                     T.C. Summary Opinion 2011-100



                        UNITED STATES TAX COURT



             CHRISTOPHER PETERSON JOHNSON, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 8607-10S.           Filed August 15, 2011.



        Christopher Peterson Johnson, pro se.

        Nicholas J. Singer, for respondent.



     DEAN, Special Trial Judge:     This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.    Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case.     Unless otherwise indicated, subsequent section references

are to the Internal Revenue Code in effect for the year at issue.
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     The petition was filed in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330.   Pursuant to section 6330(d), petitioner seeks

review of respondent’s proposed levy action.    The issues for

decision are whether:    (a) Petitioner may challenge the existence

or amount of the underlying tax liability; (b) petitioner is

entitled to an abatement of interest on his tax liability; and

(c) respondent’s determination to proceed with collection action

was an abuse of discretion.

                              Background

     All of the facts have been stipulated and are so found.      The

stipulation of facts and the attached exhibits are incorporated

herein by reference.    When the petition was filed, petitioner

resided in California.

Petitioner’s Tax Liability

     On May 8, 2006, the Internal Revenue Service (IRS) assessed

trust fund recovery penalties (TFRPs) against petitioner for

taxes related to Pier Electronics, Inc. (Pier), for the quarterly

periods ending (QE) September 30 and December 31, 2004, and

March 31, 2005.   The IRS assessed TFRPs of $36,458.33 for QE

September 30, 2004, $26,750.51 for QE December 31, 2004, and

$12,681.56 for QE March 31, 2005.

     On April 1, 2008, IRS Appeals rejected petitioner’s offer-

in-compromise (OIC) based on doubt as to liability with respect
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to the TFRPs that are the subject of this action.    Almost 2 years

after the assessments, on April 21, 2008, the IRS abated the

TFRPs for the three quarterly periods.

     In November 2008 the IRS sent to petitioner Letter 1058,

Final Notice of Intent to Levy and Notice of Your Right to a

Hearing (final notice).    The final notice referenced the three

quarterly periods at issue, listing the assessed balance as zero

for the third quarter of 2004 and the first quarter of 2005 and

as $11,139.50 for the last quarter of 2004.    The final notice

also listed accrued interest for all three quarters.    In a

December 2008 letter the IRS advised petitioner that in view of

tax payments made by Pier, the TFRPs for the three quarters at

issue had been abated.    But the letter further informed

petitioner that “The payments were made after the trust fund

recovery penalties were assessed.    Therefore, you owe interest on

the penalties.”

     Petitioner timely filed a Form 12153, Request for a

Collection Due Process or Equivalent Hearing, in which he

proposed an OIC based on doubt as to liability.    During the

section 6330 hearing petitioner argued that since the underlying

trust fund taxes had been paid, he had no further liability; the

2008 abatement of the 2006 assessment of the TFRPs vitiated his

liability for interest on the TFRPs.    Petitioner proposed no

collection alternatives.    The only issue petitioner raised in his
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petition was that the IRS may not collect from him the interest

accrued on the TFRPs between the time of assessment and the time

of payment of the related tax.

                             Discussion

     Section 6330 generally provides that the Commissioner cannot

proceed with collection by way of a levy until the taxpayer has

been given notice and the opportunity for an administrative

review of the matter (in the form of an Appeals Office hearing)

and that, if dissatisfied, the person may obtain judicial review

of the administrative determination.      See Davis v. Commissioner,

115 T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179

(2000).    The taxpayer requesting the hearing may raise any

relevant issue with regard to the Commissioner’s intended

collection activities, including spousal defenses, challenges to

the appropriateness of the collection action, and offers of

collection alternatives.    Sec. 6330(c); Sego v. Commissioner, 114

T.C. 604, 609 (2000); Goza v. Commissioner, supra at 180.

     Where the validity of the tax liability is not properly part

of the appeal, the taxpayer may challenge the determination of

the Appeals officer for abuse of discretion.      Sego v.

Commissioner, supra at 609-610; Goza v. Commissioner, supra at

181-182.   The taxpayer may raise challenges “to the existence or

amount of the underlying tax liability”, however, only if he “did

not receive any statutory notice of deficiency for such tax
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liability or did not otherwise have an opportunity to dispute

such tax liability.”    Sec. 6330(c)(2)(B).

Previous Opportunity To Dispute

     An opportunity to dispute a liability includes an

opportunity for an Appeals conference either before or after the

assessment of the liability.    Sec. 301.6330-1(e)(3), Q&A-E2,

Proced. & Admin. Regs.    A person may not raise an issue at the

hearing under section 6330 if the issue was raised at any

previous administrative hearing in which the person meaningfully

participated.   Sec. 6330(c)(4)(A).

     Petitioner submitted an OIC with respect to the present

TFRPs raising the issue of doubt as to liability before his

section 6330 hearing.    Respondent rejected petitioner’s OIC.

Petitioner argues that he contested his liability for the TFRPs,

not the interest on the TFRPs.    Except, however, with reference

to deficiency procedures, under section 6601(e)(1), Interest

Treated as Tax, references to underpaid “tax” include interest on

the tax.1   Montgomery v. Commissioner, 122 T.C. 1, 8 (2004);

Fransen v. Commissioner T.C. Memo. 2007-237 n.5.

     Because petitioner had an opportunity, and took the

opportunity, to challenge his liability for the underlying tax at

the Appeals level before the assessment of the tax, he may not do



     1
      The term “tax” also includes additions to tax, additional
amounts, and penalties. Sec. 6665(a)(2).
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so again in a section 6330 hearing or in this Court.2   Lewis v.

Commissioner, 128 T.C. 48 (2007) (holding valid section 301.6330-

1(e)(3), Q&A-E2, Proced. & Admin. Regs.); see also Orian v.

Commissioner, T.C. Memo. 2010-234 (receipt of notice of section

6672 assessment is opportunity to contest underlying liability).

Abuse of Discretion

     The second issue for the Court to decide is whether

respondent abused his discretion in determining to pursue the

intended collection action.

     An abuse of discretion is a decision based on an erroneous

conclusion of law or where the record contains no evidence on

which a decision could rationally have been based.   Premium Serv.

Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir.

1975).   Because petitioner did not challenge the appropriateness

of the collection action or present viable alternatives to

collection, the Court finds that respondent’s determination to

pursue the intended collection action was not an abuse of

discretion.


     2
      Sec. 6404 does not allow for an abatement of petitioner’s
interest. The issue that petitioner wishes to raise has been
addressed and decided contrary to his position. Interest on the
sec. 6672 penalty accrues by operation of statute. Sec.
6601(e)(2). Because the statute makes the imposition of interest
mandatory, respondent must assess interest on the sec. 6672
penalty as of the last date prescribed for payment until the
penalty is paid in full. See Holland v. United States, 873 F.2d
1321, 1322 (9th Cir. 1989); Ghandour v. United States, 37 Fed.
Cl. 121, 127 (1997); see also Bradley v. United States, 936 F.2d
707 (2d Cir. 1991).
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To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.
