                  T.C. Memo. 2009-282



                UNITED STATES TAX COURT



             TIMOTHY BURKE, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 5100-08L.              Filed December 8, 2009.



     The IRS determined a deficiency in P’s income tax
for 1998. P petitioned the Tax Court, which sustained
the IRS’s determination. P did not file an appeal bond
but appealed to the Court of Appeals for the First
Circuit, which affirmed. The Supreme Court denied P’s
petition for certiorari. After the Tax Court’s
decision and during P’s appeal, the IRS assessed tax
and interest for 1998 and issued a levy notice. The
IRS also imposed a failure-to-pay addition to tax under
I.R.C. sec. 6651(a)(3). P requested a CDP hearing and
challenged the addition to tax on the grounds that the
IRS should not have assessed the addition while P
pursued his appeals, that the assessment was improper
because neither the notice of deficiency nor the Tax
Court determined any penalties, and that he reasonably
relied on statements by IRS examining agents that no
penalties would apply. P requested abatement of the
I.R.C. sec. 6651(a)(3) failure-to-pay addition to tax.
IRS Appeals denied P’s abatement request and sustained
                              - 2 -

     the levy notice.    P appealed the notice of
     determination.

          Held: P is liable for the I.R.C. sec. 6651(a)(3)
     failure-to-pay addition to tax.

          Held, further, Appeals did not abuse its
     discretion in sustaining the collection action, and
     collection by levy may proceed.



     Timothy Burke, pro se.

     Michael R. Fiore, for respondent.



                         MEMORANDUM OPINION


     GUSTAFSON, Judge:     Petitioner Timothy Burke has appealed,

pursuant to section 6330(a), the determination by the Internal

Revenue Service (IRS) to uphold a proposed levy to collect an

addition to tax under section 6651(a)(3) for tax year 1998.1    The

issues for decision are:    (1) Whether Mr. Burke is liable for the

failure-to-pay addition to tax under section 6651(a)(3) with

respect to his unpaid income tax liability for tax year 1998; and

(2) whether the IRS abused its discretion in determining to

proceed with collection by levy.




     1
      Except as otherwise noted, all section references are to
the Internal Revenue Code (26 U.S.C.), and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

                              Background

     The parties submitted this case fully stipulated pursuant to

Rule 122, reflecting their agreement that the relevant facts

could be presented without a trial.     We incorporate by this

reference the parties’ stipulation of facts and supplemental

stipulation of facts, both dated March 17, 2009, and the exhibits

attached thereto.2

     Mr. Burke worked for the IRS from 1978 to 1985, became a

certified public accountant in 1985 or 1986, earned an LL.M. in

taxation in 1986, and has practiced law since 1987.     He resided

in Massachusetts when he filed the petition.

1998 Federal Income Tax Return and Examination

     Mr. Burke filed his 1998 Federal income tax return in

December 1999.   With his return he included a Form 8082, Notice

of Inconsistent Treatment or Administrative Adjustment Request,

to disclose that he was reporting his distributive share of

partnership income as zero even though the partnership tax return

filed by his partner reported that they each had a distributive

share for 1998 of $121,000.    The IRS determined that the $121,000

distributive share was taxable to Mr. Burke in 1998 and also



     2
      Both of the parties attached to their post-trial briefs
documents that they apparently intended as additional evidence.
These documents were not included with the parties’ stipulations
of facts, and neither party moved to reopen the record to admit
these additional documents. In this opinion we do not rely upon
information contained in documents which are not in evidence.
                                - 4 -

disallowed certain business deductions.     The IRS examining

officer’s activity record notes that the IRS did not determine an

accuracy-related penalty or a fraud penalty for 1998 because of

Mr. Burke’s disclosure.    The IRS issued a notice of deficiency

determining a $41,338 deficiency in tax and no additions to tax

or penalties.

1998 Deficiency Litigation

     On August 19, 2004, Mr. Burke filed a petition with this

Court at docket No. 14904-04 seeking a redetermination of the

deficiency.   After Mr. Burke provided an analysis of the

partnership’s income during discovery, the IRS increased the

deficiency to $53,077.    Mr. Burke contended, however, that the

existence of a controversy between Mr. Burke and his partner

rendered the amount of his partnership distributive share

indefinite, that the partnership receipts were frozen in escrow

during 1998 and thus unavailable to him, and that his lack of a

right to the income required postponing the inclusion of his

distributive share in income.

     This Court granted the Government’s motion for summary

judgment.   Burke v. Commissioner, T.C. Memo. 2005-297, filed Dec.

27, 2005 (Burke I).   We held that the distributive share was

taxable income to Mr. Burke in 1998, independent of any dispute

between him and his partner and regardless of whether the share

was distributed or held in escrow.      We affirmed the Government’s
                               - 5 -

calculation of the distributive share and sustained the

disallowance of claimed business deductions because Mr. Burke

failed to substantiate the expenses and to establish their

deductibility.   On January 18, 2006, we entered an order and

decision sustaining a $53,077 deficiency for tax year 1998.

     Mr. Burke appealed our decision, but he did not file a bond

under section 7485 to stay assessment and collection.   The U.S.

Court of Appeals for the First Circuit affirmed our decision in

May 2007, Burke v. Commissioner, 485 F.3d 171 (1st Cir. 2007),

and the U.S. Supreme Court denied Mr. Burke’s petition for a writ

of certiorari in February 2008, Burke v. Commissioner, 552 U.S.

1186 (2008).

IRS Collection Action

     On July 21, 2006, while Mr. Burke’s appeal was pending, the

IRS assessed $85,191.16, consisting of the $53,077 deficiency and

$32,114.16 of accrued interest; and no later than September 19,

2006, it issued a notice and demand for payment.3   Mr. Burke did


     3
      Although the parties did not introduce into evidence a copy
of the notice and demand for payment or a transcript showing that
one was issued, the notice of determination states: “The
Settlement Officer * * * verified through transcript analysis
that * * * the notice and demand for payment letter was mailed to
* * * [Mr. Burke’s] last known address, within 60 days of
assessment, as required by IRC section 6303”. (Emphasis added.)
This was part of the verification that the Office of Appeals was
required to obtain pursuant to section 6330(c)(1). Mr. Burke has
not alleged that he did not receive the notice and demand for
payment, and he did not challenge in his petition or otherwise
the adequacy of the section 6330(c)(1) verification. Therefore,
                                                   (continued...)
                               - 6 -

not pay the amount demanded.   Mr. Burke was able to pay the

liability at the time it was demanded,4 but he did not make any

payments toward this liability until more than a year later, in

November 2007.

     On February 17, 2007, the IRS issued a Final Notice, Notice

of Intent to Levy and Notice of Your Right to a Hearing to

Mr. Burke, advising him that the IRS intended to levy to collect

his unpaid balance for tax year 1998.5   By that time, it had been

at least five months since the IRS had given notice and demand

for payment to Mr. Burke.

CDP Hearing

     Mr. Burke submitted to the IRS a Form 12153, Request for a

Collection Due Process or Equivalent Hearing, dated March 6,

2007, timely requesting a collection due process (CDP) hearing.

Mr. Burke’s CDP request stated that he disagreed with the


     3
      (...continued)
we are satisfied that the IRS issued a notice and demand for
payment to Mr. Burke as required by section 6303. However, we
presume--for Mr. Burke’s benefit--the latest date (i.e.
September 19, 2006, the sixtieth day) for the issuance of the
notice and demand.
     4
      In response to attempts by respondent to conduct discovery
on the subject of Mr. Burke’s finances, Mr. Burke affirmed that
he does not contend that he was unable to pay the tax when it was
due or that paying on the due date would have imposed an undue
hardship. See Mar. 4, 2009, order at 2.
     5
      The record does not include a copy of the final notice of
intent to levy. However, the parties agree that the IRS issued
this notice on February 17, 2007, and that Mr. Burke timely
requested a CDP hearing in response to that notice.
                                   - 7 -

proposed levy because “the filing of a lien is inappropriate as

the issue of the taxes allegedly owed is before the First Circuit

Court of Appeals on this date”.6      Mr. Burke further indicated

that he was interested in submitting an offer-in-compromise

(OIC).

       On July 25, 2007, the IRS’s Office of Appeals scheduled

Mr. Burke’s CDP hearing for September 7, 2007, and asked him to

provide within 14 days a completed Form 433, Collection

Information Statement for Wage Earners and Self-Employed

Individuals, and a detailed proposal regarding any collection

alternative he wanted considered during the CDP hearing.

       Mr. Burke did not submit a completed Form 433 or a detailed

OIC.       A settlement officer conducted the CDP hearing through

telephone conferences and correspondence exchanges with Mr. Burke

between August 8, 2007, and January 7, 2008.       Mr. Burke requested

a stay in the CDP hearing during the pendency of his appeals.

The settlement officer concluded that there was no basis for

delaying the CDP hearing.       In September 2007 Mr. Burke requested

a copy of his account transcript and indicated that he intended




       6
      There is no indication in the record that the IRS had filed
a Federal tax lien against Mr. Burke. We presume he intended his
statement to refer to the proposed levy; i.e., that the IRS
should not levy on his property because his appeal was still
pending.
                              - 8 -

to pay 99 percent of his tax liability, with the balance paid in

installments.7

     The settlement officer sent Mr. Burke a copy of his account

transcript on September 24, 2007, and the summary section of the

transcript listed the following amounts:

         Account balance     $85,191.16
         Accrued interest      7,046.48     As of: Jul. 16, 2007
         Accrued penalty       5,042.31     As of: Jul. 16, 2007

The “Account balance” of $85,191.16 consisted of the tax and

interest that had been assessed in July 2006, and the “Accrued”

amounts were liabilities that had accrued after that time.   Apart

from the “Accrued penalty”, the tax and interest alone (i.e., the



     7
      The settlement officer noted that Mr. Burke offered to pay
“99% of the liability to allow him the opportunity to proceed
with his appeal [of Burke I] to U.S. Supreme Court on his
partnership issue”. This explanation seems to reflect confusion
either by Mr. Burke or by the settlement officer. When a case
ceases to present a “live controversy of the kind that must exist
if we are to avoid advisory opinions on abstract propositions of
law”, it has become moot. Hall v. Beals, 396 U.S. 45, 48 (1969).
A taxpayer’s appeal to the Tax Court under section 6330(d) from a
notice of determination to proceed with collection may be
rendered moot by his paying the liability and the IRS’s ceasing
collection activity because there remains nothing to collect.
See Greene-Thapedi v. Commissioner, 126 T.C. 1, 7-8 (2006).
However, Mr. Burke’s appeal that was pending in September 2007
was his appeal of the deficiency determination in Burke I, not an
appeal of a collection determination. A taxpayer’s payment of a
tax deficiency after the IRS mails a notice of deficiency does
not deprive the Tax Court of jurisdiction over the deficiency,
sec. 6213 (b)(4), and in a deficiency case, the Tax Court has
jurisdiction to determine an overpayment, see sec. 6512(b)(1).
Thus, even if Mr. Burke had paid his entire liability (rather
than 99 percent of it), he could still have pursued his appeal of
Burke I to seek an overpayment.
                               - 9 -

tax and interest assessed in July 2006 plus additional interest

accrued as of July 16, 2007) amounted to $92,237.64.

     In October 2007 Mr. Burke left a message for the settlement

officer asking about the penalty entry on the transcript, because

neither the notice of deficiency nor the decision in Burke I had

included any penalty.   The settlement officer reviewed

Mr. Burke’s file and confirmed that the IRS had not determined

any penalties in the notice of deficiency nor asserted any

penalties in the deficiency case.   He determined that the amount

in issue was an “FTP penalty” (i.e., a failure-to-pay addition to

tax under section 6651(a)(3)) that began to accrue after the Tax

Court had decided Burke I and the IRS had made the resulting

assessment of tax and interest.8

     As of September 2007, at least a year had passed since the

IRS had issued its notice and demand to Mr. Burke.   The

settlement officer prepared a proposed installment agreement

calling for an initial payment of $92,000 and monthly payments of

$376 beginning on January 15, 2008.    He mailed the proposed


     8
      The settlement officer, the account transcript, and both
parties refer to the failure-to-pay addition under section
6651(a)(3) as a “penalty”. However, each of the additions under
section 6651–-for failure to file a return, sec. 6651(a)(1); for
failure to pay the amount shown as tax on a return,
sec. 6651(a)(2); and for failure to pay an amount not shown but
required to be shown on a return within 21 days of notice and
demand (within 10 days if over $100,000), sec. 6651(a)(3)–-is an
“addition to tax” and not a “penalty”. See infra pt. II.A.
Notwithstanding the parties’ use of the term “penalty”, we use
the term “addition to tax” hereafter.
                             - 10 -

agreement to Mr. Burke on October 30, 2007, asking him to sign

and return the Form 433-D, Installment Agreement, within 15 days.

Mr. Burke did not sign and return the Form 433-D, but he made a

$92,000 payment on November 15, 2007--designating his payment

“solely to pay tax and accrued interest.”   The IRS applied the

payment toward his 1998 liability, and the payment covered all of

the tax, all of the assessed interest, and some of the additional

accrued interest.

     As is noted above, the account transcript that the

settlement officer provided to Mr. Burke reflected accrual of the

section 6651(a)(3) addition to tax (referred to as “Accrued

penalty”) in the amount of $5,042.31 as of July 16, 2007.

Following discussions with the settlement officer, Mr. Burke

submitted a request, dated December 17, 2007, for abatement of

the section 6651(a)(3) addition to tax, and the settlement

officer received the request on December 20, 2007.   Mr. Burke

argued that abatement was appropriate because (1) “the Tax Court

did not even suggest that penalties were to be applied”, and (2)

“the dispute between the Service and the taxpayer remains open

until such time that the Supreme Court makes a determination on

the issue of whether income is to be reported”--implying that no

addition to tax should be imposed while he was appealing the

underlying liability.
                              - 11 -

     The settlement officer considered Mr. Burke’s arguments and

concluded that Mr. Burke did not present any reasonable basis for

abatement.   In a telephone conference on January 7, 2008, the

settlement officer informed Mr. Burke of his decision.     Mr. Burke

stated that he disagreed with this determination and suggested an

installment agreement that did not include the failure-to-pay

penalty.   The settlement officer considered Mr. Burke’s

suggestion but concluded that the IRS would not enter into an

installment agreement for less than all of a taxpayer’s

liability.   By letter dated January 23, 2008, the settlement

officer again informed Mr. Burke that he was denying the

abatement request, and he included a detailed explanation of how

he reached this decision.

     As indicated supra note 8, certain of the documents in the

record refer to the section 6651(a)(3) addition to tax as a

“penalty”.   In addition, some documents appear to identify the

Code section for this addition inaccurately.   For example, the

notice of determination twice refers to the addition as an “IRC

6751(a)(3) penalty”, and the settlement officer’s case activity

notes occasionally refer to the addition as occurring under

section 6651(a)(2) but usually refer to section 6651(a)(3).

Other documents in the record but not admitted into evidence

contain similar errors.
                              - 12 -

     Notwithstanding these clerical errors, it is obvious from

the record that both Mr. Burke and the settlement officer clearly

focused on the section 6651(a)(3) failure-to-pay addition to tax

throughout the CDP hearing.   For example, Mr. Burke’s

December 17, 2007, letter requesting relief from the addition to

tax specifically argued for abatement of the addition under

section 6651(a)(3), and the settlement officer clearly notified

Mr. Burke--not only during the CDP hearing but also in the

attachment to his January 23, 2008, letter denying the abatement

request--that the additions were pursuant to section 6651(a)(3).

We find that the IRS undeniably informed Mr. Burke which addition

to tax it was imposing.   These minor typographical errors are

irrelevant to whether Mr. Burke is liable for the addition and to

whether he had a hearing on that liability.

     On January 25, 2008, the IRS issued to Mr. Burke a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330.   In the notice of determination, the Office of

Appeals recited that the settlement officer:   (1) verified that

applicable legal and procedural requirements were met; (2) could

not consider the OIC collection alternative indicated in the CDP

request because Mr. Burke did not submit required documentation;

(3) considered the issues Mr. Burke raised (specifically, his

challenge to the section 6651(a)(3) addition to tax); (4) could

not agree to an installment agreement because Mr. Burke refused
                                - 13 -

to enter such an agreement for the full amount of the liability

and because he did not submit required documentation (the

collection information statement and a signed, written request

for an installment agreement); and (5) concluded that collection

by levy properly balanced the need for efficient collection with

Mr. Burke’s legitimate concern that the collection action be no

more intrusive than necessary.     The IRS sustained the proposed

levy.

The Current Case

        Mr. Burke then filed his petition with the Tax Court,

pursuant to section 6330(d), alleging the following three errors:

             (a) The Respondent abused its [sic] discretion in
        failing to enter into an instalment [sic] agreement for
        the amount of outstanding tax (if any) and interest
        thereon.

             (b) The Respondent abused its discretion in
        failing to abate the penalty imposed by IRC
        § 6651(a)(3).

             (c) The Respondent's Determination, which was
        made subsequent to its representation that a
        Determination would not be issued without contacting
        the Petitioner (to the recollection of the Petitioner)
        and immediately after its failure to include its
        rationale for concluding that the subject penalty was
        not to be abated in a letter to the Petitioner
        evidences that the Determination was in error,
        arbitrary, capricious and biased against the
        Petitioner.

However, in Mr. Burke’s brief he eventually articulated a single

issue, i.e.--
                               - 14 -

     Whether the Respondent abused its [sic] discretion in the
     assessment and failure to abate the penalty of IRC
     § 6651(a)(3).

To the extent that the three-fold issues originally stated in his

petition exceed the single issue eventually argued in his brief,

Mr. Burke has abandoned those other issues,9 and we consider only

his challenge to the section 6651(a)(3) addition to tax.

     The parties jointly moved to submit the case under Rule 122,

and the case is now before the Court for decision without trial.

                            Discussion

I.   Collection Due Process Principles

     A.   Levy Procedures

     If a taxpayer fails to pay any Federal income tax liability

after notice and demand, section 6331(a) authorizes the IRS to

collect the tax by levy on the taxpayer’s property.   However,

Congress has added provisions that must be complied with before

the IRS can collect by levy.   Before proceeding, the IRS must

issue a final notice of intent to levy and notify the taxpayer of

the right to an administrative hearing--a “collection due

process” or CDP hearing--before the Office of Appeals.

Sec. 6330(a) and (b)(1).




     9
      See Rule 151(e)(4) and (5) (requiring that a party’s brief
state the points on which he relies); Remuzzi v. Commissioner,
T.C. Memo. 1988-8 (issue not addressed by the taxpayers on brief
deemed conceded), affd. without published opinion 867 F.2d 609
(4th Cir. 1989).
                               - 15 -

     B.    Issues Considered at the CDP Hearing

     Section 6330(c) sets forth three pertinent procedures for

the CDP hearing.    First, the appeals officer10 must obtain

verification from the Secretary that the requirements of any

applicable law or administrative procedure have been met.      Sec.

6330(c)(1).   Mr. Burke does not allege any defect in the required

verification.

     Second, section 6330(c)(2) addresses the issues considered

at the hearing.    The taxpayer may raise any issues relevant to

the proposed collection of tax.    Pursuant to section

6330(c)(2)(A) a taxpayer may raise collection issues (including

collection alternatives, such as installment agreements and

OICs).    In his CDP request Mr. Burke checked the box for an OIC,

and his petition alleged error in the IRS’s refusal to allow an

installment agreement; but as is noted supra p. 14, he has

abandoned any challenge to the IRS’s disallowance of any

collection alternative.

     Pursuant to section 6330(c)(2)(B) a taxpayer may challenge

the underlying tax liability, but he may do so only if he “did


     10
      The record identifies the person who conducted Mr. Burke’s
CDP hearing as a “settlement officer”. Section 6330(c)(1) and
(c)(3) refers to the person who conducts the CDP hearing as an
“appeals officer”. However, section 6330(b)(3) provides that the
CDP hearing shall be conducted by an “officer or employee” of the
IRS Office of Appeals (emphasis added). A settlement officer is
one type of employee in that office qualified to hold CDP
hearings. See Reynolds v. Commissioner, T.C. Memo. 2006-192. We
will use the statutory term “appeals officer” hereafter.
                                - 16 -

not receive any statutory notice of deficiency for such tax

liability or did not otherwise have an opportunity to dispute

such tax liability.”    During his agency-level hearing, Mr. Burke

disputed the addition to tax listed on the account transcript as

a “penalty”.    Mr. Burke did not receive any notice of deficiency

with respect to the section 6651(a)(3) failure-to-pay addition to

tax.    See infra pt. II.A.   The record does not show that

Mr. Burke had an opportunity to dispute the addition to tax

before the CDP hearing.    Thus, Mr. Burke was entitled to

challenge this addition to tax during the CDP hearing, see

Kimball v. Commissioner, T.C. Memo. 2008-78, and to litigate it

here.

       Third, from the information presented during the CDP

hearing, the appeals officer must decide whether the proposed

levy action may proceed, and section 6330(c) requires the appeals

officer to consider:    (1) “verification from the Secretary that

the requirements of any applicable law or administrative

procedure have been met”, see sec. 6330(c)(3)(A) (cross-

referencing sec. 6330(c)(1)); (2) relevant issues raised by the

taxpayer, see sec. 6330(c)(3)(B) (cross-referencing sec.

6330(c)(2)); and (3) “whether any proposed collection action

balances the need for the efficient collection of taxes with the

legitimate concern of the person that any collection action be no

more intrusive than necessary”, see sec. 6330(c)(3)(C).       If the
                                - 17 -

Office of Appeals then issues a notice of determination to

proceed with the proposed levy, the taxpayer may appeal the

determination to this Court within 30 days, as Mr. Burke has

done, and we now “have jurisdiction with respect to such matter”.

Sec. 6330(d)(1).

     C.   Standard of Review

     Where the validity of the underlying tax liability is

properly at issue in the appeal of a collection determination,

the Tax Court reviews de novo the determination of the underlying

tax liability.     Sego v. Commissioner, 114 T.C. 604, 610 (2000);

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).     Insofar as

issues other than the validity of the underlying tax liability

are presented, the Court reviews the administrative determination

for an abuse of discretion.     Downing v. Commissioner, 118 T.C.

22, 30-31 (2002); Sego v. Commissioner, supra at 610; Goza v.

Commissioner, supra at 182; Godwin v. Commissioner, T.C. Memo.

2003-289, affd. 132 Fed. Appx. 785 (11th Cir. 2005).    An abuse of

discretion occurs when the exercise of discretion is without

sound basis in fact or law.     Murphy v. Commissioner, 125 T.C.

301, 308 (2005), affd. 469 F.3d 27 (1st Cir. 2006).

     Thus, we review de novo the appeals officer’s conclusion

that Mr. Burke is liable for the section 6651(a)(3) addition to

tax, and we review for abuse of discretion other issues affecting

the subsequent determination to sustain the collection action.
                              - 18 -

II.   Mr. Burke Is Liable for the Section 6651(a)(3) Addition to
      Tax

      A.   The Nature of the Section 6651(a)(3) Addition to Tax

      Chapter 68 of the Internal Revenue Code (sections 6651-6751)

is entitled “Additions to the Tax, Additional Amounts, and

Assessable Penalties”.   As that title indicates, it provides for

some liabilities that are called “additions to the tax” and other

liabilities that are called “penalties”.    Subchapter A

(sections 6651-6665) is entitled “Additions to the Tax and

Additional Amounts” and consists of three parts:    Part I is

“General Provisions” (sections 6651-6658); part II is “Accuracy-

related and fraud penalties” (sections 6662-6664); and part III

is “Applicable Rules” (section 6665).    Subchapter B is

“Assessable Penalties” (sections 6671 through 6725).    Thus, some

“penalties” are included in subchapter A, part II (i.e., the

“Accuracy-related and fraud penalties”) and other penalties are

included in subchapter B (i.e., the “Assessable Penalties”).

However, part I of subchapter A includes not “penalties” but

rather “Additions to the Tax and Additional Amounts”.

      Within that portion of the Code--i.e., within chapter 68,

subchapter A, part I--is the liability at issue here.

Section 6651(a)(3) imposes an “addition to the tax” that the IRS

proposes to collect from Mr. Burke.    It provides as follows:
                                   - 19 -

     SEC 6651. FAILURE TO FILE TAX RETURN OR TO PAY TAX.

          (a)     Addition to the Tax.-- In case of failure--

                 *       *     *     *      *     *     *

               (3) to pay any amount in respect of any tax
     required to be shown on a return specified in paragraph
     (1) which is not so shown * * * within 21 calendar days
     from the date of notice and demand therefor * * *,
     unless it is shown that such failure is due to
     reasonable cause and not due to willful neglect, there
     shall be added to the amount of tax stated in such
     notice and demand 0.5 percent of the amount of such tax
     if the failure is for not more than 1 month, with an
     additional 0.5 percent for each additional month or
     fraction thereof during which such failure continues,
     not exceeding 25 percent in the aggregate. [Emphasis
     added.]

The “notice and demand” referred to in section 6651(a)(3) is

provided for in section 6303:

     SEC 6303.       NOTICE AND DEMAND FOR TAX.

          (a) General Rule.--Where it is not otherwise
     provided by this title, the Secretary shall, as soon as
     practicable, and within 60 days, after the making of an
     assessment of a tax pursuant to section 6203, give
     notice to each person liable for the unpaid tax,
     stating the amount and demanding payment thereof. Such
     notice shall be left at the dwelling or usual place of
     business of such person, or shall be sent by mail to
     such person's last known address. [Emphasis added.]

     “Notice and demand” thus follows the making of an

assessment.     Where the assessment is of an income tax deficiency

determined by the IRS, that assessment is deferred by the

deficiency process:       The IRS issues a notice of deficiency

pursuant to section 6212, and section 6213 gives the taxpayer

90 days to file a petition with the Tax Court.        Section 6213(a)
                              - 20 -

provides that “no assessment of a deficiency in respect of” the

income tax “shall be made * * * until the expiration of such

90-day * * * period * * * nor, if a petition has been filed with

the Tax Court, until the decision of the Tax Court has become

final.”   (Emphasis added.)

     The section 6651(a)(3) addition itself is not subject to the

deficiency procedures applicable to tax.   By its nature, the

addition is not fixed but increases in amount (up to a total of

25 percent of the tax) as time passes and the tax remains unpaid.

The IRS may assess the accrued addition from time to time, but it

is not required to do so, and it may collect the addition without

assessment.   See Reese v. Commissioner, T.C. Memo. 2006-21, affd.

201 Fed. Appx. 961 (4th Cir. 2006).    Section 6665(b) provides

explicitly that the deficiency procedures “shall not apply to any

addition to tax under section 6651”; and the exception to that

rule for “an addition * * * which is attributable to a deficiency

in tax”, sec. 6665(b)(1) (emphasis added), does not apply to the

section 6651(a)(3) addition, which by its nature is attributable

not to a tax “deficiency” but rather to a failure to pay tax that

has been assessed.11


     11
      See Estate of Russo v. Commissioner, T.C. Memo. 1991-310.
Section 6211(a) defines a deficiency as the difference between
(a) the taxpayer’s actual tax liability and (b) the tax as
originally reported by the taxpayer, plus “amounts previously
assessed * * * as a deficiency”. That is, once the tax actually
due has all been assessed, there is no more deficiency--whether
                                                   (continued...)
                               - 21 -

      The result of these interlocking provisions in a

circumstance like the one at issue in this case is as follows:

The failure-to-pay addition does not begin to accrue until notice

and demand for payment of the tax, sec. 6651(a)(3); notice and

demand for payment of the tax cannot be made until assessment,

sec. 6303; and assessment of the tax cannot be made until the Tax

Court’s decision has become final.      Consequently, the order of

events is:    (1) Tax Court decision, (2) assessment of tax,

(3) notice and demand, and--only thereafter--(4) accrual of the

failure-to-pay addition of section 6651(a)(3), with or without

assessment.    Thus, the pendency of a Tax Court deficiency suit

will, by forestalling assessment of the tax, sec. 6213(a),

indirectly delay the accrual of the section 6651(a)(3) addition

to tax.    This case poses the question of how long that delay will

be.

      B.   Mr. Burke’s Contentions

      There is no question that Mr. Burke owes the tax at issue,

that it was assessed, that notice and demand was made for payment

of it, and that Mr. Burke did not pay it within 21 days.

However, Mr. Burke contends that collection of the


      11
      (...continued)
or not the tax due has been paid. The section 6651(a)(3)
addition, on the other hand, does not accrue until after the tax
due has been assessed (and demanded, and left unpaid), when by
definition there is no deficiency. Thus, the section 6651(a)(3)
addition can never be “attributable to a deficiency”, for
purposes of section 6665(b)(1).
                                - 22 -

section 6651(a)(3) addition should not be sustained, for the four

reasons we now consider.

          1.      Non-assertion Until the CDP Hearing

     As far as the evidence before us shows, the first explicit

mention by the IRS that Mr. Burke owed an addition under

section 6651(a)(3) was during the CDP hearing.       Mr. Burke argues

that he does not owe the addition because it was not raised by

the examining agent during the audit, nor included on the IRS’s

notice of deficiency, nor litigated in or redetermined by the Tax

Court.   The argument is misguided.      The section 6651(a)(3)

addition could never be properly asserted during audit, nor in a

notice of deficiency, nor in a Tax Court decision, since at the

time of those events it remains to be seen whether the taxpayer

will pay the tax on notice and demand (which, by definition, has

not yet been made and cannot be made until the deficiency can be

assessed).     If the taxpayer does timely pay upon demand, then

there will never be a failure to pay, and the failure-to-pay

addition will never begin to accrue.       The non-assertion of the

section 6651(a)(3) addition until the CDP hearing has no effect

on Mr. Burke’s liability to pay it.

           2.     The Pendency of Mr. Burke’s Appeal

     Mr. Burke cites the pendency of the appeal of his deficiency

case as a reason that he should not be liable for the

section 6651(a)(3) failure-to-pay addition.       We discuss below in
                             - 23 -

part II.B.3 his contention that the appeal constituted

“reasonable cause” for non-payment.   It appears, however, that he

also contends that, as a matter of law, the addition should not

accrue until after resolution of the appeal.   If so, the

contention fails.

     As is explained above, when a taxpayer files suit in the Tax

Court, the deficiency determined by the IRS cannot be assessed

(and therefore the addition does not begin to accrue) “until the

decision of the Tax Court has become final.”   Sec. 6213(a).

Section 7481 provides the “Date when Tax Court decision becomes

final”, and it is affected by appeals.    A taxpayer may appeal an

adverse decision of the Tax Court pursuant to section 7483; and

if he receives an adverse decision from the Court of Appeals,

then pursuant to 28 U.S.C. section 1254 he may petition the U.S.

Supreme Court for a writ of certiorari.   In an instance like the

one at issue--i.e., where the taxpayer files a timely notice of

appeal, the Court of Appeals affirms, and the taxpayer files with

the Supreme Court a timely petition for certiorari--

section 7481(a)(2)(B) provides that “the decision of the Tax

Court shall become final * * * [u]pon the denial of a petition

for certiorari”.

     If section 7481 were the only provision pertinent to the

proper timing of the assessment, then it would appear that denial

of certiorari must happen before there could be an assessment
                                - 24 -

(and then notice and demand, and then the accrual of the failure-

to-pay addition).   Mr. Burke made his $92,000 payment in

November 2007, and as far as the record shows, that payment

covered all his assessed liabilities (though not all of the

additional accrued interest).    The Supreme Court did not deny his

petition for certiorari until February 2008.   If the

section 6651(a)(3) addition could not begin to accrue until

certiorari was denied, then the addition in question under

section 6651(a)(3) would not be owed.

     However, an overriding provision appears in section 7485:

     SEC 7485.   BOND TO STAY ASSESSMENT AND COLLECTION.

          (a) Upon Notice of Appeal.--Notwithstanding any
     provision of law imposing restrictions on the
     assessment and collection of deficiencies [e.g.,
     section 6213(a)], the review under section 7483 [i.e.,
     appeal of a Tax Court decision] shall not operate as a
     stay of assessment or collection of any portion of the
     amount of the deficiency determined by the Tax Court
     unless a notice of appeal in respect of such portion is
     duly filed by the taxpayer, and then only if the
     taxpayer--

               (1) on or before the time his notice of
     appeal is filed has filed with the Tax Court a bond in
     a sum fixed by the Tax Court not exceeding double the
     amount of the portion of the deficiency in respect of
     which the notice of appeal is filed, and with surety
     approved by the Tax Court, conditioned upon the payment
     of the deficiency as finally determined, together with
     any interest, additional amounts, or additions to the
     tax provided for by law * * *. [Emphasis added.]

That is, assessment and collection of a deficiency determined by

the Tax Court are not stayed unless the taxpayer files a bond.
                                - 25 -

See Rule 192; Kevin P. Burke v. Commissioner, 124 T.C. 189, 191

n.4 (2005); Schroeder v. Commissioner, T.C. Memo. 2005-48.

     Mr. Burke did not file a bond with this Court.

Consequently, assessment and collection were not stayed by

section 6213(a) beyond the ninetieth day, see sec. 7483, after

the Tax Court’s entry of decision in Mr. Burke’s deficiency case

on January 18, 2006.   That is, the IRS was entitled to assess the

tax as early as April 18, 2006.    As a result, the IRS’s

assessment of tax and interest on July 21, 2006, and its

subsequent issuance of notice and demand to Mr. Burke on or

before September 19, 2006, were not premature.   Pursuant to

section 6651(a)(3), the failure-to-pay addition began to accrue

21 days after that notice and demand--i.e., by October 10, 2006--

notwithstanding the pendency of Mr. Burke’s appeal.

          3.   Mr. Burke Did Not Have Reasonable Cause for
               Failing To Pay His 1998 Tax Liability After Notice
               and Demand

     Mr. Burke did not pay the assessed tax and interest within

21 days of notice and demand.    The mandatory language of section

6651(a)(3) provides:   “unless it is shown that such failure is

due to reasonable cause and not to willful neglect, there shall

be added” the failure-to-pay addition to tax.    (Emphasis added.)

     Congress used identical language for the three additions to

tax imposed by section 6651; i.e., those additions apply “unless

it is shown that such failure is due to reasonable cause and not
                              - 26 -

due to willful neglect.”   Sec. 6651(a)(1), (2), and (3).   The

Internal Revenue Code does not define either “willful neglect” or

“reasonable cause”.   In the context of the failure-to-file

addition to tax under section 6651(a)(1), the Supreme Court

explained:   (i) that to escape an addition under section 6651,

the taxpayer must prove “both (1) that the failure did not result

from ‘willful neglect,’ and (2) that the failure was ‘due to

reasonable cause’”, United States v. Boyle, 469 U.S. 241, 245

(1985) (quoting section 6651(a)(1)); and (ii) that “as used here,

the term ‘willful neglect’ may be read as meaning a conscious,

intentional failure or reckless indifference”, id.

     As for reasonable cause for a failure to pay (relevant

here), section 301.6651-1(c)(1), Proced. & Admin. Regs.,

provides, in relevant part:

     A failure to pay will be considered to be due to reasonable
     cause to the extent that the taxpayer has made a
     satisfactory showing that he exercised ordinary business
     care and prudence in providing for payment of his tax
     liability and was nevertheless either unable to pay the tax
     or would suffer an undue hardship * * * if he paid on the
     due date. [Emphasis added.]

That is, the regulation speaks only of reasonable cause arising

from an inability to pay, but Mr. Burke does not contend that he

was unable to pay the tax without suffering undue hardship.12


     12
      In correspondence with respondent’s counsel, Mr. Burke
variously stated that “Petitioner has maintained throughout[:]
the present dispute is not over his ability to pay the subject
penalty” and “there is no dispute over the ability to pay”. In a
                                                   (continued...)
                               - 27 -

       Rather, Mr. Burke contends that the IRS erred by considering

only his ability to pay the tax when it was demanded.    He argues

that section “301.6651 of the Regulations does not purport to be

an exclusive list of situations in which a failure to pay is due

to ‘reasonable cause’ and not ‘willful neglect’” (quoting East

Wind Indus., Inc. v. United States, 196 F.3d 499, 514 n.1

(3d Cir. 1999) (Stapleton, J., dissenting)).    Respondent contends

that, under the regulation, a taxpayer’s financial ability to pay

is the only relevant factor in evaluating reasonable cause for a

failure to pay, and respondent argues that in East Wind the Court

of Appeals adopted a facts-and-circumstances test that requires a

finding of financial hardship as a predicate to finding

reasonable cause for a failure to pay.

       We need not decide whether ability to pay is the exclusive

ground for proving reasonable cause for failing to pay, because

in any event the only alternative ground that Mr. Burke proffers

cannot support a finding of reasonable cause for his failure to

pay.    Mr. Burke contends that he had reasonable cause not to pay

because, when the IRS issued the notice and demand for payment,

he was appealing our decision that he was liable for tax.    He



       12
      (...continued)
conference call with the Court to resolve a discovery dispute,
the IRS withdrew its motion to show cause because Mr. Burke
affirmed that he would not contend that he was unable to pay the
tax when it was due or that paying on the due date would have
imposed an undue hardship. See supra note 4.
                                - 28 -

maintains that because he was prosecuting a good-faith appeal of

our adverse decision, as was his right, he should not be liable

for the failure-to-pay addition.

       However, as is discussed supra, the law is clear that

assessment and collection are stayed during the appeal of a

decision of this Court only if the taxpayer files a bond on or

before the date he files his appeal.     Sec. 7485(a); Schroeder v.

Commissioner, supra.     Mr. Burke did indeed have the right to

appeal; but the IRS just as surely had the right to collect if he

failed to file a bond.    The idea that his appeal somehow deprived

the IRS of its right to assess and collect the liability--or

somehow excused his obligation to pay--is mistaken as a matter of

law, and it does not provide reasonable cause for his failure to

pay.    We need not decide whether, in some circumstances,

ignorance of the law might excuse the ignorant and unwitting

taxpayer from liability for the addition under

section 6651(a)(3), since this case involves an experienced tax

lawyer well able to determine his rights and obligations under

section 7485(a).

            4.   The Government Is Not Equitably Estopped From
                 Imposing the Section 6651(a)(3) Addition to Tax

       Mr. Burke asserts that the IRS should not be allowed to

impose the section 6651(a)(3) addition to tax because the IRS

decided not to impose any penalties during the examination or to
                               - 29 -

pursue penalties in Burke I, and he relied on statements to that

effect.   His contention cannot be sustained.

     Equitable estoppel is a judicial doctrine that precludes a

party from denying his own acts or representations which induced

another to act to his detriment.    “Estoppel is applied against

the Commissioner ‘with utmost caution and restraint.’”

Hofstetter v. Commissioner, 98 T.C. 695, 700 (1992) (quoting

Estate of Emerson v. Commissioner, 67 T.C. 612, 617 (1977)).       It

is well established that the unauthorized acts of its agents

cannot estop the Government.   Sanders v. Commissioner, 225 F.2d

629, 634 (10th Cir. 1955), affg. 21 T.C. 1012 (1954).    It is

equally well settled that the IRS cannot be estopped from

correcting a mistake of law, even where a taxpayer may have

relied to his detriment on that mistake.    Norfolk S. Corp. v.

Commissioner, 104 T.C. 13, 59-60 (1995), affd. 140 F.3d 240 (4th

Cir. 1998).   An exception exists only in the rare case where a

taxpayer can prove he would suffer an “unconscionable injury”

because of that reliance.   Id. at 60.

     A taxpayer must show the following before equitable estoppel

applies against the Government:    (1) a false representation or

wrongful, misleading silence by the Government; (2) an error by

the Government in a statement of fact and not in an opinion or

statement of law; (3) the taxpayer’s ignorance of the true facts;

(4) the taxpayer’s reasonable reliance on the Government’s acts
                              - 30 -

or statements; and (5) adverse effects suffered by the taxpayer

resulting from the Government’s acts or statements.    Wilkins v.

Commissioner, 120 T.C. 109, 112 (2003).    Thus, equitable estoppel

requires a finding that the taxpayer suffered a detriment because

of his reliance on the representations of the Government.      Id.

     Mr. Burke asserts that statements in the examining officer’s

activity record from the examination of his 1998 return justify

abating the failure-to-pay addition to tax.    In an entry dated

December 13, 2001, the examining agent’s manager apparently

noted:   “Concur - no fraud penalty or section 6662 penalty due to

F8082 disclosure.   No penalties apply.”   (Emphasis added.)   The

reason that the examination personnel of the IRS asserted against

Mr. Burke no fraud penalty under section 6663(a) and no accuracy-

related penalty under section 6662 was stated in that entry--

i.e., “F8082 disclosure”--and that reason does not apply to the

failure-to-pay addition.

     As the manager tersely noted, Mr. Burke had filed a Form

8082 to inform the IRS of the inconsistency between his reporting

zero as his distributive share of partnership income on his

individual income tax return and the partnership’s reporting

$121,000 as his distributive share on its partnership return.

Mr. Burke’s position in Burke I was that because the income

reported on his Schedule K-1, Partner’s Share of Income, Credits,

Deductions, Etc., was not actually distributed to him but rather
                               - 31 -

was held in escrow because of a dispute between him and his

partner, he was not required to report his distributive share as

income.   We held that he was taxable on his distributive share,

whether distributed or not, and the Court of Appeals for the

First Circuit affirmed.   He was ultimately shown to be wrong on

that issue--but he had clearly flagged the issue on his return,

and for that reason he avoided any penalty on his reporting of

his income on his return.

     An accuracy-related penalty is imposed on substantial

understatements of income tax, pursuant to section 6662(a) and

(b)(2).   In determining whether an understatement is substantial,

the amount of the understatement is reduced by any portion

attributable to an item if--

          (I) the relevant facts affecting the item’s tax
     treatment are adequately disclosed in the return or in a
     statement attached to the return, and

          (II) there is a reasonable basis for the tax treatment
     of such item by the taxpayer.

Sec. 6662(d)(2)(B)(ii) (emphasis added).

     A fraud penalty is imposed by section 6663(a), which

provides:

    If any part of any underpayment[13] of tax required to be
    shown on a return is due to fraud, there shall be added to


     13
      Under section 6664(a), the difference between the tax
imposed by the Code and a lesser amount of tax that the taxpayer
shows on his return is an “underpayment”. Under this definition,
it is the under-reporting of the liability that gives rise to an
“underpayment”.
                             - 32 -

     the tax an amount equal to 75 percent of the portion of the
     underpayment which is attributable to fraud. [Emphasis
     added.]

Section 6664(c)(1) provides an exception to the penalties under

sections 6662 and 6663 “if it is shown that there was reasonable

cause for such portion and that the taxpayer acted in good faith

with respect to such portion.”

     The IRS did not determine any penalty in the notice of

deficiency and did not assert any penalty in Mr. Burke’s prior

deficiency case, apparently because the IRS concluded (i) that

there was a “substantial basis” for Mr. Burke’s inconsistent

position, (ii) that his position was “adequately disclosed” on

Form 8082, (iii) that Mr. Burke’s underpayment was not “due to

fraud”, and/or (iv) that Mr. Burke had “reasonable cause” and

“acted in good faith” when he under-reported his tax liability.

While for purposes of this case we assume that such conclusions

were warranted, those conclusions do not provide a basis for

Mr. Burke to avoid the failure-to-pay addition.

     Mr. Burke now alleges that he relied upon:    (1) the IRS

examining agent’s statement regarding the accuracy-related

penalty; (2) the IRS’s decision not to determine such a penalty

in the notice of deficiency or to pursue any penalties in his

deficiency case; (3) the Court’s not imposing penalties in

Burke I; and (4) the IRS’s failure to provide him notice that it

was changing its position relative to penalties.    He argues that
                              - 33 -

the IRS should be estopped from imposing the failure-to-pay

addition to tax, i.e., that the IRS’s statements and his reliance

on them foreclosed this addition to tax.

     The section 6651(a)(3) addition to tax, however, was not

imposed and could not have been imposed until after the decision

in Burke I.   See Commissioner v. McCoy, 484 U.S. 3, 7 (1987).

The IRS examining agent made his note on December 13, 2001; we

entered our decision in Burke I on January 18, 2006; and the IRS

assessed tax and interest on July 21, 2006, and issued the notice

and demand no later than September 19, 2006.   The IRS examining

agent’s statement in 2001 that the accuracy-related penalty would

not apply to Mr. Burke’s 1998 deficiency was not a false

representation or an error in a statement of fact; it was instead

a correct statement that was borne out in the IRS’s subsequent

non-imposition of such a penalty.   Nor was the agent’s 2001

statement a wrongful, misleading silence.   It was an appropriate

silence, since the question whether a failure-to-pay addition

would ever be due depended entirely on future events.14




     14
      If the IRS examining agent had informed Mr. Burke during
the examination that he was somehow inoculated against all
present and future penalties and additions to tax for tax year
1998, including the section 6651(a)(3) failure-to-pay addition to
tax, such a statement would have been an erroneous representation
of law, not of fact. The IRS ordinarily will not be estopped
from retroactively correcting a mistake of law. Norfolk S. Corp.
v. Commissioner, 104 T.C. 13, 60-61 (1995), affd. 140 F.3d 340
(4th Cir. 1998).
                               - 34 -

       If Mr. Burke failed to pay the assessed tax and interest

after notice and demand because the IRS had earlier told him that

it would not penalize his reporting position, then he inferred a

wild non sequitur.    A taxpayer who understates his tax liability

in complete innocence is nonetheless obliged to pay his actual

tax liability; and if he fails to do so after notice and demand,

his failure to pay is not excused by the innocence of his prior

mistake.    If an IRS agent informs a taxpayer that he will not be

held liable for a fraud penalty, the taxpayer has no reason to

infer that he need not pay the tax subsequently assessed or that

he will thereafter be immune from failure-to-pay additions to

tax.

       But Mr. Burke may be making a contention slightly more

subtle than that.    He may be contending that the “substantial

basis”, “reasonable cause”, and “good faith” conclusions implicit

in the IRS agent’s no-penalty decision laid the predicate for

estoppel in the failure-to-pay context.    Arguably, the IRS had

implicitly ruled, for purposes of penalties, that Mr. Burke’s

reporting position had “reasonable cause” (under

section 6664(c)); and Mr. Burke may be contending that he was

thereafter entitled to rely on that ruling, so that the

Government ought to be estopped from denying “reasonable cause”

under section 6651(a)(3) for his non-payment of the tax.
                              - 35 -

     If that is his contention, then it fails.   “Reasonable

cause” for erroneously reporting one’s tax liability in the first

instance (for purposes of section 6664(c)) is a very different

thing from “reasonable cause” for not paying one’s liability (for

purposes of section 6651(a)(3)) even after the error has been

challenged, the tax has been assessed, and payment has been

demanded.   Mr. Burke’s mistake on his tax return might be

attributed to reasonable cause; but once the deficiency in his

tax resulting from that error was assessed, a continuing refusal

to pay the tax cannot be excused by the prior mistake.

Consequently, the possibility that his reporting error had

reasonable cause did not give him reason to delay payment when

payment was required.   A taxpayer may certainly challenge the

IRS’s audit position in this Court, and he may even be able to

delay paying the liability--but only to the extent and in the

manner the Code provides.   When Mr. Burke lost before the Tax

Court but still failed to pay (or to file an appeal bond) because

he disagreed with the IRS and the Tax Court and wanted to

litigate the matter on appeal, then his loss of that appeal meant

not only liability for the tax but also liability for the

addition to tax for failure to pay.

     Mr. Burke has not demonstrated any misconduct by the IRS.

He has not shown that any injury (let alone an “unconscionable

injury”) resulted from his reliance on representations (let alone
                              - 36 -

misrepresentations) made by IRS agents.   See Norfolk S. Corp. v.

Commissioner, 104 T.C. at 61 (with no evidence of false

representations by the IRS, actions of IRS examining agents who

did not address the specific issue in suit could not have misled

a reasonable taxpayer).   Mr. Burke has not established the

elements required to invoke equitable estoppel, and his liability

for the addition to tax results from his failure to comply with

the law.   Consequently, we do not conclude that it is unfair for

the IRS to impose the addition to tax required by the statute.

     The section 6651(a)(3) addition to tax was properly imposed;

Mr. Burke has not shown that his failure to pay was due to

reasonable cause and not to willful neglect; and the Government

is not estopped from determining this addition to tax.

Therefore, Mr. Burke is liable for the addition to tax under

section 6651(a)(3).

III. The Office of Appeals Did Not Abuse Its Discretion

     The appeals officer verified that the IRS met the

requirements of applicable law and administrative procedure in

assessing and demanding payment for Mr. Burke’s 1998 liability,

issuing the notice of intent to levy, and providing him with the

CDP hearing.   The appeals officer considered the issues Mr. Burke

raised but was unable to consider any collection alternative

because Mr. Burke did not make an actual offer or return a signed

installment agreement and because he did not provide the
                               - 37 -

financial information required to support any collection

alternative.15   The appeals officer considered Mr. Burke’s

challenge to the section 6651(a)(3) addition to tax and

considered his abatement request.   He determined that Mr. Burke

did not qualify for abatement.   Finally, he determined that

collection by levy properly balanced intrusiveness and

efficiency--a matter to which Mr. Burke has never raised any

dispute.

      We conclude that the Office of Appeals did not abuse its

discretion in sustaining the notice of intent to levy, and we

hold that collection by levy may proceed.

IV.   No Section 6673 Penalty Will Be Imposed

      Respondent has moved the Court to impose on Mr. Burke a

penalty under section 6673(a)(1), which authorizes the Tax Court

to require a taxpayer to pay to the United States a penalty not


      15
      Mr. Burke and the appeals officer discussed an installment
agreement. The appeals officer prepared an agreement and sent it
to Mr. Burke, who made the $92,000 initial payment that it called
for but did not sign and return the agreement. Mr. Burke
expressed interest in an installment agreement only if it did not
include the section 6651(a)(3) addition to tax. The appeals
officer concluded that the IRS would not enter such an agreement
for only a portion of the tax debt. Mr. Burke refused to enter
an agreement that included the addition to tax, and he did not
submit a written installment agreement or the financial
information required for IRS consideration of such an agreement.
We have consistently held that the Office of Appeals does not
abuse its discretion by not considering a collection alternative
the taxpayer does not submit or support with required financial
information. See Kendricks v. Commissioner, 124 T.C. 69, 79
(2005); Cavazos v. Commissioner, T.C. Memo. 2008-257; Prater v.
Commissioner, T.C. Memo. 2007-241.
                               - 38 -

in excess of $25,000 whenever it appears that proceedings have

been instituted or maintained by the taxpayer primarily for delay

or that the taxpayer’s position in such proceeding is frivolous

or groundless.   A taxpayer’s position is frivolous or groundless

if it is “‘contrary to established law and unsupported by a

reasoned, colorable argument for change in the law.’”    Williams

v. Commissioner, 114 T.C. 136, 144 (2000) (quoting Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986)).

     However, the imposition of penalties under section 6673 is

committed to the discretion of the Court.    See Muhich v.

Commissioner, T.C. Memo. 1999-192, affd. 238 F.3d 860 (7th Cir.

2001).    Although Mr. Burke’s contentions as to the section

6651(a)(3) addition lack merit, we will not impose a penalty in

this case.    Mr. Burke disclosed very clearly on his 1998 return

the item that gave rise to the tax liability underlying this

case.    During the audit Mr. Burke was cooperative with the IRS.

During the subsequent CDP process and before commencing this

litigation, Mr. Burke made a $92,000 payment that almost

completely covered his liability for tax and interest, leaving

unpaid only a small amount of accrued interest and the

section 6651(a)(3) addition that he wanted to challenge.     His

principal contention in that challenge--i.e., that the pendency

of his appeal should excuse his liability for the failure-to-pay

addition--is very wrong, but we do not believe that, in view of
                              - 39 -

all the circumstances, it warrants a penalty under

section 6673(a).   Respondent’s motion will be denied.

     To reflect the foregoing,


                                           An appropriate order and

                                       decision will be entered.
