                  T.C. Summary Opinion 2010-137



                     UNITED STATES TAX COURT



                DONALD JOSEPH BYK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9964-09S.             Filed September 16, 2010.



     Donald Joseph Byk, pro se.

     Robert Saal, for respondent.



     PANUTHOS, Chief 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.1   Pursuant to

section 7463(b), the decision to be entered is not reviewable by



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended. All Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 2 -

any other court, and this opinion shall not be treated as

precedent for any other case.

     This case is before the Court on petitioner’s request for

judicial review of respondent’s determination sustaining a notice

of Federal tax lien (NFTL) filing to collect employment taxes for

the tax period ending June 30, 2000.

                            Background

     Some of the facts have been stipulated, and we incorporate

the stipulation and the accompanying exhibits by this reference.

Petitioner resided in New Jersey when his petition was filed.

     Petitioner operated a dental practice beginning in 1972.

His practice was separated into general dentistry and

orthodontics.   Petitioner operated the general dentistry practice

as a business reported on Schedule C, Profit or Loss From

Business.   He operated the orthodontics practice as a

corporation.

     Sometime in 2007 petitioner received a letter from

respondent stating that Form 941, Employer’s Quarterly Federal

Tax Return, for petitioner’s general dentistry business had not

been filed for the tax period ending June 30, 2000.   Petitioner

called his accountant, and an apparent retained copy of Form 941

for the questioned tax period was sent to respondent.    No

remittance accompanied the Form 941 sent in 2007.
                                 - 3 -
     Respondent treated the Form 941 sent in 2007 as an original

return filed as of January 7, 2008.       Respondent issued petitioner

a Notice of Federal Tax Lien Filing and Your Right to a Hearing

Under I.R.C. 6320 dated October 7, 2008, stating that petitioner

had not fully paid his employment tax liabilities for the tax

period ending June 30, 2000.    Respondent received petitioner’s

Form 12153, Request for a Collection Due Process or Equivalent

Hearing on November 26, 2008.

     Petitioner participated in a telephone collection due

process (CDP) hearing on February 10, 2009, where he asserted

that the employment tax was paid in 2000.       Petitioner did not

offer any collection alternatives.       A Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330

was issued on April 17, 2009, stating that the tax liability for

the tax period ending June 30, 2000, was valid and had not been

paid.   The notice states:   “Collection followed all legal and

procedural requirements and the actions taken or proposed were

appropriate under the circumstances.”       The attachment to the

notice of determination states

     Appeals has obtained verification from the IRS office
     collecting the tax that the requirements of any
     applicable law, regulation or administrative procedure
     with respect to the proposed levy or NFTL filing have
     been met. Computer records indicate that the notice
     and demand, notice of intent to levy and/or notice of
     federal tax lien filing, and notice of a right to a
     Collection Due Process hearing were issued.
                                 - 4 -
                              Discussion

     If a taxpayer fails to pay any Federal income tax liability

after notice and demand, a lien in favor of the United States is

imposed on all the property of the delinquent taxpayer.    Sec.

6321.    Within 5 business days after filing a tax lien, the IRS

must provide written notice of that filing to the taxpayer.    Sec.

6320(a).    After receiving such notice, the taxpayer may request

an administrative hearing before the Office of Appeals.    Sec.

6320(a)(3)(B).    A CDP hearing concerning a lien under section

6320 is to be conducted in accordance with the relevant

provisions of section 6330.    Sec. 6320(c).   We have jurisdiction

under section 6330(d)(1) to review the Commissioner’s

determination that the NFTL was proper and that the Commissioner

may proceed to collect by it.2

     In reviewing the Commissioner’s decision to sustain

collection actions, where the validity of the underlying tax

liability is properly at issue, the Court reviews the

Commissioner’s determination of the underlying tax liability de

novo.    Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000).     The Court reviews

any other administrative determination regarding proposed



     2
      The Pension Protection Act of 2006, Pub. L. 109-280, sec.
855, 120 Stat. 1019, amended sec. 6330(d) and granted this Court
jurisdiction over all sec. 6330 determinations made after Oct.
16, 2006. Perkins v. Commissioner, 129 T.C. 58, 63 n.7 (2007).
                               - 5 -
collection actions for abuse of discretion.   Sego v.

Commissioner, supra at 610; Goza v. Commissioner, supra at 182.3

An abuse of discretion occurs when the exercise of discretion is

without sound basis in fact or law.    Murphy v. Commissioner, 125

T.C. 301, 308 (2005), affd. 469 F.3d 27 (1st Cir. 2006).

     At the collection hearing, a taxpayer may raise any relevant

issues relating to the unpaid tax or proposed levy, including

spousal defenses, challenges to the appropriateness of the

collection actions, and offers of collection alternatives.   Sec.

6330(c)(2)(A).   In addition, he may challenge the existence or

amount of the underlying tax liability, but only if he did not

receive a notice of deficiency or otherwise have an opportunity

to dispute such liability.   Sec. 6330(c)(2)(B).

     In making a determination following a collection hearing,

the Appeals officer (AO) must consider:   (1) Whether the

requirements of any applicable law or administrative procedure

have been met, (2) any relevant issues raised by the taxpayer,

and (3) whether the proposed collection action balances the need

for efficient collection with legitimate concerns that the




     3
      A challenge to the amount of tax unpaid is a challenge to
the validity of the underlying tax liability and is reviewed de
novo. See Landry v. Commissioner, 116 T.C. 60, 62 (2001); see
also Boyd v. Commissioner, 117 T.C. 127, 131 (2001).
Respondent’s verification is mandatory. Therefore, the issue is
a question of law, and the standard of review does not matter.
See Hoyle v. Commissioner, 131 T.C. 197 (2008).
                                 - 6 -
collection action be no more intrusive than necessary.    Sec.

6330(c)(3).

       Independent of any issue raised or argument made by the

taxpayer, section 6330(c)(1) requires the AO conducting a CDP

hearing to “verify that the requirements of any applicable law or

administrative procedure have been met.”     Hoyle v. Commissioner,

131 T.C. 197, 199 (2008).    When the CDP hearing concerns a self-

reported tax liability, the AO must verify that:    (1) The IRS

timely assessed the liability, (2) the taxpayer failed to pay the

liability, (3) the taxpayer was given a notice and demand for

payment, and (4) the taxpayer was given an NFTL filing.     Med.

Practice Solutions, LLC v. Commissioner, T.C. Memo. 2009-214.       If

those requirements have not been met, the collection cannot

proceed, and the AO cannot sustain the proposed collection

action.    Id.   In other words, verification is required to be a

part of every determination.     Hoyle v. Commissioner, supra at

202.    “In view of the mandatory nature of the verification

requirement, ‘this Court will review the Appeals officer’s

verification under section 6330(c)(1) without regard to whether

the taxpayer raised it at the Appeals hearing’, * * * as long as

the taxpayer has adequately raised the issue in her appeal”.

Med. Practice Solutions, LLC v. Commissioner, supra (quoting
                                   - 7 -
Hoyle v. Commissioner, supra at 202-203).       We are satisfied that

petitioner raised this issue.4

        In the notice of determination, the AO summarily concluded:

“Collection followed all legal and procedural requirements and the

collection actions taken or proposed were appropriate under the

circumstances.”       The attachment to the notice of determination

simply reiterated verbatim the language that the Internal Revenue

Manual states as necessary to minimally document legal and

administrative review.       See IRM pt. 8.22.2.2.4.7 (Oct. 30, 2007).

        A clear record of relevant transactions is necessary in a

section 6330 court proceeding.       See Wright v. Commissioner, 381

F.3d 41 (2d Cir. 2004), vacating and remanding T.C. Memo. 2002-

312.5       Respondent apparently relied upon transcripts for

petitioner’s general dentistry business and his corporation that


        4
      Petitioner raised the issue of verification in his petition
by questioning the validity of respondent’s claim and at trial by
questioning the procedures in place to keep respondent from
assessing taxes from any year he wishes. We construe broadly
petitioner’s petition as a pro se litigant. See Rule 31(d);
Lukovsky v. Commissioner, T.C. Memo. 2010-117 (citing Haines v.
Kerner, 404 U.S. 519, 520 (1972)).
        5
      In Wright v. Commissioner, 381 F.3d 41, 44 (2d Cir. 2004),
vacating and remanding T.C. Memo. 2002-312, which was a sec. 6330
case, the Court of Appeals for the Second Circuit described the
unsatisfactory record before it as follows:

        The parties’ confusion is understandable; the relevant
        timeline and tax amounts have been reconstructed using
        photocopied forms, computer screen printouts, and dot-matrix
        printouts of tax account balances. Many of these records
        have no supporting explanation (and therefore are
        inscrutable to any non-employee of the IRS) * * *.
                                 - 8 -
respondent was unable to fully explain to either petitioner or

the Court.   The Court questioned respondent about entries in the

transcripts, specifically asking about entries concerning

nonfiling of returns.   Respondent agreed with the Court that the

Internal Revenue Service routinely offers a transcript

documenting the nonfiling of a return or a Form 3050,

Certification of Lack of Record.    No such documentation was

provided.6   No explanation, other than for two codes, was given to

decipher the numerous symbols and codes in respondent’s

transcripts.    Petitioner testified that he did not understand the

letters and numbers that make up the code in respondent’s

transcripts.7   To complicate matters, respondent’s witness could

not explain to the Court many of the codes and acronyms

referenced in the transcript.8    Respondent simply asserted, on the


     6
      Nor was any reason given for the length of time that passed
between the tax period at issue, ending June 30, 2000, and
respondent’s informing petitioner, sometime in 2007, that a Form
941 was not on file for the tax period at issue.
     7
      This is not an issue unique to petitioner. We have noted
on prior occasions the problem of understanding IRS transcripts.
“Many of the documents in the administrative file and most of the
documents labeled as transcripts of * * * [the taxpayer’s]
account are full of abbreviations, alphanumeric codes, dates, and
digits that are indecipherable and unintelligible without
additional explanation.” Barnes v. Commissioner, T.C. Memo.
2010-30.
     8
      Respondent’s witness could identify two codes used in the
transcripts. When questioned by the Court as to the meaning of
other codes and when asked to explain how the transcript system
works, the witness responded that she was unable to answer the
                                                    (continued...)
                                 - 9 -
basis of the incomplete testimony of his witness, that

petitioner’s Form 941 for that tax period was not filed until

2008.

     Petitioner supplied an apparent copy of a Form 941 from his

accountant that respondent had requested.    Petitioner asserts

that the original return was properly filed and the reported tax

liability timely paid.    The issue of petitioner’s filing a Form

941 raises questions about the validity of respondent’s

determination and an irregularity in the assessment procedure.

See Rivera v. Commissioner, T.C. Memo. 2003-35, affd. 102 Fed.

Appx. 594 (9th Cir. 2004).

     Respondent has not adequately shown that an attempt was made

to verify whether a Form 941 was timely filed and the tax

liability timely paid by petitioner in 2000.    If respondent did

not validly assess petitioner’s tax liability, then a lien would

not have arisen with respect to that tax liability and collection

could not proceed.     See secs. 6203, 6322; see also Hoyle v.

Commissioner, supra at 205.     Accordingly, if assessment was

invalid, the determination to proceed with the lien was error as

a matter of law.   See Hoyle v. Commissioner, supra at 205.

     A review of the entire record reveals that respondent did

not offer sufficient evidence that the AO had verified that all



     8
      (...continued)
Court’s questions.
                              - 10 -
legal and procedural requirements were met in the assessment of

petitioner’s employment tax liability for the period ending June

30, 2000.   It is within the Court’s discretion to remand the case

to Appeals for further review.   See Hoyle v. Commissioner, 131

T.C. 197 (2008); Calafati v. Commissioner, 127 T.C. 219 (2006);

Lunsford v. Commissioner, 117 T.C. 183 (2001).   Further review is

often necessary to protect a taxpayer’s due process rights

concerning a CDP hearing.   Lunsford v. Commissioner, supra at 189

(remand appropriate if taxpayer not afforded proper section 6330

hearing).   Given respondent’s inadequate verification and the

length of time that has passed since the tax period in question,

we conclude that remand is unnecessary and would not be

productive.   See id.; see also Marlow v. Commissioner, T.C. Memo.

2010-113 (citing Lunsford v. Commissioner, supra at 189).

     The determination to proceed with collection without

verification of all legal and procedural requirements was error

as a matter of law.

     To reflect the foregoing,


                                         Decision will be entered

                                    for petitioner.
