                   T.C. Memo. 2007-161



                 UNITED STATES TAX COURT



              LARRY BRUCE, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No.   24303-05L.            Filed June 21, 2007.



     Respondent filed a Notice of Federal Tax Lien against
P for the unpaid balance of his Federal income taxes for
2003. After notice to P and a hearing, R’s settlement
officer issued a notice of determination upholding the
proposed collection action. R moved for summary judgment on
all issues.


     Held: R’s motion for summary judgment will be granted.
R may proceed with collection by lien.



E. Kenneth Wall, for petitioner.

Jeffrey E. Gold, for respondent.
                                 - 2 -

                          MEMORANDUM OPINION


       NIMS, Judge:   Petitioner asks this Court to review a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330 (notice of determination).    This case is before

the Court on respondent’s motion for summary judgment pursuant to

Rule 121.

       Rule 121(a) provides that either party may move for summary

judgment upon all or any part of the legal issues in controversy.

Full or partial summary judgment may be granted only if it is

demonstrated that no genuine issue exists as to any material

fact, and a decision may be entered 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 is no genuine issue as to any

material fact and that a decision may be rendered as a matter of

law.

       Unless otherwise indicated, all section references are to

sections of the Internal Revenue Code in effect for the tax year

at issue, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

                              Background

       At the time he filed the petition in this case, petitioner

resided in Lumberton, North Carolina.
                                 - 3 -

     Petitioner is a long-haul trucker who spends a great deal of

time on the road.   In 2003, he won more than $1 million dollars

from a slot machine in New Jersey.       Petitioner timely filed an

income tax return and reported the winnings, calculating income

tax due of $326,772 offset by withholding of $2,188, but paid

nothing beyond the withheld amount.       Respondent assessed the

reported tax plus additions to tax and interest on May 31, 2004.

     Respondent’s revenue officer attempted negotiations to

secure payment of the assessed balance to no avail.       During a

meeting with the revenue officer on May 10, 2005, petitioner

filled out a Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals, but did not provide

any supporting documentation.    Ignoring requests and suggestions

by respondent’s revenue officer, petitioner took no steps toward

payment of his tax obligation.

     Respondent sent to petitioner a Final Notice - Notice of

Intent to Levy and Notice of Your Right to a Hearing on May 10,

2005.   Respondent filed a Notice of Federal Tax Lien on, or

around, May 12, 2005, and sent petitioner a Notice of Federal Tax

Lien Filing and Your Right to a Hearing Under IRC 6320 on May 19,

2005.   Petitioner mailed requests for Appeals hearings on June

10, 2005.   The mailing was timely with respect to the lien

notice, but not with respect to the levy notice.       Attachments to
                              - 4 -

the hearing requests, prepared by petitioner’s representative,

stated that petitioner was working on an offer-in-compromise

(OIC) to resolve his tax liability.

     By letter dated October 11, 2005, respondent’s settlement

officer informed petitioner that his request for a hearing was

timely and scheduled a telephone conference for November 1, 2005.

In response to petitioner’s mention of an OIC in the hearing

request, the settlement officer also requested a completed Form

433-A, with required attachments, copies of petitioner’s 2004

Federal and State income tax returns, and a Form 656, Offer in

Compromise, with the required processing fee.   The settlement

officer asked that this information be submitted within 14 days

to allow time for review before the telephone conference.

Petitioner never forwarded an OIC, the necessary financial

information, or any other documentation.

     Neither petitioner, nor his representative, ever confirmed

the hearing or otherwise corresponded with the settlement officer

with respect to the scheduled hearing.    Nevertheless, a telephone

conference in which petitioner’s representative participated was

conducted on November 1, 2005, as initially scheduled.   On

December 2, 2005, the settlement officer issued a determination

sustaining the Federal tax lien filing.
                                - 5 -

       Petitioner filed the petition on December 27, 2005.   In it,

petitioner stated that he was appealing the notice of

determination and wanted a redetermination of the additions to

tax.    The only specifically listed errors, as required by Rule

331, were:    (1) That petitioner was denied his right to a fair

hearing; (2) that the filing of the Notice of Federal Tax Lien

was erroneous; and (3) that the balance due on the Notice of

Federal Tax Lien was erroneous.

                             Discussion

       Respondent moved for summary judgment on all issues pursuant

to Rule 121.    Summary judgment is intended to expedite litigation

and avoid unnecessary trials.     Fla. Peach Corp. v. Commissioner,

90 T.C. 678, 681 (1988).    A motion for summary judgment may be

granted if there is no genuine issue as to any material fact and

a decision may be rendered as a matter of law.    See Rule 121(b);

Electronic Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002).

The moving party bears the burden of showing 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.    Bond v. Commissioner, 100 T.C. 32, 36 (1993);

Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).     The party

opposing summary judgment must set forth specific facts which

show that a genuine question of material fact exists and may not
                                - 6 -

rely merely on allegations or denials in the pleadings.         Grant

Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988);

Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986).

     Section 6321 creates a lien in favor of the United States on

all property and rights to property belonging to a person liable

for taxes when payment has been demanded and neglected.      The lien

arises by operation of law when the Internal Revenue Service

(IRS) assesses the amount of unpaid tax.    Sec. 6322.    The IRS

files a Notice of Federal Tax Lien to preserve priority and put

other creditors on notice.    See sec. 6323.

     Section 6320 provides that the Secretary shall furnish the

person described in section 6321 with written notice of the

filing of a lien under section 6323.    This notice must be

provided not more than 5 business days after the day the notice

of lien is filed and must advise the taxpayer of the opportunity

for administrative review in the form of a hearing.      Sec.

6320(a)(2).   Sec. 6320 further provides that the taxpayer may

request a hearing within the 30-day period beginning on the day

after the 5-day period.    The hearing generally shall be conducted

consistent with the procedures set forth in section 6330(c), (d),

and (e).   Sec. 6320(c).

     A taxpayer may raise any relevant issue at the hearing,

including challenges to “the appropriateness of collection

actions” and may make “offers of collection alternatives, which
                                - 7 -

may include the posting of a bond, the substitution of other

assets, an installment agreement, or an offer-in-compromise.”

Sec. 6330(c)(2)(A).   The Appeals officer must consider those

issues, verify that the requirements of applicable law and

administrative procedures have been met, and consider “whether

any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the

person [involved] that any collection action be no more intrusive

than necessary.”   Sec. 6330(c)(3)(C).

     After the Appeals hearing process, section 6330 gives this

Court jurisdiction to review the Appeals officer’s determination.

Where the underlying tax liability is properly at issue, we

review the Appeals determination with respect to the existence

and amount of tax liability de novo.     Sego v. Commissioner, 114

T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182

(2000).   When the underlying tax liability is not properly at

issue, we review the Appeals officer’s determination using an

abuse of discretion standard.    Sego v. Commissioner, supra at

610; Goza v. Commissioner, supra at 181-182.

     At the hearing, a taxpayer may challenge the existence and

amount of the underlying tax liability if he or she received no

notice of deficiency or did not otherwise have an opportunity to

dispute such tax liability.   Sec. 6330(c)(2)(B).   A self-reported

tax liability along with statutory penalties and interest
                               - 8 -

constitute an “underlying tax liability” and may be the proper

subject of challenge at the hearing.     See Montgomery v.

Commissioner, 122 T.C. 1, 8 (2004).

     In the case before us, petitioner would have been entitled

to challenge his self-reported tax liability.     However, it is

arguable whether petitioner raised the issue of his underlying

tax liability in his imprecise petition.     In any event,

petitioner is precluded from challenging his underlying tax

liability in the instant proceeding because he did not challenge

it at the administrative hearing.      Bourbeau v. Commissioner, T.C.

Memo. 2003-117; Tabak v. Commissioner, T.C. Memo. 2003-4; see

Miller v. Commissioner, 115 T.C. 582, 589 n.2 (2000), affd. 21

Fed. Appx. 160 (4th Cir. 2001); sec. 301.6320-1(f)(2), Q&A-F5,

Proced. & Admin. Regs.; see also sec. 6330(c) and (d).

     Petitioner’s Form 12153, Request for a Collection Due

Process Hearing, indicated that the amount of the self-reported

tax liability was disputed; however, petitioner’s representative

stated at the hearing that no such challenge to the amount of

assessment existed.   Accordingly, in this proceeding we do not

consider petitioner’s underlying tax liability.     For this reason

we do not address petitioner’s argument regarding abatement of

the section 6651 failure to pay addition to tax based on

reasonable cause, which first surfaced in petitioner’s objection

to respondent’s motion for summary judgment.
                                 - 9 -

     Since the underlying tax liability is not at issue, we

review the Appeals officer’s determination using the abuse of

discretion standard.   Under this standard, a determination will

be affirmed unless action was taken that was arbitrary or

capricious, lacks sound basis in fact, or is not justifiable in

light of the facts and circumstances.      Freije v. Commissioner,

125 T.C. 14, 23 (2005).

     Petitioner broadly assigned error to a denial of his right

to a fair hearing.   Based on the information before us and the

arguments in his opposition to summary judgment, we believe his

primary contention to be that the Appeals officer abused her

discretion by failing to recommend any collection alternatives in

lieu of the Federal tax lien.     In his opposition to summary

judgment, petitioner presents a laundry list of collection

alternatives that he believes would have been appropriate.

However, the Appeals officer is only required to consider the

“offers of collection alternatives” raised and information

presented by the taxpayer.      Chandler v. Commissioner, T.C. Memo.

2004-7.   The only collection alternative even remotely pursued by

petitioner at the Appeals hearing was an offer-in-compromise.

However, petitioner’s attempt at securing an OIC was weak at

best.   See discussion below.    Therefore, it was not an abuse of

discretion for respondent’s settlement officer to decline to give

more consideration to the matter than she did.
                              - 10 -

     Petitioner’s representative indicated in an attachment to

the Form 12153, request for a hearing, dated June 10, 2005, that

petitioner was working on an OIC at the time.   Even assuming

petitioner’s representative reiterated a desire to enter into an

OIC at the hearing, the settlement officer did not abuse her

discretion by sustaining the Notice of Federal Tax Lien filing.

     Petitioner never actually submitted an OIC or any other

collection alternative at the telephone hearing on November 1,

2005, 5-1/2 months after the notice of lien and almost 5 months

after stating he was working on an OIC in his request for a

hearing.   Petitioner’s representative indicated at the hearing

that petitioner was aware of the consequences of not cooperating

during the Appeals process.   Petitioner did not submit a

reviewable OIC or any other current financial information before

the determination was made on December 2, 2005, 31 days after the

hearing.

     The only information concerning petitioner’s ability to pay

was the Form 433-A, that had been in respondent’s file since

respondent’s revenue officer was attempting collection, almost

seven months before the determination.   This form was poorly

filled out, incomplete, and did not have any supporting
                                - 11 -

documentation attached.    Further, the information was not current

and was grossly insufficient to permit reasonable consideration

of an OIC.

     There is no abuse of discretion in failing to consider an

OIC, when no OIC has been made after a taxpayer has been given a

reasonable opportunity to submit one.       Kendricks v. Commissioner,

124 T.C. 69, 79 (2005).   Petitioner had adequate opportunity to

make an OIC but did not and, therefore, there were no less

intrusive means of collection for the Appeals officer to

consider.    Consequently, the settlement officer considered each

item required by section 6330 and reached the determination that

the filing of the notice of lien was appropriate.

     Furthermore, the information in the Form 433-A weighed

dramatically against the appropriateness of respondent’s

accepting an OIC.   Petitioner listed $5,000 per month in income

with $2,725 per month in expenses.       (Petitioner indicated that

these expenses were for himself and his girlfriend.      While the

allowance of all of these expenses is questionable at the very

least, we include all of them for illustration.)      Petitioner

valued his assets as: over $4,000 in a checking account, a house

worth $80,000, “nice furniture” worth $100,000, a Peterbilt

sleeper cab worth $100,000, a utility trailer worth $65,000, and

a pickup truck worth $53,000.    Petitioner owned all of these

assets free and clear, with no encumbrances.      The Form 433-A
                              - 12 -

showed that petitioner had no other debt.   Petitioner, who early

in the collections stage had more than $400,000 in net worth and

more than $2,000 per month in disposable income, was seeking

leniency for not paying taxes on his million dollar gambling

winnings.   Under these facts and circumstances, it was not an

abuse of discretion for respondent’s settlement officer to

sustain the filing of the Notice of Federal Tax Lien.

     We briefly address petitioner’s assignment of error that

respondent erroneously filed the Notice of Federal Tax Lien.     No

facts in the petition indicate any basis for this assertion, but

petitioner’s opposition to summary judgment reveals his view that

respondent sent the notification letter late; i.e., beyond the 5-

business-day period as provided in section 6320, and therefore,

the lien is invalid.   In support of his view, petitioner points

out that the Notice of Federal Tax Lien shows the date the

document was prepared and signed as May 11, 2005.   According to

petitioner, since the notification of the lien filing was not

mailed to him until May 19, 2005, 6 business days later, the lien

is invalid, and it was an abuse of discretion for respondent to

sustain the lien filing.

     We disagree that May 11, the date the lien notice was

prepared and signed, has any consequence in this case.   The

notice of lien sent to petitioner, the statement of the Appeals

officer, and the Appeals Case Memorandum referral all say that
                               - 13 -

the revenue officer filed the lien on May 12, 2005.   Petitioner’s

transcript of account and certified Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, both show the

notice of lien as filed on May 13, 2005.

     Regardless of which of the two aforementioned dates, May 12

or May 13, was the one on which the lien notice was actually

filed, respondent’s mailing of the notice to petitioner on May

19, does not give rise to an abuse of discretion.   In cases where

notice to the taxpayer was at issue, we have said that proper

mailing and receipt were irrelevant when a hearing was timely

requested within the prescribed 30-day period that begins to run

on the day after the fifth business day following the filing of

the notice of lien.    See Call v. Commissioner, T.C. Memo. 2005-

289, affd. 99 AFTR 2d 2007-2526, 2007-1 USTC par. 50,492 (9th

Cir. 2007); Stein v. Commissioner, T.C. Memo. 2004-124.    In those

situations, we viewed the error in a notice as harmless and not

resulting in an abuse of discretion that would prevent us from

sustaining the lien.    See Call v. Commissioner, supra; Stein v.

Commissioner, supra.    The same logic applies to the facts of this

case.   Respondent received petitioner’s hearing request on June

13, 2005, which falls well within the 30-day period described in

section 6320 whether the Notice of Federal Tax Lien was filed on
                              - 14 -

May 11, 12, or 13.   Thus, the date the lien notice was prepared

and signed has no significance and does not bear on whether there

was an abuse of discretion in this case.

     Based upon the record before us, we have determined that

there is no genuine issue of material fact.   We hold that the

settlement officer’s determination sustaining the Notice of

Federal Tax Lien filing was not an abuse of discretion.   We

therefore shall grant respondent’s motion for summary judgment.

     We have considered all of the parties’ contentions and

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

without merit, irrelevant, and/or moot.


                                    An appropriate order and

                               decision will be entered for

                               respondent.
