Michael E. Nestor v. Commissioner

118 T.C. No. 10UNITED STATES TAX COURT
MICHAEL E. NESTOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5372-00L. Filed February 19, 2002.
This opinion addresses petitioner’s (P) 1992
through 1997 (1992-97) tax years.
Respondent (R) issued notices of deficiency to
petitioner (P) for tax years 1990 through 1997 (1990-
97). P received the notices of deficiency for tax
years 1992-97 but did not file a petition for
redetermination with the Court. R issued to P a notice
of intent to levy with respect to P’s taxes due for tax
years 1990-97. P requested and R held a hearing
pursuant to sec. 6330(b), I.R.C., relating to P’s tax
years 1990-97. In his request for a hearing, P
requested that R provide him copies of the assessment
records. At the hearing, R did not permit P to
challenge his underlying tax liability for tax years
1990-97. After the hearing, R sent a notice of
determination to P stating that collection of his tax
liability for 1990-97 would proceed. R provided
assessment records to P after the hearing and before
the trial in this case.
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Held: P may not contest his underlying tax liability
for tax years 1992-97 because P received notices of
deficiency for those years. Sec. 6330(c)(2)(B).
Held, further, R’s determination to proceed with
collection with respect to P’s tax years 1992-97 was not an
abuse of discretion.
Michael E. Nestor, pro se.
David C. Holtz, for respondent.
COLVIN, Judge: On April 7, 2000, respondent sent petitioner
a Notice of Determination Concerning Collection Action(s) Under
Sections 6320 and/or 6330 (the lien or levy determination), in
which respondent determined to proceed with collection of
deficiencies in petitioner’s income tax, additions to tax,
interest, and the frivolous return penalty1 for 1990 through 1997
(1990-97).
In this opinion, we decide:
(1) Whether petitioner may contest his underlying tax
liability for tax years 1992-97. We hold that he may not.
(2) Whether respondent’s determination to proceed with
collection with respect to petitioner’s tax years 1992-97 was an
abuse of discretion. We hold that it was not.
1
We will dismiss for lack of jurisdiction the portion of
this case that relates to the frivolous return penalties for tax
years 1992-97. Van Es v. Commissioner, 115 T.C. 324, 328-329
(2000).
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Section references are to the Internal Revenue Code as
amended.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioner resided in California when he filed the petition in
this case.
A. Petitioner’s Tax Returns and the Notices of Deficiency
Petitioner filed purported Federal income tax returns for
1990-96 in May 1997, and he timely filed a purported 1997 return
on April 15, 1998.2 On each return, he reported that he had no
wages, other income, or tax liability. After petitioner filed
those tax returns and before October 1999 (when respondent issued
the notice of intent to levy discussed at paragraph B, below),
respondent assessed the frivolous return penalty under section
6702 for 1990-97.
Respondent issued notices of deficiency to petitioner for
each of his 1990-97 tax years determining deficiencies and
additions to tax as follows:
2
Petitioner’s 1997 return bears the date “04-14-97". The
parties stipulated that petitioner filed his 1997 return on or
before Apr. 15, 1998.
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Additions to Tax
Year Deficiency Sec. 6651(a) Sec. 6654
1990 $2,006 $493.00 $129.46
1991 1,834 455.75 104.73
1992 2,201 550.25 -0-
1993 2,021 493.75 -0-
1994 1,954 254.02 -0-
1995 2,899 202.93 -0-
1996 2,951 29.49 156.93
1997 2,996 89.88 -0-
Petitioner received the notices of deficiency for 1992-97,
but he did not file a petition for redetermination of the
deficiencies for 1992-97.
B. The Lien and Levy Proceeding
On October 21, 1999, respondent issued to petitioner a
Notice of Intent to Levy and Notice of Your Right to a Hearing
relating to petitioner’s 1990-97 tax years. On November 17,
1999, petitioner filed a Request for a Collection Due Process
Hearing, Form 12153, for tax years 1990-983 in which he
contended: (1) There was “no valid, underlying assessment” of
taxes; (2) he did not receive the “statutory ‘notice and demand’”
for payment of the taxes at issue; (3) he did not receive a valid
notice of deficiency; and (4) he had no underlying tax liability.
In his request for a hearing, petitioner asked that the Appeals
officer have at the hearing: (1) Verification that “the
3
The record is silent as to why petitioner requested a
hearing with respect to tax year 1998. Because respondent’s
notice of intent to levy did not include 1998, that year is not
in issue here.
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requirements of any applicable law or administrative procedure
have been met”, for example, a copy of the statutory notice and
demand for payment; (2) a copy of Form 23C, Summary Record of
Assessment, and the “pertinent parts of the assessment which set
forth the name of the taxpayer, the date of the assessment, the
character of the liability assessed, the taxable period, and the
amount assessed”; (3) delegation of authority from the Secretary
to the person (other than the Secretary) who signed the
verification required under section 6330(c)(1); and (4) proof
that notices of deficiency were sent to petitioner.
C. The Section 6330 Hearing and Respondent’s Notice of
Determination
On December 28, 1999, respondent’s Appeals Office conducted
a hearing in petitioner’s case for tax years 1990-97. Petitioner
attended the hearing. He was not given an opportunity to
challenge his underlying tax liability for 1990-97 at the
hearing. At the hearing, he asked the Appeals officer to provide
verification that the requirements of any applicable law or
administrative procedures had been met, to give him copies of a
notice and demand for payment, and to show him “anything that
indicated [he] owed income tax” or that he was required to pay
Federal income tax. The Appeals officer did not comply with
petitioner’s requests and told petitioner that the hearing was
limited to alternatives to collection. At the hearing,
petitioner did not challenge the appropriateness of the intended
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method of collection, offer an alternative means of collection,
or raise a spousal defense to collection.
On April 7, 2000, respondent sent petitioner a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 (the determination letter), in which respondent
stated that all applicable laws and administrative procedures had
been met and that collection from petitioner of his tax liability
for 1990-97 would proceed. On May 8, 2000, petitioner filed a
petition for lien or levy action under section 6320(c) or
6330(d).
OPINION
A. Whether Petitioner May Contest His Underlying Tax
Liabilities for 1992-97
Petitioner contends that he was improperly precluded at the
section 6330 hearing from challenging his underlying tax
liability for tax years 1992-97. He bases this on the claim that
the notices of deficiency he received were not valid because they
were not prepared or issued by the Secretary and because the
Director of the Service Center who prepared and issued them did
not give petitioner a copy of the order delegating authority from
the Secretary to her.
Petitioner’s contention lacks merit. The Secretary or his
delegate may issue notices of deficiency. Secs. 6212(a),
7701(a)(11)(B) and (12)(A)(i). The Secretary’s authority to
issue notices of deficiency was delegated to the District
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Director and also to the Director of the Service Center who
issued the notices of deficiency in this case. See Stamos v.
Commissioner, 95 T.C. 624, 630-631 (1990), affd. without
published opinion 956 F.2d 1168 (9th Cir. 1992); Kellogg v.
Commissioner, 88 T.C. 167, 172 (1987); Perlmutter v.
Commissioner, 44 T.C. 382, 385 (1965), affd. 373 F.2d 45 (10th
Cir. 1967); secs. 301.6212-1(a), 301.7701-9(b), Proced. & Admin.
Regs. A taxpayer may contest the existence or amount of the
underlying tax liability at the section 6330(b) hearing only if
the taxpayer did not receive a notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability. Sec. 6330(c)(2)(B). Section 6330(c)(2)(B)
bars petitioner from contesting the existence or amount of his
tax liabilities for 1992-97 because he received notices of
deficiency for those years.
B. Whether Respondent’s Determination To Proceed With
Collection as to Petitioner’s 1992-97 Tax Years Was an Abuse
of Discretion
The Appeals officer verified that the Internal Revenue
Service (IRS) had met the requirements of any applicable laws and
administrative procedures. See sec. 6330(c)(1); sec. 301.6330-
1(e)(1), Proced. & Admin. Regs. The second sentence of section
6203 provides that the Secretary shall, upon request of the
taxpayer, provide the taxpayer a copy of the record of
assessment.
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Petitioner points out that the Appeals officer did not have
at the hearing the documents (the notice and demand for payment,
verification that the requirements of applicable law or
administrative procedure have been met, Form 23C, other
assessment records, and the delegation order to the person other
than the Secretary who signed the verification) that petitioner
had requested in his request for a section 6330(b) hearing.
Petitioner contends that he was entitled to receive assessment
records under section 6203. Petitioner also contends that the
Appeals officer’s verification was incorrect, and that the
assessments were invalid, because he did not receive those
documents at the hearing. The Appeals officer used Forms 4340,
Certificate of Assessments and Payments, to verify the
assessments. Even though petitioner specified Form 23C, it was
not an abuse of discretion for the Appeals officer to use Forms
4340 for purposes of complying with section 6330(c)(1). Davis v.
Commissioner, 115 T.C. 35, 41 (2000).
Section 6330(c)(1) does not require the Appeals officer to
give the taxpayer a copy of the verification that the
requirements of any applicable law or administrative procedure
have been met. Section 301.6330-1(e)(1), Proced. & Admin. Regs.,
supra, requires that the Appeals officer obtain verification
before issuing the determination, not that he or she provide it
to the taxpayer. There is no requirement under internal revenue
laws or regulations that the Appeals officer give the taxpayer a
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copy of the delegation of authority from the Secretary to the
person (other than the Secretary) who signed the verification
required under section 6330(c)(1).
The Appeals officer did not give petitioner a copy of the
record of assessment at or before the hearing as petitioner had
requested. Respondent gave petitioner copies of the Forms 4340
prior to the trial in this case. The Forms 4340 that respondent
gave petitioner before trial showed that the amounts at issue
were properly assessed, and petitioner did not show at trial any
irregularity in the assessment procedure that would raise a
question about the validity of the assessments. Requiring the
Appeals officer to provide petitioner with a second copy of
petitioner’s Forms 4340 at this time would delay disposition of
this case. Petitioner was not prejudiced in any way by the fact
that he first received copies of those records after the section
6330 hearing. Thus, whether or not the second sentence of
section 6203 is an “applicable law or administrative procedure”
referred to in section 6330(c)(1), it is clear that no bona fide
interest would be served by further delaying the collection of
petitioner’s tax liability for 1992-97.
Petitioner contends that the notice of intent to levy
improperly failed to identify the Code sections which establish
his alleged tax liability. He contends that the assessment of
tax was improper because he filed tax returns for 1990-97 which
showed that he owed no income taxes for those years. He also
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asserts that respondent may not assess tax because section 6201
provides for self-assessment and only petitioner can determine
what tax he owes.
Petitioner’s contentions are frivolous. There is no
requirement that the notice of intent to levy identify the Code
sections which establish the taxpayer’s liability for tax,
additions to tax, or penalties.
Section 6330(c)(2)(A) permits a taxpayer to challenge the
appropriateness of the intended method of collection, offer
alternatives to collection, or raise a spousal defense to
collection. Petitioner gives no bona fide basis for his claim
that the collection action was not appropriate. We conclude that
respondent’s determination to proceed with collection of the tax
liabilities assessed against petitioner for those years was not
an abuse of discretion.4
Accordingly,
An appropriate order
will be issued.
Reviewed by the Court.
WELLS, COHEN, GERBER, RUWE, WHALEN, HALPERN, and THORNTON,
JJ., agree with this majority opinion.
MARVEL, J., concurs in result only.
4
We also hold herein that petitioner’s contentions
discussed in par. B (slip op. pp. 7-10) lack merit for years
1990-91.
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SWIFT, J., concurring: Arguably, the majority opinion
treats all “assessment records” as if they are the same, and
states overly broadly (majority op. p. 8) that “Section
6330(c)(1) does not require the Appeals officer to give the
taxpayer a copy of the verification that the requirements of any
applicable law or administrative procedure have been met.” The
quoted language is susceptible of being read to mean that Appeals
officers need not give or show to taxpayers copies of
computerized transcripts of account or Forms 4340.
Surely, we need not so hold in this case. Petitioner is not
making that argument. At the Appeals hearing herein, the Appeals
officer had a copy of the computerized transcript of account or
Forms 4340 relating to petitioner, and nothing in the opinion
suggests that the Appeals officer refused to provide petitioner
with a copy of those specific documents.1
1
Repeatedly, in connection with the Appeals hearing and
the litigation herein, petitioner insisted that he be provided
not with a transcript of account or a Form 4340, but rather with
a Form 23C and with the Summary Record of Assessment “as provided
for in sec. 301.6203-1, Proced. & Admin. Regs.” At the Appeals
hearing, petitioner was not interested in obtaining from
respondent a copy of the transcript of account or the Form 4340.
Like many other tax protesters, petitioner does not regard a
computerized transcript of account or a Form 4340 as satisfying
either the verification requirements of sec. 6330(c)(1) or the
documentation provisions of sec. 301.6203-1, Proced. & Admin.
Regs. E.g., Lunsford v. Commissioner, 117 T.C. 183, 187-189
(2001); Davis v. Commissioner, 115 T.C. 35, 40-41 (2000).
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As we noted in Davis v. Commissioner, 115 T.C. 35, 41
(2000), procedures in collection hearings under section 6330 were
intended by Congress to be handled in a manner similar to
procedures used in traditional Appeals hearings. For years, as
far as I know without exception and long before enactment of
sections 6320 and 6330, respondent’s audit and Appeals
representatives, in all collection contexts, have provided to
taxpayers copies of transcripts of account and of Forms 4340
relating to the taxpayers. I hope that this opinion will not be
read to suggest that such documents, easily and routinely
obtained by respondent’s collection personnel and by respondent’s
Appeals officers, need no longer be made available to taxpayers
and to their representatives, particularly in collection
contexts. The new collection procedures under sections 6320 and
6330 should not be interpreted to change the routine availability
to taxpayers from respondent's representatives of transcripts of
account and of Forms 4340.
In light of comments made in Judge Foley’s dissenting
opinion regarding the relationship of the verification
requirements of section 6330(c)(1) with taxpayers’ rights under
section 6203 (and the related regulations) to obtain from
respondent a copy of the “record of the assessment”, some further
comments are appropriate regarding those two quite different
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statutory provisions. In collection hearings, respondent has
certain specified verification requirements under section
6330(c)(1) relating to proposed collection activity. We held in
Davis v. Commissioner, supra at 41, that, absent irregularities,
the verification requirement with regard to the existence of an
assessment (an “applicable” administrative procedure) is
satisfied if the Appeals officers obtain Forms 4340 or
transcripts of account which corroborate the relevant assessment
information regarding the taxpayers.
Under section 6203, taxpayers have a right to request and to
receive a copy of “the record of assessment”, and if not
delivered to the taxpayers by respondent, taxpayers may have a
right to sue respondent under the Freedom of Information Act,
5 U.S.C. sec. 552 (2001), and section 601.702(c)(11), Statement
of Procedural Rules, to require respondent to provide the
documents requested. See, e.g., Dickstein v. IRS, 846 F.2d 1382(9th Cir. 1988). In my opinion, that right of taxpayers under
section 6203 is not part of respondent’s verification
requirements under section 6330(c)(1).
Further consideration of other provisions of section 6330
buttresses this analysis. It is helpful to look closely at the
specific language not only of section 6330(c)(1), but also of
section 6330(c)(2) and (3). Section 6330(c)(1) imposes the
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affirmative verification requirements on respondent with regard
to “applicable law or administrative procedure”. The
verification requirements are independent of any issue raised by
taxpayers. In this case, any holding that respondent has not
satisfied that duty would be inconsistent with Davis v.
Commissioner, supra.
Section 6330(c)(2) then provides that taxpayers may raise at
collection hearings any “relevant” issue. It does not say that
taxpayers may raise “any” issue or that the Appeals officers
should guess as to what issues the taxpayers might have raised.
Section 6330(c)(3) provides similar, express language
limiting the scope of collection hearings. Section 6330(c)(3)(B)
states that Appeals officers need only consider the “issues
raised” by taxpayers, and section 6330(c)(3)(C) states that only
“legitimate” concerns of taxpayers need be taken into account in
considering the need for efficient collection action.
Accordingly, and particularly where taxpayers are making tax
protester arguments, in collection hearings under section 6330(b)
and in subsequent court proceedings, only issues that are
actually raised by taxpayers and that constitute relevant,
legitimate, and good faith issues need be considered by Appeals
officers and by the courts.
The referenced statutory language suggests strongly to me,
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and I would so hold, that issues not raised, as well as tax
protester issues, need not be considered by Appeals officers in
collection hearings under section 6330(b) and that tax protester
issues may and should be summarily dismissed by the courts.
Further, Appeals officers and the courts need not speculate about
what issues taxpayers might have raised were they not tax
protesters or were they represented by other lawyers.2
Petitioner herein is a flagrant tax protester. Petitioner
did not file his 1990-96 income tax returns until 1997. On the
late-filed tax returns petitioner reflected no financial
information. Petitioner claimed his wages were not income. At
the evidentiary hearing before the Court, petitioner asserted:
“Since income taxes are based on self assessment, under Code
section 6201, I, alone, can determine what I owe”.
At the Appeals hearing and at the hearing before the Tax
Court in this case, petitioner raised no relevant, legitimate, or
good faith issue, and we have no business speculating as to
whether petitioner may ever raise any such issue. The maxim,
“Justice delayed is justice denied”, applies not only to cases
eventually decided in favor of taxpayers but also to cases to be
2
In the final regulations under sec. 6330, the position
is taken that taxpayers may raise in court only issues that
actually were raised by the taxpayers at the Appeals hearings.
T.D. 8979, 2002-6 I.R.B. 466; T.D. 8980 Q&A-F5, 2002-6 I.R.B.
477, 487.
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decided in favor of respondent, particularly those involving a
postponement of tax collection.
Respectively, in my opinion, arguments made by taxpayers in
administrative and court hearings under sections 6320 and 6330
that implicate only frivolous arguments and that implicate the
postponement of the collection of taxes owed, should be dealt
with by respondent’s Appeals Office and by this Court summarily
and decisively.
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HALPERN, J., concurring: I agree with the majority that, if
in determining to proceed with collection, respondent erred in
informing petitioner that all applicable laws and administrative
procedures had been met, such error was harmless error. I write
separately to express my views as to why the majority is correct.
I. Introduction
Petitioner requested and received a so-called collection due
process hearing. At that hearing, the Appeals officer was
required to obtain verification that the requirements of any
applicable law or administrative procedure had been met. Sec.
6330(c)(1). Following the hearing, the Appeals officer informed
petitioner that all applicable laws and administrative procedures
had been met and that collection from petitioner of his tax
liability for 1990 through 1997 would proceed. Petitioner
contends that he was entitled to receive assessment records under
section 6203.1 The majority finds:
The Appeals officer did not give petitioner a copy
of the record of assessment at or before the hearing as
1
Sec. 6203 provides:
SEC. 6203. METHOD OF ASSESSMENT.
The assessment shall be made by recording the
liability of the taxpayer in the office of the
Secretary in accordance with rules or regulations
prescribed by the Secretary. Upon request of the
taxpayer, the Secretary shall furnish the taxpayer a
copy of the record of the assessment. [Emphasis
added.]
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petitioner had requested. Respondent gave petitioner
copies of the Forms 4340 prior to the trial in this
case. The Forms 4340 that respondent gave petitioner
before trial showed that the amounts at issue were
properly assessed, and petitioner did not show at trial
any irregularity in the assessment procedure that would
raise a question about the validity of the assessments.
* * * Petitioner was not prejudiced in any way by the
fact that he first received copies of those records
after the section 6330 hearing. * * * [Majority op.
p. 9; emphasis added.]
As will be shown, a person seeking judicial review of agency
actions bears the burden of demonstrating prejudice from any
error. Since petitioner did not show prejudice, the “rule of
prejudicial error” is applicable, and petitioner is entitled to
no relief.
II. Administrative Procedure Act
I have previously stated my belief that various provisions
of the Administrative Procedure Act, 5 U.S.C. secs. 551-559, 701-
706 (1994) (hereafter, sections of which are cited as 5 U.S.C.),
inform our authority under section 6330(d)(1)(A) to review a
determination made by an Appeals officer pursuant to section
6330(c)(3). Lunsford v. Commissioner, 117 T.C. 159, 165, 167-168
(2001) (Halpern, J., concurring).
Among the applicable APA provisions is 5 U.S.C. sec. 706,
which, in pertinent part, provides:
Scope of review
To the extent necessary to decision and when
presented, the reviewing court shall decide all
relevant questions of law, interpret constitutional and
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statutory provisions, and determine the meaning or
applicability of the terms of an agency action. The
reviewing court shall--
(1) compel agency action unlawfully withheld or
unreasonably delayed; and
(2) hold unlawful and set aside agency action,
findings, and conclusions found to be--
(A) arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law;
* * * * * * *
(D) without observance of procedure required by
law;
* * * * * * *
In making the foregoing determinations, the court shall
review the whole record or those parts of it cited by a
party, and due account shall be taken of the rule of
prejudicial error. [Emphasis added.]
The “rule of prejudicial error” (otherwise the doctrine of
harmless error), as applied to an administrative action, provides
that the reviewing court shall disregard procedural errors unless
the complaining party was prejudiced thereby. As recently
summarized by the Court of Appeals for the First Circuit:
The doctrine of harmless error is as much a part
of judicial review of administrative action as of
appellate review of trial court judgments. Indeed, the
Administrative Procedure Act, 5 U.S.C. § 706, says that
in reviewing agency action, the court “shall” take due
account of “the rule of prejudicial error,” i.e.,
whether the error caused actual prejudice. And while
many of the decisions involve harmless substantive
mistakes, no less an authority than Judge Friendly [in
Kerner v. Celebrezze, 340 F.2d 736, 740 (2d Cir. 1965)]
has applied the harmless error rule to procedural
error, as has the circuit [Court of Appeals for the
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District of Columbia Circuit] that most often reviews
agency action. [Save Our Heritage, Inc. v. F.A.A., 269
F.3d 49, 61 (1st Cir. 2001); fn. ref. omitted.]
The Court of Appeals added:
Obviously, a court must be cautious in assuming
that the result would be the same if an error,
procedural or substantive, had not occurred, and there
may be some errors too fundamental to disregard. But
even in criminal cases involving constitutional error,
courts may ordinarily conclude that an admitted and
fully preserved error was “harmless beyond a reasonable
doubt.” Agency missteps too may be disregarded where
it is clear that a remand “would accomplish nothing
beyond further expense and delay.” [Id. at 61–62;
emphasis added; citations omitted.]
The party seeking judicial review of an agency action bears
the burden of demonstrating prejudice from any error. DSE, Inc.
v. United States, 169 F.3d 21, 31 (D.C. Cir. 1999) (“Under the
APA, we will not set aside agency action unless the party
asserting error can demonstrate prejudice from the error”
(internal quotation marks and brackets omitted)).2
It is no bar to application of the doctrine of harmless
error that the agency error complained of is the omission of a
statutory prerequisite. See, e.g., Hydro Engg., Inc. v. United
2
In certain circumstances, sec. 7491(a) imposes on the
Commissioner the burden of proof in connection with factual
issues relevant to determining the liability of the taxpayer for
any income, estate, or gift tax. See sec. 7491(a)(1). Even if
sec. 7491(a) is applicable to the determination of whether
petitioner has demonstrated prejudice, petitioner has failed to
introduce credible evidence of prejudice and, thus, must carry
the burden of proof. See sec. 7491(a)(1).
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States, 37 Fed. Cl. 448, 477 (1997) (“The standard of review for
the denial of a procedural right at the agency level, even one
that is statutory, is harmless error.” (Emphasis added.)). The
reviewing court must consider whether deviation from the
requirements of the statute would affect the interests that the
statute is designed to protect and must take into account the
general principle that public rights should not be prejudiced
because of immaterial errors on the part of public servants.
Intercargo Ins. Co. v. United States, 83 F.3d 391, 395 (Fed. Cir.
1996) (citing Brock v. Pierce County, 476 U.S. 253, 260 (1986),
in which the Court said: “We would be most reluctant to conclude
that every failure of an agency to observe a procedural
requirement voids subsequent agency action, especially when
important public rights are at stake.”).
III. Discussion
Section 6203 provides that, on request of the taxpayer, the
Secretary shall furnish the taxpayer a copy of the record of
assessment. Section 6203 does not provide any remedy for the
Secretary’s failure to comply. In United States v. James Daniel
Good Real Prop., 510 U.S. 43, 63 (1993), in connection with
agency disregard of statutorily imposed timing requirements, the
Supreme Court stated: “We have held that if a statute does not
specify a consequence for noncompliance with statutory timing
provisions, the federal courts will not in the ordinary course
impose their own coercive sanction.” The Court relied on United
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States v. Montalvo-Murillo, 495 U.S. 711, 717 (1990) (failure to
comply with Bail Reform Act's prompt hearing provision) for the
following proposition: “There is no presumption or general rule
that for every duty imposed upon the court or the Government and
its prosecutors there must exist some corollary punitive sanction
for departures or omissions, even if negligent.” See also Diaz
v. Dept. of the Air Force, 63 F.3d 1107, 1109 (Fed. Cir. 1995)
(“An agency’s violation of a statutory procedural requirement
does not necessarily invalidate the agency action, especially
where Congress has not expressed any consequences for such a
procedural violation.”).
In effect, section 6330(c)(3)(A) provides that, prior to
making his determination to proceed with collection, an Appeals
officer shall obtain verification that all applicable laws or
administrative procedures have been met. See sec. 6330(c)(1),
(3)(A). As Judges Foley’s and Swift’s separate opinions in this
case show, it is debatable whether section 6203 is an applicable
law. Assuming that it is, however, the majority has concluded
that petitioner was not prejudiced in any way by the delay in
providing him with the required record. The Appeals officer’s
verification that all applicable laws had been met may have been
in error; nevertheless, the majority has, in effect, concluded
that it was harmless error. Given the lack of a specific remedy
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in section 6203 and respondent’s eventual compliance with the
statute (without demonstrable prejudice to petitioner), I agree
with the majority’s conclusion: “Requiring the Appeals officer
to provide petitioner with a second copy of petitioner’s Forms
4340 at this time would [needlessly] delay disposition of this
case.” Majority op. p. 9.
IV. Conclusion
If the Appeals officer committed error at all, it was
harmless. Petitioner has failed to show that the Appeals
officer’s determination would have differed in the slightest if
petitioner had been provided the assessment record prior to or at
the Appeals hearing. The majority is correct.
WHALEN and THORNTON, JJ., agree with this concurring
opinion.
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BEGHE, J., concurring: The majority acknowledge that
section 6203 requires the Secretary, upon request of the
taxpayer, to furnish the taxpayer a copy of the record of the
assessment but observe that neither section 6330(c)(1) nor the
regulations thereunder require the Appeals officer to furnish
“the taxpayer a copy of the verification that the requirements of
any applicable law or administrative procedure have been met.”
Majority op. p. 8. Nor, I would add, does section 6330(c)(1) by
its terms require the Appeals officer to furnish a copy of the
record of the assessment at the hearing. However, as the dissent
points out, it is difficult to see how the Appeals officer could
have verified that the requirements of all applicable laws had
been met when respondent had not complied with section 6203.
In any event, it should be standard procedure in collection
cases for the Appeals officer, no later than the commencement of
the hearing, to furnish the taxpayer a Form 4340 confirming the
assessment. In so doing, the Appeals officer will provide the
taxpayer minimum assurance that the amounts claimed by the
Service in the lien or levy proceeding notice are due and owing.
By furnishing the taxpayer a Form 4340 at or before the hearing,
the Service will remove any excuse of the taxpayer for not coming
to grips with the relevant issues described in section
6330(c)(2).
In the case at hand, the Appeals officer’s failure to
furnish the taxpayer a Form 4340 at or before the hearing was
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harmless error. As the majority correctly hold, no purpose would
be served by remanding this case for a hearing when the only
defect was the Appeals officer’s failure to provide a document
that has now been provided, and which conclusively establishes
the obligation that the Service seeks to enforce.
Because petitioner has already shown a penchant for causing
delay and taking frivolous and groundless positions, this is not
an appropriate case for imposing any sanction on respondent for
delay in furnishing the Form 4340. However, a taxpayer who could
show that he suffered genuine harm as a result of the Service’s
delay in furnishing the Form 4340 should be entitled to a remedy.
Cf. Shea v. Commissioner, 112 T.C. 183, 207-209 (1999). For
example, a taxpayer who shows that respondent’s delay in
furnishing Form 4340 caused the taxpayer to incur additional
interest, and that no significant aspect of the delay can be
attributed to the taxpayer, might be entitled to an abatement of
interest under section 6404(e) from the date of the
administrative hearing until the Service furnishes the taxpayer
Form 4340. By providing evidence of the assessment at or before
the hearing as a matter of course, the Service satisfies section
6203, and avoids unnecessary delay and expense and any possible
sanction.
I dissented in dismay in Johnson v. Commissioner, 117 T.C.
- 26 -
204, 218 (2001), from the Court’s continued abstention from
taking jurisdiction in collection disputes over the $500 section
6702 frivolous return penalty. Our decision in Johnson required
that the case be dismissed, entitling a taxpayer patently seeking
delay to achieve his goal by refiling in the District Court. I
concur that the Johnson precedent requires us to dismiss the
portion of the case at hand that relates to the frivolous return
penalties. This will allow petitioner to refile the frivolous
return penalty issue for all years (1990-1997) in the District
Court, even as collection of the assessed deficiencies in
petitioner’s income tax, additions to tax, and interest for the
years 1992-1997, goes forward. The resultant splitting of what
should have been and remained one collection proceeding will
entail an absurd waste of time and other resources.
I renew my plea for congressional enactment of an explicit
grant of jurisdiction to this Court to provide one-stop shopping
in all cases under sections 6320 and 6330. A possible model is
the amendment of section 6214(a) by the Tax Reform Act of 1986,
Pub. L. 99-514, sec. 1554(a), 100 Stat. 2754, which furnished
jurisdiction to the Tax Court to review the Commissioner’s
determination to collect the addition to tax under section
6651(a)(2). See Downing v. Commissioner, 118 T.C. ,
(2002) (slip op. at 7).
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LARO, J., concurring in result: The majority holds that
“respondent’s determination to proceed with collection of the tax
liabilities assessed against petitioner for those [1992-1997]
years was not an abuse of discretion.” Maj. op. p. 10. On the
basis of this Court’s opinion in Lunsford v. Commissioner,
117 T.C. 183 (2001) (Lunsford II), a decision with which I
dissented and continue to disagree, but for which I shall
respectfully follow as the view of this Court, I agree with the
majority’s holding.1 As was true in Lunsford II, petitioner has
failed to advance in this proceeding any bona fide argument that
makes it “either necessary or productive to remand this case to
IRS Appeals to consider”. Id. at 189. A holding for respondent
is therefore appropriate.
I also write to clarify my understanding of the Court’s
rejection of petitioner’s argument that the Appeals officer
1
I note in passing, however, that Lunsford II appears to
have been sapped of some of its vitality by the Treasury
Department’s recent release of final regulations under sec. 6330.
The majority in Lunsford II did not require the Office of Appeals
(Appeals) to conduct a face-to-face collection due process (CDP)
hearing with the taxpayers even though the taxpayers had alleged
in their petition that they wanted such a face-to-face hearing
and that the absence of a face-to-face hearing deprived them of
their right to present their case. Lunsford v. Commissioner,
117 T.C. 183, 191 (2001) (Laro, J., dissenting). Whereas the
final regulations under sec. 6330 observe that a CDP hearing need
not be held face-to-face, the regulations indicate that the
taxpayer may demand that a CDP hearing be scheduled face-to-face.
The regulations mandate that a taxpayer who requests a face-to-
face CDP hearing “must be offered an opportunity for a hearing at
the Appeals office closest to the taxpayer’s residence or, in the
case of a business taxpayer, the taxpayer’s principal place of
business.” Sec. 301.6330-1(d)(2), Q&A-D6 and D7, Proced. &
Admin. Regs.
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failed to verify that the requirements of any applicable law or
administrative procedures had been met. Maj. op. p. 8. As was
true here, and as was true in Davis v. Commissioner, 115 T.C. 35,
41 (2000), the case upon which the majority relies to reject that
argument, the Court did not hold that an Appeals officer’s
reliance on Form 4340, Certificate of Assessments and Payments,
was sufficient to meet section 6330(c)(1)’s requirement that “The
appeals officer shall at the hearing obtain verification from the
Secretary that the requirements of any applicable law or
administrative procedure have been met.” In Davis v.
Commissioner, supra at 40-41, and as was true here, majority op.
p. 8, the narrow holding of the Court was that an Appeals officer
may at the hearing rely on Form 4340 to verify that the taxes in
question were assessed.
The fact that Form 4340 is insufficient compliance with
section 6330(c)(1) in its entirety is seen by a plain reading of
the relevant legislative history. The Senate Finance Committee
report provides that
During the hearing, the IRS is required to verify
that all statutory, regulatory, and administrative
requirements for the proposed collection action have
been met. IRS verifications are expected to include
(but not be limited to) showings that:
(1) the revenue officer recommending the
collection action has verified the taxpayer’s
liability;
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(2) the estimated expenses of levy and sale will
not exceed the value of the property to be seized;
(3) the revenue officer has determined that there
is sufficient equity in the property to be seized to
yield net proceeds from sale to apply to the unpaid tax
liabilities; and
(4) with respect to the seizure of the assets of a
going business, the revenue officer recommending the
collection action has thoroughly considered the facts
of the case, including the availability of alternative
collection methods, before recommending the collection
action. [S. Rept. 105-174, at 68 (1998), 1998-3 C.B.
537, 604.2]
Form 4340 simply does not meet each of these verification
requirements. Form 4340 was sufficient both here and in Davis
because the only irregularity alleged as to the verification
requirement concerned the proper assessment.
VASQUEZ and GALE, JJ., agree with this concurring in result
opinion.
2
The fact that this quoted text relates solely to the
verification requirement of sec. 6330(c)(1) is seen not only by
reading the quoted text but by reading the text that appears
immediately thereafter. That text, which relates to sec.
6330(c)(2), provides:
The taxpayer (or affected third party) is allowed
to raise any relevant issue at the hearing. Issues
eligible to be raised include (but are not limited to):
(1) challenges to the underlying liability as to
existence or amount;
(2) appropriate spousal defenses;
(3) challenges to the appropriateness of
collection actions; and
(4) collection alternatives, which could include
the posting of a bond, substitution of other assets, an
installment agreement or an offer-in-compromise. [S.
Rept. 105-174, at 68 (1998), 1998-3 C.B. 537, 604.]
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FOLEY, J., dissenting: In the Internal Revenue Service
Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,
sec. 3401, 112 Stat. 746, Congress enacted sections 6320 and 6330
to provide safeguards for persons subject to collection actions.
Sections 6320 and 6330 generally provide that respondent cannot
proceed with collection until the taxpayer has been given notice
and the opportunity for an Appeals Office hearing. See sec.
6330(a)(1), (b)(1), (e)(1). “In the case of any hearing
conducted under * * * [section 6330] the appeals officer shall at
the hearing obtain verification from the Secretary that the
requirements of any applicable law or administrative procedure
have been met.” Sec. 6330(c)(1).
Petitioner contends that respondent’s verification was
incorrect because respondent did not, at the section 6330
hearing, provide him with proof of assessments. I agree.
Despite respondent’s purported verification that all statutory or
administrative procedures were met, respondent did not satisfy
section 6203's requirement that the Secretary provide a copy of
the record of assessment (e.g., Form 4340, Certificate of
Assessments, Payments, and Other Specified Matters (Form 4340))
to the taxpayer upon his request. Accordingly, respondent’s
verification was erroneous.
Section 6203 provides that “The assessment shall be made by
recording the liability of the taxpayer in the office of the
Secretary in accordance with rules or regulations prescribed by
- 31 -
the Secretary. Upon request of the taxpayer, the Secretary shall
furnish the taxpayer a copy of the record of the assessment.”
The majority choose not to decide “whether * * * the second
sentence of section 6203 is an ‘applicable law or administrative
procedure’ referred to in section 6330 (c)(1)”. Majority op. p.
9. Section 6203, in its entirety, is such a law. Assessment is
an integral part of the collection process, and the method by
which respondent makes an assessment is prescribed in section
6203. In addition, regulations promulgated by respondent provide
that “If the taxpayer requests a copy of the record of
assessment, he shall be furnished a copy of the pertinent parts
of the assessment which set forth the name of the taxpayer, the
date of assessment, the character of the liability assessed, the
taxable period, if applicable, and the amounts assessed.” Sec.
301.6203-1, Proced. & Admin. Regs. Furnishing Form 4340 to the
taxpayer satisfies the requirements of section 6203. See, e.g.,
Huff v. United States, 10 F.3d 1440, 1445 (9th Cir. 1993).
Respondent, however, failed to adhere to section 6203 and section
301.6203-1, Proced. & Admin. Regs. Thus, the Appeals officer
incorrectly determined that the requirements of applicable laws
were met. See sec. 6330(c)(1).
Prior to the section 6330 hearing, respondent did not
provide petitioner with Forms 4340. Moreover, at the hearing,
respondent did not allow petitioner to discuss the assessments.
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Thus, respondent deprived petitioner of his right to raise
relevant issues relating to the assessments. See sec.
6330(c)(2). The appropriate remedy is to have a further hearing
on this matter. The majority may wonder what “bona fide interest
would be served”. In short, the “bona fide interest” served is
compliance with the provisions of section 6330.
CHIECHI, J., agrees with this dissenting opinion.