                         T.C. Memo. 2007-265



                       UNITED STATES TAX COURT



      JAMES E. ANDERSON AND CHERYL J. LATOS, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

                 CHERYL J. LATOS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 16522-02L, 5829-06L.    Filed September 5, 2007.



     Cheryl J. Latos, pro se.

     Frank W. Louis, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     CHIECHI, Judge:    Petitioners filed the respective petitions

in these consolidated cases in response to notices of determina-

tion concerning collection action(s) under section 6320 and/or

6330 (notice of determination) issued to James E. Anderson and
                               - 2 -

Cheryl J. Latos and to Cheryl J. Latos, respectively.   We must

decide whether to sustain the determinations in those notices.

We hold that we shall to the extent stated herein.

                         FINDINGS OF FACT

     All of the facts in each of these cases, which petitioner

Cheryl J. Latos (Ms. Latos) and respondent submitted under Rule

122,1 have been stipulated by them and are so found except to the

extent stated herein.2

     At the time Ms. Latos and Mr. Anderson filed the respective

petitions in these cases, they resided in Wood River Junction,

Rhode Island.

Case at Docket No. 16522-02L

     During 1998, Mr. Anderson worked as a fisherman on a U.S.

fishing vessel that had a crew of less than ten people.

     Ms. Latos and Mr. Anderson jointly filed Form 1040, U.S.

Individual Income Tax Return (Form 1040), for their taxable year


     1
      All Rule references are to the Tax Court Rules of Practice
and Procedure. All section references are to the Internal
Revenue Code in effect at all relevant times.
     2
      In the case at docket No. 16522-02L, respondent filed a
motion to dismiss for lack of prosecution as to petitioner James
E. Anderson (Mr. Anderson), the former spouse of Ms. Latos. The
Court shall grant that motion and shall enter the same decision
with respect to Mr. Anderson that the Court shall enter with
respect to Ms. Latos.

     Both Ms. Latos and Mr. Anderson are parties in the case at
docket No. 16522-02L, and only Ms. Latos is a party in the case
at docket No. 5829-06L. For convenience, we shall generally
refer only to Ms. Latos, and not to Ms. Latos and Mr. Anderson.
                                   - 3 -

1998 (1998 return).       In the 1998 return, Ms. Latos and Mr.

Anderson claimed four exemptions and a total exemption amount of

$22,800 and showed Federal income tax (income tax) due of $6,302.

When Ms. Latos and Mr. Anderson filed the 1998 return, they did

not pay the income tax due shown in that return.

       At a time not disclosed by the record, respondent determined

that Ms. Latos and Mr. Anderson made a mathematical error in

claiming in their 1998 return a total exemption amount for four

exemptions of $22,800, instead of $10,800.3      Respondent corrected

that mathematical error and the resulting error that Ms. Latos

and Mr. Anderson made in computing the amount of income tax due

shown in their 1998 return.       The correct amount of income tax

that Ms. Latos and Mr. Anderson should have shown due in that

return is $9,662 (correct amount of 1998 tax due).4

       On June 7, 1999, respondent assessed the correct amount of

1998 tax due, additions to tax under sections 6651(a)(2) and 6654

for Ms. Latos’ taxable year 1998, and interest as provided by

law.       (We shall refer to any such unpaid assessed amounts with

respect to Ms. Latos’ taxable year 1998, as well as interest

provided by law accrued after June 7, 1999, as Ms. Latos’ unpaid

1998 liability.)


       3
      Each exemption amount for the taxable year 1998 of Ms.
Latos and Mr. Anderson was $2,700.
       4
      The correct amount of 1998 tax due does not include any
self-employment tax.
                                - 4 -

     Respondent issued to Ms. Latos the notice and demand for

payment required by section 6303(a) with respect to Ms. Latos’

unpaid 1998 liability.

     On December 5, 2001, respondent issued to Ms. Latos a notice

of intent to levy and notice of your right to a hearing with

respect to, inter alia, her taxable year 1998 (1998 notice of

intent to levy).

     On December 9, 2001, in response to the 1998 notice of

intent to levy, Ms. Latos mailed to respondent Form 12153,

Request for a Collection Due Process Hearing (Ms. Latos’ Form

12153 with respect to the 1998 notice of intent to levy), and

requested a hearing with respondent’s Appeals Office (Appeals

Office).    In that form, Ms. Latos indicated that she did not

agree with the 1998 notice of intent to levy and gave the follow-

ing explanation for her disagreement:   “IRS MUST COLLECT FROM THE

EMPLOYER AND HAS NO STATUTORY AUTHORIZATION TO COLLECT FROM THE

EMPLOYEE.”    A two-page attachment to Ms. Latos’ Form 12153 with

respect to the 1998 notice of intent to levy stated in pertinent

part:

     Taxpayer is an employee.

        *        *       *        *       *       *       *

     Taxpayers have also requested that the IRS seek techni-
     cal advice on the provisions of TITLE 26 - INTERNAL
     REVENUE CODE Subtitle C - Employment Taxes CHAPTER 24 -
     COLLECTION OF INCOME TAX AT SOURCE.
                           - 5 -

IRC Sec. 3402.   Income tax collected at source

     •    (a) Requirement of withholding

          •      (1) In general
                 Except as otherwise provided in this
                 section, every employer making payment
                 of wages shall deduct and withhold upon
                 such wages a tax determined in accor-
                 dance with tables or computational pro-
                 cedures prescribed by the Secretary.

IRC Sec. 3403.   Liability for tax

     The employer shall be liable for the payment of
     the tax required to be deducted and withheld under
     this chapter, and shall not be liable to any per-
     son for the amount of any such payment

Treasury Regulation § 31.3403-1 Liability for tax

     Every employer required to deduct and withhold the
     tax under section 3402 from the wages of an em-
     ployee is liable for the payment of such tax
     whether or not it is collected from the employee
     by the employer. If, for example, the employer
     deducts less than the correct amount of tax, or if
     he fails to deduct any part of the tax, he is
     nevertheless liable for the correct amount of the
     tax. See, however, § 31.3402(d)-1. * * *

Treasury Regulation Sec. 31.6205-1 Adjustments of
underpayments.

     (a) In general. (1) An employer who makes, or has
     made, an undercollection or underpayment of--
     (iii) Income tax required under section 3402 to be
     withheld, with respect to any payment of wages or
     compensation, shall correct such error as provided
     in this section.

     (c) Income tax required to be withheld from
     wages--(4) Deductions from employee. If no income
     tax, or less than the correct amount of income
     tax, required under section 3402 to be withheld
     from wages is deducted from wages paid to an em-
     ployee in a calendar year, the employer shall
     collect the amount of the undercollection on or
                              - 6 -

          before the last day of such year by deducting such
          amount from remuneration of the employee, if any,
          under his control. Such deductions may be made
          even though the remuneration, for any reason, does
          not constitute wages. Any undercollection in a
          calendar year not corrected by a deduction made
          pursuant to the foregoing provisions of this sub-
          paragraph is a matter for settlement between the
          employee and the employer within such calendar
          year. For provisions relating to the employer’s
          liability for the tax, whether or not he collects
          it from the employee, see Sec. 31.3403-1 [T.D.
          6516, 25 FR 13032, Dec. 20, 1960; 25 FR 14021,
          Dec. 31, 1960, as amended by T.D. 7783, 46 FR
          37890, July 23, 1981]

     Treasury Regulation § 31.3402(d)-1 Failure to withhold.

          If the employer in violation of the provisions of
          section 3402 fails to deduct and withhold the tax,
          and thereafter the income tax against which the
          tax under section 3402 may be credited is paid,
          the tax under section 3402 shall not be collected
          from the employer. Such payment does not, how-
          ever, operate to relieve the employer from liabil-
          ity for penalties or additions to the tax applica-
          ble in respect of such failure to deduct and with-
          hold. The employer will not be relieved of his
          liability for payment of the tax required to be
          withheld unless he can show that the tax against
          which the tax under section 3403 may be credited
          has been paid. See § 31.3402-1, relating to lia-
          bility for tax. [Reproduced literally.]

     On December 7, 2001, respondent filed a notice of Federal

tax lien with respect to, inter alia, Ms. Latos’ taxable year

1998.

     On December 12, 2001, respondent issued to Ms. Latos a

notice of Federal tax lien filing and your right to a hearing

(notice of tax lien) with respect to, inter alia, Ms. Latos’
                               - 7 -

taxable year 1998 (1998 notice of tax lien).5

     On December 17, 2001, in response to the 1998 notice of tax

lien, Ms. Latos mailed to respondent Form 12153 (Ms. Latos’ Form

12153 with respect to the 1998 notice of tax lien) and requested

a hearing with the Appeals Office.     In that form, Ms. Latos

indicated that she did not agree with the 1998 notice of tax lien

and gave the following explanation for her disagreement:     “Re-

quested Appeals Hearings for all 3 years - never received hear-

ings.”   Attached to Ms. Latos’ Form 12153 with respect to the

1998 notice of tax lien was the first page of the two-page

attachment to Ms. Latos’ Form 12153 with respect to the 1998

notice of intent to levy.

     On January 29, 2002, a settlement officer with the Appeals

Office (settlement officer) held a conference with Ms. Latos with

respect to the 1998 notice of intent to levy and the 1998 notice

of tax lien.   During that conference, Ms. Latos claimed that

neither she nor Mr. Anderson is responsible for paying income tax

on the amounts that Mr. Anderson received during 1998 from his

fishing activities.   Instead, according to Ms. Latos, the alleged

employer of Mr. Anderson during that year is responsible for

paying such income tax.


     5
      Ms. Latos and respondent stipulated that respondent issued
the 1998 notice of tax lien to Ms. Latos on Dec. 6, 2001. That
stipulation is clearly contrary to the facts that we have found
are established by the record, and we shall disregard it. See
Cal-Maine Foods, Inc. v. Commissioner, 93 T.C. 181, 195 (1989).
                                 - 8 -

     On October 10, 2002, the Appeals Office issued to Ms. Latos

a notice of determination with respect to, inter alia, her

taxable year 1998 (1998 notice of determination).       That notice

stated in pertinent part:

     Summary of Determination
     Your position on the liability for the Income Tax is
     without merit. You have not proposed any viable alter-
     natives to enforced collection action. Without suffi-
     cient response to requests for information and alterna-
     tives, Appeals has determined that no choice exists but
     to return the matter to the jurisdiction of the Compli-
     ance Division for necessary action.

An attachment to the 1998 notice of determination stated in

pertinent part:

                          Attachment to 3193

                        Collection Due Process
                          Lien and Levy Issue

                  James E. Anderson & Cheryl J. Latos

                      Summary and Recommendation

     * * * You submitted two Forms 12153, Request for a
     Collection Due Process Hearing, in response to the
     issuance of Letter 1058, Final Notice: Notice of Intent
     to Levy and Notice of Your Rights to a Hearing issued
     on December 5, 2001 and the filing of a Notice of
     Federal Tax Lien on December 6, 2001. Your 12153
     requests were received on December 12, 2001 and Decem-
     ber 19, 2001 respectively. The settlement officer
     conducting the hearing has had no prior involvement
     with these matters. The impact of the hearing request,
     on the statute of limitations, has been verified to be
     proper.

     The request for a collection due process hearing was
     timely made and the hearing was conducted in expedi-
     tious fashion at your request. Neither in your written
     communication nor at the hearing, did you raise any
                         - 9 -

issues that would provide for relief from the collec-
tion action proposed. No alternative security, to that
afforded by the Notice of Federal Tax Lien, was of-
fered. It is the recommendation of Appeals that the
proposed levy action and the filing of the Notice of
Federal Tax Lien be sustained.

                   Brief Background

You have been engaged in a dispute with the Service
with respect to the employment status of Mr. Anderson
for a number of years. This matter involves * * * 1998
* * *. It relates to your position that Mr. Anderson
is an employee and that the employer should have with-
held federal income taxes from his wages. Your conten-
tion is that Mr. Anderson is an employee and that all
taxes are the responsibility of his employer. Previous
tax years have been subject to Examination, Collection,
Taxpayer Advocate and Appeals consideration. They are
currently at various stages of the judicial process.

At the hearing you indicated that Mr. Anderson is a
fishing boat captain. In 1998 * * * he received his
compensation from work performed on a fishing vessel.
No federal income taxes were actually withheld in the
years in question.

The issue of withholding tax has been decided by Church
810 F.2nd19 1987 87-1 USTC 9145. The United States Tax
Court ruled, and the 2nd Circuit Court of Appeals af-
firmed, that failure of an employer to withhold the tax
did not lessen the taxpayer’s obligation to report and
pay tax on the income received. Other than your posi-
tion that the employer should be liable for the with-
holding tax no other issues were raised. You declined
to discuss alternatives to the Lien and Levy. Accord-
ingly, the determination is based upon a review of the
available information. The collection action should be
sustained.

                Discussion and Analysis

Verification that Law and Procedures were followed

Under IRC section 6330 you are entitled in a Collection
Due Process matter to raise the issue of liability if
you did not otherwise have an opportunity to so. In
this particular case no Statutory Notice of Deficiency
                        - 10 -

for the liability was issued nor did you have any other
venue to raise the issue of liability. The hearing
allowed for you to present your arguments with respect
to this liability. You did so and also chose not to
discuss any collection alternatives. You contend that
your position is correct and any alternative to collec-
tion would undermine efforts to hold the employer
responsible, for all taxes, in connection with the work
preformed by Mr. Anderson. Discussion did take place
with respect to the impact that the Notice of Federal
Tax Lien is having upon your financial situation.
Alternatives, such as a bond, letter of credit and
substitute protection, to the security provided the
United States by the Federal Tax Lien, were suggested.
You avoided any discussion of alternatives citing your
position relative to the assessment.

The review of the administrative file and computer
records indicates that all procedural and legal re-
quirements have been met. Notice and demand was issued
and neglect or refusal to pay has occurred. IRC Sec-
tion 6331 (d) requires that the Internal Revenue Ser-
vice notify a taxpayer at least 30 days before a Notice
of Levy can be issued. Transcripts show that this
notice was mailed to you. You timely responded and an
opportunity for a hearing with the Office of Appeals
has been provided. The Notice of Federal Tax Lien was
properly requested. The record reveals that the as-
sessments were made, that verification of the existence
of the liability was verified and the requesting offi-
cial was properly authorized to make such request.

The tax return for the year 1998 was assessed on June
7, 1999. * * * The assessments were all properly made.
You have neglected or refused to pay the liabilities.
A review of the computer files shows that the outstand-
ing balances are still due and owing. A Letter 1058,
Final Notice - Notice of Intent to Levy and Notice of
Your Rights to a Hearing, was issued on December 6,
2001.[6] The Form 12153 contesting the levy action was
filed on December 12, 2001. The request was timely.
The Notice of Federal Tax Lien was filed on December 7,
2001. The Form 12153 contesting the action was re-
ceived in a timely manner on December 19, 2001. The
original request indicated that you had requested a


6
 See supra note 5.
                        - 11 -

hearing and never received one.

Appeals has verified, or received verification, that
applicable laws and administrative procedures have been
met, has considered the issues raised, and has balanced
the collection action with the legitimate concerns that
such action be no more intrusive than necessary as
required by IRC 6330(c)(3).

Information in the case file shows that the Internal
Revenue Service followed law and procedure in this
case. The liabilities were properly assessed. Notice
and demand was made and the assessments were not paid.

IRC § 6330(c) allows the taxpayer to raise any relevant
issues relating to the unpaid tax on the proposed levy
at the scheduled hearing. On January 29, 2002 a hear-
ing was held. Only Cheryl Latos attended. Discussions
centered on the validity of the liabilities, you es-
chewed discussion of alternatives to the proposed
enforced collection actions.

Issues raised by the taxpayer

You raised the issue of the validity of the assessment.
In this appeal, the issue involved the tax assessments
for [inter alia] * * * 1998 * * *. It related only to
income tax. The current tax assessed is not related to
self-employment. Based upon the discussion at the
hearing, held on January 29, 2002, you contend that Mr.
Anderson is an employee. You indicate that it is the
responsibility of the employer to withhold taxes. The
law does not support your position. No withholding was
taken from the remuneration of Mr. Anderson. No esti-
mated payments were ever made for the years in ques-
tion. As previously cited above, Church 810 F2nd 1987
87-1 USTC 1945 , the fact that an employer does not
withhold does not lessen your obligation to pay the
income tax.

You raised no other issues at the hearing. Attempts to
discuss collection alternatives were met with a nega-
tive response. A request for financial information
that could facilitate alternatives was declined. Your
belief is that the liability issue should be resolved
in your favor and collection alternatives would there-
fore be unnecessary.
                               - 12 -

     Balancing Efficient Collection and Intrusiveness

     Levy action appears to be the most efficient and least
     intrusive manner in which to resolve the liability.
     Had the requested financial information been provided
     and a viable alternative proposed, perhaps another
     alternative could have been explored. You failed to
     demonstrate that the proposed action is overly intru-
     sive or that a better alternative is available. Absent
     the requested information and viable alternative pro-
     posals, it is the determination of Appeals that the
     intended levy balances the efficient collection of
     taxes with your legitimate concern that the collection
     action be no more intrusive than necessary.

     With respect to the Notice of Federal Tax Lien you have
     also failed to demonstrate that the action is overly
     intrusive or that a better alternative is available.
     No security other than that proposed by the lien has
     been proposed. At the hearing you indicated that you
     were attempting to use the equity in your home to
     refinance. Your stated intention was to pay unsecured
     debt and make certain household improvements. It
     appears that the absence of the Lien would leave the
     tax liabilities unsecured and conceivably unpaid.

     The proposed Levy action as well as the filing of the
     Notice of Federal Tax Lien is sustained. [Reproduced
     literally.]

Case at Docket No. 5829-06L

     Ms. Latos and Mr. Anderson jointly filed Form 1040 for their

taxable year 1995 (1995 return).   In their 1995 return, Ms. Latos

and Mr. Anderson showed income tax due of $5,441, which they paid

when they filed that return.

     On January 30, 1997, respondent issued a notice of defi-

ciency to Ms. Latos with respect to her taxable year 1995.     On

April 10, 1997, respondent rescinded that notice in order to

allow Ms. Latos an opportunity to contest administratively the
                               - 13 -

determinations therein.   Ms. Latos and respondent were unable to

resolve administratively their differences with respect to Ms.

Latos’ taxable year 1995.    As a result, on May 6, 1997, respon-

dent issued a notice of deficiency to Ms. Latos with respect to

that year (1995 notice of deficiency).   In that notice, respon-

dent determined a deficiency in self-employment tax relating to

certain fishing activities of Mr. Anderson during 1995.   Ms.

Latos did not file a petition with the Court with respect to the

1995 notice of deficiency.

     On September 29, 1997, respondent assessed the self-employ-

ment tax determined in the 1995 notice of deficiency and interest

as provided by law.   During January 1999, Ms. Latos discussed

that assessment with respondent’s problem resolution office.     As

a result, respondent abated a portion of the self-employment tax

assessed for Ms. Latos’ taxable year 1995 so as to reduce the

amount of such self-employment tax liability to the amount of tax

under the Federal Insurance Contributions Act (FICA tax) for

which Ms. Latos and Mr. Anderson would have been liable if Mr.

Anderson had been treated as an employee for that year.   (We

shall refer to any such unpaid and unabated assessed amounts with

respect to Ms. Latos’ taxable year 1995, as well as interest as

provided by law accrued after September 29, 1997, as Ms. Latos’

unpaid 1995 liability.)

     Respondent issued to Ms. Latos the notice and demand for
                              - 14 -

payment required by section 6303(a) with respect to Ms. Latos’

unpaid 1995 liability.

     Ms. Latos and Mr. Anderson jointly filed Form 1040 for their

taxable year 1996 (1996 return).   In their 1996 return, Ms. Latos

and Mr. Anderson showed income tax due of $4,924, which they did

not pay when they filed that return.7

     On May 26, 1997, respondent assessed the income tax due

shown in the 1996 return, additions to tax under sections

6651(a)(2) and 6654 for Ms. Latos’ taxable year 1996, and inter-

est as provided by law.   (We shall refer to any such unpaid

assessed amounts with respect to Ms. Latos’ taxable year 1996, as

well as interest as provided by law accrued after May 26, 1997,

as Ms. Latos’ unpaid 1996 liability.)

     Respondent issued to Ms. Latos the notice and demand for

payment required by section 6303(a) with respect to Ms. Latos’

unpaid 1996 liability.

     Ms. Latos and Mr. Anderson jointly filed Form 1040 for their

taxable year 1997 (1997 return).   In their 1997 return, Ms. Latos

and Mr. Anderson showed income tax due of $3,491, which they did

not pay when they filed that return.8

     On June 8, 1998, respondent assessed the income tax due


     7
      The income tax due shown in the 1996 return does not in-
clude any self-employment tax.
     8
      The income tax due shown in the 1997 return does not in-
clude any self-employment tax.
                              - 15 -

shown in the 1997 return, additions to tax under sections

6651(a)(2) and 6654 for Ms. Latos’ taxable year 1997, and inter-

est as provided by law.   (We shall refer to any such unpaid

assessed amounts with respect to Ms. Latos’ taxable year 1997, as

well as interest as provided by law accrued after June 8, 1998,

as Ms. Latos’ unpaid 1997 liability.   We shall refer collectively

to Ms. Latos’ unpaid 1995 liability, Ms. Latos’ unpaid 1996

liability, Ms. Latos’ unpaid 1997 liability, and Ms. Latos’

unpaid 1998 liability as Ms. Latos’ unpaid 1995, 1996, 1997, and

1998 liabilities.)

     Respondent issued to Ms. Latos the notice and demand for

payment required by section 6303(a) with respect to Ms. Latos’

unpaid 1997 liability.

     On February 9, 2001, respondent received from Ms. Latos a

request for technical advice as to whether Mr. Anderson was an

employee or self-employed during 1996 and 1997.   On September 12,

2001, respondent held a telephonic conference with Ms. Latos

regarding respondent’s proposed technical advice with respect to

that request and gave Ms. Latos 21 days within which to respond.

     On December 17, 2001, respondent mailed to Ms. Latos the

technical advice memorandum (TAM) that respondent issued in

response to Ms. Latos’ request for technical advice.   The effects

of respondent’s conclusions in that TAM were (1) that Mr. Ander-

son was an employee of the owners of the boats on which he
                             - 16 -

engaged in fishing activities during 1996 and (2) that he was

self-employed when he engaged in such activities during 1997.

     Consistent with the TAM, on February 8, 2002, respondent

assessed FICA tax with respect to Ms. Latos’ taxable year 1996.9

On the same date, respondent also assessed interest as provided

by law with respect to that year.

     On November 12, 2003, respondent filed a notice of Federal

tax lien with respect to, inter alia, Ms. Latos’ taxable years

1995 through 1997 (1995 through 1997 tax lien filing).10

     On November 12, 2003, respondent issued to Ms. Latos a

notice of Federal tax lien with respect to, inter alia, her

taxable years 1995 through 1997 (1995 through 1997 notice of tax

lien).11

     On November 17, 2003, in response to the 1995 through 1997

notice of tax lien, Ms. Latos mailed to respondent Form 12153 and

requested a hearing with the Appeals Office.   In that form, Ms.

Latos indicated that she did not agree with the 1995 through 1997


     9
      See infra note 13.
     10
      The amount with respect to Ms. Latos’ taxable year 1996
shown in the 1995 through 1997 tax lien filing under the heading
“Unpaid Balance” included, inter alia, the FICA tax and any
interest thereon that respondent assessed on Feb. 8, 2002. See
infra note 13.
     11
      The amount with respect to Ms. Latos’ taxable year 1996
shown in the 1995 through 1997 notice of tax lien under the
heading “Amount Owed” included, inter alia, the FICA tax and any
interest thereon that respondent assessed on Feb. 8, 2002. See
infra note 13.
                              - 17 -

notice of tax lien and gave the following explanation for her

disagreement:

     NOT SELF-EMPLOYED
     IRC Sec. 3403
              3102(b)

     On January 24, 2006, a settlement officer held a telephonic

conference with Ms. Latos with respect to the 1995 through 1997

notice of tax lien.   During that conference, Ms. Latos claimed

that neither she nor Mr. Anderson is responsible for paying

income tax on the respective amounts that Mr. Anderson received

during 1995,12 1996, and 1997 from his fishing activities.

Instead, according to Ms. Latos, the alleged employer of Mr.

Anderson during those years is responsible for paying such tax.

     On February 16, 2006, the Appeals Office issued to Ms. Latos

a notice of determination with respect to, inter alia, her

taxable years 1995 through 1997 (1995 through 1997 notice of

determination).   That notice stated in pertinent part:

     Summary of Determination
     The Federal Tax Lien is sustained.

An attachment to the 1995 through 1997 notice of determination

stated in pertinent part:




     12
      As discussed above, Ms. Latos’ unpaid 1995 liability is
based on respondent’s determination of a deficiency in self-
employment tax, and not income tax, for her taxable year 1995.
See discussion infra note 20 regarding the nature of the self-
employment tax.
                              - 18 -

                     Attachment to Letter 3193

                                        Date of Notice of
Tax Form / Type           Tax Period     Federal Tax Lien
      *          *       *      *      *         *   *
          1040            12-31-1995        11-07-2003
          1040            12-31-1996        11-07-2003
          1040            12-31-1997        11-07-2003
      *          *       *      *      *         *   *

The IRS received from you Form 12153, postmarked 11-22-
2003. This is a request for a Collection Due Process
Hearing. You filed this form in response to the Col-
lection Department’s recordation of Notices of Federal
Tax Lien against you relative to the above listed
liabilities. The statutes for collection of these
liabilities were suspended during the hearing process
because your request for a hearing was mailed prior to
the deadline for timely filing as provided for in IRC
section 6330. * * *

The Settlement Officer in this case had no prior in-
volvement with the liabilities in question.

Verification that Law and Procedure were Followed

Information in the administrative case file and related
computer records shows that the IRS followed law and
procedure in this case. * * * The assessments in ques-
tion were properly made under IRC section 6201, and
notice and demand was sent to you as per IRC section
6303. You did not pay the liabilities. The IRS gave
you additional opportunities to pay the balances due
voluntarily, but you failed to do so. The Collection
Department recorded the liens to protect the govern-
ment’s interest.

Relevant Issues Raised by the Taxpayer

On the Form 12153 you state “Not Self Employed IRC Sec.
3403 and 3102(b).” The Federal Tax Lien will not be
released until the full balances of all the tax years
involved are paid in full. At your hearing it was
discussed that the equity in * * * [Ms. Latos’ resi-
                             - 19 -

     dence] should be liquidated by either refinancing or
     selling the property.

             Balancing Efficient Collection with the
         Instructiveness of Proposed Collection Actions

     Although the tax liens are inherently intrusive, you
     have proposed no other method of securing the govern-
     ment’s interest. Therefore, the liens should remain on
     file until the balances due in question are fully paid.
     [Reproduced literally.]

                             OPINION

     A taxpayer may raise challenges to the existence or the

amount of the taxpayer’s underlying tax liability if the taxpayer

did not receive a notice of deficiency or did not otherwise have

an opportunity to dispute such liability, sec. 6330(c)(2)(B),

including the tax liability reported in the return that such

taxpayer filed, Montgomery v. Commissioner, 122 T.C. 1 (2004).

Where the validity of the underlying tax liability is properly at

issue, the Court will review the matter on a de novo basis.

Where the validity of the underlying tax liability is not prop-

erly at issue, the Court will review the determinations of the

Commissioner of Internal Revenue for abuse of discretion. Sego v.

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

T.C. 176, 181-182 (2000).

     Before turning to the position of Ms. Latos in these cases,

it is important to bear in mind that Ms. Latos and respondent

stipulated that (1) it is only the unpaid assessed self-employ-

ment tax determined in the 1995 notice of deficiency (as well as
                                 - 20 -

interest as provided by law) that is at issue for Ms. Latos’

taxable year 1995; (2) it is only the unpaid assessed income tax

due shown in each of the income tax returns for Ms. Latos’

taxable years 1996 and 1997 (as well as assessed additions to tax

and interest as provided by law) that is at issue for each of

those years; and (3) it is only the unpaid assessed income tax

due shown in the 1998 return, increased by the income tax attrib-

utable to the mathematical error made in that return in calculat-

ing the total amount of exemptions allowable (as well as assessed

additions to tax and interest as provided by law), that is at

issue for Ms. Latos’ taxable year 1998.

     It is Ms. Latos’ position that the Court should not sustain

the determinations with respect to her taxable years 1995 through

1998 set forth in the respective notices of determination upon

which these cases are based.13    In support of that position, Ms.

Latos argues that, because Mr. Anderson was an employee of the

owners of the boats on which he engaged in fishing activities

during each of the years 1995 through 1998, each such owner, as

Mr. Anderson’s employer, is responsible under section 3403 for

paying Ms. Latos’ unpaid 1995, 1996, 1997, and 1998 liabili-



     13
      We do not have deficiency jurisdiction over the FICA tax
(or any interest thereon) with respect to Ms. Latos’ taxable year
1996. See Chatterji v. Commissioner, 54 T.C. 1402, 1405 (1970).
Consequently, we do not have jurisdiction over respondent’s
determinations in the 1995 through 1997 notice of determination
with respect thereto. See sec. 6330(d)(1).
                               - 21 -

ties.14   In further support of her position that the Court should

not sustain the determinations at issue, Ms. Latos argues that

respondent abused respondent’s discretion in making those deter-

minations because the settlement officer did not “verify that all

applicable laws and procedures for the collection of employment

taxes have been met in accordance with I.R.C. § 6330(c)(1).”

(Emphasis added.)

     In Anderson v. Commissioner, T.C. Memo. 2003-112, Ms. Latos

and Mr. Anderson filed a petition with the Court in response to a

notice of determination regarding a notice of intent to levy with

respect to their taxable years 1995 through 1997.15   Ms. Latos

and Mr. Anderson advanced in Anderson essentially the same

arguments that Ms. Latos advances in the instant cases.

     In Anderson v. Commissioner, supra, the Court held that Ms.

Latos and Mr. Anderson were precluded under section 6330(c)(2)(B)

from challenging the underlying tax liability for their taxable

year 1995 because they (1) received a notice of deficiency for

that year in which respondent determined a deficiency in self-

employment tax and (2) failed to file a petition with the Court




     14
      Ms. Latos does not contest the respective amounts of Ms.
Latos’ unpaid 1995, 1996, 1997, and 1998 liabilities.
     15
      In the case at docket No. 5829-06L, Ms. Latos filed a
petition with the Court in response to the 1995 through 1997
notice of determination regarding a notice of tax lien with
respect to, inter alia, her taxable years 1995 through 1997.
                                 - 22 -

with respect to that notice.16    For the reasons stated in Ander-

son v. Commissioner, supra, we hold that Ms. Latos may not

challenge Ms. Latos’ unpaid 1995 liability.

     In Anderson v. Commissioner, supra, the Court further held

that, because Ms. Latos and Mr. Anderson did not receive a notice

of deficiency with respect to their taxable year 1996 or their

taxable year 1997 and did not otherwise have an opportunity to

contest the underlying tax liability for each such year, they

were entitled to challenge each such underlying tax liability.

     In challenging the respective income tax liabilities for

their taxable years 1996 and 1997, Ms. Latos and Mr. Anderson

argued in Anderson v. Commissioner, supra, as Ms. Latos argues

here, that the alleged employer of Mr. Anderson during each of


     16
      In Anderson v. Commissioner, T.C. Memo. 2003-112, Ms.
Latos and Mr. Anderson argued with respect to their taxable year
1995, inter alia, that the Court did not have jurisdiction over
that year because the actions of respondent’s problem resolution
office in abating a portion of the self-employment tax assessed
for 1995 converted such self-employment tax to FICA tax. The
Court rejected that argument and held that it had jurisdiction
over taxable year 1995 because the actions of respondent’s
problem resolution office did “not change the fact that the 1995
liability was assessed as self-employment tax under the defi-
ciency procedures.” Id.

     In Anderson v. Commissioner, supra, Ms. Latos and Mr.
Anderson also challenged the underlying tax liability for their
taxable year 1995, as Ms. Latos does here, on the same ground on
which they challenged in Anderson, as Ms. Latos does here, the
underlying tax liability for each of the taxable years 1996 and
1997, viz., the alleged employer of Mr. Anderson during each of
those years is responsible for paying each of those liabilities.
As discussed below, in Anderson, the Court rejected that argument
as to taxable years 1996 and 1997. Id.
                                  - 23 -

the years 1996 and 1997 was responsible for paying the respective

unpaid income tax liabilities for those years.       The Court re-

jected that argument.      According to the Court,

      The obvious fallacy in petitioners’ reasoning is that
      the income tax is petitioners’ obligation in the first
      instance. An employer, on the other hand, is an inter-
      mediary or collection agent who may be obligated to
      withhold amounts from an employee for the employee’s
      future use as a credit or payment of any income tax
      liability. Whether Mr. Anderson was self-employed or
      instead was an employee of the boat owners, the fact
      remains that nothing was withheld from what they paid
      him. Thus his gross receipts from that source are
      subject to income tax in their entirety, with no credit
      for withholding. * * *

      * * * Petitioners’ arguments are without substance and
      constitute nothing more than mere protester type argu-
      ments, which are not worthy of further analysis or
      review.

      Accordingly, we hold that petitioners are liable for
      the income tax, as reported by them, for 1996 and 1997.

Id.

      Ms. Latos did not receive a notice of deficiency with

respect to her taxable years 1996 and 1997.      However, in Anderson

v. Commissioner, supra, Ms. Latos and Mr. Anderson had the

opportunity to dispute the underlying tax liability for each of

those years, and they did so, albeit unsuccessfully.       On the

record before us, we conclude that Ms. Latos may not challenge

Ms. Latos’ unpaid 1996 liability or Ms. Latos’ unpaid 1997

liability.17


      17
           Assuming arguendo that we had concluded that Ms. Latos is
                                                        (continued...)
                                - 24 -

     Ms. Latos did not receive a notice of deficiency with

respect to her taxable year 1998.     Nor did she otherwise have an

opportunity to dispute the underlying tax liability for that

year.     We shall review that liability on a de novo basis.   Sego

v. Commissioner, 114 T.C. at 610.     Ms. Latos advances essentially

the same arguments here with respect to Ms. Latos’ unpaid 1998

liability that she and Mr. Anderson advanced, and the Court

rejected, in Anderson v. Commissioner, T.C. Memo. 2003-112, with

respect to their unpaid income tax liability for each of their

taxable years 1996 and 1997.     For the reasons stated in Anderson


     17
      (...continued)
entitled to challenge the underlying tax liability for each of
her taxable years 1996 and 1997, we reject her argument with
respect to each such liability for the reasons stated in Anderson
v. Commissioner, supra. In this connection, we note that Ms.
Latos also relies in the instant cases on United States v.
Galletti, 541 U.S. 114 (2004), a case that the Supreme Court of
the United States (Supreme Court) decided after the Court issued
Anderson. Ms. Latos’ reliance on Galletti is misplaced. The
issue presented in Galletti was whether the proper assessment of
income tax that a partnership was required to withhold under sec.
3403 extended the period of limitations to collect such tax from
the partnership’s general partners who were liable for the
payment of the partnership’s debts. United States v. Galletti,
supra. The Supreme Court held that it did. Id. The Supreme
Court did not hold in Galletti that an employer is responsible
for paying the income tax liability of an employee of such
employer. Id. As the United States Court of Appeals for the
Second Circuit held in Church v. Commissioner, 810 F.2d 19, 20
(2d Cir. 1987):

     It is clear that the failure of an employer to meet its
     obligation to withhold income tax does not in any way
     lessen the obligation of an employee to pay income tax.
     Indeed, we have long since rejected the contrary posi-
     tion even in the context of a criminal prosecution.
     [Citations omitted.]
                                - 25 -

v. Commissioner, supra, we reject Ms. Latos’ arguments here with

respect to Ms. Latos’ unpaid 1998 liability.18

     In Anderson v. Commissioner, supra, the Court further held

that respondent’s Appeals officer complied with the verification

requirements of section 6330(c)(1) and that respondent did not

abuse respondent’s discretion in making the determinations at

issue in that case.     For the reasons stated in Anderson v.

Commissioner, supra, we find that the settlement officer involved

in each of the instant cases complied with the verification

requirements of section 6330(c)(1) and that respondent did not

abuse respondent’s discretion in making the respective determina-

tions over which we have jurisdiction19 in the 1995 through 1997

notice of determination and the 1998 notice of determination.20


     18
      See also discussion supra note 17 addressing Ms. Latos’
misplaced reliance on United States v. Galletti, supra.
     19
          See supra note 13.
     20
      We reject as baseless Ms. Latos’ argument that the settle-
ment officer involved in each of the instant cases did not comply
with the verification requirements of sec. 6330(c)(1) because
such settlement officer did not “verify that all applicable laws
and procedures for the collection of employment taxes have been
met”. (Emphasis added.) The instant cases involve the collec-
tion of Ms. Latos’ unpaid self-employment tax liability for her
taxable year 1995 and her unpaid income tax liability for each of
her taxable years 1996, 1997, and 1998. These cases do not
involve the collection of employment tax for any of those years.
We note that although the self-employment tax is collected
together with the income tax, it is not part of the income tax
itself. Chatterji v. Commissioner, 54 T.C. at 1404. As we
indicated in Chatterji, “The self-employment tax imposed is ‘an
additional tax on the income derived by the self-employed * * *
                                                   (continued...)
                               - 26 -

     Based upon our examination of the entire record before us,

we hold that we shall sustain respondent’s respective determina-

tions over which we have jurisdiction21 in the 1995 through 1997

notice of determination and the 1998 notice of determination.

     Although respondent does not ask us to impose a penalty on

Ms. Latos under section 6673(a)(1), we consider sua sponte

whether we should impose a penalty on her under that section.

Section 6673(a)(1) authorizes the Court to require a taxpayer to

pay a penalty to the United States in an amount not to exceed

$25,000 whenever it appears that the taxpayer instituted or

maintained a proceeding in the Court primarily for delay or that

the taxpayer’s position in such a proceeding is frivolous or

groundless.

     As discussed above, Ms. Latos advances in the instant cases

essentially the same arguments with respect to each of her

taxable years 1995 through 1998 that she and Mr. Anderson ad-

vanced with respect to their taxable years 1995 through 1997 in

Anderson v. Commissioner, T.C. Memo. 2003-112.   With respect to

her taxable year 1995 at issue here, in Anderson v. Commissioner,

supra, the Court held that Ms. Latos and Mr. Anderson were

precluded under section 6330(c)(2)(B) from challenging the



     20
      (...continued)
[taxpayer] as an employee.’”   Id. (citation omitted).
     21
          See supra note 13.
                                - 27 -

underlying tax liability for that year because (1) they received

a notice of deficiency for that year and (2) failed to file a

petition with the Court with respect to that notice.    Nonethe-

less, Ms. Latos continues to challenge here the underlying tax

liability for her taxable year 1995 in the case at docket No.

5829-06L.   With respect to her taxable years 1996, 1997, and 1998

at issue here, in Anderson v. Commissioner, supra, the Court

reviewed on a de novo basis the underlying tax liability of Ms.

Latos and Mr. Anderson for each of their taxable years 1996 and

1997 and held that their arguments with respect to those liabili-

ties were “without substance and constitute nothing more than

mere protester type arguments, which are not worthy of further

analysis or review.”     Nonetheless, Ms. Latos continues to advance

here essentially the same arguments with respect to her taxable

years 1996, 1997, and 1998 that she and Mr. Anderson advanced in

Anderson v. Commissioner, supra, with respect to their taxable

years 1996 and 1997.22

     We believe that Ms. Latos instituted and maintained each of

the instant cases primarily for delay and that her position with

respect to each of her taxable years 1995 through 1998 is frivo-

lous and/or groundless.    Although we shall not impose a penalty

under section 6673(a)(1) on Ms. Latos in the instant cases, we



     22
      We found above that Ms. Latos may not challenge the under-
lying tax liability for each of her taxable years 1996 and 1997.
                              - 28 -

caution her that she may be subject to such a penalty if in the

future she institutes or maintains a proceeding in the Court

primarily for delay and/or her position in any such proceeding is

frivolous or groundless.   See Abrams v. Commissioner, 82 T.C.

403, 409-413 (1984); White v. Commissioner, 72 T.C. 1126, 1135-

1136 (1979).

     We have considered all of the contentions and arguments of

Ms. Latos that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.

     To reflect the foregoing,


                                      Decision will be entered for

                                 respondent in the case at docket

                                 No. 16522-02L and an appropriate

                                 decision will be entered for

                                 respondent in the case at docket

                                 No. 5829-06L.
