                        T.C. Memo. 2008-240



                       UNITED STATES TAX COURT



          NACOLEON JAMES HILLSMAN, JR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11617-07L.             Filed October 28, 2008.



     Nacoleon James Hillsman, Jr., pro se.

     Gorica B. Djuraskovic, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    This case is before the Court on respon-

dent’s motion for summary judgment as supplemented.1   We shall



     1
      Respondent filed a declaration of Appeals Team Manager
Debra Dufek in support of respondent’s motion for summary judg-
ment (respondent’s declaration). We shall refer collectively to
respondent’s motion for summary judgment as supplemented and
respondent’s declaration as respondent’s motion.
                                - 2 -

grant respondent’s motion.

                             Background

     The record establishes and/or the parties do not dispute the

following.

     Petitioner’s address shown in the petition in this case was

in Chicago, Illinois.

     On December 30, 2002, respondent prepared a substitute for

return for petitioner’s taxable year 1999.

     On September 19, 2005, petitioner filed a Federal income tax

(tax) return for his taxable year 1999 (1999 return).   In that

return, petitioner showed total tax of $37,819 and tax due of

$29,052.   When petitioner filed his 1999 return, he did not pay

the tax due shown in that return.

     On February 6, 2006, respondent assessed the total tax shown

in petitioner’s 1999 return, additions to tax under sections

6651(a)(1)2 and 6654(a) of $6,943 and $1,280, respectively, and

interest as provided by law of $14,051.07 for petitioner’s

taxable year 1999.3   (We shall refer to any unpaid assessed

amounts with respect to petitioner’s taxable year 1999, as well




     2
      All section references are to the Internal Revenue Code in
effect at all relevant times. All Rule references are to the Tax
Court Rules of Practice and Procedure.
     3
      On Apr. 15, 2006, respondent credited a refund of $1,402
due to petitioner for his taxable year 2005 against the liability
for petitioner’s taxable year 1999.
                               - 3 -

as interest as provided by law accrued after February 6, 2006, as

petitioner’s unpaid 1999 liability.)

     On February 6, 2006, respondent issued to petitioner a

notice of balance due with respect to petitioner’s unpaid 1999

liability.

     On April 15, 2006, respondent issued to petitioner a final

notice of intent to levy and notice of your right to a hearing

(notice of intent to levy) with respect to petitioner’s unpaid

1999 liability.4

     On June 7, 2006, petitioner submitted to respondent Form

656, Offer in Compromise, in which petitioner offered to compro-

mise petitioner’s unpaid 1999 liability (petitioner’s June 7,

2006 offer-in-compromise).   In that form, petitioner offered to

compromise that liability by paying $11,716 over a 24-month

period.   On July 19, 2006, respondent rejected petitioner’s June

7, 2006 offer-in-compromise.

     On July 20, 2006, respondent filed a notice of Federal tax

lien with respect to petitioner’s unpaid 1999 liability.   On July

21, 2006, respondent issued to petitioner a notice of Federal tax

lien filing and your right to a hearing under IRC 6320 (notice of

tax lien) with respect to petitioner’s unpaid 1999 liability.




     4
      The record does not establish that petitioner requested a
hearing with respondent’s Appeals Office (Appeals Office) with
respect to the notice of intent to levy.
                                - 4 -

     On August 18, 2006, petitioner submitted to respondent Form

13711, Request for Appeal of Offer in Compromise, in which he

appealed respondent’s rejection of petitioner’s June 7, 2006

offer-in-compromise.

     On August 28, 2006, petitioner timely submitted to respon-

dent Form 12153, Request for a Collection Due Process Hearing

(petitioner’s Form 12153), with respect to the notice of tax

lien.   In that form, petitioner indicated his disagreement with

the notice of tax lien and requested a hearing with the Appeals

Office.    In petitioner’s Form 12153, petitioner stated in perti-

nent part:   “My initial Offer in Compromise * * * has been

forwarded to the Office of Appeals.     A final determination

regarding the outcome has not been issued, therefore, the Federal

Tax Lien should be removed until * * * final resolution has been

issued.”

     By letter dated October 19, 2006, a settlement officer with

the Appeals Office who was assigned petitioner’s Form 12153

(settlement officer) acknowledged receipt of that form.     That

letter stated in pertinent part:

     I have scheduled a telephone conference call for you on
     November 21, 2006 at 9:00AM [sic]. This call will be
     your primary opportunity to discuss with me the reasons
     you disagree with the collection action and/or to
     discuss alternatives to the collection action.

     On or about November 30, 2006, the settlement officer sent

petitioner a letter that stated in pertinent part:
                               - 5 -

     I sent you a letter offering you a telephonic Collec-
     tion Due Process conference. The conference was sched-
     uled for 11/21/2006.

     I confirmed your rejected offer has been assigned to
     someone in the New York Appeals Office. I will re-
     schedule your due process hearing on the filed tax lien
     for January 2 * * * [illegible], 2006 [sic] @ 10:00AM
     [sic]. I hope that a decision would have been made on
     the offer before the scheduled hearing date.   * * * At
     this time, the Appeals Office will not recommend a
     release of the tax lien.

     Once I complete your hearing on the tax lien issue we
     will make a determination in the Collection Due Process
     hearing you requested by reviewing the Collection
     administrative file and whatever information you have
     already provided.

     On a date not disclosed by the record, petitioner made a so-

called short-term deferred payment offer5 of $15,000.02 to be

paid over a period of 24 months to compromise petitioner’s unpaid

1999 liability.   On January 24, 2007, respondent accepted that

offer (petitioner’s accepted offer-in-compromise).

     On April 23, 2007, the Appeals Office issued to petitioner a

notice of determination concerning collection action(s) under

section 6320 and/or 6330 (notice of determination) with respect

to petitioner’s taxable year 1999.     That notice stated in perti-

nent part:




     5
      The term “short-term deferred payment offer” refers to an
amount that a taxpayer offers to compromise the taxpayer’s tax
liability and that is to be paid in more than 90 days, but within
24 months, after written notice of acceptance by the Commissioner
of Internal Revenue (Commissioner) of the offered amount. See
Internal Revenue Manual (IRM) pt. 5.8.1.9.4(3) (Sept. 1, 2005).
                              - 6 -

     Summary of Determination
     Based on all the documents that were presented we
     determined the filing of the tax lien was appropriate.
     The Service followed all applicable procedures and
     guidelines in the filing of the Notice of Federal Tax
     Lien.

     Since the filing of the tax lien your offer-in-compro-
     mise was submitted for acceptance. The Offer Unit
     determined the amount offered was adequate. The tax
     lien will be released once you have met the terms of
     the offer-in-compromise.

     The notice of determination included an attachment that

stated in pertinent part:

                   SUMMARY AND RECOMMENDATION

     You requested a hearing from Appeals under the provi-
     sions of Internal Revenue Code (IRC) [section] 6320 on
     the above income tax periods. The Form 12153, Request
     for a Due Process Hearing was timely filed. You were
     provided the opportunity to a telephone, correspondence
     or face-to-face hearing. A telephone hearing was
     conducted.

     The Internal Revenue Service followed all   legal and
     administrative requirements in filing the   tax lien
     against you. It was determined that this    action was
     the most efficient collection method when   the Notice of
     Federal Tax Lien was requested.

     The Offer Unit filed the offer [sic] after rejecting
     your submitted offer-in-compromise. You filed a timely
     appeal with the Offer Unit protesting the rejection.
     The Offer Unit reinvestigated your offer and has recom-
     mended acceptance of your offer. The tax lien will be
     released as soon as the terms of the offer are met.

                        BRIEF BACKGROUND

     A tax lien was filed against you because of your out-
     standing tax liability amount. Your income tax return
     was prepared by the Service because you neglected to
     file the tax return.
                              - 7 -

     You filed an offer-in-compromise to resolve the tax
     liability. Your offer was rejected and you filed a
     timely appeal protesting the rejection. The Settlement
     Officer contacted the Offer Unit on the status of your
     offer. The Settlement Officer was notified your offer
     was recommended and submitted for approval.

                     DISCUSSION AND ANALYSIS

     Verification of legal procedural requirements:

     Appeals has obtained verification from the IRS office
     collecting the tax that the requirements of any appli-
     cable law, regulation or administrative procedure with
     respect to the proposed levy or NFTL filing[6] have been
     met. Computer records indicate that the notice and
     demand, notice of intent to levy and/or notice of
     federal tax lien filing, and notice of a right to a
     Collection Due Process hearing were issued.

     Assessment was properly made per IRC § 6201 for each
     tax and period listed on the CDP notice.

     The notice and demand for payment letter was mailed to
     the taxpayer’s last known [address.]

     IRC [section] 6321 states that a statutory lien arises
     when a taxpayer neglects or refuses to pay a tax lia-
     bility after notice demand [sic] and demand. To be
     valid against third parties except government entities,
     notice of the lien must be filed in the proper place
     for filing per IRC [section] 6323(a) and (f). A review
     of your account indicates that you neglected or refused
     to pay after notice and demand.

     IRC [section] 6323(j) allows the Internal Revenue
     Service to withdraw a Notice of Federal Tax Lien
     (NFTL). A NFTL may be withdrawn if the filing of the
     notice was premature or otherwise not in accordance
     with the Service’s administrative procedures, if the
     taxpayer entered into an [installment] payment agree-


     6
      See supra note 4. Although the notice of determination
refers to “the proposed levy or NFTL filing”, the only collection
action that the Appeals Office sustained in that notice was the
filing of the notice of Federal tax lien with respect to peti-
tioner’s taxable year 1999.
                         - 8 -

ment under Section 6159 to satisfy the tax liability
for which the lien was imposed by means of the agree-
ment unless such agreement provides otherwise, if
withdrawal of such notice will facilitate the collec-
tion of the tax liability, or if with the consent of
the taxpayer or National Taxpayer Advocate, the with-
drawal of the notice would not [sic] be in the best
interest of the taxpayer (as determined by the National
Taxpayer Advocate) and the United States (as determined
by the IRS).

     %    The filing of the NFTL was not premature and
          followed administrative guidelines.

     %    There was no [installment] payment agreement
          [under section 6159] or the agreement pro-
          vided for the filing of the NFTL.

     %    Neither the taxpayer nor Appeals contends
          that withdrawal would facilitate collection.

Withdrawal is considered not to be in the best interest
of the Government.

There was a balance due when the CDP levy notice was
issued or when the NFTL filing was requested.

Prior involvement:

I had no prior involvement with respect to the specific
tax periods either in Appeals or Compliance Collection.

Collection statute verification:

The collection statute has been suspended; the collec-
tion period allowed by statute to collect these taxes
has been suspended by the appropriate computer codes
for the tax periods at issue.

Collection followed all legal procedural requirements
and the actions taken or proposed were appropriate
under the circumstances.
                           - 9 -

               Issues raised by the taxpayer

Collection Alternatives Offered by Taxpayer

Your due process request form indicated your initial
offer was rejected and you appealed the decision. You
believe the filing of the tax lien was premature and
the tax lien should be removed until a final resolution
was made on your offer.

A review of your account revealed you had an outstand-
ing tax liability totaling over $50,000.00. Because of
your outstanding tax liability amount and the rejection
of your offer, the filing of the tax lien was not
premature.

A telephone hearing was conducted with you and you
notified the Settlement Officer that your offer has
been approved. The Settlement Officer contacted the
Offer Unit, Ms. Smeck and verified the acceptance of
your offer.

You   were notified the tax lien would be released once
the   terms of your offer were met. Because you chose
not   to sign the Waiver form this determination letter
was   issued to you.

Challenges to the Existence of Amount of Liability

You did not challenge the liability at your hearing.

You raised no other relevant issues.

Balancing of need for efficient collection with tax-
payer concern that the collection action be no more
intrusive than necessary.

The tax lien will not be withdrawn by Appeals and is
believed to be [the] most appropriate action. IRC
[sections] 6320 and 6330 require that the Appeals
Office consider whether a proposed collection action
balances the need for efficient collection of taxes
with the legitimate concern that any collection be no
more intrusive than necessary. The filing of the tax
lien was determined to be the most effective method of
collection when it was filed.
                              - 10 -

     The tax lien will be released as soon as the terms of
     your offer are met.

     As of April 23, 2007, the date on which the Appeals Office

issued to petitioner the notice of determination, petitioner had

not begun making the 24 monthly payments required under the terms

of petitioner’s accepted offer-in-compromise.   Since May 18,

2007, petitioner has made, and as of August 4, 2008, has contin-

ued to make, those required monthly payments.

                            Discussion

     The Court may grant summary judgment where there is no

genuine issue of material fact and 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).     We

conclude that there are no genuine issues of material fact

regarding the questions raised in respondent’s motion.

     In petitioner’s response to respondent’s motion, petitioner

does not dispute the existence or the amount of petitioner’s

unpaid 1999 liability.   Where, as is the case here, the validity

of the underlying tax liability is not properly placed at issue,

the Court will review the determination of the Commissioner for

abuse of discretion.   See Sego v. Commissioner, 114 T.C. 604, 610

(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

     It is petitioner’s position that the Appeals Office abused

its discretion in determining in the notice of determination to

sustain the Federal tax lien with respect to petitioner’s unpaid
                              - 11 -

1999 liability and the filing of the notice of that lien.7

According to petitioner, the Federal tax lien with respect to

that liability “was pre-maturely placed on my account” and should

be “removed” because he has been making the payments required

under the terms of petitioner’s accepted offer-in-compromise.

     Section 6321 provides:

     SEC. 6321.   LIEN FOR TAXES.

          If any person liable to pay any tax neglects or
     refuses to pay the same after demand, the amount (in-
     cluding any interest, additional amount, addition to
     tax, or assessable penalty, together with any costs
     that may accrue in addition thereto) shall be a lien in
     favor of the United States upon all property and rights
     to property, whether real or personal, belonging to
     such person.

Section 6322 provides that “the lien imposed by section 6321

shall arise at the time the assessment is made and shall continue

until the liability for the amount so assessed * * * is satisfied

or becomes unenforceable by reason of lapse of time.”   As perti-

nent here, section 6325(a)(1) provides that the Secretary of the

Treasury shall issue a certificate of release of a Federal tax

lien no later than 30 days after the day on which the “Secretary

finds that the liability for the amount assessed, together with


     7
      In the notice of determination, the Appeals Office deter-
mined that “The tax lien will be released once * * * [petitioner
has] met the terms of the offer-in-compromise.” The Appeals
Office also determined in the notice of determination that
respondent followed all applicable procedures and guidelines in
filing the notice of Federal tax lien with respect to peti-
tioner’s unpaid 1999 liability and that withdrawal of that notice
is not appropriate at this time.
                              - 12 -

all interest in respect thereof, has been fully satisfied or has

become legally unenforceable”.

     Consistent with section 6325(a)(1), part 5.17.2.7.3(2) of

the IRM (Oct. 31, 2000) provides that “A Certificate of Release

of the federal tax lien is authorized” where, inter alia, the

“amount assessed (plus interest) is paid.”   Part 5.17.2.7.3.2(1)

of the IRM (Oct. 31, 2000) provides in pertinent part:

     (1)   When the Service accepts an offer in compromise,
           * * * the lien against the taxpayer is released,
           provided that all of the following conditions are
           met:

           a.   It is a cash offer, or all installments under
                the terms of the offer, including any accrued
                interest, have been paid.

If a taxpayer makes a cash offer to compromise a tax liability,

the offer amount must be paid within 90 days after the date on

which the Commissioner accepts the offer.    IRM pt. 5.8.1.9.4(3)

(Sept. 1, 2005).

     On February 6, 2006, respondent assessed petitioner’s unpaid

1999 liability and issued to petitioner a notice of balance due

with respect to that liability.   On that date, a Federal tax lien

arose by operation of law in favor of the United States on all

property and rights to property belonging to petitioner with

respect to petitioner’s unpaid 1999 liability.   See sec. 6322.

On a date not disclosed by the record, petitioner made a short-

term deferred payment offer of $15,000.02 to compromise that
                               - 13 -

liability.8   Pursuant to that offer, petitioner agreed to pay

$15,000.02 in 24 monthly payments to commence after written

notice of respondent’s acceptance of that offered amount.     On

January 24, 2007, respondent accepted petitioner’s offer of

$15,000.02 to compromise petitioner’s unpaid 1999 liability.       As

of April 23, 2007, the date on which the Appeals Office issued to

petitioner the notice of determination, petitioner had not made

all of the 24 monthly payments required under the terms of

petitioner’s accepted offer-in-compromise.    We conclude that

respondent was not required to release the Federal tax lien with

respect to petitioner’s unpaid 1999 liability.9    See sec.

6325(a)(1); IRM pt. 5.17.2.7.3(2), 5.17.2.7.3.2(1).

     Nor was respondent required to withdraw the notice of

Federal tax lien filed with respect to petitioner’s unpaid 1999

liability.    Section 6323(a) provides that the “lien imposed by

section 6321 shall not be valid as against any purchaser, holder

of a security interest, mechanic’s lienor, or judgment lien

creditor until notice thereof which meets the requirements of

subsection (f) has been filed by the Secretary.”    When respondent


     8
      Thus, petitioner’s offer was not a cash offer.
     9
      Form 656, Offer in Compromise, indicates that, where the
Commissioner has accepted an offer to compromise a tax liability,
the taxpayer remains liable for that liability until the taxpayer
has satisfied all of the terms of the offer-in-compromise. See
IRM pt. 5.9.4.9.1(1) (Jan. 1, 2006). Petitioner remains liable
for petitioner’s unpaid 1999 liability until he satisfies all of
the terms of petitioner’s accepted offer-in-compromise.
                              - 14 -

assessed petitioner’s unpaid 1999 liability on February 6, 2006,

a Federal tax lien arose by operation of law in favor of the

United States on all property and rights to property belonging to

petitioner with respect to petitioner’s unpaid 1999 liability.

Pursuant to section 6323(a), on July 20, 2006, respondent filed a

notice of Federal tax lien with respect to that liability in

order to protect respondent’s interest in petitioner’s property

against other creditors of petitioner.10

     Section 6323(j)(1) provides in pertinent part:

          (1) In general.--The Secretary may withdraw a
     notice of a lien filed under this section * * * if the
     Secretary determines that--

               (A) the filing of such notice was premature
          or otherwise not in accordance with administrative
          procedures of the Secretary * * *

We conclude that the filing of the notice of Federal tax lien

with respect to petitioner’s unpaid 1999 liability was not

premature.

     We also conclude that the filing of the notice of Federal

tax lien with respect to petitioner’s unpaid 1999 liability was

otherwise “in accordance with administrative procedures of the

Secretary”.   Cf. sec. 6323(j)(1)(A).   Part 5.12.2.3(1) of the IRM


     10
      See also pt. 5.12.2.4.1(1) of the IRM (May 20, 2005)
(generally a notice of Federal tax lien should be filed if “the
aggregate * * * [unpaid balance of assessment] is $5,000 or
more”). As of the date on which respondent filed the notice of
Federal tax lien with respect to petitioner’s unpaid 1999 liabil-
ity, petitioner’s unpaid 1999 liability was substantially in
excess of $5,000.
                              - 15 -

(May 20, 2005) provides that the Commissioner must make reason-

able efforts to contact a taxpayer before filing a notice of

Federal tax lien in order to advise the taxpayer that such a

notice may be filed if the taxpayer does not make full payment of

a tax liability when requested.    Part 5.12.2.3(1) of the IRM

further provides that the issuance of a notice of balance due

under section 6303(a) constitutes reasonable efforts to contact

the taxpayer.   Before filing the notice of Federal tax lien,

respondent issued to petitioner a notice of balance due with

respect to petitioner’s unpaid 1999 liability and thereby made

reasonable efforts to contact him, as required by the Internal

Revenue Manual.

     Based upon our examination of the entire record before us,

we find that the Appeals Office did not abuse its discretion in

making the determinations in the notice of determination with

respect to petitioner’s taxable year 1999.

     We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

     On the record before us, we shall grant respondent’s motion.

     To reflect the foregoing,


                                      An order granting respondent’s

                                 motion and decision for respondent

                                 will be entered.
