                  T.C. Summary Opinion 2004-172



                     UNITED STATES TAX COURT



             DAVID AND LUDMILA KLET, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4486-04S.                Filed December 20, 2004.


     David and Ludmila Klet, pro sese.

     Mindy S. Meigs, for respondent.



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

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the years in issue, and all Rule

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

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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     This case is before the Court on respondent’s motion for

summary judgment under Rule 121.    This proceeding arises from a

petition for judicial review filed in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 sent to petitioners.

     Some of the facts in this case have been stipulated and are

so found.    Petitioners resided in Los Angeles, California, at the

time they filed their petition.

     Petitioners received an extension to file their 1992 Form

1040, U.S. Individual Income Tax Return (return), to October 15,

1993.    Petitioners then filed their 1992 return late on December

18, 1993.    Petitioners received an extension to October 15, 1994,

and October 15, 1995, to file their 1993 and 1994 returns,

respectively.    Petitioners then filed the tax returns late on

September 5, 1995, and October 10, 1995, respectively.

Petitioners received an extension to file their 1995 return to

October 15, 1996.    Petitioners then filed their 1995 tax return

late on August 16, 1997.

     As stated, petitioners timely filed extensions in which to

file their returns for 1992, 1993, 1994, and 1995 (the four

years).    Petitioners then filed late joint returns for these four

years.     They failed to pay all of the liabilities reported on

the returns.    Respondent assessed the reported liabilities, along

with additions to tax and interest, for the respective years.
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     On September 30, 1996, petitioners filed a bankruptcy

petition under Chapter 13 of the United States Bankruptcy Code in

California.   On October 15, 1996, the Internal Revenue Service

filed a proof of claim in petitioners’ bankruptcy proceeding

which included $45,814.97 in income tax liabilities plus interest

for the four years.   On November 1, 1996, petitioners’ bankruptcy

proceeding was converted from a Chapter 13 to a Chapter 7

bankruptcy proceeding.   On March 14, 1997, the bankruptcy court

entered an order of discharge in the petitioners’ bankruptcy

case.

     On February 11, 2003, respondent filed a Notice of Federal

Tax Lien with the Los Angeles County Recorder’s Office in

connection with petitioners’ unpaid income tax liabilities for

the four years.   On February 14, 2003, respondent issued to

petitioners a Notice of Federal Tax Lien Filing and Your Right to

a Hearing Under IRC 6320 (the notice), which advised petitioners

that a notice of Federal tax lien has been filed with respect to

their unpaid income tax liabilities for the four years, and that

petitioners were entitled to a hearing.

     On March 25, 2003, petitioners timely filed Form 12153,

Request for Collection Due Process Hearing.   In their request,

petitioners claimed that the tax liabilities for the four years

were discharged in the bankruptcy proceeding.

     On December 9, 2003, a face-to-face conference was held
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between an Appeals officer and petitioners.   During the hearing,

petitioners said that all the money owed to the Internal Revenue

Service was discharged with their other debts in a bankruptcy

proceeding.

     On February 13, 2004, respondent issued to petitioners a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 (Notice of Determination), with respect

to petitioners’ income tax liabilities for the four years.

     On March 11, 2004, petitioners filed a petition with this

Court based on the Notice of Determination.   The petition was

filed as a petition for lien or levy action under section 6320(c)

or 6330(d).   Petitioners challenge their liabilities for the

years in issue only on the ground that the liabilities were

discharged by the bankruptcy court.

     Rule 121(a) allows a party to move “for a summary

adjudication in the moving party’s favor upon all or any part of

the legal issues in controversy.”   Rule 121(b) directs that a

decision on such a motion shall be rendered “if the pleadings,

answers to interrogatories, depositions, admissions, and any

other acceptable materials, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.”

     The moving party bears the burden of demonstrating that no

genuine issue of material fact exists and that he or she is
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entitled to judgment as a matter of law.       Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994).   Facts are viewed in the light most favorable to the

nonmoving party.     Id.   However, where a motion for summary

judgment has been properly made and supported by the moving

party, the opposing party may not rest upon mere allegations or

denials contained in that party’s pleadings but must, by

affidavits or otherwise, set forth specific facts showing that

there is a genuine issue for trial.      Rule 121(d).

     Section 6321 imposes a lien in favor of the United States

upon all property and rights to property of a taxpayer where

there exists a failure to pay any tax liability after demand for

payment.   The lien generally arises at the time assessment is

made.   Sec. 6322.

     The Secretary must notify in writing the person described in

section 6321 of the filing of a notice of lien under section

6323.   Sec. 6320(a)(1).   The notice required by section 6320 must

advise the taxpayer of the opportunity for administrative review

of the matter in the form of a hearing before the Internal

Revenue Service Office of Appeals.       Section 6320(b) and (c) grant

a taxpayer, who so requests, the right to a fair hearing before

an impartial Appeals officer, generally to be conducted in

accordance with the procedures described in section 6330(c).

     Section 6330(c) addresses the matters to be considered at
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the hearing.    As relevant here, a taxpayer may challenge the

appropriateness of the Commissioner’s collection actions and

submit offers of collection alternatives.    Sec. 6330(c)(2)(A)(ii)

and (iii).    The taxpayer may also raise challenges to the

existence or amount of the underlying tax liability if the

taxpayer did not receive a statutory notice of deficiency for the

liability or did not otherwise have an opportunity to dispute the

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

     Once the Appeals officer has issued a determination

regarding the disputed collection action, the taxpayer may seek

judicial review in the Tax Court or, if the Tax Court lacks

jurisdiction in the matter, in a U.S. District Court.    Sec.

6330(d).   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).

     The Tax Court has jurisdiction in a lien proceeding,

instituted under section 6330(d)(1), to determine whether a

petitioner’s unpaid liabilities were discharged in bankruptcy.

Washington v. Commissioner, 120 T.C. 114, 120-121 (2003).

     In this case, petitioners’ only challenge with respect to

the collection notice is a claim that the bankruptcy court had
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discharged their liabilities.

     The March 14, 1997, discharge order generally releases the

petitioners from all dischargeable debts, “(a) debts

dischargeable under 11 U.S.C. Section 523; (b) * * * debts

alleged to be excepted from discharge under clauses (2), (4), (6)

and (15) of 11 U.S.C. Section 523(a)”, and other debts the

bankruptcy court further determined to be discharged.

     The Supreme Court has stated in Young v. United States, 535

U.S. 43, 44 (2002), that “A discharge under the Bankruptcy Code

does not extinguish certain tax liabilities for which a return

was due within 3 years before the filing of an individual

debtor’s petition.   11 U.S.C. §§523(a)(1)(A), 507(a)(8)(A)(i).”

Or to put it another way, an income tax is a nondischargeable

priority claim against the estate if it relates to a tax return

whose due date, including extensions, was less than 3 years

before the commencement of the bankruptcy case.   11 U.S.C. sec.

507(a)(8)(A)(i) (2000).

     As previously noted, petitioners filed a bankruptcy petition

on September 30, 1996.    The 1992, 1993, and 1994 tax liabilities

are nondischargeable because they relate to tax returns the due

date of which, including extensions, was less than 3 years from

the date the bankruptcy petition was filed.   11 U.S.C. secs.

523(a)(1) and 507(a)(8)(A).   The 1995 tax liability is non-

dischargeable because it relates to a tax return the due date of
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which, including extensions, was for a date after the date on

which the bankruptcy petition was filed.    Id.

     The Notice of Determination included findings that all

applicable statutory and administrative procedures were met, that

for the taxes to be discharged, the due date of a return,

including extensions, must be 3 years before the filing of the

bankruptcy, that the due date of each of petitioners’ returns for

the four years, including extensions, was less than 3 years

before the filing of their bankruptcy petition, that petitioners

paid the liabilities for 1992 and 1995 in full but failed to meet

the criteria for an offer in compromise, and that the notice of

lien was appropriate.    Petitioners have not raised any other

challenges to the appropriateness of the collection action or any

collection alternatives.    A petition for review of a collection

action must clearly specify the errors alleged to have been

committed in the Notice of Determination.    Any issue not raised

in the assignments of error is deemed to be conceded by

petitioners.   Rule 331(b)(4); Lunsford v. Commissioner, 117 T.C.

183, 185-186 (2001).    There was no abuse of discretion with

respect to the issuance of the Notice of Determination.

     We conclude that the bankruptcy court did not specifically

determine that the petitioners’ unpaid Federal tax liabilities

were discharged by the bankruptcy proceeding or were

dischargeable debts under the Bankruptcy Code.    The Court has
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considered the pleadings and other materials in the record and

concludes that there is no genuine justiciable issue of material

fact regarding the collection matters in this case.

     The Court will grant respondent’s motion for summary

judgment, except with respect to 1992 and 1995, for which

petitioners satisfied their liabilities in full, and which we

assume respondent will issue a certificate of release pursuant to

section 6325.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect to foregoing,

                                             An appropriate order and

                                        decision will be entered.
