                  T.C. Summary Opinion 2004-158



                     UNITED STATES TAX COURT



                  FAY B. EDWARDS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11097-03S.            Filed November 15, 2004.


     Fay Bergfeld Edwards, pro se.

     Adam L. Flick, for respondent.



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

the provisions of sections 6330(d) and 7463 of the Internal

Revenue Code in effect when the petition was filed.    Unless

otherwise indicated, all subsequent section references are to the

Internal Revenue Code in effect at relevant times.    The decision

to be entered is not reviewable by any other court, and this

opinion should not be cited as authority.
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     Some of the facts have been stipulated, and they are so

found.    The stipulation of facts and the attached exhibits are

incorporated by this reference.    When she filed her petition,

petitioner was a resident of Dallas, Texas.

                              Background

     Respondent seeks to collect petitioner’s unpaid tax

liabilities from taxable years 1996, 1997, 1998, 2000, and 2001,

as follows:

   Year       Deficiency   Additions to Tax     Accrued Interest

   1996       $2,633.27        $526.86              $969.31
   1997        3,751.69         786.38             1,086.20
   1998        2,122.82         525.00               832.77
   2000          230.90          43.78                34.38
   2001        1,702.39         336.40               151.95

The amounts, set forth in the chart above, are from respondent’s

MRFTA-Y transcript of account, dated April 2004, and reflect

various adjustments, so they do not correspond exactly to

deficiencies initially determined.       Interest and additions to tax

are accrued through April 2004.

     For taxable year 1996, petitioner received a statutory

notice of deficiency and timely filed a petition with this Court.

She signed a stipulation for decision on June 14, 1999, and

agreed to a deficiency of $2,794.    This Court’s decision with

respect to her 1996 taxes was entered on June 14, 1999.

     For taxable year 1997, respondent issued to petitioner a

statutory notice of deficiency in which respondent determined a
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deficiency of $3,137 for the year.     Petitioner attempted to

challenge respondent’s determination, but her petition was not

timely filed, and her case was dismissed by this Court.

     For taxable year 1998, petitioner’s tax liability resulted

from a computational error she made on her return.     For 2000 and

2001, petitioner failed to pay the taxes she had properly

reported on her returns.   Respondent did not issue to petitioner

statutory notices of deficiency for 1998, 2000, or 2001.

     Respondent filed a Notice of Federal Tax Lien (NFTL) with

respect to petitioner’s tax liabilities for 1996, 1997, 1998,

2000, and 2001.   Petitioner filed requests for an administrative

hearing with respect to the filing of a Federal tax lien under

section 6320.

     In addition, respondent issued to petitioner a Final Notice-

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

with respect to her 2000 and 2001 tax liabilities.     On September

19, 2002, pursuant to section 6330 petitioner filed a request for

a hearing with respect to respondent’s proposed levy actions for

2000 and 2001.

     On May 21, 2003, petitioner met with an officer from

respondent’s Appeals Office to discuss the filing of the Federal

tax lien and the proposed levy actions.

     With respect to the NFTL, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320
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and/or 6330 on June 19, 2003 (notice of determination).

Respondent stated, in part:

     For years 1996 and 1997, statutory notices of
     deficiency were mailed to taxpayer at the appropriate
     address. Accordingly, the underlying liability cannot
     be considered under CDP proceedings for these years.

     For tax years 1998, 2000, and 2001 the taxpayer did not
     present evidence to substantiate her position that the
     underlying liability was not appropriate as assessed.

     The filing of the Notice of Federal Tax Lien is
     appropriate. The liability is valid and outstanding.

     With respect to the proposed levy action for 2000 and 2001,

respondent issued a separate notice of determination on June 19,

2003.    Respondent sustained the proposed levy, stating in part:

     Taxpayer did not present evidence to substantiate her
     position that the underlying liability was not
     appropriate as assessed. The liability is valid and
     outstanding.

     Taxpayer did not propose any collection alternatives.

     Upon receiving the notices of determination, petitioner

filed a petition with this Court.    In addition, petitioner

contacted respondent in an effort to arrange for a collection

alternative.    On June 26, 2003, petitioner sent respondent a

package of documents purporting to be an offer in compromise

(OIC).    Petitioner did not provide specific information regarding

her financial situation.    She explained generally that she had

limited resources and no relatives to help her, that she had lost

her employment, that she lived very modestly, and that she

anticipated incurring significant medical and long-term care
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expenses in the future.   Petitioner requested that respondent

dismiss or forgive her unpaid tax liability.

      By letter dated April 6, 2004, respondent contacted

petitioner to discuss the stipulation of facts for petitioner’s

trial, scheduled for April 26, 2004.     Respondent wrote:   “I have

also not ruled out the possibility of an offer in compromise, but

I will need more information.   I have enclosed an IRS form 433-

A.1   I would like you to fill this out as soon as possible.”

      On April 8, 2004, petitioner faxed to respondent a completed

Form 433-A.   On the Form 433-A, petitioner listed personal assets

including a bank account with a balance of $134,198, other

security investments including “United States HHH Bonds”, and a

home that she owns clear of any encumbrances.

                            Discussion

      Section 6321 imposes a lien in favor of the United States

upon all property and rights to property of a taxpayer who fails

to pay any tax liability after demand for payment.     The lien

arises when the assessment is made, but is not valid against any

purchaser, holder of a security interest, mechanic’s lienor, or




      1
        A Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, is used by the Internal
Revenue Service to access a taxpayer’s financial situation for
purposes of collecting unpaid tax liabilities. In completing
this form the taxpayer is required to provide information about
his or her financial assets and monthly income and expenses.
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judgment lien creditor until the Secretary files a notice of lien

with the appropriate public officials.   Secs. 6322 and 6323.

      Section 6320(a)(1) provides that the Secretary must notify

the taxpayer in writing of the filing of a notice of lien.    The

notice required by section 6320(a)(1) must be sent not more than

5 business days after the notice of tax lien is filed and must

advise the taxpayer of his or her right to request an

administrative hearing.   Sec. 6320(a)(2) and (3).   The hearing

shall generally be conducted in accordance with the procedures

described in section 6330(c), (d), and (e).   Sec. 6320(c).

      Section 6330 entitles a taxpayer to notice and an

opportunity for a hearing before certain levy actions are taken

by the Commissioner in the process of collecting unpaid Federal

taxes.   Upon request, a taxpayer is entitled to a “fair hearing”

conducted by an impartial officer from the Office of Appeals.

Sec. 6330(b)(1), (3).   At the hearing, the officer is required

to:   (1) Obtain verification from the Secretary that the

requirements of applicable law and administrative procedure have

been met; (2) consider any relevant issue raised by the taxpayer

related to the unpaid tax or proposed levy, including appropriate

spousal defenses, challenges to the appropriateness of collection

actions, and offers of collection alternatives; and (3) consider

whether any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the
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taxpayer that any collection action be no more intrusive than

necessary.   Sec. 6330(c).    If a taxpayer received a statutory

notice of deficiency for the underlying tax liability or

otherwise had an opportunity to dispute the underlying tax

liability, he or she is precluded from challenging the existence

or amount of the underlying tax liability.    Sec. 6330(c)(2)(B).

     To the extent possible, a section 6320 hearing will be held

in conjunction with a section 6330 hearing.    Sec. 301.6320-

1(d)(1), Q&A-D3, Proced. & Admin. Regs.

     This Court has jurisdiction to review the Commissioner’s

administrative determination under section 6330(d).    If the

underlying tax liability is properly at issue, we review that

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

Goza v. Commissioner, 114 T.C. 176, 181 (2000).    If the validity

of the underlying tax liability is not at issue, we review the

determination for abuse of discretion.     Sego v. Commissioner,

supra at 610.    An abuse of discretion occurs when an Appeals

officer takes action that is arbitrary, capricious, or without

sound basis in fact or law.    See Woodral v. Commissioner, 112

T.C. 19, 23 (1999).

      At trial, petitioner failed to provide any evidence that

any of the underlying liabilities was incorrect.    She did not

dispute the amount of any of those liabilities.    Accordingly, we
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sustain the underlying tax liabilities for 1996, 1997, 1998,

2000, and 2001.

     Petitioner submitted her financial information only a few

weeks prior to trial.2    Petitioner’s total tax liability,

including penalties and interest accrued as of April 2004, is

approximately $15,734.10.     In her financial information she

disclosed assets significantly greater than the total tax

liability, including a bank account in excess of $100,000 and a

home that she owns free of encumbrances.     Her financial

information indicates that petitioner is able to pay her tax

liability in full.

     We are not persuaded by petitioner’s arguments that she

needs money to make expensive repairs to her home or that she

anticipates having significant medical and long-term health care

costs in the future.     We are sympathetic to petitioner because of

her present and anticipated future problems.     She has explained

that her house is 100 years old, needs a new roof, and does not

even have central heating.     But she does not dispute that the

house has some value, and there is no evidence as to the amount

of the value.   Petitioner was almost 82 years of age at the time

of the hearing, and we have no reason to doubt that like many


     2
        It appears that settlement negotiations regarding a
collection alternative between the parties failed. Petitioner
stated: “I notice here I have in my notes that unfortunately the
information [that I provided] confirmed that * * * I am not
eligible to compromise the amount of taxes that I owe.”
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people her age, she faces the possibility of medical expenses in

the future.   Nevertheless, the record shows that petitioner has

sufficient assets to pay the amounts respondent seeks to collect,

even though petitioner might prefer to retain those assets for

other purposes.

     Accordingly, we sustain respondent’s determination not to

release the notice of Federal tax lien due to tax liabilities

from 1996, 1997, 1998, 2000, and 2001.       We also sustain

respondent’s determination to proceed with levy action for 2000

and 2001.   The Appeals officer clearly did not abuse her

discretion, and the amounts of the liabilities for all years are

undisputed.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                              Decision will be entered

                                         for respondent.
