                                                 535 RAMONA INC., PETITIONER v. COMMISSIONER
                                                      OF INTERNAL REVENUE, RESPONDENT

                                                        Docket No. 6443–07L.               Filed September 14, 2010.

                                                  P challenges R’s right to proceed with collection of any
                                               FUTA tax from P on the ground that, taking into account
                                               credits against the tax under sec. 3302, I.R.C., for actual and
                                               deemed contributions to a State employment fund, P has no
                                               outstanding liability.
                                                  1. Held: We apply a de novo standard in reviewing P’s chal-
                                               lenge to its underlying liability for FUTA tax.
                                                  2. Held, further, P has failed to carry its burden of proving
                                               its entitlement to any sec. 3302, I.R.C., credit.
                                                  3. Held, further, Appeals’ determination to proceed with
                                               collection of the assessments against P for 1996 is sustained.

                                           William E. Taggart, Jr., for petitioner.
                                           Shannon Edelstone, for respondent.
                                        HALPERN, Judge: Respondent’s Appeals Office (Appeals)
                                      has determined to proceed with the collection from petitioner
                                      of Federal Unemployment Tax Act (FUTA) tax, a penalty, an
                                      addition to tax, and interest for 1996. The crux of the parties’
                                      disagreement is whether, for 1996, petitioner paid $17,553 to
                                      the State of California.
                                        Unless otherwise stated, all section references are to the
                                      Internal Revenue Code in effect for 1996, and all Rule ref-
                                                                                                                                      353




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                                      354                135 UNITED STATES TAX COURT REPORTS                                         (353)


                                      erences are to the Tax Court Rules of Practice and Proce-
                                      dure. We round all dollar amounts to the nearest dollar.

                                                                          FINDINGS OF FACT

                                        Some facts are stipulated and are so found. The stipulation
                                      of facts, with accompanying exhibits, is incorporated herein
                                      by this reference.
                                      Background
                                         Petitioner was organized in California in 1996 and, during
                                      the second quarter of 1996, began operating a restaurant,
                                      Nola, in Palo Alto, California. Petitioner had a payroll of 50
                                      to 80 individuals by the end of 1996 and had payroll
                                      expenses for the second, third, and fourth quarters of 1996.
                                         For 1996, petitioner used a payroll service company,
                                      ExpressPay Plus (ExpressPay), to prepare its payroll. In
                                      connection with that service, ExpressPay withdrew various
                                      amounts, on various dates, from petitioner’s account with
                                      Wells Fargo Bank.
                                         Respondent’s records reflect that, with respect to the last
                                      three quarters of 1996, he received $2,582 of FUTA tax
                                      deposits from petitioner.
                                         On or about January 31, 1997, petitioner filed with the
                                      Internal Revenue Service (IRS) a Form 940–EZ, Employer’s
                                      Annual Federal Unemployment (FUTA) Tax Return, relating
                                      to Nola’s 1996 payroll (the 1996 Form 940–EZ). The 1996
                                      Form 940–EZ reported contributions of $17,553 to the Cali-
                                      fornia unemployment fund, total taxable wages of $322,784,
                                      a FUTA tax liability (0.8 percent of $322,784 1) of $2,582, and
                                      total FUTA tax deposits of $2,582. The California State
                                      reporting number on the 1996 Form 940–EZ, however, was
                                      that of Avenir Restaurant Group, Inc. (Avenir), a corporation
                                      owned substantially by the same individuals who own peti-
                                      tioner.
                                        1 The 0.8-percent multiplier is found on line 6 of the 1996 Form 940–EZ and represents the

                                      difference between the Federal FUTA tax rate, which for 1996 was 6.2 percent, and the 5.4-
                                      percent maximum rate for determining available credits against the tax under sec. 3302. In this
                                      case, that amount, $2,582, is the difference between 6.2 percent of petitioner’s total taxable
                                      wages of $322,784 (i.e., $20,013) and 5.4 percent of those wages (i.e., $17,430). The assumption
                                      is that the taxpayer is entitled to a credit against its 6.2-percent FUTA tax liability because
                                      of actual and deemed contributions (5.4 percent of total taxable wages) made to a State unem-
                                      ployment fund.




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         355


                                         In November 1998, the IRS asked California to certify that,
                                      for 1996, petitioner had paid wages for services performed in
                                      California and made contributions to the California
                                      unemployment fund. In January 1999, the Califor-
                                      nia Employment Development Department (EDD) reported to
                                      the IRS that it had no record of petitioner’s paying any wages
                                      in 1996. In March 1999, the IRS notified petitioner of the
                                      discrepancy between the EDD report and the information on
                                      the 1996 Form 940–EZ. Petitioner did not respond to the
                                      notification, and, as a result, in May 1999, respondent
                                      assessed an additional $17,430 of 1996 FUTA tax that peti-
                                      tioner owed, along with a Federal tax deposit penalty of
                                      $1,743 and interest of $3,730. Subsequently, respondent
                                      assessed additional penalties, an addition to tax, and interest
                                      and gave petitioner credit for small overpayments of subse-
                                      quent employment tax liabilities.
                                         In 2004, both petitioner and the IRS made further
                                      inquiries. In letters dated May 6, 2004 (to the IRS), and April
                                      4, 2006 (to petitioner), EDD reported that, with respect to
                                      petitioner for 1996, neither taxable wages nor contributions
                                      were reported to the department; the letters further stated
                                      that petitioner’s account was ‘‘inactive for tax year 1996.’’ In
                                      February 2009, EDD advised the IRS that petitioner’s
                                      unemployment insurance account with California first
                                      became active on January 1, 1999.
                                      Levy Notice
                                        On February 6, 2006, respondent issued to petitioner a
                                      Final Notice of Intent to Levy and Notice of Your Right to
                                      a Hearing (the levy notice) with respect to the additional
                                      FUTA tax, interest, and penalties that respondent had
                                      assessed but that petitioner had not paid. According to the
                                      levy notice, petitioner owed $28,343, which consisted of
                                      $16,137 of FUTA tax, $9,305 of accrued interest, and a late
                                      payment penalty of $2,902.
                                      Request for CDP Hearing
                                         On February 24, 2006, in response to the levy notice, peti-
                                      tioner timely requested a collection due process (CDP)
                                      hearing, contending that the ‘‘originally filed 940EZ is cor-
                                      rectly filed’’ and requesting that respondent ‘‘allow the credit




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                                      356                135 UNITED STATES TAX COURT REPORTS                                            (353)


                                      and abate all penalties.’’ In August 2006, petitioner had a
                                      CDP hearing with respect to the levy notice (the levy
                                      hearing).
                                      Lien Notice
                                         On March 16, 2006, respondent recorded a notice of Fed-
                                      eral tax lien indicating that petitioner had an assessed, but
                                      unpaid, employment tax liability of $15,528 for 1996 (relating
                                      to the May 24, 1999, assessment). On March 23, 2006,
                                      respondent issued to petitioner a Notice of Federal Tax Lien
                                      Filing and Your Right to a Hearing under IRC 6320 (the lien
                                      notice) advising petitioner of the recorded lien for $15,528
                                      and of its right, by April 24, 2006, to request a hearing. Peti-
                                      tioner did not request a hearing in response to the lien
                                      notice, and none was held.
                                      Notice of Determination
                                         On February 20, 2007, Appeals issued a Notice of Deter-
                                      mination Concerning Collection Action(s) Under Section 6320
                                      and/or 6330 (the notice of determination) by which an
                                      Appeals officer determined that ‘‘all statutory and procedural
                                      requirements’’ were followed and that the levy notice was
                                      ‘‘appropriate based on all available information’’. The notice
                                      of determination sustained in full the levy notice. 2
                                      Petition
                                        In response to the notice of determination, petitioner
                                      timely filed the petition and an amended petition.

                                                                                   OPINION

                                      I. Introduction
                                         We must determine whether respondent may proceed by
                                      levy to collect the additional FUTA tax, penalties, and interest
                                      that respondent claims petitioner owes (the disputed
                                      liability). That, in large part, depends on whether petitioner
                                      made contributions of $17,553 for 1996 to the California
                                         2 The notice of determination states that petitioner’s only challenge to the proposed levy was

                                      petitioner’s challenge to ‘‘the existence or amount of the tax liability.’’ It further states that peti-
                                      tioner was informed that it was required (and, we presume, failed) ‘‘to provide either a State
                                      Recertification letter or copies of the state returns and the front and back of the cancelled
                                      checks to verify the timely or late contributions.’’




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         357


                                      unemployment fund. Before we address that question, we
                                      shall set forth some of the general rules governing our review
                                      of collection matters, set forth the relevant FUTA and Cali-
                                      fornia State tax provisions, summarize the parties’ argu-
                                      ments, and address certain of respondent’s evidentiary objec-
                                      tions. Finally, we shall state our analysis and conclusion.
                                      II. Sections 6320, 6330, and 6331
                                         Section 6331(a) authorizes the Secretary to levy against
                                      property and property rights when a taxpayer liable for taxes
                                      fails to pay those taxes within 10 days after notice and
                                      demand for payment. Section 6331(d) requires the Secretary
                                      to send the taxpayer written notice of the Secretary’s intent
                                      to levy, and section 6330(a) requires the Secretary to send
                                      the taxpayer written notice of his right to a hearing before
                                      Appeals at least 30 days before any levy begins. A taxpayer
                                      receiving a notice of Federal tax lien has hearing rights
                                      similar to the hearing rights accorded to a taxpayer receiving
                                      a notice of intent to levy. See sec. 6320(c).
                                         After the hearing, an Appeals officer must determine
                                      whether and how to proceed with collection, taking into
                                      account, among other things, collection alternatives the tax-
                                      payer proposed and whether any proposed collection action
                                      balances the need for the efficient collection of taxes with the
                                      legitimate concern of the taxpayer that the collection action
                                      be no more intrusive than necessary. See sec. 6330(c)(3). The
                                      taxpayer may raise its underlying liability at the hearing if
                                      it did not receive any statutory notice of deficiency for the
                                      liability or did not otherwise have an opportunity to dispute
                                      the tax liability. Sec. 6330(c)(2)(B).
                                         Respondent concedes that petitioner was entitled to, and
                                      did, raise its underlying liability (i.e., the disputed liability)
                                      at the levy hearing and that the disputed liability is properly
                                      before the Court. With respect to the disputed liability, we
                                      review the record made here and not the administrative
                                      record made before Appeals, and we apply a de novo
                                      standard of review. See Sego v. Commissioner, 114 T.C. 604,
                                      610 (2000); Goza v. Commissioner, 114 T.C. 176, 181–182
                                      (2000); cf. Porter v. Commissioner, 132 T.C. 203, 210 (2009)
                                      (de novo standard of review for cases brought under section




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                                      358                135 UNITED STATES TAX COURT REPORTS                                         (353)


                                      6015(f )). Petitioner bears the burden of proof. See Rule
                                      142(a). 3
                                      III. Relevant FUTA and California State Tax Provisions
                                           A. FUTA Provisions
                                         For 1996, section 3301(1) imposes on every employer a 6.2-
                                      percent excise tax with respect to wages paid to its
                                      employees. Under section 3306(b), wages subject to tax
                                      include (with certain exceptions not here relevant) ‘‘all remu-
                                      neration for employment’’ that does not exceed $7,000 for the
                                      calendar year.
                                         Section 3302 allows taxpayers credits against that tax for
                                      certain actual and deemed contributions to State unemploy-
                                      ment funds. Section 3302(a) provides a credit for actual con-
                                      tributions to such funds during the taxable year (the normal
                                      credit). Section 3302(b) provides an additional credit (the
                                      additional credit)
                                      equal to the amount, if any, by which the contributions [the taxpayer is]
                                      required to * * * [pay] with respect to the taxable year were less than the
                                      contributions such taxpayer would have been required to pay if throughout
                                      the taxable year he had been subject under such State law to the highest
                                      rate applied thereunder * * * [or] 5.4 percent, whichever rate is lower.

                                      The additional credit allows employers with good experience
                                      ratings (and thus a lower State contribution rate) to avoid
                                      paying more Federal tax than those employers with bad
                                      experience ratings. In pertinent part, section 31.3302(b)–2(b),
                                      Employment Tax Regs., provides that the additional credit
                                      shall not be allowed unless the taxpayer submits
                                        To the district director a certificate of the proper officer of each State
                                      (with respect to the law of which the additional credit is claimed) showing
                                      for the taxpayer—
                                        (1) The total remuneration with respect to which contributions were
                                      required to be paid by the taxpayer under the State law with respect to
                                      such calendar year; and
                                        (2) The rate of contributions applied to the taxpayer under the State law
                                      with respect to such calendar year.

                                         3 Sec. 7491(a)(1), which, under certain circumstances, shifts the burden of proof, is limited in

                                      its application to factual issues ‘‘relevant to ascertaining the liability of the taxpayer for any
                                      tax imposed by subtitle A or B’’ of the Internal Revenue Code. The factual issue in this case
                                      is whether petitioner is entitled to a credit under sec. 3302 against its liability for FUTA taxes
                                      imposed by sec. 3301, which is in subtit. C. Therefore, sec. 7491(a)(1) is inapplicable.




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         359


                                         Section 3302(c)(1) limits the credits against the tax
                                      imposed by section 3301 to 90 percent of that tax. In
                                      applying the 90-percent limit on total credits, however, the
                                      tax is computed at a deemed rate of 6 percent rather than
                                      at the actual 6.2-percent rate. See sec. 3302(d)(1). Thus, in
                                      effect, total credits may not exceed 5.4 percent (90 percent ×
                                      6 percent) of the employer’s FUTA wage base.
                                           B. California Unemployment Insurance Code
                                         Pursuant to Cal. Unemp. Ins. Code sec. 675 (West 1986),
                                      an employer is subject to the California unemployment com-
                                      pensation system if, during any day within the current or
                                      preceding calendar year, the employer has or had ‘‘in employ-
                                      ment one or more employees * * * [to whom it pays or paid
                                      wages] in excess of one hundred dollars ($100) during any
                                      calendar quarter.’’ Employment includes ‘‘an individual’s
                                      entire service’’ performed in California. Id. sec. 602. Wages
                                      means ‘‘all remuneration payable to an employee for personal
                                      services’’ that does not exceed $7,000 during any calendar
                                      year. Id. secs. 926, 930. Thus, the California wage base is
                                      identical to the Federal FUTA wage base. The actual contribu-
                                      tion rate for each employer generally depends on the ratio of
                                      the employer’s reserve account (i.e., the employer’s
                                      unemployment insurance contributions to California) to its
                                      average base payroll, both as of a ‘‘computation date’’. Id.
                                      secs. 977, 1026. The maximum contribution rate is 5.4 per-
                                      cent of wages, which equals the highest rate that may be
                                      used in determining a taxpayer’s additional tax under section
                                      3302(b). Id. sec. 977.
                                      IV. Arguments of the Parties
                                         In their opening and reply briefs, the parties frame the
                                      issue regarding alleged unpaid FUTA taxes as a dispute over
                                      whether petitioner has satisfied its burden of proving that it
                                      did, in fact, make unemployment insurance contributions to
                                      California of $17,553 as stated on its 1996 Form 940–EZ,
                                      thereby entitling it to the credit taken on that return.
                                         Rule 151(e) governs the content of briefs and provides that
                                      all briefs shall contain, among other things, proposed
                                      findings of fact (with ‘‘references to the pages of the tran-
                                      script or the exhibits or other sources relied upon to support




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                                      the * * * [proposed finding]’’), a concise statement of the
                                      points on which the party relies, and the party’s argument,
                                      ‘‘which sets forth and discusses the points of law involved
                                      and any disputed questions of fact.’’ At the conclusion of the
                                      trial, the Court specifically instructed counsel for the parties
                                      to incorporate in the discussion (argument) section of their
                                      briefs cross-references to any proposed findings of fact on
                                      which they relied. Petitioner’s counsel has failed both to fol-
                                      low that instruction and to include in petitioner’s opening
                                      brief a statement, concise or not, of the points on which peti-
                                      tioner relies. We have done our best to understand
                                      petitioner’s arguments, but, particularly with respect to the
                                      crucial question of how the evidence in the case supports
                                      petitioner’s claim that it paid $17,553 to California, the fail-
                                      ures of petitioner’s counsel make petitioner’s arguments
                                      somewhat unclear. 4
                                         Petitioner argues that respondent’s disallowance of any
                                      credit for the $17,553 that petitioner reported on its 1996
                                      Form 940–EZ as paid to the California unemployment fund
                                      was apparently based on erroneous information Respondent received from
                                      EDD. Respondent’s disallowance of $17,430.33 of credit apparently was the
                                      result of a difference in association of Federal Identification Numbers with
                                      EDD Employer Identification Numbers on the respective records of
                                      Respondent and EDD.
                                        EDD confirmed that it received substantial sums of money in 1996
                                      under * * * the EDD number under which Petitioner reported to
                                      Respondent that it had paid unemployment insurance to the State of Cali-
                                      fornia. * * *

                                      Apparently in support of that argument (we say apparently
                                      because, as stated, petitioner’s counsel has failed to cross-ref-
                                      erence petitioner’s arguments and proposed findings of fact),
                                      petitioner proposes a number of facts for us to find. First,
                                      ExpressPay (1) ‘‘deposited the employment taxes, and paid
                                      the related charges, associated with * * * [petitioner’s 1996]
                                      payroll’’ and (2) ‘‘prepared the federal and California employ-
                                      ment tax returns associated with * * * [petitioner’s] 1996
                                      payroll’’. Second, ExpressPay ‘‘withdrew funds for the payroll
                                      taxes and related charges required to be deposited or paid in
                                        4 The record is not small, consisting in part of 370 pages of trial transcript and hundreds of

                                      pages of written exhibits admitted into evidence. Petitioner’s counsel further failed to follow our
                                      briefing instructions by omitting a detailed table of contents to petitioner’s approximately 24
                                      pages of proposed findings of fact.




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         361


                                      connection with * * * [petitioner’s 1996 payroll]’’. Third,
                                      most pertinently, ExpressPay ‘‘made payments in the total
                                      amount of $17,552.98 to the State of California for unemploy-
                                      ment insurance relating to * * * [petitioner’s 1996 pay-
                                      roll]’’. 5
                                        Respondent’s argument is straightforward: Petitioner is
                                      entitled to no credit against its 1996 FUTA tax because it has
                                      failed to show that, for 1996, it made any unemployment
                                      fund contribution to California.
                                      V. Evidentiary Issues
                                         At trial, we reserved ruling on respondent’s objections to
                                      four exhibits petitioner proffered. The first three relate to
                                      petitioner’s 1996 operations. They are Exhibit 20–P, a page
                                      from petitioner’s tax liability register; Exhibit 21–P, a tax
                                      status ledger report for the third and fourth quarters of
                                      1996; and Exhibit 22–P, a year-to-date register (run date
                                      12/30/96). The fourth exhibit, Exhibit 40–P, purports to be a
                                      page from a tax liability register for Avenir (run date
                                      12/30/96). Respondent objects to the four documents on var-
                                      ious grounds, including, with respect to all of them, that they
                                      constitute inadmissible hearsay. At the conclusion of the
                                      trial, we ordered the parties to address on brief respondent’s
                                      objections to all four exhibits.
                                         Petitioner’s opening brief contains a section entitled
                                      ‘‘Findings of Fact Dependent on Contested Documents’’. Peti-
                                      tioner supports those proposed findings with references to
                                      Exhibits 20–P and 21–P but with no reference to either
                                      Exhibit 22–P or Exhibit 40–P. We assume, therefore, that
                                      petitioner does not rely on the latter two exhibits to support
                                      its arguments, and we shall not consider them further. We
                                      shall not rule on the admissibility of Exhibits 20–P and
                                      21–P because, in considering their admissibility, we have
                                      read them, and, even were we to overrule respondent’s objec-
                                      tions, petitioner would still fail to carry its burden of proof.




                                        5 Alternatively, petitioner states: ‘‘For * * * [1996], ExpressPay Plus made California unem-

                                      ployment insurance payments in the total amount of $17,552.98 on behalf of Petitioner.’’




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                                      362                135 UNITED STATES TAX COURT REPORTS                                         (353)


                                      VI. Analysis
                                           A. Petitioner’s Failure To Prove Any Unemployment Insur-
                                              ance Contribution to California for 1996
                                         Petitioner has failed to support the findings of fact that it
                                      relies on in support of its argument that, for 1996, it made
                                      unemployment insurance contributions of $17,553 to Cali-
                                      fornia.
                                         In support of its proposed findings that ExpressPay depos-
                                      ited employment taxes on its behalf and prepared the associ-
                                      ated tax returns, petitioner principally relies on the testi-
                                      mony of its accountant, J. Kelly Monaghan, who testified
                                      about the operation of payroll services in general but con-
                                      ceded that he had not been involved in any way with
                                      ExpressPay and was not familiar with its business practices
                                      or day-to-day routines. Petitioner also relies on stipulations
                                      that (1) petitioner used ExpressPay’s services for 1996 and
                                      (2) ExpressPay withdrew money from petitioner’s account.
                                      Finally, petitioner relies on the testimony of Gregory H. St.
                                      Claire, who organized petitioner, and who testified that peti-
                                      tioner used ExpressPay to prepare its payroll. While none of
                                      that evidence is inconsistent with petitioner’s proposed
                                      findings of fact, none of it directly supports them. And, of
                                      course, we have the evidence of EDD reporting that, with
                                      respect to petitioner, no taxable wages and contributions
                                      were reported to the department for 1996 and petitioner’s
                                      unemployment insurance account with California first
                                      became active on January 1, 1999. Petitioner has failed to
                                      convince us that ExpressPay deposited employment taxes on
                                      its behalf and prepared the associated tax returns.
                                         While there is adequate support for petitioner’s proposed
                                      finding that ExpressPay prepared petitioner’s 1996 payroll
                                      and, in connection with its payroll duties, withdrew funds
                                      from Wells Fargo bank, petitioner has not convinced us that
                                      ExpressPay withdrew funds from that bank and paid $17,553
                                      (or any lesser amount) to California for unemployment insur-
                                      ance relating to petitioner’s 1996 payroll. Petitioner’s prin-
                                      cipal support for its argument that ExpressPay made
                                      unemployment insurance contributions to California on its
                                      behalf is Exhibit 20–P, the page from petitioner’s tax liability
                                      register, and Exhibit 21–P, petitioner’s tax status ledger




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         363


                                      reports for the third and fourth quarters of 1996. At best,
                                      those documents suggest total contributions on petitioner’s
                                      behalf of $12,589. But they do not prove that any amount
                                      was actually paid to California for 1996, only that the fore-
                                      going amount may have been owed. Indeed, the stipulated
                                      Wells Fargo bank statements, while showing that with-
                                      drawals were made from the account during 1996, do not
                                      indicate the purpose of the withdrawals, and we do not dis-
                                      cern any connection between those withdrawals and the
                                      amounts reflected in the tax status ledger report. Again, we
                                      have before us the EDD reports, which state that petitioner
                                      reported nothing, paid nothing, and had no relationship with
                                      the department in, or for, 1996.
                                         In short, we are unable to make the findings of fact that
                                      petitioner proposes in support of its argument that, for 1996,
                                      it made unemployment insurance contributions of $17,553 to
                                      California. Indeed, petitioner has failed even to propose
                                      findings of fact that would support its argument that it
                                      should receive credit for payments to California that were
                                      reported to the IRS as having been made under Avenir’s State
                                      reporting number. Petitioner has failed to prove that, for
                                      1996, it made any unemployment insurance contribution to
                                      California.
                                           B. No Credit Allowed
                                         Section 3302(a) allows the normal credit for actual con-
                                      tributions to State unemployment funds. Since petitioner has
                                      failed to prove that it made any contribution to the Cali-
                                      fornia unemployment fund for 1996, petitioner is entitled to
                                      no normal credit.
                                         To claim the additional credit provided for in section
                                      3302(b), petitioner must satisfy the State certification
                                      requirement imposed by section 31.3302(b)–2(b), Employment
                                      Tax Regs. Petitioner has failed to adduce evidence (indeed,
                                      even to claim) that the requirement has been satisfied. Peti-
                                      tioner is not entitled to the additional credit.
                                         Petitioner is entitled to no section 3202(a) or (b) credit in
                                      determining its FUTA liability for 1996. Respondent did not
                                      err in assessing an additional $17,430 of 1996 FUTA tax.




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                                           C. Penalties
                                        The levy notice listed a late payment penalty of $2,902.
                                      Respondent has assessed an addition to tax under section
                                      6651(a)(2) for failure to pay the tax shown on a return and
                                      a penalty under section 6656 for failure to make deposit of
                                      taxes. In neither the petition nor the amended petition does
                                      petitioner assign error to any addition to tax or penalty, and
                                      petitioner does not in its briefs raise any reasonable cause
                                      defense. See secs. 6651(a)(2), 6656(a). Respondent has shown
                                      an adequate ground for imposing the addition to tax and the
                                      penalty, and we shall sustain them.
                                           D. Jurisdiction Over the Notice of Tax Lien
                                         The issue here is not clear. At trial, petitioner, for the first
                                      time, raised some question as to the propriety of the lien
                                      notice. Petitioner’s witness, Mr. Monaghan (petitioner’s
                                      accountant), who participated in the levy hearing, did not
                                      recall that there was any discussion of the lien. As noted,
                                      petitioner did not request a hearing, pursuant to section
                                      6320(a)(3)(B), regarding the lien notice, and none was held.
                                      Petitioner, in its opening brief, proposes that we find facts
                                      consistent with the issuance of the lien notice, but petitioner
                                      does not further discuss the lien or raise any issue with
                                      respect to it. Respondent, in his opening brief, argues that
                                      we have no jurisdiction over the lien notice. In response (and
                                      apparently in disagreement), petitioner argues that one of
                                      the opportunities available to taxpayers at a CDP hearing is
                                      the right to offer collection alternatives, see sec.
                                      6330(c)(2)(A)(iii), and that the recording of a lien is a collec-
                                      tion alternative. Petitioner then suggests that, by recording
                                      the lien before the levy hearing, respondent has proposed a
                                      collection alternative that petitioner might have offered and
                                      that, therefore, ‘‘[i]t would be wasteful to require a second
                                      request for a CDP hearing in order to place in issue a matter
                                      that already appears to * * * be in issue.’’
                                         Aside from the inconsistency of suggesting that petitioner
                                      might have offered a collection alternative (a lien against its
                                      assets) that it obviously opposes, petitioner’s implicit argu-
                                      ment that there is something that we must consider with
                                      respect to the lien notice fails because of the absence of any
                                      evidence that the lien notice (or any other collection alter-




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                                      (353)                  535 RAMONA INC. v. COMMISSIONER                                         365


                                      native) was even discussed at the hearing and the absence
                                      of any reference to it in the notice of determination. Under
                                      those circumstances, we agree with respondent that this case
                                      is governed by Offiler v. Commissioner, 114 T.C. 492, 498
                                      (2000), in which we held that our ‘‘jurisdiction under section
                                      6330(d) is dependent on the issuance of a valid notice of
                                      determination and a timely petition for review.’’ Because nei-
                                      ther the notice of determination nor the petition referred to
                                      the propriety of the lien notice, we lack jurisdiction under
                                      section 6330(d) to consider the lien notice.
                                      VII. Conclusion
                                        The Appeals officer’s determination affirming the levy
                                      notice against petitioner for 1996 is sustained. Respondent
                                      may proceed by levy to collect the disputed liability.
                                                                     An appropriate order and decision will be
                                                                   entered.

                                                                               f




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