                               T.C. Memo. 2018-50



                        UNITED STATES TAX COURT



                 CHARLES D. WILLIAMS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 25567-16L.                        Filed April 10, 2018.



      Charles D. Williams, pro se.

      Marty J. Dama, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      PUGH, Judge: This case was commenced in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320 and/or 6330

(notice of determination), sustaining respondent’s Notice of Intent to Levy to
                                         -2-

[*2] collect petitioner’s unpaid Federal income tax liabilities for 2005, 2006, 2007,

2008, 2009, and 2010 (subject years).1

                                FINDINGS OF FACT

      The stipulated facts are incorporated in our findings by this reference.

Petitioner resided in Texas at the time he filed his petition.

      From the 1970s to the time of trial, petitioner has lived at the same street

address in Euless, Texas (Euless residence). He failed to file a Federal income tax

return for any of the subject years. Respondent therefore prepared substitutes for

returns under section 6020(b). On November 12, 2014, respondent sent, by

certified mail, two copies of the notice of deficiency for the subject years to

petitioner--one copy to his Euless residence and one copy to a post office box in

Dallas, Texas (Dallas P.O. Box). The notice of deficiency was signed by Janet A.

Miller, Territory Manager, Technical Services, GSA. The administrative record

includes a substitute U.S. Postal Service (USPS) Form 3877, Certified Mailing

List, for the mailing to the Euless residence. Attached to the Form 3877 is USPS

tracking information showing that the USPS Form 3849, Certified Mail Return

Receipt, which informs the recipient of certified mail, was delivered to the Euless

      1
        Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986, as amended and in effect at all relevant times. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                        -3-

[*3] residence on November 13, 2014. It also shows that the item of certified mail

(the notice of deficiency) was returned to respondent unclaimed. The record also

includes a copy of the envelope addressed to the Euless residence stamped by the

USPS to show that the item was unclaimed and the envelope addressed to the

Dallas P.O. Box showing that the USPS was unable to forward the item.

      On October 13, 2015, respondent sent to petitioner at P.O. Box 981 in

Bedford, Texas (Bedford P.O. Box),2 a Notice of Federal Tax Lien and Your Right

to a Hearing (lien notice). On November 18, 2015, petitioner submitted Form

12153, Request for a Collection Due Process or Equivalent Hearing, that was

blank but for his signature and date. On December 3, 2015, respondent sent

petitioner at his Bedford P.O. Box a Final Notice of Intent to Levy and Notice of

Your Right to a Hearing with respect to his unpaid tax liabilities for the subject

years (levy notice). On December 30, 2015, petitioner submitted Form 12153,

attaching both the lien notice and the levy notice. This Form 12153 likewise was

blank but for petitioner’s signature and the date.


      2
        The record does not indicate how respondent became aware of petitioner’s
new address; as noted below, petitioner argues that he mailed a notice of address
change to respondent, and we may presume on the basis of respondent’s use of the
Bedford P.O. Box that respondent ultimately became aware of petitioner’s new
address. However, we also note petitioner in his correspondence with the
settlement officer often used a different P.O. Box.
                                         -4-

[*4] On January 6, 2016, petitioner resubmitted Form 12153 (checking, as the

basis, only the “Proposed Levy or Actual Levy” box), this time completed, with a

cover letter explaining that when he had printed out the prior form the information

that he had typed in did not print out. In an attachment he asked that his prior

hearing request be merged into this one. He disputed the “alleged taxes and

penalties associated with these taxes” and, requested a face-to-face hearing that he

would record. He asked for verification that the IRS had followed and performed

the procedures required by law. Finally he asked for collection alternatives if he

was determined to owe the tax. He did not provide a telephone number.

       On June 16, 2016, Settlement Officer West (SO West) sent petitioner a

letter scheduling a telephonic conference for July 21, 2016, and requesting that he

submit financial information and past-due tax returns for 2011 through 2015 (past-

due returns). The letter advised petitioner that respondent had issued him a notice

of deficiency for the subject years but stated that he would be allowed to challenge

the underlying liabilities determined in that notice and invited him to file returns

for the subject years. The letter also explained that SO West could consider

collection alternatives only if petitioner submitted the information SO West had

requested, filed returns for the subject years, and filed all past-due returns required

to be filed.
                                         -5-

[*5] Petitioner did not call at the scheduled time for the telephonic conference on

July 21, 2016. Rather, in a series of exchanges petitioner ignored SO West’s

requests for information, reiterated his position that he had never received the

notice of deficiency, asked for proof of his liabilities, asked for a copy of the law

requiring full compliance to be entitled to a face-to-face hearing, and requested a

face-to-face hearing. SO West explained that petitioner did not qualify for a face-

to-face hearing because he was not in compliance with his tax return filing

obligations and had not provided requested financial information; and SO West

repeated the requests for the financial information and past-due returns. In his

final letter, dated August 15, 2016, petitioner disputed that the notice of deficiency

had been properly addressed and mailed to him at his Bedford P.O. Box, claiming

that he had submitted a change of address to his Bedford P.O. Box. He attached to

his letter a copy of a handwritten letter dated October 1, 2014, addressed to

“Internal Revenue Service, 1111 Constitution Ave NW, Washington, DC 20224”

that reported his Bedford P.O. Box.

      Respondent’s case activity report reflects that SO West determined that

petitioner has never filed a tax return. She also determined that petitioner’s

Bedford P.O. Box was not considered his address at the time the two copies of the

notice of deficiency were mailed to him. SO West rejected petitioner’s proof of
                                         -6-

[*6] change of address because it was only a copy of a letter without proof that he

ever mailed it. At trial petitioner testified only that he changed his address in “the

past two to three years”. He claimed that he did not receive mail at the Euless

residence because of concerns about theft from the mailbox at the street but did

not state that no mail was delivered to that address or that he refused to check that

mailbox for mail delivered to it.

      On October 28, 2016, respondent issued to petitioner a notice of

determination upholding respondent’s proposed levy to collect his income tax

liabilities for the subject years. On that same date, respondent issued Letter 3210,

Decision Letter on Equivalent Hearing, upholding the lien notice, which

respondent now asks us to treat as a notice of determination. On the basis of our

review of petitioner’s Forms 12153, we agree that petitioner should be entitled to

challenge the lien notice and that the Letter 3210 should be treated as a notice of

determination.

                                      OPINION

I. Procedural Background

      Before trial respondent filed a motion for summary judgment that the

notices of determination should be sustained to which petitioner responded and

respondent replied, in accordance with our orders. Petitioner filed a further reply.
                                        -7-

[*7] We then set respondent’s motion for hearing at the calendar call for this case.

At the hearing petitioner moved orally to submit the case under Rule 122.

Counsel for respondent objected that there were material facts which the parties

could not agree to stipulate. On that basis we denied petitioner’s oral motion to

submit under Rule 122 and we denied respondent’s motion for summary judgment.

We also denied petitioner’s cross-motion for summary judgment to the extent his

response was so styled. The parties stipulated the administrative record, and

petitioner argues that we must decide this case solely on what is in the

administrative record. He also stated at trial that his arguments are in the

administrative record and in his summary judgment briefs. We therefore refer to

those briefs in summarizing the positions of the parties.

      Specifically, petitioner claims that he did not receive the notice of

deficiency for the subject years and that SO West failed to confirm that the notice

of deficiency was signed by an official with the proper delegated authority.

II. Scope and Standard of Review

      Where the validity of the underlying tax liability is in issue, the Court

reviews the Commissioner’s determination de novo. Goza v. Commissioner, 114

T.C. 176, 181-182 (2000). When, as here, the IRS prepares a substitute for return

pursuant to section 6020(b), the taxpayer may raise his liability in an
                                         -8-

[*8] administrative hearing if he did not receive a notice of deficiency or

otherwise have a prior opportunity to contest the liability. See secs. 6320(c),

6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609 (2000). But this

Court considers a taxpayer’s challenge to his underlying liability in a collection

action case only if he properly raised that challenge at his administrative hearing.

Giamelli v. Commissioner, 129 T.C. 107, 115-116 (2007); see secs. 301.6320-

1(f)(2), Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. An issue

is not properly raised at the administrative hearing if the taxpayer fails to request

consideration of that issue by the settlement officer or if he requests consideration

but fails to present any evidence after being given a reasonable opportunity to do

so. Giamelli v. Commissioner, 129 T.C. at 115-116; see McRae v. Commissioner,

T.C. Memo. 2015-132, at *8-*9 (holding that the taxpayer failed explicitly to

contest his underlying liability during the administrative hearing and failed to

provide any evidence concerning his liability); see also Zook v. Commissioner,

T.C. Memo. 2013-128, at *6-*7 (holding that the taxpayer failed to raise her

underlying liabilities properly when she failed to provide any documentation of

the underlying liabilities and asserted frivolous arguments).

      The settlement officer must verify that the requirements of any applicable

law or administrative procedure have been met, consider issues properly raised by
                                         -9-

[*9] the taxpayer, and consider whether the proposed collection action balances

the need for the efficient collection of taxes with the taxpayer’s legitimate concern

that any collection action be no more intrusive than necessary. Secs. 6320(b) and

(c), 6330(b), (c)(3). Where the validity of the underlying tax liability is not

properly at issue, the Court will review the settlement officer’s administrative

determination on the issues above for abuse of discretion. Sego v. Commissioner,

114 T.C. at 610.

III. Last Known Address

      As part of the settlement officer’s determination, she must verify that a valid

notice of deficiency was issued to the taxpayer at the taxpayer’s last known

address. Sec. 6330(c)(1); Jordan v. Commissioner, 134 T.C. 1, 12 (2010); Hoyle

v. Commissioner, 131 T.C. 197, 200 (2008). Petitioner’s first argument is that the

notice of deficiency is invalid because it was not sent to his last known address as

required by section 6212(b). If a notice of deficiency is mailed to the taxpayer at

the taxpayer’s last known address, actual receipt of the notice is immaterial; the

notice is valid. See, e.g., United States v. Zolla, 724 F.2d 808, 810 (9th Cir.

1984).

      It is the taxpayer’s responsibility to provide the IRS clear and concise

notification of any change in address. See sec. 301.6212-2(a), (b)(2), Proced. &
                                       - 10 -

[*10] Admin. Regs. (defining the taxpayer’s “last known address” as the address

on the taxpayer’s most recently filed and properly processed return unless the IRS

has been given “clear and concise notification” of a different address); see also

Ward v. Commissioner, 907 F.2d 517 (5th Cir. 1990), rev’g 92 T.C. 949 (1989);

Tadros v. Commissioner, 763 F.2d 89 (2d Cir. 1985). The taxpayer may submit a

change of address by indicating a new address on his next return, by filing a

written or electronic notice of change of address with the IRS, or by providing an

updated address to the USPS for inclusion in its National Change of Address

(NCOA) database. Sec. 301.6212-2(a) and (b), Proced. & Admin. Regs. A

taxpayer’s written notification regarding change of address will be considered

“properly processed” 45 days after the date of receipt by one of the following: (1)

the IRS Submission Processing Campus serving the taxpayer’s old address; (2) the

Customer Service Division in the local area office; or (3) the IRS employee who

contacted the taxpayer regarding the filing of a return or an adjustment in the

taxpayer’s account. Rev. Proc. 2010-16, sec. 5.02(3), 2010-19 I.R.B. 664, 666.

      We also have held that the IRS was justified in believing that a notice of

deficiency was mailed to the correct address and that the taxpayer simply failed to

claim it when it was returned to the IRS marked “Unclaimed”, and there was no

evidence in the record that the IRS was aware either before or immediately after
                                       - 11 -

[*11] the mailing of a notice of deficiency that the address of record was not

correct. See Thomas v. Commissioner, T.C. Memo. 1998-438, aff’d without

published opinion, 194 F.3d 1305 (4th Cir. 1999). Conversely, the IRS was found

to have failed to exercise reasonable diligence by sending a notice of deficiency to

an address from which prior correspondence had been returned as undeliverable.

See Terrell v. Commissioner, 625 F.3d 254 (5th Cir. 2010).

      The only evidence petitioner offered that he had given “clear and concise

notification” of any address other than that used by respondent was the copy of the

handwritten letter dated October 1, 2014. But that handwritten letter was dated

less than 45 days before the mailing of the notice of deficiency and was not

addressed to any of the addresses identified by the IRS in Rev. Proc. 2010-16,

supra. Petitioner provided no evidence that he had mailed this letter to the IRS or

when he had done so, and he did not provide any other evidence to confirm that he

had changed his address at around this time or updated the NCOA database. At

trial petitioner could not recall when he had changed his P.O. Box. And SO West

determined that petitioner had not filed any Federal income tax returns, so

respondent would not have learned of his new address that way. We may infer

that petitioner did provide notice of the Bedford P.O. Box before the lien notice

was issued, because respondent used that address on the lien notice. But on the
                                       - 12 -

[*12] record before us, we cannot conclude that petitioner provided notice of that

new address in the time prescribed for respondent to use that new address on the

notice of deficiency.

      Petitioner did not rebut the evidence in the administrative record that the

USPS Form 3811 notifying him that certified mail (namely, the notice of

deficiency) was delivered to his Euless address. And the “UTF” (Unable to

Forward) marking on the envelope in which the notice of deficiency was mailed to

petitioner’s Dallas P.O. Box suggests that petitioner did not file a forwarding

address for that P.O. Box, considering when petitioner claims to have changed his

address. See Domestic Mail Manual (DMM) sec. 507.2.1.1 (the USPS usually

forwards mail for 18 months). The record shows that the notice of deficiency

mailed to petitioner at his Euless residence was returned to the IRS as unclaimed

rather than undelivered, as evidenced by the USPS stamp on the envelop and the

USPS tracking information. Therefore, we hold that respondent was justified in

believing the notice of deficiency was sent to the correct last known address and

that SO West was reasonable in rejecting petitioner’s alleged address change.

Snodgrass v. Commissioner, T.C. Memo. 2016-235; see Arroyo v. Commissioner,

T.C. Memo. 2013-112.
                                        - 13 -

[*13] IV. Delegation

      Petitioner also argues that SO West failed to “[v]erify that the NODS were

created/signed by the secretary of Treasury or a duly authorized delegate of the

Secretary of Treasury as required by definition in 26 U.S.C. secs. 7701(a)(11),

7701(a)(12) and 6212(a).” We disagree. For purposes of sections 6320(a) and

6330(a), either the Secretary or his delegate (e.g., the Commissioner) may issue a

final notice of intent to levy or a notice of Federal tax lien. Secs. 7701(a)(11)(B),

(12)(A)(i), 7803(a)(2); see also secs. 301.6320-1(a)(1), 301.6330-1(a)(1), Proced.

& Admin. Regs. We have held consistently that a notice of deficiency signed by a

Technical Services Territory Manager pursuant to Delegation Order 4-8, set forth

in Internal Revenue Manual pt. 1.2.43.9 (Sept. 4, 2012), is valid and have rejected

challenges like petitioner’s as frivolous. See, e.g., Batsch v. Commissioner, T.C.

Memo. 2016-140, at *9, *15, aff’d, 695 F. App’x 166 (8th Cir. 2017); Muncy v.

Commissioner, T.C. Memo. 2017-83, at *9-*10. And we have found specifically

that “Janet A. Miller, Technical Services, Gulf States Area” had proper authority.

See, e.g., Roye v. Commissioner, T.C. Memo. 2012-246, at *15, *16 n.6.

Consequently, after considering petitioner’s claim of error and reviewing the

record before us, we hold that SO West properly verified, pursuant to section
                                         - 14 -

[*14] 6330(c)(1), that “the requirements of any applicable law or administrative

procedure have been met.”

V. Right To Challenge Underlying Liabilities

      If we assume that petitioner never received the notice of deficiency for the

subject years, as he claims, he would be entitled to challenge his underlying

liabilities. The administrative record shows that SO West did give him that

opportunity, asking him to submit tax returns for the subject years. Petitioner did

not do so.

      Petitioner’s failure to present evidence as to his correct liabilities or to

provide requested financial information amount to a failure properly to raise the

issue of his underlying liabilities at the administrative hearing. See McRae v.

Commissioner, T.C. Memo. 2015-132; secs. 301.6320-1(f)(2), Q&A-F3,

301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. Because petitioner failed to

raise his underlying liabilities properly in his administrative hearing with SO

West, he is not entitled to do so now. Because his underlying liabilities are not

properly before us, we review SO West’s determination for abuse of discretion

only. See Goza v. Commissioner, 114 T.C. at 182; Caudle v. Commissioner, T.C.

Memo. 2014-196, aff’d, 603 F. App’x 220 (4th Cir. 2015); secs. 301.6320-1(f)(2),

Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
                                       - 15 -

[*15] VI. Compliance With Tax Return Filing Obligations

      At the administrative hearing a taxpayer is expected to provide relevant

information requested by the settlement officer for her consideration of the facts

and issues involved in the hearing. Sec. 301.6330-1(e)(1), Proced. & Admin.

Regs. Petitioner refused to participate in the scheduled telephonic hearing and

failed to submit the financial information and past-due returns requested by SO

West. Petitioner was not in compliance with his Federal income tax return filing

obligations, nor did he present any collection alternatives. A settlement officer

does not abuse her discretion when she declines to consider a collection alternative

under these circumstances. See Huntress v. Commissioner, T.C. Memo. 2009-161

(holding no abuse of discretion when the settlement officer rejects collection

alternatives where the taxpayer offered none, failed to provide financial

information, and was not current with filing and payment obligations); Lance v.

Commissioner, T.C. Memo. 2009-129 (holding no abuse of discretion when the

taxpayer fails to provide financial information); sec. 301.6330-1(d)(2), Q&A-D8,

Proced. & Admin. Regs. For the same reason we conclude that SO West did not

abuse her discretion by denying petitioner’s requests for a face-to-face hearing and

to audiorecord the hearing. Calafati v. Commissioner, 127 T.C. 219, 228 (2006);
                                        - 16 -

[*16] see, e.g., Zastrow v. Commissioner, T.C. Memo. 2010-215; Moline v.

Commissioner, T.C. Memo. 2009-110, aff’d, 363 F. App’x 675 (10th Cir. 2010).

      Once a taxpayer has been given a reasonable opportunity for a hearing but

has failed to avail himself of it, the Commissioner may make a determination

based on the administrative file as was done here. See Oropeza v. Commissioner,

T.C. Memo. 2008-94 (upholding a determination based on the case file where the

taxpayer refused to participate in an administrative hearing either in person or by

telephone), aff’d, 402 F. App’x 221 (9th Cir. 2010); secs. 301.6330-1(d)(2), Q&A-

D7 and Q&A-D8, 301.6330-1(f)(2), Q&A-F4, Proced. & Admin. Regs. Our

review of the record reveals no abuse of discretion.

VII. Section 6673 Penalty

      Finally, we warned petitioner at trial that section 6673 authorizes the Court

to impose a penalty of up to $25,000 for frivolous and groundless arguments or

whenever it appears to the Court that “proceedings before * * * [us] have been

instituted or maintained by the taxpayer primarily for delay”. Sec. 6673(a)(1)(A).

Notwithstanding the fact that petitioner did not to make any statements at trial

after our warning, that appears to us to be the case here. Because this is

petitioner’s first case before the Court, we will not impose a penalty; but he may

expect a penalty in a future case if he persists in maintaining the same frivolous
                                        - 17 -

[*17] and meritless positions or uses the Court primarily for delay, despite our

warning.

                                     Conclusion

      After review of the entire administrative record, the Court concludes that

SO West satisfied the verification requirements of section 6330 and did not abuse

her discretion in sustaining the notice of intent to levy and the notice of Federal

tax lien. Any contentions we have not addressed are irrelevant, moot, or meritless.

      To reflect the foregoing,


                                                 An appropriate order and decision

                                        will be entered for respondent.
