                        T.C. Memo. 2004-124



                      UNITED STATES TAX COURT



                  MICHAEL STEIN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10970-01L.            Filed May 24, 2004.


     Michael Stein, pro se.

     John Aletta, for respondent.



                        MEMORANDUM OPINION


     BEGHE, Judge:   Petitioner failed to file timely Federal

income tax returns for 1992, 1993, and 1994.    Respondent filed

“substitutes for return”1 (SFRs) for those years, mailed


     1
      The Commissioner has previously represented to this Court
that the term “substitute for return” (SFR) is a term used by the
Commissioner for returns or partial returns prepared by the
                                                   (continued...)
                                - 2 -

petitioner statutory notices of deficiency to which he never

responded, and thereafter assessed income tax liabilities against

petitioner for those years.

     As of March 8, 1999, petitioner’s total unpaid tax

liabilities for the above-mentioned years, including the unpaid

assessed income tax liabilities, and additions to tax and

interest, were as follows:

               Unpaid         Additions to Tax     Total Unpaid
     Year    Assessments      and/or Interest      Liabilities

     1992     $1,344.17          $1,068.95           $2,413.12
     1993      5,505.15           1,910.12            7,415.27
     1994    197,079.49          63,903.26          260,982.75

     On February 23, 2000, respondent filed a notice of Federal

tax lien (NFTL) against petitioner’s real property with respect

to $203,928.81, the then-unpaid balance of petitioner’s 1992

through 1994 tax liabilities.   On July 26, 2001, respondent

issued petitioner a notice of determination concerning collection




     1
      (...continued)
Commissioner where the taxpayer did not file a return. See
Swanson v. Commissioner, 121 T.C. 111, 112 n.1 (2003). The term
“SFR” has also been used to describe a return prepared by the
Commissioner under sec. 6020(b). There is no record evidence to
prove or disprove respondent’s assertion in his brief that the
substitutes for return in this case meet the requirements of sec.
6020(b). For convenience, we refer to the returns prepared by
respondent as SFRs.
                                - 3 -

action(s) under section 6320 and/or 6330,2 which upheld

respondent’s NFTL.3

     The issues for decision presented by petitioner’s timely

filed petition with this Court are:

     1.   Whether petitioner is liable for the deficiencies

assessed by respondent.    We hold petitioner is liable for the

deficiencies because petitioner has not satisfied the conditions

that would entitle him in this proceeding to contest respondent’s

deficiency determinations or assessments; and

     2.   whether respondent abused his discretion in sustaining

the filing of the Federal tax lien against petitioner’s property

to secure petitioner’s outstanding income tax liabilities for tax

years 1992 through 1994.    We hold respondent did not abuse his

discretion in so doing.




     2
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
     3
      On Mar. 8, 1999, respondent sent petitioner a final notice
of intent to levy and notice of the right to a hearing with
respect to his total unpaid tax liabilities; petitioner did not
file a timely request for a sec. 6330 hearing. After an
equivalent hearing, respondent upheld the proposed levy. We do
not have jurisdiction to consider the proposed levy. See infra
p. 16. However, because petitioner has conflated the lien and
levy issues and made some of the same arguments with respect to
both of them, we sometimes refer to the proposed levy in
considering petitioner’s arguments against the lien.
                                - 4 -

Procedural Background

     This case was tried in Hartford, Connecticut, on January 6,

2003.   Respondent’s opening brief was due April 7, 2003, and

petitioner’s answering brief was due June 5, 2003.   On April 7,

2003, respondent filed his brief with the Court.

     Petitioner filed five motions for extension of time to file

his answering brief.    These motions included three requests for

extensions to obtain and review the trial transcript, a fourth

request for extension because he did not receive notice of the

granting of the request for the third extension until 2 days

before the third extended due date, and a fifth request for

extension pending adjudication of certain motions that petitioner

stated “are concurrently being submitted to the Court in separate

envelopes” but have never been received by the Court.    The Court

granted the first four of these motions, thereby extending the

due date of petitioner’s brief from June 5 to November 20, 2003.

     The Court’s order of November 5, 2003, denying petitioner’s

fifth motion filed November 3, 2003, was served by certified mail

on petitioner at his specified mailing address, P.O. Box 210,

Greenwich, Connecticut (the post office box address), and was

returned unclaimed on November 28, 2003.   Petitioner did not

notify the Court of any change of his mailing address.   On

January 20, 2004, the Court ordered that a copy of the
                                - 5 -

November 5, 2003, order be served on petitioner at the post

office box address by certified mail and regular mail.

     On March 10, 2004, the Court ordered petitioner and

respondent to file, on or before March 22, 2004, a joint status

report or separate status reports indicating whether and when

petitioner filed Federal income tax returns for 1992 through

1994, and, if so, whether, notwithstanding the outstanding

assessments and the lien controversy in the case at hand,

respondent was examining those returns.   Respondent’s status

report, filed March 19, 2004, indicated that petitioner had not

filed the returns, and that, therefore, respondent was not in the

process of examining them.

     On April 6, 2004, petitioner filed a status report

requesting an extension to file his brief and the motions he

intended to file with his last extension request (but which he

claimed to have failed by inadvertence to file).   In this status

report, petitioner asserted that “severe health problems” and his

preoccupation with separate litigation as “a pro se defendant”

had caused the delays in filing his brief and the motions.

According to petitioner, the separate litigation involved “a

dispute over fines imposed on petitioner by a condominium

association” that had led to foreclosure litigation “involving

the same condominium property that the Respondent has placed a

lien on in the instant case.”   Petitioner stated he had not yet
                               - 6 -

filed signed Federal income tax returns for the 1992 through 1994

tax years, but he was working with respondent’s revenue officer

to submit information to complete those returns.   The Court

denied petitioner’s request for another extension of time to file

his brief and notified petitioner that the Court would decide the

case on the record and arguments previously submitted.

Factual Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.

     Petitioner testified that “for purposes of the trial” and

when he filed the petition in this case, he resided at One

Strawberry Hill Court, Unit 11-C, Stamford, Connecticut (the

Strawberry Hill address).   Petitioner testified he is a resident

of Nevada for State income tax purposes.

     Petitioner testified he is a self-employed engineer who

travels up to 3 months at a time more than once a year.    In Form

433-A, Collection Information Statement for Individuals, filed

with the Internal Revenue Service (IRS) on November 11, 1998,

petitioner said he was a “volunteer” and “not employed.”

     Petitioner does not receive wages or salary from which tax

is withheld.   During the tax years at issue, petitioner paid

estimated taxes, and petitioner held accounts with financial
                               - 7 -

institutions that withheld taxes from his interest and dividend

income.

     As of July 26, 2001, petitioner had failed to file Federal

income tax returns for his tax years 1988 through 2000.4   There

is no record information or other evidence that petitioner has

filed returns for his 1992 through 1994 tax years.

     Petitioner “[dropped] everything” in 1988 when both his

elderly parents were ill with cancer.   Petitioner’s parents died

in 1990.   Since 1988, petitioner has had a “combination of health

problems (including * * * surgery)”.

     Petitioner could not locate his 1987 return among his

papers and other personal possessions that were packed in boxes

as a result of residential moves.   Petitioner eventually found a

copy of his 1987 return before trial but made no effort to have

it admitted into evidence.   Petitioner asserted his 1987 return

shows a capital loss carryover of $187,000 and an overpayment of

tax exceeding $12,000, and he had unspecified losses in

subsequent years, including 1988 through 1993.

     During 1996, petitioner used his address at 25 West Elm

Street, Greenwich, Connecticut (the Elm Street address), to

receive Forms 1099-B, Proceeds From Broker and Barter Exchange




     4
      As of Jan. 6, 2003, petitioner had filed returns for his
1995 and 1996 tax years.
                               - 8 -

Transactions, and Forms 1099-Div, Dividends and Distributions,

from financial institutions that paid investment income to him.

     On December 12, 1996, after having prepared SFRs for

petitioner’s tax years at issue, respondent mailed three notices

of deficiency to petitioner determining income tax deficiencies

of $15,812, $10,210, and $153,787 for petitioner’s 1992, 1993,

and 1994 tax years, respectively, failure to file additions to

tax under section 6651(a)(1) of $211 for 1992 and $24,758 for

1994, and additions to tax under section 6654 of $689 for 1992

and $7,352 for 1994 for failure to pay estimated tax.5

Respondent sent the notices of deficiency by certified mail to

the Elm Street address.

     On January 8, 1997, the U.S. Postal Service returned to

respondent the notices of deficiency and the covering envelopes

stamped “unclaimed”.   The envelopes displayed no indication that

petitioner was no longer using the Elm Street address or that

this address was invalid.

     Petitioner did not file petitions with the Court disputing

the determinations set forth in the statutory notices.

     On May 5, 1997, respondent assessed income tax liabilities

against petitioner for the tax years at issue on the basis of the



     5
      Respondent did not determine penalties for petitioner’s
1993 tax year.
                               - 9 -

SFRs and petitioner’s failure to petition the Court to dispute

the deficiencies determined in the statutory notices.

     On or about December 28, 1997, respondent’s revenue officer

Ronald Mele (Revenue Officer Mele) confirmed with postal

employees that petitioner’s previous mailing address was the Elm

Street address.   On January 28, 1998, Revenue Officer Mele

confirmed with postal employees that petitioner was using his

Strawberry Hill address as his mailing address and updated

respondent’s computer records accordingly.

     During a telephone conversation sometime in 1998, petitioner

instructed Revenue Officer Mele to use the post office box

address as his mailing address rather than the Strawberry Hill

address.

     Respondent’s Proposed Levy

     On March 8, 1999, respondent sent petitioner by certified

mail addressed to petitioner at his post office box address a

final notice of intent to levy and notice of right to a hearing.

On May 14, 1999, respondent received petitioner’s untimely Form

12153, Request for a Collection Due Process Hearing.    On June 7,

1999, respondent granted petitioner a so-called equivalent

hearing under section 301.6330-1T(i), Temporary Proced. & Admin.

Regs., 64 Fed. Reg. 3413 (Jan. 22, 1999), because petitioner’s

request was untimely.   On September 13, 1999, respondent’s
                              - 10 -

Appeals Office issued petitioner a decision letter upholding the

proposed levy.

     In a letter dated October 22, 1999, Revenue Officer Mele

informed petitioner that respondent would begin levying on his

income sources and assets on November 5, 1999.

     On or about November 8, 1999, petitioner submitted a Form

9423, Collection Appeal Request, in which he attributed the

delays in filing his returns to respondent’s failure to follow

through on petitioner’s request for capital loss carryover

information from 1987 that he needed to file his returns for the

tax years at issue.   Petitioner’s Form 9423 states that Revenue

Officer Mele was unable to obtain petitioner’s 1987 return.

     On or about December 7, 1999, petitioner submitted to

Revenue Officer Mele a request to enter into an installment

agreement to pay his tax liabilities for 1992 through 1994.     On

January 11, 2000, Revenue Officer Mele sent a letter to

petitioner’s post office box address denying petitioner’s request

for an installment agreement because petitioner had not filed

income tax returns for 1992 through 1999.   The January 11, 2000,

letter specifically instructed petitioner to send an appeal

request to Revenue Officer Mele at his office address on or

before February 11, 2000, if petitioner wished to appeal the

denial of his installment agreement request.   Petitioner did not

appeal the denial of his installment agreement request.
                               - 11 -

     Lien Proceeding

     On January 31, 2000, Revenue Officer Donald Angotta (Revenue

Officer Angotta) replaced Revenue Officer Mele for purposes of

collecting petitioner’s 1992 through 1994 tax liabilities.

     On February 23, 2000, respondent filed an NFTL with respect

to petitioner’s 1992 through 1994 tax liabilities against

petitioner’s real property at the land record office in Stamford,

Connecticut.    The lien attached to the condominium unit

petitioner owned at the Strawberry Hill address.

     On February 23, 2000, respondent’s lien unit office mailed

petitioner Letter 3172, Notice of Federal Tax Lien Filing and

Your Right to a Hearing Under IRC 6320, to the Strawberry Hill

address, with a copy of the NFTL and a Form 12153.

     On March 15, 2000, respondent received from petitioner a

Form 12153 with an attached letter to Revenue Officer Angotta and

an attached memorandum (the attached memorandum).    On the Form

12153, petitioner listed his telephone number and instructed the

IRS to write to petitioner’s post office box address, which he

said he checked twice a month, if the IRS was unable to reach him

by telephone.    Petitioner placed the words “See Attachment”,

apparently referring to the attached memorandum, under both

notations on the Form 12153 that allowed him to appeal either a

“Filed Notice of Federal Tax Lien” or a “Notice of Levy”.
                             - 12 -

     In the attached memorandum, petitioner asserted he would

complete his delinquent returns within 60-90 days to prove that

he did not owe the tax liabilities determined by respondent.

     In the attached memorandum, petitioner also stated he was

appealing Revenue Officer Angotta’s “levy warning letter” dated

February 14, 2000, which, according to petitioner, stated:

“Enforced collection may include placing a levy on your bank

accounts, wages, receivables, commissions, etc.”6   In the

attached memorandum, petitioner asserted:   “Mr Angotta informed

me over the telephone that I have until March 15, 2000 to appeal

this action.”

     In the attached memorandum, petitioner also said Revenue

Officer Angotta failed to respond to petitioner’s messages left

on Revenue Officer Angotta’s answering machine before February

11, 2000, in which petitioner stated that he was ready to

personally meet with Revenue Officer Angotta to hand in his

appeal.

     In a letter dated June 22, 2000, Appeals Officer William A.

Hirsch (Appeals Officer Hirsch) informed petitioner that

respondent’s NFTL had been assigned to him for consideration.

After repeated failed attempts by Appeals Officer Hirsch and

petitioner to get in touch with each other, Appeals Officer

Hirsch, in a letter dated July 26, 2000, informed petitioner that

     6
      The Feb. 14, 2000, letter was not part of the record.
                              - 13 -

he needed to file his delinquent returns by August 31, 2000, as a

condition to discussing collection alternatives such as an

installment agreement or an offer in compromise.

     On October 3, 2000, Appeals Officer Hirsch telephoned

petitioner and attempted to conduct a section 6320 hearing, at

which time petitioner requested an extension of time to review

his notes.   During this conversation, Appeals Officer Hirsch

granted petitioner’s request for an extension to file his

delinquent returns until November 30, 2000.   Petitioner agreed to

conduct the hearing by telephone rather than in person within 1

week of submitting his delinquent returns.

     On October 4, 2000, Appeals Officer Hirsch sent petitioner a

letter scheduling a telephone hearing for December 8, 2000.

     On December 8, 2000, Appeals Officer Hirsch telephoned

petitioner and conducted petitioner’s section 6320 hearing, even

though petitioner had not yet filed his delinquent returns.

There is no evidence in the record that petitioner at any time

either requested that the hearing be held in person or objected

to the holding of a hearing by telephone.

     On July 26, 2001, respondent’s Appeals Office issued a

notice of determination concerning collection actions informing

petitioner of the determination not to withdraw the NFTL.     As of

that date, petitioner had not appealed the rejection of his

installment agreement request.
                             - 14 -

     On August 27, 2001, petitioner timely mailed his petition

with the Court in response to the July 26, 2001, notice of

determination; the Court received and filed the petition on

September 4, 2001.7

Discussion

     As a preliminary matter, we note that petitioner’s mail and

living arrangements, which have created and continue to create

difficulties in contacting him, and his repeated failures to

comply with deadlines, have impeded and delayed respondent’s

collection efforts and the efforts of the Court to resolve these

matters.

     We note that petitioner has uttered contradictory testimony

and arguments and has failed to provide respondent and the Court

with reliable information and documents to resolve this matter.

Petitioner bears the risk of loss and the responsibility arising

from failure to prepare and file returns and to preserve and

locate his cost records and copies of prior returns for use in

substantiating items required to be reported on his returns for

the years in issue.




     7
      Petitioner’s mailing of the petition was a timely filing on
the last day of the 30-day period specified by secs. 6320(c) and
6330(d), as extended by Rule 25. Aug. 25 and 26, 2001, were a
Saturday and Sunday, respectively, and petitioner mailed the
petition on Monday, Aug. 27, 2001. See Guerrier v. Commissioner,
T.C. Memo. 2002-3.
                               - 15 -

     Petitioner’s place of residence and employment status are

uncertain insofar as the record in this case is concerned because

he has given confusing, contradictory, and untrustworthy

testimony on these issues.    Petitioner testified that he is a

resident of Nevada for State income tax purposes, although Nevada

has no income tax.    See Nev. Rev. Stat. Ann. secs. 360-377A

(Michie 1999 & Supp. 2001).    Perhaps he means he is a Nevada

resident for the purpose of avoiding State income taxes.

     Petitioner’s testimony that he is a self-employed engineer

who travels away from home for up to 3 months at a time more than

once a year contradicts his claim that when he uses or has used

the post office box address as his mailing address, he checks his

mail twice a month.   In Form 433-A, filed on November 11, 1998,

petitioner said he was a “volunteer” and “not employed.”

     Petitioner has used the illness of his parents from cancer

in 1988 and thereafter as a continued excuse for failing to file

returns right up to the present, even though he also testified in

another connection that his parents died in 1990.

     On more than one occasion, petitioner defined what

respondent had to do before petitioner would take action.

Petitioner then did nothing because respondent’s officials did

not exactly follow petitioner’s requirements as he defined and

sought to impose them.   Petitioner has failed to file returns

with respect to more than 10 tax years, failed to timely appeal
                               - 16 -

the denial of his installment agreement request, failed, after

repeated extensions, to file his brief, and failed to file

certain motions that he claimed he was filing before submitting

his brief.

       Petitioner repeatedly made legal arguments orally during the

trial, even though we instructed petitioner to present his legal

arguments in his brief.    Although we could reject petitioner’s

contentions and declare him in default, and dismiss his case for

failure to file his brief, see Rules 123, 151; Stringer v.

Commissioner, 84 T.C. 693 (1985), affd. without published opinion

789 F.2d 917 (4th Cir. 1986); Horn v. Commissioner, T.C. Memo.

2002-207, we choose instead to address the merits of respondent’s

determination to file a lien on petitioner’s property, see Horn

v. Commissioner, supra; Comey v. Commissioner, T.C. Memo. 2001-

275.

       Petitioner contests the filing of the NFTL.   Petitioner

failed to file a timely request for hearing with respect to

respondent’s proposed levy.    We therefore have no jurisdiction to

consider the levy.    See Moorhous v. Commissioner, 116 T.C. 263,

269 (2001); Kennedy v. Commissioner, 116 T.C. 255, 261-262

(2001).8

       8
      Petitioner referred to respondent’s alleged levies that
occurred in January 1998 that were not part of the record. To
the extent that petitioner refers to respondent’s collection
activities before July 22, 1998, we have no jurisdiction to
                                                   (continued...)
                              - 17 -

     We have jurisdiction to review respondent’s determination of

the validity of the Federal tax lien on petitioner’s property

under section 6320.   See secs. 6211(a), 6213(a), 6214(a); Parker

v. Commissioner, 117 T.C. 63, 65 (2001); Van Es v. Commissioner,

115 T.C. 324, 327 (2000).

     Where the validity of the underlying tax liability is

properly at issue, the Court will review the matter de novo.

Where the validity of the underlying tax liability is not

properly at issue, the Court will review the Commissioner’s

administrative determination for abuse of discretion.   Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).   A taxpayer’s

underlying tax liability may be at issue if he did not receive

any statutory notice of deficiency for such tax liability or did

not otherwise have an opportunity to dispute such tax liability.

See secs. 6320(c), 6330(c)(2)(B).

     Petitioner claims he did not file petitions with this Court

contesting the determinations in the three notices of deficiency

because he did not receive the notices of deficiency.

     The notices of deficiency were properly mailed on December

12, 1996, to petitioner’s last known address, which, at the time,


     8
      (...continued)
review them. See Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746
(which created new sec. 6330 and provided for an effective date
of 180 days after July 22, 1998); see also Van Es v.
Commissioner, 115 T.C. 324, 327-328 (2000).
                              - 18 -

was the Elm Street address.   There is no record evidence

petitioner notified respondent before December 12, 1996, that the

Elm Street address was no longer his mailing address. Respondent

performed a thorough investigation to determine petitioner’s

address by contacting the U.S. Postal Service and using the

numerous Forms 1099 petitioner received in 1996.

     On January 8, 1997, the U.S. Postal Service returned to

respondent the notices of deficiency and the covering envelopes

stamped “unclaimed”.   The envelopes displayed no indication that

petitioner was no longer using the Elm Street address or that

this address was invalid.   In the absence of clear evidence to

the contrary, the presumptions of official regularity and

delivery justify the conclusion that respondent sent the

statutory notices, and the U.S. Postal Service properly attempted

to deliver the notices.   See United States v. Zolla, 724 F.2d 808

(9th Cir. 1984); United States v. Ahrens, 530 F.2d 781 (8th Cir.

1976); Sego v. Commissioner, 114 T.C. 604, 611 (2000).      The facts

and circumstances of this case, including petitioner’s failure to

claim mail sent by the Court and the difficulties in contacting

him, lead us to conclude that petitioner’s conduct constituted

deliberate refusal of delivery of the statutory notices.     He

thereby forfeited his opportunity to contest the underlying

deficiencies in a proceeding in this Court under section 6330(d).
                                - 19 -

See Goza v. Commissioner, supra at 183; Sego v. Commissioner,

supra; Carey v. Commissioner, T.C. Memo. 2002-209.

     Because the underlying tax liabilities are not properly at

issue, we review respondent’s determination for abuse of

discretion.     See Goza v. Commissioner, supra; Sego v.

Commissioner, supra at 610; Hodgson v. Commissioner, T.C. Memo.

1998-70, affd. 18 Fed. Appx. 571 (9th Cir. 2001).    We must decide

whether respondent exercised his discretion arbitrarily,

capriciously, or without sound basis in fact or law.       See

Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Fargo v.

Commissioner, T.C. Memo. 2004-13.

     Petitioner argues he is not liable for the deficiencies

assessed by respondent.    Petitioner also argues respondent’s

Appeals Office abused its discretion in sustaining the filing of

the lien because:    (1) Respondent did not comply with the notice

requirements of section 6320(a); (2) respondent failed to comply

with petitioner’s request to conduct the section 6320 hearing in

person rather than by telephone; and (3) respondent is precluded

from filing the NFTL before petitioner appeals the rejection of

his installment agreement request.

     As explained below, we hold petitioner is liable for the

deficiencies.    We hold respondent’s Appeals Office did not abuse

its discretion by upholding respondent’s filing of the lien.
                               - 20 -

     Issue 1.    Petitioner’s Liability for the Assessed
                 Deficiencies

     Petitioner has stated that he wishes to contest the

underlying liabilities for his tax years at issue.    Petitioner

argues that respondent’s determination of the amounts of the

assessed income tax liabilities is incorrect because petitioner

would have little or no capital gains tax liability if

respondent’s SFRs had used the actual cost bases, instead of

zero-cost bases, to determine his income from the sale of

securities, and if the SFRs had accounted for a capital loss

carryover from 1987.

     Petitioner is liable for the assessed deficiencies because

the conditions have not been satisfied that would entitle him to

contest the deficiencies in this proceeding.

     Petitioner was entitled at the hearing with the Appeals

officer to challenge the existence or amount of the underlying

tax liabilities for the periods in issue only if he did not

receive a statutory notice of deficiency or did not otherwise

have an opportunity to dispute the liabilities.    See sec.

6330(c)(2)(B).

     Petitioner forfeited his opportunity to contest the

underlying deficiencies in a proceeding in this Court under

section 6330(d) because of his deliberate refusal of delivery of

the statutory notices.    See supra pp. 18-19.
                              - 21 -

     In any event, petitioner was not ready at trial to prove

that the assessments overstated his tax liabilities.     Taxpayers

bear the burden of proving their entitlement to deductions.     Rule

142(a); Welch v. Helvering, 290 U.S. 111 (1933).   The

Commissioner is required only to prepare the substitute for

return “from his own knowledge and from such information as he

can obtain through testimony or otherwise.”   Sec. 6020(b); see

Andary-Stern v. Commissioner, T.C. Memo. 2002-212.     Petitioner

did not offer into evidence any records, not even the 1987

return, that would tend to prove his contentions that he had cost

bases greater than zero for purposes of determining gains and

losses on the sale of his securities, or that he had a capital

loss carryover from 1987.   See Poindexter v. Commissioner, 122

T.C. 280 (2004); Horn v. Commissioner, T.C. Memo. 2002-207; Smith

v. Commissioner, T.C. Memo. 2002-59.   Respondent is not obligated

to accept any late-filed returns unless petitioner can

substantiate his claimed capital loss carryover or any other

losses.   See sec. 6001; Rules 142(a), 149(b); Horn v.

Commissioner, supra; Smith v. Commissioner, supra; sec.

1.6001-1(a), (e), Income Tax Regs.

     We do not accept petitioner’s excuse that he intends to file

returns for 1992 through 1994.   Petitioner has procrastinated and

has failed to file the returns more than 1 year after finding his

1987 return in 2002.   See, e.g., Montgomery v. Commissioner, 122
                                - 22 -

T.C. 1, 19 (2004) (Marvel, J., concurring) (“A taxpayer who

procrastinates and seeks to rely solely on his announced

intention to file an amended return as a defense to a proposed

levy or lien * * * proceeds at his peril as his undocumented

intention is not likely to be viewed as a credible challenge to

the underlying tax liability.”).     So much more so with respect to

petitioner, who has never even filed original returns for the

years in issue.

       Issue 2.   Respondent’s Exercise of Discretion in Sustaining
                  the Lien

       a.   Overview of Lien Proceedings

       The Federal Government obtains a lien against “all property

and rights to property, whether real or personal” of any person

liable for Federal taxes upon demand for payment and failure to

pay.    See sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293

(2004).     The lien arises automatically on the date of the

assessment and continues until the tax liability is satisfied or

the statute of limitations bars enforcement of the lien.       Sec.

6322; Iannone v. Commissioner, supra.      If the taxpayer fails to

pay, the IRS usually files an NFTL with the appropriate State

office in order to validate the lien against any purchaser,

holder of a security interest, mechanic’s lienor, or judgment

lien creditor.     See sec. 6323(a); Lindsay v. Commissioner, T.C.

Memo. 2001-285.
                                  - 23 -

       The Commissioner must provide the taxpayer with written

notice of the filing of an NFTL not more than 5 business days

after filing and must advise the taxpayer of the right to a

hearing before the IRS Appeals Office.     Sec. 6320(a)(1), (2) and

(3).

       If the taxpayer requests a hearing, the IRS Appeals officer

conducting the hearing must verify that the requirements of any

applicable law or administrative procedure have been met.     Secs.

6320(c), 6330(c)(1).     The Appeals officer must also determine

whether any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the

taxpayer that any collection action be no more intrusive than

necessary.    Secs. 6320(c), 6330(c)(3).

       The IRS may withdraw an NFTL if the taxpayer has entered

into an installment agreement to satisfy the liability for which

the lien was imposed (and the installment agreement does not

specify that the lien will not be withdrawn).     Sec. 6323(j)(1).

       b.   Abuse of Discretion

             (i)   Section 6320(a) Notice Requirements

       We reject petitioner’s argument that respondent should not

have sustained the filing of the Federal tax lien because

respondent failed to mail Letter 3172 and the accompanying NFTL

to petitioner’s last known address.
                             - 24 -

     Notice of the lien filing may be given to the taxpayer in

person, left at the taxpayer’s dwelling, or sent by certified or

registered mail to the taxpayer’s last known address.    Sec.

6320(a)(2).

     On February 23, 2000, respondent timely mailed to

petitioner’s Strawberry Hill address, Letter 3172, with a copy of

the NFTL.

     Petitioner sent a Form 12153 that was received by respondent

on March 15, 2000, within 30 days of respondent’s filing of the

NFTL and the mailing of the Letter 3172.   Petitioner sent the

Form 12153 to appeal the February 14, 2000, “levy warning letter”

he claims was issued by Revenue Officer Angotta.

     On December 8, 2000, respondent provided petitioner with a

section 6320 hearing to contest the filing of the NFTL.    Because

the hearing had been timely requested within the prescribed 30-

day period, petitioner’s claims that respondent did not send

Letter 3172 to petitioner’s last known address and that

petitioner never received it are beside the point.   Even though,

in the Form 12153, petitioner appealed an alleged “levy warning

letter”, Appeals Officer Hirsch’s letters sent to petitioner

before the section 6320 hearing clearly indicated that the

section 6320 hearing would deal with the NFTL.
                                - 25 -

          (ii)     Section 6320 Hearing in Person

     Petitioner argued Appeals Officer Hirsch did not properly

conduct the section 6320 hearing in person.

     Section 6320(c) requires that the section 6320 hearing be

conducted under the provisions of section 6330(c), (d), and (e).

The hearing under section 6330 need not be conducted face to

face.   See sec. 301.6320-1(d)(2), Q&A-D6 and D7, Proced. & Admin.

Regs; see also Lunsford v. Commissioner, 117 T.C. 183 (2001);

Day v. Commissioner, T.C. Memo. 2004-30; Armstrong v.

Commissioner, T.C. Memo. 2002-224.

     Respondent was not required to provide petitioner with a

face-to-face section 6320 hearing.       There is no evidence in the

record petitioner requested such a hearing.      Petitioner agreed

the telephone hearing constituted his section 6320 hearing and

did not object to the holding of the hearing by telephone.

     On the basis of the entire record and applicable law, we

conclude that the Appeals officer properly conducted petitioner’s

section 6320 hearing under section 6320(c).

           (iii)    Appeal of Rejection of Installment Agreement

     Petitioner argues that Revenue Officer Angotta prevented him

from filing an administrative appeal of the denial of his

installment agreement request, and that respondent’s

consideration of the appeal would have precluded respondent from

filing the NFTL or levying against his property.
                              - 26 -

     Respondent would not have been required to withdraw the NFTL

even if petitioner had entered into an installment agreement to

satisfy the liability for which the lien was imposed.     See sec.

6323(j)(1); sec. 301.6323(j)-1(c), Proced. & Admin. Regs.     IRS

Publication 594, What You Should Know About the IRS Collection

Process, cited by petitioner, specifically states that the

Commissioner may file a tax lien even if an installment agreement

is in effect.   IRS Publication 594 at 6; see, e.g., Beery v.

Commissioner, 122 T.C. 184, 189-190 (2004) (section 6015(e)(1)(B)

does not preclude the Commissioner from filing a Federal tax lien

against an individual making an election under section 6015).9

We hold respondent was not precluded from filing the NFTL against

petitioner’s property.

Conclusion

     Respondent’s Appeals Office did not abuse its discretion in

upholding respondent’s filing of a Federal tax lien against

petitioner’s property to collect outstanding income tax

liabilities for petitioner’s 1992 through 1994 tax years.    As

required by section 6330(c)(1), the Appeals officer verified that

the requirements of applicable laws and administrative procedures



     9
      In his petition and during trial, petitioner conflated the
lien and levy issues. We do not have jurisdiction to consider
any of petitioner’s arguments with respect to respondent’s
proposed levy including petitioner’s argument that his appeal of
the rejection of his installment agreement request would preclude
respondent’s proposed levy. See supra p. 16.
                              - 27 -

had been met.   The Appeals officer also determined that the

filing of the tax lien balanced the need for efficient collection

of taxes with petitioner’s legitimate concerns that any

collection action be no more intrusive than necessary.    Although

this case does not involve a jeopardy assessment under section

6861, respondent’s security interest in petitioner’s property

will be jeopardized if respondent’s security interest is

subordinated to those of other creditors, such as the party or

parties involved in the foreclosure litigation with respect to

petitioner’s condominium against which respondent filed the NFTL.

See sec. 6323(a); Lindsay v. Commissioner, T.C. Memo. 2001-285;

see also Iannone v. Commissioner, 122 T.C. at 293 (Federal tax

liens are not extinguished by personal discharge in bankruptcy).

     Petitioner’s latest status report indicates petitioner is

working with a revenue officer to attempt to reach agreement with

respondent on his outstanding tax liabilities.    If that is so, we

commend respondent for displaying extraordinary patience and

forbearance in attempting to continue to work with petitioner.

See, e.g., Montgomery v. Commissioner, 122 T.C. at 10 (the

substantive and procedural protections contained in sections 6320

and 6330 reflect congressional intent that the Commissioner

collect the correct amount of tax, and do so by observing all

applicable laws and administrative procedures).

     In the meantime, we have sustained respondent’s lien;
                             - 28 -

respondent has complied with all requirements for its validity.

In any event, we do not intend to subject respondent’s ability to

collect petitioner’s tax liabilities to further jeopardy.

     To reflect the foregoing,


                                      Decision will be entered

                                 for respondent.
