Barnes v. Comm'r

T.C. Memo. 2010-30
UNITED STATES TAX COURT
JAMES BARNES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8219-07L. Filed February 22, 2010.
R determined to proceed with collection of P’s
income tax liability for 2002 without allowing P to
challenge the underlying tax liability at a sec. 6330,
I.R.C., hearing before the Office of Appeals. R moved
for summary judgment.
Held: Pursuant to sec. 6330(c)(2)(B), I.R.C., P
is entitled to raise the existence or amount of the
underlying tax liability at an Appeals hearing, unless
P has previously received a notice of deficiency or
otherwise had an opportunity to dispute the liability.
P did not receive the notice of deficiency for 2002,
and R has failed to allege or show that P deliberately
refused delivery of the notice of deficiency. R’s
motion for summary judgment will be denied and this
case will be remanded to the Office of Appeals for
further hearing.
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James Barnes, pro se.
Alisha M. Harper, for respondent.
MEMORANDUM OPINION
RUWE, 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
determination).1 This case is before the Court on respondent’s
motion for summary judgment. We must decide whether the
determination by respondent’s Appeals Office to proceed with
collection action with respect to petitioner’s unpaid income tax
liability for tax year 2002 was proper.
Background
At the time the petition was filed, petitioner resided in
Kentucky.
Respondent sent to petitioner a Letter 1058, Final Notice of
Intent to Levy and Notice of Your Right to a Hearing, dated
September 10, 2005, regarding petitioner’s unpaid tax for 2002.
Petitioner submitted to respondent a Form 12153, Request for a
Collection Due Process Hearing, dated September 30, 2005. In the
Form 12153 petitioner requested a face-to-face hearing (section
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
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6330 hearing) and informed the Appeals Office that he would be
audio recording the section 6330 hearing. Petitioner also
indicated that one of the issues he wanted to address was whether
respondent had followed proper procedures in making the
assessment against him.
By letter dated December 20, 2005, respondent’s Appeals
Office acknowledged receipt of petitioner’s request to audio
record the section 6330 hearing but denied his request for a
face-to-face conference, stating: “Face-to-face conferences are
not allowed if the only items that a taxpayer raises are
frivolous or groundless.” Respondent did not identify which of
petitioner’s arguments were considered frivolous or groundless.2
By letter dated January 9, 2006, petitioner asserted that he
had relevant, nonfrivolous issues to discuss at the section 6330
hearing and that it had to be a face-to-face hearing so that he
might audio record it. Petitioner also raised the issue of the
underlying tax liability and stated: “I have no idea as to how
or where the IRS got these numbers. [A]lthough you claim that I
have had an opportunity to dispute the liability, I don’t even
recall ever receiving any notification or explanation from the
2
It appears that petitioner did not file a return for 2002.
Internal Appeals Office records indicate that the Appeals Office
had identified petitioner as a “frivolous filer”. Form 12153-A,
Referral Request for CDP Hearing and Request for CDPTS Input,
dated “11-2-5” indicates that petitioner “mentions frivolous
arguments in the past, although DI does not show any frivolous
filer information.”
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IRS that explains how they came up with these numbers against
me.”
Almost 9 months later, respondent’s Appeals Office sent to
petitioner a letter dated September 30, 2006, which states, in
pertinent part:
You requested a face-to-face conference in order to
dispute the underlying liability: A Notice of
Deficiency for tax year ended 12/2002 was mailed to you
on November 30, 2004 at * * * Louisville, KY 40272-
2342040. (You apparently elected not to claim the
Notice.) The Notice afforded you the opportunity to
dispute the liability in Tax Court prior to its
assessment. Therefore, you may not raise challenges to
the existence or amount of the tax liability specified
on the CDP Notice.
The Appeals Office does not provide a face-to-face
conference if the only items a taxpayer wishes to
discuss are frivolous or, may otherwise not be raised
in the hearing. During the hearing, we must consider
whether the IRS met all the requirements of any
applicable law or administrative procedure, and any
non-frivolous issues you wish to discuss. * * *
In response, by letter dated October 13, 2006, petitioner
disputed the determination not to grant him a face-to-face
conference and the determination that he had been given a prior
opportunity to dispute his underlying tax liability. In a letter
dated October 30, 2006, the Appeals officer stated that
petitioner’s request had been transferred to the nearest Appeals
Office “for a face-to-face hearing.” Thereafter, the newly
assigned settlement officer (whose office was in South Bend,
Indiana) sent to petitioner (at his Louisville, Kentucky,
address) a followup letter, dated December 7, 2006, indicating
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that petitioner would not be allowed a face-to-face hearing and
scheduling a telephone conference call for December 21, 2006.
The letter did, however, advise petitioner that he might be
allowed a face-to-face section 6330 hearing if he were to provide
to the Appeals Office the nonfrivolous issue in writing within 14
days from the date of the letter.
By letter dated December 14, 2006, petitioner responded to
the settlement officer, stating that he would not be able to
participate in the telephone conference3 and explaining again
that he had no knowledge of ever receiving a notice of
deficiency. The Appeals Office did not receive petitioner’s
letter until December 29, 2006. Before receipt of petitioner’s
letter, however, the settlement officer had sent to petitioner a
3
Petitioner’s letter states in part:
Regretfully, I will not be able to participate in this
telephone conference. The Appeals Office where my pre-
scheduled hearing is to be held, is located in Indiana,
I currently reside in Kentucky. But I am certain we
can agree on a mutually convenient date and location,
sometime in the near future. Knowing that I requested
for a FACE-TO-FACE hearing, why did the IRS appoint
someone in the South Bend, IN Office to conduct my CDP
Hearing? The South Bend, IN Office is miles away from
my place of residence. That’s hours worth of driving
alone, which I can not afford. This is most
inconvenient and unacceptable. I find it hard to
believe that the IRS does not have a local office in
Louisville, KY. Please understand that I am NOT
refusing to participate in my CDP Hearing. I am just
asking the IRS to assist in making this process a
little bit more convenient for me that I may be able to
attend the FACE-TO-FACE Hearing that I initially
requested.
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letter dated December 21, 2006, which indicated that petitioner
neither called for his scheduled telephone conference nor
indicated that the date and/or time were inconvenient. The
letter also afforded petitioner an additional 14 days to provide
information for consideration by the Appeals Office before making
a determination.
In response to the settlement officer’s letter dated
December 21, 2006, petitioner, in a letter dated January 3, 2007,
took exception to the settlement officer’s statement that
petitioner had not indicated that the scheduled date for the
telephone conference was inconvenient, but otherwise did not
provide any further information for the Appeals Office to
consider before making its determination.
Respondent’s Appeals Office issued to petitioner a notice of
determination dated March 7, 2007. On April 9, 2007, petitioner
filed an incomplete petition in which he generally contested the
determination made by the Appeals Office and requested assistance
from the Court. In an amended petition, filed on October 12,
2007, petitioner alleged that “Respondent did not meet all the
applicable requirements during the Collection Due Process
Hearing” and that he was not allowed the “opportunity to
challenge the liability of the assessed tax.”
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Discussion
This case is before us on respondent’s motion for summary
judgment, to which petitioner objects. Summary judgment is
intended to expedite litigation and avoid unnecessary and
expensive trials. See FPL Group, Inc. v. Commissioner, 116 T.C.
73, 74 (2001). Rule 121(a) provides that either party may move
for summary judgment upon all or any part of the legal issues in
controversy. Full or partial summary judgment is appropriate
where there is no genuine issue as to any material fact and a
decision may be rendered as a matter of law. See Rule 121(b);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.
17 F.3d 965 (7th Cir. 1994). Respondent, as the moving party,
bears the burden of proving that no genuine issue exists as to
any material fact and that he is entitled to judgment as a matter
of law. See Bond v. Commissioner, 100 T.C. 32, 36 (1993); Naftel
v. Commissioner, 85 T.C. 527, 529 (1985). In deciding whether to
grant summary judgment, the factual materials and the inferences
drawn from them must be considered in the light most favorable to
the nonmoving party. See Bond v. Commissioner, supra at 36;
Naftel v. Commissioner, supra at 529.
Section 6330(a)(1) provides that no levy may be made on any
property or right to property of any person unless the Secretary
has notified such person in writing of the right to a hearing
under this section before such levy is made. The notice must
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include in simple and nontechnical terms the right of the person
to request a hearing to be held by the Internal Revenue Service
(IRS) Office of Appeals. Sec. 6330(a)(3). Section 6330(c)
governs the conduct of a requested hearing. At the hearing the
person may raise any relevant issue relating to the unpaid tax or
the proposed levy, including appropriate spousal defenses,
challenges to the appropriateness of collection actions, and
offers of collection alternatives. Sec. 6330(c)(2)(A). Section
6330(c)(2)(B) further provides that 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 the tax liability
or did not otherwise have an opportunity to dispute the tax
liability. Under section 6330(c)(2)(B), the receipt of a notice
of deficiency, not its mailing, is the relevant event.4
Kuykendall v. Commissioner, 129 T.C. 77, 80 (2007); Conn v.
Commissioner, T.C. Memo. 2008-186.
Among the attachments to respondent’s motion for summary
judgment were a declaration by the settlement officer who handled
petitioner’s case in the Appeals Office, a copy of the notice of
4
By contrast, for purposes of assessing a deficiency in
tax, a notice of deficiency mailed to the taxpayer at his last
known address is sufficient regardless of receipt or nonreceipt.
Sec. 6212(b); Pietanza v. Commissioner, 92 T.C. 729, 735-736
(1989), affd. without published opinion 935 F.2d 1282 (3d Cir.
1991); Shelton v. Commissioner, 63 T.C. 193 (1974); Tatum v.
Commissioner, T.C. Memo. 2003-115 n.4.
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deficiency for 2002 dated November 30, 2004, and the envelope
that respondent alleges contained the notice of deficiency mailed
to petitioner on November 30, 2004. The face of the envelope
shows that it was returned to respondent and was stamped
unclaimed. Thus, there is no dispute that petitioner did not
actually receive the notice of deficiency. Because it is
undisputed that petitioner did not actually receive the notice of
deficiency, he would normally have been entitled to challenge the
underlying tax liability at the section 6330 hearing. See
Kuykendall v. Commissioner, supra; Conn v. Commissioner, supra.
Even if the taxpayer did not actually receive the notice of
deficiency, we have held that the taxpayer cannot dispute the
underlying tax liability where there is a showing that he
deliberately refused delivery of a notice of deficiency. Sego v.
Commissioner, 114 T.C. 604 (2000). But absent sufficient
evidence that a taxpayer deliberately refused delivery of the
notice of deficiency, proof that the notice of deficiency was not
actually received will be sufficient to entitle a taxpayer to
dispute the underlying tax liability in a section 6330
proceeding. Conn v. Commissioner, supra; Calderone v.
Commissioner, T.C. Memo. 2004-240; Tatum v. Commissioner, T.C.
Memo. 2003-115; Carey v. Commissioner, T.C. Memo. 2002-209.
The notice of determination sent by the Appeals Office on
March 7, 2007, alleged that the U.S. Postal Service attempted
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delivery but that petitioner failed to pick up the notice of
deficiency and that petitioner’s conduct “constituted deliberate
refusal of delivery”. In his answer to petitioner’s amended
petition, respondent alleges “that Respondent sent a notice of
deficiency for the year 2002 to Petitioner at his current address
on November 30, 2004 and that Petitioner refused to claim said
notice from the postal service.” However, in his motion for
summary judgment, respondent has not alleged that petitioner
deliberately refused delivery of the notice of deficiency. On
the record before us, we cannot conclude that petitioner
deliberately refused its delivery or otherwise had an opportunity
to dispute the liability for 2002 so as to preclude him from
challenging his underlying tax liability at a hearing before the
IRS Office of Appeals.
Attached to respondent’s motion for summary judgment were
the settlement officer’s declaration and 19 exhibits, including
numerous items of correspondence between the Appeals Office and
petitioner, a copy of the administrative file relating to the
examination of petitioner’s income tax liability for 2002, and
various transcripts for several years. Many of the exhibits
contained multiple unnumbered pages that seem to be in no
particular order. Many of the documents in the administrative
file and most of the documents labeled as transcripts of
petitioner’s account are full of abbreviations, alphanumeric
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codes, dates, and digits that are indecipherable and
unintelligible without additional explanation. One page of the
transcript related to the year 2002 that was intelligible shows
entries for the substitute for return, withholding credits, and
the tax assessment, all dated April 25, 2005. It also shows that
the “Intent To Levy Collection Due Process Notice” was issued on
September 10, 2005, and shows an entry dated September 19, 2005,
for “Intent To Levy Collection Due Process Notice Return Receipt
Signed 9-19/2005”. Noticeably absent from this transcript is an
entry for the issuance of a notice of deficiency.
One of the exhibits that respondent identified as the
administrative file regarding the examination of petitioner’s
2002 income tax liability included copies of the notice of
deficiency dated November 30, 2004; the envelope in which it was
allegedly mailed; a Form 12616, Correspondence Examination
History Sheet, showing “11/30/04 Send 90day letter with report”;
and a computer-generated printout for 2002 that shows “90-Day
Statutory Notice ll/18/2004”.5 This seemingly conflicting
information regarding the date of the notice of deficiency raises
a question about its mailing date. The postmark on the photocopy
of the envelope, which respondent alleges was returned to him
unclaimed, is indecipherable as to its mailing date because of
5
The terms “notice of deficiency”, “90-day letter”, and
“90-day statutory notice” are often used synonymously.
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what appears to be a label that has been marked “other” as the
reason it was returned to the sender. The envelope has two
“windows”; one to reveal the name and address of petitioner that
was typed on the enclosed notice of deficiency, the other titled
“Certified Mail”. The certified mail number that would appear in
this “window” is printed on the notice of deficiency. This
indicates to us that the certified mail number was placed on the
notice of deficiency before it was put into the envelope for
delivery to the Post Office. Absent from the documentation
respondent presented is a U.S. Postal Service Form 3877,
Certified Mailing List, showing the date on which the notice of
deficiency was mailed. A properly completed Form 3877 certified
mailing list reflecting Postal Service receipt represents direct
documentary evidence of the date and fact of mailing. Coleman v.
Commissioner, 94 T.C. 82, 90 (1990).6
6
In Hoyle v. Commissioner, 131 T.C. ___, ___ (2008) (slip
op. at 12), we stated:
We have held that exact compliance with Postal Service
Form 3877 mailing procedures raises a presumption of
official regularity in favor of the Commissioner and is
sufficient, absent evidence to the contrary, to
establish that the notice was properly mailed. Coleman
v. Commissioner, 94 T.C. 91 (1990); see also United
States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984).
* * *
We also noted that Chief Counsel Notice CC-2006-019 (Aug. 18,
2006) states that when an Appeals officer identifies an
irregularity in the assessment procedure, he may be required to
examine underlying documents, such as the certified mailing list.
(continued...)
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Also notably absent from the array of documents attached to
respondent’s motion for summary judgment is a Form 4340,
Certificate of Assessments, Payments, and Other Specified
Matters. The IRS Web site describes Form 4340 as follows:
The Certified Transcript Program (CERTS) produces a
common language transcript that gives the history
assessments and payments on taxpayers’ accounts. These
transcripts are used in civil and criminal court cases.
Form 4340, Certificate of Assessments, Payments, and
Other Specified Matters, is used by the government in
litigation to certify extracts from a taxpayer’s
account. * * * [http://www.irs.gov/privacy/article/
0,,id=174281,00.html.]
Unlike many of the printouts from respondent’s computer system
that were attached to respondent’s motion for summary judgment, a
Form 4340 is normally a readable and understandable history of
transactions and events concerning a taxpayer’s account for a
particular taxable period. See Tufft v. Commissioner, T.C. Memo.
2009-59. Form 4340 is “‘generally regarded as being sufficient
proof, in the absence of evidence to the contrary, of the
adequacy and propriety of notices and assessments that have been
made.’” Orum v. Commissioner, 123 T.C. 1, 9 (2004) (quoting
Gentry v. United States, 962 F.2d 555, 557 (6th Cir. 1992)),
affd. 412 F.3d 819 (7th Cir. 2005). Generally, courts have held
that Form 4340 provides at least presumptive evidence that a tax
has been validly assessed under section 6203. Davis v.
6
(...continued)
Id. at ___ n.7 (slip op. at 15).
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Commissioner, 115 T.C. 35, 40 (2000) (citing 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), and United States v. Miller, 318 F.2d 637,
638-639 (7th Cir. 1963)).
A clear record of relevant transactions is very important in
a section 6330 court proceeding. See Wright v. Commissioner, 381
F.3d 41 (2d Cir. 2004), vacating and remanding T.C. Memo. 2002-
312.7 This is especially true in cases submitted to the Court on
7
In Wright v. Commissioner, 381 F.3d 41, 44 (2d Cir. 2004),
vacating and remanding T.C. Memo. 2002-312, which was a sec. 6330
case, the Court of Appeals for the Second Circuit described the
unsatisfactory record before it as follows:
Here, the record that has been presented to this Court
by Wright and the IRS is unhelpful. Wright’s initial
2002 complaint to the Tax Court expressed bewilderment
as to the nature of the tax balances that have been
calculated (and recalculated) against him by the IRS.
At oral argument and in its briefs, the IRS seemed
equally unsure about several basic and crucial facts.
The parties’ confusion is understandable; the relevant
timeline and tax amounts have been reconstructed using
photocopied forms, computer screen printouts, and dot-
matrix printouts of tax account balances. Many of
these records have no supporting explanation (and
therefore are inscrutable to any non-employee of the
IRS), many are from time periods that are not the same,
and even the documents that are from similar time
periods often contain amounts that are inexplicably
contradictory.
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a motion for summary judgment, where there is no opportunity to
question witnesses about the meaning of coded computer
transcripts that might otherwise be indecipherable or
unintelligible to a reviewing court. The Chief Counsel for the
IRS recognized this and has instructed his attorneys as follows:
A certified copy of an updated Form 4340 transcript
should also be submitted with all summary judgment
motions. The Form 4340 transcript has been
consistently requested by Tax Court judges in summary
judgment cases. Even though this transcript is
prepared after the issuance of the notice of
determination, submission of the Form 4340 is not a
violation of the record rule because it generally
contains the same information originally reviewed by
the appeals or settlement officer in making the CDP
determination. See Bowman v. Commissioner, T.C. Memo.
2007-114. * * * [Chief Counsel Notice CC-2009-010
(Feb. 13, 2009).]
The Chief Counsel’s instructions also state: “The Form 4340
should be reviewed thoroughly and any issues raised by entries on
the Form 4340, or inconsistencies with other documents, should be
explained in the motion.” Id.
We have recognized that Appeals officers are not required to
rely on any particular document, such as a Form 4340, when making
their determinations. See Craig v. Commissioner, 119 T.C. 252,
261-262 (2002); Nestor v. Commissioner, 118 T.C. 162, 166-167
(2002). However, a Form 4340 generated after the determination
by the Office of Appeals can properly be offered in subsequent
court proceedings to explain information used by the Appeals
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officer. See Dinino v. Commissioner, T.C. Memo. 2009-284; Med.
Practice Solutions, LLC v. Commissioner, T.C. Memo. 2009-214.
On the basis of the record before us, we will deny
respondent’s motion for summary judgment and remand this case to
the Appeals Office for further hearing.
To reflect the foregoing,
An appropriate order will
be issued.