                                T.C. Memo. 2012-97



                          UNITED STATES TAX COURT



                     LANCE CRAIN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 8307-10L.                            Filed April 2, 2012.



      Lance Crain, pro se.

      Robert A. Varra, Cynthia Jane Olson, and Melinda K. Fisher, for

respondent.

                             MEMORANDUM OPINION


      JACOBS, Judge: Petitioner filed a petition in this Court seeking review of

respondent’s determination to sustain actions taken (the filing of a tax lien) and

proposed to be taken (intent to levy) to collect petitioner’s unpaid Federal income
                                          -2-

tax liability for 2004. The matter presently before the Court involves respondent’s

motion for summary judgment (respondent’s motion), filed September 7, 2011.

Respondent contends that no genuine issue exists as to any material fact and that we

should sustain his determination as a matter of law. The issues for decision are (1)

whether petitioner may challenge respondent’s determination as to petitioner’s

underlying tax liability for 2004, and (2) whether respondent abused his discretion

by denying petitioner a face-to-face hearing. For the reasons discussed infra, we

will grant respondent’s motion.

      All section references are to the Internal Revenue Code, and all Rule

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

in Wyoming when he filed his petition.

                                     Background

      Petitioner did not file a Form 1040, U.S. Individual Income Tax Return, for

2004. Relying on information reported on Form W-2, Wage and Tax Statement,

filed by petitioner’s employer, respondent prepared a substitute for return pursuant

to section 6020(b). Respondent determined a deficiency in petitioner’s 2004

income tax, and on September 22, 2008, mailed a notice of deficiency to

petitioner. Petitioner did not file a Tax Court petition in response to the notice of

deficiency. Consequently, on March 16, 2009, respondent assessed the income tax
                                          -3-

deficiency determined for 2004 of $4,926, a section 6651(a)(1) addition to tax of

$1,108 for failure to timely file a return, a section 6651(a)(2) addition to tax of

$1,182 for failure to timely pay tax, a section 6654 addition to tax of $141.15 for

failure to pay estimated income tax, and interest of $1,874.57.

      Because petitioner failed to pay his tax liability after notice and demand for

payment, on August 3, 2009, respondent mailed him a Letter 1058, Final Notice of

Intent to Levy and Notice of Your Right to a Hearing (levy notice), informing him

that (1) respondent intended to levy on his property to collect his unpaid 2004

income tax liability, and (2) he could receive a hearing with a representative of

respondent’s Office of Appeals with respect to the proposed levy. On August 31,

2009, petitioner signed and dated a Form 12153, Request for a Collection Due

Process or Equivalent Hearing (section 6330 hearing). On Form 12153, petitioner

requested a face-to-face section 6330 hearing at “an Appeals office closest to my

place of residence, which I will be audio recording.” Petitioner stated he wished to

discuss the following matters at the hearing:

      Verify whether or not the IRS followed all proper procedures as required by
      law.

               *         *        *         *        *         *        *

      To challenge this “liability” seeing that I NEVER had a chance to challenge
      it before.
                                             -4-

       If this liability is indeed a proper assessment and can be proven that it is
       authentic and owed, I would like to discuss what collection alternatives are
       available to me, to include, but not limited to Offer in Compromise,
       Installment Agreements, and any other payment arrangements that may be
       available to me.

Petitioner did not state any grounds for his assertion that he did not owe the tax

liability as set forth in the levy notice.

       On September 19, 2009, respondent’s Appeals Office sent petitioner a letter

acknowledging receipt of the Form 12153. Respondent’s letter advised petitioner

that because he had not filed income tax returns for 2005, 2006, 2007, and 2008,

respondent’s Appeals Office would not consider collection alternatives.

       On September 29, 2009, respondent mailed petitioner a Notice of Federal

Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (lien notice),

advising him that (1) a lien had been filed on September 29, 2009, to collect his

unpaid 2004 tax liability, and (2) if so requested, he could receive a hearing with a

representative of respondent’s Appeals Office with respect to the lien filing. On

October 19, 2009, petitioner sent a Form 12153 to respondent’s Appeals Office

requesting a section 6330 hearing with respect to both the lien and levy notices.

Petitioner raised virtually the same issues in this Form 12153 as he had in the one
                                           -5-

replying to respondent’s levy notice. Petitioner did not state any grounds for his

assertion that he did not owe the tax liability set forth in the lien notice.

       On November 24, 2009, respondent’s Appeals Office sent petitioner a letter

informing him that his request for a section 6330 hearing had been received and

that Appeals Settlement Officer (ASO) Ruggles would be the contact person for

his case. Enclosed with this letter was a copy of IRS Publication 4165,

Introduction to Collection Due Process Hearings.

       In preparation for the section 6330 hearing, ASO Ruggles reviewed

petitioner’s administrative file and verified that the notice of deficiency was

mailed to his last known address, which was the same address as that used in the

mailing of the levy and lien notices. On December 9, 2009, ASO Ruggles sent

petitioner a letter scheduling a telephone section 6330 hearing for 11 a.m. on

January 12, 2010, to discuss the levy notice. She advised petitioner that he was

not entitled to a face-to-face hearing because he had not filed tax returns for prior

years. Petitioner was informed that if he wished to discuss collection alternatives

to the proposed levy, such as an installment agreement or an offer-in-compromise,

he had to (1) submit Form 433-A, Collection Information Statement for Wage

Earners and Self-Employed Individuals, and (2) file his as yet unfiled Federal

income tax returns for 2005, 2006, 2007, and 2008. ASO Ruggles informed
                                          -6-

petitioner that he could have a face-to-face hearing if he filed all of the requested

documents by December 24, 2009. Petitioner was further informed that if the

scheduled time for the hearing was inconvenient, he should contact ASO Ruggles

to reschedule the hearing.

      On January 4, 2010, ASO Ruggles sent a second letter to petitioner

informing him that she needed to reschedule the section 6330 hearing to January

27, 2010. On January 6, 2010, petitioner responded to ASO Ruggles’ December 9

letter. In his response letter, petitioner stated that the originally scheduled

conference date of January 12, 2010 was not convenient for him. Petitioner

insisted on a face-to-face section 6330 hearing and informed ASO Ruggles that “I

don’t recall ever receiving any notification or explanation from the IRS that

explains how they came up with these numbers against me.”

      On January 22, 2010, ASO Ruggles sent a third letter to petitioner. This

letter informed petitioner that ASO Ruggles would include the lien filing in the

section 6330 hearing scheduled for January 27, 2010. The letter reiterated that

petitioner would be required to file Form 433-A as well as his delinquent income

tax returns in order to be permitted to discuss collection alternatives as well as to be

eligible for a face-to-face hearing.
                                          -7-

      Petitioner did not contact ASO Ruggles on January 27, 2010, nor did he

submit the requested documentation. Therefore, on January 27, ASO Ruggles sent a

letter to petitioner stating that because he had not contacted her as scheduled, she

would make her determination by reviewing the administrative file and the

information he had already provided. ASO Ruggles also informed petitioner that if

he desired her to consider additional information, he would need to send it to her

within 14 days from the date of the letter, i.e., by February 10, 2010.

      On February 17, 2010, petitioner sent ASO Ruggles a letter in which he

demanded that ASO Ruggles explain the basis on which she refused to provide him

with a face-to-face section 6330 hearing. Petitioner again stated: “I don’t recall

ever receiving any notification or explanation from the IRS that explains how they

came up with these numbers against me.”

      On February 19, 2010, ASO Ruggles reviewed the administrative file and

determined that petitioner had not raised any specific challenges to the assessment

or to the accuracy of the 2004 deficiency. As part of her analysis, ASO Ruggles

determined that (1) petitioner was not entitled to a face-to-face meeting, and (2) he

was not eligible for consideration of a collection alternative (e.g., an-offer-in-

compromise or an installment agreement) because he had not filed Federal income

tax returns for 2005 through 2008. ASO Ruggles then verified that the
                                          -8-

requirements of all applicable law and administrative procedure had been met. ASO

Ruggles determined that the proposed levy and the filing of the lien notice

appropriately balanced (1) the need for efficient collection of petitioner’s unpaid

2004 Federal income tax obligation with (2) petitioner’s concerns that the collection

actions (i.e., the proposed levy and the filing of the lien notice) be no more intrusive

than necessary. Consequently, ASO Ruggles determined that the collection actions

were proper.

      On March 3, 2010, respondent mailed two Notices of Determination

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

determination). The first notice of determination sustained the proposed levy, and

the second sustained the filing of the lien notice.

                                      Discussion

A.    Summary Judgment

      Summary judgment is used to expedite litigation and avoid unnecessary and

expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).

This Court may grant summary judgment where there is no genuine issue of any

material fact and a decision may be rendered as a matter of law. Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965

(7th Cir. 1994). The moving party bears the burden of proving that there is no
                                          -9-

genuine issue of material fact, and the Court will view all factual material and

inferences in the light most favorable to the nonmoving party. Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985). Rule 121(d) provides that where the

moving party properly makes and supports a motion for summary judgment “an

adverse party may not rest upon the mere allegations or denials of such party’s

pleading,” but rather must set forth specific facts, by affidavits or otherwise,

“showing that there is a genuine issue for trial.”

B.    Sections 6320 and 6330

      Section 6320(a) provides that written notice of the filing of a Federal tax

lien must be furnished by the Secretary to the taxpayer whose property is subject

to the lien. Section 6320(b) provides that a taxpayer may thereafter request a

hearing regarding the filing of the tax lien, and section 6320(c) provides that the

hearing must be conducted pursuant to the rules of section 6330 (thus the hearing

regarding the filing of a tax lien is referred to as a “section 6330 hearing”).

Section 6330(a) provides that no levy may be made on any property or right to

property of any person unless the Secretary has notified that person in writing of

the right to a hearing before the levy is made (the section 6330 hearing). Section

6330(b)(3) provides that if a person requests a section 6330 hearing, that hearing

shall be held before an impartial officer or employee of the Internal Revenue
                                        - 10 -

Service. During the hearing the taxpayer may raise any relevant issue, including

appropriate spousal defenses, challenges to the appropriateness of the collection

action, and collection alternatives, including offers-in-compromise. Sec.

6330(c)(2)(A).

      A taxpayer is precluded from contesting the existence or amount of the

underlying tax liability at the section 6330 hearing unless the taxpayer did not

receive a notice of deficiency for the tax in question or did not otherwise have an

opportunity to dispute the underlying tax liability. Sec. 6330(c)(2)(B); see also

Sego v. Commissioner, 114 T.C. 604, 609 (2000).1

      Following a section 6330 hearing, the Appeals settlement officer must make a

determination as to whether the proposed levy action may proceed. The Appeals

settlement officer is required to take into consideration: (1) Whether the

requirements of applicable law and administrative procedure have been met; (2) all

relevant issues raised by the taxpayer; and (3) whether the proposed collection

actions appropriately balance the need for efficient collection of taxes with the




      1
       We have interpreted the phrase “underlying tax liability” to include any
amounts a taxpayer owes pursuant to tax laws that are subject to the
Commissioner’s collection activities. Katz v. Commissioner, 115 T.C. 329, 338-
339 (2000).
                                         - 11 -

taxpayer’s concerns that the collection actions be no more intrusive than is

necessary. Sec. 6330(c)(3).

      Where the validity of the underlying tax liability is properly at issue in a

section 6330 hearing, we will review the matter de novo. Davis v. Commissioner,

115 T.C. 35, 39 (2000). However, where the validity of the underlying tax liability

is not properly at issue, we will review the determination of the Appeals Office for

abuse of discretion. Sego v. Commissioner, 114 T.C. at 610; Goza v.

Commissioner, 114 T.C. 176, 182 (2000). An abuse of discretion is defined as any

action that is unreasonable, arbitrary or capricious, clearly unlawful, or lacking

sound basis in fact or law. Thor Power Tool Co. v. Commissioner, 439 U.S. 522,

532-533 (1979); Woodral v. Commissioner, 112 T.C. 19, 23 (1999). As explained

more fully infra, the existence or amount of petitioner’s 2004 tax liability is not

properly at issue. We therefore review the determination of respondent’s Appeals

Office for abuse of discretion.

C.    Whether Petitioner May Challenge His Underlying Tax Liability

      Section 6330(c)(2)(B) precludes a taxpayer from challenging the existence or

amount of the underlying liability unless the taxpayer did not receive a notice of

deficiency for that liability or did not otherwise have an earlier opportunity to

dispute the liability. Petitioner asserts that respondent has not introduced
                                         - 12 -

sufficient evidence to establish that (1) respondent properly mailed him a notice of

deficiency for 2004, and (2) he actually received it. Hence, petitioner posits that he

should be permitted to challenge in this proceeding respondent’s determination

regarding his underlying tax liability. Respondent maintains, first, that because

petitioner failed to raise this issue at his section 6330 hearing, he is precluded from

raising it in this proceeding. Moreover, respondent contends that the notice of

deficiency was properly mailed to petitioner’s last known address and hence he is

deemed to have received it.

      The Commissioner must send a notice of deficiency to the taxpayer before he

may assess, collect, or reduce to judgment most income tax liabilities. United States

v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984). The taxpayer’s last known address is

that address to which the Commissioner reasonably believes the taxpayer wishes the

notice to be sent. Id.

      If the taxpayer contests receipt of the notice of deficiency, the Commissioner

must introduce evidence of actual mailing. Rivas v. Commissioner, T.C. Memo.

2012-20. However, the Commissioner is entitled to a presumption of mailing if he

(1) introduces evidence that the notice of deficiency existed, and (2) produces a

properly completed U.S. Postal Service Form 3877 (Form 3877) or its equivalent.

Id. Respondent provided a copy of the notice of deficiency for 2004 which
                                          - 13 -

was dated September 22, 2008, and the equivalent of Form 3877. Specifically,

respondent provided a redacted copy of Form 3624, a computerized certified

mailing list, listing the pieces of certified mail sent by his Audit Division office in

Detroit, Michigan, on September 22, 2008. We have stated that such a certified

mailing list provides the same type of information as that reflected on a Form 3877.

Virgin v. Commissioner, T.C. Memo. 1991-63. The list so provided by respondent

discloses that (1) the notice of deficiency was sent to petitioner by certified mail; (2)

the notice’s certified mail tracking number, and (3) the address to which the notice

was sent. The list bears a U.S. Postal Service date stamp of September 22, 2008.

This constitutes direct documentary evidence of the date and fact of mailing of the

notice of deficiency.

      At the hearing before the Court, petitioner admitted that the address on the

notice of deficiency was his correct address, that he resided at that address at all

relevant times, and that he still resides at that address. On the basis of our

observations of petitioner, we do not find his statement that he did not receive the

notice of deficiency to be credible. We thus are satisfied that the notice of
                                         - 14 -

deficiency was timely and properly mailed to petitioner and that petitioner

received it. Petitioner therefore may not challenge his underlying tax liability for

2004.2

D.       Petitioner’s Request for a Face-to-Face Hearing

         Petitioner next asserts that respondent improperly denied him the opportunity

to have a face-to-face section 6330 hearing. We have held on numerous occasions

that a section 6330 hearing is an informal proceeding and not a formal adjudication.

Thus, a face-to-face hearing is not mandatory. See Katz v. Commissioner, 115 T.C.

329, 337 (2000); Davis v. Commissioner, 115 T.C. at 41; Rivas v. Commissioner,

T.C. Memo. 2012-20; Bean v. Commissioner, T.C. Memo. 2006-88.

         A section 6330 hearing may properly take the form of a telephone

conference or one or more written communications between the taxpayer and the




         2
       Petitioner asserts that we may not consider the certified mailing list
respondent submitted because we are limited to a review of the administrative
record. We disagree. As we noted in Rivas v. Commissioner, T.C. Memo. 2012-20
n.5, when a Court of Appeals has held that administrative review of the
Commissioner’s determination pursuant to sec. 6330 is subject to the Administrative
Procedure Act and that we must focus on the administrative record, the record may
be supplemented if it does not adequately disclose the basis for the Commissioner’s
determinations. Robinette v. Commissioner, 439 F.3d 455, 461-462 (8th Cir. 2006),
rev’g 123 T.C. 85 (2004). As in Rivas, in this matter respondent offered evidence
of timely mailing to refute petitioner’s argument that he did not receive a notice of
deficiency.
                                         - 15 -

Appeals settlement officer. Katz v. Commissioner, 115 T.C. at 337-338; sec.

301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. As we have often noted,

when a taxpayer is given a reasonable opportunity for a hearing and fails to avail

himself of that opportunity, we may sustain the Commissioner’s determination to

proceed with collection on the basis of an Appeals settlement officer’s review of the

case file. Rivas v. Commissioner, T.C. Memo. 2012-20; see e.g., Bean v.

Commissioner, T.C. Memo. 2006-88; Ho v. Commissioner, T.C. Memo. 2006-41.

      Section 301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs., provides that

the Commissioner’s Appeals Office will not grant a face-to-face section 6330

hearing to discuss a taxpayer’s request for a collection alternative, such as an

installment agreement or an offer-in-compromise, “unless other taxpayers would be

eligible for the alternative in similar circumstances.” To be eligible for a collection

alternative, the taxpayer must provide required returns or make required deposits of

tax. Id.

      Petitioner requested a face-to-face section 6330 hearing to address his

underlying tax liability as well as collection alternatives. As noted supra pp. 13-14,

petitioner is deemed to have received the relevant notice of deficiency. He is thus

precluded from raising his underlying tax liability at the section 6330 hearing.
                                        - 16 -

      Petitioner also asserted that he wanted to discuss collection alternatives.

However, he failed to provide any financial information to respondent’s Appeals

Office, including the requested tax returns and Form 433-A, all of which were

necessary to allow ASO Ruggles to evaluate his ability to pay his tax liability. We

have previously held that it is not an abuse of discretion to proceed with collection

where the taxpayer has not filed all required tax returns for prior years. Moline v.

Commissioner, T.C. Memo. 2009-110, aff’d, 363 Fed. Appx. 675 (10th Cir. 2010);

see Summers v. Commissioner, T.C. Memo. 2006-219; Collier v. Commissioner,

T.C. Memo. 2004-171.

      ASO Ruggles informed petitioner of his right to have a section 6330 hearing

by telephone or by correspondence. Petitioner failed to participate in the scheduled

telephone conference, and his correspondence with ASO Ruggles contained nothing

more than generalities. We therefore conclude that respondent’s refusal to hold a

face-to-face section 6330 hearing was not an abuse of discretion.

E.    Other Matters Considered at the Section 6330 Hearing

      Petitioner did not propose any collection alternative. Nor did petitioner

introduce any evidence or make any argument that would indicate that

respondent’s determination to sustain the lien filing or the proposed levy action
                                         - 17 -

was arbitrary, capricious, or without sound basis in fact or law. We therefore hold

that respondent did not abuse his discretion in sustaining the filing of the lien notice

and the proposed levy action.

      Finally, section 6330(c)(3) provides that the Appeals settlement officer must

verify that the requirements of applicable law and administrative procedure have

been met and consider whether any proposed collection action balances the need for

the efficient collection of taxes with the legitimate concern of the taxpayer that any

collection be no more intrusive than necessary. The notice of determination states

that ASO Ruggles (1) verified that the requirements of all applicable law and

administrative procedure were met, and (2) determined that the proposed levy action

and the lien filing appropriately balanced the need for the efficient collection of

taxes with petitioner’s concerns that these collection actions be no more intrusive

than necessary. Consequently, we are satisfied that the mandate of section

6330(c)(3) has been met.
                                         - 18 -

F.    Conclusion

      We sustain respondent’s filing of the tax lien and respondent’s intent to levy

on petitioner’s property. Respondent is entitled to judgment as a matter of law. We

therefore shall grant respondent’s motion for summary judgment.

      To give effect to the foregoing,


                                                        An order and decision will be

                                                  entered for respondent.
