Rivas v. Comm'r

T.C. Memo. 2012-20
UNITED STATES TAX COURT
IVAN RIVAS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5448-08L. Filed January 18, 2012.
Ivan Rivas, pro se.
Frederick C. Mutter, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
MARVEL, Judge: Pursuant to section 6330(d),1 petitioner
seeks review of respondent’s determination to proceed by levy
with the collection of petitioner’s unpaid 1999-2003 Federal
income tax liabilities. The issues for decision are: (1)
1
All section references are to the Internal Revenue Code, as
amended.
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Whether petitioner is precluded from contesting his underlying
tax liabilities for 1999-2003; (2) whether respondent improperly
denied petitioner a face-to-face hearing under section 6330; and
(3) whether respondent abused his discretion in upholding the
proposed levy action.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulation
of facts is incorporated herein by this reference. Petitioner
resided in New York when he petitioned this Court.
Petitioner failed to file Federal income tax returns for
1999-2003. Respondent prepared substitutes for returns for
petitioner under section 6020(b), and on August 19, 2005,
respondent mailed to petitioner by certified mail five notices of
deficiency, one for each of the years 1999-2003. Each notice was
addressed to petitioner at P.O. Box 76, Hurleyville, New York,
12747, his last known address. Petitioner did not claim the
certified mail, and the U.S. Postal Service (USPS) returned the
notices of deficiency to respondent as unclaimed. Petitioner did
not petition this Court with respect to the notices of
deficiency.
Following the expiration of the period for petitioning this
Court set forth in the notices of deficiency, respondent timely
assessed the income tax deficiencies and additions to tax plus
statutory interest (collectively the 1999-2003 tax liabilities).
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On March 14, 2007, respondent issued a notice pursuant to
section 6330(a) with respect to the 1999-2003 tax liabilities
informing petitioner of respondent’s intent to levy and of his
right to a hearing (section 6330 hearing). In response,
petitioner timely submitted a Form 12153, Request for a
Collection Due Process or Equivalent Hearing. Petitioner
indicated that he disagreed with the proposed levy and requested
an audiotaped face-to-face section 6330 hearing. Petitioner
stated in pertinent part:
A couple of the issues we will address are whether or
not the IRS followed proper procedure and to ensure
that this “liability” is authentic or even owed. If
this is indeed a proper assessment, I would like to
discuss what collection alternatives are available to
me such as, but not limited to, and any other payment
options that may be available to me. If the IRS has
considered any of prior issues that I’ve raised in the
past to be frivolous, I hereby renounce them.
By letter dated October 23, 2007, respondent’s Appeals Office
acknowledged receipt of petitioner’s Form 12153 and assigned
petitioner’s case to Settlement Officer Edward Repko (Officer
Repko). Respondent’s Appeals Office informed petitioner that it
would not provide a face-to-face section 6330 hearing if he
raised only frivolous arguments.2 The letter also informed
2
Petitioner’s position as expressed in Form 12153 is very
similar in phrasing and tone to the positions of other taxpayers
whose cases we have decided. In those cases, both the Appeals
Office and this Court characterized the taxpayers’ positions as
frivolous, groundless, and/or asserted for purposes of delay.
See, e.g., Reynolds v. Commissioner, T.C. Memo. 2009-181; Cyman
(continued...)
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petitioner that he raised only frivolous arguments in his hearing
request but that the Appeals Office would grant him a face-to-
face hearing if he submitted a letter to Officer Repko raising
legitimate issues.
In response, on November 7, 2007, petitioner mailed a letter
to Officer Repko that disagreed with the determination that he
had raised only frivolous arguments and that also requested a
face-to-face section 6330 hearing at the closest Appeals Office
to his residence. In the letter, petitioner requested
documentation supporting respondent’s assessment, specifically “a
copy of the original documents that were used to enter those
numbers into your computer, not the printout that you would get
from your own computer.” Petitioner contended that he had earned
no taxable income during the relevant years and wrote:
If I do not feel that I had any taxable income for
those years, why would the IRS want me to file? I have
also been informed that if I file showing that I had
zero income; I would be penalized $500.00. Isn’t that
Double Jeopardy?
Petitioner also requested that Officer Repko verify that
respondent complied with applicable law and procedure.
Respondent transferred petitioner’s case to the Albany
Appeals Office, where it was assigned to Settlement Officer
Thomas A. Conley (Officer Conley). By letter dated December 6,
2
(...continued)
v. Commissioner, T.C. Memo. 2009-144.
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2007, Officer Conley advised petitioner that he did not qualify
for a face-to-face section 6330 hearing because he had raised
only frivolous arguments. In the letter Officer Conley scheduled
a telephone conference call for January 9, 2008, and requested
that petitioner submit the following: (1) A completed Form 433-
A, Collection Information Statement for Wage Earners and Self-
Employed Individuals; and (2) Forms 1040, U.S. Individual Income
Tax Return, for 2005 and 2006. By letter dated January 5, 2008,
petitioner continued to assert similar arguments, declined to
participate in the January 9 telephone hearing, and reiterated
his request for a face-to-face hearing.
By letter dated January 10, 2008, Officer Conley rescheduled
the telephone hearing for January 24, 2008,3 and again requested
that petitioner submit a completed Form 433-A and Forms 1040 for
2005 and 2006. In the letter Officer Conley informed petitioner
that the January 24 telephone conference was his final
opportunity to discuss why he disagreed with the levy or to
discuss collection alternatives. By letter dated January 22,
2008, petitioner again declined to participate in a telephone
hearing and reiterated his request for a face-to-face
hearing. Petitioner did not submit a completed Form 433-A or the
2005 and 2006 Forms 1040.
3
The letter rescheduling the telephone hearing contained a
typographical error in that it showed the rescheduled date for
the hearing as Jan. 24, 2007.
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On January 31, 2008, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 sustaining the proposed levy action. In the notice
of determination, the Appeals Office determined the following:
(1) All legal and administrative requirements had been met, (2)
petitioner failed to raise any nonfrivolous issue or offer a
reasonable collection alternative, and (3) the levy properly
balanced the need for efficient collection of taxes with a
taxpayer’s concerns regarding the intrusiveness of the proposed
levy action. The Appeals Office refused to consider petitioner’s
underlying tax liabilities, stating: “Statutory notices of
deficiency were issued to you when the liability was proposed by
the Examination division. You do not have another opportunity to
challenge the liability in the CDP forum.” Petitioner timely
filed a petition contesting respondent’s notice of determination.
OPINION
I. Determination To Proceed With Collection
Section 6330(a) provides that no levy may be made on any
property or right to property of any person unless the Secretary4
has notified such person in writing of their right to a hearing
4
The term “Secretary” means “the Secretary of the Treasury
or his delegate”, sec. 7701(a)(11)(B), and the term “or his
delegate” means “any officer, employee, or agency of the Treasury
Department duly authorized by the Secretary of the Treasury
directly, or indirectly by one or more redelegations of
authority, to perform the function mentioned or described in the
context”, sec. 7701(a)(12)(A)(i).
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before the levy is made. If a taxpayer requests a hearing, a
hearing shall be held before an impartial officer or employee of
the Internal Revenue Service Office of Appeals. Sec. 6330(b)(1),
(3). At the hearing, the taxpayer may raise any relevant issue,
including appropriate spousal defenses, challenges to the
appropriateness of the collection action, and collection
alternatives. Sec. 6330(c)(2)(A). A taxpayer is precluded from
contesting the existence or amount of the underlying tax
liability unless the taxpayer did not receive a notice of
deficiency for the liability in question or did not otherwise
have an earlier opportunity to dispute the liability. Sec.
6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609
(2000). The phrase “underlying tax liability” includes the tax
deficiency, additions to tax, and statutory interest. Katz v.
Commissioner, 115 T.C. 329, 339 (2000).
Following a hearing, the Appeals Office must determine
whether the proposed levy action may proceed. In so doing, the
Appeals Office must take into consideration: (1) Verification
presented by the Secretary that the requirements of applicable
law and administrative procedure have been met, (2) relevant
issues raised by the taxpayer, and (3) whether the proposed levy
appropriately balances the need for efficient collection of taxes
with a taxpayer’s concerns regarding the intrusiveness of the
proposed levy action. Sec. 6330(c)(3).
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Section 6330(d)(1) grants this Court jurisdiction to review
the Appeals Office’s determination made pursuant to the section
6330 hearing. Where the underlying liability is properly at
issue, we review that determination de novo. Sego v.
Commissioner, supra at 610. We review any other administrative
determination regarding the proposed levy for abuse of
discretion. Id. An abuse of discretion occurs if the Appeals
Office exercises its discretion “arbitrarily, capriciously, or
without sound basis in fact or law.” Woodral v. Commissioner,
112 T.C. 19, 23 (1999).
II. Notices of Deficiency
Section 6330(c)(2)(B) precludes a taxpayer from challenging
the existence or amount of the underlying liability unless the
taxpayer did not receive a notice of deficiency for that
liability or did not otherwise have an earlier opportunity to
dispute the liability. Petitioner contends that respondent has
not introduced sufficient evidence that (1) respondent properly
mailed the notices of deficiency for 1999-2003 and (2) petitioner
actually received the notices. Therefore, petitioner contends
that respondent improperly denied him a face-to-face section 6330
hearing on his underlying tax liabilities.5 Respondent contends
5
Petitioner also contends that this Court cannot consider
respondent’s evidence regarding proper mailing because we are
limited to a review of the administrative record. We disagree.
Even in a circuit where the Court of Appeals has held that
(continued...)
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that he properly mailed notices of deficiency to petitioner at
his last known address and that he is deemed to have received the
notices; therefore, he was precluded from challenging his
underlying liabilities during the section 6330 hearing.
The Commissioner is expressly authorized to send a notice of
deficiency by certified or registered mail to the taxpayer’s last
known address. Sec. 6212. Although section 6330(c)(2)(B)
contemplates actual receipt of a notice of deficiency by the
taxpayer, see, e.g., Tatum v. Commissioner, T.C. Memo. 2003-115,
the taxpayer may not avoid actual receipt by deliberately
refusing delivery, Sego v. Commissioner, supra at 610-611. A
taxpayer who refuses delivery of a notice of deficiency is deemed
to have received the notice. Id. at 611; see also Cyman v.
Commissioner, T.C. Memo. 2009-144.
If the taxpayer contests receipt of the notice of
deficiency, the Commissioner must introduce evidence of actual
mailing. See Smith v. Commissioner, T.C. Memo. 2008-229. The
5
(...continued)
administrative review of an IRS determination under sec. 6330 is
subject to the Administrative Procedure Act and that we must
focus on the administrative record, that record may be
supplemented if the record does not adequately disclose the basis
for the IRS’ determination. See Robinette v. Commissioner, 439
F.3d 455, 461-462 (8th Cir. 2006), revg. 123 T.C. 85 (2004). In
this case, respondent offered evidence of timely mailing and
attempted delivery to refute petitioner’s argument that he did
not receive valid notices of determination and to explain the
basis of the IRS’ determination that petitioner could not
challenge the underlying tax liabilities.
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U.S. Court of Appeals for the Second Circuit, to which an appeal
in this case would lie absent a stipulation to the contrary, see
sec. 7482(b)(1)(A), has held that the Commissioner is entitled to
a presumption of actual mailing if the Commissioner introduces
evidence that the notice of deficiency existed and produces “a
properly completed Postal Form 3877 * * * (or [its] equivalent)”,
O’Rourke v. United States, 587 F.3d 537, 540 (2d Cir. 2009). In
O’Rourke the Commissioner introduced a torn, partial copy of Form
3877 as evidence of mailing. The Court of Appeals for the Second
Circuit noted that the mail log “‘(a) bears the signature of the
individual who issued the Deficiency Notice; (b) sets forth the
same certified mail number as is imprinted on the Deficiency
Notice; (c) sets forth the correct address of the Debtors’” and
was stamped by USPS on the alleged date of mailing. Id. (quoting
In re O’Rourke, 346 Bankr. 643, 646 (Bankr. W.D.N.Y. 2006)).6 If
6
The opinion of the Court of Appeals for the Second Circuit
in O’Rourke v. United States, 587 F.3d 537 (2d Cir. 2009), is
consistent with opinions of other courts finding that the
Commissioner is not required to produce a USPS Form 3877 if the
Commissioner introduces equivalent evidence of proper mailing.
See, e.g., Mason v. Commissioner, 132 T.C. 301, 318 n.10 (2009)
(“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.”); Walthers v. Commissioner, T.C. Memo. 2009-139
(holding that the Commissioner is not required to produce a Form
3877, but the Commissioner must introduce evidence that “he
mailed the notice to petitioner’s last known address by certified
mail.”); Welch v. United States, 98 Fed. Cl. 655 (2011) (stating
that if the IRS is unable to produce a Form 3877, “it can raise
the same presumption by establishing that it followed a set
(continued...)
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the Commissioner introduces sufficient evidence of mailing, the
taxpayer bears the burden of going forward. Id.
The record contains copies of five notices of deficiency,
each dated August 19, 2005, for 1999-2003. Each notice of
deficiency bears petitioner’s name and post office box address.7
Each notice of deficiency bears a certified mail tracking number.
The record also contains copies of the envelopes in which
respondent separately mailed the notices of deficiency. Each
envelope bears a postmark indicating that the envelope was mailed
via certified mail on August 19, 2005, and a sticker indicating
that USPS returned the envelopes to the sender as “unclaimed”
mail.
At trial LaTrayer Sumter-Moreau (Ms. Sumter-Moreau), a
delivery retail analyst for USPS, testified about procedures
employed when a USPS office receives a piece of certified mail
addressed to a post office box. When USPS accepts a piece of
certified mail from the sender, a postal service employee labels
the envelope with a certified mail tracking number and the date
of receipt. When the envelope reaches the recipient’s post
6
(...continued)
procedure with respect to the taxpayers and providing
corroborating documentation.”).
7
Petitioner does not dispute that the post office box
address was his last known address. Furthermore, petitioner used
the same address on his correspondence with the Appeals Office,
on the petition he filed with this Court, and in his sworn
testimony at trial.
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office, a postal service employee completes a USPS Form 3849,
Delivery Notice/Reminder/Receipt, and places the form in the
recipient’s post office box. The USPS Form 3849 notifies the
recipient that he needs to claim a piece of certified mail. If
the recipient does not claim the item within 5 days, a postal
service employee completes another USPS Form 3849 and places the
form in the recipient’s post office box. If the recipient fails
to claim the item after another 10 days have passed, a postal
service employee will stamp the envelope “Returned to sender” and
return the item to the sender. If the intended recipient’s post
office box is full, a postal service employee will remove all of
the recipient’s mail, including the USPS Form 3849, and place a
notice in the post office box informing the recipient that he has
overflow mail.
Ms. Sumter-Moreau also identified and explained the various
postal stamps and marks on the envelopes in the record. After
examining the photocopied envelopes, Ms. Sumter-Moreau testified
that the envelopes bore a return address for the Internal Revenue
Service office in Philadelphia, Pennsylvania. She testified that
the postmark on the envelope bore the date the item came through
the USPS processing and distribution facility, August 19, 2005,
and that the postmark indicated that the item was sent from
Philadelphia, Pennsylvania. She identified the certified mail
tracking labels on the envelopes and the “Returned to sender”
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stamp. Finally, Ms. Sumter-Moreau identified a stamp on the
envelope indicating the first date USPS notified the recipient
about the certified mail item, the date of the second notice, and
the date USPS returned the item to the sender.
Respondent introduced evidence that the notices of
deficiency existed and evidence of actual mailing equivalent to a
USPS Form 3877. The record contains no credible evidence to
rebut the presumption of actual mailing arising therefrom.
Petitioner did not testify as to whether he received or recalled
receiving the notices of deficiency, but merely asserted that
respondent failed to introduce proof of proper mailing and
receipt. Petitioner advanced no argument and presented no
credible evidence challenging the presumption of actual mailing
and delivery. Petitioner also did not explain why he failed to
pick up the notices of deficiency after appropriate notification
of the delivery of the notices was placed in his post office box.
We find on this record that petitioner failed to accept
and/or refused delivery of the notices of deficiency for the
years at issue and therefore is deemed to have received them.
Accordingly, respondent’s Appeals Office correctly determined
that petitioner was precluded from challenging the underlying tax
liabilities at the section 6330 hearing. See Sego v.
Commissioner, 114 T.C. at 611; Clark v. Commissioner, T.C. Memo.
2008-155.
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III. Demand for Face-to-Face Section 6330 Hearing
Petitioner also contends that respondent improperly denied
him a face-to-face section 6330 hearing. We have held repeatedly
that because a section 6330 hearing is an informal proceeding
rather than a formal adjudication, a face-to-face hearing is not
mandatory. See Katz v. Commissioner, 115 T.C. at 337; Davis v.
Commissioner, 115 T.C. 35, 41 (2000); Bean v. Commissioner, T.C.
Memo. 2006-88. Accordingly, a proper section 6330 hearing may
take the form of a face-to-face meeting, a telephone conference,
or one or more written communications between the taxpayer and
the Appeals Office. Katz v. Commissioner, supra at 337-338; sec.
301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. Once a taxpayer
is given a reasonable opportunity for a hearing and fails to
avail himself of that opportunity, this Court may sustain the
Commissioner’s determination to proceed with collection on the
basis of an Appeals officer’s review of the case file. See,
e.g., Bean v. Commissioner, supra; Ho v. Commissioner, T.C. Memo.
2006-41; Leineweber v. Commissioner, T.C. Memo. 2004-17.
The applicable regulations provide that the Appeals Office
will not grant a request for a face-to-face section 6330 hearing
concerning a taxpayer’s underlying liability if “the taxpayer
wishes only to raise irrelevant or frivolous issues” concerning
the liability. Sec. 301.6330-1(d)(2), Q&A-D8, Proced. & Admin.
Regs. If the taxpayer requests a face-to-face hearing concerning
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a collection alternative, the Appeals Office will not grant the
request “unless other taxpayers would be eligible for the
alternative in similar circumstances.” Id. To be eligible for a
collection alternative, the taxpayer must provide required
returns or make required deposits of tax. Id.
Petitioner requested a face-to-face section 6330 hearing
allegedly to address the underlying liabilities as well as any
available collection alternatives. The Appeals Office properly
denied petitioner’s request. The Appeals Office advised
petitioner on several occasions that it would grant his request
for a face-to-face hearing if he identified relevant issues he
wanted to discuss. Instead of identifying relevant issues,
petitioner repeatedly responded with the same vague contentions
similar to those we have rejected in the past as frivolous and
groundless or offered for purposes of delay. See, e.g., Reynolds
v. Commissioner, T.C. Memo. 2009-181; Cyman v. Commissioner, T.C.
Memo. 2009-144. Furthermore, petitioner was not entitled to a
face-to-face hearing on the underlying liabilities because he is
deemed to have received the relevant notices of deficiency.
Petitioner also asserted that he wanted to discuss
collection alternatives. However, he failed to provide any
financial information to the Appeals Office, including the
requested Forms 1040 and Forms 433-A, which were necessary to
evaluate petitioner’s ability to pay the liabilities and he did
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not propose any collection alternative. We conclude on these
facts that petitioner was not entitled to a face-to-face hearing
on the availability of collection alternatives. See, e.g.,
Williams v. Commissioner, T.C. Memo. 2008-173.
The Appeals Office offered petitioner the right to conduct
his section 6330 hearing by telephone or through written
correspondence. Petitioner refused to participate in the two
scheduled telephone conferences. Petitioner was given an
opportunity for a section 6330 hearing and failed to take
advantage of it. The Appeals Office did not abuse its discretion
in denying petitioner a face-to-face hearing under these
circumstances.
IV. Review of the Notice of Determination
Because the validity of the underlying liabilities is not
properly at issue, we review the notice of determination for
abuse of discretion. See Sego v. Commissioner, supra at 610;
Goza v. Commissioner, 114 T.C. 176, 182 (2000). Ordinarily, we
consider only those matters raised during the section 6330
hearing or considered in the notice of determination. Magana v.
Commissioner, 118 T.C. 488, 493-494 (2002). The Appeals Office
abuses its discretion if it acts “arbitrarily, capriciously, or
without sound basis in fact.” Mailman v. Commissioner, 91 T.C.
1079, 1084 (1988).
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Petitioner has not advanced any argument or introduced any
evidence that would allow us to conclude that the determination
to sustain the levy was arbitrary, capricious, or without sound
basis in fact. Petitioner did not submit a Form 433-A or any
other financial information during the section 6330 hearing, nor
did he offer a reasonable collection alternative. The Appeals
Office determined that the requirements of applicable law and
administrative procedure were met and concluded that the proposed
levy appropriately balanced the need for efficient collection of
taxes with petitioner’s concerns regarding the intrusiveness of
the levy action. Accordingly, we hold that the Appeals Office
did not abuse its discretion in upholding the proposed levy
action.
We have considered the parties’ remaining arguments, and to
the extent not discussed above, conclude those arguments are
irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.