                        T.C. Memo. 2006-21



                      UNITED STATES TAX COURT



          WILLIAM REESE, Petitioner v. COMMISSIONER OF
                   INTERNAL REVENUE, Respondent



     Docket No.   1174-05L.             Filed February 9, 2006.



     William Reese, pro se.

     Jeffrey E. Gold, for respondent.



                        MEMORANDUM OPINION

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

response to a Notice of Determination Concerning Collection

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

determination), in which respondent determined to proceed with
                               -2-

collection by levy of petitioner’s Federal income tax liability

for 1988 to 1992, inclusive, plus accrued interest and failure to

pay penalty under section 6651(a)(3).   Unless otherwise

indicated, all section references are to sections of the Internal

Revenue Code in effect for the years in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

Petitioner resided in Reston, Virginia, at the time the petition

was filed.

                           Background

     Under “Brief Background,” the notice of determination

states, among other things, that

     The outstanding tax liabilities are the result of TC
     300 additional tax assessments because Mr. Reese was a
     non-filer.[1] When the required Notices of Deficiencies
     [for 1988 to 1992, inclusive,] were issued, * * * [Mr.
     Reese] petitioned Tax Court. The TC 300 assessments
     and all applicable penalties and interest are in
     accordance with the Tax Court Decision documents for
     each year.

     Under Relevant Issues Presented by the Taxpayer, the Notice

states that

     IRC 6330(c) allows the taxpayer to raise any relevant
     issue relating to the unpaid tax. Form 12153 as
     prepared by Mr. Reese claims that the amounts
     outstanding are in error: that the Philadelphia
     Service Center transposed numbers from the Tax Court
     Decision Documents, and have [sic] refused to abate the
     incorrect amounts.


     1
      TC 300, 1 Audit, Internal Revenue Manual (CCH), exhibit
4.4.1-1, at 7425, is a so-called transaction code number used
internally by the Internal Revenue Service. It has no
significance for purposes of this case.
                                  -3-

     Appeals received and reviewed all TC 300 assessments
documents in addition to the Tax Court Decision documents for tax
years 1988-1992, inclusive. All TAX as stipulated by the Tax
Court was correctly assessed for the years in question. However,
Appeals did conclude that Mr. Reese was not given proper credit
for his federal income tax withholding for the years 1989, 1990
or 1992.

     Appeals prepared three adjustment documents (Form 3870)
     to give Mr. Reese the following credit: $2,840 for
     1989, $3,517 for 1990 and $295 for 1992. (No
     adjustments were warranted on tax years 1988 or 1991 as
     the correct amount of tax was assessed with the correct
     amount of withholding credits given per year). Mr.
     Reese was advised of the Appeals adjustments.

     Mr. Reese was requested to provide a repayment proposal
     (such as an Installment Agreement or an Offer in
     Compromise) to Appeals by October 1, 2004 in lieu of
     the proposed collection actions as the minimal
     adjustments requested by Appeals would NOT satisfy his
     tax indebtedness to the IRS. There was no further
     response nor information received from Mr. Reese.
     Accordingly, there was no agreement reached on this
     account.

     The taxpayer raised no other issues.   [Emphasis added.]

     Petitioner filed his petition on T.C. Form 2 (Rev. 5/03).

Petitioner’s request for relief and statement of error, as stated

in the petition, is as follows:

          4. Set forth the relief requested and the reasons
     why you believe you are entitled to such relief. 1.)
     Abatement of all excessive and wrongful IRS
     assessments. 2.) Proper accounting of my liability.
     The fact situation underlying this case is the
     egregious pattern and practice by the IRS of issuing
     excessive and wrongful assessments and ignoring
     requests to abate those wrongful assessments. The IRS
     Appeals Officer acted in bad faith by imposing an
     illusory conclusion to this problem that failed to
     mitigate harm caused by IRS misfeasance and excessive
     interest caused by IRS delays. The Appeals Officer
                                -4-

     acted in bad faith by being unresponsive to telephone
     calls and information requests, and deliberately
     supplying false contact information that frustrated
     efficient communication.

     On August 5, 2005, respondent filed his Motion for Summary

Judgment (Motion) in response to which petitioner filed

Petitioner’s Opposition to Respondent’s Motion for Summary

Judgment.   Pursuant to an Order of the Court dated October 28,

2005, respondent filed his Supplement to Respondent’s Motion for

Summary Judgment (Respondent’s Supplement, discussed infra), in

response to which petitioner filed Petitioner’s Opposition to

Respondent’s Supplement to Respondent’s Motion for Summary

Judgment (Petitioner’s Opposition).

     Under Rule 121, a summary adjudication may be made “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.”

Rule 121(b).   While petitioner throughout this case has made a

number of conclusory and unsupported allegations of Internal

Revenue Service (IRS) misconduct, no material facts are in

dispute; thus, whether respondent has authority to proceed with

levy may be decided as a matter of law.
                                  -5-

     On March 22, 2004, respondent sent to petitioner a Final

Notice, Notice of Intent to Levy and Notice of Your Right to a

Hearing (Levy Notice).    On April 26, 2004, the IRS Service Center

in Kansas City, Missouri, received petitioner’s Request for a

Collection Due Process Hearing (Request) in response to the Levy

Notice on IRS Form 12153, in which petitioner claimed that the

amounts which the IRS asserted were outstanding are in error,

that the Philadelphia Service Center transposed numbers from the

Tax Court decision documents, and has refused to abate the

incorrect amounts.

     As stated in the notice of determination, respondent had

previously sent deficiency notices to petitioner for the tax

years 1988 to 1992, inclusive, to which petitioner responded by

filing petitions in this Court.    The 1992 case resulted in a

trial and related to an issue not relevant to this case.    The

trial also resulted in a holding that the income tax deficiency

and penalties due from petitioner were as detailed below.      See

Reese v. Commissioner, T.C. Memo. 1997-346.

     The cases for the remaining years, 1988 to 1991, inclusive,

were settled.   The decision documents for all 5 years reflect,

among other things, the following:

                 Income tax     IRC Sec. 6651(a)    IRC Sec.
     Year        deficiency     addition to tax       6654
     1988          $5,101            $445             None

            It is stipulated:
                              -6-


            *    *       *   *      *   *   *

      4. petitioner has withholding credits in the
amount of $3,321.00 for calendar year 1988 which will
be credited toward the deficiency due for calendar year
1988.

            Income tax       IRC Sec. 6651(a)   IRC Sec.
Year        deficiency       addition to tax      6654
1989          $4,729            $472.25         $121.27

       It is stipulated:

            *    *       *   *      *   *   *

      4. petitioner has withholding credits in the
amount of $2,840.00 for calendar year 1989 which will
be credited toward the deficiency due for calendar year
1989.

            Income tax       IRC Sec. 6651(a)   IRC Sec.
Year        deficiency       addition to tax      6654
1990          $5,976            $614.75         $151.97

       It is stipulated:

            *    *       *   *      *   *   *

      4. petitioner has withholding credits in the
amount of $3,517.00 for calendar year 1990 which will
be credited toward the deficiency due for calendar year
1990.

            Income tax       IRC Sec. 6651(a)   IRC Sec.
Year        deficiency       addition to tax      6654
1991          $8,269           $1,047.75        $188.18

       It is stipulated:

            *    *       *   *      *   *   *

      4. petitioner has withholding credits in the
amount of $4,078.00 for calendar year l991 which will
be credited toward the deficiency due for calendar year
1991.
                                -7-


               Income tax      IRC Sec. 6651(a)    IRC Sec.
     Year      deficiency      addition to tax       6654
     1992       $20,106           $4,953             $613

     Petitioner had a withholding credit in the amount of $295 to

be credited toward the deficiency due for calendar year 1992.

                            Discussion

     In light of petitioner’s “request for relief and statement

of error” in his petition, referred to above, in which he

requested “abatement of all excessive and wrongful IRS

assessments,” and “Proper accounting of my liability,” the Court

issued an Order requiring respondent to supplement his Motion in

certain respects.   The Order required the following:

          ORDERED that on or before November 18, 2005,
     respondent shall supplement his [summary judgment]
     motion with a statement showing petitioner’s current
     outstanding Federal income tax liabilities for the
     years 1988, 1989, 1990, 1991, and 1992. It is further

          ORDERED that the statement described in the
     foregoing paragraph shall: (1) Explain how the
     liability for each year has been computed; (2) explain
     why amounts listed in the “Paying Late Penalty” column
     (presumably the addition to tax imposed by I.R.C.
     section 6651(a)(3))[2] in respondent’s final notice of
     intent to levy, dated March 22, 2004, are not reflected
     in the transcripts of account attached to respondent’s
     motion; and (3) demonstrate the allowance of Federal
     income tax withholdings for 1989, 1990, and 1992 which
     are not taken into account in respondent’s final notice
     of intent to levy, dated March 22, 2004. It is further




     2
      This is not expressly stated in the Levy Notice or the
Notice of Determination.
                                -8-

          ORDERED that in support of the statement described
     above, respondent shall submit a certified copy of a
     current certificate of assessments and payments for
     each of the above-referenced years.

     In response to the Order, respondent filed Respondent’s

Supplement, which contains detailed and comprehensive

explanations of the matters raised in the Order.

     Respondent’s Supplement demonstrates the differences between

the assessed balances of tax and penalties, the late-paying

penalties under section 6651(a)(3) and accrued interest,

reflected in the Levy Notice for the tax years 1988 to 1992

inclusive, and the same categories of items currently assessed or

accrued.   As of November 18, 2005, petitioner owed $111,407.46,

rather than $123,226.56, the total amount asserted in the Levy

Notice, a difference of $11,819.10 in petitioner’s favor.   In

paragraph 96 of Respondent’s Supplement, respondent concedes that

he can collect only the current amount petitioner owes (i.e., the

net assessed amounts of tax, including section 6651(a)(1)

penalty, plus interest and section 6651(a)(3) nonpayment penalty

accrued to date of payment).

     Interest and the section 6651(a)(3) penalty (up to the

limitation contained in that section) continue to accrue until

petitioner makes payments of the amounts assessed for the

aforementioned years.   Petitioner did not analyze respondent’s

carefully detailed computations contained in Respondent’s

Supplement, but instead made bald allegations that respondent
                                -9-

intentionally failed to credit his withholding, which is

manifestly untrue, as plainly demonstrated in the notice of

determination and Respondent’s Supplement.

     With regard to the Levy Notice, the Order directed

respondent to “explain why amounts listed in the ‘Paying Late

Penalty’ column * * * are not reflected in the transcripts of

account attached to respondent’s motion.”       The so-called “Paying

Late Penalty” and Interest are shown on the Notice under the

category “Statutory Additions” and not as assessed items.

     Section 6651(a)(3) provides:

     SEC. 6651(a).   Addition to the Tax.

               *     *    *    *      *     *     *

          (3) to pay any amount in respect of any tax
     required to be shown on a return specified in paragraph
     (1) which is not so shown (including an assessment made
     pursuant to section 6213(b)) within 21 calendar days
     from the date of notice and demand therefor (10
     business days if the amount for which such notice and
     demand is made equals or exceeds $100,000), unless it
     is shown that such failure is due to reasonable cause
     and not due to willful neglect, there shall be added to
     the amount of tax stated in such notice and demand 0.5
     percent of the amount of such tax if the failure is for
     not more than 1 month, with an additional 0.5 percent
     for each additional month or fraction thereof during
     which such failure continues, not exceeding 25 percent
     in the aggregate.

     Thus, section 6651(a)(3) imposes an addition to tax for

failure to pay any amount, in respect of any tax required to be

shown on a return which is not so shown, within 21 calendar days

from the date of notice and demand of payment.        The addition to
                               -10-

tax under section 6651(a)(3) is in an amount of 0.5 percent of

the amount of such tax if the failure to pay the tax is for not

more than one month, with an additional 0.5 percent for each

additional month or fraction thereof during which such failure to

pay continues, not to exceed 25 percent in the aggregate.    The

failure to pay penalty thus may continue to accrue for up to 50

months, until payment.   The addition to tax under section

6651(a)(3) is imposed unless the taxpayer establishes that the

failure was due to reasonable cause and not willful neglect.

     Since petitioner has failed to pay any of the net assessed

balance of tax and section 6651(a)(1) penalties (after

withholding credits), the section 6651(a)(3) failure to pay

penalty in this case equals 25 percent of the net assessed

amounts after withholding credits.    Respondent asserts that he is

not required to make a separate assessment of the accruals of the

section 6651(a)(3) additions to tax to collect the accruals.       We

agree with respondent for the following reasons:

     Section 6665(a) provides, in paragraph (1), that additions

to tax, additional amounts, and penalties are to be paid upon

notice and demand and are to be assessed, collected, and paid in

the same manner as taxes, and paragraph (2) provides that any

reference to “tax” is to be deemed also to refer to the foregoing

items.
                               -11-

     Section 6665(b), entitled “Procedure for Assessing Certain

Additions to Tax,” provides certain exceptions to subsection (a),

including, in effect, an exception that section 6651 additions

must be attributable to a deficiency for section 6665(a) to

apply.   Thus, since section 6651(a)(3) additions are not

attributable to a deficiency, they are not required to be

assessed in the same manner as taxes.   Instead section 6651(a)(3)

additions are attributable to amounts that have already been

assessed but remain unpaid, and therefore may be collected by

respondent by notice and demand, as in this case, without

assessment, and without recourse to the deficiency procedures.

See Greenhouse v. United States, 780 F. Supp. 136, 141 n.14

(S.D.N.Y. 1991).

     A taxpayer may raise at a section 6330 hearing challenges to

the existence or amount of an underlying tax liability for any

tax period if the taxpayer did not receive any statutory notice

of deficiency for such tax liability or did not otherwise have an

opportunity to dispute such tax liability.   Sec. 6330(c)(2)(B).

We need not, however, decide whether the section 6651(a)(3)

addition, although not deemed a tax under section 6651(a) and

section 6665, nevertheless falls within the ambit of section

6330(c)(2)(B).   Petitioner did not challenge the section

6651(a)(3) addition at the Appeals Office hearing or in this

Court.
                               -12-

     As already noted, the only issue raised by petitioner at the

Appeals hearing was that the Philadelphia Service Center had

transposed numbers from the Tax Court decision documents and

refused to abate the incorrect amounts.    The Appeals officer

determined that the tax, including penalties, reflected in the

Tax Court decision documents had been correctly assessed, but

that petitioner had not been credited with withholding tax for

1989, 1990, and 1992.   Accordingly, the Appeals officer made

three adjustment documents for crediting petitioner with the

withholding taxes.

     Because petitioner in his petition persisted in maintaining

that the IRS had made excessive and wrongful assessments, the

Court, as already discussed, directed respondent, among other

things, to explain how the liability for each year was computed,

and to demonstrate the allowance of the 1989, 1990, and 1992

withholdings, which were not taken into account in respondent’s

Levy Notice, dated March 22, 2004.    Respondent’s notice of

determination, issued after the Levy Notice, properly reflects

the allowance of the withholding credits.

     In petitioner’s “Opposition” to Respondent’s Supplement, he

makes no attempt whatsoever to demonstrate why he believes

respondent transposed decision document numbers, or why

respondent’s assessments are incorrect.    Instead he persists in
                               -13-

making frivolous allegations such as that the IRS engaged in an

“egregious” pattern and practice of issuing excessive and

wrongful assessments.

     For the foregoing reasons, we shall grant respondent’s

motion for summary judgment.   We hold that respondent may proceed

with a levy with respect to petitioner’s 1988, 1989, 1990, 1991,

and 1992 tax years.


                                      An appropriate order and

                               decision will be entered.
