                          T.C. Memo. 2011-170



                        UNITED STATES TAX COURT



         JEFFREY S. AND NICOLE JUNGSTAND KURTZ, Petitioners v.
              COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10234-10L.              Filed July 13, 2011.



     Jeremy Bell, for petitioners.

     Michael T. Shelton, for respondent.



                          MEMORANDUM OPINION


     LARO, Judge:    Petitioners, while residing in Illinois,

petitioned the Court under section 6330(d) to review a

determination of respondent’s Office of Appeals (Appeals)

sustaining a proposed levy upon petitioners’ property.1

     1
      Section references are to the Internal Revenue Code, and
                                                   (continued...)
                                -2-

Respondent proposed the levy to collect a $24,624 deficiency in

petitioners’ 2006 Federal income tax, a $2,603 addition to tax

under section 6651(a)(1), and a $4,925 accuracy-related penalty

under section 6662(a).   Respondent has filed with the Court a

motion for summary judgment under Rule 121.     Although ordered to

do so, petitioners did not file a response to respondent’s

motion.   We shall grant respondent’s motion.

                            Background

     Respondent selected petitioner Jeffrey S. Kurtz’s (Mr.

Kurtz) 2005 Federal income tax return for audit.    As a result of

that audit, respondent issued to Mr. Kurtz a notice of deficiency

dated August 7, 2008 (first notice of deficiency).    In the first

notice of deficiency, respondent determined a $20,532 deficiency

in Mr. Kurtz’s 2005 Federal income tax, a $4,106 addition to tax

under section 6651(a)(1), and a $4,106 accuracy-related penalty

under section 6662.

     Respondent also selected petitioners’ 2006 and 2007 Federal

income tax returns for audit.   As a result of that audit,

respondent issued to petitioners a second notice of deficiency

dated August 7, 2008 (second notice of deficiency).    In the

second notice of deficiency, respondent determined deficiencies

of $24,624 and $18,956 in petitioners’ 2006 and 2007 Federal


     1
      (...continued)
Rule references are to the Tax Court Rules of Practice and
Procedure. Some dollar amounts are rounded.
                                  -3-

income taxes, respectively, accuracy-related penalties under

section 6662(a) of $4,925 and $3,791, respectively, and a $2,603

addition to tax under section 6651(a)(1) related to petitioners’

2006 Federal income tax return.

     By letter dated March 15, 2009, petitioners’ representative

acknowledged receipt of the first and second notices of

deficiency.   Mr. Kurtz did not petition the Court to challenge

respondent’s determinations in the first notice of deficiency.

Nor did petitioners petition the Court to challenge respondent’s

determinations in the second notice of deficiency.   Respondent

assessed the liabilities determined in the first and second

notices of deficiency in due course.

     On April 9, 2009, respondent sent to Mr. Kurtz a Letter

1058, Final Notice of Intent to Levy and Notice of Your Right to

a Hearing (final levy notice), with respect to (1) his 2005

Federal income tax liability, and (2) petitioners’ 2006 and 2007

Federal income tax liabilities.    The final levy notice informed

Mr. Kurtz that respondent intended to levy upon his property to

collect unpaid tax liabilities for 2005, 2006, and 2007.   The

final levy notice also advised Mr. Kurtz that he was entitled to

a hearing with Appeals to review the propriety of the proposed

levy.

     In response to the final levy notice petitioners sent to

respondent Form 12153, Request for a Collection Due Process or
                                 -4-

Equivalent Hearing, for the 2005, 2006, and 2007 Federal income

tax liabilities.   On that Form 12153 petitioners aggregated Mr.

Kurtz’s 2005 Federal income tax liability with petitioners’ 2006

and 2007 Federal income tax liabilities.    Petitioners asserted

that the proposed levy was inappropriate because respondent’s

auditor did not evaluate the documentation which they had

submitted in connection with the audit of their 2005, 2006, and

2007 Federal income tax returns.    Petitioners did not request an

installment agreement or an offer-in-compromise on that Form

12153.

     On March 19, 2010, a settlement officer in Appeals held a

face-to-face collection due process (CDP) hearing with

petitioners’ representative.    The settlement officer determined

that petitioners had been provided with several opportunities to

dispute their 2005, 2006, and 2007 Federal income tax liabilities

but were unable to convince respondent’s auditor that they were

not liable for those taxes.    Following the CDP hearing Appeals

issued to petitioners three separate notices of determination,

one for each of the years 2005, 2006, and 2007.    By notice of

determination dated April 6, 2010 (notice), Appeals sustained the

proposed collection action for 2006.2



     2
      Appeals sustained the proposed collection action for
petitioners’ 2005 and 2007 Federal income tax liabilities by
separate notices of determination dated Apr. 6 and 13, 2010,
respectively.
                                -5-

     The notice stated that Appeals had verified or received

verification that the requirements of applicable law and

administrative procedure for the proposed levy had been met.

That notice stated that collection alternatives were discussed

but none was initiated.   That notice determined that petitioners

had been given several prior opportunities to dispute their 2006

Federal income tax liability but failed to do so.   Finally, the

notice balanced the proposed collection action with the concern

that such action be no more intrusive than necessary.   In

response to the notice petitioners petitioned the Court on May 4,

2011.3

                            Discussion

     We decide whether to grant respondent’s motion for summary

judgment in this collection review proceeding.4   Summary judgment

may be granted with respect to any part of the legal issue in

controversy “if the pleadings, answers to interrogatories,

depositions, admissions, and any other acceptable materials * * *

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.”    Rule 121(a)


     3
      Mr. Kurtz also petitioned the Court in response to the
notice of determination for 2005, and petitioners petitioned the
Court in response to the notice of determination for 2007.
     4
      Respondent has filed a separate motion for summary judgment
with respect to each petition filed in response to the 2005,
2006, and 2007 collection actions. We address these motions in
separate Memorandum Opinions because these cases were not
consolidated.
                                 -6-

and (b); Craig v. Commissioner, 119 T.C. 252, 259-260 (2002).      As

the moving party, respondent bears the burden of establishing

that there is no genuine issue of material fact.    Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,

79 T.C. 340, 344 (1982).   Although factual inferences will be

drawn in a light most favorable to petitioners as the nonmoving

party, petitioners cannot merely rest upon the allegations or

denials in their pleadings but must “set forth specific facts

showing that there is a genuine issue for trial.”   See Rule

121(d); Dahlstrom v. Commissioner, supra at 820-821.

     Respondent supports his motion for summary judgment with the

pleadings, a declaration from the Appeals manager who supervised

petitioners’ CDP hearing, and various exhibits.    Petitioners, in

failing to respond to respondent’s motion for summary judgment,

have failed to raise any genuine issue of material fact.   We

therefore conclude that this case is ripe for summary judgment.

     Section 6331(a) authorizes the Commissioner to levy upon a

taxpayer’s property where that taxpayer is liable for taxes but

neglects or refuses to pay that liability within 10 days after

notice and demand for payment.   Section 6330 generally provides

that the Commissioner may not proceed with collection by levy

until the taxpayer has been given written notice and an

opportunity for a hearing with an impartial Appeals officer.     See

sec. 6330(a) and (b); Davis v. Commissioner, 115 T.C. 35, 37
                                 -7-

(2000).   Following the CDP hearing Appeals must issue a notice of

determination which sets forth its findings and decisions.      See

sec. 6330(c)(3); see also sec. 301.6330-1(e)(3), Q&A-E8, Proced.

& Admin. Regs.    Section 6330(d)(1) allows for judicial review of

Appeals’ determination where the taxpayer files a timely petition

with the Court.

     A taxpayer may generally challenge the existence or amount

of an underlying tax liability only if he or she did not receive

a statutory notice of deficiency for such liability or did not

otherwise have an opportunity to dispute that tax liability.

Sego v. Commissioner, 114 T.C. 604, 609 (2000); see also sec.

6330(c)(2)(B).    Where the underlying tax liability is not at

issue, we review the Commissioner’s administrative determination

for abuse of discretion.    Lunsford v. Commissioner, 117 T.C. 183,

185 (2001); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

Abuse of discretion exists where Appeals acted arbitrarily,

capriciously, or without sound basis in fact or law.      Murphy v.

Commissioner, 125 T.C. 301, 320 (2005), affd. 469 F.3d 27 (1st

Cir. 2006); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

Petitioners received a notice of deficiency for 2006 and

acknowledged receipt of that notice of deficiency through a

letter from their representative.      Because petitioners did not

file a petition for redetermination within 90 days, they are

precluded from challenging their 2006 tax liability.      See
                                -8-

Martinez v. Commissioner, T.C. Memo. 2010-181.   We thus review

Appeals’ determination to sustain the proposed levy for abuse of

discretion.   Goza v. Commissioner, supra.

     Under section 6330(c)(3), the determination of an Appeals

officer must consider (A) the verification that the requirements

of applicable law and administrative procedure have been met, (B)

any relevant issues relating to the unpaid tax or proposed levy,

and (C) whether the proposed levy balances the need for efficient

collection of tax with the taxpayer’s legitimate concern that the

collection action be no more intrusive than necessary.      Here, the

Appeals settlement officer addressed each of these requirements.

She reviewed the Internal Revenue Service’s transcripts and

computer records of petitioners’ account to determine that the

requirements of applicable law and administrative procedure had

been met.   See Neugebauer v. Commissioner, T.C. Memo. 2003-292;

Hack v. Commissioner, T.C. Memo. 2002-243.    The Appeals

settlement officer considered the issues petitioners raised but

determined that petitioners could not contest the validity or

amount of their underlying tax liability because they had been

given a prior opportunity to do so.   See Martinez v.

Commissioner, supra.   Finally, the Appeals settlement officer

balanced the need for efficient collection of taxes against

petitioners’ legitimate concern that the proposed collection

action be no more intrusive than necessary.
                                 -9-

     We conclude that Appeals did not abuse its discretion in

sustaining the proposed levy on petitioners’ property to satisfy

their 2006 Federal income tax liability.     Accordingly, we will

grant respondent’s motion for summary judgment.

     To reflect the foregoing,


                                            An appropriate order and

                                       decision will be entered.
