                       T.C. Memo. 2010-181



                     UNITED STATES TAX COURT



 JOSE DE JESUS MARTINEZ AND EVANGELINA MARTINEZ, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19209-08L.              Filed August 10, 2010.



     Ralph C. McBride, for petitioners.

     Kristen Nygren, for respondent.



                       MEMORANDUM OPINION


     GOLDBERG, Special Trial Judge:    The petition in this case

was filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330.   This case

is before the Court on respondent’s motion for summary judgment

as supplemented, requesting an adjudication that respondent’s

determination to sustain a levy on petitioners’ assets to collect
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their unpaid Federal income tax liabilities for 2002, 2003, and

2004 was not an abuse of discretion.      Unless otherwise indicated

all section references are to the Internal Revenue Code, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

                             Background

     Petitioners resided in Georgia at the time they filed their

petition.    They timely filed joint Federal income tax returns for

2002, 2003, and 2004.   The Internal Revenue Service (IRS)

subsequently examined the returns.      As a result, the IRS mailed

to each petitioner duplicate joint notices of deficiency dated

April 4, 2007, determining Federal income tax deficiencies of

$122,055, $76,881, $78,355, and civil fraud penalties under

section 6663 of $91,541.25, $57,660.75, and $57,603 for 2002,

2003, and 2004, respectively.   The IRS mailed the deficiency

notices by certified mail to petitioners’ residence in Georgia,

which is the same address listed on their petition.     Petitioners

did not file a petition with the Court in response to the notices

of deficiency; therefore, on August 20, 2007, the IRS assessed

the income tax deficiencies and fraud penalties as set forth in

the notices of deficiency, plus statutory interest.

     On November 12, 2007, respondent sent petitioners a notice

of intent to levy and right to a hearing under section 6330 with

respect to petitioners’ unpaid income tax liabilities for 2002,
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2003, and 2004.   In response petitioners’ attorney, Ralph C.

McBride, filed on petitioners’ behalf a Form 12153, Request for a

Collection Due Process or Equivalent Hearing.    On the Form 12153

Mr. McBride stated that petitioners disagreed with the levy and

that they proposed as a collection alternative an offer-in-

compromise on the ground that “WE ARE PRESENTLY WORKING WITH IRS

THROUGH MRS. TODD.   SEE COPY OF COVER LTR SENT BY CERTIFIED MAIL

#7007-0220-003-2024-4676”.   Apparently, Mr. McBride was

attempting to resolve the underlying liability issues with Ms.

Todd, the IRS auditor in Holtsville, New York.   The IRS referred

petitioners’ request for a collection hearing to Dan Kelly, a tax

examining technician.   Because Mr. McBride was unable to resolve

the matter with Ms. Todd, he requested that the IRS refer the

matter to an Appeals officer.   The IRS subsequently assigned the

case to Settlement Officer Shirley J. Rivers in the Memphis,

Tennessee, Appeals Office.   On February 20, 2008, Mr. McBride

called Ms. Rivers and requested a face-to-face hearing with her

or someone at a local IRS office.

     The IRS complied by reassigning the case to Settlement

Officer T.W. Duvall in the Atlanta, Georgia, Appeals Office.

Settlement Officer Duvall sent a letter dated March 28, 2008, to

petitioners with a copy to Mr. McBride, acknowledging receipt of

their request for a collection hearing and scheduling a telephone

conference for May 20, 2008.    Mr. Duvall’s letter stated that he
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had to consider whether the IRS met all requirements of any

applicable law or administrative procedure, and any nonfrivolous

issue petitioners wished to discuss such as collection

alternatives and challenges to the appropriateness of the

collection action.

     The letter contained language stating that he could consider

the underlying tax liability only if petitioners had not

otherwise had an opportunity to dispute the liability with

Appeals or did not receive a notice of deficiency.   Mr. Duvall

stated that in petitioners’ case, because they had previously had

an opportunity to dispute the liability, they are precluded from

raising their liability again as an issue.   Further, he

emphasized that before he could consider alternative collection

methods such as an installment agreement or an offer-in-

compromise, petitioners had to send a completed Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals, a Form 433-B, Collection Information

Statement for Businesses, with all required attachments, and a

credit report.   Similarly, Mr. Duvall wrote that he could not

consider collection alternatives unless petitioners were

currently in compliance with Federal income tax laws.

     On May 20, 2008, the date of the scheduled telephone

conference, Mr. McBride called Mr. Duvall and stated that on

petitioners’ behalf, he had filed a petition with the Tax Court
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(presumably for 2002, 2003, and 2004) and would like to discuss

the underlying income tax liabilities and/or collection

alternatives.   Mr. Duvall replied that he was unable to discuss

any of the underlying adjustments that resulted in the assessed

taxes.   Further, Mr. Duvall told Mr. McBride that petitioners

still needed to submit a completed Form 433-A with all the

required attachments and a credit report before he could consider

an offer-in-compromise.   After the telephone conference Mr.

Duvall checked the Tax Court Web site to see whether petitioners

had filed a petition and found no record of a petition filed by

them.

     On June 12, 2008, Mr. McBride provided Mr. Duvall with

petitioners’ financial information and a Form 656-L, Offer In

Compromise (Doubt as to Liability), for petitioners’ Federal

income tax liabilities for 2002, 2003, and 2004.   Mr. Duvall

reviewed the financial information petitioners submitted and

determined that they had over $400,000 of net equity in assets

that they could use to pay the outstanding liabilities.    On July

9, 2008, Mr. McBride submitted some additional financial

information, but he did not propose any new collection

alternatives.

     After completing its review of the case, the Appeals office

mailed petitioners a notice of determination dated July 11, 2008,

sustaining the proposed levy action.   In response, petitioners
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filed a petition on August 6, 2008, stating that they disagreed

with the IRS determination because:      “The conclusions reached by

the examiner are not supported by evidence.      Supporting

documentation submitted by taxpayer and the return preparer were

ignored by the examiner.”

                             Discussion

     Summary judgment may be granted when there is no genuine

issue of material fact and a decision may be rendered as a matter

of law.   Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C.

518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).      The opposing

party cannot rest upon mere allegations or denials in his

pleadings and must “set forth specific facts showing that there

is a genuine issue for trial.”    Rule 121(d).    The moving party

bears the burden of proving there is no genuine issue of material

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment.      Dahlstrom v.

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

79 T.C. 340, 344 (1982).    Since petitioners did not present any

facts and acknowledged certain facts respondent alleged in his

motion, we rely on respondent’s version of the facts.      We

conclude that there is no dispute about any material fact and,

accordingly, the issue may be decided on the basis of a summary

judgment motion.
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     If a taxpayer neglects or refuses to pay a Federal income

tax liability within 10 days after notice and demand for payment,

the Commissioner may collect the tax by levy upon the person’s

property.   Sec. 6331(a).   The Commissioner generally must provide

the taxpayer written notice of the right to a hearing before the

levy is made.   Sec. 6330(a).   Upon a timely request, the taxpayer

is entitled to an administrative hearing before an impartial

officer or employee of the Appeals Office.    Sec. 6330(b).

     At the hearing a taxpayer may raise any relevant issue,

including challenges to the appropriateness of the collection

action and possible collection alternatives such as an offer-in-

compromise.   Sec. 6330(c)(2)(A).   A taxpayer may contest the

validity of the underlying tax liability, but only if the

taxpayer did not receive a statutory notice of deficiency or

otherwise have an opportunity to dispute the tax liability.      See

sec. 6330(c)(2)(B); see also Hoyle v. Commissioner, 131 T.C. 197,

199 (2008).

     Following the hearing the Appeals officer must determine

whether the collection action is to proceed, taking into account

the verification the Appeals officer has made, the issues raised

by the taxpayer at the hearing, and whether the collection action

balances the need for the efficient collection of taxes with the

legitimate concern of the taxpayer that any collection action be

no more intrusive than necessary.    Sec. 6330(c)(3).
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     The Tax Court is a court of limited jurisdiction, and the

Court may exercise jurisdiction only to the extent expressly

authorized by Congress.    Breman v. Commissioner, 66 T.C. 61, 66

(1976).    We review a collection determination under an abuse of

discretion standard when the underlying tax liability is not in

issue.    Goza v. Commissioner, 114 T.C. 176, 182 (2000).    Under

the abuse of discretion standard, petitioners are required to

show that respondent’s actions were arbitrary, capricious, or

without sound basis in fact.    See Sego v. Commissioner, 114 T.C.

604, 610 (2000).   We will now apply the law to the present facts

and circumstances.

     The only issue petitioners raise in the petition is their

disagreement with the Appeals office’s determination precluding

them from contesting the validity of the underlying tax

liabilities at the collection hearing.      Furthermore, an offer-in-

compromise based on doubt as to liability is likewise precluded

if section 6330(c)(2)(B) applies.       Baltic v. Commissioner, 129

T.C. 178, 183 (2007).

     In analyzing this matter, we note at the outset that the

Appeals officer complied with all of the procedural requirements

before and after the collection hearing.      Furthermore,

petitioners failed to provide all of the information the Appeals

officer requested and did not provide a serious collection

alternative.
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     Mr. McBride argues that petitioners filed a petition with

the Court in response to the April 4, 2007, duplicate notices of

deficiency, but for some unexplained reason it was not filed by

the Court.    To prove his contention, Mr. McBride provided a copy

of a certified mail receipt showing that the Court received a

document.    However, the date stamped on the receipt is August 8,

2008, the same date the Court filed the petition in this case.

Clearly the receipt does not support Mr. McBride’s assertion that

the certified mail receipt is proof that the document received by

the Court on August 8, 2008, was a petition contesting the

deficiency notices dated April 4, 2007.

     Similarly, the Court received two other pieces of evidence

from Mr. McBride through which he intended to prove that

petitioners had filed a petition in response to the notices of

deficiency:   (1) A copy of an undated handwritten petition signed

by him contesting the determination in the April 4, 2007,

deficiency notices; and (2) a copy of an undated typed petition

signed by petitioners.   However, petitioners and Mr. McBride

failed to prove that they filed either document with the Court,

and therefore, the evidence is unpersuasive.

     In summary, the duplicate notices of deficiency for 2002,

2003, and 2004, the proverbial “ticket to Tax Court”, gave

petitioners an opportunity to dispute the underlying Federal

income tax liability for those years.   However, because
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petitioners received the notices of deficiency and failed to file

a petition in response to the notices, section 6330(c)(2)(B)

precluded them from contesting the validity of the underlying tax

liability during their collection hearing and likewise precludes

them from raising the underlying liability anew in this

proceeding.

     Thus for all of the foregoing reasons, with no material

facts in dispute and viewing the facts in a light most favorable

to petitioners, the parties opposing the summary judgment motion,

we hold that the Appeals office’s determination to sustain the

proposed levy was not an abuse of discretion.

     To reflect the foregoing,


                                     An appropriate order and

                                 decision will be entered for

                                 respondent.
