                          T.C. Memo. 2009-308



                        UNITED STATES TAX COURT



               JAMES SCOTT SPARKMAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 9278-08L, 9279-08L.      Filed December 28, 2009.



     James Scott Sparkman, pro se.

     Jonathan J. Ono, for respondent.



                          MEMORANDUM OPINION


     GOEKE, Judge:   These consolidated cases involve respondent’s

efforts to collect income taxes and section 66721 trust fund

recovery penalties through lien and levy.       Jurisdiction is based

upon section 6330(d).    Petitioner’s sole argument is that he does


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                  - 2 -

not owe the income tax liabilities.        As we will explain, this

argument is not available to petitioner in this collection case,

and we uphold respondent’s determinations.

                               Background

     Petitioner was a resident of Hawaii when the petitions were

filed.   Before trial, respondent filed motions to show cause why

proposed facts in evidence should not be accepted as established

in these two consolidated dockets.        After consideration of

petitioner’s reply to the motions, the facts proposed were

accepted as established, and the exhibits attached to the motions

were deemed admitted into evidence.        There is no other

stipulation of facts, but petitioner testified at trial.

     Respondent’s collection efforts involve these liabilities:

     Tax Period                Type of Tax        Assessed Amount Due
         1996                  Income                  $51,962.71
         1997                  Income                   54,210.54
         1998                  Income                   32,753.04
         1999                  Income                  117,933.12
         2000                  Income                   44,470.51
         200203                Sec. 6672                   298.64
         200303                Sec. 6672                 4,753.35
         200306                Sec. 6672                 2,933.75

     On October 5, 2006, respondent issued to petitioner a Notice

of Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320 (NFTL).      A notice of intent to levy was issued to petitioner
                                - 3 -

on August 12, 2006, in response to which he submitted a timely

request for a collection due process (CDP) hearing.        Petitioner

timely submitted his request for a CDP hearing to respondent in

response to the NFTL.   Petitioner’s request for a CDP hearing

contained the following statements:

     Several months ago 7-14-2006 I requested a payment plan
     no response. I never breached any prior payment plan.
     I have also requested a CDP hearing 4 times now. More
     importantly I do not owe the tax assessed. The case is
     in 9th Circuit Appeals.

     Your agent omitted evidence at trial. Your agent
     fabricated evidence at trial. I told your office not
     to file a lien several times yet IRS did anyway. This
     has been noted and will be dealt with per code 7433.

     Petitioner’s delinquent income tax liabilities for years

1996 through 2000 arose from assessments that were made following

the issuance of a statutory notice of deficiency to him on March

28, 2003.   Petitioner timely filed a petition with this Court in

response to the notice of deficiency.      Sparkman v. Commissioner,

docket No. 8400-03.   After a trial was conducted on June 22,

2004, the Court filed a Memorandum Findings of Fact and Opinion

in docket No. 8400-03 on June 13, 2005.      Sparkman v.

Commissioner, T.C. Memo. 2005-136.      A decision in docket No.

8400-03 was entered on December 15, 2005, finding that petitioner

was liable for the following:
                               - 4 -

                                              Additions to Tax
Tax Year         Deficiency            Sec. 6651(a)(1) Sec. 6662(a)

  1996            $22,364               $5,591.00       $2,516.00

  1997             23,665                5,916.25        2,753.20

  1998             15,290                3,822.50        1,613.20

  1999             61,028                9,154.20       10,704.80

  2000             29,490                   ---          3,460.60

     Petitioner timely filed a notice of appeal in the case at

docket No. 8400-03, and the case was appealed to the U.S. Court

of Appeals for the Ninth Circuit.   The Court of Appeals filed its

opinion on December 10, 2007, and entered a judgment in that case

on February 1, 2008, affirming the decision of this Court.

Sparkman v. Commissioner, 509 F.3d 1149 (9th Cir. 2007).     No

petition for certiorari was timely filed in docket No. 8400-03.

     Respondent assessed income tax deficiencies and additions to

tax for the years 1996 through 2000 in May and June 2006,

pursuant to the decision of the Court in docket No. 8400-03.       The

income tax liability for 2000 was assessed on July 3, 2006.

     For the taxable quarterly periods ending March 31, 2002,

March 31, 2003, and June 30, 2003, respondent determined that

petitioner was liable for trust fund recovery penalties under

section 6672 as a person required to collect, account for, and

pay over withheld employment taxes for a business entity known as

Mercury Solar.   Respondent assessed the section 6672 penalties

against petitioner on August 16, 2004.     Before the assessment
                                - 5 -

respondent sent petitioner by certified mail a Letter 1153, Trust

Funds Recovery Penalty Letter, dated May 10, 2004, which provided

him with an opportunity to appeal or protest the proposed section

6672 penalties.   Petitioner received the Letter 1153 on May 12,

2004, but submitted no timely appeal or protest.   Forms 4340,

Certificate of Assessments, Payments, and Other Specified

Matters, were issued to petitioner with respect to the assessed

section 6672 penalties.

     After considering petitioner’s request for a CDP hearing, on

March 20, 2009, respondent’s Appeals Office issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination).   The notice of

determination stated in part:

     We have discussed the taxpayer’s appeal with him on
     several occasions. In each of these discussions and in
     written correspondence, the taxpayer has steadfastly
     held to the position that he does not owe the
     individual income tax amounts assessed against him.
     Most recently, he states this position in a letter
     dated March 2, 2008. He has also stated on a number of
     occasions that he feels that the proposed levy action
     is not legal since he had appealed the decision by the
     United States Tax Court to the Ninth Circuit Court of
     Appeals.

     We have advised the taxpayer that IRC § 6330(c)(2)(b)
     does not allow a taxpayer to challenge the existence or
     the amount of the liability if the taxpayer had a prior
     opportunity to dispute the liability. We have noted
     that the taxpayer’s assessments were made based on a
     decision by the United States Tax Court. This clearly
     gave the taxpayer an opportunity to dispute the amount
     of the liability. We also advised the taxpayer that he
     could have forestalled assessment and collection of the
     tax as determined by the Tax Court by filing an appeal
                         - 6 -

bond. Since he did not do so, assessment and
subsequent proposed collection action was appropriate.

We also advised the taxpayer that based on
documentation we received from the administrative case
file relating to assertion of the Trust Fund Recovery
Penalty, the postal records indicate he received Letter
1153 but he did not make a timely appeal of the
proposed assertion of the Trust Fund Recovery Penalty.
Accordingly, IRC § 6330(c)(2)(b) does not allow a
taxpayer to challenge the existence or the amount of
the liability when he had a prior opportunity to
dispute the liability.

We have also given the taxpayer a reasonable period of
time to discuss a collection alternative for payment of
his accounts. Consideration of a collection
alternative has been difficult since the taxpayer
continues to take the position that the income tax
assessed against him is not correct. He made it clear
in his letter of March 2, 2008, that he expects Appeals
will process his amended tax returns and allow the
depreciation he claimed on his amended returns. He
completely ignores the decisions by the courts. In
fact, he states that the Ninth Circuit Court of Appeals
merely “rubber stamped” the decision by the Tax Court.

However, even if the taxpayer acknowledged liability
for the amounts assessed against him, we are unable to
determine the taxpayer’s ability to pay his delinquent
accounts. The financial information provided by the
taxpayer does not lead to a collection alternative.
The taxpayer provided a Collection Information
Statement for Individuals, Form 433-A dated May 30,
2007. The primary concern with the information on Form
433-A is that the taxpayer indicates he has living
expenses of $10,500 but listed income of only $1,600
per month. Included in his living expenses are
mortgage payments on two properties totaling $8,100 per
month and a car payment of $850 per month. Since these
payments cannot be made on income of $1,600 per month,
we believe that we have an incomplete picture of the
taxpayer’s actual financial condition. Incomplete
financial information does not enable us to determine
an appropriate collection alternative.

          *    *    *    *       *   *   *
                                - 7 -

     We have determined that the * * * [filing of the notice
     of Federal tax lien] was appropriate under the
     circumstances presented in this case. We have given
     the taxpayer a reasonable period of time to discuss the
     issues he raised in his appeal. The fact that the
     taxpayer has not * * * [presented any basis for
     withdrawing the lien] and has not provided complete
     financial information leaves us unable to determine an
     appropriate collection alternative. We are left with
     no alternative to sustaining * * * [the filing of the
     notice of Federal tax lien] * * *.

A similar notice of determination was issued regarding

respondent’s attempt to levy.

     In filing his petition for lien or levy action under section

6320(c) or 6330(d), petitioner continued to contest his assessed

income tax deficiencies and alleged, in part:

     This was not justice but a legal stunt or at best an
     error which I sought to correct with a due process
     hearing. The LIEN and LEVY are unjust and not correct
     they were obtained by illegal, negligent and fraudulent
     IRS collection maneuvering. IRS Collection due process
     agent did not take a new objective view of the case.

                            Discussion

     Section 6320(a) requires the Secretary to notify the

taxpayer in writing of the filing of an NFTL and of the

taxpayer’s right to an administrative hearing on the matter.

Section 6330 provides a similar hearing opportunity before a

proposed levy.   Section 6320(b) affords the taxpayer the right to

a fair hearing with respect to an NFTL before an impartial

hearing officer.   Section 6320(c) requires that the

administrative hearing be conducted pursuant to section 6330(c),

(d), and (e).
                                - 8 -

     At the hearing a taxpayer may raise any relevant issues,

including appropriate spousal defenses, challenges to the

appropriateness of the collection action, and possible collection

alternatives.    Sec. 6330(c)(2)(A).    A taxpayer is precluded,

however, from contesting the existence or amount of the

underlying tax liability unless the taxpayer did not receive a

notice of deficiency for the tax liability in question or did not

otherwise have an opportunity to dispute the tax liability.        See

sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609

(2000).

     On the basis of petitioner’s request for a CDP hearing, the

petition filed, and his position at trial, petitioner is

attempting to contest his assessed income tax liabilities.      As a

statutory matter he is precluded under section 6330(c)(2)(B) from

doing so in this proceeding since a notice of deficiency was

issued to him.    Furthermore, not only did petitioner receive a

notice of deficiency for his delinquent income tax liabilities

for the years 1996 through 2000; he also litigated the

liabilities in this Court and appealed the adverse decision to

the Court of Appeals for the Ninth Circuit, which affirmed this

Court’s holding.    Petitioner’s arguments regarding his income tax
                               - 9 -

liabilities are precluded in these collection cases.2     See

Stroube v. Commissioner, 130 T.C. 257 (2008).     Such a challenge

in these cases is also precluded by res judicata.

     Following a hearing, the Appeals Officer must issue a notice

of determination regarding the validity of the filed Federal tax

lien or proposed levy.   If the taxpayer disagrees with the

Appeals Office’s determination, the taxpayer may seek judicial

review by appealing to this Court.     Sec. 6330(d).   Where the

validity of the underlying tax liability is properly at issue,

the Court reviews the determination regarding the underlying tax

liability de novo.   Sego v. Commissioner, supra at 610; Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).     Where the validity

of the underlying tax liability is not properly at issue, the

Court reviews the determination of the Appeals Office for abuse

of discretion.   Sego v. Commissioner, supra at 610; Goza v.

Commissioner, supra at 182.

     Section 6672(a) imposes a penalty (commonly known as a trust

fund recovery penalty) on any person required to collect,

truthfully account for, and pay over tax who willfully fails to

do so or who willfully attempts to evade or defeat any such tax.

     At trial petitioner did not contest his section 6672 trust

fund recovery penalty assessments.     Nevertheless, he may not do


     2
      Petitioner, in conjunction with these cases, also filed a
motion for leave to file a motion to vacate the decision in
docket No. 8400-03. This motion was denied on Sept. 10, 2009.
                             - 10 -

so in any event because he previously received by certified mail

from respondent a Letter 1153, which proposed the assessment of

the subject penalties and provided him with an opportunity to

appeal or protest said assessments.    For purposes of section

6330(c)(2)(B), petitioner has previously had an opportunity to

dispute the underlying section 6672 penalties.    See Mason v.

Commissioner, 132 T.C. ___, ___ (2009) (slip op. at 30).

     In conclusion, respondent did not abuse his discretion

regarding the proposed collection actions and may proceed by

means of the NFTL and the proposed levy to collect petitioner’s

tax liabilities for the years in issue.

     To reflect the foregoing,


                                      Decisions will be entered for

                                 respondent.
