                        T.C. Memo. 2008-136



                      UNITED STATES TAX COURT



               JOHN D. MCCLURE, JR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9406-07L.                 Filed May 20, 2008.



     John D. McClure, Jr., pro se.

     David E. Whitcomb, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   This case was commenced in response to a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 with respect to unpaid trust fund

recovery penalties under section 6672 for periods ended December

31, 1998, March 31, 1999, June 30, 1999, September 30, 1999, and
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December 31, 1999.   Unless otherwise indicated, all section

references are to the Internal Revenue Code.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in Texas at the time that he filed the

petition.

     On October 25, 2001, the Internal Revenue Service (IRS) sent

by certified mail a Letter 1153, Trust Funds Recovery Penalty

Letter, proposing to assess against petitioner a trust fund

recovery penalty attributable to unpaid liabilities from Form

941, Employer’s Quarterly Federal Tax Return, incurred by Netco

Electrical Services, Inc., for the final quarter of 1998 and all

four quarters of 1999.

     On December 10, 2001, petitioner contested his liability for

the proposed trust fund recovery penalty on the Form 2751,

Proposed Assessment of Trust Fund Recovery Penalty, included with

the Letter 1153.

     Petitioner’s contest was unsuccessful, and on January 1,

2002, the IRS assessed a liability pursuant to section 6672 for

the third quarter of 1999.   On January 17, 2002, the IRS assessed

a liability pursuant to section 6672 for the fourth quarter of

1998, and on April 1, 2002, the IRS assessed liabilities for the

first, second and fourth quarters of 1999.
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     On May 11, 2006, the IRS sent to petitioner a Letter 3172,

Notice of Federal Tax Lien Filing and Your Right to a Hearing

Under IRC 6320 (CDP Notice).   On or about May 18, 2006,

petitioner sent to the IRS a Form 12153, Request for a Collection

Due Process Hearing.

     The notice of determination that is the basis of this

proceeding was sent to petitioner on April 12, 2007.   In

sustaining the notice of lien, the notice of determination set

forth the verification of legal and procedural requirements and

discussed the relevant issues petitioner presented.    In part, the

notice stated:

          Pursuant to IRC 6330(c)(2)(B), a taxpayer can
     raise a challenge to the existence or amount of the
     underlying tax liability if the person did not receive
     any statutory notice of deficiency for the tax
     liability or did not otherwise have an opportunity to
     dispute the tax liability.

          The Taxpayer Bill of Rights 2 (TBORII) added a
     preliminary notice requirement regarding trust fund
     recovery penalty assessments made (assessed) after July
     1, 1996. Pursuant to IRC 6672(b), the taxpayer must be
     notified in writing before an assessment is made. The
     notice of the proposed assessment must precede the
     notice and demand for payment by at least 60 days.

          In this case, Letter 1153 was mailed by certified
     mail to the taxpayer’s last known address on October
     25, 2001. The taxpayer received the notice and
     submitted an inadequate appeal. The taxpayer was
     afforded an opportunity to perfect his protest but
     failed to do so by the deadline of December 24, 2001.
     The notice and demand for payment was sent on January
     17, 2002, more than 60 days after the issuance of
     Letter 1153. Therefore, the required pre-assessment
     procedures were followed.
                              - 4 -

          Appeals has determined that the taxpayer is
     precluded from challenging the existence or amount of
     the underlying tax liability within the context of this
     due process hearing pursuant to IRC 6330(c)(2)(B).
     However, the taxpayer also filed Form 843, Claim for
     Refund and Request for Abatement, which was denied by
     Technical Services Advisory on November 30, 2006 and
     assigned to Appeals in conjunction with the collection
     due process hearing. The taxpayer’s issues concerning
     the validity of the underlying liability were addressed
     within the separate claim proceeding. Appeals
     sustained the claim disallowance after determining that
     the taxpayer was a responsible person who willfully
     failed to pay the trust fund taxes as defined by IRC
     6672(a) and 6671(b). A statutory notice of claim
     disallowance was mailed to the taxpayer within the
     claim proceeding.

The notice of determination also summarized petitioner’s claim

that he could not pay the trust fund recovery penalty and

petitioner’s refusal to provide information concerning his

spouse’s assets and stated:

          Consequently, Appeals is unable to accurately
     determine the taxpayer’s ability to pay and cannot
     recommend that the taxpayer’s account be declared
     currently not collectible at this time.

          The taxpayer did not propose an installment
     agreement or offer in compromise as a collection
     alternative.

In the petition, petitioner asserts that

          These are not my taxes. They are taxes owed by C.
     Snider who owns Netco Electrical Services. I have
     given proof to the IRS of the ownership of Netco. I
     had no ownership of Netco Electrical Services, I did
     not collect monies; write checks or performed any daily
     activities of Netco. I was hired as a consultant to
     down size Netco, and try to increase share of Market.
                               - 5 -

                              OPINION

     The underlying liabilities in this case were assessed under

section 6672, which imposes penalties for failure to collect,

account for, and pay over income and employment taxes of

employees.   These penalties are commonly referred to as trust

fund recovery penalties.   As set forth in section 6671, such

penalties are assessed and collected in the same manner as taxes

against a person who is “an officer or employee of a corporation

* * * who as such officer, employee or member is under a duty to

perform” the duties referred to in section 6672.    Such persons

are referred to as “responsible persons”, and the term may be

broadly applied.   See generally Logal v. United States, 195 F.3d

229, 232 (5th Cir. 1999); Barnett v. IRS, 988 F.2d 1449, 1454

(5th Cir. 1993).   Any person who qualifies as a responsible

person under the statute is liable for the penalty vis-a-vis the

Government; a right of contribution against other responsible

persons exists but must be claimed separate and apart from

proceedings to collect the penalty brought by the United States.

Sec. 6672(d).

     In his trial memorandum and at trial petitioner continued to

maintain that he was not responsible for the trust fund recovery

penalties assessed against him, and he argued that the IRS should

pursue the person or persons in fact responsible.    He did not

dispute that he had pursued his arguments previously and
                                - 6 -

unsuccessfully.   Respondent’s position is that the prior

opportunity to dispute the underlying liabilities precludes our

consideration of petitioner’s arguments.

     Section 6321 creates a lien in favor of the United States on

all property and rights to property belonging to a person liable

for taxes when payment has been demanded and neglected.     The lien

arises by operation of law when the IRS assesses the amount of

unpaid tax.   Sec. 6322.   The IRS files a notice of Federal tax

lien to preserve priority and put other creditors on notice.    See

sec. 6323.

     Section 6320 provides that the Secretary shall furnish the

person described in section 6321 with written notice of the

filing of a lien under section 6323.    This notice must be

provided not more than 5 business days after the day the notice

of lien is filed and must advise the taxpayer of the opportunity

for administrative review in the form of a hearing.    Sec.

6320(a)(2).   Petitioner has not shown or asserted any omission

with respect to the filing or notice of the lien, and none is

disclosed in the record.

     Section 6320 further provides that the taxpayer may request

a hearing within the 30-day period beginning on the day after the

5-day period.   The hearing generally shall be conducted

consistent with the procedures set forth in section 6330(c), (d),

and (e).   Sec. 6320(c).   A taxpayer may raise any relevant issue
                               - 7 -

at the hearing including challenges to “the appropriateness of

collection actions” and may make “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.”   Sec. 6330(c)(2)(A).   At the hearing a

taxpayer may challenge the existence and amount of the underlying

tax liability only if he or she received no notice of deficiency

or did not otherwise have an opportunity to dispute such tax

liability.   Sec. 6330(c)(2)(B).

     Our jurisdiction to review determinations under section 6330

with respect to trust fund recovery penalties is relatively

recent.   See Ginsberg v. Commissioner, 130 T.C. ___ (2008).     Thus

we have not explored the meaning of a “prior opportunity to

dispute” in this context.   However, section 301.6320-1(e)(3),

Q&A-E2, Proced. & Admin. Regs., addresses the meaning of that

term as follows:

          Q-E2. When is a taxpayer entitled to challenge
     the existence or amount of the tax liability specified
     in the CDP Notice?

          A-E2. A taxpayer is entitled to challenge the
     existence or amount of the underlying liability for any
     tax period specified on the CDP Notice if the taxpayer
     did not receive a statutory notice of deficiency for
     such liability or did not otherwise have an opportunity
     to dispute such liability. Receipt of a statutory
     notice of deficiency for this purpose means receipt in
     time to petition the Tax Court for a redetermination of
     the deficiency determined in the notice of deficiency.
     An opportunity to dispute the underlying liability
                                - 8 -

     includes a prior opportunity for a conference with
     Appeals that was offered either before or after the
     assessment of the liability. * * *

The quoted regulation has been explained and applied in

circumstances similar to those in this case.   See Pelliccio v.

United States, 253 F. Supp. 2d 258 (D. Conn. 2003).   Petitioner

contested the liability in response to the Letter 1153, although

his contest was unsuccessful.   Apparently he failed to follow up

with Appeals after being afforded the opportunity.

     In Lewis v. Commissioner, 128 T.C. 48, 50-61 (2007), we

discussed at length and upheld the validity of section 301.6330-

1(e)(3), Q&A-E2, Proced. & Admin. Regs., concluding that a prior

opportunity to dispute a liability, for purposes of section

6630(c)(2)(B), did not require an opportunity for judicial review

of the liability.   Thus we conclude that petitioner is not

entitled to dispute here his status as a responsible person and

the consequent liabilities for the underlying trust fund recovery

penalties.

     Because we may not redetermine the underlying liabilities,

our review of the notice of determination is for abuse of

discretion.   See, e.g., Jones v. Commissioner, 338 F.3d 463 (5th

Cir. 2003).   Petitioner has not in this proceeding pursued any

argument or presented any evidence that would allow us to

conclude that the determination to sustain the lien was
                              - 9 -

arbitrary, capricious, without foundation in fact or law, or

otherwise an abuse of discretion.   See, e.g., Giamelli v.

Commissioner, 129 T.C. 107, 111-112 (2007).   Therefore,


                                         Decision will be entered

                                    for respondent.
