                         T.C. Memo. 2009-206



                       UNITED STATES TAX COURT



                  STEVE A. HARRY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket No. 28096-07L.             Filed September 14, 2009.



     Steve A. Harry, pro se.

     William F. Castor, for respondent.



                         MEMORANDUM OPINION


     JACOBS, Judge:1   The dispute between the parties concerns

actions taken (the filing of a lien) and proposed to be taken


     *
      This opinion replaces our previously filed opinion, T.C.
Memo. 2008-295, dated Dec. 23, 2008, which was withdrawn by order
dated July 31, 2009.
     1
      This case was assigned to Judge Julian I. Jacobs for
disposition of respondent’s motion for summary judgment by order
of the Chief Judge on Sept. 24, 2008.
                               - 2 -

(intent to levy) by respondent against petitioner to collect an

unpaid civil penalty pursuant to section 6700 (section 6700

penalty) for 2002.   On August 7, 2008, respondent filed a motion

for summary judgment pursuant to Rule 121.   Petitioner, though

ordered by the Court to file a response to the motion for summary

judgment, filed none.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code (Code), and all Rule references are to

the Tax Court Rules of Practice and Procedures.

                            Background

     On September 5, 2006, respondent sent petitioner, an

attorney, a letter captioned Section 6700 Pre-Assessment Letter

advising him that respondent was considering assessing a section

6700 penalty against him on account of his participation in the

issuance of $150,400,000 of Multifamily Housing Revenue Bonds,

2002 Series on February 28, 2002, by the Oklahoma Housing

Development Authority.   That letter stated in pertinent part:

          We have reviewed certain materials with respect to the
     issuance of the above referenced bonds (collectively, the
     “Bonds”). We are considering assessing penalties under
     section 6700 of the Internal Revenue Code as a result of
     your organization or assistance in the issuance of the
     Bonds.
          The enclosed explanation provides a detailed summary of
     the facts, law and analysis on which our consideration of
     the penalty assessment is based. The report also includes a
     computation of the penalty amount.
          You may request a conference with an IRS supervisor to
     discuss the merits of any factual or legal issues indicating
     such action should not be taken or to discuss the
     possibility of entering into a closing agreement. * * *
                                - 3 -

Petitioner was advised that if respondent did not receive a reply

within 30 days from the date of the letter, respondent would

initiate procedures to assess the section 6700 penalty.

Petitioner did not respond to this Section 6700 Pre-Assessment

Letter.

     On February 28, 2007, respondent sent a second letter to

petitioner, stating that respondent would assess the section 6700

penalty.   The second letter informed petitioner that upon

assessment of the section 6700 penalty, (1) within 30 days

petitioner could pay 15 percent of the assessment and file Form

843, Claim for Refund and Request for Abatement, and (2) if

petitioner received notice that the claim was disallowed,

petitioner would have 30 days to notify respondent of his intent

to appeal the denied claim to respondent’s Appeals Office.

Finally, the second letter informed petitioner that if he made

such a payment and his claim for refund was administratively

denied, he could file suit in a U.S. District Court within 30

days of the disallowance of the claim, or within 30 days after

the expiration of the 6-month period following the filing of his

claim, whichever was earlier.   Petitioner failed to respond

to the second letter.

     Respondent assessed the section 6700 penalty against

petitioner on April 16, 2007, and thereafter sent petitioner a
                               - 4 -

notice of the assessment and demand for payment.   Petitioner did

not pay the assessed amount or any part thereof.

     On June 27, 2007, respondent sent petitioner Letter 1058,

Final Notice - Notice of Intent to Levy and Your Right to a

Hearing Under I.R.C. § 6330 (the levy notice), with respect to

the section 6700 penalty.   On July 17, 2007, respondent sent

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

a Hearing under I.R.C. § 6320 (the lien notice), advising

petitioner that a notice of Federal tax lien had been filed with

respect to the section 6700 penalty and that petitioner had the

right to a hearing to appeal this collection action and to

discuss payment method options.

     On July 11, 2007, petitioner filed Form 12153, Request for a

Collection Due Process Hearing, regarding the levy notice.    On

August 3, 2007, petitioner filed another Form 12153 regarding the

lien notice.   On both of these forms petitioner checked the box

indicating that he wished to make an offer-in-compromise.    By a

letter dated August 29, 2007, Scott Penny, a settlement officer

in respondent’s Oklahoma City, Oklahoma, Appeals Office, informed

petitioner that he would like to hold a collection due process

hearing via a conference call on September 19, 2007.   Appeals

Settlement Officer Penny informed petitioner that in order for

him to consider alternative collection methods, such as an offer-
                                - 5 -

in-compromise, petitioner had to provide certain financial and

tax return information.

     On September 14, 2007, Appeals Settlement Officer Penny

received a letter from petitioner enclosing the requested

information.   In his letter, petitioner requested that the notice

of Federal tax lien be withdrawn and that his offer-in-compromise

be accepted.   Petitioner argued that he had started an insurance

company but that he had “been denied sponsorship through some

insurance companies due to [his] credit rating and the tax lien

of record.”    He stated that he could not “write insurance with

[his] new license and company due to the tax lien.”    Petitioner

offered to settle all of his and his wife’s taxes, including the

section 6700 penalty and potential income tax liabilities for

2003, 2004, and 2005 that respondent might assess following the

conclusion of an audit, by turning his retirement assets in a

section 401(k) plan over to the IRS.

     During the September 19, 2007, conference call, petitioner

stated that the filing of a tax lien created a financial hardship

for him.   In addition, petitioner renewed his proposal to resolve

the section 6700 penalty and all tax liabilities for 2003, 2004,

and 2005 by way of an offer-in-compromise.    Appeals Settlement

Officer Penny replied that no offer-in-compromise could be

considered until the audit of petitioner’s 2003, 2004, and 2005

tax returns was completed.    After stating that he understood
                                 - 6 -

respondent’s position, petitioner posited that the section 6700

penalty might have been erroneously assessed on the basis that

the Oklahoma Housing Development Authority had appealed its own

section 6700 penalty which had been assessed as a result of the

sale of the Multifamily Housing Revenue Bonds.    After reviewing

petitioner’s section 6700 penalty file, Appeals Settlement

Officer Penny rejected petitioner’s claim.

     On November 6, 2007, respondent issued petitioner a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330, determining that the tax lien was filed in

accordance with all legal and procedural requirements and

sustaining the proposed levy action.     In that notice respondent

rejected petitioner’s argument that the section 6700 penalty

should not have been imposed against petitioner individually

while the Oklahoma Housing Development Authority’s own section

6700 penalty was under appeal.    Appeals Settlement Officer Penny

took the position that the assessment against petitioner was not

predicated on any determination regarding the appeal of the

penalty assessment against the Oklahoma Housing Development

Authority.

     On December 5, 2007, petitioner filed a petition in this

Court alleging:

          There is an outstanding appeal on a preliminary
     determination letter on a tax exempt bond issue that
     relates to the incorrect findings by the IRS on the
     Sec. 6700 exam against me. The premature findings on
                                - 7 -

     the Sec. 6700 exam violated my due process rights
     since the bonds in question are under appeal. The IRS
     delayed the requested appeal on the bonds while moving
     forward on the Sec. 6700 exam in an apparent attempt
     to force some kind of settlement agreement. I
     received this civil liability fine when I refused to
     settled [sic] on the exam for the bonds. The amount
     of the fine was in excess of the actual income I
     received. I request that the lien be released and the
     fine eliminated.

Petitioner resided in Oklahoma when he filed the petition.

                           Discussion

A.   Summary Judgment

     Summary judgment is used to expedite litigation and

avoid unnecessary and expensive trials.    Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).    This Court may grant

summary judgment where there is no genuine issue of any material

fact and a decision may be rendered as a matter of law.    Rule

121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), affd. 17 F.3d 965 (7th Cir. 1994).   The moving party

bears the burden of proving that there is no genuine issue of

material fact, and the Court will view any factual material and

inferences in the light most favorable to the nonmoving party.

Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).    Rule 121(d)

provides that where the moving party properly makes and supports

a motion for summary judgment “an adverse party may not rest upon

the mere allegations or denials of such party’s pleading,” but

must set forth specific facts, by affidavits or otherwise,

“showing that there is a genuine issue for trial.”
                               - 8 -

B.   Jurisdiction

     The section 6700 penalty is governed by the procedural rules

of section 6703,2 which generally removes section 6700 penalty

assessments from the deficiency jurisdiction of this Court.

However, section 6330(d)(1)3 provides this Court with

jurisdiction to review an appeal from the Commissioner’s

determination to proceed with collection activity regardless of

the type of underlying tax involved.   We have held that our

jurisdiction includes the right to review the Commissioner’s lien

and levy collection activity regarding penalties governed by the

procedural rules of section 6703.   See Callahan v. Commissioner,

130 T.C. 44 (2008).   Thus, we have jurisdiction to review the

notice of determination of November 6, 2007, issued to petitioner

under sections 6320 and 6330 because the underlying tax liability

consists of a section 6700 penalty.




     2
      Sec. 6703(b) provides that subch. B of ch. 63 of the Code
(relating to deficiency procedures) does not apply with respect
to the assessment or collection of the penalties provided by
secs. 6700, 6701, and 6702. Sec. 6703(c) provides that a
taxpayer may challenge a penalty under secs. 6700 and 6701 by
paying 15 percent of the assessed penalty, filing an
administrative claim for refund, and if that claim is not
granted, filing a claim for refund in the appropriate U.S.
District Court.
     3
      As amended by the Pension Protection Act of 2006, Pub. L.
109-280, sec. 855, 120 Stat. 1019, effective for determinations
made after Oct. 16, 2006.
                              - 9 -

C.   Sections 6320 and 6330

     Section 6320(a) provides that written notice of the filing

of a Federal tax lien must be furnished by the Secretary to the

taxpayer whose property is subject to the lien.    Section 6320(b)

provides that a taxpayer may request a hearing regarding the

lien, and section 6320(c) provides that the hearing must be

conducted pursuant to the rules of section 6330.    Section 6330(a)

provides that no levy may be made on any property or right to

property of any person unless the Secretary has notified that

person in writing of the right to a hearing before the levy is

made (the section 6330 hearing).   Section 6330(b)(3) provides

that if a person requests a section 6330 hearing, that hearing

shall be held before an impartial officer or employee of the IRS.

During the hearing, a taxpayer may raise any relevant issue,

including appropriate spousal defenses, challenges to the

appropriateness of the collection action, and collection

alternatives, including offers-in-compromise.   Sec.

6330(c)(2)(A).

     A taxpayer is precluded from contesting the existence or

amount of the underlying tax liability at the section 6330

hearing unless the taxpayer did not receive a notice of

deficiency for the tax in question or did not otherwise have an

opportunity to dispute the underlying tax liability.   Sec.
                              - 10 -

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

(2000).4

     Following a section 6330 hearing, the Commissioner’s Appeals

settlement officer must make a determination whether the proposed

levy action may proceed.   The Commissioner’s Appeals settlement

officer is required to take into consideration:   (1) The

verification presented by the Secretary that the requirements of

applicable law and administrative procedures have been met; (2)

the relevant issues raised by the taxpayer; and (3) whether the

proposed levy action appropriately balances the need for

efficient collection of taxes with the taxpayer’s concerns that

the levy action be no more intrusive than is necessary.     Sec.

6330(c)(3).

     When reviewing a section 6330 hearing, if the validity of

the underlying tax liability was at issue in a section 6330

hearing, this Court will review the matter de novo.   Davis v.

Commissioner, 115 T.C. 35, 39 (2000).   If the underlying tax

liability was not at issue, this Court will review the

determination of the Appeals Office for abuse of discretion.

Goza v. Commissioner, 114 T.C. 176, 182 (2000).


     4
      We have interpreted the phrase “underlying tax liability”
to include any amounts a taxpayer owes pursuant to tax laws that
are subject to the Commissioner’s collection activities. Katz v.
Commissioner, 115 T.C. 329, 338-339 (2000). This includes
penalties that are governed by the procedural rules of sec. 6703.
See Callahan v. Commissioner, 130 T.C. 44 (2008) (concerning the
sec. 6702 frivolous return penalty).
                                - 11 -

D.   Application

     Petitioner argues in his petition that the section 6700

penalty (the underlying tax) was incorrectly assessed.    However,

petitioner has failed to aver facts sufficient to show error in

the assessment.

     Rule 331 addresses the commencement of lien and levy actions

under sections 6320 and 6330.    An action under either section is

commenced by the filing of a petition.    Rule 331(a).   Rule 331(b)

specifies the content of the petition.    Rules 331(b)(4) and (5)

require the petition to contain:

          (4) Clear and concise assignments of each and every
     error which the petitioner alleges to have been committed in
     the notice of determination. * * *

          (5) Clear and concise lettered statements of the facts
     on which the petitioner bases each assignment of error.

     Petitioner challenged the existence and amount of the

section 6700 penalty at his section 6330 hearing and now

challenges it before us.   For the validity of the underlying tax

liability to be properly at issue before us, petitioner must

comply with Rule 331.   His pleading must contain a sufficient

specificity of facts so that the Court can conduct a meaningful

hearing to determine whether respondent can proceed with the

collection of that liability.

     Petitioner’s averments make clear that he disagrees with the

imposition of the section 6700 penalty.    However, other than

claiming that the imposition was premature and excessive,
                               - 12 -

petitioner fails to specify the basis of his disagreement; i.e.,

he fails to explain why it is premature, why the investigation of

the Oklahoma Housing Development Authority is relevant, or the

basis for his claim that the section 6700 penalty is excessive.

Furthermore, petitioner has failed to respond to respondent’s

motion for summary judgment.   As we noted supra, Rule 121(d)

provides that petitioner must set forth specific facts, by

affidavits or otherwise, “showing that there is a genuine issue

for trial.”

     In his motion for summary judgment, respondent states that

Appeals Settlement Officer Penny reviewed petitioner’s section

6700 file and found that the procedural requirements for

assessing the section 6700 penalty were followed.   Petitioner

does not contradict this.   We find that petitioner has failed to

state grounds or to aver facts on which we could find that

respondent erred in his determination.   On that basis, respondent

is entitled to summary disposition in his favor.    See Poindexter

v. Commissioner, 122 T.C. 280 (2004), affd 132 Fed. Appx. 919 (2d

Cir. 2005).

     During the section 6330 hearing, petitioner made an offer-

in-compromise with respect to his liability for the section 6700

penalty as well as his potential liability for 2003, 2004, and

2005 income taxes.   Petitioner’s offer-in-compromise was rejected

because of the IRS’s ongoing audit for 2003, 2004, and 2005.
                              - 13 -

Petitioner did not contest the rejection of his offer-in-

compromise in his petition, and he did not respond to

respondent’s motion for summary judgment.   Accordingly, this

issue is deemed conceded.   See Rule 331(b)(4).

      Petitioner also argued at his section 6330 hearing that the

notice of Federal tax lien should be withdrawn because,

petitioner asserted, it created a financial hardship.    Respondent

rejected this argument.   Petitioner did not raise this issue in

his petition, and he did not respond to respondent’s motion for

summary judgment.   Therefore, pursuant to Rule 331(b)(4), this

issue is deemed conceded.

     To conclude, we sustain respondent’s filing of the tax lien

and respondent’s intent to levy petitioner’s property.

Respondent is entitled to judgment as a matter of law.

     To give effect to the foregoing,


                                    An order and decision will be

                               entered for respondent.
