                        T.C. Memo. 2005-294



                      UNITED STATES TAX COURT



                  LEONARD PARKER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2712-00L.            Filed December 22, 2005.



     Robert E. Kovacevich, for petitioner.

     Catherine L. Campbell, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, 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 (notice of

determination).   After concessions by petitioner, the issue for

decision is whether there was an abuse of discretion by the

Internal Revenue Service (IRS) in determining that collection of
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petitioner’s unpaid income tax liabilities for 1986 through 1996

should proceed.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner is a member of a federally recognized Indian tribe

known as the Coeur d’Alene Indian Tribe.     He resided in Idaho at

the time that he filed his petition.     Petitioner operates a

business on property that is held in trust by the United States

for the benefit of petitioner.

     Petitioner did not file a Form 1040, U.S. Individual Income

Tax Return, for any year from 1986 through 1992.     Petitioner

filed untimely returns for 1993 through 1996; however, the tax

due was not paid at the time of the filing of any of these

returns.

     Petitioner’s unpaid taxes, penalties, and interest were duly

assessed.   Based on the unpaid balances of the assessed tax

liabilities, penalties, and interest, the IRS filed Forms 668,

Notice of Federal Tax Lien, with respect to 1986 through 1996.

The liens for the 1986 through 1991 taxes were filed in Kootenai

and Benewah Counties, Idaho, on February 20, 1997.     The liens for

the 1992 through 1995 taxes were filed in Kootenai County on
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September 15, 1997, and in Benewah County on September 12, 1997.

The lien for the 1996 taxes was filed in Benewah County on

December 12, 1998.

     On September 14, 1999, pursuant to section 6331, the IRS

mailed to petitioner a “Final Notice--Notice of Intent to Levy

and Notice of Your Right to a Hearing” for 1986 through 1996.    In

a protest letter dated October 12, 1999, petitioner requested a

hearing under section 6330 to review the proposed levy.   In a

letter dated December 1, 1999, Appeals Officer Lavada Harmon

(Harmon) informed petitioner that there was no record of an offer

in compromise’s having been submitted to the IRS, although

petitioner’s counsel had indicated that such an offer had been

made and rejected.   Harmon enclosed the necessary forms to submit

an offer in compromise and requested that petitioner complete and

return the forms to her by December 20, 1999.   A telephonic

hearing was held in December 1999 between Harmon and petitioner’s

counsel.   Petitioner never provided the forms or financial

information necessary for consideration of an offer in

compromise.

     The IRS Office of Appeals reviewed the proposed levy and

sent a notice of determination dated February 25, 2000, stating

that “Appeals should not restrict the appropriate collection

action.”   The notice of determination explained:
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     The Secretary has provided sufficient verification that
     the requirements of any applicable law or
     administrative procedure have been met.

     Your request for a Collection Due Process Hearing was
     submitted under IRC §6330, objecting to the proposed
     collection action. You proposed an alternative
     collection resolution of an offer in compromise.
     Appeals provided you opportunities to submit the
     required forms and financial information necessary to
     determine an adequate offer. You have not responded.

     Without further cooperation, it is Appeals [sic]
     determination that the proposed collection action
     should not be restricted, and balances the need for
     efficient collection of taxes with the taxpayer’s
     legitimate concern that any collection action be no
     more intrusive than necessary.

                               OPINION

     The Internal Revenue Service Restructuring and Reform Act of

1998 (RRA 1998), Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746,

granted the Court jurisdiction to review the Commissioner’s

determination as to the propriety of a filing of a notice of

Federal tax lien under section 6320 or a proposed levy upon

property under section 6330.   Congress provided in RRA 1998 that

the addition of sections 6320 and 6330 was to be effective for

“collection actions initiated” on or after January 19, 1999.      RRA

1998 sec. 3401(d), 112 Stat. 750.       Sections 301.6321-1 and

301.6331-1(a)(5), Proced. & Admin. Regs., state:

     Solely for purposes of sections 6321 and 6331, any
     interest in restricted land held in trust by the United
     States for an individual noncompetent Indian (and not
     for a tribe) shall not be deemed to be property, or a
     right to property, belonging to such Indian. * * *
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Petitioner argues that the liens filed by the IRS are invalid

because they did not specifically exempt petitioner’s property

located within the Coeur d’Alene Indian reservation.

     The Commissioner’s filing of a tax lien and the

Commissioner’s notification of an intent to levy are separate

actions.   Parker v. Commissioner, 117 T.C. 63, 65 (2001).

Because the liens in this case were filed in 1997 and 1998, prior

to the effective date of the statute, section 6320 does not

apply, and the Court does not have jurisdiction to review the

propriety of the liens.    Thus, we decline petitioner’s invitation

to invalidate the recorded liens.   However, the Court does have

jurisdiction to review the IRS Office of Appeals’ determination

to proceed with the proposed levy under section 6330.    Id.

     Section 6330 generally provides that the IRS cannot proceed

with the collection of taxes by way of a levy on a taxpayer’s

property until the taxpayer has been given notice of and the

opportunity for an administrative review of the matter (in the

form of an IRS Office of Appeals hearing).   Section 6330(c)(1)

provides that the Appeals officer shall obtain verification that

the requirements of any applicable law or administrative

procedure have been met.    Section 6330(c)(2)(A) provides that the

taxpayer may raise "any relevant issue relating to the unpaid

tax" including spousal defenses, challenges to the

appropriateness of collection actions, and alternatives to
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collection.    The taxpayer may also raise challenges to the

existence or amount of the underlying tax liability if he or she

did not receive a statutory notice of deficiency with respect to

the underlying tax liability or did not otherwise have an

opportunity to dispute that liability.    Sec. 6330(c)(2)(B).

     Section 6330(c)(3) provides that the determination of the

Appeals officer shall take into consideration the verification

under section 6330(c)(1), the issues raised by the taxpayer, and

whether the proposed 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.    If the taxpayer is dissatisfied with the

determination made after the hearing, judicial review of the

determination, such as that sought in this case, is available.

See generally Goza v. Commissioner, 114 T.C. 176, 179-181 (2000).

     Where the validity of the underlying tax liability is at

issue, the Court will review the matter de novo.     Davis v.

Commissioner, 115 T.C. 35, 39 (2000).    However, petitioner does

not contest the amount of the underlying tax liability.

Therefore, the Court will review respondent’s determination for

abuse of discretion.    Sego v. Commissioner, 114 T.C. 604, 610

(2000); Goza v. Commissioner, supra.     In order to prevail, a

taxpayer must prove that the Commissioner exercised this
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discretion arbitrarily, capriciously, or without sound basis in

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

     The notice of determination stated that the Commissioner had

verified that the requirements of any applicable law or

administrative procedure had been met, and petitioner has

presented no evidence to the contrary.

     Petitioner’s brief argues:   “Here, the IRS was requested to

clarify the exempt property at the hearing.   A simple form could

have been executed.   The IRS refused, thereby violating the due

process rights Congress sought to extend to taxpayers like

Petitioner.”   Nothing in the record supports petitioner’s claim

of a specific request during the Appeals hearing.   The testimony

at trial shows only that the Appeals Office was aware of

petitioner’s status and that the lien was not released.     In any

event, the trust property is exempt from levy.   Sec. 301.6331-

1(a)(5), Proced. & Admin. Regs.   Nothing in the regulations or

any authority requires that filed liens expressly exclude exempt

property, and we have found no reason why such an express

statement is necessary.   There is no indication that levy on the

exempt property has been or will be attempted.

     Petitioner offered no credible evidence showing that

respondent’s determination was arbitrary, capricious, or without

sound basis in law.   Based upon our review of the relevant

evidence in this case, we conclude that there was no abuse of
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discretion when respondent sustained the proposed levy to collect

petitioner’s unpaid income tax liabilities for 1986 through 1996.

     We have considered the arguments of the parties that were

not specifically addressed in this opinion.    Those arguments are

either without merit or irrelevant to our decision.

     To reflect the foregoing,


                                           Decision will be entered

                                      for respondent.
