                         T.C. Memo. 2006-27



                      UNITED STATES TAX COURT



                   FRED DEUTSCH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3583-05L.              Filed February 15, 2006.



     Ira B. Stechel and John T. Morin, for petitioner.

     William C. Bogardus, for respondent.



                         MEMORANDUM OPINION


     JACOBS, Judge:   This collection review case is before the

Court on respondent’s motion for partial summary judgment

pursuant to Rule 121.1   As explained in detail below, we shall

grant respondent’s motion.


     1
      Rule references are to the Tax Court Rules of Practice and
Procedure. Section references are to the Internal Revenue Code.
                              - 2 -

                            Background2

      On March 3, 2001, petitioner executed and submitted to

respondent a Form 2848, Power of Attorney and Declaration of

Representative, appointing Richard H. Champion (Mr. Champion),

identified as an attorney, to act as petitioner’s representative

with regard to Federal income tax matters for 1995 through 1998.

On March 3, 2001, Penny Drue Baird (Ms. Baird), petitioner’s

wife, executed and submitted to respondent a separate Form 2848,

appointing Mr. Champion to act as her representative with regard

to Federal income tax matters for 1994 through 1998.   Paragraph 5

of each Form 2848 states:

     Acts authorized. The representatives are authorized to
     receive and inspect confidential tax information and to
     perform any and all acts that I (we) can perform with
     respect to the tax matters described on line 3, for
     example, the authority to sign any agreements,
     consents, or other documents. The authority does not
     include the power to receive refund checks (see line 6
     below), the power to substitute another representative
     unless specifically added below, or the power to sign
     certain returns. * * *

     The remainder of paragraph 5 of Form 2848 provides a space

where a taxpayer may list specific additions to or deletions from

the acts that the representative is authorized to perform.   Those

spaces on petitioner’s and Ms. Baird’s Forms 2848 are blank.



     2
      The following summary of the relevant facts is based on
the parties’ pleadings with attached exhibits. The facts are
stated solely for the purpose of deciding the pending motion and
are not findings of fact for other purposes of this case. See
Rule 1(a); Fed. R. Civ. P. 52(a).
                              - 3 -

     Petitioner allegedly informed Mr. Champion he did not owe

any material amount of tax to the Internal Revenue Service (IRS)

for the years at issue because he believed that he had sustained

over $8 million of business losses in earlier years that carried

forward to the years in question.   Petitioner expected Mr.

Champion to communicate with him regularly, inform him of any

developments in his case, and obtain his consent to any agreement

that would bind him to any tax liability.

     On January 14, 2003, Mr. Champion executed on petitioner’s

behalf a Form 4549, Income Tax Examination Changes, consenting to

the immediate assessment and collection of the following

additional taxes, fraud penalties under section 6651(a)(1) and

(f), and interest computed to February 8, 2003, for 1995 and

1996:

        Year         Tax      Penalty         Interest

        1995     $182,167   $136,625.25      $229,530.82
        1996      114,958     86,218.50       115,781.70

     On January 14, 2003, Mr. Champion executed on petitioner’s

and Ms. Baird’s behalf a Form 4549 consenting to the immediate

assessment and collection of the following additional tax, fraud

penalty under section 6663(a), and interest computed to February

8, 2003, for 1997:

        Year         Tax      Penalty         Interest

        1997     $252,079   $84,059.85       $148,078.32
                               - 4 -

     The Forms 4549 state:   “I do not wish to exercise my appeal

rights with the Internal Revenue Service or to contest in the

United States Tax Court the findings in the report.”

     On January 27, 2004, respondent mailed to petitioner a Final

Notice, Notice of Intent to Levy and Your Right to a Hearing

Under IRC 6330 for 1995, 1996, and 1997 (the levy notice).   In

response to the levy notice, petitioner’s counsel Ira B. Stechel

(Mr. Stechel) on behalf of petitioner submitted to respondent a

timely Form 12153, Request for a Collection Due Process Hearing.

On the Form 12153, Mr. Stechel explained that petitioner did not

agree with the levy because:

     The amounts reflected as the taxpayer’s liabilities for
     the tax years in question are incorrect and have been
     substantially reduced upon administrative review by the
     Service. In addition, the taxpayer will shortly file
     returns for the years in question which will supersede
     the substitutes for return prepared by the Service for
     the taxpayer’s 1995 and 1996 taxable years and which
     will amend the taxpayer’s return for his taxable year
     1997, which returns will claim net operating loss
     carryforwards and carrybacks and passive loss
     carryforwards that are anticipated to eliminate much,
     if not all, of the liabilities assessed against the
     taxpayer for these years.

     By letter dated July 15, 2004, respondent advised petitioner

that his case had been assigned to Appeals Officer Joan Azim of

respondent’s Appeals Office in Manhattan, New York.

     On August 30, 2004, petitioner filed tax returns for 1995

and 1996 that reported taxes due of $19,096 and $14,334,

respectively, and an amended return for 1997 that reported an
                                - 5 -

overpayment of $248,093.   At that time, petitioner also filed

returns for 1998 through 2002 that reflected tax liabilities of

$11,484 for 1998 and $22,099 for 1999 and overpayments of tax of

$132,870 for 2000, $131,289 for 2001, and $242,448 for 2002 (a

net overpayment of $473,024).

     Mr. Stechel sent copies of the 1995 and 1996 returns and the

amended return for 1997 to Appeals Officer Azim.    In the cover

letter, Mr. Stechel stated:    “As we previously discussed, I am

enclosing a set of the returns being filed contemporaneously on

behalf of the taxpayer.    I believe that these filings will render

moot the necessity for a Collection Due Process hearing.    Please

call me if you have had the opportunity to review these

enclosures.”

     Respondent did not accept the returns for 1995 and 1996 or

the amended return for 1997.    Respondent accepted the returns for

1998 through 2004.   Respondent did not credit the overpayment

petitioner claimed for 2000 because credit or refund of the

overpayment was barred by section 6511(b)(1).

     On January 21, 2005, respondent’s Appeals Office mailed to

petitioner a Notice Of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330, sustaining the filing

of the levy notice against petitioner.    On February 24, 2005,

petitioner timely filed with the Court a petition challenging

respondent’s notice of determination.
                                - 6 -

     Petitioner alleged in the petition that respondent erred in

determining that he had any outstanding tax liability for 1995,

1996, or 1997.   After filing an answer to the petition,

respondent filed a motion for partial summary judgment.

Petitioner filed an opposition to respondent’s motion, respondent

filed a response to petitioner’s opposition to respondent’s

motion, and petitioner filed a response to respondent’s response

to petitioner’s opposition to respondent’s motion.

                             Discussion

     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 there is no

genuine issue as to any material fact and that a decision may be

rendered as a matter of law.”   Rule 121(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 of proving that

there is no genuine issue of material fact, and factual

inferences will be read in a manner most favorable to the party

opposing summary judgment.   See Dahlstrom v. Commissioner, 85

T.C. 812, 821 (1985); Marshall v. Commissioner, 85 T.C. 267, 271
                               - 7 -

(1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982).      The

party opposing the motion, however, cannot rest upon the

allegations or denials in the pleadings but must “set forth

specific facts showing that there is a genuine issue for trial.”

Rule 121(d).

     Respondent asserts that there is no issue as to any material

fact and that, as a matter of law, petitioner was not permitted

to challenge his underlying tax liability for 1995, 1996, or 1997

during the administrative proceeding and cannot challenge them in

this proceeding.   We agree.

     Section 6330 entitles a taxpayer to notice and an

opportunity for a hearing before the IRS can collect tax by levy.

Upon request, a taxpayer is entitled to a fair hearing before an

impartial officer from the IRS Office of Appeals.     Sec.

6330(b)(1), (3).   At the hearing, the Appeals officer is required

to verify that the requirements of any applicable law or

administrative procedure have been met and to consider any

relevant issue the taxpayer raises relating to the unpaid tax or

the proposed levy.   Sec. 6330(c)(1) and (2)(A).

     A taxpayer may generally raise any relevant issue relating

to his/her unpaid tax liability or the proposed levy during the

hearing.   Relevant issues include an appropriate spousal defense,

challenges to the appropriateness of the collection action, and

offers of collection alternatives.     Sec. 6330(c)(2)(A).   The
                               - 8 -

taxpayer may challenge the existence or amount of the underlying

tax liability if he/she did not receive a statutory notice of

deficiency for the tax liability or did not otherwise have an

opportunity to dispute it.   Sec. 6330(c)(2)(B).

     Section 6330 does not provide an opportunity to contest tax

liability for a taxpayer who chooses not to receive a notice of

deficiency.   Id.; see also Sego v. Commissioner, 114 T.C. 604,

611 (2000) (taxpayers who deliberately refused to accept delivery

of the notices of deficiency repudiated the opportunity to

contest the notices of deficiency in the Tax Court).     For

purposes of section 6330(c)(2)(B), a taxpayer who has waived

his/her right to challenge the proposed assessments is deemed to

have had an opportunity to dispute tax liabilities and is thereby

precluded from challenging those tax liabilities in a section

6330 hearing.   Zapara v. Commissioner, 124 T.C. 223, 228 (2005);

Aguirre v. Commissioner, 117 T.C. 324, 327 (2001).

     Following the hearing, the Appeals officer must determine

whether the collection action is to proceed, taking into account

the verification the Appeals officer has made, the issues raised

by the taxpayer at the hearing, and whether any proposed

collection action balances the need for the efficient collection

of taxes with the legitimate concern of the taxpayer that any

collection action be no more intrusive than necessary.    Sec.

6330(c)(3).   If the Commissioner issues a determination letter to
                               - 9 -

the taxpayer following an administrative hearing, the taxpayer

may file a petition for judicial review of the administrative

determination.   Sec. 6330(d)(1); Davis v. Commissioner, 115 T.C.

35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).

In a proceeding commenced under section 6330(d), the Court

applies a de novo standard to determine a taxpayer’s underlying

tax liability, when and if it is at issue, and an abuse of

discretion standard to review certain other administrative

determinations of the Commissioner.    Sego v. Commissioner, supra

at 610.

     Petitioner alleged in the petition that respondent erred in

determining that he had any outstanding tax liability for 1995,

1996, or 1997.   Respondent asserts that, in accordance with

Zapara v. Commissioner, supra at 238, and Aguirre v.

Commissioner, supra at 327, petitioner is precluded from

challenging the underlying tax liabilities in this judicial

proceeding because Mr. Champion, as petitioner’s authorized

representative, signed the Forms 4549 waiving petitioner’s right

to challenge the proposed assessments.

     Petitioner asserts that Zapara and Aguirre do not apply

because in those cases it was the taxpayers who signed the

waivers.   Petitioner contends that (1) the Forms 2848 did not

authorize Mr. Champion to execute returns on petitioner’s behalf;

(2) the Forms 4549 in issue “embodied the revenue agent’s
                              - 10 -

determinations and served as the functional equivalent of a

substitute for a return”; (3) Mr. Champion executed the Forms

4549 without petitioner’s knowledge or consent; and (4)

respondent assessed the taxes, penalties, and interest computed

on the basis of substitutes for returns that petitioner neither

consented to nor signed.   Petitioner frames the issue to be

herein decided as:   “Whether enforced collection by Respondent of

an assessment based upon an unsigned substitute for return and

unaccompanied by a Notice of Deficiency may be upheld by this

Court.”

     Petitioner’s argument appears to be as follows:   (1) Because

the income tax liabilities shown on the Forms 4549 were made on

the basis of the substitutes for return prepared by respondent,

the Forms 4549 are the equivalent of returns; (2) inasmuch as Mr.

Champion was not authorized to sign returns on petitioner’s

behalf, Mr. Champion was not authorized to sign the Forms 4549 on

petitioner’s behalf; (3) since Mr. Champion was not authorized to

sign the Forms 4549 on petitioner’s behalf, the waivers on the

forms are invalid; (4) since the waivers are invalid, respondent

was required to issue petitioner a notice of deficiency; and (5)

because respondent did not issue petitioner a notice of

deficiency, and petitioner has not otherwise had an opportunity

to challenge the tax liabilities in issue, petitioner may

challenge those liabilities at the collection review hearing.
                              - 11 -

Petitioner’s argument is flawed in two crucial respects.    First,

Forms 4549 are not returns, and second, Mr. Champion was

authorized to sign an agreement waiving petitioner’s rights to a

notice of deficiency.

     In general, a document filed with the IRS is treated as a

return if the document:   (1) Contains sufficient data to

calculate the tax liability; (2) purports to be a return; (3)

represents an honest and reasonable attempt to satisfy the

requirements of the tax law; and (4) is executed under penalties

of perjury.   Beard v. Commissioner, 82 T.C. 766, 777 (1984)

(citing Badaracco v. Commissioner, 464 U.S. 386 (1984);

Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934); and

Florsheim Bros. Drygoods Co. v. United States, 280 U.S. 453

(1930)), affd. 793 F.2d 139 (6th Cir. 1986).   The Forms 4549 were

not returns because, among other reasons, they were not signed

under penalty of perjury.

     The significance of a sworn verification that the document

is true and correct is unmistakably clear.   Section 6065

specifically requires that a return “shall contain or be verified

by a written declaration that it is made under the penalties of

perjury.”   See also sec. 1.6065-1(a), Income Tax Regs.   Even

those Forms 1040 submitted to the IRS in which the verification

language has been obliterated do not constitute valid returns.

Ledbetter v. Commissioner, 837 F.2d 708, 710 (5th Cir. 1988),
                               - 12 -

affg. T.C. Memo. 1986-575; United States v. Moore, 627 F.2d 830

(7th Cir. 1980); Cupp v. Commissioner, 65 T.C. 68, 78-79 (1975),

affd. without published opinion 559 F.2d 1207 (3d Cir. 1977); Lee

v. Commissioner, T.C. Memo. 1981-26 (Forms 1040 that were not

signed under penalties of perjury were not valid returns for that

fact alone), affd. 723 F.2d 1424 (9th Cir. 1984); see Lucas v.

Pilliod Lumber Co., 281 U.S. 245, 248 (1930) (corporate return).

     As its title, “Income Tax Examination Changes”, connotes,

Form 4549 is the form the IRS uses to explain and/or describe

changes made to a taxpayer’s income tax by the IRS Examination

Division.    As a general rule, the Commissioner may not assess or

collect a taxpayer’s deficiency unless the requisite notice of

deficiency is sent.   Secs. 6212 and 6213.   If the taxpayer agrees

to changes described on a Form 4549, the form provides a space

that permits the taxpayer to indicate his/her agreement to the

changes and to waive restrictions such as the statutory notice

requirement on the assessment of the agreed tax.   The waiver on

Form 4549 (like the waiver in Form 870) permits the taxpayer to

waive the right to file a pre-payment action in this Court

without foreclosing his/her right to seek a refund of the tax

once paid.   See Smith v. United States, 328 F.3d 760, 766-768

(5th Cir. 2003) (comparing Form 870 with Forms 870-L and

870-L(AD)); Philadelphia & Reading Corp. v. United States, 944

F.2d 1063, 1067 (3d Cir. 1991) (a taxpayer should not sign a Form
                              - 13 -

870 unless he/she is willing to waive his/her right to challenge

the tax in the Tax Court before paying the tax and any penalties

due).

     A taxpayer is not required to sign the Form 4549.   If the

taxpayer does not sign the Form 4549, the Commissioner ordinarily

must issue a notice of deficiency before the tax deficiency may

be assessed and collected.

     Mr. Champion signed the Forms 4549 on petitioner’s behalf

pursuant to the authority petitioner granted to him in the Form

2848.   Pursuant to the Form 2848, petitioner authorized Mr.

Champion “to perform any and all acts” that petitioner could

perform with respect to his taxes for 1995 through 1998,

including “the authority to sign any agreements, consents, or

other documents”.   Thus, petitioner authorized Mr. Champion to

sign an agreement with respect to petitioner’s tax liabilities

for 1995 through 1998 and to consent to the immediate assessment

and collection of those liabilities.   An executed Form 2848 gives

the person holding the power of attorney the authority to sign a

consent agreement on behalf of the taxpayer.   See, e.g., Scherr

v. Commissioner, T.C. Memo. 1991-92 (the person holding the power

of attorney was authorized to sign a consent agreement extending

the period for assessment).   Although Mr. Champion could not sign

a return on petitioner’s behalf, we have previously found that

the Forms 4549 were not returns.
                               - 14 -

     By signing Form 4549, Mr. Champion, as petitioner’s agent,

agreed to the amounts of petitioner’s liabilities for taxes,

penalties, and interest for the years 1996 through 1998, as well

as the immediate assessment and collection of those liabilities.

See Hudock v. Commissioner, 65 T.C. 351, 363 (1975) (Form 4549 is

evidence of the taxpayer’s consent to the immediate assessment

and collection of the proposed deficiency).    By signing the Forms

4549, Mr. Champion explicitly waived petitioner’s right to

contest in the Tax Court petitioner’s tax liabilities for the

years covered in the Forms 4549.

     When a taxpayer executes a valid Form 2848, he is normally

bound by the acts performed by his agent pursuant to the power of

attorney.    Willoughby v. Commissioner, T.C. Memo. 1994-398; Lyon

v. Commissioner, T.C. Memo. 1994-351; Lefebvre v. Commissioner,

T.C. Memo. 1984-202 (1984), affd. 758 F.2d 1340 (9th Cir. 1985).

Petitioner does not dispute that he granted Mr. Champion

authority to represent him with respect to the years at issue.

Moreover, petitioner does not claim that the Form 2848 was

invalid.    See Lavine v. Commissioner, T.C. Memo. 1995-270.

     Even if Mr. Champion executed the waivers without seeking

petitioner’s consent, petitioner is bound by Mr. Champion’s acts

insofar as respondent is concerned.     Respondent had no reason to

know that Mr. Champion’s conduct may have been improper.     This is

so even if Mr. Champion’s actions did not benefit petitioner.
                              - 15 -

See, e.g., Willoughby v. Commissioner, supra; 1 Restatement,

Agency 2d, secs. 112 comment C, 165 (1958).    Accordingly, the

waivers are valid, and the assessment of the tax was proper.

      Under the circumstances, petitioner is deemed to have had a

prior opportunity to dispute his liabilities for 1995, 1996, and

1997 within the meaning of section 6330(c)(2)(B).    Consequently,

petitioner is not entitled to challenge the existence or amount

of his 1995, 1996, and 1997 tax liabilities during the collection

review process.   See Zapara v. Commissioner, 124 T.C. at 228;

Aguirre v. Commissioner, 117 T.C. at 327.

     To reflect the foregoing,


                                      An order granting respondent’s

                                 motion for partial summary judgment

                                 will be issued.
