                        T.C. Memo. 2010-102



                      UNITED STATES TAX COURT



          INDEPENDENT STAFFING SOLUTIONS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9734-08L.                Filed May 10, 2010.



     Jack Duran, for petitioner.

     James A. Whitten, for respondent.



                        MEMORANDUM OPINION


     MARVEL, Judge:   Pursuant to section 6330(d),1 petitioner

seeks review of respondent’s determination to sustain a notice of

Federal tax lien (NFTL) with respect to petitioner’s unpaid



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                                - 2 -

employment tax,2 i.e., unpaid withholding and FICA tax

liabilities reported on Form 941, Employer’s Quarterly Federal

Tax Return, for the quarters ending September 30 and December 31,

2006, and March 31, 2007, and unpaid FUTA tax liabilities

reported on Form 940, Employer’s Annual Federal Unemployment

(FUTA) Tax Return, for 2006.    For the reasons that follow, we

shall sustain respondent’s determination.

                            Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.   The stipulation of facts is incorporated herein by

this reference.   Petitioner’s mailing address was in California,

when the petition was filed.3

     Petitioner is a wholly owned, tribally chartered enterprise

of the Fort Independence Indian Tribe, a federally recognized




     2
      We use the term “employment tax” to refer to taxes under
the Federal Insurance Contributions Act (FICA), secs. 3101-3128,
the Federal Unemployment Tax Act (FUTA), secs. 3301-3311, and
Federal income tax withholding, secs. 3401-3406, and 3509.
     3
      Petitioner’s principal place of business is unclear. The
record suggests that petitioner’s principal place of business in
2003 was on the sovereign Indian Lands of the Fort Independence
Indian Reservation. However, there is no evidence in the record
with respect to petitioner’s principal place of business on the
date the petition was filed.
                                - 3 -

Indian tribe.4   Petitioner was established in 2003.   Petitioner

is in the business of providing temporary staffing services.

     In September 2003 petitioner entered into an agreement with

MRG California, L.L.C. (MRG).   The terms of the agreement called

for MRG to provide management services to petitioner, including

administration of petitioner’s payroll.

     On November 13, 2007, respondent filed an NFTL against

petitioner in the Inyo County recorder’s office with respect to

the following employment tax liabilities:

         Form          Quarter/Tax Year                Amount Due

         940                 2006                         $249.48
         941               9/30/2006                   697,056.42
         941              12/31/2006                   286,031.60

Also on November 13, 2007, respondent mailed to petitioner a

Notice of Federal Tax Lien Filing and Your Right to a Hearing

Under IRC 6320 (CDP notice) regarding the same liabilities.

     On December 18, 2007, petitioner timely filed a Form 12153,

Request for a Collection Due Process or Equivalent Hearing, with

respect to the CDP notice.   In the Form 12153 petitioner stated


     4
      As a threshold matter, we note that tribally chartered
enterprises generally are required to withhold employment taxes
in the same manner as other employers. See Rev. Rul. 59-354,
1959-2 C.B. 24; Rev. Rul. 56-110, 1956-1 C.B. 488; cf. Allen v.
Commissioner, T.C. Memo. 2005-118 (rejecting taxpayer’s claim
that income received as a member of a tribal council was exempt
from employment tax for both wage withholding and self-employment
tax purposes and holding that taxpayer’s income was to be treated
as self-employment income subject to Federal self-employment tax
under sec. 1401); Doxtator v. Commissioner, T.C. Memo. 2005-113
(same).
                               - 4 -

as follows with respect to the employment tax liabilities:    “Tax

payments have been made.   The tax is not due and owing.   The

taxes have not been properly calculated.   Taxpayer is not

responsible for the tax payments.”

     On March 17 and 18, 2008, petitioner’s counsel5 sent several

documents to respondent’s settlement officer, Ruth Beck (Ms.

Beck), relating primarily to the business relationship between

petitioner and MRG.   On March 24, 2008, petitioner’s counsel and

Ms. Beck held a collection due process hearing by telephone.

During the hearing petitioner’s counsel contended that petitioner

was not liable for the employment tax liabilities because of the

unlawful acts of MRG and its successor, Independent Management

Resources, L.L.C. (IMR).   Specifically, petitioner’s counsel

argued the lien should be discharged because MRG and IMR

misappropriated the funds petitioner had earmarked for payment of

its employment tax liabilities.6   Petitioner did not make any

other arguments with respect to the existence of the employment

tax liabilities and did not suggest any collection alternatives.7


     5
      Petitioner’s then counsel, John M. Peebles, has since
withdrawn.
     6
      The record does not corroborate any illegal or improper
acts on the part of MRG or IMR, and we express no opinion with
respect to petitioner’s assertion that MRG or IMR misappropriated
petitioner’s funds.
     7
      Petitioner’s counsel asserted that petitioner’s tax
liability was calculated incorrectly. However, he presented no
                                                   (continued...)
                              - 5 -

     On March 31, 2008, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination).   In the notice of

determination respondent sustained the filing of the NFTL with

respect to petitioner’s employment tax liabilities.   In an

attachment to the notice of determination, respondent addressed

petitioner’s argument as follows:

     Form 12153 was annotated, Lien “discharge.”

     Your representative intimated that it appears another
     entity may be liable for the tax liability. Other than
     a copy of an agreement between the taxpayer and another
     entity of which the Service had no part in this
     agreement [sic], there was no more information provided
     to the Settlement Officer regarding this possible
     issue.

     Review of IRM 5.12.3.12, Discharge of Property and IRM
     5.12.3.12.1, When to Issue a Certificate of Discharge
     has affirmed the Settlement Officers [sic]
     determination that a lien discharge is inappropriate in
     this case.

     No other issues were raised.

Petitioner timely filed a petition in this Court challenging

respondent’s notice of determination.




     7
      (...continued)
evidence or explanation with respect to this argument.
                                - 6 -

                              Discussion

I.   Sections 6320 and 6330

     Section 6320(a) provides that the Secretary must notify a

taxpayer in writing of the filing of an NFTL and of the

taxpayer’s right to request an administrative hearing with

respect to the lien.    Section 6320(b) provides that the taxpayer

is entitled to a fair hearing before an impartial officer of the

Internal Revenue Service Office of Appeals (Appeals Office).

Section 6320(c) provides that the hearing shall be conducted

according to the provisions of section 6330(c), (d), and (e)

(other than section 6330(d)(2)(B)).

     A taxpayer may raise any relevant issue at the hearing,

including appropriate spousal defenses, challenges to the

appropriateness of collection action, and offers of collection

alternatives.   Sec. 6330(c)(2)(A).     A taxpayer may also challenge

the existence or amount of the underlying liability, but only if

the taxpayer did not receive a statutory notice of deficiency or

did not otherwise have a previous opportunity to dispute the

underlying liability.   Sec. 6330(c)(2)(B).

     Following the hearing, the Appeals Office must issue a

notice of determination with respect to the proposed collection

activity.   In making the determination, the Appeals Office must

take into consideration:   (1) Verification from the Secretary

that the requirements of any applicable law or administrative
                                - 7 -

procedure have been followed;8 (2) any relevant issues raised by

the taxpayer; and (3) whether the proposed collection action

appropriately balances the need for appropriate collection of

taxes with the taxpayer’s legitimate concerns regarding the

intrusiveness of the proposed collection action.    Sec.

6330(c)(3).

     If the taxpayer disagrees with the Appeals Office’s

determination, the taxpayer may seek review of the determination

by filing a timely petition in this Court.    Sec. 6330(d).    If a

taxpayer’s underlying liability is properly at issue, we review

any determination with respect to the underlying liability de

novo.    Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).    We review any other

administrative determination for abuse of discretion.       Craig v.

Commissioner, 119 T.C. 252, 260 (2002) (citing Sego v.

Commissioner, supra at 610).

     Respondent concedes that petitioner did not receive a notice

of deficiency and did not otherwise have an opportunity to

challenge the employment tax liabilities.    Accordingly,

petitioner may challenge the underlying liabilities in this


     8
      No particular form of verification is required, and it is
well settled that a taxpayer’s account transcripts presumptively
will satisfy the verification requirement of sec. 6330(c)(1).
Burke v. Commissioner, 124 T.C. 189, 195 (2005) (citing Roberts
v. Commissioner, 118 T.C. 365, 371 n.10 (2002), affd. 329 F.3d
1224 (11th Cir. 2003), Nestor v. Commissioner, 118 T.C. 162, 166
(2002), and Lunsford v. Commissioner, 117 T.C. 183 (2001)).
                               - 8 -

proceeding and, to the extent the underlying liabilities are at

issue, we will review respondent’s determination de novo.

II.   Respondent’s Notice of Determination

      A.   Applicable Law and Administrative Procedure

      The record establishes that Ms. Beck reviewed petitioner’s

account transcripts for the tax periods at issue and determined

that all applicable laws and administrative procedures had been

satisfied with respect to the NFTL.    Petitioner does not argue

that respondent failed to fulfill the requirements of any

applicable law or administrative procedure, and our review of the

record does not reveal any legal or procedural errors with

respect to respondent’s proposed collection action.    Accordingly,

we conclude that respondent’s determination that the requirements

of all applicable laws and administrative procedures were

satisfied was not an abuse of discretion.

      B.   Petitioner’s Arguments

      Petitioner advanced only one argument during the collection

due process hearing; i.e., that a third party’s misappropriation

of funds set aside for payment of petitioner’s employment tax

liabilities relieves petitioner of liability for the unpaid

employment taxes.9   As petitioner’s argument is a challenge to


      9
      Petitioner stated on the Form 12153 that the employment tax
liabilities were not due and owing, and petitioner’s counsel
asserted during the hearing that petitioner’s employment tax was
not properly calculated. However, as discussed above, petitioner
                                                   (continued...)
                                 - 9 -

the existence of the underlying liability, we review petitioner’s

argument de novo.     See Sego v. Commissioner, supra at 610; Goza

v. Commissioner, supra at 181-182.       On the basis of the record

before us, however, we conclude that petitioner’s argument is not

supported by the facts or applicable law.

     Despite petitioner’s assertions, there is no credible

evidence in the record that MRG, IMR, or any other third party

misappropriated petitioner’s funds.10      Accordingly, petitioner’s

assertion that a third party misappropriated the funds set aside

to pay petitioner’s employment tax liabilities is without factual

support and, in any event, is not a recognized defense to

respondent’s proposed collection action.

          C.      Balancing Efficient Collection With Taxpayer’s
                  Legitimate Concerns

     Finally, on the basis of her review of petitioner’s account

transcripts, Ms. Beck determined that respondent’s collection

action; i.e., the filing of an NFTL, was no more intrusive than

necessary.     Petitioner does not specifically address this



     9
      (...continued)
failed to explain or submit any evidence to the     hearing officer
with respect to this argument. Petitioner does      not argue in its
petition that the employment tax was improperly     calculated.
Consequently, we deem this issue conceded. See      Rule 331(b)(4).
     10
      MRG’s and IMR’s bankruptcy petitions, which were among the
documents mailed to Ms. Beck before the hearing and are part of
the record in this case, list petitioner as an unsecured
creditor. However, such evidence, standing alone, does not
establish that MRG or IMR misappropriated petitioner’s funds.
                                - 10 -

conclusion.    On the basis of the record before us, we can see no

reason to conclude that the determination on this point was

erroneous.

III. Conclusion

     We conclude that respondent did not err in determining that

all applicable laws and administrative procedures had been

followed with respect to petitioner’s unpaid employment tax and

that the filing of the NFTL appropriately balanced the need for

efficient collection of tax with the taxpayer’s legitimate

concerns.     We further conclude that the sole issue raised by

petitioner, i.e., whether a third party’s alleged

misappropriation of petitioner’s funds relieves petitioner of

liability for unpaid employment tax, is factually unsupported by

the record and legally without merit.     Consequently, respondent’s

determination is sustained.

     We have considered the remaining arguments of both parties

and, to the extent not discussed above, we conclude those

arguments are irrelevant, moot, or without merit.

     To reflect the foregoing,


                                      Decision will be entered for

                                 respondent.
