                         T.C. Memo. 2004-168



                     UNITED STATES TAX COURT



                 PEGGY A. FARLEY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6897-03L.                  Filed July 19, 2004.


     Peggy A. Farley, pro se.

     Brian D. Derdowski, for respondent.



                         MEMORANDUM OPINION


     PANUTHOS, Chief Special Trial Judge:      This matter is before

the Court on respondent’s motion for summary judgment, filed

pursuant to Rule 121.1   As explained in more detail below we

shall grant such motion.


     1
        Section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure.
                                 - 2 -

                              Background

     The petition in this case was timely filed in response to a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 with respect to the taxable years 1992

through 1997.   At the time the petition was filed herein,

petitioner resided in Newton, New Jersey.        While the tax returns

are not part of the record in this case, our recitation of the

background of the case is based in part upon IRS transcripts of

account.   The facts do not appear to be in dispute.

     Petitioner’s 1990 and 1991 Federal income tax returns were

filed September 20, 1993.    The returns each reflected a balance

due after withholding; the taxes shown on the returns, plus

interest and estimated tax penalty, were assessed.       The balances

due for 1990 and 1991 were ultimately paid in full by January

1999, after periodic payments and overpayment offsets from years

after 1991.

     Petitioner’s 1992 through 1996 returns were filed as

follows:

                Year        Date of Filing of Return

                1992             Oct.   10,   1994
                1993             Nov.   28,   1994
                1994             Apr.   27,   1998
                1995             July   27,   1998
                1996             July   27,   1998
                               - 3 -

While there were withheld taxes and payment credits, a balance is

due and owing with respect to each of the taxable years 1992

through 1996.

     The 1997 tax return was filed on August 3, 1998.   While

petitioner’s account was credited with some withholding tax, a

balance was reflected as due on the return.   An additional tax

was assessed on February 28, 2000, based on an agreement by

petitioner.   A balance remains due.

     On January 3, 1999, petitioner filed amended returns for the

taxable years 1990, 1991, 1992, and 1993.   Petitioner claimed a

casualty loss for 1990, which she sought to carry forward to the

taxable years 1991 through 1993.

     On November 17, 1999, respondent notified petitioner of a

proposed disallowance of the claimed casualty loss.   On December

13, 1999, respondent issued a letter to petitioner advising of

the right to an Appeals Office hearing with respect to the

disallowance.   Petitioner requested a hearing before the Appeals

Office.   By letter dated November 2, 2000, respondent’s Appeals

Office advised petitioner that the claim was disallowed on the

merits and further indicated as follows:

     If you wish to bring suit or proceedings for the
     recovery of any tax, penalties or other moneys for
     which this disallowance notice is issued, you may do so
     by filing such a suit with the United States District
     Court having jurisdiction, or with the United States
     Court of Federal Claims. The law permits you to do
     this within 2 years from the mailing date of this
     letter. However, if you signed a waiver of the notice
                                    - 4 -

     of claim disallowance (Form 2297), the period for
     bringing suit began to run on the date you filed the
     waiver.

In an attachment to the letter, respondent explained the basis

for the disallowance.    Petitioner did not file suit with the

United States District Court or the United States Court of

Federal Claims.

     On February 22, 2001, respondent sent to petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing.

The amounts listed as owing were set forth on the second page of

the letter as follows:

         TYE        Unpaid Amount           Additional
     Amount
       Dec. 31    from Prior Notices    Penalty & Interest     You Owe

       1992          $23,074.30             $31,031.44       $54,105.74
       1993           32,723.25              29,164.71        61,887.96
       1994           32,639.49               9,996.45        42,635.94
       1995           33,669.86              10,483.24        44,153.10
       1996           31,933.14              11,484.01        43,417.15
       1997           22,862.00              10,740.11        33,602.11

        Total:                                               279,802.00

Petitioner requested a hearing by letter dated March 19, 2001.

On June 14, 2002, an IRS revenue officer had a telephone

conference with petitioner’s representative concerning the

February 22, 2001, letter from the IRS.          On April 7, 2003,

respondent sent petitioner a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and or 6330 (notice of

determination), with respect to the taxable years 1992 through
                                 - 5 -

1997.    As indicated, a timely petition was filed in response

thereto.2

     The petition in this case, timely filed on May 8, 2003,3 in

response to the notice of determination raises only issues of the

underlying tax liability as claimed by petitioner in the amended

returns for 1990 through 1993.    Petitioner asserts that she is

entitled to a casualty loss for 1990.

     Respondent’s motion for summary judgment was set for

hearing, and the parties appeared and presented argument.    Also,

petitioner filed an objection to the motion.

                             Discussion

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.    See Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).    Summary judgment may be

granted with respect to all or any part of the legal issues in


     2
       During the period of the collection proceeding, petitioner
also sent to respondent a letter dated May 23, 2002, and Form
843, Claim for Refund and Request for Abatement, dated May 17,
2002, requesting abatement of interest and penalties for the
taxable years 1992 through 1999. By letter dated Nov. 6, 2002,
respondent issued a letter of final determination to petitioner
disallowing the interest abatement claim under sec. 6404(e)(1).
The letter advised petitioner of a right to file a petition with
the Tax Court. The petition filed in this case does not make any
reference to the request for interest abatement or the claim
disallowance, nor was a copy of such correspondence attached to
the petition.
     3
        The envelope in which the petition was contained reflects
that it was received by Federal Express (priority overnight) on
May 6, 2003. The timely mailing, timely filing provisions apply.
See sec. 7502(a), (f); IRS Notice 2001-62, 2001-2 C.B. 307.
                                - 6 -

controversy “if the pleadings, answers to interrogatories,

depositions, admissions, and any other acceptable materials,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that 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); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);

Naftel v. Commissioner, 85 T.C. 527, 529 (1985).   The moving

party bears the burden of proving that 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.    See

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

Commissioner, 79 T.C. 340, 344 (1982).   We are satisfied from our

review of the record that there is no genuine issue as to any

material fact.

     Section 6330 generally provides that the Commissioner cannot

proceed with collection of tax by levying upon the property of

any person until the person has been given notice and the

opportunity for an administrative review of the matter.    See Goza

v. Commissioner, 114 T.C. 176, 179 (2000).   Section 6330(d)

provides for judicial review of the administrative determination

in the Tax Court or a Federal District Court, as may be

appropriate.
                                 - 7 -

     Section 6330(c) prescribes the matters that a person may

raise at an Appeals Office hearing.       Section 6330(c)(2)(A)

provides that a person may raise collection issues such as

spousal defenses, the appropriateness of the Commissioner’s

intended collection action, and possible alternative means of

collection.   See Montgomery v. Commissioner, 122 T.C. 1, 5

(2004); Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v.

Commissioner, supra.     In addition, section 6330(c)(2)(B)

establishes the circumstances under which a person may challenge

the existence or amount of his or her underlying tax liability.

Section 6330(c)(2)(B) provides:

     (2).   Issues at hearing.--

                *    *     *    *     *      *     *

          (B) Underlying Liability.-–The person may also
     raise at the hearing challenges to the existence or
     amount of the underlying tax liability for any tax
     period if the person did not receive any statutory
     notice of deficiency for such tax liability or did not
     otherwise have an opportunity to dispute such tax
     liability.

     In Montgomery v. Commissioner, supra, we were called upon to

decide the meaning of the term “underlying tax liability”.        In

that case we held that the amount the taxpayers reported due on

their tax return along with statutory interest and penalties

constituted the underlying tax liability.        As the taxpayers in

Montgomery did not receive a notice of deficiency, we had to

further decide, whether they “did not otherwise have an
                               - 8 -

opportunity to dispute such tax liability”.   The taxpayers argued

before the IRS that they had overstated their tax liability for

the taxable year 2000 on their original return and intended to

submit an amended return.   Although the parties agreed that the

taxpayers would be permitted to submit an amended return, the IRS

Appeals Office issued the taxpayers a notice of determination

concerning collection action before the taxpayers submitted an

amended return.   The taxpayers subsequently submitted an amended

return, but the record did not reflect whether the IRS considered

it.

      We concluded in Montgomery that, as of the time of the

issuance of our opinion, the taxpayers had not had an opportunity

to dispute the underlying tax liability.   We opined that since

the taxpayers did not have an earlier opportunity to dispute the

underlying tax liability, they came within the provisions of

section 6330(c)(2)(B) and could dispute the assessed amounts

reflected on the tax return in the context of the collection

proceeding.

      In the present case, petitioner filed amended returns for

1990 through 1993 claiming a refund of taxes for those years.

Petitioner was notified by the IRS of a proposed disallowance and

was given an opportunity for a hearing in the IRS Appeals Office.

On November 2, 2000, the IRS Appeals Office issued a notice of

disallowance which explained that if petitioner disagreed with
                                - 9 -

the claim disallowance, that she had the right to file a suit for

refund in either the United States District Court or the United

States Court of Federal Claims.    The record does not reflect that

any suit was filed seeking a refund.

     Petitioner asserts in her objection that:

     9. Pursuant to receipt of respondent’s appeals action,
     petitioner hired an attorney to conduct further action,
     especially court actions. Petitioner was not kept
     informed of the attorney’s actions by the attorney and
     assumed that appropriate action was being taken.

     10. Petitioner maintains that there should have been
     an appeal before the United States District Court
     relating to her case. Petitioner believes that the
     Court’s decision related to the appeal would have been
     favorable to petitioner.

     This case is clearly distinguishable from Montgomery.     After

submitting the amended returns, petitioner was given an

opportunity to have the claim for refund considered by the IRS

Appeals Office.    Further, upon receipt of the notice of claim

disallowance dated November 2, 2000, petitioner was provided an

opportunity to dispute the underlying tax liability by filing a

suit for a refund in the United States District Court or the

United States Court of Federal Claims.    Petitioner did not file a

suit for refund.

     Based on the foregoing we are satisfied that petitioner had

an opportunity to dispute the underlying tax liability within the

meaning of section 6330(c)(2)(B), and, accordingly, we agree with

respondent that petitioner is not entitled to challenge the
                              - 10 -

underlying liability in this proceeding.    Goza v. Commissioner,

114 T.C. 176 (2000).   Furthermore, petitioner has not raised an

issue of a spousal defense, made a challenge to the

appropriateness of respondent’s intended collection action, or

offered alternative means of collection.    These issues are now

deemed conceded.   Rule 331(b)(4).   Under these circumstances, we

conclude that respondent is entitled to judgment as a matter of

law sustaining the notice of determination.

     An appropriate order and decision will be entered that

respondent may proceed with collection action as determined in

the Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 for the taxable years 1992 through 1997,

dated April 7, 2003.

                                           An appropriate order and

                                     decision will be entered.
