                        T.C. Memo. 2009-75



                      UNITED STATES TAX COURT



                 CAROLINE MCCALL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

                    CRAIG GEBO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 26790-06L, 26791-06L.   Filed April 6, 2009.



     Woodford G. Rowland, for petitioners.

     Kaelyn J. Romey, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   In these consolidated cases petitioners,

pursuant to section 6330,1 seek review of respondent’s


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
                                                   (continued...)
                               - 2 -

determinations to proceed with collection of trust fund recovery

penalties for the taxable periods ending September 30 and

December 31, 2001 (the periods at issue).

     We consolidated the cases for purposes of trial, briefing,

and opinion.   The issues for decision2 are whether respondent

made invalid jeopardy assessments against petitioners and whether

respondent abused his discretion by determining that petitioners

were not entitled to a streamlined installment agreement.

                         FINDINGS OF FACT

     Some of the facts have been stipulated.   We incorporate the

stipulation of facts into our findings by this reference.

Petitioners resided in California when the petitions were filed.

     Respondent issued Letters 1153, Trust Funds Recovery Penalty

Letter, to petitioners notifying them of proposed trust fund

recovery penalty assessments, and petitioners filed an

administrative appeal with respect to the proposed assessments.

On December 13, 2005, respondent’s Appeals Office made final

administrative determinations upholding the proposed assessments.

On the same date, the cases were sent to one of respondent’s

revenue officers, as reflected in Forms 5402, Appeals Transmittal



     1
      (...continued)
Court Rules of Practice and Procedure.
     2
      The parties raised several evidentiary issues at trial, and
we reserved ruling on some of them. By order dated Mar. 12,
2009, we resolved the remaining issues.
                               - 3 -

and Case Memo, with the recommendation that respondent make quick

assessments against petitioners for the trust fund recovery

penalties.

     Petitioners’ cases were assigned to Lorna Canady (Ms.

Canady), who was responsible for reviewing and forwarding to

respondent’s revenue accounting collection system (RACS), a

department in the Ogden Service Center responsible for processing

assessments, the documents necessary for assessing the trust fund

recovery penalties.   On December 20, 2005, respondent assessed

trust fund recovery penalties of $16,581.64 and $14,216.84.    On

February 14, 2006, respondent sent petitioners Letters 1058,

Notice of Intent To Levy and Notice of Your Right to a Hearing,

with respect to the assessed trust fund recovery penalties.

Petitioners timely requested a hearing with respondent’s Appeals

Office (collection hearing) and their cases were assigned to

Settlement Officer Raymundo Jacquez (Mr. Jacquez).

     During the collection hearing process Mr. Jacquez sent

petitioners’ counsel “IMF MCC Transcript-IMF Literal” of

petitioners’ tax accounts for the periods at issue (disputed

transcripts) showing that on December 20, 2005, respondent made

jeopardy assessments of $16,581.64 and $14,216.84.   After

petitioners’ counsel questioned the validity of the jeopardy

assessments, Mr. Jacquez requested petitioners’ trust fund

recovery penalty files and reviewed the documents in the files.
                                 - 4 -

In a letter to petitioners’ counsel Mr. Jacquez assured him that

respondent had not made jeopardy assessments against petitioners

and that the disputed transcripts contained an internal clerical

error.   Mr. Jacquez explained that the error did not materially

affect petitioners’ rights.

     Petitioners’ counsel also informed Mr. Jacquez that

petitioners wanted to resolve their unpaid liabilities through a

streamlined installment agreement.       Because petitioners’ unpaid

assessed liabilities were not $25,000 or less, as required to

qualify for a streamlined installment agreement, Mr. Jacquez gave

petitioners an opportunity to pay within 10 days the amount of

their unpaid liabilities exceeding $25,000.      Petitioners did not

remit any payment by the deadline, and Mr. Jacquez gave them an

additional 10 days to submit payment.      Petitioners submitted two

checks for the amount of the unpaid liabilities exceeding $25,000

but conditioned the deposit of the checks on the resolution of

the jeopardy assessment issue.    Mr. Jacquez returned the checks

because of the condition petitioners imposed.      He explained that

petitioners had missed the second deadline to submit payment for

consideration of a streamlined installment agreement and that

they did not submit financial information for consideration of

other collection alternatives.    Mr. Jacquez stated that he would

recommend sustaining respondent’s collection actions.
                                - 5 -

     On November 21, 2006, respondent’s Appeals Office sent each

petitioner a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 sustaining respondent’s

proposed collection actions.   An attachment to the notices of

determination stated that research of official records and

transcripts established that the assessments were not jeopardy

assessments and that petitioners were not entitled to any

collection alternatives, including the streamlined installment

agreement, because they had not provided Mr. Jacquez with the

requested payments or financial information.   Petitioners timely

filed petitions contesting respondent’s determinations.

                               OPINION

I.   Section 6330

     The Secretary is authorized to collect tax by levy upon the

taxpayer’s property if any taxpayer liable to pay any tax

neglects or refuses to pay such tax within 10 days after notice

and demand for payment.   Sec. 6331(a).   Section 6330(a) requires

the Secretary to send written notice to the taxpayer of the

taxpayer’s right to request a section 6330 hearing before a levy

is made.   If the taxpayer makes a timely request for a hearing, a

hearing shall be held by the Internal Revenue Service (IRS)

Office of Appeals.   Sec. 6330(b).

     At the hearing a taxpayer may raise any relevant issue,

including appropriate spousal defenses, challenges to the
                                - 6 -

appropriateness of the collection action, and collection

alternatives, such as an installment agreement.    Sec.

6330(c)(2)(A).    Additionally, the taxpayer may contest the

validity of the underlying tax liability, but only if the

taxpayer did not otherwise have an opportunity to dispute the tax

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

     Following a hearing the Appeals Office must issue a notice

of determination regarding the appropriateness of the proposed

levy action.   In making a determination, the Appeals Office must

consider:    (1) The verification presented by the Secretary that

the requirements of applicable law and administrative procedures

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).   If the taxpayer disagrees

with the Appeals Office’s determination, the taxpayer may seek

judicial review by petitioning this Court.3    Sec. 6330(d).


     3
      Before the enactment of the Pension Protection Act of 2006
(PPA), Pub. L. 109-280, sec. 855, 120 Stat. 1019, we had
jurisdiction to review the Commissioner’s determinations in cases
where the underlying tax liability was of a type that normally
fell within our deficiency jurisdiction. See, e.g., Zapara v.
Commissioner, 126 T.C. 215, 227 (2006), supplementing 124 T.C.
223 (2005). However, the PPA, which applies to determinations
made after Oct. 16, 2006, expanded our jurisdiction to review the
Commissioner’s collection determinations with respect to any type
of underlying tax, including trust fund recovery penalties.
                                                   (continued...)
                                - 7 -

II.   Assessments

      A.    Jurisdiction and Standard of Review

      Section 6330(d)(1) grants this Court jurisdiction to review

determinations made by the Appeals Office in the collection

hearing, including the Appeals Office’s determinations that the

requirements of applicable law and administrative procedures have

been met.    See sec. 6330(c)(1).   In the notices of determination

the Appeals Office determined that all requirements of applicable

law and administrative procedures were satisfied and that the

assessments were valid.    Thus, we have jurisdiction to review the

Appeals Office’s determinations that respondent followed legal

and administrative procedural requirements in assessing the trust

fund recovery penalties.

      Although the Court generally will review a determination of

the Appeals Office for abuse of discretion when, as in these

cases, the tax liability is not at issue, see Lunsford v.

Commissioner, 117 T.C. 183, 185 (2001), respondent concedes his

determination regarding the assessments is subject to de novo

review.    In accordance with respondent’s concession, we shall




      3
      (...continued)
Ginsberg v. Commissioner, 130 T.C. 88, 91-92 (2008). Because the
determinations in these cases were made after Oct. 16, 2006, we
have jurisdiction to review respondent’s determinations to
proceed with the enforced collection of the trust fund recovery
penalties.
                                - 8 -

examine the trial record de novo to decide whether respondent

made invalid jeopardy assessments against petitioners.

     B.    Burden of Proof

     Generally, the Commissioner’s determination is presumed

correct, and the taxpayer bears the burden of proving that the

determination is erroneous.    Rule 142(a)(1); Welch v. Helvering,

290 U.S. 111, 115 (1933).    Petitioner contends, however, that

respondent should bear the burden of proving the assessments were

valid.    In support of their contention, petitioners cite Cohen v.

Commissioner, 266 F.2d 5 (9th Cir. 1959), remanding T.C. Memo.

1957-172, and Estate of Mitchell v. Commissioner, 250 F.3d 696

(9th Cir. 2001), affg. in part, vacating in part and remanding

103 T.C. 520 (1994) and T.C. Memo. 1997-461.

     In Cohen the Court of Appeals for the Ninth Circuit stated:

          When the Commissioner’s determination has been
     shown to be invalid, the Tax Court must redetermine the
     deficiency. The presumption as to the correctness of
     the Commissioner’s determination is then out of the
     case. The Commissioner and not the taxpayer then has
     the burden of proving whether any deficiency exists and
     if so the amount. It is not incumbent upon the
     taxpayer under these circumstances to prove that he
     owed no tax or the amount of the tax which he did owe.
     [Cohen v. Commissioner, supra at 11; fn. refs. and
     citation omitted.]

Cohen, however, is distinguishable from this case.     Cohen

involved a redetermination of a deficiency that the taxpayers

established was erroneous and arbitrary.    Id.   As the Court of

Appeals recognized in Cohen, the burden is on the taxpayer to
                               - 9 -

show that the Commissioner’s determination is invalid.     Id.       If

the taxpayer does so, then the Commissioner must come forward

with proof of the tax owed by the taxpayer.     Id.

     Petitioners have not shown and do not argue that

respondent’s determinations of the trust fund recovery penalties

were erroneous or arbitrary.   At most, petitioners have shown

that a labeling error occurred on the disputed transcripts.      They

have not proven that respondent acted arbitrarily or erroneously

with respect to the assessment of the trust fund recovery

penalties.

     The other case upon which petitioners rely, Estate of

Mitchell v. Commissioner, supra, is also distinguishable.       In

Estate of Mitchell the Court of Appeals for the Ninth Circuit

held that the burden of proof shifted to the Commissioner because

the taxpayer established that the Commissioner’s determination of

a tax deficiency was arbitrary and excessive.     Id. at 702.

Again, petitioners have not proven respondent acted arbitrarily.

     The cases petitioners cite do not apply here.    The burden of

proof remains with petitioners.4   See Rule 142(a)(1).




     4
      Petitioners do not contend that sec. 7491(a), which shifts
the burden of proof to the Commissioner if its requirements are
met, applies, and the record does not contain sufficient evidence
to establish that petitioners satisfy the sec. 7491(a)
requirements.
                              - 10 -

     C.    Applicable Law

           1.   Trust Fund Recovery Penalty

     Section 6672(a) imposes a penalty (commonly known as a trust

fund recovery penalty) on any person required to collect,

truthfully account for, and pay over tax who willfully fails to

do so or who willfully attempts to evade or defeat any such tax.

The penalty applies to an officer or employee of a corporation or

a member or employee of a partnership who is under a duty to

perform the actions described in section 6672(a) and who

willfully fails to do so.   Sec. 6671(b).   The penalties are

assessed and collected in the same manner as taxes.    Sec.

6671(a).

     Before a trust fund recovery penalty can be assessed, the

Secretary must notify the taxpayer in writing by mail to the

taxpayer’s last known address or in person at least 60 days

before giving notice and demand for payment that the taxpayer

shall be subject to an assessment of such penalty.    Sec.

6672(b)(1) and (2).   If the taxpayer is properly notified before

the expiration of the period of limitations for making

assessments under section 6501,5 the period of limitations for

making an assessment of the trust fund recovery penalty shall not

expire before the later of the date 90 days after the date the



     5
      Sec. 6501 generally requires that the Commissioner assess
tax within 3 years after the taxpayer files a return.
                                - 11 -

notice was mailed or delivered or, if there is a timely protest

of the proposed assessment, the date 30 days after the Secretary

makes a final administrative determination with respect to such

protest.    Sec. 6672(b)(3).   However, the notification procedures

do not apply to a jeopardy assessment.    Sec. 6672(b)(4).

            2.    Jeopardy and Quick Assessments

     The Secretary is authorized and required to make the

assessments of all taxes, including assessable penalties.      Sec.

6201(a).    Assessments are made by recording the liability of the

taxpayer in the Office of the Secretary in accordance with rules

or regulations prescribed by the Secretary.    Sec. 6203.    The

Secretary, at any time within the period prescribed for

assessment, may make a supplemental assessment whenever it is

ascertained that any assessment is imperfect or incomplete in any

material respect.    Sec. 6204(a).

     The Secretary is authorized to assess a deficiency

immediately if the Secretary believes that the assessment or

collection of the deficiency will be jeopardized by delay, and

notice and demand shall be made by the Secretary for the payment

thereof.    Sec. 6861(a).   This immediate assessment is known as a

jeopardy assessment.    Assessment or collection of a deficiency is

determined to be in jeopardy if one of the following conditions

exist:     (1) The taxpayer is or appears to be designing quickly to

depart from the United States or to conceal himself or herself;
                               - 12 -

(2) the taxpayer is or appears to be designing quickly to place

property beyond the reach of the Government; or (3) the

taxpayer’s financial solvency is or appears to be imperiled.

Sec. 301.6861-1(a), Proc. & Admin. Regs.; sec. 1.6851-1(a),

Income Tax Regs.   A jeopardy assessment may not be made unless

the IRS Chief Counsel (or his delegate) gives written approval of

the assessment.    Sec. 7429(a)(1)(A).

     Within 5 days after a jeopardy assessment is made, the

Secretary must provide the taxpayer with a written statement of

information on which the Secretary relied in making the jeopardy

assessment.   Sec. 7429(a)(1)(B).   The taxpayer has 30 days from

the date the taxpayer is given the written statement to request

an administrative review of the assessment.   Sec. 7429(a)(2).

After the administrative review, the taxpayer may seek judicial

review of the assessment in a U.S. District Court.    Sec.

7429(b)(1) and (2).

     In contrast, a quick assessment is an internal

administrative term used to identify assessments made, for

example, when the period of limitations on assessment will soon

expire, Internal Revenue Manual (IRM) pt. 4.4.25.2.2 (Feb. 8,

1999).   Under the IRM, a quick assessment of a trust fund

recovery penalty is made when the period of limitations on

assessment will expire in 30 days, IRM pt. 5.7.6.4(1) (Apr. 13,

2006).   Unlike a jeopardy assessment, a quick assessment does not
                              - 13 -

require Chief Counsel approval, and there is no requirement to

provide the taxpayer written notice of information on which the

Secretary relied in making the quick assessment within 5 days

after the assessment.

     D.   Analysis

     Petitioners argue that the December 20, 2005, assessments

are invalid jeopardy assessments and must be abated.   In support

of their argument, petitioners introduced into evidence the

disputed transcripts provided to them during the collection

hearing, showing respondent made jeopardy assessments.

Respondent, however, argues that the disputed transcripts

reflected quick assessments that were mislabeled as jeopardy

assessments.   Respondent contends that the mislabeling error does

not render the assessments invalid.

     At trial both parties presented the testimony of several of

respondent’s employees regarding the assessments made against

petitioners, and we find their testimony credible.   Ms. Canady, a

tax technician responsible for reviewing documents necessary for

requesting and making assessments and for forwarding those

documents to RACS so that assessments can be made, testified that

she followed all procedures for making valid quick assessments of

trust fund recovery penalties.   Her testimony included the

following.   Ms. Canady received from a revenue officer Forms

2749, Request for Trust Fund Recovery Penalty Assessment,
                             - 14 -

requesting quick assessments for the periods at issue.    She also

received from respondent’s Appeals Office the Forms 5402

recommending that respondent make quick assessments.   Ms. Canady

prepared Forms 2859, Request for Quick or Prompt Assessment,

requesting quick assessments against petitioners of $16,581.64

and $14,216.84 for the periods at issue, and her manager signed

the forms on December 15, 2005.   Ms. Canady signed Forms 3210,

Document Transmittal, requesting quick assessments for the

periods at issue, and on December 15, 2005, Ms. Canady sent by

facsimile to RACS the Forms 2749, 5402, 2859, and 3210.    On or

around December 21, 2005, RACS returned to Ms. Canady the Forms

3210 with RACS’s date stamp, handwritten notations of the

document locator numbers6 and assessment date, a signature

showing the Forms 3210 were received and verified, and an

acknowledgment date of December 20, 2005.   She also received from

RACS certain billing statements for the periods at issue showing

assessments were made on December 20, 2005.   Ms. Canady reviewed

the billing statements to determine that petitioners’ names and

addresses, the document locator numbers, and the assessment

amounts were correct and then mailed two copies to petitioners.

     Respondent introduced into evidence the Forms 2749, 5402,

2859, and 3210, and the billing statements, that Ms. Canady


     6
      Document locator numbers are numbers assigned to all
transactions, including assessments, posted on respondent’s
integrated data retrieval system.
                              - 15 -

either prepared or reviewed in the process of requesting

assessments against petitioners, and none of the forms or the

billing statements indicates that jeopardy assessments were

requested or made.   In addition, Ms. Canady, who is not

authorized to make jeopardy assessments, credibly testified that

when she received the documents from RACS after respondent made

the assessments, nothing indicated that respondent made jeopardy

assessments.

     Tim Mathers, respondent’s court witness coordinator in

criminal investigations, whose duties include ordering returns

from files, preparing certified transcripts in preparation for

trial, and testifying at trials, testified about the document

locator numbers that were assigned to petitioners’ assessments.

He testified that the document locator numbers on the disputed

transcripts, despite the jeopardy assessment notations, reflected

trust fund recovery penalty quick assessments.   Mr. Jacquez also

testified that the document locator numbers assigned to the

assessments in these cases indicated that respondent made quick

assessments.   Mr. Jacquez testified that during the collection

hearing he reviewed the revenue officer’s case history and the

various transaction codes relating to assessments and determined

that there were no jeopardy assessments.

     All testimonial and documentary evidence, except the

disputed transcripts given to petitioners’ counsel during the
                              - 16 -

collection hearing, indicates that all procedures were followed

to request and make quick assessments against petitioners.    All

of respondent’s witnesses at trial credibly testified that

respondent made quick assessments rather than jeopardy

assessments.   Petitioners did not introduce any testimony or

documents other than the disputed transcripts to support their

contention that respondent made jeopardy assessments against

petitioners.

     We also note that petitioners have not shown that they were

prejudiced by the error on the disputed transcripts.   Before

respondent assessed the trust fund recovery penalties,

petitioners received Letters 1153 notifying them of the proposed

assessments, and they requested and received an administrative

hearing with respondent’s Appeals Office regarding the trust fund

recovery penalties.   Because jeopardy assessments may be assessed

immediately, see sec. 6861(a), petitioners would not have

received preassessment notices or had the opportunity for a

preassessment administrative hearing if the assessments that were

made had been jeopardy assessments, see sec. 6672(b)(4).    In

addition, petitioners received a collection hearing under section

6330 before levy, which strongly suggests that quick assessments

and not jeopardy assessment were made.7   Despite the jeopardy


     7
      In cases where the Secretary has made a finding that the
collection of tax is in jeopardy, sec. 6330 does not apply except
                                                   (continued...)
                               - 17 -

assessment entry on the disputed transcripts, petitioners have

received all notices and rights to which they were entitled under

sections 6672 and 6330.

     The record provides ample grounds for concluding that valid

quick assessments were made against petitioners for the periods

at issue and that the entry on the disputed transcripts regarding

a jeopardy assessment is an error that does not invalidate the

assessments.8   We so hold.

III. Collection Alternatives

     Petitioners argue that if we conclude that the assessments

are valid, we should remand the case to the Appeals Office so

that petitioners can enter into a streamlined installment

agreement.9   Specifically, petitioners argue that because of the

assessment issue, Mr. Jacquez did not give proper attention to

collection alternatives.


     7
      (...continued)
that the taxpayer is given the opportunity for a collection
hearing within a reasonable time after the levy. See sec.
6330(f)(1); Zapara v. Commissioner, 124 T.C. at 241.
     8
      Our conclusion is in accordance with Dallin v. United
States, 62 Fed. Cl. 589, 601 (2004). In Dallin the Court of
Federal Claims held that a trust fund recovery penalty assessment
on a Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters, that was mislabeled as a jeopardy assessment,
instead of a quick assessment, did not render the assessment
invalid where the assessment was otherwise valid.
     9
      Petitioners do not argue that the burden of proof shifts to
respondent with respect to our review of respondent’s
determination regarding collection alternatives, and accordingly,
the burden of proof remains with petitioners. See Rule 142(a).
                              - 18 -

     We review respondent’s Appeals Office determination with

respect to collection alternatives for an abuse of discretion.

See Lunsford v. Commissioner, 117 T.C. at 185; Sego v.

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

T.C. 176, 182 (2000).   In reviewing for an abuse of discretion,

we do not conduct an independent review of whether any collection

alternative proposed by a taxpayer was acceptable or substitute

our judgment for that of the Appeals Office.    Rather, we must

uphold the Appeals Office determination unless it is arbitrary,

capricious, or without sound basis in fact or law.    See, e.g.,

Murphy v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469 F.3d

27 (1st Cir. 2006); Hansen v. Commissioner, T.C. Memo. 2007-56;

Catlow v. Commissioner, T.C. Memo. 2007-47.

     Section 6159(a) authorizes the Secretary to enter into

written agreements with any taxpayer under which such taxpayer is

allowed to make payment on any tax in installment payments if the

Secretary determines that such agreement will facilitate full or

partial collection of such liability.   A streamlined installment

agreement is an installment agreement that may be processed

quickly and without financial analysis or managerial approval and

is available for taxpayers whose aggregate unpaid balance of

assessments is $25,000 or less.   IRM pt. 5.14.5.1(1) (Mar. 30,

2002); IRM pt. 5.14.5.2(1) (July 12, 2005).    Accepting or

rejecting an installment agreement proposed by a taxpayer is
                               - 19 -

within the discretion of the Commissioner.10   See sec. 301.6159-

1(b)(1)(i), Proced. & Admin. Regs.

     During the collection hearing, after petitioners requested a

streamlined installment agreement, Mr. Jacquez gave petitioners

the opportunity to submit a payment for the amount of assessed

trust fund recovery penalties that exceeded $25,000, as required

for a streamlined installment agreement.   Petitioners submitted

two checks that could not be deposited, and Mr. Jacquez returned

those checks because he was not authorized to hold checks.

Because petitioners’ outstanding liability exceeded $25,000,

petitioners could not enter into a streamlined installment

agreement.   Therefore, Mr. Jacquez did not abuse his discretion

in rejecting the streamlined installment agreement.

     In addition, petitioners did not provide the requested

financial information that Mr. Jacquez needed to consider other

collection alternatives such as a regular installment agreement

or an offer-in-compromise.   Accordingly, we conclude that he did

not abuse his discretion by not considering other collection

alternatives.   See, e.g., Prater v. Commissioner, T.C. Memo.

2007-241.    Therefore, respondent’s determinations to proceed with

the proposed collection actions were not an abuse of discretion.



     10
      Although not applicable here, sec. 6159(c) requires the
Secretary to enter into an installment agreement in certain
circumstances generally involving tax liabilities of less than
$10,000.
                             - 20 -

     We have considered all arguments raised by either party, and

to the extent not discussed, we find them to be irrelevant, moot,

or without merit.

     To reflect the foregoing,

                                        Decisions will be entered

                                   for respondent.
