                               T.C. Memo. 2012-82



                        UNITED STATES TAX COURT



               ALFRED Q. CAMPBELL III, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 13687-11L.                      Filed March 22, 2012.



      Alfred Q. Campbell III, pro se.

      Martha Jane Weber, for respondent.



                          MEMORANDUM OPINION


      WELLS, Judge: This case is before the Court on respondent’s motion for

summary judgment pursuant to Rule 121 and to impose a penalty pursuant to
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section 6673.1 The issues we have been asked to decide are: (1) whether petitioner

is precluded from contesting his underlying Federal income tax liabilities for his

2001, 2002, 2003, 2004, 2005, 2006, and 2007 tax years; (2) whether respondent’s

Appeals Office abused its discretion in sustaining respondent’s collection actions;

and (3) whether the Court should impose a penalty under section 6673(a)(1).2

                                     Background

      The facts set forth below are based upon examination of the pleadings,

moving papers, responses, and attachments. At the time he filed his petition,

petitioner resided in Tennessee.

      Petitioner failed to file income tax returns for his 2001, 2002, 2003, 2004,

2005, 2006, and 2007 tax years (years in issue). Respondent therefore prepared a

substitute for return with respect to each of the years in issue. On February 16,

2010, via certified mail, respondent mailed to petitioner a notice of deficiency with




      1
       Unless otherwise indicated, section references are to the Internal Revenue
Code of 1986, as amended, and Rule references are to the Tax Court Rules of
Practice and Procedure.
      2
       Because we decide below that there is a genuine issue of material fact as to
whether petitioner refused delivery of the notices of deficiency and therefore
whether petitioner is entitled to contest his underlying liabilities, we will deny
respondent’s motion for summary judgment and his motion for imposition of a
penalty pursuant to sec. 6673 and will decide these issues at trial.
                                          -3-

respect to each of the years in issue. As shown on the Postal Service Form 3877

attached to respondent’s motion, respondent mailed separate copies of those notices

of deficiency to petitioner’s post office box and to his street address in Cordova,

Tennessee. Petitioner’s post office box address is the address petitioner used in his

correspondence with respondent’s Appeals Office and with this Court. According

to a USPS.com “Track & Confirm” printout supplied by respondent, a notice was

left at petitioner’s addresses on February 18, 2010. However, petitioner did not

claim the notices of deficiency, and they were returned to respondent marked

“unclaimed”.

      On or about November 22, 2010, respondent mailed to petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing, advising petitioner

that respondent intended to levy to collect petitioner’s unpaid tax liabilities,

penalties, and interest for the years in issue, which at the time totaled almost

$800,000. On December 21, 2010, petitioner requested a collection due process

hearing by submitting to respondent a completed Form 12153, Request for a

Collection Due Process or Equivalent Hearing.

      On February 23, 2011, Settlement Officer Darlene Macaulay mailed

petitioner a letter informing him that she had scheduled a telephone conference for

March 29, 2011. She advised him that although he had requested a face-to-face
                                          -4-

hearing, he was ineligible for a face-to-face hearing because his account was not

current and because he had not supplied the information required for the Appeals

Office to consider a collection alternative. The letter also informed petitioner that

because he had failed to claim the notices of deficiency mailed by respondent, he

had already forfeited his opportunity to contest the underlying liabilities. Ms.

Macaulay advised petitioner that if he wished the Appeals Office to consider

collection alternatives, he needed to: file his tax returns for 2007, 2008, and 2009;

complete a Form 433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals; and supply proof of estimated tax payments for his 2010

tax year. Ms. Macaulay enclosed copies of the notices of deficiency mailed to

petitioner on February 16, 2010.

      On March 22, 2011, petitioner mailed a response to Ms. Macaulay’s letter of

February 23, 2011. Petitioner informed Ms. Macaulay that he would be unable to

participate in the March 29, 2011, conference call and again requested a face-to-

face hearing. He also requested that Ms. Macaulay provide various documentation,

including: proof that petitioner received the notices of deficiency; copies of

respondent’s assessment of petitioner’s tax liability for each of the years in issue;

and copies of the rules and procedures governing collection due process hearings.

By letter dated April 5, 2011, Ms. Macaulay again explained to petitioner that he
                                           -5-

was ineligible for a face-to-face hearing because his account was still not current.

She gave petitioner 14 days to reschedule a telephone conference. On April 27,

2011, petitioner sent Ms. Macaulay another letter again requesting a face-to-face

hearing and the documentation he had requested in his March 22, 2011, letter. In

that letter, he denied ever having received a notice of deficiency for any of the years

in issue.

       On May 5, 2011, respondent mailed to petitioner a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330 with respect to

the years in issue. Petitioner timely filed his petition in this Court, in which he

contends that he never received the notices of deficiency and is therefore entitled to

challenge his underlying liabilities.

                                        Discussion

       Rule 121(a) allows a party to move “for a summary adjudication in the

moving party’s favor upon all or any part of the legal issues in controversy.” Rule

121(b) directs that a decision on such a motion shall be rendered “if the pleadings,

answers to interrogatories, depositions, admissions, and any other acceptable

materials, together with the affidavits, if any, show that there is no genuine issue as

to any material fact and that a decision may be rendered as a matter of law.” The

moving party bears the burden of demonstrating that no genuine issue of
                                          -6-

material fact exists and that the moving party is entitled to judgment as a matter of

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

965 (7th Cir. 1994). In deciding whether to grant summary judgment, we must

consider the factual materials and the inferences drawn from them in the light most

favorable to the nonmoving party. See Bond v. Commissioner, 100 T.C. 32, 36

(1993); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

      Section 6330(a)(1) provides that no levy may be made on any property or

right to property of any person unless the Commissioner has notified such person in

writing of the right to a hearing under section 6330 before such levy is made. The

notice must include in simple and nontechnical terms the right of the person to

request a hearing to be held by the Internal Revenue Service Office of Appeals.

Sec. 6330(a)(3). Section 6330(c) governs the conduct of a requested hearing. At

the hearing, the person may raise any relevant issue relating to the unpaid tax or the

proposed levy, including appropriate spousal defenses, challenges to the

appropriateness of collection actions, and offers of collection alternatives. Sec.

6330(c)(2)(A). Section 6330(c)(2)(B) further provides that 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 the tax liability or did not otherwise have an opportunity to dispute
                                         -7-

the tax liability. Under section 6330(c)(2)(B), the receipt of a notice of deficiency,

not its mailing, is the relevant event. Kuykendall v. Commissioner, 129 T.C. 77, 80

(2007); Conn v. Commissioner, T.C. Memo. 2008-186.

      Respondent included among the attachments to his motion for summary

judgment a declaration by the settlement officer who handled petitioner’s case in the

Appeals Office, copies of the notices of deficiency for the years in issue, and the

envelopes that respondent contends contained the notices of deficiency mailed to

petitioner on February 16, 2010. The faces of the envelopes show that they were

returned to respondent marked “unclaimed”. Accordingly, there is no dispute that

petitioner did not actually receive the notices of deficiency. Because it is

undisputed that petitioner did not actually receive the notices of deficiency, he

would normally have been entitled to challenge the underlying tax liabilities at the

section 6330 hearing. See Kuykendall v. Commissioner, 129 T.C. 77; Conn v.

Commissioner, T.C. Memo. 2008-186.

      Even if the taxpayer did not actually receive the notice of deficiency, we

have held that the taxpayer cannot dispute the underlying tax liability where the

taxpayer deliberately refused delivery of the notice of deficiency. Sego v.

Commissioner, 114 T.C. 604 (2000). However, if the evidence is insufficient to

show that a taxpayer deliberately refused delivery of the notice of deficiency,
                                          -8-

proof that the notice of deficiency was not actually received entitles a taxpayer to

dispute the underlying tax liability in a section 6330 proceeding. Barnes v.

Commissioner, T.C. Memo. 2010-30; Calderone v. Commissioner, T.C. Memo.

2004-240; Tatum v. Commissioner, T.C. Memo. 2003-115.

      Because the instant case is before us on respondent’s motion for summary

judgment, we view all facts and make all inferences in the light most favorable to

petitioner. Respondent contends that petitioner deliberately refused delivery of the

notices of deficiency, but petitioner denies that he refused delivery. In similar cases

where there was no evidence that the taxpayer deliberately refused delivery of the

notices of deficiency, we have denied the Commissioner’s motions for summary

judgment because we concluded that there was a genuine issue of material fact. See

Barnes v. Commissioner, T.C. Memo. 2010-30; Powers v. Commissioner, T.C.

Memo. 2009-229. Similarly, we conclude that there is a genuine issue of material

fact as to whether petitioner deliberately refused delivery. Consequently, we will

deny respondent’s motion for summary judgment. However, we note that,

although we will deny respondent’s motion for summary judgment because we

conclude that there are genuine issues of material fact and we are obliged to view

the facts in the light most favorable to petitioner as the nonmoving party, at the trial

we will decide the issue of whether petitioner deliberately refused the notices of
                                         -9-

deficiency on the preponderance of the evidence. In a similar case where we denied

the Commissioner’s motion for summary judgment, we held in the Commissioner’s

favor after examining all of the evidence and weighing the taxpayer’s testimony

elicited at trial. See Cyman v. Commissioner, T.C. Memo. 2009-144; see also Sego

v. Commissioner, 114 T.C. at 611 (concluding, contrary to taxpayer’s testimony,

that taxpayer deliberately ignored notices of attempted delivery and that such

behavior was tantamount to refusal of delivery); Carey v. Commissioner, T.C.

Memo. 2002-209 (concluding, contrary to taxpayer’s testimony, that facts and

circumstances suggested that taxpayers refused notices of deficiency). But see

Tatum v. Commissioner, T.C. Memo. 2003-115 (concluding on basis of taxpayers’

credible testimony that they did not receive notice of attempted delivery and did not

deliberately refuse delivery of notice of deficiency).

      Petitioner is not a stranger to the Tax Court. He has previously appeared

before us in the case at docket No. 21555-05. In that case, he similarly contended,

among other arguments that we deemed to be frivolous and groundless, that he had

not received a statutory notice of deficiency. In the instant case, respondent has

moved for the Court to impose a penalty pursuant to section 6673. Section

6673(a)(1) provides that this Court may require the taxpayer to pay a penalty not
                                         - 10 -

in excess of $25,000 whenever it appears to this Court: (a) the proceedings were

instituted or maintained by the taxpayer primarily for delay; (b) the taxpayer’s

position is frivolous or groundless; or (c) the taxpayer unreasonably failed to pursue

available administrative remedies. We have already imposed a penalty pursuant to

section 6673 of $2,500 on petitioner in the case at docket No. 21555-05. Although

today we deny, without prejudice, respondent’s motion for the imposition of another

section 6673 penalty, we take this opportunity to warn petitioner that if, after trial,

we conclude that he is again pursuing frivolous or groundless arguments or that he

has instituted this case primarily for delay, we will not hesitate to impose a

significantly higher penalty.

      In reaching these holdings, we have considered all the parties’ arguments,

and, to the extent not addressed herein, we conclude that they are moot, irrelevant,

or without merit.

      To reflect the foregoing,


                                              An appropriate order will be issued.
