                  T.C. Memo. 2002-312



                UNITED STATES TAX COURT



             RAYMOND WRIGHT, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 6240-01L.             Filed December 26, 2002.


     P failed to file returns for 1987 and 1989. P
received a notice of deficiency for 1987 and 1989. P
petitioned the Court. The Court ruled for R, and P
appealed. The Court of Appeals affirmed our decision.

     R sent a Notice of Intent to Levy and Notice of
Your Right to a Hearing to P for 1987 and 1989. P
requested a sec. 6330, I.R.C., hearing. R held a sec.
6330, I.R.C., hearing with P. R determined that R
could proceed with the proposed levy action.

     Held: P raised the issue of interest abatement at
the sec. 6330, I.R.C., hearing. Therefore we have
jurisdiction over this issue. Katz v. Commissioner,
115 T.C. 329 (2000).

     Held, further, P is not entitled to interest
abatement for amounts greater than those abated or
conceded by R because P failed to file returns for 1987
and 1989 and failed to pay in full the amount of tax he
owed for those years.
                                 - 2 -


          Held, further, R’s determination to proceed with
     collection was not an abuse of discretion.


     Raymond Wright, pro se.

     Marie E. Small, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:     Pursuant to section 6330(d),1 petitioner

seeks review of respondent’s determination to proceed with

collection of his 1987 and 1989 tax liabilities.

                           FINDINGS OF FACT

     None of the facts have been stipulated.     At the time he

filed the petition, petitioner resided in New York, New York.

Deficiency Proceedings

     Petitioner did not file returns for 1987 and 1989.     On

October 29, 1993, respondent filed substitute returns for

petitioner’s 1987 and 1989 tax years.

     On September 27, 1995, respondent sent petitioner a notice

of deficiency for 1987 and 1989 setting forth deficiencies of

$3,777 and $6,500, respectively, and additions to tax pursuant to

section 6651(a)(1) of $358 and $1,556, respectively.

     On January 2, 1996, petitioner filed a petition with the


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                - 3 -

Court in which he disputed that he was liable for self-employment

taxes on income he received in 1987 and 1989 and for additions to

tax pursuant to section 6651(a)(1) for 1987 and 1989.

     On June 24, 1998, the Court issued an opinion and entered a

decision in favor of respondent for the amounts set forth in the

notice of deficiency.2

     On November 20, 1998, respondent assessed $3,777 of income

tax, a $358 addition to tax pursuant to section 6651(a)(1), and

$6,116.44 of statutory interest for 1987.    Respondent also

assessed $6,500 of income tax, a $1,556 addition to tax pursuant

to section 6651(a)(1), and $6,542.53 of statutory interest for

1989.

     On May 4, 1999, the U.S. Court of Appeals for the Second

Circuit affirmed the Court’s decision.

Payments

     On June 21, 1994, petitioner mailed respondent a payment of

$6,681.22.    On June 23, 1994, respondent applied the $6,681.22

payment to petitioner’s unassessed liabilities for 1987 and

1989--$1,431 to 1987 and $5,250.22 to 1989.

1993 Refund

     On May 1, 1995, respondent sent petitioner a refund check of



     2
        In our Memorandum Opinion, we found that petitioner did
not file returns for 1987 and 1989. Wright v. Commissioner, T.C.
Memo. 1998-224, affd. without published opinion 173 F.3d 848 (2d
Cir. 1999).
                               - 4 -

$1,046.90 for his 1993 tax year.    The check represented

petitioner’s refund for 1993 of $971.78 and $75.12 in interest.

Section 6330 Proceedings

     On May 10, 2000, respondent sent petitioner a Final Notice,

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

(levy notice) with respect to petitioner’s 1987 and 1989 taxable

years.

     On June 8, 2000, petitioner filed a Form 12153, Request for

a Collection Due Process Hearing for 1987 and 1989 (hearing

request).   Petitioner attached a two-page letter to the hearing

request explaining his disagreement with the levy notice.    In the

two-page letter, petitioner stated, among other things:     (1) That

the “IRS inordinately delayed billing me for years, thereby

drastically increasing the amount owed”, (2) the “IRS sent what

it admitted to be a wrong bill” and “then sent an amended bill

which was itself apparently wrong”, (3) for 10 years “the IRS

failed to respond to my timely request for an installment plan”,

(4) “I experienced a delay of well over 30 days and often months

and years to resolve specific issues”, (5) “the IRS failed to

respond to my request for information about the amount owed,

about installment payment procedures, about abatement”, and (6)

“the IRS made numerous errors and delays”.    Petitioner also

requested an offer-in-compromise.

     On December 20, 2000, Appeals Officer Phyllis Cayenne held a
                               - 5 -

section 6330 hearing with petitioner.   At the hearing, Appeals

Officer Cayenne explained the collection alternatives available

to petitioner.   Petitioner indicated that he wanted respondent to

consider an offer-in-compromise.   Appeals Officer Cayenne gave

petitioner the appropriate forms to file an offer-in-compromise.

Petitioner did not submit an offer-in-compromise.

     Before issuing the notice of determination, Appeals Officer

Cayenne reviewed petitioner’s transcript of account for 1993 and

determined that respondent had sent petitioner his refund for

that year.   After the section 6330 hearing, Appeals Officer

Cayenne sent petitioner transcripts of his account for 1987 and

1989.   Appeals Officer Cayenne also submitted a request for

petitioner to be given credit for withholding for 1987 and 1989

that had not been credited to him.

     On April 11, 2001, respondent sent petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination) for 1987 and 1989

concluding that respondent could proceed with the proposed levy

action.   The notice of determination stated that the levy should

reflect allowance of withholding credits of $2,346 for 1987 and

$278 for 1989, and that forms had been forwarded to effect this

change.

Withholding Credits and Abatement of Interest

     On May 7, 2001, respondent mailed petitioner two notices--
                                 - 6 -

one reflecting changes to his account for 1987 and the other

reflecting changes to his account for 1989.   The notice for 1987

credited petitioner’s account $2,346 for tax withheld and abated

$3,260.71 in interest.   The notice for 1989 credited petitioner’s

account $278 for tax withheld.

Unpaid Balance

     As of March 11, 2002, petitioner had unpaid income tax

liabilities, including penalties and interest, for 1987 and 1989

of $3,213.73 and $9,070.31, respectively.

                               OPINION

     Pursuant to section 6330(c)(2)(A), a taxpayer may raise at

the section 6330 hearing any relevant issue with regard to the

Commissioner’s collection activities, including spousal defenses,

challenges to the appropriateness of the Commissioner’s intended

collection action, and alternative means of collection.     Sego v.

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114

T.C. 176, 180 (2000).    If a taxpayer received a statutory notice

of deficiency for the years in issue or had the opportunity to

litigate the underlying tax liability, the taxpayer is precluded

from challenging the existence or amount of the underlying tax

liability.   Sec. 6330(c)(2)(B); Sego v. Commissioner, supra at

610-611; Goza v. Commissioner, supra at 182-183.    Additionally, a

taxpayer is precluded from relitigating issues raised and

considered in any previous Appeals hearing or any other
                                - 7 -

administrative or judicial proceeding in which the taxpayer

meaningfully participated.   Sec. 6330(c)(4); Katz v.

Commissioner, 115 T.C. 329, 339 (2000).

     Petitioner received a notice of deficiency for 1987 and

1989, and he litigated the underlying tax liability in this

Court.   Wright v. Commissioner, T.C. Memo. 1998-224, affd.

without published opinion 173 F.3d 848 (2d Cir. 1999).

Accordingly, petitioner cannot contest the underlying tax

liability for 1987 and 1989.3   Sec. 6330(c)(2)(B); Katz v.

Commissioner, supra at 339-340; Sego v. Commissioner, supra at

610-611; Goza v. Commissioner, supra at 182-183.     Where the

validity of the underlying tax liability is not properly in

issue, we review the Commissioner’s determination for an abuse of

discretion.   Sego v. Commissioner, supra at 610.

Did Petitioner Raise Interest Abatement at the Section 6330
Hearing?

     The parties disagree on whether petitioner raised the issue

of interest abatement at the section 6330 hearing.    Petitioner

argues that he raised the issue of interest abatement in his

request for a hearing and at the section 6330 hearing.

Respondent contends that he did not.

     If, as part of a section 6330 proceeding, a taxpayer makes a



     3
        The doctrine of res judicata also precludes relitigation
of the issues decided in petitioner’s underlying tax case. Katz
v. Commissioner, 115 T.C. 329, 240, n.16 (2000).
                                 - 8 -

request for abatement of interest, we have jurisdiction over the

request for abatement of interest that is the subject of the

Commissioner’s collection activities.     Katz v. Commissioner,

supra at 340-341.    Generally, the Court considers only arguments,

issues, and other matters that were raised by the taxpayer at the

section 6330 hearing or otherwise brought to the attention of the

Appeals Office.     Magana v. Commissioner, 118 T.C. 488, 493

(2002); Miller v. Commissioner, 115 T.C. 582, 589 n.2 (2000);

Sego v. Commissioner, supra at 612.

     Petitioner’s hearing request is peppered with references to

Internal Revenue Service (IRS) errors and delays, including the

IRS’s failure to respond to petitioner, and it specifically

mentions abatement.    Petitioner’s testimony made it clear to the

Court that he raised the issue of interest abatement any time he

was in contact with respondent.4

     Furthermore, Appeals Officer Cayenne testified that she

recalled petitioner’s mentioning at the section 6330 hearing an

18-month delay, various other errors and delays by respondent,

and delays by the Appeals officer assigned to petitioner’s




     4
        We also note that in the underlying tax case petitioner
raised the issue of interest abatement as to his 1987 and 1989
tax years, but the Court concluded that petitioner’s request for
abatement of interest was premature--at that time there was
neither an assessment of such interest nor a final determination
by respondent not to abate interest. Wright v. Commissioner,
supra.
                               - 9 -

deficiency case.   She also stated that it was possible that

petitioner raised the issue of interest abatement at the section

6330 hearing.

     We conclude that petitioner raised the issue of interest

abatement at the section 6330 hearing.

     B.   Is Petitioner Entitled to Interest Abatement?

     Section 6404(e)(1) provides, in pertinent part, that the

Commissioner may abate the assessment of interest on any

deficiency if the interest is attributable to any error or delay

by an officer or employee of the IRS (acting in his official

capacity) in performing a ministerial act.5    Woodral v.

Commissioner, 112 T.C. 19, 24-25 (1999).   A ministerial act means

a procedural or mechanical act that does not involve the exercise

of judgment.    Lee v. Commissioner, 113 T.C. 145 (1999); Donovan

v. Commissioner, T.C. Memo. 2000-220.

     This Court may order abatement where the Commissioner abuses

his discretion by failing to abate interest.   Sec. 6404(h)(1).

In order to prevail, a taxpayer must prove that the Commissioner




     5
        In 1996, sec. 6404(e) was amended under sec. 301 of the
Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1452, 1457
(1996), to permit the Commissioner to abate interest with respect
to an “unreasonable” error or delay resulting from “managerial”
and ministerial acts. The new provision applies to interest
accruing with respect to deficiencies or payments for tax years
beginning after July 30, 1996; therefore, it is not applicable to
the case at bar. Woodral v. Commissioner, 112 T.C. 19, 25 n.8
(1999).
                              - 10 -

exercised this discretion arbitrarily, capriciously, or without

sound basis in fact or law.   Woodral v. Commissioner, supra at

23.

      Congress intended for the Commissioner to abate interest

where the failure to abate interest would be perceived as grossly

unfair.   Lee v. Commissioner, supra at 149.   Congress, however,

did not intend for abatement to be used routinely to avoid the

payment of interest.   Id.

      An error or delay is taken into account only (1) if no

significant aspect of the error or delay can be attributed to the

taxpayer and (2) after the IRS has contacted the taxpayer in

writing with respect to the deficiency or payment.   Sec.

6404(e)(1); Lee v. Commissioner, supra at 149.

      Petitioner’s complaint essentially is that because

respondent failed to restore his withholding credits totaling

$2,624 until 2001, if he had paid his tax liability for 1987 and

1989 before 2001 he would have paid the wrong amount.

Petitioner’s argument has no merit.

      Even though respondent did not give petitioner credit for

his withholdings until 2001, this delay did not prevent

petitioner from filing tax returns for 1987 and 1989.      In fact,

respondent mailed petitioner seven taxpayer delinquency notices

informing him that he had not filed his 1987 or 1989 tax return.

      If petitioner had filed returns for 1987 and 1989,
                              - 11 -

respondent would then have been able to assess the taxes

petitioner owed.   Sec. 6201(a)(1).    Petitioner did not file

returns for those years; therefore, respondent was forced to

issue a notice of deficiency for 1987 and 1989.    Secs. 6211-6213.

The conference committee report for the Tax Reform Act of 1986,

Pub. L. 99-514, 100 Stat. 2085, states in pertinent part as

follows:   “if a taxpayer files a return but does not pay the

taxes due, this provision would not permit abatement of this

interest regardless of how long the IRS took to contact the

taxpayer and request payment.”     Downing v. Commissioner, 118 T.C.

22, 30-31 (2002); H. Conf. Rept. 99-841 (Vol. II), at II-811

(1986), 1986-3 C.B. (Vol. 4) 1, 811.     It follows that if a

taxpayer fails to file a return and fails to pay the tax he owes,

section 6404(e) does not apply to the interest that accrues on

the unpaid tax before the Commissioner contacts the taxpayer in

writing with respect to the tax.

     Respondent could not send petitioner a bill until after

respondent assessed the taxes for 1987 and 1989.     Secs. 6213,

6303(a).   In this case, petitioner’s returns for 1987 and 1989

were due on April 15, 1988, and April 16, 1990, respectively.

Secs. 6072(a), 7503.   Petitioner failed to file these returns.

     On September 27, 1995, pursuant to sections 6213(a) and
                                - 12 -

6501(c)(3),6 respondent issued a notice of deficiency to

petitioner.     Petitioner then chose to petition the Court

regarding his underlying tax liabilities and to appeal the

Court’s decision.

         On September 18, 1998, petitioner filed a notice of appeal

in the underlying tax case.     Petitioner, however, did not post a

bond to stay assessment and collection as required by section

7485.     Therefore, the earliest respondent could have assessed

petitioner’s taxes for 1987 and 1989 was on September 19, 1998--

the day after the notice of appeal was filed.7    Secs. 6213(a),

7481(a), 7483, 7485(a); Barnes Theater Ticket Serv., Inc. v.

Commissioner, 50 T.C. 28, 29 (1968).

     The record shows that on November 20, 1998, respondent

assessed the taxes, additions to tax, and interest for 1987 and

1989.     That same day, respondent issued to petitioner a statutory

notice of balance due.     On February 8, 1999, respondent issued to




     6
        Pursuant to sec. 6501(c)(3), in the case of failure to
file a return, the tax may be assessed, or a proceeding in court
for the collection of such tax may be begun without assessment,
at any time.
     7
        If a taxpayer files a notice of appeal from a Tax Court
decision, assessment and collection of the deficiency are not
stayed unless the taxpayer posts a bond secured by the guaranty
of an approved surety company or furnishes other satisfactory
collateral. Sec. 7485(a); Barnes Theater Ticket Serv., Inc. v.
Commissioner, 50 T.C. 28, 29 (1968).
                                - 13 -

petitioner a notice of balance due, and on March 15, 1999,

respondent issued to petitioner a statutory notice of intent to

levy.

     Any “delay” in sending petitioner a final bill for his 1987

and 1989 tax years was attributable to petitioner’s failure to

file tax returns for those years.     Additionally, the mere passage

of time in the litigation phase of a tax dispute does not

establish error or delay by the Commissioner in performing a

ministerial act.     Lee v. Commissioner, 113 T.C. at 150.

     While at one point petitioner’s account may not have been

credited with his $6,681.22 payment or his withholding credits

totaling $2,624, as of the date of trial, his account was

credited with those amounts.8    Furthermore, the evidence

established that petitioner’s 1993 refund was mailed to him.

Therefore, petitioner’s 1993 refund could not be applied against

his outstanding liabilities for 1987 and 1989, as he argues.

     Additionally, on May 7, 2001, respondent abated $3,260 in

interest associated with 1987 for the $2,346 credit for tax

withheld.     Furthermore, respondent concedes that the interest

associated with the $278 withholding credit for 1989 should be

abated.9


     8
        Petitioner admits that he has received credit for his
withholding for 1987 and 1989.
     9
           As of the time of trial, respondent had not abated this
                                                      (continued...)
                              - 14 -

     The evidence does not establish that petitioner is entitled

to abatement of interest in amounts greater than those abated or

conceded by respondent.   We conclude that respondent did not

abuse his discretion in not abating interest for 1987 or 1989 for

any amounts greater than those he abated or conceded.

     C.   Remaining Section 6330 Issues

     Petitioner stated that he wanted to make an offer-in-

compromise at the section 6330 hearing; however, petitioner did

not follow through.   Appeals Officer Cayenne gave petitioner the

appropriate forms to file an offer-in-compromise, but petitioner

did not submit an offer-in-compromise.

     Petitioner has failed to raise a spousal defense, make a

valid challenge to the appropriateness of respondent’s intended

collection action, or offer alternative means of collection.

These issues are now deemed conceded.    Rule 331(b)(4).

     Accordingly, we conclude that respondent’s determination to

proceed with collection with respect to petitioner’s 1987 and

1989 tax years was not an abuse of discretion.

     No motions remain outstanding.    In reaching all of our



     9
      (...continued)
interest. In his reply brief, respondent proffered that as of
the date of the filing of his reply brief, respondent had abated
the interest associated with petitioner’s withholding credit for
1989. The record does not contain evidence that the
aforementioned interest has been abated; therefore, we will
incorporate respondent’s concession of this issue into our
decision.
                             - 15 -

holdings herein, we have considered all arguments made by the

parties, and to the extent not mentioned above, we conclude they

are irrelevant or without merit.

     To reflect the foregoing,

                                        An appropriate decision

                                   will be entered.
