determined that petitioner had not filed all
necessary tax returns and because he had not returned to them the collection
information statements they had requested. See, e.g., Rosenthal v. Commissioner,
T.C. Memo. 2014-252, at *16 ("It is not an abuse of discretion for the Appeals
Office to reject collection alternatives and sustain a proposed collection action on
the basis of the failure of a taxpayer to submit requested financial information or
to achieve current compliance with filing obligations.").
4. Conclusion
We will deny petitioner's motion and grant respondent's motion in part. We
will grant respondent's motion to the extent that, with respect to the NFTL
determination, we find no error in Appeals' determination that respondent may
proceed with collection by lien of petitioner's income tax liabilities for 2003
through 2006. With respect to the NFTL determination for 2007 and the levy-
notice determination, we will grant respondent's motion to the extent that
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[*36] respondent asks us to determine that (1) Appeals verified that the
requirements of any applicable law or administrative procedure were met, (2) the
NFTL hearing and the levy-notice hearing were fair and impartial, (3) neither SO
Hayes nor SO Reeve had to provide petitioner with any written confirmation of
her verification efforts, (4) neither settlement officer abused her discretion in
denying petitioner a face-to-face hearing or the right to audio record any telephone
hearing, and (5) neither abused her discretion in not considering collection
alternatives.
We will remand the cases at docket Nos. 16108-14L and 9435-15L to
Appeals for supplemental determinations clarifying the record as to the grounds on
which Appeals relied in precluding petitioner from challenging his 2007 and 2009
tax liabilities. If petitioner was entitled to raise challenges to those liabilities,
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[*37] Appeals shall consider such challenges and report the results of its
consideration in its supplemental determinations.
An appropriate order will be issued
denying petitioner's motion for summary
judgment, granting respondent's motion for
summary judgment in part, and remanding
these cases for further proceedings
consistent with this report.