                               T.C. Memo. 2016-122



                         UNITED STATES TAX COURT



                    DAVID BUFFANO, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 23407-07L.                         Filed June 21, 2016.



      David Buffano, pro se.

      Brian A. Press, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


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

petitioned the Court to review two Notices of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (notices of determination),

one sustaining the filing of a Notice of Federal Tax Lien (NFTL) to enable

collection of petitioner’s Federal income tax liabilities for 2000 through 2003 and
                                              -2-

[*2] the other sustaining a proposed levy to collect petitioner’s 2002 and 2003

Federal income tax liabilities. Petitioner had timely requested a hearing pursuant

to sections 6320 and 63301 (collection due process or CDP hearing) with respect to

the foregoing collection actions, and the notices of determination set forth the

Internal Revenue Service (IRS) Office of Appeals (Appeals’) disposition of the

issues petitioner raised at the hearing.

         The amended petition averred inter alia that (1) petitioner had been

improperly denied the opportunity to challenge the underlying tax liabilities for the

years at issue at the CDP hearing and (2) the settlement officer conducting the CDP

hearing had not properly verified that the requirements of applicable law and

administrative procedure had been met.2

         Respondent subsequently moved the Court to remand the case to Appeals for

further consideration. The Court granted that motion. After reconsideration on

remand Appeals mailed to petitioner Supplemental Notices of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330 with respect to

the lien filing and the proposed levy (supplemental notices).



         1
             Section references are to the Internal Revenue Code in effect at all relevant
times.
         2
       The petition raised additional issues, but given our disposition of this case it
is unnecessary to address them.
                                          -3-

[*3]   The supplemental notices, while concluding that petitioner was not entitled

to relief from the filing of the NFTL or from the proposed levy, each conceded that

the IRS was unable to show that a statutory notice of deficiency had been mailed to

petitioner at the “correct” address for any of the years at issue. As more fully

discussed herein, this concession, coupled with respondent’s failure to demonstrate

at trial that notices of deficiency for the years at issue were mailed to petitioner’s

last known address, requires a decision that the collection actions are not sustained

as the liabilities they seek to collect were invalidly assessed.

                                FINDINGS OF FACT

       Petitioner resided in Illinois when he filed his petition.

       Petitioner did not file Federal income tax returns for the 2000 through 2003

taxable years (years at issue). The IRS prepared a separate notice of deficiency for

each year at issue. Respondent has conceded that petitioner did not receive any of

the notices of deficiency, and at least one of the notices (the one for 2000) was

returned to the IRS as undeliverable.

       The IRS subsequently mailed to petitioner a Letter 1058, Final Notice of

Intent to Levy and Notice of Your Right to a Hearing (levy notice), with respect to

his Federal income tax liabilities for 2002 and 2003 and a Letter 3172, Notice of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (lien
                                           -4-

[*4] notice), with respect to his Federal income tax liabilities for 2000, 2001, 2002,

and 2003.

       Petitioner timely submitted Forms 12153, Request for a Collection Due

Process or Equivalent Hearing, requesting CDP hearings with respect to the lien

and levy notices. Petitioner asserted in the request relating to the levy notice that

he was challenging whether “the IRS followed proper procedure and to ensure that

this ‘liability’ is authentic or even owed.” Petitioner made a similar assertion in

the request relating to the lien notice.

       Appeals subsequently mailed the notices of determination to petitioner. The

letter that sustained the IRS’ filing of the NFTL stated: “The determination in

Appeals is that all statutory and procedural requirements were followed prior to the

filing of the Notice of Federal Tax Lien. Therefore, the NFTL filing is appropriate

in this case.” The letter that sustained the IRS’ proposed levy stated: “The

determination of appeals is that all statutory and procedural requirements were

followed prior to issuance of the Notice of Intent to Levy. Therefore, the proposed

levy action is appropriate in this case.” Neither letter specifically addressed

petitioner’s underlying tax liability for any of the years at issue or whether a notice

of deficiency for any of those years was properly mailed to petitioner’s last known

address (or otherwise received by him).
                                          -5-

[*5]   After this case was set for trial, respondent moved the Court to continue the

trial date because, respondent stated in part, “the settlement officer failed to

properly consider the petitioner’s underlying liabilities for the taxable years at

issue.” Respondent also moved the Court to remand the case to Appeals. The

Court granted both motions.

       Pursuant to the remand, Appeals mailed the supplemental notices to

petitioner. The supplemental notice concerning the proposed levy stated:

       The determination of Appeals is that you are not entitled to relief from
       the proposed collection action. You did not provide any information
       so the matter of the underlying liability could be considered. You also
       did not provide any financial information so collection alternatives
       could be considered. You would not qualify for any collection
       alternatives at the present time because you are not in compliance with
       all of your filing requirements.

The supplemental notice concerning the lien filing stated:

       It is the determination of Appeals not to grant you relief from the
       filing of the Notice of Federal Tax Lien covering your unpaid liability
       for the taxes and tax periods shown above [2000 through 2003]. You
       have not met any conditions for withdrawal of the Lien. You did not
       provide any information so the matter of the underlying liability could
       be considered. You also did not provide any financial information so
       collection alternatives could be considered. You would not qualify
       for any collection alternatives at the present time because you are not
       in compliance with all of your filing requirements.

Both supplemental notices advised petitioner that Appeals had mailed him a copy

of the notices of deficiency for 2002 and 2003 but that “the Service could not show
                                          -6-

[*6] that a statutory Notice of Deficiency [for any of the years at issue] was issued

to you at the correct address”.

                                      OPINION

I.    Applicable Rules

      A.     Liens

      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

against certain categories of third parties. See sec. 6323(a), (f); Behling v.

Commissioner, 118 T.C. 572, 575 (2002).

      Section 6320 provides that the Secretary shall furnish the taxpayer with

written notice of the filing of an NFTL 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, an Appeals officer must at the hearing verify that the

requirements of any applicable law or administrative procedure have been met.

See secs. 6320(c), 6330(c)(1). In addition, the taxpayer generally may raise at the

hearing “any relevant issue” relating to the unpaid tax or to the lien. See secs.
                                           -7-

[*7] 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 secs. 6320(c), 6330(c)(2)(B).

      B.     Levy

      The Secretary may collect a taxpayer’s unpaid tax by levying upon the

taxpayer’s property or rights to property. See sec. 6331(a). Such a levy, however,

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

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

appropriate. See sec. 6330(a)(1), (b)(1). If the taxpayer timely requests a hearing,

then, as is true as in the case of a hearing on the propriety of a lien, the

Appeals officer must at the hearing verify that the requirements of any applicable

law or administrative procedure have been met. See sec. 6330(c)(1). In addition,

the taxpayer generally may raise at the hearing “any relevant issue” relating to the

unpaid tax or to the levy. See sec. 6330(c)(2)(A). Likewise, 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).
                                            -8-

[*8] II.    Discussion

       Petitioner claims that the IRS did not properly mail him a notice of

deficiency for any of the years at issue. Respondent conceded at trial that

petitioner did not receive a notice of deficiency for any of those years but asserted

that a notice of deficiency for each year was mailed to petitioner’s last known

address. Respondent did not introduce any evidence to support that assertion. Nor

does respondent attempt to harmonize that assertion with the statements in the

supplemental notices that the IRS is unable to show that a notice of deficiency was

mailed to petitioner’s “correct” address.

       A collection action will not be sustained where the underlying liability is

premised on an invalid assessment. Hoyle v. Commissioner, 131 T.C. 197, 205

(2008); Freije v. Commissioner, 125 T.C. 14, 34-37 (2005); see also Bach v.

Commissioner, T.C. Memo. 2008-202, slip op. at 11 n.4. A Federal income tax

deficiency may not be assessed unless the Commissioner first mails a statutory

notice of deficiency to the taxpayer’s last known address. See sec. 6213(a); Hoyle

v. Commissioner, 131 T.C. at 200; see also Coleman v. Commissioner, 94 T.C. 82,

90 (1990) (noting that the Commissioner bears the burden of proving by competent

and persuasive evidence that a notice of deficiency was properly mailed). The

deficiencies that gave rise to the underlying tax liabilities at issue in this case were
                                          -9-

[*9] not properly assessed unless respondent mailed notices of deficiency to

petitioner’s last known address.3 See Hoyle v. Commissioner, 131 T.C. at 200.

The admission in the supplemental notices that respondent was unable to show that

notices for the years at issue were sent to the “correct” address, coupled with

respondent’s failure to demonstrate at trial that notices were sent to petitioner’s last

known address, dictate a finding that the assessments sought to be collected herein

are invalid. Cf. Buffano v. Commissioner, T.C. Memo. 2016-121 (record

established that notices of deficiency were properly mailed and received by

petitioner for 2004 and 2005).

      Consequently, the supplemental notices of determination upholding the lien

filing and the proposed levy are not sustained. To reflect the foregoing,


                                                Decision will be entered for

                                         petitioner.




      3
        A notice of deficiency that is not mailed to a taxpayer’s last known address
may still be valid if the taxpayer received the notice with sufficient time to petition
the Court with respect thereto. See, e.g., Freiling v. Commissioner, 81 T.C. 42,
51-53 (1983). That rule is not applicable here, given respondent’s concession that
petitioner did not receive a notice of deficiency for any of the years at issue.
