                        T.C. Memo. 2006-43



                      UNITED STATES TAX COURT



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



     Docket No. 4053-03L.              Filed March 15, 2006.


     Leonard O. Parker, Jr. pro se.

     Hieu C. Nguyen, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   This is a case under sections 6320 and

6330.1   Petitioner failed to pay income tax liabilities for 1992,

1993, and 1994 (years at issue).   As a result, respondent filed a

Notice of Federal Tax Lien (NFTL).    The issues for decision are:


     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended. Amounts are rounded to
the nearest dollar.
                               - 2 -

(1) Whether the amount assessed in each year at issue was

correct; (2) whether petitioner’s April 7, 1994, bankruptcy

filing barred the assessment of his 1994 income tax liability;

(3) whether the assessments for the tax years at issue were

timely; (4) whether penalties under section 6651(a)(2) should be

abated; (5) whether interest on the tax liabilities for all tax

years at issue should be abated; (6) whether petitioner received

proper notice of the filing of the NFTL; and (7) whether

collection alternatives were properly considered.

                          FINDINGS OF FACT

     Petitioner resided in Torrance, California, when he filed

the petition.   Prior to becoming a California resident, he was a

resident of New Orleans, Louisiana.

     Petitioner filed tax returns in which he reported income of

$37,353 for 1992, $12,265 for 1993, and $8,123 for 1994, and

income taxes due of $4,924.32, $2,874.95, and $1,133.74, for

those respective years.   Petitioner failed to pay the income

taxes due other than a partial payment of $156 for 1994.

Respondent assessed petitioner's 1992-94 Federal income tax

liabilities on September 20, 1993, August 5, 1996, and October 9,

1995, respectively.   The assessment for each tax year was made

within 3 years from the date the return for that year was filed.

     Petitioner filed for bankruptcy on three separate occasions:

The bankruptcy proceeding filed on April 7, 1994, was dismissed
                               - 3 -

June 28, 1996; the proceeding filed on November 26, 1997, was

closed May 12, 1998; and the proceeding filed on June 30, 1998,

was closed October 27, 1998.

     In 1999, petitioner filed two Forms 656, Offer-in-

Compromise, to settle the 1992-94 tax liabilities.   The first

offer filed on February 18, 1999, was rejected on June 6, 1999,

after petitioner failed to respond to respondent’s request for

verifiable financial statements.    The second offer, filed August

10, 1999, was rejected on September 26, 2000, because petitioner

again failed to provide necessary financial information and

failed to provide an original signature on the Form 656.

     On March 21, 2001, respondent’s Automatic Collection Service

(ACS) requested an NFTL.   On March 29, 2001, an NFTL was prepared

which was filed on April 5, 2001, by respondent with the New

Orleans Parish Recorder’s Office.   Petitioner had no offer-in-

compromise in effect or pending at the time the NFTL was filed.

     On April 5, 2001, the New Orleans Taxpayer Advocate Services

Office (Taxpayer Advocate) told petitioner a 45-day “hold” would

be placed on all collection actions to allow petitioner to submit

another offer-in-compromise.

     On April 11, 2001, respondent timely sent, via certified

mail, a Notice of Federal Tax Lien Filing and Your Right to a

Hearing Under IRC 6320, to petitioner regarding his unpaid income

tax liabilities for the years at issue.   The Notice indicated on
                               - 4 -

April 5, 2001, a Federal tax lien was filed with respect to

petitioner’s unpaid income tax liabilities for the years at

issue.   The lien was recorded on April 17, 2001.

     On April 18, 2001, the Taxpayer Advocate sent a letter to

petitioner explaining why his previous offers were rejected.    The

letter also stated petitioner needed to complete another offer

containing current financial information and file it through the

Taxpayer Advocate’s Office.

     On May 13, 2001, petitioner timely filed a Form 12153,

Request for a Collection Due Process Hearing.   Petitioner’s

request contained his New Orleans address and telephone number.

In his hearing request, he alleged the notice of tax lien filing

was untimely, an offer-in-compromise was pending, and the

Taxpayer Advocate had placed a hold on collection.

     On July 13, 2001, the Taxpayer Advocate’s Office sent

another letter to petitioner expressing: “[we] have never

received [your] current Form 656 or financial statements with

verification.”   Again, petitioner failed to work with respondent

to resolve his 1992-94 tax liabilities.

     Petitioner became a permanent resident of Southern

California later in 2001.

     Respondent’s Appeals Office sent a letter dated March 19,

2002, to petitioner’s New Orleans address informing him that

Appeals had scheduled a conference with petitioner on March 27,
                                - 5 -

2002 (i.e., 8 days after the letter was sent), in respondent’s

Jackson, Mississippi, Appeals Office.   Jackson is approximately

180 miles from New Orleans.

     Appeals requested petitioner to provide any documents to be

considered during the Jackson hearing no later than 3 days after

the date Appeals sent the letter.   Further, Appeals did not

inform petitioner the proposed conference was the hearing under

section 6320(b) petitioner had requested when he submitted the

Form 12153.

     Petitioner received the Appeals’ March 19, 2002, letter on

March 25, 2002, 2 days before the date Appeals had chosen for the

conference.    The same day, petitioner faxed a response to Appeals

stating he was unable to attend or adequately prepare for the

conference in Jackson, and the Appeals deadline for sending

affidavits and documents in advance of the conference had already

passed.   Petitioner stated he would be available for the

conference via telephone.   Petitioner and Appeals held their

telephone conference on March 27, 2002.

     On February 12, 2003, respondent issued to petitioner a

Notice of Determination Concerning Collection Action(s) in which

respondent determined the filing of the tax lien for 1992-94 was

appropriate.

     Petitioner timely filed a petition with this Court.

The case was tried before this Court in Los Angeles, California.
                                - 6 -

At trial, respondent contended:    (a) Respondent was not required

to provide petitioner an opportunity for a hearing at the Appeals

Office closest to petitioner’s residence, and (b) petitioner

waived any right to a hearing because petitioner had a telephone

conference with Appeals in lieu of attending the conference in

Jackson, Mississippi.    Parker v. Commissioner, T.C. Memo. 2004-

226.

       The Court ruled respondent was required to provide

petitioner with an opportunity for a hearing at the Appeals

Office closest to his residence.    Id.   Further, the Court found

petitioner did not explicitly or implicitly waive his right to a

hearing at respondent’s Appeals Office.     Id.   The Court remanded

the case to respondent’s Office of Appeals with instructions to

offer petitioner a face-to-face conference at the Appeals Office

closest to petitioner’s residence in Southern California.      Id.

       On December 15, 2004, petitioner met with Settlement Officer

Adlai Climan (Mr. Climan) at respondent’s Los Angeles Appeals

Office.    This office was the closest Appeals Office to

petitioner’s Southern California address.

       At the hearing, petitioner asserted the amounts due were

incorrect, the assessments for tax years 1992-94 were untimely,

the NFTL was not timely filed, and the penalties and interest on

the assessed liabilities should be abated.    In addition,

petitioner asserted his April 7, 1994, bankruptcy filing barred
                               - 7 -

the assessment of his 1994 tax liability on October 9, 1995.

Collection alternatives were also discussed at length.

Petitioner indicated he wished to enter into an offer-in-

compromise or an installment agreement as a means of settling the

tax liability.

     Petitioner and Mr. Climan discussed petitioner’s current

financial circumstances.   Petitioner stated he received State

assistance of $221 monthly, and $149 monthly in food stamps.     He

further asserted he had no assets.     The parties’ discussion

focused upon the possible use of an offer-in-compromise.

     As a result of his alleged limited resources, petitioner

informed Mr. Climan he was not financially able to pay the $150

offer-in-compromise application fee.     Mr. Climan told petitioner

that if his representations concerning his financial position

were true, he would qualify for the application fee waiver.

Further, Mr. Climan assured petitioner if everything petitioner

stated regarding his current financial position was true, if

petitioner “put an offer-in-compromise for $100 on [Mr. Climan’s]

desk [he] would make it fly like a bird.”

     At the end of the hearing, Mr. Climan gave petitioner a

previously prepared letter which stated petitioner had until

January 5, 2005, to submit the Form 656 Offer-in-Compromise and
                                 - 8 -

Form 433-A.2    The letter further stated that if Mr. Climan did

not “receive such documents by January 5, 2005, [he would] make a

determination based on the information contained in the case

file.”   In addition to the letter, petitioner was provided all

the necessary forms with accompanying instructions on how to

complete an offer-in-compromise.

     Petitioner failed to submit the offer or any financial

statement.     As a result, no collection alternatives were

considered.     Mr. Climan closed the case and determined the NFTL

was appropriate and in accordance with all procedural guidelines.

     A further trial of this case was held in Los Angeles,

California, on March 23, 2005.    At trial, petitioner reiterated

the issues presented during the section 6320 hearing.    Petitioner

further asserted that the Appeals officer at that hearing had not

addressed the issues and concerns raised, but had attempted to

talk him into submitting another offer-in-compromise.    Petitioner

testified he did not submit the offer-in-compromise because he

could not afford the $150 application fee.    In addition, he

disagreed with Mr. Climan over whether the recorded lien would

remain in effect until the compromised balance of the tax

liability was completely paid.




     2
       Form 433-A, Collection Information Statement for Wage
Earners and Self Employed Individuals.
                                 - 9 -

        At the conclusion of trial, petitioner agreed to submit an

offer-in-compromise and respondent agreed to expedite the review

process.    The parties’ agreement was incorporated into an order

issued by the Court on March 23, 2005.    Petitioner failed to

mention to respondent and the Court that petitioner intended the

submission of an offer to be contingent upon respondent’s

withdrawing the NFTL when the offer was accepted.    On March 23,

2005, Mr. Climan and his manager met with petitioner.    Petitioner

was given detailed instructions as to how to complete all the

forms necessary to submit an offer-in-compromise.    During this

meeting Mr. Climan again informed petitioner that respondent

would not withdraw the NFTL until the compromised liability was

paid.    Later, respondent’s counsel reiterated respondent’s

position concerning removal of the lien.

     On April 21, 2005, petitioner informed counsel for

respondent he would not submit an offer.

                                OPINION

     Section 6321 imposes a lien in favor of the United States

upon all property and rights to property of a taxpayer who is

liable for a tax and fails to pay the tax liability after demand

for payment.    The lien generally arises at the time the

assessment is made and continues until the liability for the

assessed amount is paid or becomes unenforceable because of lapse

of time.    Sec. 6322.   Pursuant to section 6323(a), a lien is not
                               - 10 -

valid against certain third parties until the Secretary files a

notice of lien with the appropriate public office under section

6323(f).

     Section 6320 sets forth the notice and hearing procedures

which must be followed when a tax lien is filed.     Under this

provision the Secretary is required to send written notice to the

taxpayer liable for the tax not more than 5 business days after

the NFTL is filed.   Sec. 6320(a)(1) and (2).    The notice must

advise the taxpayer of his right to appeal.     Sec. 6320(a)(3).   A

taxpayer, who so requests, must be granted a hearing before an

impartial Appeals officer.   Sec. 6320(b) and (c).    The hearing is

generally conducted in accordance with the procedures described

in section 6330(c), (d), and (e).

     Section 6330(c) prescribes the matters a taxpayer may raise

at an Appeals Office hearing, such as, spousal defenses, the

appropriateness of the Commissioner’s intended collection action,

and possible alternative means of collection, including an offer-

in-compromise or installment agreement.    Sego v. Commissioner,

114 T.C. 604, 609 (2000).    The existence and amount of the

underlying tax liability can be contested at an Appeals Office

hearing if the taxpayer did not receive a notice of deficiency

for the taxes in question or did not otherwise have an

opportunity to dispute such tax liability.      Sec. 6330(c)(2)(B).
                                  - 11 -

       If the taxpayer does not agree with the Appeals officer's

written determination, the taxpayer can appeal the determination

to the Tax Court or to a United States District Court (if the Tax

Court does not have jurisdiction over the underlying tax

liability).    Sec. 6330(d)(1).

       To determine the correct standard of review, the Court must

first decide whether petitioner's underlying tax liability is

properly at issue.    Sego v. Commissioner, supra at 610; Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).    The term “underlying

tax liability” under section 6330(c)(2)(B) includes amounts self-

assessed under section 6201(a), together with penalties and

interest.    Sec. 6201(a)(1); Montgomery v. Commissioner, 122 T.C.

1, 9 (2004); sec. 301.6203-1, Proced. & Admin. Regs..

       The amount of the underlying tax liability may be placed at

issue if the taxpayer did not receive a statutory notice of

deficiency or otherwise have an opportunity to dispute the tax

liability.    Sec. 6330(c)(2)(B); see Behling v. Commissioner, 118

T.C. 572, 576-577 (2002).    In this case, petitioner was not

issued a notice of deficiency and did not have a prior

opportunity to dispute the tax liability.    Therefore, the proper

standard of review for the arguments challenging the underlying

tax liability is de novo.    Sego v. Commissioner, supra at 609-

610.
                                  - 12 -

     Petitioner makes several arguments:      (1) The amounts

assessed for tax years 1992-94 were incorrect; (2) petitioner’s

April 7, 1994, bankruptcy filing barred the assessment of his

1994 tax liability; (3) the assessments for tax years 1992-94

were untimely; (4) penalties under section 6651(a)(2) should be

abated; (5) interest on the tax liabilities for all tax years at

issue should be abated; (6) petitioner did not receive proper

notice of the filing of the NFTL; and (7) collection alternatives

were not properly considered.

     The facts in this case do not support petitioner’s

arguments.       Petitioner asserts the assessed amounts of taxes are

incorrect for all tax years at issue.      However, the taxes so

assessed were reported by petitioner on his own Federal income

tax returns.      The assessed taxes were properly entered on the

NFTL.       The Court finds no evidence or reason to believe that any

of the amounts are incorrect.

     Petitioner asserts his April 7, 1994, bankruptcy barred the

assessment of his 1994 tax liability.      A bankruptcy petition

operates as an automatic stay of certain acts to collect, assess,

or recover any claim against the debtor that arose before the

commencement of the case in bankruptcy.3      11 U.S.C. sec. 362(a)(6)


        3
       Effective for bankruptcy proceedings commenced after Oct.
22, 1994, the Bankruptcy Code was amended to allow for an
assessment of any tax during a bankruptcy stay. 11 U.S.C. sec.
362(b)(9)(D) (2000).
                              - 13 -

(1994).   Personal income taxes are due on the date the return is

required to be filed.   Sec. 6151(a); Holywell Corp. v. Smith, 503

U.S. 47, 58 (1992); Pan Am. Van Lines v. United States, 607 F.2d

1299, 1301 (9th Cir. 1979).   Because the liability for the 1994

income tax arose after the commencement of the case in

bankruptcy, the assessment of that tax was not subject to the

bankruptcy stay.   The Court finds the bankruptcy stay did not bar

the assessment of petitioner’s 1994 income tax liability.

     Petitioner asserts the assessments for the years at issue

were untimely.   Section 6501(a) generally provides that an

assessment of income tax liability is to be made within 3 years

after the tax return was filed.   The Court finds petitioner’s

income tax for each of the years at issue was assessed within 3

years of the date the tax return for that year was filed.

     Petitioner asserts penalties should be abated because they

accumulated due to respondent’s delays and payment will cause an

undue hardship because of his limited financial resources.

Section 6651(a)(2) imposes an addition to the tax for failure to

pay the amount shown as tax on the return by the prescribed date.

To avoid the addition to tax, petitioner must make an affirmative

showing the failure to pay was due to reasonable cause.   Sec.

301.6651-1(c), Proced. & Admin. Regs.   A showing of reasonable

cause requires the taxpayer to demonstrate he exercised ordinary

business care and prudence in providing for the payment of his
                                - 14 -

tax liability and nevertheless was unable to pay the tax or would

have suffered undue hardship if he had paid it on the due date.

Id.

       On several occasions petitioner asserted he has very

limited financial resources, but he has failed to provide

financial evidence every time he has been asked to substantiate

these statements.   Petitioner is unable to show his failure to

pay was due to reasonable cause.    The Court concludes petitioner

is liable for the addition to tax under section 6651(a)(2) for

failure to make timely payment of income tax for the years at

issue.

      Petitioner asserts the payment of interest should be abated

because it accumulated to his detriment due to respondent’s

delays and payment will cause an undue hardship because of his

limited financial resources.

      We apply an abuse of discretion standard when reviewing the

Commissioner's failure to abate interest.    Krugman v.

Commissioner, 112 T.C. 230, 239 (1999).    Section 6404(e) permits

the Commissioner to abate interest with respect to an error or

delay in payment of tax resulting from an employee of the

Internal Revenue Service’s being erroneous or dilatory in

performing a ministerial act.    There is no provision under

section 6404 or the regulations promulgated thereunder that

allows for the abatement of interest due to financial hardship.
                               - 15 -

     Petitioner has not alleged, and the record contains no

evidence, that respondent committed any erroneous or dilatory

acts requiring abatement of interest.     Thus, the Court concludes

respondent's decision not to abate interest is not an abuse of

discretion.

     Petitioner asserts he did not receive proper notice of the

filing of the NFTL with respect to his unpaid income tax

liabilities for the years at issue.     Under section 6320 the

Secretary shall furnish the person described in section 6321 with

written notice of the filing of a notice of lien under section

6323.   The notice may be sent by certified mail to the person’s

last known address not more than 5 business days after the day of

filing the Federal tax lien.   Sec. 6320(a)(2).    Petitioner was

duly sent notice within 5 business days of the filing of the

Federal tax lien.   Thus, the Court concludes respondent did not

abuse his discretion in determining petitioner received proper

notice of the filing of the NFTL.

     Finally, respondent did not abuse his discretion in

determining further consideration of collection alternatives was

futile.   Petitioner repeatedly failed to cooperate and respond to

respondent’s requests for financial information or to submit a

processable offer-in-compromise.

     Accordingly, the Court holds that respondent’s determination

upholding the Federal tax lien was not an abuse of his
                              - 16 -

discretion.   The Court further holds respondent may proceed with

collection of tax years 1992, 1993, and 1994.

     The Court, in reaching its holding herein, has considered

all arguments made and concludes that any arguments not mentioned

above are moot, irrelevant, or without merit.

     To reflect the foregoing,


                                       Decision will be entered for

                                 respondent.
