Craig v. Comm'r

*252 OPINION

LARO, Judge: Petitioner, while residing in Scottsdale, Arizona, petitioned the Court under section 6330(d)(1) to review respondent's determination as to his proposed levy upon petitioner's property. Respondent proposed the *54 levy to collect Federal income taxes of approximately $ 10,656.55 for 1990, $ 12,192.27 for 1991, $ 18,437.01 for 1992, and $ 307.63 for 1995. ¹ Currently, the case is before the Court on respondent's motion for summary judgment under Rule 121 and to impose a penalty against petitioner under section 6673(a). Petitioner has filed with the Court a response to respondent's motion.

We decide as a matter of first impression whether the Court has jurisdiction under section 6330(d)(1), given that respondent has never issued to petitioner a notice of determination *253 with respect to a hearing described in section 6330 (Hearing). ² Respondent acknowledges that petitioner was entitled to and should have been given a Hearing. All the same, respondent argues, the Court has jurisdiction to decide this case. Respondent argues that respondent's failure to grant petitioner's timely request for a Hearing was harmless error because petitioner was offered and attended an "equivalent hearing" under section 301.6330-1(i), Proced. & Admin. Regs. (equivalent hearing), *55 and received a decision letter (decision letter) as to the equivalent hearing.

We hold that we have jurisdiction. Also, we shall grant respondent's motion for summary judgment, and we shall impose a $ 2,500 penalty against petitioner. Unless otherwise noted, section references are to the applicable versions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.

             Background

Petitioner and his wife, Lorraine Craig (Ms. Craig), did not file timely Federal income tax returns for 1990 and 1991. On February 18, 1993, respondent prepared and filed substitutes for returns for those years under section 6020. In preparing the substitutes for returns, respondent relied *56 on information received from the Bureau of Labor Statistics. On October 27, 1994, and on December 14, 1994, petitioner and Ms. Craig filed joint 1990 and 1991 Federal income tax returns, respectively. Those returns were treated by respondent as amended returns. On February 3, 1995, petitioner and Ms. Craig filed a joint 1992 Federal income tax return.

On October 5, 1995, respondent issued a notice of deficiency to petitioner and Ms. Craig. The notice determined that petitioner and Ms. Craig were liable for deficiencies in their 1990, 1991, and 1992 Federal income taxes as follows:

*254                 Additions to Tax

Year    Deficiency   Sec. 6651(a)(1)   Sec. 6654

____    __________   _______________   _________

1990     $ 6,700      $ 1,675      $ 441

1991     50,686       12,672      2,913

1992      6,814       1,704       294

Petitioner and Ms. Craig petitioned the Court with respect to the notice on December 21, 1995. On February 24, 1997, petitioner and Ms. Craig signed a stipulated decision. This decision listed the deficiencies in Federal income tax due from petitioner and Ms. Craig in accordance with the notice of deficiency and provided that "effective upon the entry of the decision *57 by the Court, petitioners [petitioner and Ms. Craig] waive the restriction contained in Internal Revenue Code 6213(a) prohibiting assessment and collection of the deficiencies and additions to the tax (plus statutory interest) until the decision of the Tax Court has become final." That stipulated decision was entered by the Court on February 27, 1997.

On May 5, 1997, on the basis of the stipulated decision, respondent assessed the 1990, 1991, and 1992 Federal income tax liabilities of petitioner and Ms. Craig.

On December 4, 1997, petitioner filed a 1995 Federal income tax return. On the basis of this return, respondent assessed petitioner's tax liability for 1995 on January 12, 1998.

On February 22, 2001, respondent mailed to petitioner and Ms. Craig a letter, "Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing" (final notice), for 1990, 1991, and 1992. On the same day, respondent mailed to petitioner a final notice for 1995. Both final notices were signed by a chief of the IRS Automated Collection Branch in Ogden, Utah. These notices informed petitioner and Ms. Craig of (1) respondent's intent to levy *58 upon their property pursuant to section 6331 and (2) their right under section 6330 to a Hearing with respondent's Office of Appeals (Appeals). Enclosed with the final notices were copies of *255 Forms 12153, Request for a Collection Due Process Hearing. On March 17, 2001, petitioner requested timely the referenced Hearing for 1990, 1991, 1992, and 1995 by mailing to respondent a letter accompanied by two Forms 12153, the first for 1990, 1991, and 1992, and the second for 1995. Petitioner signed the letter, but he did not sign the Forms 12153. In that letter, petitioner requested a Hearing and stated the following disagreement with the proposed levy:

   this letter constitutes my request for a Collection Due Process

   Hearing, as provided for in Code Sections 6320 and 6330, with

   regards to the Final Notice -- Notice of Intent to Levy at issue

   * * *

   Since Section 6330(c)(1) requires 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," I am requesting that the appeals

   officer have such verification with him at the Collection Due

   Process Hearing and that he *59 send me a copy such verification

   within 30 days from the date of this letter. In the absence of

   any such hearing, and if you fail to send me the requested

   Treasury Department Regulations and Delegation Orders within 30

   days from the date of this letter, then I will consider this

   entire matter closed. If you do attempt to take any enforcement

   action against me without according me the hearing requested,

   and without sending me the documentation requested, you will be

   violating numerous laws which I will identify in a 7433 lawsuit

   against you and the government.

On April 12, 2001, the Ogden Service Center returned the requests to petitioner and Ms. Craig because the Forms 12153 were not signed. Two identical letters with respect to 1990, 1991, 1992, and with respect to 1995, sent to petitioner with Forms 12153 stated:

   We are returning your Form 12153, Request for a Collection Due

   Process Hearing, because you did not sign it. If you have not

   been able to work out a solution to your tax liability and still

   want to request a hearing with the IRS Office of Appeals, you

   need to complete and sign the Form 12153.

   If we do not hear from you by May 3, 2001, we may *60 take

   enforcement action without notifying you further.

On May 6, 2001, the Ogden Service Center received from petitioner two signed Forms 12153 for 1990, 1991, and 1992, and for 1995, respectively, which stated:

   This Form 12153 WAS NOT SIGNED VOLUNTARILY, but UNDER DURESS,

   not wishing to give the I.R.S. or it's agents any cause to deny

   or delay the Due Process Hearing guaranteed to me by law as per

   I.R.C. Section 6330. My signature on this document DOES NOT give

   even TACIT AGREEMENT that the "statutory period of

   limitations for collection be *256 suspended during the Collection

   Due Process Hearing and any subsequent judicial review".

On September 28, 2001, the Appeals officer held with petitioner an equivalent hearing. At the equivalent hearing, the Appeals officer explained to petitioner that it was an equivalent hearing and not a Hearing. The Appeals officer then reviewed and showed to petitioner Forms 4340, Certificate of Assessments, Payments and Other Specified Matters. The Forms 4340 were dated July 17, 2001, and were for 1990, 1991, 1992, and 1995. On September 28, 2001, after the equivalent hearing, the Appeals officer sent the Forms 4340 to petitioner.

On October *61 27, 2001, the Appeals officer issued to petitioner a "Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330" (i.e., the decision letter) for 1990, 1991, 1992, and 1995. The decision letter sustained the proposed collection action against petitioner. The decision letter stated that petitioner did not have the right to judicial review of the decision set forth in the decision letter. The decision letter stated:

   Your due process hearing request was not filed within the time

   prescribed under Section 6320 and/or 6330. However, you

   received a hearing equivalent to a due process hearing except

   that there is no right to dispute a decision by the Appeals

   Office in court under IRC Sections 6320 and/or 6330.

             Discussion

We decide for the first time whether we have jurisdiction under section 6330(d)(1) in the setting at hand. We conclude that we do. We set forth the relevant text of section 6330 in an appendix.

Section 6330(d)(1) is the specific provision that governs our jurisdiction to review a proposed collection action. Our jurisdiction under that section depends upon the issuance of a valid notice of determination *62 and a timely petition for review. E.g., Goza v. Commissioner, 114 T.C. 176, 182 (2000); see also Lunsford v. Commissioner, 117 T.C. 159, 161 (2001). See generally Offiler v. Commissioner, 114 T.C. 492, 498 (2000) (" The notice of determination provided for in section 6330 is, *257 from a jurisdictional perspective, the equivalent of a notice of deficiency."). Here, petitioner has timely filed a petition with this Court. ³ Thus, we are left to decide whether respondent has made a "determination" within the meaning of section 6330(d)(1) which we have jurisdiction to review.

Respondent acknowledges that petitioner did not have the Hearing described in section 6330. All the same, respondent argues, the decision letter issued to petitioner as to the equivalent hearing reflects a "determination" sufficient to invoke the Court's jurisdiction under section 6330(d)(1). We agree. The *63 Treasury Department regulations interpreting section 6330 recognize specifically that there are two types of hearings which may be conducted by Appeals in connection with section 6330; i. e., Hearings and equivalent hearings. As explained below, the Treasury Department regulations state that an Appeals officer will consider at an equivalent hearing the same issues as at a Hearing, and that the contents of the decision letter that results from an equivalent hearing will generally be the same as in the notice of determination that results from a Hearing.

As to a Hearing, the statute provides that a taxpayer has a right to a Hearing with an Appeals officer before a levy may be made upon his or her property, if the Hearing is timely requested by the taxpayer. Sec. 6330(a)(1), (a)(2), (a)(3)(B), and (b)(1). The statute provides further that at the Hearing the taxpayer may raise any relevant matter set forth in section 6330(c) and that the Appeals officer shall make a "determination" as to those matters. Sec. 6330(c) and (d)(1); see also sec. 301.6330-1(f), Proced. & Admin. Regs. (regulations interpreting section 6330 provide that the Appeals officer must issue a "Notice of Determination" *64 to any taxpayer who timely requests a Hearing). ^4*65 The statute gives *258 a taxpayer the right to contest the Appeals officer's determination in the appropriate judicial forum, sec. 6330(d)(1), and precludes respondent from proceeding with the proposed levy that is the subject of the Hearing while the Hearing and any appeals thereof are pending, sec. 6330(e)(1). The statute provides that the applicable periods of limitation under sections 6502, 6531, or 6532 are suspended for the same period. Sec. 6330(e)(1).

Whereas the above-stated rules for a Hearing are provided explicitly in the statute, the rules for an equivalent hearing have their genesis in the statute's legislative history and the regulations implementing Congressional intent as gleaned from that history. See H. Conf. Rept. 105-599, at 266 (1998); 1998-3 C. B. 1020 (in the event that a taxpayer does not timely request a Hearing, "The Secretary must provide a hearing equivalent to the hearing if later requested by the taxpayer"); cf. Johnson v. Commissioner, 86 AFTR 2d 2000-5225, 2000-2 USTC par. 50,591 (D. Or. 2000) ("'equivalent hearing' is provided for only by regulation and is not mandated by Section 6330 itself"). The scheme of the *66 regulations as they apply to equivalent hearings generally follows the statutory scheme for Hearings.

Under the regulations, any taxpayer who fails to timely request a Hearing may receive an equivalent hearing. Sec. 301.6330- 1(i)(1), Proced. & Admin. Regs. The equivalent hearing (like the Hearing) is held with Appeals, and the Appeals officer considers the same issues which he or she would have considered had the equivalent hearing been a Hearing. Id. The Appeals officer also generally follows the same procedures at an equivalent hearing which he or she would have followed had the equivalent hearing been a Hearing. Id. Although the Appeals officer concludes an equivalent hearing by issuing a decision letter, as opposed to a notice of determination, the different names which are assigned to these documents are merely a distinction without a difference when it comes to our jurisdiction over this case, where a Hearing was timely requested. The decision letter *259 contains all of the information required by section 301.6330-1(e)(3), Q&A-E8, Proced. & Admin. Regs., to be included in a notice of determination but for the fact that the decision letter ordinarily states in regard to most issues *67 that a taxpayer may not (as opposed to may) seek judicial review of the decision. ⁵ Id.; cf. sec. 301.6330-1(i)(2), Q&A- I5, Proced. & Admin. Regs. (taxpayer may in certain cases contest in court the Appeals officer's decision in an equivalent hearing to deny a claim for relief from joint liability under section 6015).

Under the facts herein, where Appeals issued the decision letter to petitioner in response to his timely request for a Hearing, we conclude that the "decision" reflected in the decision letter issued to petitioner is a "determination" for purposes of section 6330(d)(1). Cf. Moorhous v. Commissioner, 116 T.C. 263, 270 (2001) (decision reflected in a decision letter was not a "determination" under section 6330(d)(1) where the taxpayer's request for a Hearing was untimely); Nelson v. Commissioner, T.C. Memo 2002-264*68 (same); Lopez v. Commissioner, T.C. Memo 2001-228 (same). The fact that respondent held with petitioner a hearing labeled as an equivalent hearing, rather than a hearing labeled as a Hearing, and that respondent issued to petitioner a document labeled as a decision letter, rather than a document labeled as a notice of determination, does not erase the fact that petitioner received a "determination" within the meaning of section 6330(d)(1). We hold that we have jurisdiction to decide this case.

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that *260 there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). The moving party bears the burden *69 of proving that there is no genuine issue of material fact, and factual inferences are drawn in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982).

Petitioner has raised no genuine issue as to any material fact. Accordingly, we conclude that this case is ripe for summary judgment.

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 may collect such tax by levy on the person's property. Section 6331(d) provides that at least 30 days before enforcing collection by levy on the person's property, the Secretary must provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

Section 6330 generally provides that the Commissioner cannot proceed with collection by levy until the person has been provided with notice and the opportunity for an administrative review of the matter (in the form of a Hearing before Appeals) and, if dissatisfied, with judicial review of the administrative determination. Davis v. Commissioner, 115 T.C. 35, 37 (2000); *70 Goza v. Commissioner, 114 T.C. at 179. In the event of such a judicial review, the Court's standard of review depends on whether the underlying tax liability is at issue. The Court reviews a taxpayer's liability under the de novo standard where the validity of the underlying tax liability is at issue. The Court reviews the other administrative determinations for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000). A taxpayer's underlying tax liability may be at issue only if he or she "did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." Sec. 6330(c)(2)(B).

With respect to 1990, 1991, and 1992, petitioner received a notice of deficiency and petitioned the Court with respect thereto. It follows that petitioner's underlying tax liability for 1990, 1991, and 1992 is not at issue. Accordingly, we review *261 respondent's determination for these years for abuse of discretion.

With respect to 1995, petitioner neither received a notice of deficiency nor had an opportunity to dispute the underlying tax liability. Whereas the Appeals officer did not allow petitioner to raise at the equivalent *71 hearing the underlying tax liability for that year, respondent now recognizes that it was error to do so (i.e., to not allow petitioner to dispute the underlying tax liability for 1995). See Hoffman v. Commissioner, 2002 U.S. Tax Ct. LEXIS 44, 119 T.C. 140 (2002). We review petitioner's underlying tax liability for 1995 on a de novo basis.

Petitioner asserts in his petition the following allegations of error as to 1990, 1991, 1992, and 1995:

   a) * * * the appeals officer violated the law by not

   "presenting" petitioner with the "verification from

   the Secretary" as required by Code Sections 6330(c)(1) and

   6330(c)(3)(A).

   b) No statutory Notice and Demand for payment was ever sent to

   petitioner in accordance with the provisions and requirements of

   Code Sections 6303, 6321, and 6331.

   c) No Regulation exists, as referred to in Code Sections 6001

   and 6011, that requires petitioner to pay the tax at issue.

   d) No valid statutory notice of deficiency was sent to

   petitioner.

   e) No valid assessment showing an amount due could have been

   assessed from petitioner's returns.

   f) No other returns exist from which an assessment could have

   complied with the provisions of section 26 USC 6201(a)(1).

   *72 g) No statute in the Internal Revenue Code establishes the

   "existence * * * of the underlying liability" as

   referred to in 6330(c)(2)(B), and the United States will not be

   able to identify for this Court any statute that refers to any

   such tax liability as for example Code sections 4401(c),

   5005(a), and 5703(a) do with respect to Wagering, Distilled

   spirits, and Tobacco taxes.

   h) No statute in the Internal Revenue code establishes a

   requirement "to pay" the income tax at issue, as for

   example code sections 4401(c), 5007(a) and 5703(b) do with

   respect to Federal Wagering, Alcohol, and Tobacco taxes.

   i) The notice received by petitioner notifying him of his right

   to a hearing was not signed by the Secretary or his delegate as

   required by 26 USC 6330(a)(1).

We turn to address these allegations.

First, petitioner alleges that the Appeals officer failed to obtain verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required by section 6330(c)(1). We disagree. Section 6330(c)(1)*262 does not require the Appeals officer to rely upon a particular document (e.g., the summary record itself rather than transcripts *73 of account) in order to satisfy this verification requirement. Kuglin v. Commissioner, T.C. Memo 2002-51; see also Weishan v. Commissioner, T.C. Memo 2002-88. Nor does it mandate that the Appeals officer actually give a taxpayer a copy of the verification upon which the Appeals officer relied. Sec. 6330(c)(1); sec. 301.6330-1(e)(1), Proced. & Admin. Regs.; see also Nestor v. Commissioner, 118 T.C. 162 (2002). Given the additional fact that petitioner was actually given copies of the relevant Forms 4340, ⁶ which are a valid verification that the requirements of any applicable law or administrative procedure have been met, Roberts v. Commissioner, 118 T.C. 365 (2002); Mudd v. Commissioner, T.C. Memo 2002-204; Howard v. Commissioner, T.C. Memo 2002-81; Mann v. Commissioner, T.C. Memo 2002-48, we hold that: (1) The assessments were valid, Kuglin v. Commissioner, supra; see also Duffield v. Commissioner, T.C. Memo 2002-53; and (2) the Appeals officer satisfied the verification requirement of section 6330(c)(1), Yacksyzn v. Commissioner, T.C. Memo 2002-99; cf. Nicklaus v. Commissioner, 117 T.C. 117, 120-121 (2001). Petitioner has not demonstrated in this proceeding any irregularity in the assessment procedure that would raise a question about the validity *74 of the assessment or the information contained in Forms 4340.

Second, petitioner alleges that no statutory notice and demand for payment was sent to him. We disagree. "The Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof. " Sec. 6303(a). If mailed, this notice and demand is required to be sent to the taxpayer's last known address.