                  T.C. Summary Opinion 2010-43



                      UNITED STATES TAX COURT



             PAMELA L. JOHNSON-THOMAS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4330-08S.                Filed April 13, 2010.



     Pamela L. Johnson-Thomas, pro se.

     Ronald S. Collins, Jr., for respondent.



     DEAN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    Pursuant to section

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

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

for any other case.   Unless otherwise indicated, subsequent
                              - 2 -

section references are to the Internal Revenue Code, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

     On January 18, 2008, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination).   Respondent issued a

supplemental notice of determination on February 12, 2009.     The

notice of determination and supplemental notice of determination

disallowed petitioner’s claim for interest abatement with respect

to her unpaid 1988 and 1989 Federal income tax liabilities

(income tax liabilities).   The issues for decision are whether

respondent abused his discretion in denying petitioner’s request

for interest abatement under section 6404(e) and sustaining the

proposed collection action with respect to petitioner’s income

tax liabilities.

                            Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by reference.   When petitioner filed her

petition, she resided in Pennsylvania.

     Petitioner did not timely file a return for 1988 or 1989.

She filed her 1988 Federal income tax return on June 1, 1990, and

her 1989 Federal income tax return on July 7, 1995.   She reported
                                 - 3 -

a tax liability of $2,479 for 1988 and $4691 for 1989 but did not

remit payment with her returns.

I.    Bankruptcy

      Petitioner filed for bankruptcy during the 1990s on two

separate occasions.    On July 3, 1991, she filed her first

petition for bankruptcy, but it was dismissed on October 26,

1992.     On June 17, 1993, she filed her second petition, and on

December 2, 1996, the bankruptcy court dismissed the petition due

to an apparent misfiling.     Neither bankruptcy case resulted in

the discharge of her income tax liabilities.

II.   Installment Agreement

      In 19932 petitioner entered into an installment agreement to

pay her unpaid Federal payroll tax liability for her 1988 Form

940, Employer’s Annual Federal Unemployment (FUTA) Tax Return


      1
      At trial petitioner contested this amount. She offered
what purported to be the second page of a 1989 Federal income tax
return indicating that she reported zero tax due for 1989.
However, the validity of the copy of the “return” she provided at
trial is highly questionable. The Court finds that petitioner
reported a tax of $469 as shown in the certified Form 4340,
Certificate of Assessments, Payments, and Other Specified
Matters. In addition, petitioner failed to contest her 1989
underlying tax liability at the collection due process hearing
and is foreclosed from doing so here. A taxpayer must raise an
issue at a collection due process hearing to preserve it for this
Court’s consideration. Giamelli v. Commissioner, 129 T.C. 107,
115 (2007); sec. 301.6330-1(f)(2), Q&A-F5, Proced. & Admin. Regs.
      2
      The record is unclear as to when petitioner entered into
the installment agreement. As early as Jan. 1, 1993, petitioner
made a payment pursuant to an installment agreement for her 1988
business tax liability. The Court hereinafter refers to the
installment agreement as entered into in 1993.
                                   - 4 -

(business tax liability).       Petitioner continued to make payments

under this installment agreement and eventually satisfied her

business tax liability in 1999 or 2000.

III.       Personal Income Tax Liabilities

       Some time before 2000, petitioner realized that her

outstanding income tax liabilities remained unpaid.3      Petitioner

contacted the Internal Revenue Service (IRS) to determine the

amount of her outstanding liabilities so that she could begin

making payments.      She alleges that she was prevented from making

payments because each time she contacted the IRS, the IRS was

unable to find her account.4

       On October 2, 2001, petitioner filed a Form 911, Application

for Taxpayer Assistance Order, requesting assistance from the IRS

Taxpayer Advocate Service (TAS).5      TAS advised petitioner to file

an offer-in-compromise (offer) to settle her 1988 and 1989 income

tax liabilities.       Petitioner filed two offers with respondent,



       3
      Form 4340 indicates that on Jan. 1, 2000, petitioner
entered into an installment agreement for her unpaid 1988 and
1989 Federal income tax liabilities. The Form 4340 shows no
payments pursuant to this installment agreement and a reversal of
the installment agreement more than 2 years later. The parties
made no reference to the existence of this installment agreement.
       4
      When petitioner filed her 1988 and 1989 returns, she filed
under her former name, Butts. In 1992 her name was changed
because of a change in marital status.
       5
      At this time petitioner was aware of the purported problem
associated with finding her account; i.e., the requirement that
an asterisk follow her Social Security number.
                                - 5 -

but respondent rejected both offers.    She then requested and

respondent denied an abatement of interest associated with her

income tax liabilities.

     On April 26, 2005, respondent issued a Final Notice, Notice

of Intent to Levy and Notice of Your Right to a Hearing (Final

Notice).   Petitioner timely filed Form 12153, Request for a

Collection Due Process Hearing, requesting a face-to-face

hearing.   Respondent received petitioner’s request and advised

petitioner that her request was being processed. Respondent then

transferred petitioner’s case to the Philadelphia Appeals Office

on July 20, 2005.

     When petitioner’s case arrived at the Philadelphia Appeals

Office on August 22, 2007, respondent assigned her case to

settlement officer Robert Richards (SO Richards).    SO Richards

met with petitioner on December 12, 2007, and discussed

petitioner’s interest abatement request.    Petitioner did not

dispute her underlying tax liabilities and did not request or

present collection alternatives.    Her only argument was directed

at the abatement of interest.

     Respondent issued to petitioner a notice of determination

denying petitioner’s request for interest abatement and

sustaining the collection action.   Petitioner timely filed a

petition with this Court contesting the determination.
                               - 6 -

                            Discussion

     Under section 6320(a) the Secretary is required to notify

the taxpayer in writing of the filing of a Federal tax lien and

inform the taxpayer of his right to a hearing.    Section 6330(a)

similarly provides that no levy may be made on a taxpayer’s

property or right to property unless the Secretary notifies the

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

made.   If the taxpayer requests a hearing under either section

6320 or 6330, a hearing shall be held before an impartial officer

or employee of the IRS Office of Appeals. Secs. 6320(b)(1), (3),

6330(b)(1), (3).   At the hearing a taxpayer may raise any

relevant issue, including appropriate spousal defenses,

challenges to the appropriateness of the collection action, and

collection alternatives.   Sec. 6330(c)(2)(A).   A taxpayer is

precluded from contesting the existence or amount of the

underlying tax liability unless the taxpayer did not receive a

notice of deficiency for the tax in question or did not otherwise

have an opportunity to dispute the tax liability.    Sec.

6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609

(2000).

     Following a hearing, the Appeals Office must determine

whether the Secretary may proceed with the proposed collection

action.   In so doing, the Appeals Office is required to consider:

(1) The verification presented by the Secretary that the
                                   - 7 -

requirements of applicable law and administrative procedure have

been met; (2) the relevant issues raised by the taxpayer; and (3)

whether the proposed collection action appropriately balances the

need for efficient collection of taxes with a taxpayer’s concerns

regarding the intrusiveness of the proposed collection action.

Sec. 6330(c)(3).

       Where a taxpayer makes a request for an abatement of

interest in an Appeals hearing, the Court has jurisdiction to

review the determination of the Appeals Office pursuant to

section 6330(d)(1).       See sec. 6404(e); Katz v. Commissioner, 115

T.C. 329, 340-341 (2000).

       For tax years beginning before July 31, 1996, section

6404(e)(1) provided in pertinent part that the Secretary may

abate the assessment of interest on:       (1) Any deficiency

attributable to any error or delay by an officer or employee of

the IRS in performing a ministerial act;6 or (2) any payment of

any tax described in section 6212(a) to the extent that any error

or delay in such payment is attributable to such officer or

employee being erroneous or dilatory in performing a ministerial

act.       A ministerial act is a procedural or mechanical act that

does not involve the exercise of judgment or discretion by the



       6
      Petitioner does not have a deficiency, but rather an
underpayment of tax. See secs. 6211, 6404(e)(1)(A). Therefore,
petitioner’s interest abatement claim will be determined under
sec. 6404(e)(1)(B). See secs. 6211, 6212(a).
                               - 8 -

Commissioner.   Sec. 301.6404-2T(b)(1), Temporary Proced. & Admin.

Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987).     Section 6404(e)

affords a taxpayer relief only if no significant aspect of the

error or delay can be attributed to the taxpayer and only after

the Commissioner has contacted the taxpayer in writing about the

deficiency or payment in question.     H. Rept. 99-426, at 844

(1985), 1986-3 C.B. (Vol. 2) 1, 844 (“This provision does not

therefore permit the abatement of interest for the period of time

between the date the taxpayer files a return and the date the IRS

commences an audit, regardless of the length of that time

period.”).

     The Commissioner’s authority to abate interest involves the

exercise of discretion, and we must give due deference to the

Commissioner’s exercise of discretion.     See sec. 6404(h); Woodral

v. Commissioner, 112 T.C. 19, 23 (1999); Mailman v. Commissioner,

91 T.C. 1079, 1082 (1988).   To prevail, a taxpayer must prove

that the Commissioner abused his discretion by exercising it

arbitrarily, capriciously, or without sound basis in fact or law.

See sec. 6404(h)(1); Rule 142(a); Woodral v. Commissioner, supra

at 23; Mailman v. Commissioner, supra at 1084.     The mere passage

of time does not establish error or delay in performing a

ministerial act.   See Cosgriff v. Commissioner, T.C. Memo. 2000-

241 (citing Lee v. Commissioner, 113 T.C. 145, 150 (1999)).
                                 - 9 -

      The Court discusses below the relevant periods in

determining whether respondent abused his discretion in refusing

to abate interest accruals on petitioner’s income tax

liabilities.7

I.   January 1, 1997 Through October 1, 2001

      Petitioner alleges that after her second bankruptcy case was

dismissed, she entered into an installment agreement in January

1997 with the IRS and requested that the installment agreement

include both her income tax and business tax liabilities.

      Although petitioner alleges that respondent’s failure to

include all her liabilities in the alleged 1997 installment

agreement contributed to a delay in payment, there is no credible

evidence beyond petitioner’s testimony that she entered into an

installment agreement in 1997.    The record indicates that

petitioner entered into only one installment agreement, the 1993

installment agreement, solely in satisfaction of her business tax

liability.   After her second bankruptcy case was dismissed in




      7
      The Court finds that respondent did not abuse his
discretion in refusing to abate interest between the time
petitioner filed her 1988 and 1989 returns and the time she
allegedly entered into an installment agreement in 1997.
Petitioner’s nonpayment of her income tax liabilities during this
time was due in substantial part to her own acts. She was in
bankruptcy for most of this time, she untimely filed both
returns, and she has failed to identify any ministerial act on
the part of the IRS that led to a delay in the payment of her
income tax liabilities.
                              - 10 -

December 1996, petitioner had an opportunity but chose not to

make payments towards her income tax liabilities.

     Petitioner further testified that around 2000 she began

receiving notices from the IRS addressing her with different

names regarding her 1988 and 1989 income tax liabilities.8

Petitioner alleges that she contacted the IRS to determine her

correct liability but that the IRS was unable to find her

account.   Beyond testifying that the IRS was unable to find her

account, petitioner did not provide any further explanation of

the substance of her conversations with the IRS agents.

Specifically, petitioner did not clarify whether she explained

the full extent of her circumstances to the IRS agents, i.e.,

that she had filed the returns at issue using her former name,

that her name had subsequently changed because of a change in

marital status, and that she had received correspondence from the

IRS using different names.   Accordingly, the Court is unable to

conclude that any delay in payment on petitioner’s account was

not due in significant part to petitioner’s own acts.   See Urban

Redev. Corp. v. Commissioner, 294 F.2d 328, 332 (4th Cir. 1961)

(the Court may reject a taxpayer’s uncorroborated, self-serving

testimony), affg. 34 T.C. 845 (1960); Tokarski v. Commissioner,



     8
      At trial petitioner appeared confused as to why she would
receive correspondence from the IRS under different names. As
discussed supra, however, petitioner filed her 1988 and 1989
returns under her former name, Butts.
                                - 11 -

87 T.C. 74, 77 (1986) (same).    The Court finds that respondent

did not abuse his discretion in refusing to abate interest on

petitioner’s income tax liabilities from January 1, 1997, through

October 1, 2001.

II.   October 2, 2001 Through April 25, 2005

      On October 2, 2001, after discovering the alleged problem

associated with her account, petitioner filed a Form 911.

      On August 27, 2002, and October 21, 2003, petitioner filed

offers with respondent; however, respondent rejected both offers.

After these unsuccessful attempts to settle her tax liabilities,

on September 21, 2004, petitioner requested that respondent abate

the accrued penalties and interest on her income tax liabilities.

On February 9, 2005, respondent granted petitioner’s request for

abatement of penalties but denied the interest abatement request.

      Despite petitioner’s assertion that respondent’s delays

contributed to unnecessary interest accruals, the record includes

evidence to the contrary.   From October 2, 2001, through April

25, 2005, the parties engaged in extensive communications

regarding petitioner’s 1988 and 1989 income tax liabilities

followed by petitioner’s pursuit of collection alternatives.

There is no evidence of an IRS error or delay in the performance

of a ministerial act.   Accordingly, the Court finds that

respondent did not abuse his discretion in refusing to abate

interest from October 2, 2001, through April 25, 2005.
                                  - 12 -

III.       April 26, 2005 Through August 22, 2007

       On April 26, 2005, respondent issued a Final Notice to

petitioner for her 1988 and 1989 income tax liabilities.           Upon

receiving it, petitioner timely filed a Form 12153, requesting a

face-to-face hearing.       Respondent received petitioner’s request

and notified petitioner on May 12, 2005, that her hearing request

was being sent to Appeals for consideration.

       When the IRS receives a Form 12153, the running of the

period of limitations on collection for the tax year at issue is

suspended.       See secs. 6330(e), 6502.    The IRS records the

suspension of the limitations period by posting the appropriate

codes to the taxpayer’s account.       Respondent attempted to record

the suspension of the limitations period following receipt of

petitioner’s request for a hearing.         The record indicates,

however, that when respondent attempted to post the codes to

petitioner’s account, the codes “went unpostable” for the 1988

and 1989 tax years.       The unpostables seemed to prevent any

further action on petitioner’s request for a hearing.         The

problem continued and was indicated on case activity records

until October 25, 2005.       From October 26, 2005, through July 19,

2007, there is no indication that respondent was processing or

otherwise working on petitioner’s request for a hearing.9


       9
      On Aug. 20, 2007, the activity record indicated that
because of problems with unpostable TC 971 AC 069 and TC 520
                                                   (continued...)
                               - 13 -

Finally on August 22, 2007, the Philadelphia Appeals Office

received petitioner’s hearing request and respondent assigned the

case to SO Richards.

     For over two years petitioner’s hearing request was put on

hold as a result of respondent’s inability to post codes to

petitioner’s account.    Although this contributed to a significant

delay in the processing of petitioner’s hearing request, there is

no indication that this delay caused petitioner to delay in

making payments.   She was aware of her income tax liabilities and

chose to forgo making payments on her reported income tax

liabilities to pursue alternative avenues of relief.   Therefore,

respondent’s refusal to abate interest during this time was not

an abuse of discretion.

     In summary, respondent did not abuse his discretion in

refusing to abate interest, and the Court sustains respondent’s

determination in full.    Additionally, because petitioner did not

present viable alternatives to collection, the Court finds that

respondent’s determination to sustain the intended collection

action was not an abuse of discretion.   See Premium Serv. Corp.

v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir. 1975).


     9
      (...continued)
codes, the case was sent to the Kansas office for resolution.
When it was returned, the problem with unpostables remained, so
it was sent back to the Kansas office. The case remained in the
Kansas office for a year and a half. There is no indication as
to why the task of posting codes to petitioner’s account resulted
in such a delay in the processing of her Appeals request.
                        - 14 -

To reflect the foregoing,

                                     Decision will be entered

                                 for respondent.
