                                T.C. Memo. 2012-145



                          UNITED STATES TAX COURT



                     SEAN DEVLIN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 13580-11L.                          Filed May 21, 2012.



      Sean Devlin, pro se.

      S. Mark Barnes and Inga C. Plucinski, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


      VASQUEZ, Judge: Pursuant to sections 6320(c) and 6330(d)(1),1 petitioner

seeks review of respondent’s determination to proceed with collection of his unpaid


      1
         Unless otherwise indicated, all section references are to the Internal
Revenue Code (Code), and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                          -2-

Federal income tax for 1999, 2000, 2001, 2002, and 2004 (years at issue). The

issues for decision are: (1) whether petitioner may challenge his underlying tax

liabilities and, if so, whether any adjustment is appropriate; (2) whether respondent

abused his discretion in sustaining the filing of the notice of Federal tax lien (NFTL)

against petitioner for the years at issue; and (3) whether petitioner is liable for a

penalty under section 6673(a).

                                 FINDINGS OF FACT

      Petitioner did not file his Federal income tax returns for 1999, 2000, 2001,

2002, and 2004. Consequently, the Internal Revenue Service (IRS) prepared a

substitute for return for each year. On December 6, 2004, respondent sent petitioner

a notice of deficiency for 1999 via certified mail to 3 Huskel Lane, Smith Town,

New York.2 The notice was returned to respondent as undeliverable. Subsequently,

in 2005 and 2007, respondent sent petitioner notices of deficiency for 2000, 2001,

2002, and 2004 via certified mail to 6110 Plumas Street, Reno, Nevada (6110

Plumas). The notices of deficiency for 2000, 2001, 2002, and 2004 were not

returned to respondent.3 Petitioner did not file a petition with the Court contesting

      2
          Petitioner’s parents reside at 3 Huskel Lane.
      3
        As proof that the IRS mailed the notices of deficiency respondent
introduced at trial a Substitute USPS Form 3877 (Form 3877) for each year at issue.
                                                                      (continued...)
                                            -3-

the deficiency determinations, and the IRS assessed petitioner’s tax liabilities for all

years.

         Petitioner did not pay the assessed tax liabilities, and on June 1, 2010, the

IRS sent petitioner Letter 3172, a Notice of Federal Tax Lien Filing and Your Right

to a Hearing Under IRC 6320.4 Petitioner timely requested a face-to-face collection

due process hearing (CDP hearing) to discuss, inter alia, IRS procedural violations,

deceptive and misleading representations by the IRS, the misapplication of the Code

to him because of his status as a nontaxpayer, and the lack of any evidence that he is

in default.

         On December 14, 2010, Settlement Officer Cook of the IRS Office of

Appeals (Appeals) sent petitioner a letter explaining that he had raised only

frivolous arguments in his CDP hearing request and would not be allowed a face-to-

face conference unless he withdrew, in writing, his frivolous arguments. On January

6, 2011, petitioner sent Officer Cook a letter stating that he was withdrawing any

perceived frivolous arguments, but in the same letter he continued to raise the same

arguments that he had previously made. On March 10, 2011, Officer Cook sent

         3
       (...continued)
Form 3877 is a mailing list form of the Postal Service that is prepared and used by
the IRS to identify items mailed by certified or registered mail.
         4
             Letter 3172 was mailed to petitioner’s current address.
                                           -4-

petitioner a letter scheduling a telephone conference for March 22, 2011. The letter

instructed petitioner to submit a Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals, signed tax returns for tax years 1999-

2009, and proof of estimated tax payments. Officer Cook again advised petitioner

that if he wanted a face-to-face hearing he would need to withdraw his frivolous

arguments in writing.

      On March 22, 2011, Officer Cook held a telephone conference with petitioner

during which petitioner disputed the underlying tax liabilities for all five years at

issue. Officer Cook instructed petitioner to provide the previously requested

documentation for Officer Cook’s consideration by April 6, 2011. Petitioner,

instead of providing the requested documentation, sent Officer Cook 50 pages filled

with arguments that this Court has long considered frivolous.

      On May 11, 2011, respondent issued to petitioner a Notice of Determination

Concerning Collection Action(s) Under Section 6320 (notice of determination)

sustaining the NFTL. On June 8, 2011, petitioner timely filed a petition5 with the

Court in which he argued: “There is no demonstrable statutory liability in the

Petitioner’s name for the payment of any federal personal income tax, additions to

tax, interest, or penalties within the disputed tax years under the written provisions

      5
          Petitioner resided in Nevada at the time he filed his petition.
                                          -5-

of [the Code].” At trial respondent orally moved for the Court to impose a penalty

on petitioner under section 6673.

                                        OPINION

      Section 6321 imposes a lien in favor of the United States on all property and

rights to property of a taxpayer liable for taxes when a demand for payment of the

taxes has been made and the taxpayer fails to pay those taxes. Section 6320(a)

provides that the Secretary shall furnish the taxpayer with an NFTL within five

business days after the notice of lien is filed. Section 6320 further provides that the

taxpayer may request an Appeals hearing within 30 days beginning on the day after

the five-day period described above. Sec. 6320(a)(3)(B), (b)(1). Section 6320(c)

provides that the Appeals hearing generally shall be conducted consistent with the

procedures set forth in section 6330.

      Section 6330(c) provides for review with respect to collection issues such as

spousal defenses, the appropriateness of the Commissioner’s proposed collection

actions, and the possibility of collection alternatives. Sec. 6330(c)(2)(A). The

taxpayer may also challenge the amount of the underlying tax liability if a statutory

notice of deficiency was not received or the taxpayer did not otherwise have an

opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).
                                          -6-

      Pursuant to section 6330(d)(1), within 30 days of the issuance of a notice of

determination, the taxpayer may appeal the determination to this Court. 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 (2000). Where the validity of the underlying tax

liability is not properly at issue, however, the Court will review the Commissioner’s

determination for abuse of discretion. Sego v. Commissioner, 114 T.C. at 610;

Goza v. Commissioner, 114 T.C. at 181.

I.    Challenging the Underlying Tax Liabilities

      Section 6330(c)(2)(B) precludes a taxpayer from challenging the existence or

amount of the underlying liability unless the taxpayer did not receive a notice of

deficiency for that liability or did not otherwise have an opportunity to dispute the

liability. Under section 6330(c)(2)(B), the receipt of a notice of deficiency, not its

mailing, is the relevant event.6 A properly completed Form 3877 reflecting the

timely mailing of a notice of deficiency to a taxpayer at the taxpayer’s last known


      6
         For the purpose of determining a deficiency in tax, the Commissioner is
authorized to send a notice of deficiency to the taxpayer. Sec. 6212(a). For that
purpose, mailing a notice of deficiency to the taxpayer’s last known address is
sufficient regardless of receipt or nonreceipt. Sec. 6212(b); Pietanza v.
Commissioner, 92 T.C. 729, 735-736 (1989), aff’d without published opinion, 935
F.2d 1282 (3d Cir. 1991).
                                         -7-

address by certified mail, absent evidence to the contrary, establishes that the notice

was properly mailed to the taxpayer. United States v. Zolla, 724 F.2d 808, 810 (9th

Cir. 1984); Coleman v. Commissioner, 94 T.C. 82, 90-91 (1990). Furthermore,

compliance with Form 3877 mailing procedures raises a presumption of official

regularity in favor of the Commissioner. See Coleman v. Commissioner, 94 T.C. at

91. If the presumption is raised and the taxpayer does not rebut the presumption,

the court may find that the taxpayer received the notices of deficiency, thus

precluding challenges to the underlying liability under section 6330(c)(2)(B). See,

e.g., Sego v. Commissioner, 114 T.C. at 611; Clark v. Commissioner, T.C. Memo.

2008-155.

      Respondent concedes that petitioner did not receive a copy of the notice of

deficiency for 1999 and that his 1999 underlying tax liability is properly at issue.

As for 2000, 2001, 2002, and 2004, respondent contends that the Forms 3877 are

proof that the notices of deficiency were properly mailed to petitioner at 6110

Plumas and therefore the Court may find that he received the notices of deficiency

and may not challenge the underlying tax liabilities for those years. Petitioner

argues that he did not receive the notices of deficiency and testified that he did not

live at 6110 Plumas when respondent mailed the notices of deficiency.
                                         -8-

      We find nothing in the record that connects petitioner with 6110 Plumas. As

late as December 6, 2004, the IRS was mailing correspondence to petitioner at 3

Huskel Lane, Smith Town, New York. Although it is possible that after that date

and before February 2, 2005, the date the IRS mailed the notices of deficiency for

2000 and 2002, the IRS received an information return or other document showing

petitioner’s address to be 6110 Plumas, there is no evidence of this.7 Additionally,

nowhere in Settlement Officer Cook’s declaration, respondent’s pretrial

memorandum, or respondent’s posttrial brief is there anything to show that 6110

Plumas was petitioner’s correct address during 2005 and 2007. Accordingly, the

presumption of proper mailing is not raised, and there is insufficient evidence to

show that petitioner received the notices of deficiency for 2000, 2001, 2002, and




      7
         The IRS used information returns to prepare petitioner’s substitutes for
returns. If the record contained a copy of one of the Forms W-2, Wage and Tax
Statement, or Forms 1099-MISC, Miscellaneous Income, showing his address to be
6110 Plumas, this likely would be sufficient to connect petitioner with 6110 Plumas
and allow the presumption of proper mailing to attach.
                                          -9-

2004.8 We therefore allow petitioner to challenge his underlying tax liabilities for

the years at issue.

      Our de novo review of respondent’s determinations with respect to

petitioner’s underlying tax liabilities permits us to consider and resolve the issue.

See Priestly v. Commissioner, T.C. Memo. 2003-267, aff’d, 125 Fed. Appx. 201

(9th Cir. 2005). Remand to Appeals for consideration of petitioner’s tax liabilities

is not necessary, nor would it be productive. See Lunsford v. Commissioner, 117

T.C. 183, 189 (2001); Sapp v. Commissioner, T.C. Memo. 2006-104; Priestly v.

Commissioner, T.C. Memo. 2003-267. Further, a remand to Appeals would, more




      8
          In a number of recent cases the Court has found a taxpayer to have received
a notice of deficiency despite a claim to the contrary. In these cases, however, the
taxpayer either did not argue that the notice of deficiency was mailed to an improper
address or did not unequivocally deny under oath receiving a notice of deficiency, or
the evidence showed that the notice of deficiency was mailed to the correct address.
See, e.g., Diamond v. Commissioner, T.C. Memo. 2012-90 (properly completed
Form 3877 showing taxpayer’s correct address raised the presumption of proper
mailing and allowed the Court to find that the taxpayer received the notice of
deficiency after he refused to deny receipt under oath); Kamps v. Commissioner,
T.C. Memo. 2011-287 (taxpayer argued only that he did not receive the notice of
deficiency, not that it was mailed to the improper address); Clark v. Commissioner,
T.C. Memo. 2008-155 (taxpayer presented no evidence that he did not receive the
notices of deficiency and did not contest that the notices of deficiency were mailed
to his correct address); Bailey v. Commissioner, T.C. Memo. 2005-241
(“[p]etitioner does not dispute that the notice of deficiency was mailed to his last
known address, and he does not unequivocally deny that he received it”). None of
these scenarios is present in the matter before us.
                                              - 10 -

likely than not, needlessly delay the collection of petitioner’s tax plus related

additions to tax and interest, which, if the proper amounts have been assessed, are

already long overdue. See Priestly v. Commissioner, T.C. Memo. 2003-267.

         The Commissioner’s determinations in a notice of deficiency are presumed

correct, and taxpayers bear the burden of proving that the Commissioner’s

determinations are incorrect.9 See Rule 142(a); Welch v. Helvering, 290 U.S. 111,

115 (1933). Petitioner advanced only frivolous arguments throughout the CDP

hearing and has continued to advance his groundless arguments in his petition, trial

memorandum, and testimony.10 Any contention raised that challenges the

“existence” of any statute imposing or requiring him to pay income tax warrants no

further comment. See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984)

(“We perceive no need to refute these arguments with somber reasoning and

copious citation of precedent; to do so might suggest that these arguments have

some colorable merit.”). Petitioner’s challenge lacks any substance, and the

underlying tax liabilities stand as assessed by respondent.



         9
         Petitioner has neither claimed nor shown that he satisfied the requirements
of sec. 7491(a) to shift the burden of proof to respondent with regard to any factual
issue.
         10
              Although the Court ordered petitioner to file a posttrial brief, he failed to
do so.
                                         - 11 -

II.    Collection Action

       Having established under a de novo review standard that petitioner’s tax

liabilities were as determined by respondent, we now review respondent’s

determination to proceed with collection under an abuse of discretion standard.

Appeals abuses its discretion if it acts “arbitrarily, capriciously, or without sound

basis in fact or law.” Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

       Petitioner has not advanced any argument or introduced any evidence that

would allow us to conclude that the determination to sustain the NFTL was

arbitrary, capricious, or without sound basis in fact or law. Petitioner did not submit

a Form 433-A or any other financial information during the section 6330 hearing,

nor did he offer any reasonable collection alternative. Appeals determined that the

requirements of applicable law and administrative procedure were met and

concluded that sustaining the NFTL appropriately balanced the need for efficient

collection of taxes with petitioner’s concerns regarding the intrusiveness of the lien

action. Accordingly, we hold that Appeals did not abuse its discretion in sustaining

the NFTL.

III.   Section 6673 Penalty

       Respondent orally moved the Court to impose a penalty on petitioner under

section 6673(a)(1). Section 6673(a)(1) authorizes the Court to require a taxpayer to
                                         - 12 -

pay to the United States a penalty not to exceed $25,000 if the taxpayer took

frivolous or groundless positions in the proceedings or instituted the proceedings

primarily for delay. We choose not to impose a penalty on petitioner but take this

opportunity to warn him that the Court may impose a penalty pursuant to section

6673(a)(1) if he returns to the Court and proceeds in a similar fashion in the future.

See Pierson v. Commissioner, 115 T.C. 576 (2000).

      In reaching our holdings, we have considered all arguments made, and to the

extent not mentioned, we consider them irrelevant, moot, or without merit.

      To reflect the foregoing,


                                                      An appropriate order and

                                        decision will be entered.
