                               T.C. Memo. 2016-90



                         UNITED STATES TAX COURT



                 ROBERT W. SCHLEGEL, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 31005-14L.                        Filed May 4, 2016.


      Robert W. Schlegel, pro se.

      Christina L. Cook, for respondent.



                           MEMORANDUM OPINION


      PUGH, Judge: This case was commenced in response to a Notice of

Determination Concerning Collection Action(s) Under Section 63201 and/or 6330,



      1
        Unless otherwise indicated all section references are to the Internal
Revenue Code of 1986, as amended and in effect at all relevant times. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                         -2-

[*2] sustaining respondent’s Notice of Intent to Levy to collect petitioner’s unpaid

Federal income tax liabilities for 2009 and 2010.

      Respondent filed a Motion for Summary Judgment and accompanying

exhibits, including a declaration of Christina L. Cook. Petitioner filed a Cross-

Motion for Summary Judgment in response. We then held a hearing on the

pending motions at which both sides appeared and represented that this case was

ripe for decision without trial as there is no dispute over any material fact.

      Rule 121(b) provides in part that after a motion for summary judgment and

an opposing response are filed, “[a] decision shall * * * be rendered if the

pleadings * * * and any other acceptable materials, together with the affidavits or

declarations, if any, show that there is no genuine dispute as to any material fact

and that a decision may be rendered as a matter of law.” Summary judgment is

intended to expedite litigation and avoid unnecessary and expensive trials. Fla.

Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).

      We have reviewed respondent’s motion and the documents submitted in

support of respondent’s motion, and we have considered petitioner’s response and

cross-motion. We incorporate by reference the statement of facts contained in the

declaration of Ms. Cook. We agree with the parties that the material facts are not
                                         -3-

[*3] in dispute, and for the reasons summarized below, we hold that respondent is

entitled to a decision sustaining the proposed levy.

                                     Background

      Petitioner failed to file Federal income tax returns for 2009 and 2010. In

two notices of deficiency, both dated September 9, 2013, respondent determined

deficiencies for petitioner’s 2009 and 2010 taxable years on the basis of

substitutes for returns prepared pursuant to section 6020(b). The notices of

deficiency were sent to petitioner’s last known address by certified mail.

Petitioner failed to file a petition with the Court challenging the notices of

deficiency.

      On April 19, 2014, respondent sent a Notice of Intent to Levy and Notice of

Your Right to a Hearing to petitioner with respect to his unpaid 2009 and 2010 tax

liabilities. On May 15, 2014, respondent received petitioner’s Form 12153,

Request for a Collection Due Process or Equivalent Hearing.

      On May 29, 2014, respondent mailed a letter to petitioner, requesting that

petitioner complete Forms 1040, U.S. Individual Income Tax Return, for 2011,

2012, and 2013. On August 5 and 6, 2014, Settlement Officer Monica Coronado

(SO Coronado) verified that the Internal Revenue Service’s (IRS) records included

notices of deficiency for 2009 and 2010 and a certified mailing list, with a date
                                         -4-

[*4] stamp and postal employee signature, confirming that the notices were sent to

petitioner’s last known address. The mail article numbers on the certified mailing

list matched the mail article numbers on the copies of the notices of deficiency,

and the corresponding tracking information showed that both articles of mail were

reported as being delivered in Glencoe, MN. The address on the certified mailing

list is the same address as was on petitioner’s Form 12153 and on his petition to

this Court.

      On August 12, 2014, SO Coronado mailed a letter to petitioner scheduling a

telephonic administrative hearing for September 17, 2014. The letter notified

petitioner that to qualify for a face-to-face hearing petitioner had to submit Form

433-A, Collection Information Statement for Wage Earners and Self-Employed

Individuals, and signed Forms 1040 for 2011, 2012, and 2013. The letter

explained that petitioner might not be able to dispute the underlying liabilities for

2009 and 2010 because SO Coronado’s review of the record indicated that the

notices of deficiency were properly sent. The letter, therefore, asked for

petitioner’s address on the date that the notices were sent, asked whether he had

received the notices of deficiency, and enclosed copies thereof. The letter also

informed petitioner that he could prepare corrected Forms 1040 for 2009 and 2010
                                        -5-

[*5] if he believed the amounts due were inaccurate. On September 9, 2014,

Settlement Officer Cheryl Rieux (SO Rieux) was assigned the case.

      On September 16, 2014, SO Rieux received a letter from petitioner, in

which he asserted that he had not received a notice of deficiency for 2009 or 2010.

He again requested a face-to-face hearing and requested that his case be

transferred to a settlement officer in Minnesota so that a face-to-face hearing

would be more convenient. He did not answer the other questions posed or

provide any of the requested documents. Petitioner also failed to contact SO

Rieux at the scheduled date and time for the administrative hearing.

      On October 21, 2014, SO Rieux mailed petitioner a letter notifying him that

he had missed the scheduled administrative conference and that she had not

received any of the documents the IRS Office of Appeals (Appeals) had requested.

The letter informed petitioner that SO Rieux had reviewed the administrative file

and reiterated that to be eligible for an in-person hearing, petitioner would have to

be in compliance with his tax filing obligations. The letter also notified petitioner

that Appeals would make a determination based on the administrative record and

information previously provided and gave petitioner an additional 14 days to

provide any other information he wanted Appeals to consider. On that same day,
                                         -6-

[*6] SO Rieux attempted to call petitioner at two different numbers but was unable

to reach him.

      On November 12, 2014, petitioner sent a letter to SO Rieux again requesting

a face-to-face hearing. Petitioner did not provide any of the requested documents.

       On November 26, 2014, SO Rieux sent petitioner a notice of determination

sustaining the collection action. Petitioner then timely petitioned this Court for

redetermination.

                                     Discussion

I. Statutory Framework

      A taxpayer requesting a hearing in response to a notice of levy pursuant to

section 6330 is entitled to a hearing before an impartial officer or employee of

Appeals. Sec. 6330(b)(1), (3). At the hearing the taxpayer may raise any relevant

issue, including appropriate spousal defenses, challenges to the appropriateness of

the collection action, and collection alternatives. Sec. 6330(c)(2)(A). A taxpayer

is precluded from contesting the existence or amount of the underlying tax liability

unless the taxpayer did not receive a notice of deficiency for the liability in

question or did not otherwise have an earlier opportunity to dispute the liability.

Sec. 6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609 (2000).
                                          -7-

[*7] Following the hearing, Appeals must determine whether proceeding with

the proposed levy is appropriate. In making that determination Appeals is

required to consider relevant issues raised by the taxpayer under section

6330(c)(2) and also whether the proposed levy action appropriately balances the

need for efficient collection of taxes with the taxpayer’s concerns regarding the

intrusiveness of the proposed collection action. Sec. 6330(c)(3). In addition, the

Appeals officer must verify that the requirements of any applicable law or

administrative procedure have been met. Sec. 6330(c)(1), (3).

      Where the validity of the underlying tax liability is at issue, we review the

Commissioner’s determination de novo. Goza v. Commissioner, 114 T.C. 176,

181-182 (2000). Where the underlying tax liability is not properly at issue, we

review the determination for abuse of discretion. Id. at 182. Appeals abuses its

discretion if it acts “arbitrarily, capriciously, or without sound basis in fact or

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

II. Challenges to the Underlying Liabilities

      When, as here, the IRS prepares a substitute for return pursuant to section

6020(b), the taxpayer may raise his underlying liability in an administrative

hearing if he did not receive a notice of deficiency or otherwise have a prior

opportunity to contest the liability. See secs. 6320(c), 6330(c)(2)(B); see also
                                          -8-

[*8] Sego v. Commissioner, 114 T.C. at 609 (2000). But this Court considers a

taxpayer’s challenge to his underlying liability in a collection action case only if

he properly raised that challenge at his administrative hearing. See Giamelli v.

Commissioner, 129 T.C. 107, 115-116 (2007); secs. 301.6320-1(f)(2), Q&A-F3,

301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. An issue is not properly

raised at the administrative hearing if the taxpayer fails to request consideration of

that issue by Appeals or if he requests consideration but fails to present any

evidence after being given a reasonable opportunity to do so. Giamelli v.

Commissioner, 129 T.C. at 115; see McRae v. Commissioner, T.C. Memo. 2015-

132, at *8 (holding that the taxpayer failed properly to raise his underlying

liability where he failed explicitly to contest it during the administrative hearing

and failed to provide any evidence concerning it); see also Zook v. Commissioner,

T.C. Memo. 2013-128, at *6 (holding that the taxpayer failed properly to raise her

underlying liabilities when she failed to provide any documentation of them and

asserted frivolous arguments).

      Although petitioner sent several letters asserting that he did not receive a

notice of deficiency for either 2009 or 2010, his failure to present evidence, such

as Forms 1040 for 2009 and 2010 or the requested financial information, amounts

to a failure properly to raise the issue of his underlying liabilities at the
                                         -9-

[*9] administrative hearing. See McRae v. Commissioner, T.C. Memo. 2015-132;

secs. 301.6320-1(f)(2), Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. & Admin.

Regs. In the August 12, 2014, letter SO Coronado informed petitioner that he

could prepare corrected Forms 1040 for 2009 and 2010 if he believed the amounts

due were inaccurate. Petitioner thus was given a reasonable opportunity challenge

the underlying liabilities by submitting tax returns to replace the substitutes for

returns. Petitioner declined the opportunity and provided none of the information

requested. Accordingly, we find that regardless of whether petitioner received the

notices of deficiency, he did not properly raise his underlying liabilities during the

administrative hearing, and therefore cannot dispute the liabilities here. See

Caudle v. Commissioner, T.C. Memo. 2014-196, aff’d, 603 F. App’x. 220 (4th

Cir. 2015).

III. Verification

      Section 6330(c)(1) requires Appeals, as part of its review, to verify that a

valid notice of deficiency was issued to the taxpayer. Jordan v. Commissioner,

134 T.C. 1, 12 (2010); Hoyle v. Commissioner, 131 T.C. 197, 200 (2008). Where,

as here, a taxpayer identifies an irregularity in the assessment procedure, an

Appeals officer cannot rely solely on the tax transcripts to verify that a notice of

deficiency has been sent. See Hoyle v. Commissioner, 131 T.C. at 205 n.7
                                         - 10 -

[*10] (“[W]here a taxpayer alleges no notice of deficiency was mailed he has * * *

‘[identified] an irregularity[.]’”(alteration in original)). Instead, the Appeals

officer is directed to examine “underlying documents in addition to the tax

transcripts, such as the taxpayer’s return, a copy of the notice of deficiency, and

the certified mailing list”. See id. (quoting Chief Counsel Notice CC-2006-19);

Marlow v. Commissioner, T.C. Memo. 2010-113, 2010 WL 2011617, at *8 n.4;

Casey v. Commissioner, T.C. Memo. 2009-131.

      Compliance with Postal Service Form 3877 mailing procedures raises a

presumption of official regularity in favor of the Commissioner. Hoyle v.

Commissioner, 131 T.C. at 203; Coleman v. Commissioner, 94 T.C. 82, 91 (1990).

We have applied this principle in both the deficiency and lien/levy case settings.

See Meyer v. Commissioner, T.C. Memo. 2013-268.

      Petitioner argues that respondent is not entitled to the presumption of

official regularity in this case because the certified mailing list did not indicate the

number of items received by the U.S. Postal Service office and is not signed or

initialed by the IRS employees who issued the notices. We have found in other

cases that such infirmities render the presumption of official regularity

inapplicable. See id. Respondent may still prevail, however, if the evidence of
                                        - 11 -

[*11] mailing is otherwise sufficient. See Coleman v. Commissioner, 94 T.C. at

91; see also Wheat v. Commissioner, T.C. Memo. 1992-268, 1992 WL 95632, at

*4.

      While not sufficient to create a presumption of official regularity, the

incomplete certified mailing list serves as evidence that the notices of deficiency

were mailed to petitioner. See Portwine v. Commissioner, T.C. Memo. 2015-29;

see also Massie v. Commissioner, T.C. Memo. 1995-173, aff’d without published

opinion, 82 F.3d 423 (9th Cir. 1996). The certified mailing list bears a U.S. Postal

Service date stamp and signature. Also, both entries show petitioner’s name, his

address, and the certified mail article number of the corresponding notice of

deficiency. Petitioner has not argued that the address on the certified mailing list

was not his last known address, and the address on the certified mailing list is the

same address that petitioner reported on his administrative hearing request and on

his petition filed with this Court.

      Furthermore, Appeals did not rely solely on the certified mailing list to

verify that the notices of deficiency had been mailed to petitioner. Appeals also

reviewed the copies of the notices of deficiency for the years at issue, and each

notice of deficiency bears the same mailing date, mailing address, and certified

mail article number as the corresponding entry on the certified mailing list. In
                                        - 12 -

[*12] addition, SO Coronado reviewed the tracking information for each piece of

mail corresponding to the certified mail article numbers on the notices of

deficiency and verified that those articles of mail were reported as being delivered.

      Although respondent is not entitled to a presumption of mailing, we

conclude that the dated copies of the notices of deficiency, combined with the

incomplete mailing list, are sufficient to show that the notices of deficiency for the

years at issue were mailed to petitioner at his last known address. Consequently,

we hold that it was not an abuse of discretion for the settlement officers to rely on

this information to verify that valid assessments had been made and that the

settlement officers properly verified, pursuant to section 6330(c)(1), that “the

requirements of any applicable law or administrative procedure have been met”.

IV. Face-to-Face Hearing Request

      In addition, petitioner sought a face-to-face rather than a telephonic

administrative hearing. A face-to-face hearing is not a requirement under section

6330. See Katz v. Commissioner, 115 T.C. 329, 337-338 (2000) (holding that a

hearing by telephone or by correspondence is sufficient to satisfy the requirements

under section 6330); sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs.

The regulations further provide that if a face-to-face hearing is not held, a hearing

conducted by telephone, by correspondence, or by review of documents will
                                        - 13 -

[*13] suffice for purposes of section 6330(b). See sec. 301.6330-1(d)(2), Q&A-

D7, Proced. & Admin. Regs. A settlement officer’s denial of a face-to-face

hearing does not constitute an abuse of discretion where a taxpayer fails to present

nonfrivolous arguments, refuses to provide requested financial information, and is

not current with his Federal income tax. Zastrow v. Commissioner, T.C. Memo.

2010-215; see Williamson v. Commissioner, T.C. Memo. 2009-188 (holding that

it is not an abuse of discretion to deny a face-to-face hearing when the taxpayer

raises frivolous arguments and therefore the hearing would not be productive);

Moline v. Commissioner, T.C. Memo. 2009-110 (holding that it is not an abuse of

discretion when a settlement officer denies a taxpayer’s request for a face-to-face

hearing after determining that the hearing would not be productive because of the

taxpayer’s frivolous or groundless arguments or where the taxpayer has not filed

all required tax returns for prior years), aff’d, 363 F. App’x 675 (10th Cir. 2010);

sec. 301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs.

      The record demonstrates that a face-to-face hearing would not have been

productive. The settlement officers provided petitioner with a reasonable

opportunity for a telephonic hearing, and petitioner failed to take advantage of that

opportunity. In addition, petitioner failed to submit any of the requested financial

information and was not in compliance with his Federal income tax obligations.
                                        - 14 -

[*14] Aside from his argument that he did not receive the notices of deficiency,

petitioner did not present any relevant arguments. Therefore, the settlement

officers did not abuse their discretion by denying a face-to-face hearing.

                                     Conclusion

      On the basis of our review of the administrative record and the notice of

determination, the Court concludes that Appeals satisfied the requirements of

section 6330, that there is no genuine dispute as to any material fact, and that a

decision may be rendered as a matter of law.

      To reflect the foregoing,


                                                 An order and decision will be entered

                                       for respondent.
