Ronald A. Davis v. Commissioner

115 T.C. No. 4UNITED STATES TAX COURT
RONALD A. DAVIS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13532-99L. Filed July 31, 2000.
Pursuant to sec. 6330(a), I.R.C., R issued a
notice of intent to levy to P indicating that R
intended to collect income taxes due for the taxable
years 1991, 1992, and 1993. Pursuant to sec. 6330(b),
I.R.C., P requested a hearing before IRS Appeals
regarding the proposed collection action. Ultimately,
Appeals issued a notice of determination to P stating
that all applicable laws and administrative procedures
had been met and that collection would proceed.
Pursuant to sec. 6330(d), I.R.C., P filed a timely
petition for review with this Court. P contests the
Appeals determination on the grounds that: (1) The
Appeals officer who conducted the hearing failed to
properly verify that the requirements of any applicable
law or administrative procedure had been met as
required by sec. 6330(c)(1), I.R.C., because the
Appeals officer relied on Form 4340, Certificate of
Assessments and Payments, to verify the assessments of
taxes in issue; (2) P was not afforded the type of
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Appeals hearing that sec. 6330, I.R.C., envisions
because P was not given the opportunity to subpoena
witnesses or to examine and cross-examine witnesses;
and (3) the notice of determination was not signed
under penalties of perjury in accordance with the
requirements of sec. 6065, I.R.C.
Held: In the absence of any showing of
irregularity in the assessments, the Appeals officer’s
reliance on Form 4340 to verify the proper assessment
of tax is sufficient for the purposes of complying with
sec. 6330(c)(1), I.R.C.
Held, further, the right to a hearing before the
IRS Office of Appeals provided by sec. 6330(b), I.R.C.,
does not include the right to subpoena and examine
witnesses.
Held, further, sec. 6065, I.R.C., which generally
requires that returns and other documents required by
the I.R.C. be verified under penalties of perjury, does
not apply to a determination letter issued by Appeals
pursuant to sec. 6330, I.R.C.
Thomas W. Roberts, for petitioner.
J. Michael Melvin and Robert A. Varra, for respondent.
OPINION
RUWE, Judge: This case is based on a petition filed under
section 6330(d).1 Respondent has moved for judgment on the
1
Unless otherwise indicated, section references are to the
Internal Revenue Code. Petitioner concedes that he is not
entitled to relief under sec. 6320, as originally claimed in the
petition.
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pleadings. For convenience, we will combine the facts, which are
not in dispute, with our opinion.
Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy upon property belonging to the taxpayer.
Section 6331(d) provides that the Secretary is obliged to provide
the taxpayer with notice, including notice of the administrative
appeals available to the taxpayer, before proceeding with
collection by levy on the taxpayer’s property. Before 1998,
there were no statutory provisions requiring that a taxpayer be
given a pre-levy hearing. The constitutionality of the pre-1998
levy procedures has long been settled. See United States v.
National Bank of Commerce, 472 U.S. 713, 721 (1985); Haggert v.
Hamlin, 25 F.3d 1037 (1st Cir. 1994); Taylor v. IRS, 192 F.R.D.
233, 225 (S.D. Tex. 1999).
In 1998, Congress enacted section 6330 to provide additional
protections for taxpayers in tax collection matters. See
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746. Section 6330
generally provides that the Commissioner cannot proceed with the
collection of taxes by way of a levy on a taxpayer’s property
until the taxpayer has been given notice and an opportunity for a
pre-levy administrative hearing by the Internal Revenue Service
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Office of Appeals (Appeals). After the Appeals hearing, the
statute contemplates that Appeals will make a determination.
Judicial review of an Appeals determination is available if the
taxpayer timely files a petition with this Court or the
appropriate District Court of the United States. See sec.
6330(d). If an Appeals hearing is requested, the proposed levy
action must normally be suspended during the pendency of the
Appeals consideration and any subsequent judicial review. See
sec. 6330(e)(1).2
On February 3, 1999, respondent sent to petitioner a notice
of intent to levy regarding petitioner’s unpaid income tax
liabilities for 1991, 1992, and 1993. Pursuant to section 6330,
petitioner had 30 days from February 3, 1999, in which to file a
request for a hearing to be held by Appeals. Petitioner made a
timely request for such a hearing. In his request for an Appeals
hearing, the only disagreement that petitioner expressed
regarding the proposed levy was that he did not believe that
there were any valid assessments because of the lack of a valid
summary record of assessment. Appeals verified the assessments
using Form 4340, Certificate of Assessments and Payments, and
2
An exception to the suspension of any levy action is made
if the Secretary, pursuant to sec. 6331(a), finds that the
collection of tax is in jeopardy. See sec. 6330(f). Another
exception applies when the underlying tax liability is not in
issue and the court before which the matter is pending has
determined that the Secretary has shown good cause not to suspend
the levy. See sec. 6330(e)(2).
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provided petitioner with a copy. Appeals did not grant
petitioner’s request to subpoena witnesses and documents for
purposes of the Appeals hearing. Subsequently, Appeals sent a
“notice of determination” to petitioner. This notice contained
the following pertinent language:
NOTICE OF DETERMINATION
CONCERNING COLLECTION ACTIONS UNDER SECTION 6330
Dear Mr. Davis:
We have reviewed the proposed collection action for the
period shown above. This letter is your legal Notice
of Determination, as required by law. A summary of our
determination is stated below and the enclosed
statement shows, in detail, the matters we considered
at your Appeals hearing and our conclusions.
* * * * * * *
Summary of Determination:
The Service’s position that the assessment is valid is
supported. No evidence was presented that Mr. Davis is
a nonresident alien nor that he had no trade or
business or income from sources in the US. Mr. Davis
did not provide valid income tax returns, evidence that
he was not liable for taxes nor did he address any
method of paying the tax liability. A copy of the
Certificate of Records Payment Form 4340 was provided
to Mr. Davis.
The enclosed statement stated:
ATTACHMENT - 3193
With the best information available, the requirements
of various applicable law and administrative procedures
have been met. The assessments are based on
substitutes for returns. The only legal requirements
before taking general enforcement action are the notice
and demand and the notice of intent to levy and notice
of right to a collection due process hearing. Computer
records indicate that the appropriate notices were sent
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to the last known address. Mr. Davis questioned the
23C assessment and a copy of the Certificate of
Official Record Form 4340 was provided to validate the
assessment per Stettler, 98-1 USTC 50,136 (10th Cir)
and Cassity, 98-1 USTC 50,463 (9th Cir). Manual
requirements were met.
No financial information was provided and therefor no
alternative collection arrangements could be
considered. Mr. Davis’s issues as to the validity of
the assessment were addressed however he provided no
evidence to support his position. The filing of the
notice of federal tax lien was filed prior to the
implementation of the collection due process appeal
program and therefor is not covered.
Appeals believes that since no requested financial
information nor evidence to dispute the liability were
provided, we must assume that the determination
balances the need for efficient collection of taxes
with the concern as to the intrusiveness of the action.
Petitioner timely filed a petition with this Court for
review of the Appeals determination, pursuant to section
6330(d).3
Where the validity of the underlying tax liability is
properly at issue, the Court will review the matter de novo.
Section 6330(c)(2)(B) provides:
SEC. 6330(c). Matters Considered at Hearing.--
* * * * * * *
(B) Underlying liability.-– The person may
also raise at the hearing challenges to the
existence or amount of the underlying tax
liability for any tax period if the person did not
receive any statutory notice of deficiency for
such tax liability or did not otherwise have an
3
Sec. 6330(d) allows a petition to be filed within 30 days
of an Appeals determination.
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opportunity to dispute such tax liability.
[Emphasis added.]
Petitioner does not allege that he did not receive a notice of
deficiency for the tax liabilities in issue, nor does he allege
that he did not have an opportunity to contest the deficiency
determinations. Because petitioner failed to aver the facts
specified in section 6330(c)(2)(B), which are required to put the
underlying tax liability in issue, petitioner’s underlying tax
liability is not properly before the Court. See Goza v.
Commissioner, 114 T.C. 176 (2000).
Where, as in this case, the underlying liability is not in
issue, the Court will review the Commissioner’s administrative
determination for abuse of discretion. See Sego v. Commissioner,
114 T.C. ___ (2000); Goza v. Commissioner, supra at 181-182.
The only error alleged in the petition was stated in
paragraph 5 as follows:
The appeals officer failed to properly verify that the
service followed the requirements of any applicable law
or administrative procedure as required by 26 CFR
§301.6320-T(e)(1).
The facts upon which petitioner relied to support this
alleged error are stated in paragraph 6 of the petition as
follows:
The appeals officer took the position that the
assessment is valid without verifying that there was in
fact an assessment. Form 4340 was all that the appeals
officer claimed to have relied upon without verifying
that it was accurate or that it was in fact signed by
an assessment officer. The Form 4340 listed a 23C date
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but the appeals officer did not verify that a 23C was
actually prepared pursuant to his duty under 26 CFR
§301.6320-T(e)(1)and the nonexistence of the properly
prepared and signed certificate of assessment pursuant
to 26 U.S.C. §6203 and 26 C.F.R. §301.6203-1 was placed
in issue. * * *
In petitioner’s response in opposition to respondent’s
motion and at the hearing on the motion, petitioner made three
arguments for our consideration. First, petitioner alleges that
the Appeals officer who conducted the hearing failed to properly
verify that the Internal Revenue Service (IRS) met the
requirements of any applicable law or administrative procedure as
required by section 6330(c)(1). Specifically, petitioner alleges
that the Appeals officer improperly relied on Form 4340 to verify
the proper assessments of the taxes in issue (verification
issue). Secondly, petitioner argues that he was not afforded the
type of due process hearing that section 6330 envisions.
Petitioner argues that any meaningful hearing requires that he be
able to subpoena witnesses and documents (meaningful hearing
argument). Finally, petitioner alleges that the notice of
determination was not signed in accordance with the requirements
of section 6065 (section 6065 issue).
Verification Issue
Petitioner alleges that the Appeals officer who conducted
the hearing failed to properly verify that the IRS met the
requirements of any applicable law or administrative procedure as
required by section 6330(c)(1). Specifically, petitioner argues
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that it was improper for the Appeals officer to rely on the Form
4340 to verify that the taxes in question were assessed.
Generally, courts have held that Form 4340 provides at least
presumptive evidence that a tax has been validly assessed under
section 6203. See Huff v. United States, 10 F.3d 1440, 1445 (9th
Cir. 1993); Hefti v. IRS, 8 F.3d 1169, 1172 (7th Cir. 1993); Farr
v. United States, 990 F.2d 451, 454 (9th Cir. 1993); Geiselman v.
United States, 961 F.2d 1, 5-6 (1st Cir. 1992); Rocovich v.
United States, 933 F.2d 991, 994 (Fed. Cir. 1991); United States
v. Chila, 871 F.2d 1015, 1017-1018 (11th Cir. 1989); United
States v. Miller, 318 F.2d 637, 638-639 (7th Cir. 1963).
“Certificates of Assessments and Payments are ‘routinely used to
prove that tax assessment has in fact been made.’ They are
‘presumptive proof of a valid assessment.’” Guthrie v. Sawyer,
970 F.2d 733, 737 (10th Cir. 1992) (quoting Geiselman v. United
States, supra at 6). The Form 4340 reflecting petitioner’s
income tax liabilities for the years in issue indicates that
those tax liabilities were properly assessed and remain unpaid.
Petitioner has not demonstrated any irregularity in the
assessment procedure that would raise a question about the
validity of the assessments. We therefore hold that it was not
an abuse of discretion for Appeals to rely on a Form 4340 in this
case for the purpose of complying with section 6330(c)(1).
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Meaningful Hearing Argument
Hearings at the Appeals level have historically been
conducted in an informal setting. Section 601.106(c), Statement
of Procedural Rules, provides:
(c) Nature of proceedings before Appeals. Proceedings
before the Appeals are informal. Testimony under oath
is not taken, although matters alleged as facts may be
required to be submitted in the form of affidavits, or
declared to be true under the penalties of perjury.
* * *
Saltzman, IRS Practice and Procedure, par. 9.05[3], at 9-37 (2d
ed. 1991), explains:
Appeals Office conferences are informal. No
stenographer is present to record the discussions of
the facts and the law relating to the issue involved.
Testimony under oath is not taken. Matters alleged as
fact must be submitted in the form of an affidavit or
declared to be true under penalties of perjury. * * *
When Congress enacted section 6330 and required that
taxpayers be given an opportunity to seek a pre-levy hearing with
Appeals, Congress was fully aware of the existing nature and
function of Appeals. Nothing in section 6330 or the legislative
history suggests that Congress intended to alter the nature of an
Appeals hearing so as to compel the attendance or examination of
witnesses. When it enacted section 6330, Congress did not
provide either Appeals or taxpayers with statutory authority to
subpoena witnesses.4 The references in section 6330 to a hearing
4
Compare sec. 7456, giving this Court the specific authority
to require the attendance and testimony of witnesses by subpoena.
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by Appeals indicate that Congress contemplated the type of
informal administrative Appeals hearing that has been
historically conducted by Appeals and prescribed by section
601.106(c), Statement of Procedural Rules. The nature of the
administrative Appeals process does not include the taking of
testimony under oath or the compulsory attendance of witnesses.
We therefore hold that a hearing before Appeals pursuant to
section 6330 does not include the right to subpoena witnesses.
Section 6065 Issue
Finally, petitioner alleges that the notice of determination
was not signed in accordance with the requirements of section
6065.
Section 6065 provides:
SEC. 6065. VERIFICATION OF RETURNS.
Except as otherwise provided by the Secretary, any
return, declaration, statement, or other document
required to be made under any provision of the internal
revenue laws or regulations shall contain or be
verified by a written declaration that it is made under
the penalties of perjury.
Section 6065 requires returns to contain or be verified by a
written declaration that they are made under the penalties of
perjury. To facilitate a taxpayer’s compliance with this
requirement, for example, Form 1040, Individual Income Tax
Return, contains a preprinted jurat.5 By signing the jurat
5
The jurat is the portion of the Form 1040 which reads:
(continued...)
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included within the Form 1040, a taxpayer satisfies the
requirement that his return be executed under penalty of perjury.
See Sloan v. Commissioner, 102 T.C. 137, 146-147 (1994), affd. 53
F.3d 799 (7th Cir. 1995); Sochia v. Commissioner, T.C. Memo.
1998-294. Section 6065 was enacted to permit the taxpayer to
submit a verified return rather than a notarized return. See,
e.g., Cohen v. United States, 201 F.2d 386, 393 (9th Cir. 1953)
(construing the predecessor of section 6065). Courts have held
that section 6065 does not apply to notices issued by the
Commissioner; its requirements are directed at documents that are
originated by the taxpayer. See, e.g., Morelli v. Alexander, 920
F. Supp. 556 (S.D.N.Y. 1996). We hold that section 6065 does not
require an Appeals officer to sign a notice of determination
under penalties of perjury.
The relevant facts regarding the proceedings before Appeals
are not in dispute. The foregoing analysis disposes of all the
grounds upon which petitioner relied in his petition and in his
arguments in response to respondent’s motion for judgment on the
pleadings. We hold that the grounds upon which petitioner
relies, as stated in his petition and arguments in response to
respondent’s motion, do not constitute a basis upon which we can
5
(...continued)
“Under penalties of perjury, I declare that I have examined this
return and accompanying schedules and statements, and to the best
of my knowledge and belief, they are true, correct, and
complete.”
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find that the Appeals determination was an abuse of discretion.
We will therefore grant respondent’s motion.
To reflect the foregoing,
An order and decision will be
entered for respondent.