                        T.C. Memo. 2011-12



                     UNITED STATES TAX COURT



                 ANTHONY ATKINS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18529-08L.          Filed January 18, 2011.



     Anthony Atkins, pro se.

     Mayer Y. Silber and Brett A. Saltzman, for respondent.



            MEMORANDUM FINDINGS OF FACTS AND OPINION


     MORRISON, Judge:   Petitioner Anthony Atkins appeals two

determinations of the IRS Office of Appeals:   first, a

determination sustaining the filing of a lien to collect the

frivolous-return penalty for 2000, and income tax liabilities for

1998, 1999, 2001, and 2002; second, a determination sustaining a

proposed levy to collect the frivolous-return penalty for 2000.
                               - 2 -

Atkins seeks a remand to the Appeals Office for it to conduct a

hearing to consider collection alternatives.   We sustain the

determinations of the Appeals Office.

                         FINDINGS OF FACT

     The parties agreed to a stipulation of facts, which the

Court hereby incorporates into its findings of fact.   The

respondent will be referred to here as the IRS.

     Atkins failed to file federal income tax returns for the

years 1998, 1999, 2001, and 2002.   The IRS issued notices of

deficiency for these four years.    Atkins did not file a Tax Court

petition in response to these notices of deficiency.

     On December 21, 2004, the IRS filed a lien with the Recorder

of Deeds of DuPage County, Illinois, with respect to Atkins’

federal income tax liability for 2000.

     The IRS assessed tax liabilities based on the notices of

deficiency for years 1998, 1999, 2001, and 2002.   The assessments

were made on May 9, 2005 (for 1998, 1999, and 2002), and on July

11, 2005 (for 2001).

     On October 19, 2005, the IRS issued a notice of intent to

levy to collect the income tax liabilities for 1998, 1999, 2001,

and 2002.   Section 6330(a)(3)(B)1 provides that a person

receiving such a notice may request a hearing within 30 days



     1
      All section references are to the Internal Revenue Code of
1986, as amended.
                                 - 3 -

after the notice was sent.    The IRS claims that Atkins failed to

request such a hearing within 30 days.

     At some point, Atkins submitted to the IRS a Form 1040, U.S.

Individual Income Tax Return, for the year 2000 which the IRS

considered a frivolous return.    The IRS assessed a frivolous-

return penalty for 2000 on March 6, 2006.2   On October 18, 2006,

the IRS mailed to Atkins a notice of intent to levy to collect

the frivolous-return penalty for 2000.3

     On November 11, 2006, Atkins sent to the IRS a request for a

hearing to challenge a notice of intent to levy and a notice of

filing of lien.    The request listed the type of tax as “1040”

(i.e. income tax) and the tax periods as 1998, 1999, 2000, 2001,

2002, and 2003.4   The IRS concedes that this request was a timely


     2
      Both parties agree that this was the date of this
assessment.
     3
      The parties stipulated that on Oct. 18, 2006, the IRS
mailed to Atkins a notice of intent to levy. However, the
parties did not stipulate the type of tax or the tax period to
which the notice corresponded. Although the parties stipulated
that Exhibit 3-J is a copy of the notice, Exhibit 3-J does not
indicate the type of tax or the tax periods for which the levy
was intended. The IRS states on brief that the notice of intent
to levy was to collect the frivolous-return penalty for 2000.
Atkins agrees with this statement in his brief. Also, the
determination sustaining the levy stated that the notice of
intent to levy to collect the frivolous-return penalty for 2000
was dated Oct. 18, 2006. We conclude that the Oct. 18, 2006,
notice was a notice of intent to levy to collect the frivolous-
return penalty for 2000.
     4
      It is unclear why the request referred to tax year 2003.
The record does not reveal when, or if, a notice of intent
                                                   (continued...)
                                    - 4 -

response to the October 18, 2006, notice of intent to levy to

collect the frivolous-return penalty for 2000.           The IRS does not

concede that the request was a timely response to any other

notice.

     On December 7, 2006, the IRS mailed a notice to Atkins that

it had filed a lien to collect Atkins’ income tax liabilities for

1998, 1999, 2001, and 2002 and to collect the frivolous-return

penalty for 2000.

     The following table lists the notices of intent to levy and

notices of filing of lien that the IRS issued to Atkins:

                                                                      2000
              2000        1998      1999       2001       2002      (penalty)
Notice      Unknown     10/19/05   10/19/05   10/19/05   10/19/05   10/18/06
  of
  intent
  to
  levy
Notice     Unknown,      12/7/06   12/7/06    12/7/06    12/7/06    12/7/06
  of         but
  filing     lien
  of         filed
  lien       12/21/04

     On January 2, 2007, Atkins sent a request contesting the

filing of a lien.       The request stated that the type of tax was

“1040” (i.e. income tax) and “6702” (the frivolous-return

penalty) and that the tax periods were 1998, 1999, and 2000.              The

parties stipulated that the request explained Atkins’


     4
      (...continued)
to levy was issued with respect to 2003. A lien was filed to
collect 2003 income tax liabilities on Oct. 3, 2008, but that was
almost two years after the request for a hearing.
                               - 5 -

disagreement with the filing of lien of which he was notified on

December 7, 2006; i.e. the filing of lien to collect income tax

liabilities for 1998, 1999, 2001, and 2002 and to collect the

frivolous-return penalty for 2000.     The IRS concedes that this

hearing request was timely.   Atkins’ requests for hearings were

assigned to Settlement Officer Marilyn Dismukes.

     On March 25, 2008, Officer Dismukes sent a letter to Atkins

indicating that the Appeals Office had received a request for a

hearing regarding a levy and a lien.     The letter made two

statements regarding the timeliness of the request for a hearing.

The letter said that (1) the request was timely with respect to

the levy to collect the 2000 frivolous-return penalty, and (2)

the request for a hearing was untimely to the extent it requested

a lien hearing with respect to the 2000 frivolous-return

penalty.5   The letter scheduled a “face to face conference call”

with Atkins on April 25, 2008, at 9 a.m.     With respect to the

lien filed to collect the 2000 frivolous-return penalty, the

letter offered only an “equivalent” hearing.     The letter



     5
      With respect to statement (1), the letter correctly
reflected that Atkins’ request for a hearing to contest the levy
to collect the 2000 frivolous-return penalty was timely. The
notice of this proposed levy was sent on Oct. 18, 2006. Atkins
requested a hearing on Nov. 11, 2006. With respect to statement
(2), the letter incorrectly claimed that Atkins’ request for a
hearing to contest the filing of a lien to collect the 2000
frivolous-return penalty was untimely. The IRS sent the notice
of the lien filing on Dec. 7, 2006. Atkins sent a timely request
for a hearing on Jan. 2, 2006.
                                - 6 -

indicated that for the Appeals Office to consider collection

alternatives, Atkins needed to submit a Form 433-A, Collection

Information Statement for Wage Earners and Self-Employed

Individuals, and file all federal tax returns.   The letter

indicated that Atkins had not filed an income tax return for

2006.

     Also on March 25, 2008, Officer Dismukes sent a letter to

Atkins acknowledging that the Appeals Office had received Atkins’

request for a hearing regarding a levy.   The letter advised that

the hearing request was untimely because it was not postmarked

within 30 days of the notice of intent to levy to collect Form

1040 tax liabilities for 1998, 1999, 2000, 2001, and 2002.    This

appears to be inaccurate.   If one considers--as the IRS does

now--Atkins to have requested a hearing to contest the filing of

a lien to collect the frivolous-return penalty for 2000 and to

collect income tax liabilities for 1998, 1999, 2001, and 2002,

then the letter from Officer Dismukes acknowledging this request

erred in three respects.    First, it erroneously characterized the

request as relating to a levy rather than a lien.   Second, it

erroneously characterized the request as relating to the year

2000.   Third, it claimed that the request was untimely when, in

fact, the request was made on January 2, 2007, which was within
                               - 7 -

30 days of the December 7, 2006, notice of filing of lien.6     The

letter stated that the IRS would offer Atkins an equivalent

hearing.   The letter stated that a “face-to-face conference call”

was scheduled for 9 a.m. on April 25, 2008.   The letter indicated

that for alternative collection methods to be considered, Atkins

needed to file all federal tax returns7 and submit a Form 433-A.

     On April 24, 2008, Officer Dismukes spoke with Atkins by

telephone and informed him that their conference on April 25,

2008, would not be face-to-face because Atkins was not current

with his federal income tax filings.   Atkins told Officer

Dismukes that he was unaware that the conference was scheduled

for that date, that he would not be available at the scheduled

time, and that he wanted a face-to-face conference.   Officer

Dismukes agreed to reschedule the conference, but only if Atkins

filed his federal income tax returns for 2006 and 2007 within 14



     6
       The IRS makes the following characterization of the two
acknowledgment letters in its brief:
                                                   (continued...)
     6
       (...continued)
     On March 25, 2008, SO Dismukes sent letters to
     petitioner’s home address confirming the receipt and
     timeliness of his CDP hearing requests, and scheduling
     a face-to-face conference call with the petitioner for
     April 25, 2008 at 9:00 a.m. * * *.

But the letter we are discussing did not “[confirm]” the
“timeliness” of Atkins’ hearing request. It denied the
timeliness of the request.
     7
      Unlike the prior letter, this letter did not note that
Atkins had failed to file his 2006 tax return.
                                - 8 -

days.    On April 25, 2008, Atkins apparently did not participate

in any conference with Officer Dismukes.

     On May 13, 2008, Atkins sent Officer Dismukes a letter.    The

letter was in reply to an April 25, 2008, letter from Officer

Dismukes that is not in the record.     In his letter Atkins stated

that he wanted to schedule a face-to-face meeting and that he

would need several weeks in order to make arrangements to meet.

He also stated that Congress did not require him to provide

Officer Dismukes with a completed Form 433-A before the hearing.8

     On June 25, 2008, the Appeals Office issued a determination

sustaining the proposed levy to collect the frivolous-return

penalty for 2000.   The determination stated that the date of the

notice of levy was October 18, 2006, and that the date of the

request for the hearing was November 11, 2006.

     On June 25, 2008, the Appeals Office issued a second

determination.   The determination sustained the filing of a lien

to collect a frivolous-return penalty for 2000 and income tax

liabilities for 1998, 1999, 2001, and 2002.9    The determination


     8
      In its brief the IRS claims that Atkins stated in his
letter “that he would not file his returns within the 14 day
period.” The letter makes no such statement.
     9
      The determination also purported to address the filing of a
lien to collect Atkins’s year 2000 income tax liability, but the
reference to the year 2000 was a mistake. As noted previously,
the IRS had filed a lien to collect Atkins’ year 2000 income tax
liability in December 2004. There is no other reference in the
record to a lien filing for 2000 income tax under sec. 6323, or
to a notice of such a lien filing under sec. 6320(a)(1). The
                               - 9 -

stated that the date of the notice of filing of lien was December

7, 2006, and that the date of the request for the hearing was

January 5, 2007.   The IRS now concedes in its brief that the date

of the request was January 2, 2007, not January 5, 2007.

     In his petition Atkins challenged the two determinations of

June 25, 2008.   At the time he filed the petition, Atkins was a

resident of Illinois.   The case was tried in Chicago, Illinois.

                              OPINION

1.   Background Principles

     Before the IRS can collect tax from a taxpayer through a

levy or a lien filing, it must first assess the tax.10   If the

taxpayer refuses to pay the assessment, the IRS can then seize

the property of the taxpayer through its power of levy.11   Before


case will be dismissed for lack of jurisdiction to the extent
that the case places at issue any determination of the IRS under
sec. 6320 regarding the filing of a lien with respect to the
                                                   (continued...)
     9
       (...continued)
liability of Atkins for income taxes for the year 2000. So much
of the pleadings will be stricken as relate to any determination
of the IRS under sec. 6320 regarding the filing of a lien with
respect to the liability of Atkins for income taxes for the year
2000.
     10
       “The tax assessment is a predicate to collection of the
tax; tax collection follows assessment.” Elliott, Federal Tax
Collections, Liens, and Levies, par. 2.01[1], at 2-4 (2d ed.
2008).
     11
      “The levy enables the Service to gain custody of
taxpayer’s property whether in the possession of the taxpayer or
third parties.” Elliott, supra at par. 13.01, at 13-6 (2d ed.
2008). “The * * * levy does not determine whether the
government’s rights to the seized property are superior to those
                                - 10 -

the IRS can levy on property, it must first offer the taxpayer a

section 6330 hearing.

     Levy is not the only means of collecting unpaid tax.     The

assessment by the IRS automatically creates a government property

interest, called a lien, in all property owned by the taxpayer

and even in property later acquired by the taxpayer.    Sec. 6321.

The tax lien is not effective against four important classes of

third parties until the IRS files a notice of lien with the

appropriate state or local government in which the property is

located.   Sec. 6323(a), (f).   The IRS is required to notify the

taxpayer within 5 business days after it files a notice of lien.

Sec. 6320(a)(1) and (2).   Within 30 days after the expiration of

the 5-business-day period for sending the notification, the

taxpayer is permitted under section 6320(a)(3)(B) to request a

hearing with the IRS Appeals Office.

     Hearings concerning IRS levies are provided for in section

6330, and hearings concerning the filing of a notice of tax lien

are provided for in section 6320.    The rules that govern the

scope of a lien hearing are borrowed from the statutory

provisions that govern a levy hearing.    Sec. 6320(c).12   Section


of other claimants; the levy does, however, protect the
government against diversion or loss while such claims are being
resolved.” Id.
     12
      Sec. 6320(c) provides that “For purposes of this section,
subsections (c), (d) (other than paragraph (2)(B) thereof), and
(e) of section 6330 shall apply.”
                               - 11 -

6330(c)(2) sets forth what issues can be raised by the taxpayer

at a levy hearing, and, by operation of section 6320(c), it also

governs what issues can be raised by the taxpayer at a lien

hearing.   Section 6330(c)(2) provides:

     (2)   Issues at hearing.--

          (A) In general.--The person may raise at the
     hearing any relevant issue relating to the unpaid tax
     or the proposed levy, including--

                (i) appropriate spousal defenses;

                (ii) challenges to the appropriateness of
           collection actions; and

                (iii) offers of collection alternatives,
           which may include the posting of a bond, the
           substitution of other assets, an installment
           agreement, or an offer-in-compromise.

          (B) Underlying liability.--The person may also
     raise at the hearing challenges to the existence or
     amount of the underlying tax liability for any tax
     period if the person did not receive any statutory
     notice of deficiency for such tax liability or did not
     otherwise have an opportunity to dispute such tax
     liability.

The duties of the hearing officer in a levy hearing (and

therefore also a lien hearing) are set forth in section

6330(c)(3).   That provision requires the hearing officer to make

a “determination”, and in making the determination the hearing

officer must “take into consideration * * * the issues raised

under [section 6330(c)(2)]”.

     Once the hearing officer has made the determination

described above, a taxpayer can petition the Tax Court for review
                                - 12 -

of the determination.   Sec. 6330(d)(1).   Where the existence or

amount of the underlying tax liability is properly at issue, the

Court will review the determination de novo.    In cases involving

taxpayers who do not dispute the existence or amount of their

underlying tax liability (or who are not permitted to do so

because they had a prior opportunity to dispute it), the Court

will review the determination of the Appeals officer for abuse of

discretion.   Lunsford v. Commissioner, 117 T.C. 183, 185 (2001);

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

inquiry hinges on whether the IRS’s application of its discretion

was “arbitrary, capricious, or without sound basis in fact or

law.”   Giamelli v. Commissioner, 129 T.C. 107, 111 (2007);

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

2.   Positions of the Parties

     As far as we can tell, Atkins’ brief contains only one

contention.   He argues that the Appeals Office failed to hold a

face-to-face meeting with him.    The rest of the brief is either

redundant or irrelevant.   In his reply brief Atkins expands his

original contention slightly.    He claims he did not receive any

type of hearing, face-to-face or otherwise.    At trial he

explained that the remedy he seeks is a remand for a hearing to

consider collection alternatives.

     The IRS argues that a hearing consists of all forms of

communication between the taxpayer and the Appeals Office from
                             - 13 -

the time the taxpayer requests a hearing to the issuance of a

notice of determination concerning the hearing; that Atkins

communicated with Officer Dismukes by telephone or by mail on

several occasions; that this string of communications constituted

a hearing; that Officer Dismukes adjourned the hearing because

Atkins refused to file tax returns and submit a Form 433-A; that

Atkins was not entitled to a face-to-face hearing because he was

ineligible for collection alternatives on account of his failure

to file tax returns and submit financial information; that Atkins

could not contest the income tax liabilities because he received

statutory notices of deficiency for 1998, 1999, 2001, and 2002;

that even if Atkins had not received the notices of deficiency

for 1998, 1999, 2001, and 2002, Atkins could have contested his

income tax liabilities for those years by requesting a pre-levy

hearing in response to the October 19, 2005, notice; that Atkins

is liable for the frivolous-return penalty; that he could have

contested his liability for the frivolous-return penalty before

it was assessed; and that he failed to raise the issue of his

liability for the frivolous-return penalty at the Appeals Office

or at trial.

3.   Discussion

     To rectify the alleged failure of the Appeals Office to hold

a hearing, Atkins seeks a remand for the Appeals Office to hold a

hearing with respect to collection alternatives.   He does not
                               - 14 -

seek a remand for a hearing to contest his underlying tax

liabilities.   Thus, we need not consider whether the Appeals

Office denied Atkins a hearing on his underlying tax liabilities.

     We find that the Appeals Office had a hearing with Atkins to

consider collection alternatives.   The record demonstrates that

Officer Dismukes communicated to Atkins that he needed to file

tax returns to be considered for collection alternatives.    This

communication took place during the telephone conversation of

April 24, 2008.   After this conversation, Atkins did not file his

returns.   Instead, he sent Officer Dismukes a letter on May 12,

2008, stating that he would not file a Form 433-A.   We surmise

from this that Officer Dismukes had already communicated to

Atkins the requirement that Atkins file a Form 433-A.   The filing

of tax returns and the submission of a Form 433-A are

prerequisites to the Appeals Office’s considering collection

alternatives.13   The communications between Atkins and Officer

Dismukes were sufficient to establish that Atkins did not qualify

for collection alternatives.   Therefore, these communications

constitute a hearing to discuss collection alternatives.14




     13
      It is not an abuse of discretion for the Appeals Office to
require tax returns and financial information. Giamelli v.
Commissioner, 129 T.C. 107, 111-112 (2007).
     14
      Letters between the taxpayer and the Appeals Office can
form part of the hearing. Katz v. Commissioner, 115 T.C. 329,
337-338 (2000).
                             - 15 -

     As noted earlier, the two letters in which Officer Dismukes

offered Atkins a hearing contained mistakes in describing the

requests by Atkins for a hearing.   Atkins does not now claim he

was prejudiced by these mistakes.   Therefore, we do not consider

these mistakes in determining whether the Appeals Office erred.

     To reflect the foregoing,


                                         An appropriate order and

                                    decision will be entered.
