                         T.C. Memo. 2005-262



                       UNITED STATES TAX COURT



                  ROBERT NEWSTAT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket No. 16989-02L.            Filed November 10, 2005.


          P initially filed a petition for judicial review
     pursuant to sec. 6330, I.R.C., in response to a
     determination by R that levy action was appropriate for
     the taxable years 1985 and 1999. Following remand for
     further administrative consideration of the 1999 year,
     R issued a supplemental determination upholding levy
     action for that year.

          Held: R’s determination to proceed with
     collection action for 1999 is sustained.


     Robert Newstat, pro se.

     Jack T. Anagnostis, for respondent.

____________________

     * This opinion supplements our previously filed Memorandum
Opinion in Newstat v. Commissioner, T.C. Memo. 2004-208.
                                - 2 -

                  SUPPLEMENTAL MEMORANDUM OPINION


     WHERRY, Judge:    This case was initially filed in response to

a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 with respect to petitioner’s 1985 and

1999 taxable years.1   In a previous opinion, Newstat v.

Commissioner, T.C. Memo. 2004-208, the Court sustained

respondent’s collection determination as to 1985 and remanded the

matter for further consideration before the Internal Revenue

Service (IRS) Office of Appeals as to 1999.   Following the

remand, respondent issued a Supplemental Notice of Determination

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

and the case is once more before the Court.   The issue for

decision is whether respondent may proceed with collection for

1999.

                             Background

     On September 16, 2004, the Court issued its opinion in

Newstat v. Commissioner, supra.    As explained therein, we could

not conclude from the evidence that petitioner understood that

the Appeals officer was simultaneously handling both his 1985 and

1999 years.   Hence, we were likewise unable to conclude that

petitioner was aware that the communications and conference


     1
       Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
                               - 3 -

transpiring with the Appeals officer in the spring and summer of

2002 were to represent his opportunity to be heard with respect

to 1999 as well as 1985.   Accordingly, the Court held as follows

regarding 1999:

          Here, because the assessments at issue for 1999
     were based upon the amounts reported on petitioner’s
     filed tax return, and petitioner never received a
     notice of deficiency or other opportunity to dispute
     those amounts, he would be entitled to challenge his
     underlying liabilities in this collection proceeding.
     Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). The
     Form 12153 submitted by petitioner indicates a desire
     to claim business expenses not shown on his original
     return. In light of our conclusion regarding the lack
     of a hearing for 1999, we believe that petitioner
     should be afforded a final opportunity to supply
     relevant documentation. Petitioner will also have a
     further chance to raise relevant issues reviewed for
     abuse of discretion, such as collection alternatives.

          We caution petitioner, however, that were it not
     for the unusual circumstances of this case, his history
     of delay and failure to supply information would give
     us pause. We remind petitioner that section 6330 does
     not afford him an unlimited right to present
     information in person and at a time or place of his
     choosing. If petitioner cannot promptly meet with an
     Appeals officer to submit documentation and other
     pertinent data, we would expect him to do so through a
     representative or by written or telephonic
     communication. Otherwise, respondent will be in a
     position to close petitioner’s 1999 case on the
     existing record. [Newstat v. Commissioner, supra.]

The Court also issued an order dated September 16, 2004,

directing that an administrative hearing be offered to

petitioner, to be held no later than January 15, 2005, and that

the parties submit status reports on or before January 31, 2005.
                               - 4 -

     On January 25, 2005, a motion for reconsideration from

petitioner was filed by leave of Court.   Respondent was ordered

to file any response on or before February 25, 2005.

     Respondent and petitioner then filed status reports on

January 28 and February 7, 2005, respectively.   The reports

indicated that Appeals Officer Joan R. Carter had contacted

petitioner by telephone on October 26, 2004, in an attempt to

schedule a hearing in compliance with the Court’s September 16,

2004, order.   Petitioner had communicated that he hoped to engage

an attorney to appeal the Court’s ruling and to represent him at

the hearing.   A followup letter sent by Ms. Carter on

November 12, 2004, stated that petitioner had assured Ms. Carter

that a representative would contact her on November 3, 2004, but

that no call had been received.   The letter also enclosed a Form

433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals, for petitioner’s completion and as a

prerequisite to consideration of any collection alternatives.

     On February 28, 2005, respondent filed a notice of objection

to petitioner’s motion for reconsideration, together with a

memorandum of points and authorities in support thereof.      On

March 2, 2005, the Court denied petitioner’s motion.     We

concluded that petitioner had not met the standards necessary to

obtain reconsideration with respect to the principal subject of

his motion, i.e., the issue of res judicata as it pertained to
                              - 5 -

his 1985 year, and we added the following caution directed toward

1999:

          Regarding 1999, the parties have filed status
     reports indicating that petitioner, in contravention of
     the Court’s September 16, 2004, order directing that an
     administrative hearing before the Internal Revenue
     Service Office of Appeals be held on or before
     January 15, 2005, has refused to so meet. Petitioner
     has apparently declined the offered hearing on two
     principal grounds, i.e., that he wished first to
     dispute or “appeal” the Court’s ruling as to 1985, and
     that he was attempting to obtain funds to engage an
     attorney.

          To eliminate any possible misunderstanding, we
     clarify that because the 1985 and 1999 years are
     docketed as a single case, the Court must enter a
     decision as to both years before any portion of the
     opinion at T.C. Memo. 2004-208 will be subject to
     appeal.[2] The Court will afford petitioner a final
     opportunity to seek administrative resolution with
     respect to 1999 by extending the date for an Appeals
     Office hearing to March 31, 2005. However, we again
     caution petitioner that should he not promptly take
     advantage of this chance to be heard, either in person,
     by telephone, or through correspondence, the Court
     expects that respondent will issue a supplemental
     notice of determination on the existing record and, if
     such determination remains in dispute between the
     parties, this case will then be set for trial as to
     1999. If petitioner is presently unable to afford an
     attorney, it is nonetheless his obligation to proceed
     with alacrity in a pro se manner; the Court will
     tolerate no further delay.




     2
       This general principle is applied by the Court of Appeals
for the Third Circuit, to which appeal in the instant case would
normally lie, absent issuance of an order making a determination
analogous to those made under Fed. R. Civ. P. 54(b) that a matter
is an appropriately final subject for appeal. N.Y. Football
Giants, Inc. v. Commissioner, 349 F.3d 102, 106-107 (3d Cir.
2003); see also sec. 7482(a)(2).
                               - 6 -

We further directed the parties to file status reports on or

before April 15, 2005.

     Pursuant to the foregoing order, Ms. Carter on March 4,

2005, sent to petitioner a letter scheduling an appointment for

March 22, 2005, and requesting that petitioner advise her by

March 17, 2005, whether he preferred an in-person, telephone, or

correspondence conference and if he needed to reschedule.    The

letter also asked that petitioner complete the Form 433-A to

enable consideration of any collection alternatives.   Through a

series of facsimiles and phone calls, petitioner initially

requested that an in-person hearing be held on March 28 or 29,

2005, and then rescheduled the conference for March 30 via

telephone.   Ms. Carter confirmed this understanding by a letter

dated March 28, 2005, and further stated:

     You mentioned that you were unable to find any of your
     Schedule C business receipts or statements and was
     [sic] conceding this issue in full. You wish for this
     office to continue the task of evaluating collection
     alternatives.

     As requested, I have enclosed Form 433-A Collection
     Information Statement that you promised to complete and
     facsimile back tomorrow. We also discussed how the IRS
     has no record of you filing your income tax returns for
     years 2001 and 2002 and the need for you to gather your
     tax information so that you can file these delinquent
     returns with this office. * * * If you are required to
     file, you will be given 30 days to file your 2001
     and/or 2002 tax returns with this office.

     Another series of faxes from petitioner followed the above

letter.   On March 30, 2005, he asked that the conference be held
                                - 7 -

instead on March 31.   On March 31, 2005, he advised Ms. Carter by

fax that he would be calling late in the day because he had

forgotten that he first needed to attend to a notice of tax sale

for his residence that had been issued on account of unpaid State

tax obligations.    Petitioner failed to call later in the day but

sent a fax the following afternoon saying that he had found a box

of documents and would like an additional week to supply

information.   Further faxes on April 12, 14, and 15, 2005, dealt

with petitioner’s attempts to find and provide copies of his 2001

and 2002 returns.

     The Court was informed of the above events by means of

status reports filed by respondent and by petitioner on April 11

and 18, 2005, respectively.   Petitioner, referencing various

problems of age and health, asked to have until May 15, 2005, to

complete work on the 1999 year.   The Court thereafter, on May 16,

2005, received and filed as a status report a document from

petitioner.    The document alluded to various problems pertaining

to petitioner’s 2001 and 2002 returns.

     The Court on May 19, 2005, held a conference call with

petitioner and counsel for respondent.   Counsel for respondent

indicated that the Appeals Office was prepared to issue a

supplemental notice of determination but would hold any action

until an agreed deadline for petitioner to provide the alleged
                                 - 8 -

box of documents, signed original 2001 and 2002 returns, and a

Form 433-A.

      On June 8, 2005, the Court received a final status report

from petitioner, to which he had attached the aforementioned

Supplemental Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330, issued on May 25, 2005.

These documents reveal that while petitioner did provide signed

copies of the 2001 and 2002 returns, he never produced any

supporting documentation related to business expenses in 1999 and

never completed a Form 433-A.     Petitioner had apparently sought

to have the Appeals Office permit some form of “standard”

business expense allowance for 1999.       Ultimately, the

supplemental notice of determination upheld the proposed levy

action with respect to 1999.

                              Discussion

I.   General Rules

      As explained in our previous opinion in this matter, section

6331(a) authorizes the Commissioner to levy upon all property and

rights to property of a taxpayer where there exists a failure to

pay any tax liability within 10 days after notice and demand for

payment.   Sections 6331(d) and 6330 then set forth procedures

generally applicable to afford protections for taxpayers in such

levy situations.     Section 6331(d) establishes the requirement

that a person be provided at least 30 days’ prior written notice
                               - 9 -

of the Commissioner’s intent to levy before collection may

proceed.   Section 6331(d) also indicates that this notification

should include a statement of available administrative appeals.

Section 6330(a) expands in several respects upon the premise of

section 6331(d), forbidding collection by levy until the taxpayer

has been furnished notice of the opportunity for administrative

review of the matter in the form of a hearing before the IRS

Office of Appeals.   Section 6330(b) grants a taxpayer who so

requests the right to a fair hearing before an impartial Appeals

officer.

     Section 6330(c) addresses the matters to be considered at

the hearing:

          SEC. 6330(c). Matters Considered at Hearing.--In
     the case of any hearing conducted under this section--

                (1) Requirement of investigation.--The
           appeals officer shall at the hearing obtain
           verification from the Secretary that the
           requirements of any applicable law or
           administrative procedure have been met.

                (2) Issues at hearing.--

                     (A) In general.--The person may raise at
                the hearing any relevant issue relating to
                the unpaid tax or the proposed levy,
                including--

                          (i) appropriate spousal defenses;

                          (ii) challenges to the
                     appropriateness of collection actions;
                     and

                          (iii) offers of collection
                     alternatives, which may include the
                                - 10 -

                      posting of a bond, the substitution of
                      other assets, an installment agreement,
                      or an offer-in-compromise.

                      (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.

      Once the Appeals officer has issued a determination

regarding the disputed collection action, section 6330(d) allows

the taxpayer to seek judicial review in the Tax Court or a

District Court, depending on the type of tax involved.      In

considering whether taxpayers are entitled to any relief from the

Commissioner’s determination, this Court has established the

following standard of review:

      where the validity of the underlying tax liability is
      properly at issue, the Court will review the matter on
      a de novo basis. However, where the validity of the
      underlying tax liability is not properly at issue, the
      Court will review the Commissioner’s administrative
      determination for abuse of discretion. [Sego v.
      Commissioner, 114 T.C. 604, 610 (2000).]

II.   Analysis

      1.   Review of Underlying Liabilities

      As the Court observed in Newstat v. Commissioner, T.C. Memo.

2004-208, petitioner would be entitled to dispute the underlying

liability shown on his filed tax return for 1999.   See Montgomery

v. Commissioner, 122 T.C. 1, 9 (2004).    In that connection,

petitioner has repeatedly alluded to his entitlement to
                               - 11 -

unspecified business expenses deductions.     Nonetheless, despite

having been given every opportunity over a period in excess of 8

months between the issuance of our prior opinion and the

supplemental notice of determination, petitioner has failed to

produce an iota of supporting documentation substantiating such a

claim.    The Court is therefore not in a position to afford

petitioner any relief in this regard.

     2.    Review for Abuse of Discretion

     In evaluating the propriety of a collection determination,

the Court reviews for abuse of discretion those issues enumerated

in section 6330(c)(2)(A); i.e., spousal defenses, challenges to

the appropriateness of the collection action, and offers of

collection alternatives.    Action constitutes an abuse of

discretion under this standard where it is arbitrary, capricious,

or without sound basis in fact or law.      Woodral v. Commissioner,

112 T.C. 19, 23 (1999).

     Here, petitioner has at various junctures expressed an

apparent interest in a collection alternative such as an

installment agreement.    However, again despite substantial

additional time to meet the prerequisites for consideration of an

alternative collection arrangement, the scenario before the Court

remains virtually unchanged from that described within the

context of the 1985 year in Newstat v. Commissioner, supra.     We

in that opinion stressed the concept that a taxpayer must supply
                               - 12 -

complete financial information, in particular a Form 433-A,

before respondent will be considered to have committed an abuse

of discretion in declining to accept an offer in compromise or

installment agreement.   Id.   Because petitioner did not heed this

warning, the Court lacks any ground for concluding that

respondent acted arbitrarily or capriciously in determining to

proceed with levy for 1999.

     Thus, although the Court remains sympathetic to petitioner’s

health and economic situation and has given petitioner every

chance to demonstrate his entitlement to relief, we are

constrained to sustain respondent’s supplemental collection

determination as it pertains to the 1999 taxable year.    To

reflect the foregoing and the Court’s previous ruling,


                                          Decision will be entered

                                     for respondent.
