                        T.C. Memo. 2004-159



                      UNITED STATES TAX COURT



               CHARLES EDWIN LYKES, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13402-02L.            Filed July 12, 2004.


     Charles Edwin Lykes, pro se.

     Michael A. Pesavento, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     JACOBS, Judge:   Pursuant to section 6330(d),1 petitioner

seeks our review of a determination by respondent’s Appeals

officer that filing of a notice of Federal tax lien with respect

to the collection of petitioner’s unpaid income tax liability

(including additions to tax and interest) for 1996-99 was


     1
      All section references are to the Internal Revenue Code.
                               - 2 -

appropriate.   In his petition, petitioner requests us to

determine whether respondent improperly refused to abate

assessments for additions to tax under section 6651(a)(1) and (2)

and section 6654, and interest on those additions to tax,2

arising from delinquent income tax returns filed by petitioner

for 1996-99.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits submitted therewith are

incorporated herein by this reference.

     At the time the petition in this case was filed, petitioner

resided in Clearwater, Florida.

     Petitioner graduated from Stetson University in Deland,

Florida, where he received a bachelor of science degree in

physics.   After graduating from college, petitioner served in the

military, and, after a 3-year tour of duty with the Signal Corps,

he attended and graduated from law school.   Petitioner returned

to the military and practiced criminal law in the U.S. Army at

Fort Ord, California.   He later worked as an attorney for the

Department of Energy, where he practiced patent law.

     In 1985, petitioner moved to Clearwater, Florida, where he

has been practicing law as a sole practitioner.   The bulk of his


     2
      Petitioner has conceded that he is liable for interest on
additions to tax under secs. 6651(a)(1) and (2) and 6654 if such
additions are not abated.
                               - 3 -

private law practice has consisted of criminal work.    Petitioner

failed to pay employment taxes pertaining to his law practice,

and the Internal Revenue Service (IRS) assessed those taxes.

     Petitioner filed delinquent income tax returns for 1996-99

after he was contacted by a representative of the IRS.

Petitioner and his former wife filed joint returns for 1996-98.

Petitioner filed his return for 1999 as single.    He failed to

remit all the taxes shown as due on the returns.    The IRS

assessed additions to tax for late filing under section

6651(a)(1), late payment under section 6651(a)(2), and failure to

pay estimated tax under section 6654.   The returns were filed and

assessments for taxes, interest, and additions to tax were made

on the following dates:

            Year   Date Return Filed    Assessment Date

            1996           5/7/01           9/17/01
            1997           5/7/01           9/24/01
            1998           5/7/01           9/10/01
            1999          4/16/01          11/19/01

     Petitioner and the IRS entered into an installment agreement

in connection with the collection of petitioner’s tax liability.

This agreement covered both petitioner’s income and employment

tax liabilities, as well as additions to tax and interest.

Petitioner defaulted on his agreement after making two monthly

payments.
                                 - 4 -

     On December 7, 2001, the IRS filed a notice of Federal tax

lien for income taxes (including additions to tax and interest)

owed by petitioner for 1996-99.    On December 11, 2001, the IRS

sent petitioner a Form 3172, Notice of Federal Tax Lien Filing

and Your Right to a Hearing Under IRC 6320, and a Form 12153,

Request for a Collection Due Process Hearing.    On January 7,

2002, petitioner submitted a completed Form 12153 to the IRS.

     Petitioner’s case was assigned to Appeals Officer James H.

Reagan.   On April 2, 2002, Appeals Officer Reagan sent petitioner

a letter in which a face-to-face hearing, as authorized by

section 6320, was scheduled.   Per that letter, the topics to be

discussed at the hearing included the additions to tax at issue,

as well as the reinstatement of the installment agreement.    The

hearing was held as scheduled.

     On June 20, 2002, Appeals Officer Reagan sent petitioner a

letter in which Appeals Officer Reagan recommended that

petitioner consider making a partial payment and pay the balance

due the IRS in installments.   The letter stated that if

petitioner wanted to enter into an installment agreement, then,

by July 8, 2002, petitioner would have to complete a Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals, (which was enclosed with Appeals Officer

Reagan’s letter) and provide Appeals Officer Reagan with copies

of petitioner’s personal and business bank statements and check
                                 - 5 -

registers for March-May 2002.    Petitioner did not complete the

Form 433-A or submit copies of his bank statements to the IRS by

July 8, 2002.     On July 18, 2002, the IRS sent petitioner a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330.    That notice stated that the filing of the

notice of tax lien was “appropriate and reasonable under the

circumstances” and thus would not be withdrawn.    The notice

further stated that the IRS would not abate the interest or

additions to tax.    The reason given for denying petitioner’s

request for the abatement of interest was:

     The interest cannot be abated since the interest is
     assessed on underpayments in tax, and the abatement
     provisions or I.R.C. Section 6404(e) only pertains to
     the assessment of interest on a deficiency attributable
     in whole or in part to any unreasonable error [or]
     delay by an officer or employee of the Internal Revenue
     Service (acting in his official capacity) in performing
     a ministerial or managerial act.

     The reason given for denying petitioner’s request for the

abatement of additions to tax was:

     The delinquency penalty and failure to pay penalty will
     not be abated since you have failed to show that your
     failure to timely file and pay the tax due was due to
     reasonable cause and not willful neglect. The
     estimated tax penalty will not be abated since you have
     failed to show that you qualify for a statutory waiver
     provided by I.R.C. 6654(e).

     On August 20, 2002, petitioner filed a petition with this

Court under section 6330(d) disputing respondent’s

determinations.    See sec. 6320(c).
                               - 6 -

                              OPINION

     Section 6321 imposes a lien in favor of the United States

upon all property and rights to property belonging to a person

liable for unpaid taxes after demand for payment has been made.

Within 5 business days after the day of filing the notice of

lien, the Secretary must notify the taxpayer, in writing, that a

tax lien was filed and inform the taxpayer of his/her right to a

hearing before an impartial Appeals officer.   Sec. 6320.

Pursuant to section 6320(c), the hearing is to be conducted

consistent with procedures set forth in subsections (c), (d)

(other than paragraph (2)(B) thereof), and (e) of section 6330.

If the Commissioner issues a determination letter adverse to the

position of the taxpayer, the taxpayer may seek judicial review

of that determination.   Sec. 6330(d).

     Preliminarily we deal with a jurisdictional issue.

Petitioner maintains that we should consider his income and

employment tax liabilities together because the assigned IRS

revenue officer pursued the collection of petitioner’s income tax

liabilities in conjunction with his employment tax liabilities.

Respondent, on the other hand, objects to petitioner’s raising of

respondent’s collection activities of petitioner’s employment tax

liability.   Respondent maintains that the lien in question

pertains only to petitioner’s unpaid income taxes for 1996-99,

not petitioner’s unpaid employment taxes.   In this regard,
                               - 7 -

respondent asserts that the filing of the lien is the event that

triggered petitioner’s right to a section 6330 hearing and

subsequently to our review of respondent’s determination to

continue collection activities, as well as the denial of

petitioner’s request for the abatement of interest and additions

to tax.   We agree with this assertion.

     We now turn to whether respondent’s denial of petitioner’s

request for the abatement of additions to tax was an abuse of

discretion.   Both parties acknowledge that this Court has

jurisdiction in this section 6330(d) proceeding to consider

whether respondents’s refusal to abate the additions to tax

relating to petitioner’s income tax liabilities was an abuse of

discretion.   See Montgomery v. Commissioner, 122 T.C. 1 (2004);

Downing v. Commissioner, 118 T.C. 22 (2002).

     The income tax assessments for the years in question include

assessments for additions to tax under section 6651(a)(1) and (2)

for 1996-99 and under section 6654 for 1996-97.    Petitioner did

not have an opportunity to dispute these additions; hence, he can

challenge them during the section 6330 hearing proceeding.    Sec.

6330(c)(2)(B).   We review de novo respondent’s determination with

respect to these additions to tax.     See Goza v. Commissioner, 114

T.C. 176, 181-182 (2000).

     Section 6651(a)(1) imposes an addition to tax for failure to

timely file a return, and section 6651(a)(2) imposes an addition
                                - 8 -

to tax for failure to timely pay the amount shown as tax on the

return.    These additions to tax are applicable unless the

taxpayer establishes that his/her failure to timely file or

timely pay is due to reasonable cause and not due to willful

neglect.

      A delay in filing a return is due to a reasonable cause “If

the taxpayer exercised ordinary business care and prudence and

was nevertheless unable to file the return within the prescribed

time”.    Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.   Petitioner

may demonstrate reasonable cause for his failure to pay taxes by

showing he exercised ordinary business care and prudence in

providing for payment of his tax liability and was nevertheless

either unable to pay the tax or would suffer an undue hardship

(as described in section 1.6161-1(b), Income Tax Regs.) if he

paid on the due date.    Sec. 301.6651-1(c), Proced. & Admin. Regs.

Section 1.6161-1(b), Income Tax Regs., defines "undue hardship"

as:

      more than an inconvenience to the taxpayer. It must
      appear that substantial financial loss, for example,
      loss due to the sale of property at a sacrifice price,
      will result to the taxpayer from making payment on the
      due date of the amount with respect to which the
      extension is desired. If a market exists, the sale of
      property at the current market price is not ordinarily
      considered as resulting in an undue hardship.

      In order to avoid the section 6651(a)(1) addition to tax,

petitioner must show both reasonable cause and a lack of willful

neglect.    Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241
                               - 9 -

(1985).   Petitioner’s failure to file is due to reasonable cause

if he exercised ordinary business care and prudence and was,

nevertheless, unable to file his return within the time

prescribed by law.   Sec. 301.6651-1(c)(1), Proced. & Admin. Regs.

     The reasons offered by petitioner for his failure to timely

file his returns and pay his income taxes are (1) his marital

troubles, which concluded in divorce, and (2) his financial

setbacks caused by his ex-wife’s spending habits and his

deployment to Saudi Arabia during Operation Desert Shield/Storm,

as a reservist, from November, 28, 1990, until June 29, 1991.

     In defense of respondent’s refusal to abate the late-filing

and late-payment additions to tax, respondent states in his

posttrial brief filed with the Court the following:

          With respect to his marital troubles, petitioner
     failed to establish how the illness of his wife, and
     his eventual divorce from her, prevented him from
     timely filing and paying his taxes over a four year
     period, i.e., from April 1997 through May of 2001.
     Petitioner did not allege, for example, that during
     this four year stretch he was unable to function due to
     an emotional or physical disability connected to his
     troubled marriage. The evidence is to the contrary.
     During this time, petitioner was fully able to carry
     out the duties of an attorney representing clients in
     criminal matters, as well as manage his sole practice
     on a day to day basis. Moreover, petitioner was not
     hospitalized or otherwise incapacitated during this
     period.

          In this regard it is important to note that it is
     only after the revenue officer assigned to the case
     contacted petitioner, requested his delinquent income
     tax returns, and commenced collection activities, that
     petitioner came forward and filed his returns during
     2001. This evidence tends to negate that petitioner’s
                                 - 10 -

     delinquency was due to disability or other reasonable
     cause.

               *       *     *    *    *     *    *

          Petitioner’s argument that his service during
     Desert Storm during 1990 and 1991 somehow affected his
     ability to comply with internal revenue laws almost six
     years later is implausible, and not supported by any
     evidence in the record. Petitioner abandoned that
     argument upon questioning by the court.

     Respondent’s position in this regard is well taken.       The

Court further notes that petitioner did not provide Appeals

Officer Reagan or this Court with any financial records that

might have supported petitioner’s claim of undue hardship.        We

may infer that petitioner had no records that would have

supported his claim.

     We have carefully considered the reasons offered by

petitioner for his failure to timely file his 1996-99 tax returns

and timely pay the amounts shown on the returns for such years

when filed belatedly.      Neither reason offered by petitioner

constitutes “reasonable cause”.

     As to the section 6654 addition to tax for failure to pay

estimated taxes for 1996 and 1997, none of the statutory

exceptions apply.   See sec. 6654(e).      Consequently, the

imposition of this addition to tax is mandatory.

     In sum, we conclude that respondent’s denial of petitioner’s

request for abatement of the additions to tax under section

6651(a)(1) and (2) and section 6654 was not an abuse of
                              - 11 -

discretion.   We further conclude that respondent (through Appeals

Officer Reagan) did not abuse his discretion in determining that

the notice of Federal tax lien was appropriate and reasonable

under the circumstances involved herein and thus should not be

withdrawn.

     Accordingly,


                                         Decision will be entered

                                    for respondent.
