                         T.C. Memo. 2002-286



                       UNITED STATES TAX COURT



                 DUANE S. ASHLEY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5151-00L.              Filed November 25, 2002.



     Duane S. Ashley, pro se.

     Steven M. Webster, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     CHIECHI, Judge:    The petition in this case was filed in

response to a “NOTICE OF DETERMINATION CONCERNING COLLECTION

ACTION(S) UNDER SECTION 6320 and/or 6330" (notice of determina-

tion).

     We must consider whether respondent may proceed with collec-

tion with respect to petitioner’s taxable year 1989.   We hold
                                - 2 -

that respondent may.

                          FINDINGS OF FACT

     Virtually all of the facts have been deemed established

pursuant to the Court’s Order under Rule 91(f)1 dated September

5, 2002.

     Petitioner resided in Beaufort, South Carolina, on the date

he filed the petition in this case.

     Petitioner worked for the U.S. Government (Government) from

1973 until January or February 1987, when the Government dis-

charged him.    At the time of his discharge, petitioner was

working for the Parris Island Marine Corps Recruit Depot.      After

his discharge in early 1987, petitioner made various claims

against the Government, which were not resolved to his satisfac-

tion.    In an effort to have such claims resolved by a Federal

court, petitioner decided not to, and did not, file a Federal

income tax return (return) for taxable year 1989 or any taxable

year thereafter.

     On August 12, October 7, November 18, and December 30, 1991,

respondent sent petitioner delinquency notices with respect to

his taxable year 1989.

     On April 28, 1992, respondent sent by certified mail to

petitioner’s last known address, i.e., Star Route 6, Box 295½A,


     1
      All Rule references are to the Tax Court Rules of Practice
and Procedure. All section references are to the Internal
Revenue Code in effect at all relevant times.
                               - 3 -

Beaufort, South Carolina 29902 (Route 6 mailing address), a

notice of deficiency (notice) with respect to petitioner’s

taxable year 1989.2   The USPS notified petitioner on April 29,

1992, and again on May 5, 1992, about the certified mail from

respondent that it was attempting to deliver to him.     On May 13,

1992, the USPS returned that certified mail to respondent as

“unclaimed”.

     In the notice that respondent issued to petitioner with

respect to taxable year 1989, respondent determined, inter alia,

that for that year petitioner had nonemployee compensation

totaling $31,302 and interest income totaling $63.     In the

notice, respondent further determined for taxable year 1989 a

deficiency of $9,022 in Federal income tax (tax) and additions to

tax under sections 6651(a)(1) and 6654 of $2,256 and $608,

respectively.   Petitioner did not petition the Court with respect

to the notice issued by respondent relating to his taxable year

1989.

     On September 28, 1992, respondent assessed tax of $9,022 and

additions to tax under sections 6651(a)(1) and 6654 of $2,256 and

$608, respectively, with respect to petitioner’s taxable year

1989, as determined in the notice.     On September 28, 1992,


        2
      Petitioner resided in the property at the Route 6   mailing
address throughout 1992 and thereafter. Sometime after    1992, the
United States Postal Service (USPS) changed the mailing   address
of that property from the Route 6 mailing address to 14   Woodbine
Avenue, Beaufort, South Carolina.
                               - 4 -

respondent also assessed interest of $2,994.50 that had accrued

as of that date on such deficiency and such additions to tax.

(We shall refer to such assessed tax, assessed additions to tax,

and assessed interest, as well as any interest thereon as pro-

vided by law which respondent has not assessed but which accrued

after September 28, 1992, as petitioner’s unpaid liability for

1989.)

     On September 28 and December 7, 1992, and January 11, 1993,

respondent sent petitioner notices of balance due with respect to

petitioner’s unpaid liability for 1989.   On September 28, 1993,

respondent filed a notice of Federal tax lien with respect to

petitioner’s taxable year 1989.3   On January 10, 1997, a payment

of $192.55 was made by levy with respect to petitioner’s taxable

year 1989.4   On March 31, 1999, respondent issued a Final Notice,

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

(notice of intent to levy) with respect to petitioner’s taxable

year 1989.

     On or before April 29, 1999, in response to the notice of

intent to levy, petitioner filed Form 12153, Request for a


     3
      The Federal tax lien filed on Sept. 28, 1993, was not a
collection action subject to sec. 6320. See sec. 301.6320-
1(a)(1), (b)(2) Q&A-B2, Proced. & Admin. Regs.; see also Nicklaus
v. Commissioner, 117 T.C. 117, 118 n.3 (2001).
     4
      The levy made on Jan. 10, 1997, was not subject to sec.
6330. See sec. 301.6330-1(a)(1), (3) Q&A-A4, (4) Example 1,
Proced. & Admin. Regs.; see also Nicklaus v. Commissioner, supra.
                                - 5 -

Collection Due Process Hearing (Form 12153).    In Form 12153,

petitioner alleged:

     Have been requesting hearing for almost 10 years now
     from local and Atlanta agents and no response except
     liens and seizure of bank account in excess of actual
     amount in account, by local agent * * *. Not taking
     into consideration or complying with your own instruc-
     tions by field agents has led to this. I want my day
     in Federal Court and am again requesting such

     On January 19, 2000, petitioner submitted to respondent’s

Appeals Office (Appeals Office) Form 433-A, Collection Informa-

tion Statement for Individuals (Form 433-A).    In that form,

petitioner indicated that he had two dependents--the mother of

his son and their son.    Petitioner indicated in Form 433-A that

he owned:   His home located in Beaufort, South Carolina, which he

valued at $77,000; four automobiles, two of which he did not

value, one of which he valued at $6,500, and one of which he

valued at $1,500; three boats which he did not value; and certain

tools of trade on which he placed a “current pawn value” of

$5,000 to $7,500 and a “replacement value” of $20,000 to $25,000.

In Form 433-A, petitioner indicated that his monthly compensation

varied but that it was around $2,000 and that his monthly total

expenses were $1,300.    In response to a question in Form 433-A

asking for “Additional information or comments”, petitioner

stated:   “Dept of Navy owes me disability from Oct ‘86 thru

current”.

     According to the Appeals Office Case Memorandum relating to
                              - 6 -

the notice of intent to levy with respect to petitioner’s taxable

year 1989,

     Mr. Ashley [petitioner] makes claims that he cannot pay
     the amount due. He included another letter with his
     protest alluding to a large government debt owed him
     from another agency for disability payments which he
     claims were improperly denied. He believes that the
     Internal Revenue Service should help him in his cause
     to recover what he believes are his benefits and then
     share in those benefits to pay the taxes at hand.

        *       *       *       *       *       *       *

     In the instant case, Mr. Ashley in his protest claims
     not that he doesn’t owe the tax, but that the liability
     should be offset by the debt owed him by another fed-
     eral government agency. It should be noted that the
     assessment at hand was made under “substitute for
     return” procedures and is not from a voluntarily filed
     tax return. Therefore, Mr. Ashley may file an original
     tax return to correct the amount of tax at any time
     based upon relevant records he may have.

        *       *       *       *       *       *       *

     Mr. Ashley responded to a letter sent by the settlement
     officer saying in a phone message that he would be
     amenable to completing a financial statement to declare
     his inability to pay. Such a financial statement was
     sent to Mr. Ashley with instructions to complete as
     fully as possible and return to the settlement officer
     for evaluation. His overture at not being able to pay
     should be treated as a collection alternative within
     the meaning of the new Restructuring and Reform Act of
     1998 as it applies here.

        *       *       *       *       *       *       *

     A telephone conference was agreed upon and held with
     Mr. Ashley. * * *

     Mr. Ashley went over his claim that the Internal Reve-
     nue Service should straighten out his problem with the
     Department of the Navy, which he said denied his dis-
     ability claim. * * *
                             - 7 -


Mr. Ashley was again advised that he could file an
original tax return for 1989. * * *

   *            *      *       *        *       *      *

The financial information submitted by Mr. Ashley
indicates that he has equity in property from which
some funds may be generated. Mr. Ashley houses not
only himself but his common law wife and their natural
son. Thus, there are three who are claimable as de-
pendents for purposes of determining disposable income.
Mr. Ashley indicated that his wife does not work and
that his income is the sole income of the household.
An analysis of his monthly income over allowable ex-
penses reveals the following:

       Income       Expense Type      Expense Amount
       $2,000       National Std.     $ 781*
                    Housing & Util.   $ 350**
                    Transportation    $ 235***
                    Total             $1,366****

       *3 people in household, source: BLS 10/99.
       **as claimed but unsubstantiated, no housing pur-
       chase or rental expense is involved or included.
       ***as allowed for one car, no purchase expense is
       involved or included.
       ****Mr. Ashley’s claim reflects monthly expenses
       of $1,300.

       Footnote: The home and autos are paid for. Mr.
       Ashley claims that he lost his health and life
       insurance because of the circumstances described
       above.

Applying a present value to the excess income over
expenses yields a total of $25,994 [$634 per month x 41
months left on statute = $25,994].

According to the county valuation of Mr. Ashley’s
realty and the information on encumbrances, he has the
full equity of the home because he had satisfied the
mortgage. The county valuation is $75,353. There are
no available valuations for the vehicles or boats in
Mr. Ashley’s possession. However, it is unnecessary to
obtain that information because the addition of present
value to the equity in the realty substantially exceeds
what is owed by Mr. Ashley. Even reducing the value of
                         - 8 -

the realty by 20% leaves equity of $60,282. Also,
eliminating present value in its entirety because of
the dischargeability of the taxes still leaves net
realizable equity substantially in excess of the amount
owed.

Mr. Ashley might have been entitled to enter into an
installment agreement but for the fact that he is not
current in his filing obligations. [See IRM
5.14.1.4(4).] Mr. Ashley was given ample opportunity
to file the delinquent, and as he indicated to the
settlement officer, taxable returns (all since 1989)
but unfortunately, has not done so. He requested
assistance from the Internal Revenue Service in prepar-
ing the unfiled returns which, according to information
secured by the settlement officer, could not be of-
fered. Therefore, an installment agreement isn’t an
option for Mr. Ashley.

The settlement officer considered an offer in compro-
mise as an [sic] collection alternative. However,
there are several reasons why an offer is inappropri-
ate. As indicated above, Mr. Ashley’s equity in assets
far exceeds the amount owed which precludes acceptance
based on “doubt as to collectibility”. Nor has he
claimed or demonstrated that there are any special
circumstances which would warrant consideration of an
“Effective Tax Administration” offer. In any event,
the Service policy with respect to individuals who
submit offers is that they be current in filing all due
returns before their offers can be processed. [See IRM
5.8.3.3(2).] As noted above Mr. Ashley was not in
compliance with his filing responsibilities at the time
of his appeal nor has he become compliant in filing
since.

Mr. Ashley has not offered a viable collection alterna-
tive in his case. Nor has he availed himself to date
of the opportunity to file an original income tax
return for the subject year which he claims verbally
would reduce the amount of tax due. Further, Mr.
Ashley will not be available for a viable collection
alternative until such time that he becomes compliant
with his filing obligations. Therefore, the following
conclusions and determinations are made in this matter.

The sending of the Notice of Intent to Levy was proper
under the circumstances. Since no viable collection
                                 - 9 -

     alternative has been offered, the intrusiveness of the
     proposed levy is commensurate with the need to collect
     the revenue efficiently and in such a manner. Mr.
     Ashley was advised that the liability can be adjusted
     at any time if an accurate return is filed and substan-
     tiated. The sending of the Notice of Intent to Levy
     should thus be sustained.

     On March 29, 2000, pursuant to section 6330, the Appeals

Office issued to petitioner a notice of determination with

respect to petitioner’s taxable year 1989.   That notice stated in

pertinent part:

     Summary of Determination:

     The Service followed its procedural, administrative and
     legal guidelines in sending the Notice of Intent to
     Levy.

     There were no viable collection alternatives advanced
     by the taxpayer.

     The intrusiveness of the proposed levy is commensurate
     with the need to collect the revenue efficiently.

Attached to the notice of determination was a document entitled

“Attachment - 3193".   That document stated in pertinent part:

     Matters Considered

     Whether the Service followed its procedural, adminis-
     trative and legal guidelines in issuing the Notice of
     Intent to Levy.

          As [sic] assessment of tax was made and notice and
          demand for payment followed. Failure to pay the
          amount occurred thereafter. Before levy can be
          made a Notice of Intent to Levy must first be
          issued. * * * The Service followed the required
          procedures in issuing the Notice of Intent to
          levy.

     Whether any collection alternatives are advanced by the
     taxpayer and the viability of such offers.
                              - 10 -


          The taxpayer proposed the Service act on his be-
          half in seeking to recover damages the taxpayer
          says are owed to him by another federal agency.
          There is no established debt at this time, and
          therefore, no power of levy against the debt to
          recover the taxes owed. The taxpayer was advised
          that he could file an original income tax return
          for the subject year but has yet to do so. The
          taxpayer was asked to file delinquent tax returns
          but has not done so. There were no other alterna-
          tives offered.

     Whether the proposed action would be unnecessarily
     intrusive as against the need to collect the revenue
     efficiently.

          The intrusiveness of the proposed levy is commen-
          surate with the need to collect the revenue effi-
          ciently and in such a manner. The failure to file
          delinquent returns precludes the collection alter-
          natives most often employed.

                              OPINION

     Where, as is the case here, the validity of the underlying

tax liability is not properly placed at issue, the Court will

review the administrative determination of the Appeals Office for

abuse of discretion.5   Sego v. Commissioner, 114 T.C. 604, 610

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


     5
      Petitioner did not petition the Court with respect to the
notice that respondent issued to him relating to his taxable year
1989. Moreover, although invited to do so by the Appeals Office,
petitioner did not prepare and file with the Appeals Office a
return for 1989. At trial, petitioner testified that he did not
know what he owed for his taxable year 1989. Assuming arguendo
that petitioner had properly placed at issue the validity of the
underlying tax liability at issue, on the record before us, we
find that petitioner has failed to establish that petitioner’s
unpaid liability for 1989 is not valid.
                               - 11 -

     Petitioner asks the Court to grant him various remedies,

including full compensation for claimed disability benefits,

appropriate redress for his alleged wrongful discharge by the

Government, an investigation of various complaints against the

Internal Revenue Service, and relief from petitioner’s unpaid

liability for 1989 and for any unpaid liabilities for taxable

years thereafter.

     We do not have the authority to resolve any of the matters

raised by petitioner except the issue as to whether respondent

may proceed with collection with respect to petitioner’s taxable

year 1989.    The record is devoid of any evidence establishing

that respondent abused respondent’s discretion in determining in

the notice of determination to proceed with collection with

respect to that year.   On the record before us, we find that

respondent did not abuse respondent’s discretion in making that

determination.

     We have considered all of petitioner’s arguments and conten-

tions which are not discussed herein relating to whether respon-

dent may proceed with collection with respect to petitioner’s

taxable year 1989, and we find them to be without merit and/or

irrelevant.

     To reflect the foregoing,

                                      Decision will be entered for

                                 respondent.
