Brian and Tina Nicklaus v. Commissioner

117 T.C. No. 10
UNITED STATES TAX COURT
BRIAN AND TINA NICKLAUS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4221-00L. Filed September 14, 2001.
Held: Sec. 301.6203-1, Proced. & Admin. Regs.,
does not require that one of respondent’s assessment
officers sign and date Form 4340, Certificate of As-
sessments and Payments, in order to have a valid as-
sessment of a taxpayer’s liability.
Held, further: Forms 4340 that respondent pre-
pared with respect to petitioners’ respective tax
liabilities for taxable years 1993 through 1996 indi-
cate that respondent properly assessed those liabili-
ties.
Held, further: Respondent did not abuse respon-
dent’s discretion in determining to proceed with col-
lection of petitioners’ respective tax liabilities for
taxable years 1993 through 1996.
- 2 -
Brian and Tina Nicklaus, pro sese.
Kenneth P. Dale, for respondent.
OPINION
CHIECHI, Judge: The petition in this case was filed in
response to a “NOTICE OF DETERMINATION CONCERNING COLLECTION
ACTION(S) UNDER SECTION 6320 and/or 6330" (notice of determina-
tion).
Background
The record establishes and/or the parties do not dispute the
following:
At the time the petition in this case was filed, petition-
ers’ mailing address was in Stevenson, Washington.
On September 12, 1995, petitioners filed their Federal
income tax return (return) for 1993, and on September 19, 1995,
petitioners filed their return for 1994. On January 28, 1998,
pursuant to section 6020(b)1 respondent prepared substitute
returns for petitioners’ taxable years 1995 and 1996, respec-
tively. On April 3, 1998, respondent issued a notice of defi-
ciency (notice) with respect to each of petitioners’ taxable
years 1993 through 1996. Petitioners did not petition the Court
in order to dispute respondent’s determinations in those notices.
1
All section references are to the Internal Revenue Code in
effect at all relevant times.
- 3 -
On August 24, 1998, respondent made the following assess-
ments on Form 23C, Assessment Certificate--Summary Record of
Assessments (Form 23C),2 “per default of 90 day letter”, of
petitioners’ tax liability for each of their taxable years 1993
and 1994 and sent a so-called notice of balance due to petition-
ers with respect to each of those years, and on August 31, 1998,
respondent made the following assessments on Form 23C, “per
default of 90 day letter”, of petitioners’ tax liability for each
of their taxable years 1995 and 1996 and sent a notice of balance
due with respect to each of those years:
1993 1994 1995 1996
Deficiency $2,044.00 $2,516.00 $6,082.00 $9,352.90
Late filing 429.25 143.00 1,192.00 1,757.48
penalty
Accuracy-related 408.80 263.20 -- --
penalty
Estimated tax –- -- 250.61 360.43
penalty
Interest on 1,187.04 339.42 1,374.78 1,118.61
deficiency
At a time not disclosed by the record prior to November 25,
1998, petitioners received notice from respondent that respondent
intended to issue a notice of levy with respect to their taxable
years 1993 through 1995. On November 25, 1998, respondent issued
a notice of levy with respect to those taxable years to each of
the following banks: First Independent Bank in Vancouver,
2
The record does not contain Form 23C, Assessment
Certificate--Summary Record of Assessments, that the Commissioner
of Internal Revenue uses to assess the tax liabilities of taxpay-
ers. However, we have obtained and take judicial notice of that
form.
- 4 -
Washington, and First National Bank in Libby, Montana.3
On July 16, 1999, respondent filed notices of Federal tax
lien with respect to petitioners’ taxable years 1993 through 1996
(July 16, 1999 notices of Federal tax lien) and notified peti-
tioners of their right to an Appeals Office hearing. Petitioners
requested such a hearing. In their request for an Appeals Office
hearing, petitioners did not refer to the notices of intent to
levy with respect to their taxable years 1993 through 1995 that
they had received from respondent sometime prior to November 25,
1998, or to the notices of levy with respect to those years that
respondent issued to two banks on that date. At the Appeals
Office hearing regarding the July 16, 1999 notices of Federal tax
lien, respondent’s Appeals officer did not raise any questions
regarding those notices of intent to levy or those notices of
levy.
3
Sec. 6330, which generally provides that the Secretary may
not proceed with the collection of taxes by way of levy until the
taxpayer has been given notice and an opportunity for administra-
tive review of the matter in the form of an Appeals Office
hearing, was enacted as part of the Internal Revenue Service
Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,
sec. 3401, 112 Stat. 685, 746. Sec. 6330 is effective with
respect to collection actions initiated more than 180 days after
July 22, 1998, i.e., after Jan. 18, 1999. See RRA 1998 sec.
3401(d), 112 Stat. 750. Sec. 6330 did not require respondent to
offer petitioners an opportunity for an Appeals Office hearing
regarding the levy with respect to petitioners’ taxable years
1993 through 1995 referred to above. That is because it was
prior to the effective date of sec. 6330 that respondent notified
petitioners of respondent’s intent to levy with respect to their
taxable years 1993 through 1995 and issued notices of levy to two
banks with respect to those years.
- 5 -
During the consideration by the Appeals Office of petition-
ers’ objection to the July 16, 1999 notices of Federal tax lien,
the Appeals Office sent petitioners Form 4340, Certificate of
Assessments and Payments (Form 4340), with respect to each of
their taxable years 1993 through 1996. Form 4340 for each of the
years 1993 and 1994 showed, inter alia, that on August 24, 1998,
respondent had assessed on Form 23C petitioners’ tax liability
for each such year. Form 4340 for each of the years 1995 and
1996 showed, inter alia, that on August 31, 1998, respondent had
assessed on Form 23C petitioners’ tax liability for each such
year.
After the Appeals Office hearing was held regarding the July
16, 1999 notices of Federal tax lien, the Appeals Office issued a
notice of determination to petitioners on March 16, 2000. That
notice of determination stated in pertinent part as follows:
• All provisions of IRC §6330 and IRC §6320 have
been met. The Secretary has provided sufficient
verification that the requirements of applicable
law or administrative procedures have been met.
• Your Request for a Collection Due Process Hearing
was submitted under IRC §6320 to have the Notice
of Federal Tax Lien rescinded. In your request
for a hearing you alleged that you do not agree
with the notices or the amounts stated on these
notices and that you have not had an opportunity
to be heard and to present your facts to prove the
notices incorrect. You state that there is not an
assessment Form 23C in the record and that the
liens were filed without the mandated lawful pro-
cess of the Internal Revenue Code. You also state
that you have not been sent an official Notice of
Deficiency and that the Notices of Deficiency you
- 6 -
received were not signed and therefore are in-
valid. You had an opportunity to respond to the
notices and be heard during the audit process.
Additionally, the notices provided you the oppor-
tunity to proceed to tax court if you disagreed
with the proposed liabilities. You have been
provided a certified transcript of your accounts
certifying the assessments. The Notices of Fed-
eral Tax Lien were filed in accordance with the
Internal Revenue Code. The Notices of Deficiency
were issued properly to you in accordance with the
Internal Revenue Code. The courts have found that
there is no Internal Revenue Code requirement that
the Notice of Deficiency be signed.
• It is Appeals decision that the Notices of Federal
Tax Lien were properly recorded and that the
recordation of the liens balances the need for
efficient collection of taxes with the taxpayer’s
legitimate concern that any collection action be
no more intrusive than necessary.
* * * * * * *
Summary of Determination:
It is Appeals decision that the Notices of Federal Tax
Lien were properly recorded.
Discussion
On brief, petitioners state: “The Petitioners in the case
at bar are only going to challenge, in this brief, the mandated
requirements of the Certificates of Assessments and Payments”,
i.e., Forms 4340, that the Appeals Office sent them with respect
to their taxable years 1993 through 1996.4
4
On brief, petitioners advance none of the other arguments
and contentions that petitioners asserted prior to the filing of
their brief in this case. We conclude that petitioners have
abandoned those other arguments and contentions. See Rybak v.
Commissioner, 91 T.C. 524, 566 n.19 (1988). Even if we had not
(continued...)
- 7 -
Where, as is the case here, the validity of the underlying
tax liability is not properly at issue, the Court will review the
administrative determination of the Commissioner of Internal
Revenue for abuse of discretion. Sego v. Commissioner, 114 T.C.
604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000).
Petitioners state on brief, and we agree, that, in order for
the July 16, 1999 notices of Federal tax lien to be valid and
enforceable, the assessments that respondent made of petitioners’
respective tax liabilities for their taxable years 1993 through
1996 must have been valid. Petitioners argue that respondent’s
assessments of those liabilities were procedurally defective and
therefore not valid. That is because, according to petitioners,
one of respondent’s assessment officers did not sign and date
Forms 4340 that respondent prepared with respect to petitioners’
taxable years 1993 through 1996, respectively, as required by
section 301.6203-1, Proced. & Admin. Regs.
On the record before us, we reject petitioners’ position.
Section 301.6203-1, Proced. & Admin. Regs., does not require that
one of respondent’s assessment officers sign and date Form 4340
in order to have a valid assessment of a taxpayer’s liability.
Although those regulations do require an assessment to be made
4
(...continued)
concluded that petitioners abandoned the arguments and conten-
tions which they advanced prior to the time that they filed their
brief in this case, on the record before us, we reject those
other arguments and contentions.
- 8 -
“by an assessment officer signing the summary record of assess-
ment”, sec. 301.6203-1, Proced. & Admin. Regs., the summary
record of assessments that respondent uses to comply with that
regulation is Form 23C, Assessment Certificate--Summary Record of
Assessments, and not Form 4340, Certificate of Assessments and
Payments.5
The courts have generally held that Form 4340 provides at
least presumptive evidence that a tax has been validly assessed
under section 6203. Davis v. Commissioner, 115 T.C. 35, 40
(2000)(citing, inter alia, 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)).
We conclude that Forms 4340 that respondent prepared with respect
to petitioners’ respective tax liabilities for taxable years 1993
through 1996 establish that respondent properly assessed those
liabilities6 and that those liabilities remain unpaid. Petition
5
Petitioners rely on Brafman v. United States, 384 F.2d 863(5th Cir. 1967), to support their position that, in order for
there to be valid assessments of their respective tax liabilities
for petitioners’ taxable years 1993 through 1996, one of respon-
dent’s assessment officers was required to sign and date Forms
4340 that respondent prepared with respect to those years.
Petitioners’ reliance on Brafman is misplaced. Brafman involved
Form 23C, Assessment Certificate--Summary Record of Assessments;
it did not involve Form 4340, Certificate of Assessments and
Payments.
6
Forms 4340 in question show that on Aug. 24 and 31, 1998,
respectively, respondent assessed on Forms 23C petitioners’
respective tax liabilities (1) for taxable years 1993 and 1994
(continued...)
- 9 -
ers have not shown any irregularity in respondent’s assessment
procedures that raises a question about the validity of respon-
dent’s assessments of those tax liabilities.
On the record before us, we find that respondent did not
abuse respondent’s discretion in determining to proceed with
collection of petitioners’ respective tax liabilities for taxable
years 1993 through 1996.
We have considered all of petitioners’ contentions and
arguments on brief that are not discussed herein with respect to
their position that respondent’s assessments of their respective
tax liabilities for taxable years 1993 through 1996 are invalid
because one of respondent’s assessment officers did not sign and
date Forms 4340 that respondent prepared with respect to those
years, and we find them to be irrelevant and/or without merit.7
6
(...continued)
and (2) for taxable years 1995 and 1996. Petitioners have not
shown, or even alleged, that one of respondent’s assessment
officers did not sign and date those Forms 23C.
7
We shall address one matter that, while not altogether
clear, petitioners may be arguing on brief. Petitioners may be
taking the position on brief that the July 16, 1999 notices of
Federal tax lien are invalid and unenforceable because they did
not receive certain documentation to which they are entitled
under sec. 6203. That section states that a taxpayer is entitled
to a copy of the “record of the assessment”. The regulations
under sec. 6203 provide:
If the taxpayer requests a copy of the record of as-
sessment, 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
(continued...)
- 10 -
To reflect the foregoing,
Decision will be entered
for respondent.
7
(...continued)
liability assessed, the taxable period, if applicable,
and the amounts assessed. [Sec. 301.6203-1, Proced. &
Admin. Regs.]
The Court of Appeals for the Ninth Circuit, to which an appeal in
this case would normally lie, has held that respondent’s provid-
ing a taxpayer with a copy of Form 4340 satisfies the require-
ments of sec. 6203 and the regulations thereunder quoted above.
Koff v. United States, 3 F.3d 1297, 1298 (9th Cir. 1993).
Petitioners admitted through petitioner Brian Nicklaus’ testimony
that they received Forms 4340 that respondent prepared with
respect to their taxable years 1993 through 1996. We conclude
that petitioners received the documentation to which they are
entitled under sec. 6203 and sec. 301.6203-1, Proced. & Admin.
Regs.