                       T.C. Memo. 2002-264



                     UNITED STATES TAX COURT



  RONALD W. NELSON, JR. AND JENNIFER J. NELSON, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5323-02L.               Filed October 10, 2002.


     Ronald W. Nelson, Jr. and Jennifer J. Nelson, pro sese.

     Karen Nicholson Sommers and Scott A. Hovey, for respondent.



                       MEMORANDUM OPINION

     ARMEN, Special Trial Judge:    This matter is before the Court

on respondent’s Motion To Dismiss For Lack Of Jurisdiction And To

Strike, as supplemented.    Respondent moves that this case,

insofar as it relates to a decision letter concerning equivalent

hearing, be dismissed for lack of jurisdiction on the ground that

“no Notice of Determination under I.R.C. § 6320 or § 6330 was
                               - 2 -

sent to petitioners with respect to a proposed levy to collect

liabilities arising with respect to tax year 1997.”   As explained

in detail below, we shall grant respondent’s motion, as

supplemented.

Background

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

following:

     A.   Respondent’s Notice of Intent To Levy

     On February 9, 2001, respondent mailed to petitioners a

Final Notice Of Intent To Levy And Notice Of Your Right To A

Hearing (notice of intent to levy) concerning petitioners’ unpaid

tax liability for the taxable year 1997.   The notice of intent to

levy was sent to petitioners by certified mail at their last

known address, see sec. 6330(a)(2)(C),1 and was received by them

on February 12, 2001.

     Petitioners did not respond to the notice of intent to levy

by paying their outstanding tax liability or making alternative

arrangements to pay, nor did petitioners request, within the

requisite period of time, consideration by respondent’s Appeals

Office.   Accordingly, on or about May 1, 2001, respondent served

a notice of levy on petitioner Jennifer J. Nelson’s employer.




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

     B.   Respondent’s Notice of Federal Tax Lien

     On or shortly after May 2, 2001, respondent filed a notice

of Federal tax lien with the County Recorder for San Diego

County, San Diego, California.    See sec. 6323.   Thereafter, on

May 7, 2001, respondent mailed to petitioners a Notice Of Federal

Tax Lien Filing And Your Right To A Hearing Under IRC 6320 (the

notice required by section 6320(a)) concerning their unpaid tax

liability for the taxable year 1997.2    The notice required by

section 6320(a) was sent to petitioners at their last known

address, see sec. 6320(a)(2)(C), and was received by them no

later than May 11, 2001.

     C.   Petitioners’ Request for an Administrative Hearing

     On or shortly after May 11, 2001, petitioners sent to the

Internal Revenue Service Office of Appeals (Appeals Office) Form

12153, Request for a Collection Due Process Hearing, concerning

their unpaid tax liability for the taxable year 1997

(petitioners’ request for an administrative hearing). Petitioners

filed their request for an administrative hearing in respect of

both the notice of intent to levy and the notice required by

section 6320(a).




     2
        Both the notice of Federal tax lien and the notice
required by sec. 6320(a) listed petitioners’ unpaid tax liability
for 1997 as $1,916.23.
                                - 4 -

     D.    The Appeals Office Hearing

     The Appeals Office concluded that petitioners’ request for

an administrative hearing was timely filed in respect of the

notice required by section 6320(a) but was not timely filed in

respect of the notice of intent to levy.    Accordingly, on October

9, 2001, the Appeals Office conducted both an administrative

hearing in respect of the notice required by section 6320(a) and

a so-called equivalent hearing in respect of the notice of intent

to levy.    See sec. 301.6330-1(c)(2)Q&A-C7, (i), Proced. & Admin.

Regs.

     E.    The Notice of Determination and the Decision Letter

     On January 25, 2002, the Appeals Office issued to

petitioners a Notice of Determination Concerning Collection

Action(s) Under Sections 6320 and/or 6330 (notice of

determination).    The notice of determination was issued in

respect of the notice required by section 6320(a), and it

reflected the conclusion of the Appeals Office that the filing of

the notice of Federal tax lien was an appropriate collection

action by respondent.    The notice of determination also advised

petitioners that they had 30 days to file a petition with the Tax

Court seeking judicial review of respondent’s determination

regarding the notice required by section 6320(a).

     Also on January 25, 2002, the Appeals Office issued to

petitioners a Decision Letter Concerning Equivalent Hearing Under
                                 - 5 -

Section 6320 and/or 6330 of the Internal Revenue Code (the

decision letter).    See sec. 301.6330-1(i), Proced. & Admin. Regs.

The decision letter was issued in respect of the notice of intent

to levy, and it reflected the conclusion of the Appeals Office

that the notice of intent to levy was an appropriate collection

action by respondent.    The decision letter also stated in

pertinent part:

     Your due process hearing request was not filed within
     the time prescribed under Section 6320 and/or 6330.
     However, you received a hearing equivalent to a due
     process hearing except that there is no right to
     dispute a decision by the Appeals Office in court under
     IRC Sections 6320 and/or 6330.

     F.    Petitioners’ Petition and Respondent’s Motion

     On March 4, 2002, petitioners filed with the Court a

Petition For Lien Or Levy Action Under Code Sections 6320(c) Or

6330(d).    See Rule 331(b).   Petitioners filed their petition in

respect of both the notice of intent to levy and the notice

required by section 6320(a).

     In response to the petition, respondent filed a Motion To

Dismiss For Lack Of Jurisdiction And To Strike.    Respondent

asserts that the Court lacks jurisdiction in respect of the

notice of intent to levy on the ground that the decision letter

does not constitute a notice of determination sufficient to

invoke the Court’s jurisdiction pursuant to section 6330(d).

     Petitioners filed an objection to respondent’s motion to

dismiss, asserting in pertinent part as follows:
                                - 6 -

     The hearing, of whatever nature, was held and it was
     during that hearing that the issue of, and challenge
     to, the underlying liability was raised and is a fait
     accompli. That “No Notice of Determination”, of
     whatever nature, was or was not made is irrelevant to
     the issue of jurisdiction.”

     Pursuant to notice, this matter was called for hearing at

the Court’s motions session in Washington, D.C.   Counsel for

respondent appeared at the hearing and argued in support of

respondent’s motion to dismiss.   There was no appearance by or on

behalf of petitioners, nor did petitioners file a written

statement pursuant to Rule 50(c), the applicability of which was

noted by the Court in its Order calendaring respondent’s motion

for hearing.

Discussion

     A.   Statutory Framework

     Section 6321 provides that if any person liable to pay any

tax neglects or refuses to pay the same after demand, the unpaid

tax shall be a lien in favor of the United States upon all

property and rights to property belonging to that person.

Section 6322 provides that the lien imposed under section 6321

generally arises at the time of assessment.   However, section

6323 provides that the lien shall not be valid against any

purchaser, holder of a security interest, mechanic’s lienor, or

judgment lien creditor until the Secretary files a notice of lien

with the appropriate public officials.
                                - 7 -

     Section 6331(a) provides that if any person liable to pay

any tax neglects or refuses to pay the same within 10 days after

notice and demand for payment, the Secretary is authorized to

collect the tax by levy upon the person’s property.    Section

6331(d) provides that at least 30 days before enforcing

collection by way of a levy on the person’s property, the

Secretary is obliged to provide the person with a final notice of

intent to levy, including notice of the administrative appeals

available to the person.

     In the Internal Revenue Service Restructuring and Reform Act

of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress

enacted new sections 6320 (pertaining to liens) and 6330

(pertaining to levies) to provide protections for taxpayers in

tax collection matters.    Sections 6320 and 6330 generally provide

that the Commissioner cannot proceed with collection until the

taxpayer has been given notice of, and the opportunity for, an

administrative review of the matter (in the form of an Appeals

Office hearing) and, if dissatisfied, the taxpayer may seek

judicial review of the administrative determination.    See Davis

v. Commissioner, 115 T.C. 35, 37 (2000); Goza v. Commissioner,

114 T.C. 176, 179 (2000).

     Sections 6320(a) and 6330(a) provide in pertinent part that

the Secretary shall notify a person in writing of his or her

right to an Appeals Office hearing regarding the Secretary’s
                               - 8 -

filing of a notice of lien under section 6323 or the Secretary’s

intent to levy, respectively, by mailing the notice required by

section 6320(a) or section 6330(a), as the case may be, by

certified or registered mail to such person at his or her last

known address.3

     Section 6320(a)(2) provides that the prescribed notice shall

be provided not more than 5 business days after the day on which

the notice of lien under section 6323 is filed.   Further, section

6320(a)(3)(B) provides that the prescribed notice shall explain

that the person has the right to request an Appeals Office

hearing during the 30-day period beginning on the day after the

5-day period described in paragraph (2).

     Section 6330(a)(2) provides that the prescribed notice shall

be provided not less than 30 days before the day of the first

levy with respect to the amount of the unpaid tax for the taxable

period.   Further, section 6330(a)(3)(B) provides that the

prescribed notice shall explain that the person has the right to

request an Appeals Office hearing during the 30-day period under

paragraph (2).


     3
        Although the term “last known address” is not defined in
the Internal Revenue Code, we have held that a taxpayer’s last
known address (as the term is used in sec. 6213 regarding the
proper mailing of a notice of deficiency) is the address shown on
the taxpayer’s most recently filed return, absent clear and
concise notice of a change of address. See, e.g., Abeles v.
Commissioner, 91 T.C. 1019, 1035 (1988); see also sec. 301.6212-
2, Proced. & Admin. Regs.
                                 - 9 -

     Where the Appeals Office issues a determination letter to

the taxpayer following an administrative hearing regarding a lien

or levy action, sections 6320(c) (by way of cross-reference) and

6330(d)(1) provide that the taxpayer will have 30 days following

the issuance of the determination letter to file a petition for

review with the Tax Court or a Federal District Court.    We have

held that the Court’s jurisdiction under sections 6320 and 6330

depends on the issuance of a valid determination letter and the

filing of a timely petition for review.     Kennedy v. Commissioner,

116 T.C. 255, 260-261 (2001); Moorhous v. Commissioner, 116 T.C.

263, 269 (2001);     Offiler v. Commissioner, 114 T.C. 492, 498

(2000).

     As discussed below, we conclude that because respondent did

not issue to petitioners a notice of determination pursuant to

section 6330 in respect of the notice of intent to levy, we

therefore lack jurisdiction over the petition insofar as that

matter is concerned.

     B.   Petitioners’ Failure To Make a Timely Request for an

Administrative Hearing in Respect of the Notice of Intent To Levy

     On February 9, 2001, respondent sent to petitioners a notice

of intent to levy.    Petitioners received the notice of intent to

levy on February 12, 2001.    The notice informed petitioners that

they had 30 days from the date of the notice to file a request

for an Appeals Office hearing.
                               - 10 -

     On May 7, 2001, respondent issued to petitioners the notice

required by section 6320(a).

     On or shortly after May 11, 2001, petitioners submitted to

the Appeals Office a request for an administrative hearing in

respect of both the notice of intent to levy and the notice

required by section 6320(a).   The 30-day period prescribed in

section 6330(a)(2) and (3)(B) for the filing of a timely request

for an Appeals Office hearing in respect of the notice of intent

to levy expired on Monday, March 12, 2001.   See sec. 301.6330-

1(c)(2) Q&A-C3, Proced. & Admin. Regs.; see also sec. 7503.

Because petitioners’ request for an Appeals Office hearing was

not timely in respect of the notice of intent to levy, the

Appeals Office was not obliged to provide petitioners with the

administrative hearing contemplated by section 6330 in respect of

that notice.   On the other hand, because petitioners’ request for

an Appeals Office hearing was timely with respect to the notice

required by section 6320(a), the Appeals Office was obliged to

provide petitioners with the administrative hearing contemplated

by section 6320 in respect of that notice.   Indeed, the record

demonstrates that an administrative hearing was in fact conducted

on October 9, 2001, in respect of the notice required by section

6320(a).
                                - 11 -

     C.    Equivalent Hearing

     In lieu of a hearing under section 6330(b) in respect of the

notice of intent to levy, the Appeals Office granted petitioners

a so-called equivalent hearing.     We have previously held that the

Commissioner’s decision to conduct an equivalent hearing does not

result in a waiver by the Commissioner of the time restrictions

within which a taxpayer is required to request an Appeals Office

hearing under section 6330 in respect of a notice of intent to

levy.     Kennedy v. Commissioner, supra at 262; Moorhous v.

Commissioner, supra at 269-270.

     D.     Decision Letter

     On January 25, 2002, following the equivalent hearing, the

Appeals Office issued to petitioners a decision letter stating

that the notice of intent to levy was an appropriate collection

action by respondent.     In addition, the decision letter

unambiguously states that the equivalent hearing was not intended

to serve as an Appeals Office hearing within the meaning of

section 6330.     On the other hand, on January 25, 2002, the

Appeals Office issued to petitioners a notice of determination

advising petitioners that they had 30 days to file a petition

with the Tax Court contesting the determination in respect of the

notice required by section 6320(a).

     As previously discussed, because petitioners failed to file

a timely request for an Appeals Office hearing in respect of the
                              - 12 -

notice of intent to levy, the Appeals Office was not obliged to

conduct such a hearing.   In this regard, the decision letter

issued to petitioners was not, and did not purport to be, a

notice of determination pursuant to section 6320 or section 6330.

See Moorhous v. Commissioner, supra; Kennedy v. Commissioner,

supra; Offiler v. Commissioner, supra at 495.

     E.   Conclusion

     Consistent with the foregoing, we shall grant respondent’s

Motion To Dismiss For Lack Of Jurisdiction And To Strike, as

supplemented, on the ground that the Appeals Office did not issue

a determination letter to petitioners pursuant to section 6330

due to petitioners’ failure to file a timely request for an

Appeals Office hearing pursuant to section 6330(a)(3)(B) and (b).

In addition, we shall strike all references in the petition to

the decision letter.

     F.   Postscript Regarding Section 6673

     Because our action granting respondent’s motion will serve

to dismiss only a portion of this case, we take this opportunity

to advise petitioners of the provisions of section 6673(a)(1).

As relevant herein, that section authorizes the Tax Court to

require a taxpayer to pay to the United States a penalty not in

excess of $25,000 whenever it appears that proceedings have been

instituted or maintained by the taxpayer primarily for delay or

that the taxpayer's position in such proceeding is frivolous or
                               - 13 -

groundless.   The Court has indicated its willingness to impose

such penalty in lien and levy cases, Pierson v. Commissioner, 115

T.C. 576, 580-581 (2000), and has in fact imposed a penalty in a

number of such cases; see, e.g., Davich v. Commissioner, T.C.

Memo. 2002-255 (imposing a penalty in the amount of $5,000).

     The petition in the present case advances some of the same

arguments that led to the imposition of a penalty in Davich v.

Commissioner, supra.   Petitioners might therefore care to review

that case and consider whether it is in their interest to persist

in advancing such arguments.

     In order to reflect the foregoing,



                                    An appropriate order granting

                               respondent’s motion to dismiss for

                               lack of jurisdiction and to strike,

                               as supplemented, will be issued.
