                        T.C. Memo. 2009-301



                      UNITED STATES TAX COURT



                WILLIAM RAY CESSNA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 30707-08L.             Filed December 22, 2009.



     William Ray Cessna, pro se.

     Jeremy L. McPherson, for respondent.



                        MEMORANDUM OPINION


     GERBER, Judge:   Respondent moved for summary judgment in

this section 63201 collection proceeding involving the filing of

a notice of Federal tax lien (NFTL).   Petitioner objected,



     1
      All section references are to the Internal Revenue Code in
effect for the period under consideration. Rule references are
to the this Court’s Rules of Practice and Procedure.
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alleging, among other things, that the assessment period had

expired at the time of the issuance of the notice of deficiency

and that this matter was not ripe for summary judgment because

there was a dispute about material facts.      The issues we consider

are:    (1) Whether this matter is ripe for summary judgment;

(2) whether petitioner may contest the underlying 1999 tax

liability; (3) whether the period for assessment had expired at

the time of the issuance of the notice of deficiency; and (4)

whether respondent may proceed with collection.

                             Background

       During 1993 petitioner’s wife Janice R. Cessna (deceased on

July 15, 2005) won the California State lottery under which she

was entitled to 20 annual payments.      On February 18, 1999,

petitioner and his wife entered into a lottery prize assignment

agreement, which was approved by the California superior court on

March 24, 1999.    Under the agreement Woodburn Sterling Capital,

LLC (Woodburn), was to pay petitioner and his wife $1,161,500 in

exchange for their assignment to Woodburn of their rights to

eight annual lottery payments.

       On their 1999 joint Form 1040, U.S. Individual Income Tax

Return, filed October 24, 2000, petitioner and his wife reported

the $1,161,500 payment from Woodburn as long-term capital gain.

The address shown on petitioner and his wife’s 1999 return was

P.O. Box 39, McArthur, California 96056.     In a notice of
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deficiency issued and mailed on August 30, 2002, to petitioner

and his wife at that address, respondent determined that the

$1,161,500 was ordinary income and that petitioner and his wife,

therefore, had a $234,540 income tax deficiency for 1999.    On

November 25, 2002, petitioner and his wife petitioned this Court

in docket No. 18327-02.

     On June 28, 2005, respondent’s and petitioner and his wife’s

executed stipulation to be bound was filed.   In that stipulation,

the parties agreed to be bound by the outcome of two test cases.

In addition, petitioner and his wife agreed to the assessment of

the income tax deficiency after the issuance of an opinion

unfavorable to petitioner and his wife and before any appeal of

this Court’s opinion in the test cases.   On November 7, 2006,

this Court issued, in the test cases, an opinion favorable to

respondent.   See Womack v. Commissioner, T.C. Memo. 2006-240.

The decision was appealed and was affirmed by the Court of

Appeals for the Eleventh Circuit.   See Womack v. Commissioner,

510 F.3d 1295 (11th Cir. 2007).   On August 7, 2007, respondent,

in accord with the agreement to be bound, assessed a $234,540

income tax deficiency against petitioner and his wife.   With

respect to petitioner and his wife’s deficiency proceeding at

docket No. 18327-02, no decision had been entered by this Court.

Respondent moved for entry of decision, and this Court entered a

decision on July 29, 2009.
                               - 4 -

     On September 19, 2007, respondent issued an NFTL for the

1999 tax year and on September 27, 2007, respondent sent

petitioner and his wife a Notice of Federal Tax Lien Filing and

Your Right to a Hearing Under IRC 6320.    In response, on November

7, 2007, petitioner submitted a Form 12153, Request for a

Collection Due Process or Equivalent Hearing.    On that form,

petitioner requested a hearing with respect to the lien filing.

He also checked the box which indicated that his spouse was alone

responsible for the tax liability (innocent spouse relief), but

he did not attach a Form 8857, Request for Innocent Spouse

Relief, as required on the Form 12153.    Petitioner did not

suggest any collection alternatives, such as an offer-in-

compromise.   Finally, petitioner contended that the NFTL was “in

violation of I.R.C. 6501”; i.e., that the period for assessment

had expired before respondent assessed the 1999 deficiency.      In

correspondence exchanged during the administrative hearing

process, petitioner asked that any documents be sent to him at

“P.O. Box 39, McArthur, CA 96056-0039.”    In all of his

correspondence with respondent’s personnel, petitioner raised

only the section 6501 issue, and he specifically indicated in a

letter dated August 27, 2008, that he did not wish to pursue

collection alternatives.

     In a September 23, 2008, letter, respondent’s settlement

officer advised petitioner that he was not entitled to challenge
                               - 5 -

the underlying tax liability because he had received a notice of

deficiency and pursued the opportunity to contest it in the Tax

Court.   The settlement officer also explained that the period for

assessment had automatically been extended under section 6503

during the pendency of the deficiency proceeding in the Tax

Court.   Along with that same letter, petitioner was provided a

Form 4340, Certificate of Assessments, Payments, and Other

Specified Matters, reflecting all account activity for

petitioner’s 1999 tax year.

     In response to the September 23, 2008, letter, petitioner,

in an October 11, 2008, letter, alleged that “No Notice of

Deficiency was ever sent to Mr. Cessna.”   He also reiterated his

claim that the assessment period had expired before assessment.

Although petitioner had requested a face-to-face meeting with the

settlement officer, a telephone conference was held on September

18, 2008, during which the focus of the conversation was the

notice of deficiency and petitioner’s claim that the assessment

was untimely.

     Ultimately, on November 22, 2008, respondent issued a notice

of determination sustaining the collection activity of the filing

of an NFTL with respect to petitioner’s 1999 tax liability.

Petitioner appealed respondent’s determination to this Court.     In

his petition, he alleged that the period for assessment had

expired under section 6501 because the notice of deficiency was
                               - 6 -

sent to his former accountant and not to petitioner or his wife.

On the basis of the alleged failure to send a notice of

deficiency to petitioner or his wife, petitioner contends that

the administrative process for his collection case was flawed and

that the period for assessment had expired before the date of

assessment.   Petitioner did not allege entitlement to a

collection alternative or to any other relief such as under

section 6015 (innocent spouse).

     Respondent filed a motion for summary judgment contending

essentially that petitioner is not entitled to question the

underlying merits of his 1999 tax liability; the period for

assessment had not expired before the assessment of the 1999

deficiency; petitioner has not requested any relief upon which

respondent could act; and the settlement officer had complied

with all administrative requirements.

     Petitioner opposed the granting of summary judgment,

contending essentially that there is a genuine issue of material

fact; respondent’s personnel did not comply with administrative

requirements; and the 1999 assessment was made beyond the 3-year

period.

                            Discussion

Summary Judgment

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.   Fla. Peach Corp. v.
                                - 7 -

Commissioner, 90 T.C. 678, 681 (1988).   Summary judgment may be

granted with respect to a legal issue, if there is “no genuine

issue as to any material fact and * * * a decision may be

rendered as a matter of law.”   Rule 121(a) and (b); Craig v.

Commissioner, 119 T.C. 252, 259-260 (2002); Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994).

     Petitioner contends that the stipulation to be bound by the

outcome of the test cases (entered into in the deficiency case)

does not limit petitioner’s right or opportunity to have a

hearing under section 6320 and does not limit petitioner’s right

to question whether the period for assessment had expired when

respondent assessed the 1999 tax liability.   As to that

contention, petitioner has mistaken a legal question for a

question of fact.   The stipulation to be bound is included in the

materials before the parties and the Court and there is no

ambiguity in its content.   Petitioner’s rights to a hearing and

to question the assessment period are governed by applicable law.

     Petitioner contends that the 1999 notice of deficiency was

not sent to him and his wife but instead was sent to his

accountant.   It is upon that basis that petitioner argues that

the period for assessment had expired.   This question can be

addressed by reference to the documents presented to the Court.

Petitioner and respondent presented the same documents addressing
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the question of the notice of deficiency and its mailing.    Both

parties interpret those documents the same way.    Accordingly,

there is no genuine issue of material fact that additional

evidence would resolve.    Under those circumstances, the facts of

the controversy between the parties are established and this

matter is ripe for summary judgment.

Period for Assessment

     Section 6501(a) provides the general rule that the

Commissioner must assess within 3 years after the return was

filed.    Petitioner and his wife’s 1999 joint return was filed

October 24, 2000.   The 1999 income tax deficiency was assessed on

September 27, 2007, more than 3 years from the filing of the

return.   Within the 3-year period, on August 30, 2002, respondent

mailed a notice of deficiency to petitioner and his wife, and on

November 25, 2002, they filed a petition with this Court.

Section 6503(a) provides that the period for assessment shall be

suspended for the period the Secretary is prohibited from making

the assessment or, among other reasons, until the decision of the

Tax Court becomes final and for 60 days thereafter.    As

previously noted, a decision was entered in the deficiency case

(docket. No. 18327-20) on July 29, 2009.

     Because respondent issued a notice of deficiency and

petitioner filed a petition with this Court before the expiration

of the normal 3-year period for assessment, the period was
                                 - 9 -

suspended.     At the time of the assessment during 2007, this

Court’s decision had not become final, and accordingly, the

period remained suspended and the assessment was timely.

     Petitioner also contends that he did not receive a notice of

deficiency.2    Assuming arguendo that petitioner did not receive

the notice of deficiency, that fact is rendered irrelevant

because a petition was timely filed and petitioner had the

opportunity to contest respondent’s determination.     For purposes

of the suspension of the assessment period, it would suffice that

respondent mailed a notice to petitioner and/or that a proceeding

was commenced.    Receipt of the notice is not required to stay or

suspend the assessment period.

Whether Petitioner May Contest the Underlying Liability

     We agree with respondent that petitioner is precluded from

contesting the underlying deficiency.     That is so because

petitioner already had the opportunity to contest the underlying

income tax deficiency in this Court.     See sec. 6330(c)(2)(B).




     2
      Petitioner alleges that the notice was sent to his former
accountant instead of him. Documentation clearly reflects that a
notice of deficiency was timely mailed to petitioner at the
address shown on his tax return, which is the same address that
petitioner used in the administrative proceeding that preceded
this case. It is possible that a copy or duplicate of the notice
was also sent to petitioner’s representative, but that fact does
not, in these circumstances, change the outcome.
                                - 10 -

The Administrative Proceeding

     Petitioner has questioned the administrative proceeding to

the extent that he did not have a face-to-face hearing; and he

has also made the blanket allegation that respondent’s settlement

officer did not comply with the statutory requirements.

     If the taxpayer requests a section 6330 hearing, an officer

in the IRS’ Appeals Office with no prior involvement in the case

is to conduct the hearing.   Sec. 6330(b)(1), (3).   At the hearing

the officer is to verify that the requirements of any

applicable law or administrative procedure have been met.    Sec.

6330(c)(1).   The taxpayer may raise any issue relevant to the

collection action.   Sec. 6330(c)(2)(A).   The taxpayer may also

challenge the existence or amount of the underlying tax liability

if he did not receive a statutory notice of deficiency or did not

otherwise have an opportunity to dispute that liability.    Sec.

6330(c)(2)(B); Montgomery v. Commissioner, 122 T.C. 1 (2004).

     Petitioner received a notice of deficiency and proceeded to

this Court.   The underlying liability which is the subject of the

collection action is the one adjudicated in this Court.

Accordingly, petitioner was not entitled to question the

underlying liability, and we review respondent’s actions under an

abuse of discretion standard.    See Sego v. Commissioner, 114 T.C.

604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182

(2000).
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     After the hearing the officer must determine whether and how

to proceed with collection and shall consider: (1) The

administrative and procedural verification; (2) relevant

issues raised by the taxpayer; (3) where permitted, challenges to

the underlying tax liability; and (4) whether any proposed

collection action properly balances the need for efficient

collection of taxes with the taxpayer’s legitimate concern that

the collection action be no more intrusive than necessary.     Sec.

6330(c)(3).

     There was substantial correspondence between petitioner and

respondent’s personnel.   In that correspondence and in

petitioner’s request for a hearing he mainly raised the question

of whether the period for assessment had expired before

respondent assessed the 1999 deficiency.   Respondent’s personnel

explained in a similar manner as we have in this opinion that the

assessment period remained open at the time of the assessment.

Petitioner did check the box indicating that he was seeking

innocent spouse relief, but he did not follow up on that request

or even mention it in any correspondence or during the telephone

conference afforded to him.   He did not raise or further pursue

that issue during the administrative proceeding or with this

Court.

     The record reveals that respondent’s settlement officer did

comply with the requirements of section 6330(c)(3).   Petitioner
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did not request collection alternatives, nor did he indicate the

he had any documentation other than what he proffered with his

correspondence and his filings with this Court.   Petitioner

agreed to and participated in a telephone hearing.   The absence

of a face-to-face hearing was of no significance in this setting.

In sum the settlement officer addressed each and every argument

raised and pursued by petitioner.   Under these circumstances,

there was no abuse of discretion and respondent is entitled to

proceed with collection.

     To reflect the foregoing,

                                         An appropriate order and

                                    decision will be entered.
