                         115 T.C. No. 31



                     UNITED STATES TAX COURT



                 WILLIAM B. MEYER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

                  DIANE S. MEYER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 2263-00L, 5001-00L.1   Filed November 7, 2000.


          R issued final notices of intent to levy to Ps.
     The notices requested payment of frivolous return
     penalties imposed under sec. 6702, I.R.C., for the
     taxable years 1996 and 1997. Ps requested an Appeals
     Office hearing pursuant to sec. 6330(b), I.R.C. On
     Jan. 13, 2000, prior to conducting an Appeals Office
     hearing, R issued determination letters to Ps stating
     that R would proceed with collection. On Feb. 23,
     2000, the Court received and filed petitions for review
     of R's determination letters that Ps had mailed to the
     Court on Feb. 15, 2000. R filed motions to dismiss the
     petitions for lack of jurisdiction on the grounds: (1)
     The petitions were not filed within the 30-day period
     prescribed in sec. 6330(d)(1), I.R.C.; and (2)
     consistent with Moore v. Commissioner, 114 T.C. 171

     1
        These cases are consolidated solely for the purpose of
disposing of the pending jurisdictional motions.
                                 - 2 -

     (2000), the Court lacks jurisdiction to review the
     disputed determination letters because the Court lacks
     jurisdiction over the underlying taxes (frivolous
     return penalty under sec. 6702). Ps filed oppositions
     to R's motions asserting that the cases should be
     dismissed on the ground that the determination letters
     are invalid.

          Held: R's motions to dismiss will be denied.
     Held, further,: These cases will be dismissed on the
     ground that the determination letters are invalid.



     William B. Meyer and Diane S. Meyer, pro se.

     Katrine Shelton and Richard Goldman, for respondent.

                                OPINION

     DAWSON, Judge:     These cases were assigned to Chief Special

Trial Judge Peter J. Panuthos pursuant to the provisions of

section 7443A(b)(4).2    The Court agrees with and adopts the

opinion of the Special Trial Judge, which is set forth below.

               OPINION OF THE SPECIAL TRIAL JUDGE

     PANUTHOS, Chief Special Trial Judge:     These cases are before

the Court on respondent's Motions to Dismiss for Lack of

Jurisdiction, as supplemented.    As discussed in detail below, we

will dismiss these cases for lack of jurisdiction on the ground

that respondent's Notices of Determination Concerning Collection

Action are invalid.


     2
        Unless otherwise indicated, all section references are to
the Internal Revenue Code. All Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 3 -

Background

     On October 19, 1998, respondent issued a collection letter

to William B. and Diane S. Meyer (petitioners) requesting that

they pay frivolous return penalties under section 6702 in the

amount of $500 for each of the taxable years 1996 and 1997.    On

February 25, 1999, respondent issued to petitioners separate

final notices of intent to levy for the years 1996 and 1997.

     Petitioners timely requested a hearing with the Internal

Revenue Service Office of Appeals (Appeals Office) pursuant to

section 6330(a).   However, the appeals officer assigned to

petitioners' case did not offer or schedule a hearing because his

communications with petitioners led him to believe that they were

challenging respondent's collection efforts solely on

constitutional grounds.

     On January 13, 2000, the Appeals Office issued to

petitioners separate Notices of Determination Concerning

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

(determination letters) stating that all applicable laws and

administrative procedures had been met and that respondent would

proceed with collection against them for 1996 and 1997.

     On or about February 4, 2000, petitioners wrote to the

Appeals Office to complain that they had not received a hearing

prior to the issuance of the above-described determination

letters.   On February 9, 2000, Appeals Officer Tony Aguiar wrote
                                - 4 -

to petitioners and informed them that he had scheduled a

collection conference for February 11, 2000.    His letter further

stated that the conference would not extend the period during

which petitioners were required to file a petition for review

with the Tax Court regarding the determination letters dated

January 13, 2000.

     On February 23, 2000, petitioners filed with the Court

separate petitions for review of respondent's determinations to

proceed with collection.    The petitions arrived at the Court in a

single envelope bearing a U.S. Postal Service postmark date of

February 15, 2000.    At the time the petitions were filed,

petitioners resided at Las Vegas, Nevada.

     In response to the petitions, respondent filed Motions to

Dismiss for Lack of Jurisdiction on the alternative grounds:    (1)

The petitions were not filed within the 30-day period prescribed

in section 6330(d)(1)(A); and (2) because the Court generally

lacks jurisdiction over the frivolous return penalty imposed

under section 6702, section 6330(d) bars the Court from reviewing

respondent's determination to collect such penalties.

     Petitioners filed responses in opposition to respondent's

motions to dismiss.    They assert that the determination letters

are invalid inasmuch as the Appeals Office issued the letters

without first conducting a hearing as mandated under section

6330(b).   Petitioners’ responses are tantamount to (and will be
                                - 5 -

treated as) motions to dismiss for lack of jurisdiction on the

ground that the determination letters are invalid.

     Respondent subsequently supplemented his motions to dismiss,

as directed by the Court, by providing the Court with Postal

Service Form 3877 confirming that the Appeals Office mailed the

disputed determination letters to petitioners on January 13,

2000.

     These cases were called for hearing at the Court's motions

session in Washington, D.C.   Counsel for respondent appeared at

the hearing and argued in support of respondent's motions to

dismiss, as supplemented.   Although petitioners did not appear at

the hearing, they did file Rule 50(c) statements with the Court.

Discussion

     The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress.    See sec. 7442; Judge v. Commissioner, 88 T.C. 1175,

1180-1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529

(1985).   These cases are before the Court pursuant to the

collection review procedures set forth in section 6330.3     Before




     3
        Sec. 6330 was enacted under the Internal Revenue Service
Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,
sec. 3401, 112 Stat. 685, 746, and is effective with respect to
collection actions initiated more than 180 days after July 22,
1998; i.e., Jan. 19, 1999. See RRA 1998 Pub. L. 105-206, sec.
3401(d), 112 Stat. 750.
                               - 6 -

proceeding with our analysis, we will briefly review the

applicable statutory provisions.

     Section 6331(a) provides that, if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after

notice and demand for payment, the Secretary is authorized to

collect such tax by levy upon property belonging to the taxpayer.

Section 6331(d) provides that the Secretary is obliged to provide

the taxpayer with notice, including notice of the administrative

appeals available to the taxpayer, before proceeding with

collection by levy on the taxpayer's property.

     Section 6330 generally provides that the Commissioner cannot

proceed with the collection of taxes by way of a levy on a

taxpayer's property until the taxpayer has been given notice of,

and the opportunity for, an administrative review of the matter

in the form of an Appeals Office hearing, and, if dissatisfied,

given an opportunity for judicial review of the administrative

determination.   See Davis v. Commissioner, 115 T.C. 35 (2000);

Goza v. Commissioner, 114 T.C. 176 (2000).4



     4
          Sec. 6330(a)(3)(B) provides that the notice required
under this section must include the right of the taxpayer to
request a hearing. Sec. 6330(b)(1) provides:

     SEC. 6330(b).   Right to Fair Hearing.--

               (1) In general.–If the person requests a
          hearing under subsection (a)(3)(B), such hearing
          shall be held by the Internal Revenue Service
          Office of Appeals.
                               - 7 -

     Section 6330(c) prescribes the matters that may be raised by

a taxpayer at an Appeals Office hearing.   In sum, section 6330(c)

provides that a taxpayer may raise collection issues such as

spousal defenses, the appropriateness of the Commissioner's

intended collection action, and possible alternative means of

collection.   Section 6330(c)(2)(B) provides that the existence

and amount of the underlying tax liability can be contested at an

Appeals Office hearing if the taxpayer did not receive a notice

of deficiency for the taxes in question or did not otherwise have

an opportunity to dispute such tax liability.   See Sego v.

Commissioner, 114 T.C. 604 (2000); Goza v. Commissioner, supra.

     Section 6330(d) provides for judicial review of the

Commissioner's administrative determination in pertinent part as

follows:

     SEC. 6330(d).   Proceeding After Hearing.--

          (1) Judicial review of determination.-–The person
     may, within 30 days of a determination under this
     section, appeal such determination–-

                (A) to the Tax Court (and the Tax Court shall
           have jurisdiction to hear such matter); or

                (B) if the Tax Court does not have
           jurisdiction of the underlying tax liability, to a
           district court of the United States.

     If a court determines that the appeal was to an incorrect
     court, a person shall have 30 days after the court
     determination to file such appeal with the correct court.

     Section 6330(d) imposes certain procedural prerequisites on

judicial review of collection matters.   Much like the Court's
                               - 8 -

deficiency jurisdiction, the Court's jurisdiction under section

6330(d) is dependent upon a valid determination letter and a

timely filed petition for review.   See Rule 330(b).   Like a

notice of deficiency under section 6213(a), an Appeals Office

determination letter is a taxpayer's "ticket" to the Tax Court.

See Offiler v. Commissioner, 114 T.C. 492, 498 (2000).    See also

Mulvania v. Commissioner, 81 T.C. 65, 67 (1983); see also Gati v.

Commissioner, 113 T.C. 132, 134 (1999).   Moreover, a petition for

review under section 6330 must be filed with the appropriate

court within 30 days of the mailing of the determination letter.

See McCune v. Commissioner, 115 T.C. __ (2000).

     In addition to timely filing requirements, section 6330(d)

limits the Tax Court's jurisdiction to the review of collection

actions in which the underlying tax is of a type over which the

Court normally has jurisdiction.    See Van Es v. Commissioner, 115

T.C. __ (2000)(dismissing a petition for review of a collection

action pertaining to the frivolous return penalty); Moore v.

Commissioner, 114 T.C. 171 (2000) (dismissing a petition for

review of a collection action pertaining to trust fund taxes).

     As indicated, respondent moves to dismiss on the alternative

grounds:   (1) The petitions were not filed within the 30-day

filing period prescribed in section 6330(d)(1)(A); and (2) the

underlying liabilities (frivolous return penalties) are not

matters over which the Court normally has jurisdiction.
                               - 9 -

Petitioners do not dispute either point.   However, they contend

that the cases should be dismissed on a third ground; i.e., that

the determination letters are invalid.

     There is no dispute that the Court lacks jurisdiction in

these cases.   Because the basis for dismissal may affect whether

respondent may proceed with collection, we are obliged to

determine the proper ground for dismissal.   Assuming that

respondent failed to issue valid determination letters, we will

dismiss the cases on that basis, rather than on either of the

alternative grounds upon which respondent's motions are based.

See, e.g., Pietanza v. Commissioner, 92 T.C. 729, 735-736 (1989),

affd. by unpublished opinion 935 F.2d 1282 (3d Cir. 1991).

     The Court has not previously considered the elements

necessary for a valid determination letter under section 6330.

Suffice it to say, section 6330(b) contemplates that an Appeals

Office hearing, if duly requested by the taxpayer, must precede

the issuance of a determination letter.    See Offiler v.

Commissioner, supra.   Section 6330(b)(1) plainly states that if a

taxpayer "requests a hearing under subsection (a)(3)(B), such

hearing shall be held by the Internal Revenue Service Office of

Appeals."

     In Katz v. Commissioner, 115 T.C. __, ___ (2000)(slip op. at

14-15), we recently held that the Commissioner had complied with

the hearing requirement under section 6330(b)(1) by offering the
                               - 10 -

taxpayer a hearing at the Appeals Office located nearest the

taxpayer's residence.    We further concluded that, where the

taxpayer had declined to attend the scheduled hearing on the

ground that the location of the Appeals Office would impose an

undue burden on his witnesses, the taxpayer nevertheless received

an acceptable Appeals Office hearing by way of a telephone

conference with the Appeals officer.    See id. at ___ (slip op. at

15); see Davis v. Commissioner, supra (an Appeals Office hearing

does not include the right to subpoena or examine witnesses).

     The record in this case shows that the Appeals Office did

not provide petitioners with an opportunity for a hearing either

in person or by telephone prior to issuing the disputed

determination letters.    Consistent with the plain language of

section 6330(b), we conclude that the disputed determination

letters are invalid.    The Appeals officer's attempt to invest the

determination letters with legitimacy by scheduling a conference

with petitioners after the issuance of the determination letters

was too late in light of the clear mandate of section 6330.

     Accordingly, we shall deny respondent's Motions to Dismiss

for Lack Jurisdiction, as supplemented, and we shall dismiss

these cases on the ground that the determination letters are

invalid.

     To reflect the foregoing,
- 11 -

Appropriate orders of dismissal

will be entered.
