                    114 T.C. No. 37



                UNITED STATES TAX COURT



        STEVEN AND DAVINA SEGO, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 12313-99L.            Filed June 30, 2000.



     Ps commenced a proceeding in response to two
Notices of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330. P husband
had received a notice of deficiency but returned it to
the IRS with frivolous language written on it; he did
not file a petition in response to the notice of
deficiency. Attempts to deliver the notice of
deficiency to P wife were made at Ps’ residence, but
the notice was returned unclaimed. Ps seek in this
action to challenge the underlying merits of
respondent’s determination in the statutory notices of
deficiency rather than challenging the appropriateness
of the intended method of collection, offering an
alternative means of collection, or raising spousal
defenses to collection. Held, there was no abuse of
discretion by respondent in allowing collection to
proceed.
                                 - 2 -


     Steven Sego and Davina Sego, pro se.

     Thomas N. Tomashek, for respondent.



                                OPINION

     COHEN, Judge:   The petition in this case was filed in

response to two Notices of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330.    Unless otherwise

indicated, all section references are to the Internal Revenue

Code in effect for the years in issue.    The notice of

determination sent to Steven Sego set forth the following:

     Summary of Determination

     The Service should proceed with the proposed levy
     action.

     Matters Considered at your Appeals hearing

     •    The requirements of various applicable law or
          administrative procedures have been met based upon
          the best information available.

     •    No spousal defenses were raised.

     •    No offers of collection alternatives were made.

     •    Challenges to the existence or amount of liability
          were raised including additional challenges as to
          the appropriateness of the collection actions on
          the basis of moral, religious, political,
          constitutional, conscientious, or similar grounds.

     •    On August 13, 1997, the Service issued a notice of
          deficiency to you for taxable years ending
          December 31, 1993, 1994, and 1995. The notice of
          deficiency was mailed to your last known address.
          You failed to petition the Tax Court for
                                - 3 -

          redetermination and thus, the notice of deficiency
          was defaulted and the proposed deficiencies were
          assessed. The liability as reflected in the
          notice of deficiency was based upon the community
          property laws of the State of Idaho and your
          proportionate share of the community income.

     •    The assessments are deemed correct because you
          have failed to present any credible evidence to
          overcome the Commissioner’s presumption of
          correctness. You have continued to procrastinate
          with regards to providing additional information
          or evidence to support your position. You have
          made numerous arguments based upon moral,
          religious, political, constitutional,
          conscientious, or similar grounds which Appeals
          believes are without merit.

     •    Appeals believes the proposed enforcement action
          balances the need for the efficient collection of
          taxes with your concerns as to the intrusiveness
          of the action to be taken.

The notice of determination sent to Davina Sego set forth the

following:

     Summary of Determination

     The Service should proceed with the proposed levy action.

     Matters Considered at your Appeals hearing

     •    The requirements of various applicable law or
          administrative procedures have been met based upon
          the best information available.

     •    No return was filed and thus, the spousal defense
          is not applicable.

     •    No challenges were raised to the appropriateness
          of the collection actions.

     •    No offers of collection alternatives were made.

     •    You believe the liability is invalid because you
          either (1) had no sources of income, or (2) had no
                              - 4 -

          filing requirements, or (3) did not receive a
          notice of deficiency.

     •    On August 13, 1997, the Service issued a notice of
          deficiency to you for taxable years ending
          December 31, 1993, 1994, and 1995. The notice of
          deficiency was mailed to your last known address.
          You failed to accept delivery of said notice of
          deficiency and you subsequently failed to timely
          petition the Tax Court for redetermination of the
          proposed liability. The liability as reflected in
          the notice of deficiency was based upon the
          community property laws of the State of Idaho and
          your proportionate share of the community income.

     •    Appeals believes the proposed enforcement action
          balances the need for the efficient collection of
          taxes with your concerns as to the intrusiveness
          of the action to be taken.

     In the petition, it is alleged that, after a conference

conducted with an Internal Revenue Service Appeals officer,

petitioners received additional documents relating to disputed

gains on sales transactions and that petitioners “found that the

IRS had created income to Petitioners based on statistics, and

this was unknown to Petitioners until after the conference”.    The

petition also contains various accusations concerning the

credibility of the statements in the above-quoted notices of

determination.

     Respondent contends that section 6330(c)(2)(B) precludes

petitioners from challenging the existence or amount of their

income tax liability for 1993, 1994, and 1995, because

petitioners had received statutory notices of deficiency for that

liability.
                                - 5 -

                            Background

     Statutory notices with respect to 1993, 1994, and 1995 were

sent to each petitioner on August 13, 1997.   Duplicate originals

were sent to Steven Sego; one of those was sent by certified mail

to an address in Spirit Lake, Idaho, and one was sent by regular

mail to the address in Rathdrum, Idaho, that is the address used

on the petition in this case.   The statutory notice sent to

Steven Sego in Spirit Lake, Idaho, was returned undelivered by

the Postal Service.   The statutory notice sent to Steven Sego by

regular mail was returned to respondent on October 10, 1997.

Handwritten across the first page of the returned statutory

notice were the words “This presentment Dishonored at UCC 1-207".

At the time the notice was returned to respondent by Steven Sego,

there remained 31 days for Steven Sego to petition the Tax Court.

He did not do so.

     With respect to Davina Sego, respondent asserts that a

statutory notice of deficiency was sent to her for 1993, 1994,

and 1995 at the Rathdrum, Idaho, address, as shown by the

postmark stamped on the executed Application for Registration or

Certification, U.S. Postal Service Form 3877, a copy of which is

in the record.   Respondent contends that, after leaving two

notices of certified mail in petitioners’ mailbox on August 18,

1997, and on August 25, 1997, the notice of deficiency was

returned to respondent by the Postal Service.
                              - 6 -

     The record contains other documents that respondent asserts

are indicative of Steven Sego’s “deliberate practice of refusing

to accept mail sent by respondent, including (a) the ‘Refusal to

Accept Service of Form 668-(Y)(c)’ stated in a document entitled

‘Final Declaration - Form 668(Y)(c) Refused for Cause without

Dishonor & Notice of Default’ dated July 12, 1998".     Respondent

further alleges:

     A document entitled “Witnessed Notice & Refusal” dated
     July 12, 1998, confirms that petitioner Davina Sego
     shared in her husband’s views and practices with regard
     to the refusal to accept mail from respondent. In that
     document Davina Sego referred to her husband’s “Final
     Declaration - Form 668(Y)(c) Refused for Cause without
     Dishonor & Notice of Default” of the same date, and
     requested that it “be deemed as if I had stated it.”
     * * *

Respondent’s position is that “The foregoing evidence leads to

the conclusion that petitioner Davina Sego deliberately refused

to claim the statutory notice of deficiency mailed to her on

August 13, 1997.”

     The Postal Service employee responsible for the postal route

that includes petitioners’ address testified that she attempted

delivery of certified mail to Davina Sego on August 18, 1997, and

left a second notice of attempted delivery on August 25, 1997.

By reference to exhibits, she identified the certified mail as

the August 13, 1997, statutory notice of deficiency.1


     1
        Petitioners sought to reopen the record by reference to
subsequent events allegedly reflecting on the credibility of the
                                                   (continued...)
                               - 7 -

     Davina Sego testified that “I do not recall ever getting any

yellow slips for--and I did not receive a statutory notice.”      Her

position is:   “It’s all--that has all been fabricated.   My notice

of deficiency, these certificates that the post office was

supposed to try to mail me, everything has been fabricated.

Because if I had received the certificates, it would have been

replied to as we replied to [Steven Sego’s notice].”

                            Discussion

     The statutory background of proceedings such as this one is

set forth in Goza v. Commissioner, 114 T.C. 176 (2000).     For

completeness and because of its direct relevance, we repeat here

that portion of the discussion.

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

any tax neglects or refuses to pay such tax within 10 days after

notice and demand for payment, the Secretary is authorized to

collect such tax by levy upon property belonging to the taxpayer.

Section 6331(d) provides that the Secretary is obliged to provide

the taxpayer with notice, including notice of the administrative

appeals available to the taxpayer, before proceeding with

collection by levy on the taxpayer's property.




     1
      (...continued)
Postal Service witness. Petitioners’ proffered evidence and
arguments in this regard, however, do not undermine the testimony
of the witness as corroborated by the physical exhibits in this
case.
                               - 8 -

     In the Internal Revenue Service Restructuring and Reform Act

of 1998 (RRA 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 due process protections

for taxpayers in tax collection matters.   Section 6330 generally

provides that the Commissioner cannot proceed with the collection

of taxes by way of a levy on a taxpayer's property 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 due process hearing) and, if dissatisfied, with judicial

review of the administrative determination.   Section 6330(e)

generally provides for the suspension of the period of

limitations on collection during the period that administrative

and judicial proceedings are pending and for 90 days thereafter.

Section 6330 is effective with respect to collection actions

initiated more than 180 days after July 22, 1998 (January 19,

1999).   See RRA 1998 sec. 3401(d), 112 Stat. 750.

     Section 6330(c) prescribes the matters that may be raised by

a taxpayer at an Appeals Office due process hearing in pertinent

part as follows:

          SEC. 6330(c). Matters Considered at Hearing.--In
     the case of any hearing conducted under this section–-

               (1) Requirement of investigation.-–The
          appeals officer shall at the hearing obtain
          verification from the Secretary that the
          requirements of any applicable law or
          administrative procedure have been met.
                              - 9 -

               (2) Issues at hearing.--

                    (A) In general.-–The person may raise at
               the hearing any relevant issue relating to
               the unpaid tax or the proposed levy,
               including–-

                         (i) appropriate spousal defenses;

                         (ii) challenges to the
                    appropriateness of collection actions;
                    and

                         (iii) offers of collection
                    alternatives, which may include the
                    posting of a bond, the substitution of
                    other assets, an installment agreement,
                    or an offer-in-compromise.

                    (B) Underlying liability.-–The person
               may also raise at the hearing challenges to
               the existence or amount of the underlying tax
               liability for any tax period if the person
               did not receive any statutory notice of
               deficiency for such tax liability or did not
               otherwise have an opportunity to dispute such
               tax liability.

               (3) Basis for the determination.-–The
          determination by an appeals officer under this
          subsection shall take into consideration–-

                    (A) the verification presented under
               paragraph (1);

                    (B) the issues raised under paragraph
               (2); and

                    (C) whether any proposed collection
               action balances the need for the efficient
               collection of taxes with the legitimate
               concern of the person that any collection
               action be no more intrusive than necessary.

In sum, section 6330(c) provides for an Appeals Office due

process hearing to address collection issues such as spousal
                               - 10 -

defenses, the appropriateness of the Commissioner's intended

collection action, and possible alternative means of collection.

Section 6330(c)(2)(B) provides that the existence and amount of

the underlying tax liability can be contested at an Appeals

Office due process hearing only if the taxpayer did not receive a

notice of deficiency for the taxes in question or did not

otherwise have an earlier opportunity to dispute such tax

liability.

     Section 6330(d) provides for judicial review of respondent’s

determination.    Although section 6330 does not prescribe the

standard of review that the Court is to apply in reviewing the

Commissioner's administrative determinations, the subject is

addressed in detail in the legislative history of the provision.

In particular, H. Conf. Rept. 105-599, at 266 (1998), states in

pertinent part:

     Judicial review

          The conferees expect the appeals officer will
     prepare a written determination addressing the issues
     presented by the taxpayer and considered at the
     hearing. * * * Where the validity of the tax liability
     was properly at issue in the hearing, and where the
     determination with regard to the tax liability is part
     of the appeal, no levy may take place during the
     pendency of the appeal. The amount of the tax
     liability will in such cases be reviewed by the
     appropriate court on a de novo basis. Where the
     validity of the tax liability is not properly part of
     the appeal, the taxpayer may challenge the
     determination of the appeals officer for abuse of
     discretion. * * *
                              - 11 -

Accordingly, where the validity of the underlying tax liability

is properly at issue, the Court will review the matter on a

de novo basis.   However, where the validity of the underlying tax

liability is not properly at issue, the Court will review the

Commissioner's administrative determination for abuse of

discretion.

     In Goza v. Commissioner, 114 T.C. 176 (2000), we concluded

that the taxpayer had failed to raise a valid challenge to

respondent’s proposed levy before the Appeals Office and had

continued to assert frivolous constitutional claims in his

petition for review filed with this Court.   Insofar as the

petition seeks relief with respect to Steven Sego, the reasoning

of Goza is applicable.   Steven Sego received the statutory notice

of deficiency in time to file a petition but repudiated that

right by returning to respondent the statutory notice with

frivolous language on it.   He did not file a petition, and the

express language of section 6330(c)(2)(B) precludes de novo

review of his tax liability in this proceeding.

     Davina Sego did not actually receive a statutory notice of

deficiency.   She contends that the statutory notice and the

notices of attempted delivery of certified mail are “fabricated”,

but she also asserts that she would have responded to them in the

same manner as her husband.   Thus, she has aligned herself with

the pattern reflected in the record of rejecting mail from the
                              - 12 -

Internal Revenue Service, accusing supposed adversaries of false

statements and fabrication of documents, and belatedly raising

new issues.

     The record in this case contains a copy of a notice of

deficiency dated August 13, 1997, addressed to Davina Sego; a

Form 3877 indicating that the notice was sent on the date it

bears; corroborating Postal Service forms and testimony

indicating attempted delivery of the statutory notice to Davina

Sego at the address acknowledged by petitioners to be their

residence; and evidence that Davina Sego would not have

petitioned the Court in response to the statutory notice of

deficiency if she had actually received it.   In the absence of

clear evidence to the contrary, the presumptions of official

regularity and of delivery justify the conclusion that the

statutory notice was sent and that attempts to deliver were made

in the manner contended by respondent.   See United States v.

Zolla, 724 F.2d 808 (9th Cir. 1984); United States v. Ahrens, 530

F.2d 781 (8th Cir. 1976).

      Davina Sego testified that she “did not recall” receiving

the Postal Service notices and asserted that the statutory notice

was “fabricated”.   Her alleged subjective belief is not evidence,

and there is no evidence of irregularity in this case.    See also

Pietanza v. Commissioner, 92 T.C. 729 (1989), affd. 935 F.2d 1282

(3d Cir. 1991).   Based on the Court’s observation of petitioners,
                              - 13 -

their claims are at best misguided and, in any event, unreliable

and improbable.   On the preponderance of the evidence, we

conclude that the statutory notice of deficiency was sent to

Davina Sego and that the notices of attempted delivery of

certified mail were left at petitioners’ residence as testified

by the Postal Service employee.   Further, we conclude that each

petitioner had an earlier opportunity to dispute in this Court

his or her tax liability for 1993, 1994, and 1995 and

deliberately declined to do so.   See sec. 6330(c)(2)(B).

     The applicable legal principles with respect to Davina Sego

are set forth in Erhard v. Commissioner, 87 F.3d 273 (9th Cir.

1996), affg. T.C. Memo. 1994-344, and Patmon & Young Professional

Corp. v. Commissioner, 55 F.3d 216, 218 (6th Cir. 1995), affg.

T.C. Memo. 1993-143, which held that taxpayers cannot defeat

actual notice by deliberately refusing delivery of statutory

notices of deficiency.   Petitioners’ conduct in this case

constituted deliberate refusal of delivery and repudiation of

their opportunity to contest the notices of deficiency in this

Court, which provides the prepayment option for disputing tax

liability.   (They still have the option, however, of paying the

tax and instituting suits for refund.)   The provisions in section

6330(c)(2)(B) limiting in collection due process cases their

right to contest the underlying tax liability are clearly

intended to prevent the creation of a belated prepayment remedy
                              - 14 -

in cases such as this one.   The validity of the underlying tax

liability is not properly before the Court.

     As indicated above, petitioners’ claims in part are based on

events occurring after the Appeals Office hearing.    Matters

raised after a hearing do not reflect on whether the

determinations that are the basis of this petition were an abuse

of discretion.   Attacks on the use of statistics to determine

Steven Sego’s income relate to the underlying liability and

cannot be considered for the reasons set forth above.    There is

no explanation or challenge in the petition to the

appropriateness or inappropriateness of the intended method of

collection, no offer of an alternative means of collection, and

no spousal defenses.   The petition does not assert and there is

no basis in the record for the Court to conclude that respondent

abused his discretion with respect to any of these matters.

     The decision in this case will indicate that we sustain

respondent’s administrative determination to proceed with

collection against petitioners.   Our decision does not serve as a

review of respondent’s determination as to petitioners’

underlying tax liability for 1993, 1994, or 1995.

     To reflect the foregoing,

                                         Decision will be entered

                                    for respondent.
