                               T.C. Memo. 2015-69



                        UNITED STATES TAX COURT



                   BARRY KNUDSEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 5145-12L.                       Filed April 7, 2015.



      Barry Knudsen, pro se.

      Joline M. Wang, for respondent.



                          MEMORANDUM OPINION


      SWIFT, Judge: This proceeding was commenced in response to a notice of

determination concerning a proposed levy under section 6330 with respect to

assessed Federal income tax for 2004 and 2006. Pending before the Court is

respondent’s motion for summary judgment.
                                         -2-

[*2] Unless otherwise indicated, all section references are to the Internal

Revenue Code in effect at all relevant times, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

                                    Background

      At the time of the filing of the petition, petitioner resided in Branson,

Missouri.

      Petitioner failed to file his 2004 and 2006 Federal income tax returns.

Under authority of section 6020(b), respondent prepared for petitioner substitutes

for returns reflecting Federal income tax liabilities of $9,204 and $8,375,

respectively.

      On the basis of the substitutes for returns, on September 7, 2010, and on

November 2, 2009, respondent issued notices of deficiency relating to petitioner’s

2004 and 2006 Federal income tax liabilities.

      Respondent alleges that on September 7, 2010, he mailed the notice of

deficiency for 2004 to petitioner’s last known address by certified mail with article

No. 7105 5678 7185 3291 7286.

      Respondent alleges that on October 28, 2009, he mailed the notice of

deficiency for 2006 to petitioner’s last known address by certified mail with article

No. 7161 7618 3631 1671 9237.
                                        -3-

[*3] Respondent’s records reflect no receipt of a U.S. Postal Service notice of

nondelivery to petitioner for either of the above notices of deficiency.

      Petitioner did not file a petition with the Tax Court to challenge either of the

notices of deficiency.

      On April 5, 2010, for 2006, and on January 10, 2011, for 2004, respondent

assessed Federal income tax against petitioner.

      On April 18, 2011, respondent sent to petitioner a notice of proposed levy

regarding the assessed tax for 2004 and 2006 plus interest and penalties--by then a

total of $18,683 and $15,265, respectively.

      On or about May 10, 2011, petitioner submitted to respondent a Form

12153, Request for a Collection Due Process or Equivalent Hearing, concerning

respondent’s effort to collect by levy the above assessed Federal income tax and

related interest and penalties. Therein petitioner:

      (1) requested a face-to-face hearing;

      (2) requested respondent to verify all of respondent’s required procedures

were followed in connection with the assessments;

      (3) challenged as improper the underlying tax liabilities and penalties on the

ground respondent never mailed and he never received the above two notices of
                                             -4-

[*4] deficiency and requested an opportunity to challenge the underlying tax

liabilities; and

       (4) raised collection alternatives.

By letter dated October 4, 2011, respondent’s settlement officer (SO) informed

petitioner that petitioner’s request for a face-to-face hearing was denied because of

petitioner’s failure to file his 2007, 2009, and 2010 Federal income tax returns.

The letter asked petitioner to provide the SO, by October 25, 2011, his delinquent

individual Federal income tax returns for 2004, 2006, 2007, 2009, and 2010 and a

collection information financial statement.

       On November 9, 2011, petitioner sent the SO a letter in which he again:

       (1) asserted his entitlement to a face-to-face hearing;

       (2) asked respondent for copies of all of respondent’s rules and regulations

relating to a face-to-face hearing;

       (3) disputed the underlying tax liabilities and penalties on the ground

respondent never mailed to him and he never received the related notices of

deficiency; and

       (4) requested collection alternatives be considered if the tax liabilities are

sustained.
                                        -5-

[*5] In response to petitioner’s letter, in late November 2011 the SO, among

other things:

      (1) obtained copies of the notices of deficiencies addressed to petitioner;

and

      (2) entered each of the certified mail numbers shown on respondent’s copies

of the notices of deficiency into the U.S. Postal Service’s “Track and Confirm”

Internet search site.

      The SO’s Track and Confirm search indicated only that respondent’s notice

of deficiency relating to petitioner’s 2004 tax was delivered on September 11,

2010, “in Branson, MO 65616”. No further description of the delivery address in

Branson, MO, is described.

      The SO’s “Track and Confirm” search produced no information relating to

respondent’s mailing of the notice of deficiency to petitioner for 2006 because the

U.S. Postal Service’s Track and Confirm site went back only two years and

respondent’s notice of deficiency to petitioner for 2006 was dated November 2,

2009, slightly more than two years before the search date.
                                        -6-

[*6] The SO also obtained:

      (1) a copy of a “substitute” U.S. Postal Service Form 3877 (PS Form 3877)

pertaining to respondent’s mailing to petitioner of the notice of deficiency to

petitioner for 2004; and

      (2) a copy of a PS Form 3877 pertaining to respondent’s mailing to

petitioner of the notice of deficiency for 2006.

      However, the copies of the PS Forms 3877 obtained by the SO that

respondent provided to the Court with his motion for summary judgment as proof

of respondent’s mailing to petitioner of the notices of deficiency are not complete

and do not provide certain information specifically called for on the forms, as

follows:

      The PS Form 3877 for 2004:

      (1) lists 12 pieces of mail but does not indicate how many pieces of mail the

U.S. Postal Service actually received from respondent; and

      (2) is stamped signed but is not signed manually by the individual U.S.

Postal Service employee, as is called for on the PS Form 3877.

      The PS Form 3877 for 2006:

      (1) lists 21 pieces of mail but does not indicate how many pieces of mail the

U.S. Postal Service actually received from respondent;
                                         -7-

[*7] (2) is not signed either with a stamp or manually by the individual U.S.

Postal Service employee;

      (3) does not identify the listed items as notices of deficiency; and

      (4) does not state the year to which the listed items relate.

      In a letter to petitioner dated November 18, 2011, the SO again asked

petitioner to file his 2004 and 2006 Federal income tax returns and made it clear

that if he would file his delinquent tax returns and provide a completed collection

information statement, the SO would compare them with the tax returns

respondent had prepared for him and reconsider his correct tax liabilities for each

year. The SO’s letter further stated that, if petitioner wanted to continue with the

collection due process (CDP) hearing, he should send whatever relevant

information and documents he had to the SO by December 2, 2011. The letter

cautioned petitioner that if the SO did not hear from him by December 2, 2011,

respondent would issue a final notice of determination.

      By December 2, 2011, petitioner had not provided any further information

and had not telephoned the SO. On January 19, 2012, respondent issued a final

adverse notice of determination sustaining the proposed levy relating to the tax

deficiencies, interest, and penalties that had been assessed against petitioner for

2004 and 2006.
                                         -8-

[*8] On February 24, 2012, petitioner filed in this Court his letter petition

challenging respondent’s notice of determination.

       On April 18, 2012, petitioner filed an amended petition and claimed:

       (1) respondent improperly denied him a face-to-face CDP hearing;

       (2) respondent improperly did not allow him to challenge his underlying tax

liabilities;

       (3) respondent’s proof as to the mailing and as to his receipt of the notices

of deficiency was defective;

       (4) he never received the notices of deficiency;

       (5) respondent never provided requested documents; and

       (6) respondent did not give him a fair hearing.

       On May 29, 2012, respondent filed his answer to the amended petition and

therein alleged that, because petitioner had never submitted his 2004 and 2006

Federal income tax returns, petitioner properly was not allowed to challenge his

underlying tax liabilities.

       On December 28, 2012, respondent filed a motion for summary judgment.

       On February 11, 2013, petitioner filed his objection to respondent’s motion

for summary judgment. Therein petitioner asserted he had not been given a

meaningful CDP hearing, he had not been allowed to challenge the underlying tax
                                          -9-

[*9] liabilities, and respondent had the burden to prove the notices of deficiency

were mailed properly to and received by him.

       On the basis of factual issues relating to petitioner’s receipt of the notices of

deficiency and whether he should be allowed to challenge his underlying Federal

income tax liabilities for 2004 and 2006 as determined by respondent, on March

13, 2013, the Court denied respondent’s motion for summary judgment.

       On October 18, 2013, respondent filed a motion to remand this case to the

Internal Revenue Service Appeals Office to reconsider petitioner’s underlying tax

liabilities. Without objection from petitioner, on November 5, 2013, the Court

granted respondent’s motion.

       On remand, on November 19, 2013, the SO sent petitioner a letter

scheduling a supplemental CDP telephone hearing for December 18, 2013. The

SO’s letter asked petitioner to explain why he believed respondent’s notices of

deficiency reflected incorrect amounts for his 2004 and 2006 Federal income tax

liabilities.

       Petitioner did not provide the SO any information about his underlying tax

liabilities, and on December 18, 2013, the SO sent him a letter stating that since he

had provided no further information, respondent’s notice of determination to

collect the assessed taxes by levy would be sustained. The SO’s December 18,
                                        - 10 -

[*10] 2013, letter, however, also gave petitioner an additional 14 days to provide

information regarding his underlying tax liabilities.

      On December 19, 2013, petitioner sent a letter to the SO and:

      (1) alleged respondent never mailed to him the notices of deficiency for

2004 and 2006 and asked respondent for proof of mailing;

      (2) alleged that absent proof of mailing from respondent, respondent should

be treated as never having mailed to him the notices of deficiency in question and

the Court should conclude petitioner owes no tax--in essence that respondent has

the burden of proof as to mailing of the notices of deficiency and has not satisfied

that burden; and

      (3) acknowledged he knew respondent on remand was willing to reconsider

his underlying 2004 and 2006 Federal income tax liabilities.

      On January 14, 2014, the SO sent a letter to petitioner in which he again

reiterated his willingness, because of petitioner’s allegations as to nonreceipt of

the notices of deficiency, to reconsider petitioner’s underlying Federal income tax

liabilities for 2004 and 2006.

      On January 17, 2014, petitioner sent the SO another letter and again alleged

that he had never received the notices of deficiency and again requested

respondent to provide information as to how respondent determined the amounts
                                       - 11 -

[*11] of his tax liabilities. The SO did not respond to petitioner’s January 17,

2014, letter, and on February 10, 2014, respondent issued a supplemental notice of

determination sustaining respondent’s proposed levy on the ground petitioner on

remand had not provided any relevant additional information relating to his

underlying tax liabilities and had not otherwise cooperated.

      On February 27, 2014, respondent filed with the Court a status report

detailing petitioner’s communications with the SO.

      On March 4, 2014, petitioner filed a status report with the Court in which he

provided no substantive information about his underlying tax liabilities but in

which he:

      (1) again asserted he never received respondent’s notices of deficiency for

2004 and 2006 and asked respondent to provide proof of mailing;

      (2) asserted the burden of proof should be on respondent to prove the

notices of deficiency were actually mailed to and received by him;

      (3) claimed that absent additional proof by respondent of the mailing of the

notices of deficiency respondent should be treated as never having mailed the

notices and the Court should treat respondent’s assessments against petitioner for

2004 and 2006 as invalid.
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[*12] On July 28, 2014, respondent filed a second motion for summary judgment.

Respondent’s second summary judgment motion is based on an alleged lack of any

further genuine dispute of material fact and respondent’s entitlement to judgment

as a matter of law.

                                     Discussion

      The purpose of summary judgment is to expedite litigation and avoid

unnecessary and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681 (1988). The Court may grant summary judgment when there is no

genuine dispute as to a material fact and a decision may be rendered as a matter of

law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d

965 (7th Cir. 1994). The burden of proving no genuine dispute of material fact is

on the moving party. See Naftel v. Commissioner, 85 T.C. 527, 529 (1985). A

party objecting to a motion for summary judgment “may not rest upon the mere

allegations or denials of such party’s pleading” but must set forth specific facts, by

affidavit or otherwise, showing that there is a genuine dispute for trial. Rule

121(d).

       On remand respondent clearly gave petitioner an opportunity to challenge

the amounts of his underlying tax liabilities as respondent had determined them.

Petitioner repeatedly chose not to provide respondent with any income or expense
                                         - 13 -

[*13] information and not to submit to respondent tax returns for 2004 and 2006.

If that were the question before us now, we would not hesitate to grant summary

judgment in respondent’s favor.

      However, the key issue before us at this stage, which has been repeatedly

raised by petitioner, is whether respondent ever mailed to petitioner the notices of

deficiency on which respondent’s tax assessments and proposed levy are based.

This is a question that involves not the amounts of petitioner’s underlying tax

liabilities but rather the legality of the assessments made against him. As

explained, this issue has been repeatedly raised by petitioner and is inherent in the

verification requirement of section 6330(c)(1); i.e., it is an issue raised by statute

in every CDP case. See Hoyle v. Commissioner, 131 T.C. 197, 200 (2008).

      In Hoyle, we explained that in a collection due process hearing section

6330(c)(1) provides the Commissioner is to “obtain verification from the Secretary

that the requirements of any applicable law or administrative procedure have been

met.” This provision places a burden on respondent and requires respondent to

take the initiative and verify that a notice of deficiency was properly mailed to the

taxpayer. See Lee v. Commissioner, 144 T.C. ___, ___ (slip op. at 16-17) (Jan.

21, 2015).
                                        - 14 -

[*14] In deficiency cases, the Commissioner bears the initial burden of proving by

competent and persuasive evidence that a notice of deficiency was properly mailed

to a taxpayer. Clough v. Commissioner, 119 T.C. 183, 187 (2002); Cataldo v.

Commissioner, 60 T.C. 522, 524 (1973), aff’d per curiam, 499 F.2d 550 (2d Cir.

1974). The Commissioner’s act of mailing may be proven by evidence of his

mailing practices corroborated by direct testimony and documentary evidence.

Coleman v. Commissioner, 94 T.C. 82, 90 (1990). The Commissioner’s and the

U.S. Postal Service’s compliance with established mailing procedures may raise a

presumption of official regularity in favor of the Commissioner and may be

sufficient, absent evidence to the contrary, to establish proper mailing of a notice

of deficiency. See Hoyle v. Commissioner, 131 T.C. at 203. If this presumption is

not rebutted, the burden of going forward would shift to the taxpayer. Coleman v.

Commissioner, 94 T.C. at 91. However, a defective Form 3877 does not trigger a

presumption of regularity. See id.

      These same standards apply in CDP cases. See Hoyle v. Commissioner, 131

T.C. at 203; Meyer v. Commissioner, T.C. Memo. 2013-268; Butti v.

Commissioner, T.C. Memo. 2008-82, slip op. at 8-9.

      Petitioner consistently has claimed the PS Forms 3877 in the record in this

case are defective in that they contain no indication of the number of items
                                         - 15 -

[*15] respondent delivered to the U.S. Postal Service and no required signatures of

the U.S. Postal Service employees who received from respondent the items to

mail.1

         Additionally, contrary to respondent’s mailing requirements, the PS Form

3877 in the record relating to the notice of deficiency for 2006 does not identify

the listed items as notices of deficiency or the years to which the documents relate.

See Internal Revenue Manual pt. 4.8.9.9.3(2)(1), (3) (Dec. 1, 2006).

         Petitioner’s contention that respondent never mailed the notices of

deficiency to him, if true, would be fatal to respondent’s proposed levy. If

respondent’s assessments of petitioner’s 2004 and 2006 tax liabilities were not

preceded by the mailing of notices of deficiency to petitioner as required by

section 6213(a), the assessments would be invalid. See Hoyle v. Commissioner,

131 T.C. at 205. Without valid assessments the instant proposed levy would be

illegal, see id., and the “opportunity * * * to dispute the underlying tax liability

does not cure an assessment made in derogation of * * * [a taxpayer’s] right under




         1
       The U.S. Postal Service’s mailing procedures require postal employees to
enter on the Form 3877 the total number of items received and to sign and
postmark the form. USPS Registered Mail Handbook DM-901, at 3-4.2.1 (April
2010), available at http://www.apwu.org/sites/apwu/files/resource-files/DM-
901%20Registered%20Mail%204-10%20%281.77%20MB%29.pdf.
                                       - 16 -

[*16] section 6213(a) to a deficiency proceeding”, Freije v. Commissioner, 125

T.C. 14, 36 (2005).2

      The U.S. Court of Appeals for the Second Circuit has held that a failure to

indicate the number of pieces of mail received by the U.S. Postal Service and the

absence of a signature by the receiving U.S. Postal Service post office employee,

both of which defects are present in this case, render a PS Form 3877 improperly

completed. See O’Rourke v. United States, 587 F.3d 537, 541 (2d Cir. 2009).

This holding is consistent with this Court’s holdings in similar instances. See,

e.g., Coleman v. Commissioner, 94 T.C. at 92; Massie v. Commissioner, T.C.

Memo. 1995-173, aff’d without published opinion, 82 F.3d 423 (9th Cir. 1996);

Wheat v. Commissioner, T.C. Memo. 1992-268.

      Petitioner has raised a factual issue concerning respondent’s mailing to him

of the notices of deficiency, and respondent has failed adequately to address this

issue. Summary judgment is not a substitute for a trial and is not to be used to



      2
        As stated in Hoyle v. Commissioner, 131 T.C. 197, 205 n.7 (2008), Chief
Counsel Notice CC-2006-19 (Aug. 18, 2006) explains that an Appeals officer
“‘may rely on a Form 4340 to verify the validity of an assessment, unless the
taxpayer can identify an irregularity in the assessment procedure’ (emphasis
added) and acknowledges that, where it is alleged that a notice of deficiency was
not mailed, the Appeals officer may be required ‘to examine underlying
documents in addition to the tax transcripts, such as the taxpayer’s return, a copy
of the notice of deficiency, and the certified mailing list’”.
                                           - 17 -

[*17] resolve disputes over factual issues. See Espinoza v. Commissioner, 78 T.C.

412, 416 (1982).

      Viewing the alleged facts in the light most favorable to petitioner, we

conclude respondent has not sufficiently established that summary judgment is

warranted. A trial will be necessary concerning respondent’s alleged mailing of

the notices of deficiency to petitioner.

      As noted in our recent opinion in Portwine v. Commissioner, T.C. Memo.

2015-29, at trial the defects in the PS Forms 3877 do not necessarily preclude a

decision in favor of respondent with respect to the proper mailing of the notices of

deficiency. Our ultimate decision on this issue will depend on the credibility and

persuasiveness of what petitioner and respondent offer into evidence at trial.

      To reflect the foregoing,


                                           An appropriate order will be issued.
