Held: R's determination to proceed with collection by levy is sustained.
MEMORANDUM FINDINGS OF FACT AND OPINION
WHERRY, Judge: This case is before the Court on a petition for judicial review of a Notice of Determination Concerning Collection Action(s) Under 6330.1 The issue for decision is whether respondent may proceed with collection by levy of petitioner's 2000 corporate income tax.
FINDINGS OF FACT
Some of the facts have been stipulated by the parties. The stipulations, with accompanying exhibits, are incorporated herein by this reference. At the time the petition was filed petitioner's principal place of business was located in Spokane, Washington.
Petitioner is a professional corporation incorporated under the state laws of Washington, and is wholly owned by Peter Dahlin (Mr. Dahlin), an attorney. For taxable year 2000, petitioner filed Form 1120-X, Amended U.S. Corporation Income Tax Return, that reflected a tax liability of $1,463.
On December 9, 2004, respondent mailed to petitioner a Final Notice Of Intent To Levy And Notice Of Your Right To A Hearing, which included, inter alia, petitioner's 2000 corporate Federal income tax. Utilizing Form 12153, Request for a Collection Due Process Hearing, petitioner timely requested a "CDP hearing face to face with the hearing officer", and stated its disagreement with the assessment and levy of its corporate tax liability. Petitioner also alleged mistakes in the computation of tax due and complained about "the failure to send 4340 forms with 23C dates".2
On March 11, 2005, the Appeals officer assigned to petitioner's case, Kathleen Derrick (Ms. Derrick), mailed to petitioner a letter entitled We Received Your Request for A Collection Due Process Hearing And We Need To Advise You On Procedures. The letter informed petitioner that the issues petitioner raised in its Appeals hearing request on Form 12153 were frivolous or groundless.
The letter provided:
Appeals does not provide a face-to-face conference if the only items you wish to discuss are those mentioned above. You may, however, have a telephone conference or discuss with us by correspondence any relevant challenges to the filing of the notice of federal tax lien or the proposed levy.
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If you are interested in receiving a face-to-face conference, you must be prepared to discuss issues relevant to paying your tax liability. These include, for example, offering other ways to pay the taxes you owe, such as an installment agreement or offer in compromise. The Internal Revenue Manuel determines whether Appeals can accept your proposal. If you wish to have a face-to-face conference, please write me within 15 days from the date of this letter and describe the legitimate issues you will discuss.
The letter further provided that petitioner was scheduled for a telephonic hearing on March 30, 2005, at 10 a.m. Additionally, the letter instructed petitioner to fill out Form 433-B, Collection Information Statement for Businesses, and return it by March 28, 2005, so that collection options could be considered. Ms. Derrick attached to the letter "literal transcripts" of petitioner's tax liability.
In response, petitioner mailed a letter, dated March 24, 2005, to Ms. Derrick, which provided that petitioner was requesting a "face to face conference" and "The legitimate issues we wish to discuss are delay and issues of mishandling of this matter." A telephonic hearing was held on March 30, 2005. That same day Ms. Derrick mailed to petitioner a letter that requested specific documents and information that would facilitate the Appeals Office's determination as to whether petitioner was entitled to a face-to-face hearing. The letter requested, inter alia, that petitioner complete and return Form 433-B, a copy of which was attached, and explain with supporting documentation why petitioner did "not owe a tax liability for the Form 1120 for the tax year 2000." The letter informed petitioner that if Ms. Derrick did not receive the relevant information by April 13, 2005,3 she would issue a notice of determination. As of April 18, 2005, petitioner had not provided the requested information.
On May 20, 2005, respondent mailed to petitioner the above-mentioned Notice of Determination Concerning Collection Action(s) Under 6330. The notice of determination provided in pertinent part:
We advised that some of the issues raised in your appeal were of a frivolous nature. We advised that this was your opportunity to discuss why you believed you did not owe the tax and/or why you could not pay the tax liability. You advised that you believe you were assessed additional tax because your election for S-corporation status was denied. You stated that you believed that the denial was in error and that the IRS granted this status in 1999. Your representative advised that you could not pay the tax because you had received threats on your life.4 You have not advised as to how the alleged death threats have impacted your ability to pay the tax liability.
The notice of determination stated that petitioner did not provide the requested information and documentation to Ms. Derrick. It further provided that "Although a levy is intrusive, you have not provided financial data that would allow our office to consider a viable collection alternative". The Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, for taxable year 2000, attached as an exhibit to the joint stipulation of facts in this case, was not obtained until after the notice of determination was issued. Petitioner filed a timely petition, and a trial was held on June 13, 2006, in Spokane, Washington.5
OPINION
I. General Rules
Pursuant to Section 6330 elaborates on Sec. 6330(a)(3)(B), (b)(1).
At the collection hearing, the taxpayer 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)(B).
In rendering a determination, the Appeals officer must verify that the requirements of any applicable law and administrative procedure have been met. Also, the Appeals officer must consider and weigh relevant issues relating to the unpaid tax or proposed levy, and "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 6330(d)(1)6 Where the validity of the underlying tax liability is properly at issue, the Court will review the matter de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). The Court reviews any other administrative determination regarding the proposed levy action for an abuse of discretion. Sego v. Commissioner, supra at 610; Goza v. Commissioner, supra at 182.II. Appeals Hearing
Petitioner contends that it was entitled to a face-to-face hearing because the regulations promulgated under 7 Proced. & Admin. Regs., provides:
Q-D7. If a taxpayer wants a face-to-face CDP hearing, where will it be held?
A-D7. The taxpayer must be offered an opportunity for a hearing at the Appeals office closest to taxpayer's residence or, in the case of a business taxpayer, the taxpayer's principal place of business. If that is not satisfactory to the taxpayer, the taxpayer will be given an opportunity for a hearing by correspondence or by telephone. If that is not satisfactory to the taxpayer, the Appeals officer or employee will review the taxpayer's request for a CDP hearing, the case file, any other written communications from the taxpayer (including written communications, if any, submitted in connection with the CDP hearing), and any notes of any oral communications with the taxpayer or the taxpayer's representative. Under such circumstances, review of those documents will constitute the CDP hearing for the purposes of
At issue in this case is respondent's right to collect petitioner's self-determined tax liability for 2000 (i.e., the amount set forth on petitioner's filed 2000 Form 1120-X). A taxpayer's challenge to his self-determined tax liability at an Appeals Office hearing constitutes a permissible challenge to the underlying tax liability under section 6330(c)(2)(A) determination relating to an "unpaid tax" subject to review for abuse of discretion.8 Accordingly, the Court will review the administrative record of the levy for an abuse of discretion.9 An abuse of discretion has occurred if the "Commissioner exercised * * * [his] discretion arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Federal tax assessments are formally recorded on a record of assessment in accordance with section 6330(c)(1) mandates neither that the Appeals officer rely on a particular document in satisfying the verification requirement nor that the Appeals officer actually give the taxpayer a copy of the verification upon which he or she relied. Craig v. Commissioner, 119 T.C. 252, 262 (2002); Nestor v. Commissioner, 118 T.C. 162, 166 (2002).
A Form 4340, for instance, constitutes presumptive evidence that a tax has been validly assessed pursuant to section 6330. Id. at 40-41. This Court has specifically held that it is not an abuse of discretion for an Appeals officer to rely on Form 4340 to comply with section 6330(c)(1). Schroeder v. Commissioner, T.C. Memo. 2002-190; Mann v. Commissioner, T.C. Memo. 2002-48.
Ms. Derrick relied on computer transcripts of petitioner's account in verifying that all applicable law and administrative procedures had been met, which is not an abuse of discretion. The record now contains Form 4340 for taxable year 2000, which indicates that an assessment was made for 2000 and that taxes remain unpaid. Petitioner has cited no irregularities that would cast doubt on the pertinent liability information recorded on Form 4340.
In addition to the specific dictates of section 6203 and section 301.6203-1, Proced. & Admin. Regs. Roberts v. Commissioner, supra at 370 n.7. This Court has likewise upheld collection actions where taxpayers were provided with literal transcripts of account (so-called MFTRAX). See Frank v. Commissioner, T.C. Memo. 2003-88; Swann v. Commissioner, T.C. Memo. 2003-70. Ms. Derrick mailed to petitioner literal transcripts prior to the telephonic hearing, and petitioner was provided with Form 4340 subsequent to the telephonic hearing and issuance of the notice of determination, but prior to trial.
Petitioner argues, relying on Huff v. United States, 10 F.3d 1440 (9th Cir. 1993), that if requested, 10 However, Huff v. United States, supra at 1446, held that
Given the defect in the Forms 4340 [lack of 23C date on Mr. Huff's Form 4340] and the fact that the record contains no evidence indicating that the Huffs received copies of their assessments pursuant to their request under section 6203.
The court in Huff v. United States, supra, did not mandate that Form 4340 must be furnished to all taxpayers who so request it in order for section 6203 was satisfied in that particular case, due to one Form 4340 lacking a 23C date and the Commissioner's failing to provide requested assessments to the taxpayers. Petitioner's reliance on Huff v. United States, supra, is misplaced. Accordingly, this Court concludes that
To reflect the foregoing,
Decision will be entered for respondent.1 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure.2 A "23C date" is the date on which the actual assessment of the tax liability was made.3 The letter actually stated the date as Apr. 13, 2004, which was a typographical error as the letter was dated Mar. 30, 2005.4 Mr. Dahlin's former legal assistant and office manager solicited a "hitman" to murder him. Respondent objected, based on relevancy, to the admission into evidence of a newspaper article that discussed the solicitation of first degree murder by Mr. Dahlin's former employee and the subsequent trial. See Fed. R. Evid. 401. The Court concludes that while the relevancy of the newspaper article is certainly limited, it meets the threshold definition of relevant evidence and is admissible. The Court will give the article only such consideration as is warranted by its pertinence to the Court's analysis of the case.5 At trial, petitioner admitted that "we're not challenging the deficiency, but we did want to get current information."6 Determinations made after Oct. 16, 2006, are appealable only to the Tax Court. See Pension Protection Act of 2006, Pub. L. 109-280, sec. 855, 120 Stat. 1019.7 Sec. 301.6330-1(d)(2), Q&A-D7, Proced. & Admin. Regs., was revised in regard to the provision of face-to-face Appeals hearings. Effective Nov. 16, 2006, it provides that "a taxpayer who presents in the CDP hearing request relevant, non-frivolous reasons for disagreement with the proposed levy will ordinarily be offered an opportunity for a face-to-face conference at the Appeals office closest to taxpayer's residence." See sec. 301.6330-1(d)(2), Q&A-D7, Proced. & Admin. Regs. The revised regulations promulgated under 8 Petitioner expressed concern with the calculation of interest on its Federal corporate income tax. The Court notes that its authority to redetermine interest, pursuant to 9 The Court notes that it would also sustain respondent's determination to proceed with collection action even under a de novo standard of review.10 Pursuant to Golsen v. Commissioner, 54 T.C. 742, 757 (1970), affd. 445 F.2d 985 (10th Cir. 1971), this Court will follow the precedent established in the court to which an appeal would lie. Appeal in the instant case would normally lie, absent stipulation to the contrary, with the Court of Appeals for the Ninth Circuit.
Alvin S. Brown
Tax Attorney
www.irstaxattorney.com
703 425-1400
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