                        T.C. Memo. 2006-143



                      UNITED STATES TAX COURT



                  KENT E. HOVIND, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11894-05L.            Filed July 6, 2006.


     Peter Gibbons, for petitioner.

     Karen Nicholson Sommers, for respondent.



                       MEMORANDUM OPINION

     SWIFT, Judge:   This matter is before us under Rule 121 on

the parties’ cross-motions for summary judgment.   The underlying

issue in this so-called collection “due process” case involves

the appropriateness of respondent’s proposed levy action against

petitioner’s property arising from jeopardy assessments

respondent made against petitioner.
                                 -2-

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     For purposes of the instant cross-motions for summary

judgment, and the respective objections thereto, the record

consists primarily of documents set forth in respondent’s

administrative file, the pleadings filed herein, and the parties’

cross-motions for summary judgment and attachments thereto.


                             Background

     Respondent seeks to levy on petitioner’s property in

connection with assessed and outstanding 1995, 1996, and 1997

Federal income taxes and additions to tax and interest in the

cumulative total amount of $520,099.

     Petitioner apparently has a college degree from the

Midwestern Baptist College located in Pontiac, Michigan, with a

major in religious education.   Petitioner has established a

purported religious ministry under the name of Creation Science

Evangelism, based in Pensacola, Florida.

     Allegedly as part of his ministry, petitioner produces and

sells books and recordings and travels extensively throughout the

United States and occasionally in other countries giving

speeches.    Petitioner also hosts a daily radio talk show and has

established Dinosaur Adventure Land, which is described as a
                               -3-

theme park, science center, and museum located in Pensacola,

Florida.

     The organizational structure petitioner established for the

above activities, including petitioner’s purported religious

ministry and theme park, apparently was based on various

questionable trust documents purchased from Glenn Stoll, a known

promoter of tax avoidance schemes.1

     Among other things, the trust documents petitioner utilized

provide as follows:


     [a] gathering of two or more believers, in agreement
     with your calling, forms a lawfully established
     unincorporated association of pure trust. Upon a grant
     of value, the trust must assign beneficial interest &
     appoint a trustee. This trust agreement, when reduced
     to writing, becomes written evidence of a Ministerial
     Trust under which you may manage your personal ministry
     for the church.


     Petitioner has not filed individual Federal income tax

returns for 1995, 1996, and 1997.

     During an audit and a criminal tax investigation that began

in the early spring of 2004, respondent concluded (1) that

petitioner appeared to be using the referred-to trust documents

as well as various nominees and sham entities for the purpose of

concealing ownership and control of his activities and



     1
        Aspects of Glenn Stoll’s tax avoidance schemes are
described in United States v. Stoll, 96 AFTR 2d 2005-5044, 2005-2
USTC par. 50,459 (W.D. Wash. 2005), and United States v. Stoll,
96 AFTR 2d 2005-5052, 2005-2 UTSC par. 50,460 (W.D. Wash. 2005).
                                 -4-

properties, and (2) that substantial revenue from the various

activities with which petitioner was involved appeared to

constitute income to petitioner personally.

       Respondent also concluded that petitioner appeared to be

planning to transfer property into the name of a nominee entity

(a so-called “corporation sole”) and that this planned transfer,

among other things, indicated a “willful and deliberate attempt

[by petitioner] to conceal the receipt of taxable income and to

evade federal income taxes.”2

       Based on respondent’s conclusion, on June 1, 2004,

respondent made jeopardy assessments under section 6861 against

petitioner of income tax, of additions to tax under section

6651(f) for civil fraud and under section 6654 for underpayment

of estimated tax, and of interest, relating to 1995, 1996, and

1997, as follows:


                              Additions to Tax
Year           Tax        Sec. 6651(f) Sec. 6654      Interest

1995         $44,898        $33,674      $2,434        $66,985
1996          39,747         29,810       2,116         48,268
1997          98,941         74,206       5,293         94,585


       On June 3, 2004, respondent’s agent hand delivered to

petitioner at petitioner’s then current residence (viz,

29 Cummings Road, Pensacola, Florida 32503) a notice of the above



       2
        The use by tax protesters of abusive “corporations sole”
is well documented. See, e.g., United States v. Harkins, 355 F.
Supp. 2d 1175 (D. Or. 2004); Rev. Rul. 2004-27, 2004-1 C.B. 625.
                                -5-

jeopardy assessments and of petitioner’s right of appeal under

section 7429.   Upon being handed the notice, petitioner refused

to accept it, whereupon respondent’s agent left the notice of the

jeopardy assessments on petitioner’s doorstep.   A copy of

respondent’s notice of jeopardy assessments was also delivered by

respondent to petitioner via certified mail to the same address.

     Also on June 3, 2004, based on the jeopardy assessments and

a search warrant, respondent seized $42,817 in cash from

petitioner’s office, and respondent applied the $42,817 to

petitioner’s Federal income tax for 1995, as assessed on June 1,

2004.

     Petitioner requested neither administrative nor judicial

review of respondent’s jeopardy assessments.

     On June 4, 2004, respondent mailed to petitioner at the

above address of petitioner a notice of Federal tax lien filing

and right to a hearing under section 6320 (Lien Notice), which

lien related to the above jeopardy assessments and which notice

explained petitioner’s right to a section 6320 hearing with

regard to the filed Federal tax lien.

     Petitioner did not request a hearing with regard to the

above Lien Notice.

     On July 29, 2004, respondent mailed to petitioner at

petitioner’s address a notice of deficiency with respect to
                                  -6-

petitioner’s Federal income taxes for 1995, 1996, and 1997, in

amounts identical to the above jeopardy assessments.

     Respondent’s Postal Service Form 3877 certified mailing list

indicates that respondent’s notice of deficiency was delivered by

respondent to the U.S. Postal Service for mailing to petitioner.

     A U.S. Postal Service track & confirm record indicates that

the above notice of deficiency was delivered to petitioner via

certified mail on August 2, 2004.

     Petitioner did not file a petition with this Court with

respect to respondent’s notice of deficiency.

     On August 13, 2004, petitioner mailed back to respondent an

envelope containing respondent’s June 4, 2004, notice to

petitioner of the tax lien filing with the words stamped on the

first page “REFUSED FOR FRAUD”.    Also included in petitioner’s

envelope mailed to respondent was a letter making various bizarre

arguments, some of which constitute tax protester arguments

involving excise taxes and the alleged “100% voluntary” nature of

the income tax.

     On February 25, 2005, respondent mailed to petitioner a

final notice of intent to levy and notice of right to a hearing

(Levy Notice) with regard to the balances petitioner owed on the

above assessments for 1995, 1996, and 1997 and explaining

petitioner’s right to a section 6330 hearing with regard to the

proposed levy.    Petitioner received this notice, and on March 8,
                                -7-

2005, petitioner requested of respondent in writing a hearing

with regard thereto.

     A telephone hearing with an Appeals officer located in

Birmingham, Alabama, was scheduled for April 20, 2005, but was

later rescheduled for May 17, 2005.   On May 4, 2005, petitioner

requested that the hearing be rescheduled and be relocated to

respondent’s Riverside, California, office, near petitioner’s

attorney’s law office.   This request was denied by respondent.

     Petitioner did not participate in the May 17, 2005,

telephone hearing, but petitioner did submit to respondent’s

Appeals Office written correspondence in which petitioner made a

number of arguments relating to the amount of petitioner’s

underlying Federal income taxes.

     In connection with the hearing, respondent’s Appeals officer

reviewed a transcript of account Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, relating to

petitioner’s Federal income taxes for the years in issue,

verified that respondent’s assessments were made against

petitioner for the years 1995, 1996, and 1997, and concluded that

respondent’s proposed levy action was appropriate and not

unnecessarily intrusive.

     On May 25, 2005, respondent’s Appeals Office issued to

petitioner a notice of determination under section 6330

sustaining respondent’s proposed levy action.
                                  -8-

     Petitioner timely filed a petition for review of

respondent’s determination.


                              Discussion

     Summary judgment is proper “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.”   Beery v.

Commissioner, 122 T.C. 184, 187 (2004).

     A party opposing a motion for summary judgment “may not rest

upon the mere allegations or denials of such party's pleading,”

but the objecting party's response “must set forth specific facts

showing that there is a genuine issue for trial.”   Rule 121(d);

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

     The burden of establishing the nonexistence of a genuine

issue of fact is on the party moving for summary judgment.

Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

     Section 6331(a) provides generally that if a taxpayer liable

to pay any tax neglects or refuses to pay the same within 10 days

after notice and demand it shall be lawful for respondent to

collect such tax by levy upon all property and rights to property

belonging to the taxpayer.

     Section 6331(d)(1) requires that respondent give written

notice to a taxpayer prior to making a levy on the taxpayer’s
                                 -9-

property.    Also, under section 6330(a)(1) respondent must notify

a taxpayer in writing of the right to a hearing before the levy

is made.3

     In such a hearing, respondent is required to verify whether

the requirements of all applicable laws and administrative

procedures have been met and to consider other issues raised by a

taxpayer including appropriate spousal defenses, collection

alternatives, and challenges to the appropriateness of the

collection actions.   Sec. 6330(c).

     Under section 6330(c)(3), respondent also is required to

consider whether any collection action balances the need for

efficient collection of taxes with the taxpayer's legitimate

concern that any collection action be no more intrusive than

necessary.

     Under section 6330(c)(2)(B), if a taxpayer received a notice

of deficiency for a year in question and does not file a petition

for redetermination of the deficiency with the Tax Court, in a

collection hearing a taxpayer may not contest the existence or

amount of his or her underlying tax liabilities.    Nestor v.

Commissioner, 118 T.C. 162, 165-166 (2002).    Rather, to contest

the underlying tax liabilities in such a situation, the taxpayer


     3
        Even though respondent’s assessment herein was made as a
jeopardy assessment under section 6861, apparently respondent’s
proposed levy was not made as a jeopardy levy. See last sentence
of sec. 6331(a).
                                -10-

would be required to pay the taxes assessed by respondent and to

pursue a refund claim and a refund suit in Federal District

Court.   Secs. 6511, 7422.

     Also, if a taxpayer receives a notice of tax lien filing

under section 6320 and does not request a hearing with regard

thereto, the taxpayer may not in a subsequent hearing under

section 6330 relating to a proposed levy contest the underlying

tax liabilities.   Sec. 301.6330-1(e)(3), Q&A-E7, Proced. & Admin.

Regs.

     If respondent properly mails a notice of deficiency to a

taxpayer, a presumption arises that the notice was delivered to

the taxpayer in the normal course of the mail.    Zenco Engg. Corp.

v. Commissioner, 75 T.C. 318, 323 (1980), affd. without published

opinion 673 F.2d 1332 (7th Cir. 1981).

     The act of mailing may be proven by evidence of respondent's

mailing practices corroborated by direct testimony or documentary

evidence of mailing.    Fed. R. Evid. 406; Magazine v.

Commissioner, 89 T.C. 321, 326 (1987); Cataldo v. Commissioner,

60 T.C. 522, 524 (1973), affd. per curiam 499 F.2d 550 (2d Cir.

1974); August v. Commissioner, 54 T.C. 1535, 1536-1537 (1970).

     Respondent bears the burden of proving proper mailing of a

notice of deficiency.    Coleman v. Commissioner, 94 T.C. 82, 90

(1990); Cataldo v. Commissioner, supra; August v. Commissioner,

supra.
                                 -11-

     A U.S. Postal Service Form 3877 certified mailing list

reflecting delivery of a document by respondent to the Postal

Service represents direct evidence of the date and fact of

mailing.     Magazine v. Commissioner, supra.

     Generally, courts have held that a Form 4340 transcript of

account provides at least presumptive evidence that a tax has

been validly assessed under section 6203, unless irregularities

are evident that raise a question as to the accuracy of the

Form 4340.    Davis v. Commissioner, 115 T.C. 35, 41 (2000).

     Where the validity of the underlying tax liability is not

properly at issue, a court under section 6330 will review the

administrative determination of the Appeals officer only for an

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

(2000).

     Petitioner argues that respondent’s proposed levy action is

inappropriate because his correct tax liability for each of 1995,

1996, and 1997 is zero.    Petitioner argues that he received

neither respondent’s notice of jeopardy assessments nor the

notice of deficiency relating to his 1995, 1996, and 1997 Federal

income taxes, and petitioner therefore argues that he has not had

an opportunity to challenge the existence and amount of the

underlying tax deficiencies determined by respondent.    Petitioner

seeks to do so in this proceeding.
                                 -12-

     Respondent argues that petitioner received both respondent’s

Lien Notice and respondent’s notice of deficiency and that

petitioner could have filed an appeal or a Tax Court petition

with regard to either of those documents, and therefore that

petitioner may not now, in the instant proceeding involving

respondent’s levy notice, dispute the existence or amount of his

1995, 1996, and 1997 Federal income tax liabilities.

Sec. 6330(c)(2)(B).

     We agree with respondent.    The evidence adequately

establishes that petitioner received the July 29, 2004, notice of

deficiency.

     The Postal Service receipt of delivery and the Form 3877

constitute strong evidence in support of the mailing by

respondent and the receipt by petitioner of the notice of

deficiency.

     Petitioner actually had two opportunities (upon receipt of

the Lien Notice -- which receipt petitioner does not dispute --

and upon receipt of the notice of deficiency) to challenge the

existence and amount of his 1995, 1996, and 1997 Federal income

tax liabilities.   Under section 6330(c)(2)(B) petitioner may not

now, in this proceeding involving respondent’s proposed levy

action, dispute the amounts of his underlying Federal income

taxes and additions to tax for 1995, 1996, and 1997.
                                -13-

     Petitioner argues that because the notice of deficiency was

not sent with a return receipt requested respondent’s mailing

thereof was inadequate.   Section 6212(a), however, does not

require mailing of notices of deficiency with a return receipt

requested.   Eisenberg v. Commissioner, T.C. Memo. 1983-767, affd.

without published opinion 753 F.2d 1078 (7th Cir. 1985).

     Petitioner cites Brafman v. United States, 384 F.2d 863, 865

(5th Cir. 1967), and petitioner argues that because respondent’s

transcript of account was not signed by a proper official the tax

assessments against petitioner are invalid and the proposed levy

action is not appropriate.   We disagree.    Forms 4340 are not

required to be signed.    Nestor v. Commissioner, 118 T.C. 162

(2002); Nicklaus v. Commissioner, 117 T.C. 117, 121 (2001);

sec. 301.6203-1, Proced. & Admin. Regs.     The Forms 4340

reflecting petitioner's income tax liabilities for the years in

issue indicate that those tax liabilities were assessed and

remain largely unpaid.

     Petitioner has not demonstrated any credible irregularity in

the assessment procedures that would raise a question about the

validity of the assessments.

     Respondent’s Appeals officer verified that the assessments

of tax were proper and obtained verification that the

requirements of applicable laws and administrative procedures

were met.
                                -14-

     Petitioner did not raise spousal defenses, nor did he offer

collection alternatives.    We are satisfied that respondent’s

proposed collection action balances the need for the efficient

collection of taxes with the concern that the collection action

be no more intrusive than necessary.

     Petitioner makes various other arguments which we have

considered and which we conclude are without merit and are

rejected.

     For the reasons stated, petitioner’s motion for summary

judgment will be denied, and respondent's motion for summary

judgment will be granted.

                                            An appropriate order and

                                       decision will be entered.
