                                 T.C. Memo. 2016-77



                          UNITED STATES TAX COURT



         SAMUEL S. YASGUR AND EVA A. YASGUR, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 20391-06L.                       Filed April 25, 2016.



      Jared J. Scharf, for petitioners.

      Alex Shlivko and Sheila Olaksen, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      GALE, Judge: Pursuant to sections 6320(c) and 6330(d), petitioners

petitioned the Court to review a Decision Letter Concerning Equivalent Hearing

Under Section 6320 and/or 6330 of the Internal Revenue Code (decision letter)
                                            -2-

[*2] issued by the Internal Revenue Service Office of Appeals (Appeals).1 The

decision letter sustained (1) respondent’s filing of a notice of Federal tax lien as to

the unpaid portion of the 2003 Federal income tax petitioners reported as due on

their return and (2) respondent’s proposed levy to collect that unpaid tax.

Petitioners challenge the decision letter to the extent that it relates to the filing of

the lien, for which they timely requested a hearing under section 6320 (section

6320 hearing) after receiving an August 16, 2005, Notice of Federal Tax Lien

Filing and Your Right to a Hearing Under IRC 6320.2 Petitioners’ only challenge

to the filing of the lien notice is their contention that their underlying tax liability

for 2003 is less than respondent asserts.




      1
        Unless otherwise indicated, section references are to the applicable versions
of the Internal Revenue Code.
      2
        The decision letter related to an “equivalent hearing” that Appeals held as to
both the lien and the proposed levy. Appeals concluded that petitioners were not
entitled to a sec. 6320 hearing as to the lien because petitioners failed to timely
request such a hearing. Appeals also concluded that petitioners failed to timely
request a hearing under sec. 6330 as to the proposed levy. Respondent now
asserts, and we agree, that petitioners’ request for a sec. 6320 hearing was timely
as to the lien. We note that the lien notice was mailed on August 16, 2005, and
petitioners’ attorney requested a hearing concerning the lien in a letter dated
August 24, 2005. The decision letter, therefore, contains a determination with
respect to the lien that may be reviewed by this Court. See Craig v. Commissioner,
119 T.C. 252 (2002); cf. Wilson v. Commissioner, 131 T.C. 47 (2008) (holding
that the Court lacked jurisdiction to review a decision resulting from an equivalent
hearing); MacDonald v. Commissioner, T.C. Memo. 2009-63 (similar holding).
                                          -3-

[*3]   The Court previously ordered that petitioner Eva A. Yasgur is precluded

from challenging the existence or amount of her underlying tax liability for 2003

because she had a prior opportunity to do so. See sec. 6330(c)(2)(B); Bell v.

Commissioner, 126 T.C. 356 (2006). We noted that Mrs. Yasgur received as to the

liability an April 30, 2005, levy notice (i.e., Letter 1058, Final Notice of Intent to

Levy and Notice of Your Right to a Hearing) and failed to avail herself of her right

under section 6330 to timely request a hearing as to the levy notice to challenge the

liability. See generally sec. 6330(a) and (b).

       We now decide whether petitioner Samuel S. Yasgur is precluded under

section 6330(c)(2)(B) from challenging his underlying tax liability for 2003

because, as respondent contends, Mr. Yasgur either “received, was aware of, or

deliberately failed to learn of” an April 30, 2005, levy notice issued to him as to the

liability. The Court held an evidentiary hearing on this matter, and we find that

Mr. Yasgur neither received nor deliberately refused receipt of the levy notice

mailed to him as to petitioners’ 2003 Federal income tax liability. Accordingly, we

hold that Mr. Yasgur may challenge his underlying tax liability for 2003, and we

will remand this case to Appeals to allow him to do so.
                                          -4-

[*4]                            FINDINGS OF FACT

       The parties submitted stipulated facts and exhibits, which we incorporate.

Petitioners are husband and wife, and they resided in New York when their petition

was filed.

       Mr. Yasgur has practiced law for more than four decades following his

graduation from Cornell University and the University of Chicago School of Law.

At the time of the evidentiary hearing, he was the county attorney for the County of

Sullivan, New York.

       Though married, petitioners ceased living together in 1998. Mr. Yasgur

resided in Rock Hill, New York, and Mrs. Yasgur resided approximately 100 miles

away in petitioners’ jointly owned house in Mamaroneck, New York (Mamaroneck

house). After petitioners ceased living together, and throughout the period in issue,

they maintained a cordial but distant relationship, communicating only

sporadically. They would often go months without communicating.

       Petitioners continued to file joint returns after they established separate

residences, and they listed the address of the Mamaroneck house as their address

on their joint returns (Mamaroneck address). The parties have stipulated that the

Mamaroneck address was each petitioner’s last known address for all relevant

purposes. Mrs. Yasgur generally forwarded to Mr. Yasgur the mail he received at
                                         -5-

[*5] the Mamaroneck address, which consisted primarily of correspondence related

to Federal and State taxes. It was her practice to forward unopened any mail

addressed to Mr. Yasgur individually and to open mail addressed to them jointly

and to forward to Mr. Yasgur either the original or a copy.

      On or about October 18, 2004, petitioners filed a joint Federal income tax

return for 2003 (2003 return), reporting a tax liability of $88,801 and tax due of

$60,801. The $88,801 liability was attributable primarily to petitioners’ reporting

of certain passive income from Mr. Yasgur’s interest in a law partnership. The

partnership had issued a Schedule K-1 (Form 1065), Partner’s Share of Income,

Credits, Deductions, etc., to Mr. Yasgur shortly before the extended due date of his

2003 return, which reported his share of the partnership’s passive income in an

amount that Mr. Yasgur believed was significantly overstated. Mr. Yasgur’s

relationship with his partners had become acrimonious as of that time, and

petitioners were unable to obtain from the partnership any documentation to

support Mr. Yasgur’s belief. Upon the advice of their accountant/tax preparer,

petitioners reported Mr. Yasgur’s share of partnership income on their 2003 return

consistently with the Schedule K-1, with the intention of subsequently filing an

amended return when they had documentation to support Mr. Yasgur’s claim of a

lesser share.
                                          -6-

[*6]   Respondent timely assessed the $88,801 reported liability, and petitioners

have not paid the $60,801 balance due (or any interest thereon). By January 2005

respondent’s collection office in Holtsville, New York (Holtsville office), had

notified petitioners by correspondence addressed to them jointly at the

Mamaroneck address that they owed the reported unpaid tax. Mr. Yasgur promptly

contacted the collection manager in the Holtsville office. Mr. Yasgur explained to

the manager that petitioners believed that their 2003 return overreported their

Federal income tax liability for that year and requested that respondent refrain from

any further collection activity until such time as petitioners could file an amended

return for 2003. The Holtsville manager suggested that the means available to

petitioners to forestall collection actions would be to enter into an installment

agreement. Mr. Yasgur informed Mrs. Yasgur of his discussions with the

Holtsville collections manager. Those discussions extended at least through

May 23, 2005, as reflected in a letter he sent to the manager on that date requesting

additional time to execute the necessary forms for proposing an installment

agreement.

       Nonetheless, on April 30, 2005, respondent’s Automated Collection System

Support office in Bensalem, Pennsylvania, mailed separate notices of intent to levy

(i.e., Letters 1058) to Mr. and Mrs. Yasgur by certified mail to the Mamaroneck
                                         -7-

[*7] address. Mrs. Yasgur received notification of these two pieces of certified

mail and on May 4, 2005, picked both up from the U.S. Post Office in

Mamaroneck, New York. The certified mailings were sent with return receipt

service. Mrs. Yasgur signed the return receipt for each mailing. A Form 4340,

Certificate of Assessments, Payments, and Other Specified Matters,3 for

petitioners’ 2003 taxable year records that respondent received two separate signed

return receipts for certified mail on May 23, 2005. Mrs. Yasgur did not forward to

Mr. Yasgur the notice of levy addressed to him, and neither petitioner requested a

hearing with respect to the levy notices within 30 days of their mailing.

      At some time before August 9, 2005, petitioners contacted an attorney, Jared

J. Scharf (who represents them in this proceeding), regarding one or both of the

notices of levy. On August 9, 2005, petitioners executed a power of attorney

authorizing Mr. Scharf to represent them with respect to their 2003 income tax. On

August 18, 2005, Mr. Scharf sent a letter to respondent requesting a hearing with

respect to the levy notice mailed on April 30, 2005.4


      3
        The Form 4340 for petitioners’ 2003 taxable year records that two notices
of intent to levy were issued on April 30, 2005, and a certified mail list postmarked
on the same date records separate certified mailings to Mr. and Mrs. Yasgur.
      4
       The parties stipulated, and petitioners contend, that Mr. Scharf’s August 18,
2005, letter requested a hearing with respect to a notice of lien mailed on August
16, 2005 (discussed infra). The letter on its face contradicts the stipulation. The
                                                                          (continued...)
                                          -8-

[*8]   On August 16, 2005, two days before Mr. Scharf requested a hearing with

respect to the levy notice, an office of respondent in Cincinnati, Ohio, mailed a

notice of lien filing (i.e., Letter 3172, Notice of Federal Tax Lien Filing and Your

Right to a Hearing Under IRC 6320) addressed to petitioners jointly at the

Mamaroneck address. On August 24, 2005, Mr. Scharf sent a letter to respondent

requesting a hearing with respect to the notice of lien filing.

       In late September 2005 petitioners submitted to respondent an amended

Federal income tax return for 2003 on which they reported that their total tax for

that year was $24,087 (rather than $88,801 as originally reported) and claimed a

refund due of $3,913.

       On or about October 13, 2005, Mr. Scharf submitted to respondent a Form

12153, Request for a Collection Due Process or Equivalent Hearing, on behalf of

petitioners in which he also requested a hearing with respect to both the levy and

the lien notice.




       4
         (...continued)
letter requests a hearing with respect to a notice of levy issued on April 30, 2005,
and makes no mention whatsoever of the notice of lien. We accordingly find as
above, contrary to the stipulation. See Cal-Maine Foods, Inc. v. Commissioner, 93
T.C. 181, 195-196 (1989) (holding that the Court may disregard a stipulation that
is clearly contrary to the evidence in the record); see also McLaulin v.
Commissioner, 115 T.C. 255, 257 n.2 (2000) (same), aff’d, 276 F.3d 1269 (11th
Cir. 2001).
                                          -9-

[*9]   Petitioners’ hearing request was assigned to an Appeals settlement officer

who, having determined that their request for a hearing was untimely with respect

to both the levy notice and the lien notice, provided them an “equivalent hearing”

and issued a decision letter.5 The decision letter determined, inter alia, that

petitioners were not entitled to challenge the existence or amount of the underlying

tax liability because they had a prior opportunity to “discuss” the tax liability.

                                       OPINION

       Mr. Yasgur contends that the determination by Appeals to sustain the lien

notice filing was an abuse of discretion because he has no unpaid tax liability for

2003. It is respondent’s position, however, that Mr. Yasgur’s underlying tax

liability for 2003 may not be disputed in this proceeding because he had a prior

opportunity to dispute that liability and failed to do so.

       Section 6321 imposes a lien in favor of the United States on all property and

rights to property of a taxpayer after a demand for the taxes has been made and the

taxpayer fails to pay those taxes. The lien arises when an assessment is made. See

sec. 6322. The Secretary generally must file a notice of lien with certain State or

local authorities where a taxpayer’s property is situated for the lien to be valid


       5
       As noted, it is now undisputed that the hearing request was timely with
respect to the lien notice. We accordingly have jurisdiction to review the related
determination embodied in the decision letter. See supra note 2.
                                          - 10 -

[*10] against third parties. See sec. 6323(a), (f); Lindsay v. Commissioner, T.C.

Memo. 2001-285, aff’d, 56 F. App’x 800 (9th Cir. 2003).

      Section 6320 provides that the Secretary shall furnish the taxpayer with

written notice of the filing of a notice of lien and of the taxpayer’s right to a

hearing with Appeals concerning the lien. See sec. 6320(a)(1), (3). If the taxpayer

timely requests a hearing, the taxpayer generally may raise at the hearing “any

relevant issue” relating to the unpaid tax or the lien. See secs. 6320(c),

6330(c)(2)(A). The taxpayer may challenge the existence or amount of the

underlying tax liability, but only if he did not receive a notice of deficiency with

respect to the liability or otherwise have an opportunity to dispute the liability. See

sec. 6330(c)(2)(B). When such a challenge is allowed, it may cover amounts

reported as due on the taxpayer’s original return. See Montgomery v.

Commissioner, 122 T.C. 1, 9-10 (2004).

      The Secretary is authorized to collect a taxpayer’s unpaid tax by levying

upon the taxpayer’s property or rights to property. Sec. 6331(a). However, such a

levy generally requires that the Secretary first notify the taxpayer in writing of his

right to a prelevy hearing with Appeals on the issue of whether the levy is

appropriate. Sec. 6330(a)(1), (b)(1). Where the liability for the unpaid tax is joint

and several because it arises from a joint return, the Secretary or his delegate must
                                         - 11 -

[*11] send a separate notice to each spouse upon whose property the

Commissioner intends to levy. See Moorhous v. Commissioner, 116 T.C. 263, 271

(2001). See generally Internal Revenue Manual pt. 8.22.2.2.4.9.1(4) (Dec. 14,

2010) (“Collection must issue separate * * * notices to husband and wife when the

liabilities are joint.”). A taxpayer is entitled to the hearing with Appeals so long as

the taxpayer’s request is made within 30 days of the day after the day that the

notice was personally left at the taxpayer’s dwelling or place of business, or sent

by certified or registered mail, return receipt requested, to the taxpayer’s last

known address. Sec. 6330(a)(2); sec. 301.6330-1(c)(2), Q&A-C3, Proced. &

Admin. Regs.; see also Andre v. Commissioner, 127 T.C. 68, 70 (2006).

      Respondent argues that Mr. Yasgur had a prior opportunity to dispute his

underlying tax liability because he could have requested a hearing with respect to

the April 30, 2005, levy notice. Respondent contends that Mr. Yasgur either

“received, was aware of, or deliberately failed to learn of” the levy notice.

Respondent relies on section 301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs.,

which precludes a taxpayer from challenging his or her underlying tax liability in a

section 6320 hearing if the taxpayer previously received a notice of levy with

respect to the same tax and tax period and did not request a hearing. See also Bell

v. Commissioner, 126 T.C. at 358; Nichols v. Commissioner, T.C. Memo. 2007-5.
                                        - 12 -

[*12] A similar preclusion may also apply where an individual did not receive a

notice of levy because he or she deliberately refused to receive it. Cf. Sego v.

Commissioner, 114 T.C. 604, 610-611 (2000) (holding that the taxpayer was

precluded from challenging her underlying tax liability in a proceeding

commenced under section 6330 because she deliberately refused receipt of a notice

of deficiency that would have allowed her to challenge that liability earlier).

Section 301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs., has no preclusive

effect where an individual neither actually received a notice of levy nor

deliberately refused to receive the notice. See Downing v. Commissioner, T.C.

Memo. 2007-291.

      Respondent concedes that he has the burden of production to show that

Mr. Yasgur received the notice of levy so that section 6330(c)(2)(B) and section

301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs., would preclude Mr. Yasgur

from challenging the underlying tax liability. Mr. Yasgur denies that he ever

received a notice of levy addressed to him and contends that he only became aware

of the notice of levy addressed to Mrs. Yasgur in early August 2005, well after the

expiration of the 30-day period for requesting a hearing. Respondent relies upon

the presumption of official regularity to establish receipt. Under that presumption,

respondent’s production of the certified mail list showing that two levy notices
                                        - 13 -

[*13] were sent by certified mail to the Mamaroneck address, and that one such

notice was addressed to Mr. Yasgur and the other notice was addressed to Mrs.

Yasgur, creates a strong presumption that the notices were mailed to that address,

that they were delivered or offered for delivery there, and that they were actually

received by the addressees. See Sego v. Commissioner, 114 T.C. at 610-611;

Zenco Eng’g Corp. v. Commissioner, 75 T.C. 318, 323 (1980), aff’d without

published opinion, 673 F.2d 1332 (7th Cir. 1981); Casey v. Commissioner, T.C.

Memo. 2009-131; see also Rosenthal v. Walker, 111 U.S. 185, 193-194 (1884);

Estate of Wood v. Commissioner, 92 T.C. 793, 798-799 (1989), aff’d, 909 F.2d

1155 (8th Cir. 1990).

      Respondent has proffered evidence sufficient to entitle him to a finding, on

the basis of the presumption, that the levy notice issued to Mr. Yasgur was

delivered to the Mamaroneck address. The Form 4340 for petitioners’ 2003

taxable year records that two separate notices of levy were issued on April 30,

2005, and the certified mail list postmarked on the same date records that separate

certified mailings were made at that time to Mr. Yasgur and to Mrs. Yasgur.

Further, the Form 4340 records that return receipts confirming that the certified

mailings had been claimed were returned to respondent on May 23, 2005.
                                         - 14 -

[*14] Mrs. Yasgur’s testimony confirms that two items of certified mail were

claimed; she recalls going to the post office and claiming them.

      Petitioners attempt to show irregularity in the foregoing on two grounds.

First, they suggest that because the record includes two copies of the levy notice

addressed to Mrs. Yasgur and no copy of the levy notice addressed to Mr. Yasgur,

then it must be the case that the two certified mail envelopes claimed by

Mrs. Yasgur each contained a notice of levy addressed to her. That contention is

easily dismissed, as Mrs. Yasgur’s levy notice on its face states that a copy of the

notice is enclosed. Second, Mrs. Yasgur testified at trial that she recalls that she

never received a levy notice addressed to Mr. Yasgur. However, in a previous

sworn statement, Mrs. Yasgur stated that she did not recollect receiving a levy

notice addressed to Mr. Yasgur. As the finder of fact, we are skeptical that recall

improves over time. Having observed Mrs. Yasgur’s demeanor, her claim at trial

that she recalled not receiving a levy notice addressed to Mr. Yasgur, after having

previously sworn that she could not recall receiving a levy notice addressed to him,

is simply not reliable. We reject it and conclude instead that, at best, Mrs. Yasgur

cannot recall whether a certified mailing she received was addressed to

Mr. Yasgur.
                                        - 15 -

[*15] Mrs. Yasgur’s unreliable recollections are insufficient to rebut the

presumption arising from respondent’s records that a notice of levy addressed to

Mr. Yasgur was delivered to the Mamaroneck address. See Sego v. Commissioner,

114 T.C. at 611. If Mr. Yasgur had been residing at the Mamaroneck address, and

there were no other evidence bearing on this issue, that might well end the matter

and entitle respondent to the further finding that Mr. Yasgur received the notice of

levy mailed to him.

      But the matter does not end here. There is other, significant evidence

rebutting any presumption of receipt. Petitioners have established that beginning

in 1998 through the period after the levy notice was mailed to Mr. Yasgur, he did

not reside at the Mamaroneck address and communicated only infrequently with

Mrs. Yasgur. Mr. Yasgur testified that he was unaware of any levy notice until

early August 2005. Respondent contends that Mr. Yasgur was aware of the levy

notice because Mrs. Yasgur would undoubtedly have told him about something so

serious and significant affecting their financial circumstances.

      We are not persuaded. When Mrs. Yasgur picked up the levy notices in

early May 2005, she was aware (because Mr. Yasgur had advised her) that

Mr. Yasgur had been in regular discussions with the Holtsville collections manager

since at least January 2005 to resolve their 2003 Federal income tax liability.
                                         - 16 -

[*16] Mrs. Yasgur had previously received other correspondence from the Internal

Revenue Service (IRS) concerning the 2003 liability and had forwarded it to

Mr. Yasgur or otherwise made him aware of it. We believe that Mrs. Yasgur

plausibly could have believed that the levy notices concerned matters that

Mr. Yasgur was already addressing with the Holtsville office and therefore

misjudged their significance and the importance of notifying Mr. Yasgur of them.

      In addition, Mr. Yasgur, an attorney, was generally punctilious and

transparent in his dealings with the IRS. When he received a Schedule K-1 that he

believed significantly overstated his share of partnership income, his course of

action was nevertheless to report the income on his 2003 return and thereafter to

seek documentation to support his claim of overstatement. Similarly, when the

Holtsville office first sent correspondence indicating that it intended to collect the

2003 liability reported on the return, Mr. Yasgur promptly contacted the Holtsville

collections manager and commenced discussions to address the matter (which were

ongoing when the notice of levy was issued by another IRS office). This pattern of

conduct, which is undisputed, is at odds with the contention that Mr. Yasgur

received, or was aware of, the levy notice within the 30-day period to request a

hearing and simply ignored it.
                                        - 17 -

[*17] Finally, respondent argues alternatively that Mr. Yasgur “deliberately failed

to learn of” the levy notice mailed to him. Respondent perceives a deliberate

scheme wherein Mr. Yasgur arranged to have all IRS correspondence sent to the

Mamaroneck address while residing elsewhere so that he could disclaim

knowledge of any notice when it served his interests. Respondent thereby

apparently seeks to bring these circumstances within the “deliberate refusal” line of

cases where receipt of IRS correspondence is deemed to have occurred

(notwithstanding the absence of actual receipt) when the evidence supports a

finding that the taxpayer deliberately refused delivery. See, e.g., Sego v.

Commissioner, 114 T.C. 604; Baxter v. Commissioner, T.C. Memo. 2001-300.

      In Lehmann v. Commissioner, T.C. Memo. 2005-90, we suggested that a

taxpayer who intentionally provided the Commissioner with an inaccurate address

had deliberately refused a notice of deficiency mailed to that address, despite the

notice’s having been returned unclaimed to the Commissioner. We do not find that

Mr. Yasgur engaged in any similar scheme to thwart receipt of IRS

correspondence. He did not provide the Mamaroneck address to respondent in bad

faith. He used the Mamaroneck address for Federal income tax purposes because

Mrs. Yasgur still lived there and the couple continued to file joint returns. The

Form 1040 used for filing jointly allowed entry of only one address. In addition,
                                         - 18 -

[*18] Mr. Yasgur had no reason to suspect that a notice of levy would be mailed to

him in April 2005. At the time, he was in active discussions with the Holtsville

office concerning an installment agreement to cover the 2003 liability. Finally,

that Mr. Yasgur was not attempting to thwart receipt is also seen in the fact that he

did receive several IRS mailings sent to him at the Mamaroneck address, including

the initial collection correspondence sent by the Holtsville office and the lien

notice at issue.

       Instead, Mr. Yasgur’s circumstances are more akin to those of taxpayers

who are not residing at their “last known address” when a notice is sent. See, e.g.,

Kuykendall v. Commissioner, 129 T.C. 77, 81-82 (2007); Smith v. Commissioner,

T.C. Memo. 2008-229. Such taxpayers have not received a notice within the

meaning of section 6330(c)(2)(B) or section 301.6320-1(e)(3), Q&A-E7, Proced.

& Admin. Regs., nor have they deliberated refused receipt.

       For the foregoing reasons, we find that Mr. Yasgur neither deliberately

refused delivery nor “deliberately failed to learn of” the levy notice. Mrs. Yasgur

neglected to forward it to him or to tell him about it until approximately three

months later, but that is insufficient grounds to conclude that he should be deemed

to have received it.
                                       - 19 -

[*19] We accordingly hold that Mr. Yasgur is entitled to challenge his underlying

tax liability for 2003, and we will remand this case to Appeals to allow him to do

so. We have considered all arguments respondent made for a contrary holding and,

to the extent not discussed, we have rejected those arguments as without merit.

      To reflect the foregoing,


                                                An appropriate order will be issued.
