                        T.C. Memo. 2009-63



                      UNITED STATES TAX COURT



         DOUGAL C. AND DIANE N. MACDONALD, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12652-07L.            Filed March 24, 2009.



     William E. Taggart, Jr., for petitioners.

     Margaret A. Martin and Jeremy L. McPherson, for respondent.



                        MEMORANDUM OPINION


     MARVEL, Judge:   Petitioners petitioned this Court in

response to respondent’s Notice of Determination Concerning

Collection Action(s) Under Section 63201 and/or 6330 for 1998



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 2 -

through 2004 (notice of determination) and Decision Letter

Concerning Equivalent Hearing Under Section 6320 and/or 6330 of

the Internal Revenue Code for 1996 and 1997 (decision letter).

This matter is before the Court on respondent’s (1) motion to

dismiss for lack of jurisdiction and to strike as to 1996 and

1997 and (2) motion to dismiss on ground of mootness and to

strike as to 1999 through 2004.2    For the reasons stated herein,

we shall grant respondent’s motions.

                             Background

     Petitioners resided in California when their petition was

filed.

     The record establishes and the parties do not dispute the

following.   On August 30, 1999, respondent issued petitioners a

Final Notice of Intent to Levy and Notice of Your Right to a

Hearing for 1996 and 1997.   Petitioners did not request a hearing

with respondent’s Appeals Office.    Instead, on September 9, 1999,

petitioners filed a bankruptcy petition under chapter 7 of the

Bankruptcy Code.   Respondent filed a proof of claim and in 2005

received distributions out of the bankruptcy estate which he

applied to petitioners’ 1996 through 1998 tax accounts.

Petitioners’ bankruptcy case was closed in 2005.



     2
      Mootness is itself a jurisdictional concept. See Greene-
Thapedi v. Commissioner, 126 T.C. 1, 6 n.9 (2006); Hefti v.
Commissioner, 97 T.C. 180, 191 (1991), affd. 983 F.2d 868 (8th
Cir. 1993).
                               - 3 -

     On June 17, 2006, respondent issued petitioners a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing

for 1998 through 2004.3   On or about July 17, 2006, petitioners

submitted a Form 12153, Request for a Collection Due Process

Hearing, requesting a hearing with respondent’s Appeals Office

with respect to 1996 through 2004.     In the attachment to the Form

12153, petitioners asserted that they had fully paid their 1996

through 1998 Federal income tax liabilities.    Petitioners also

proposed to make certain monthly payments until respondent and

petitioners would reach an agreement as to the amount of

petitioners’ unpaid tax liabilities, and thereafter petitioners

would pay the remaining balance within 90 days.4    With the Form

12153, petitioners paid $40,000 and requested that respondent

apply the payment to their most recent Federal income tax

liabilities.   Respondent applied $38,336.63 and $1,663.37 to

petitioners’ 2004 and 2003 Federal income tax liabilities,




     3
      On or about June 26, 2006, respondent also issued
petitioners a Final Notice Before Levy on Social Security
Benefits for 1996 and 1997.
     4
      In the Form 12153 petitioners characterize their proposal
as an “Offer-In-Compromise based on doubt as to liability”
whereas in their petition petitioners characterize it as an
“installment payment agreement based on doubt as to
collectibility and Effective Tax Administration”. The type of
collection alternative proposed does not affect our disposition
of respondent’s motions. Likewise, the amount of payment is not
relevant to our disposition of respondent’s motions.
                               - 4 -

respectively, and the payment satisfied petitioners’ 2004 Federal

income tax liabilities in full.

     The settlement officer assigned to the case conducted the

hearing by telephone and correspondence.   During the hearing

petitioners asserted that respondent waived his claim to the

interest that accrued after petitioners had filed their

bankruptcy petition (postpetition interest) because respondent

failed to file a proof of claim with respect to such interest in

the bankruptcy proceeding.   Accordingly, petitioners contended

that their 1996 through 1998 Federal income tax liabilities had

been fully paid.   The settlement officer rejected the collection

alternative as not processable because petitioners had not

offered a specific monthly payment and had relegated to

themselves the decision as to the correct balance they owed.

     On May 4, 2007, respondent’s Appeals Office issued

petitioners a notice of determination sustaining the levy with

respect to their 1998 through 2004 Federal income tax

liabilities.5   Because the Appeals Office concluded that

petitioners had not timely requested a hearing with respect to

1996 and 1997, it issued petitioners a decision letter dated




     5
      Respondent issued the notice of determination with respect
to 1998 through 2004 even though petitioners had fully paid their
2004 Federal income tax liability on July 17, 2006.
                               - 5 -

May 11, 2007, sustaining the levy with respect to their unpaid

Federal income tax liabilities for 1996 and 1997.   In the

decision letter, respondent’s Appeals Office stated:

     Your due process hearing request was not filed within
     the time prescribed under Section 6320 and/or 6330.
     However, you received a hearing equivalent to a due
     process hearing except that there is no right to
     dispute a decision by the Appeals Office in court under
     IRC Sections 6320 and/or 6330.

     On June 4, 2007, petitioners petitioned this Court

challenging the notice of determination and the decision letter.

Petitioners contend that their request for a hearing with the

Appeals Office was timely with respect to all years and that they

did not receive a proper hearing under section 6330.   Petitioners

assert that respondent erred in rejecting petitioners’ proposed

collection alternative and sustaining the levy without

determining whether petitioners had unpaid Federal income tax

liabilities.   Petitioners request that we redetermine their

unpaid 1999 through 2004 Federal income tax liabilities and find

that they have no unpaid 1996 through 1998 Federal income tax

liabilities.

     On August 22, 2007, petitioners paid their 1999 through 2003

Federal income tax liabilities in full.

                            Discussion

I.   Collection by Levy

     Section 6331(a) provides that if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after
                                   - 6 -

notice and demand for payment, the Secretary is authorized to

collect such tax by levy upon the person’s property.      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

such person in writing of the right to a hearing (section 6330

hearing) before the levy is made.

      The taxpayer must request a section 6330 hearing within the

30-day period commencing on the day after the date of the notice

of intent to levy.      Sec. 6330(a)(3)(B); sec. 301.6330-1(b)(1),

Proced. & Admin. Regs.      If a taxpayer timely requests a section

6330 hearing, a hearing shall be held before an impartial officer

or employee of the Internal Revenue Service Office of Appeals.

Sec. 6330(b)(1), (3).      After the section 6330 hearing the Appeals

Office issues a notice of determination indicating whether the

proposed levy action may proceed.      Sec. 301.6330-1(e)(3), Q&A-E8,

Proced. & Admin. Regs.      Under section 6330(d)(1) the taxpayer may

petition this Court to review the determination made by the

Appeals Office.      See sec. 301.6330-1(f)(1), Proced. & Admin.

Regs.

II.   Respondent’s Motion To Dismiss for Lack of Jurisdiction

      A.      Equivalent Hearing

      In response to the petition respondent filed a motion to

dismiss for lack of jurisdiction and to strike as to 1996 and

1997.      The Court held a hearing on respondent’s motion at its
                                - 7 -

trial session in San Francisco, California.    Respondent argues

that he has not issued a notice of determination for 1996 and

1997 that would give the Court jurisdiction under section

6330(d)(1).

     This Court is a court of limited jurisdiction, sec. 7442,

and accordingly, we may exercise jurisdiction only to the extent

expressly authorized by Congress, Naftel v. Commissioner, 85 T.C.

527, 529 (1985).    Jurisdiction under section 6330(d)(1) depends

on the issuance of a notice of determination by the Appeals

Office.   See Sarrell v. Commissioner, 117 T.C. 122, 125 (2001);

Moorhous v. Commissioner, 116 T.C. 263, 269 (2001); Offiler v.

Commissioner, 114 T.C. 492, 498 (2000); see also Rule 330(b).

     Generally, if a person requests a section 6330 hearing after

the 30-day period for requesting that hearing, the taxpayer is

not entitled to a section 6330 hearing but nevertheless may

receive a so-called equivalent hearing.    See Kennedy v.

Commissioner, 116 T.C. 255, 262 (2001); sec. 301.6330-1(i)(1),

Proced. & Admin. Regs.    An equivalent hearing, held by the

Appeals Office, is generally conducted in the same manner as a

section 6330 hearing.    Sec. 301.6330-1(i)(1), Proced. & Admin.

Regs.   After the equivalent hearing, the Appeals Office does not

issue a notice of determination but instead issues a decision

letter, which generally includes the same information as a notice

of determination.   Sec. 301.6330-1(i)(2), Q&A-I4, Proced. &
                                   - 8 -

Admin. Regs.       The decision letter generally is not subject to

judicial review under section 6330(d)(1).6       Rule 330; Severo v.

Commissioner, 129 T.C. 160, 163 (2007); Kennedy v. Commissioner,

supra at 261-263; sec. 301.6330-1(i)(2), Q&A-I5, Proced. & Admin.

Regs.

       Petitioners do not dispute that they did not timely request

a section 6330 hearing.       Accordingly, respondent properly held an

equivalent hearing and issued a decision letter instead of a

notice of determination.       See Kennedy v. Commissioner, supra at

262.       Consequently, we do not have jurisdiction to review

respondent’s determination in the decision letter.

       In opposition to respondent’s motion, petitioners assert

that respondent failed to file a proof of claim in petitioners’

bankruptcy proceeding thereby waiving his claim to postpetition

interest.       Petitioners also contend that respondent improperly

applied payments from petitioners’ bankruptcy estate to their tax

accounts, which resulted in an incorrect record of petitioners’

1996 and 1997 Federal income tax liabilities,7 and that the Court


       6
           Cf. Craig v. Commissioner, 119 T.C. 252 (2002).
       7
      Petitioners advance the same argument with respect to 1998.
They assert that the Court has jurisdiction with respect to 1996
through 1998 because “any decision * * * with respect to
Petitioners’ 1998 tax year will be res judicata with respect to
Petitioners’ 1996 and 1997 tax years as the issues and parties
are identical.” The possible application of the doctrines of
collateral estoppel or res judicata is not relevant to our
consideration of whether we have jurisdiction to review a
                                                   (continued...)
                                 - 9 -

has jurisdiction to consider whether such payments and credits

should have been applied to 1999 through 2004.8    Petitioners’

contentions raise an issue relevant to the appropriateness of the

collection action.     See Swanson v. Commissioner, 121 T.C. 111,

119 (2003).   Although section 6330(c)(2)(A) provides that a

taxpayer may raise challenges to the appropriateness of the

collection action in the section 6330 hearing, respondent held an

equivalent hearing and not a section 6330 hearing with respect to

1996 and 1997.   Because respondent’s Appeals Office properly

issued a decision letter to petitioners, we do not have

jurisdiction to review any issue raised during the equivalent

hearing, including challenges to the appropriateness of the

collection action.     See Severo v. Commissioner, supra at 163.

     B.   Jurisdiction Under Section 6404

     Petitioners argue that respondent’s motion should be denied

because section 6404(h)(1) provides a foundation for the Court’s

jurisdiction that is independent of our jurisdiction under

section 6330(d)(1).    Petitioners allege that during the

equivalent hearing they requested an abatement of postpetition



     7
      (...continued)
decision letter.
     8
      Were it not for the fact that full payment renders this
proceeding moot as to 1999 through 2004, it is arguable whether
petitioners’ claim regarding the reallocation of payments and
credits would be entertained. See Freije v. Commissioner, 125
T.C. 14, 24-30 (2005).
                              - 10 -

interest9 under section 6404(e)(1) on the ground that respondent

would have collected it if he had filed a proof of claim in

petitioners’ bankruptcy proceeding.

     Section 6404(e) authorizes the Secretary to abate interest

assessments attributable to unreasonable errors or delays by the

Internal Revenue Service.   Section 301.6404-1(c), Proced. &

Admin. Regs., provides that a taxpayer shall request abatement on

a Form 843, Claim for Refund and Request for Abatement.10

Section 6404(h)(1) generally gives the Court jurisdiction to

review the Commissioner’s denial of the taxpayer’s request for

abatement of interest if the taxpayer files a petition with the

Court within 180 days after the Secretary mails a final

determination not to abate interest.   The Commissioner’s final

determination letter “is a prerequisite to the Court’s

jurisdiction and serves as a taxpayer’s ‘ticket’ to the Tax

Court.”   Bourekis v. Commissioner, 110 T.C. 20, 26 (1998); see

also Rule 280(b).   Petitioners do not dispute that respondent has

not issued a final determination not to abate interest.

Accordingly, the Court lacks jurisdiction to review respondent’s

alleged failure to abate interest under section 6404(e).


     9
      Petitioners contend that for 1996 and 1997 only
postpetition interest is at issue.
     10
      This regulation predates the enactment of sec. 6404(e) and
has not yet been amended to reflect that interest may be abated
with respect to income tax if the requirements of sec. 6404(e)
are met.
                                - 11 -

     We have previously held that we may review an Appeals

officer’s determination regarding interest abatement if a

taxpayer requests an abatement of interest in a section 6330

hearing, Katz v. Commissioner, 115 T.C. 329, 340-341 (2000), but

we will not consider a taxpayer’s underlying liability if it was

not properly raised at the section 6330 hearing or considered in

the notice of determination, see Giamelli v. Commissioner, 129

T.C. 107 (2007); Magana v. Commissioner, 118 T.C. 488, 493-494

(2002).   The parties disagree whether petitioners raised a

section 6404(e)(1) argument during the equivalent hearing.

Respondent contends that petitioners only argued that respondent

had waived postpetition interest by failing to submit a proof of

claim in petitioners’ bankruptcy proceeding.   Petitioners’

counsel asserts that he raised interest abatement under section

6404(e)(1) when the settlement officer disagreed with

petitioners’ waiver argument.

     Nothing in the decision letter or petition suggests that

during the equivalent hearing petitioners raised a section

6404(e)(1) issue.   Even if petitioners’ position regarding a

waiver during the equivalent hearing could be interpreted as an

interest abatement request, see, e.g., Urbano v. Commissioner,

122 T.C. 384, 391 (2004) (construing the taxpayers’ argument that

they were not liable for disputed interest as an interest

abatement request); Katz v. Commissioner, supra at 340-341
                                 - 12 -

(viewing the taxpayer’s argument that interest should not have

accrued during his bankruptcy case as an interest abatement

request), we do not need to decide whether petitioners’ argument

was sufficient to preserve the issue for our review, see Magana

v. Commissioner, supra at 493-494.        Our jurisdiction to review

denials of interest abatement requests made during a section 6330

hearing is confined to cases in which we have section 6330(d)(1)

jurisdiction, see Katz v. Commissioner, supra at 340-341, which

we do not have in this case.11

     C.   Conclusion

     On the basis of the foregoing, we shall grant respondent’s

motion to dismiss for lack of jurisdiction and to strike with

respect to 1996 and 1997.

III. Respondent’s Motion To Dismiss on the Ground of Mootness

     After petitioners paid in full their 1999 through 2003

Federal income tax liabilities, respondent filed a motion to

dismiss on the ground of mootness and to strike as to 1999

through 200412 because he no longer intended to proceed with the



     11
      We have held that our jurisdiction under sec. 6330(d) to
redetermine interest extends beyond that conferred by sec.
6404(h) to grant an interest abatement. Urbano v. Commissioner,
122 T.C. 384, 392-393 (2004). However, because petitioners’
claim does not relate to years covered by the notice of
determination and does qualify as a “stand-alone” claim for
interest abatement, neither source of jurisdiction is available.
     12
      On July 17, 2006, petitioners paid their 2004 Federal
income tax liabilities.
                              - 13 -

proposed levy.   Petitioners agree that the payment of their 1999

through 2004 Federal income tax liabilities rendered moot all

issues relating to respondent’s proposed levy.   However,

petitioners assert that issues other than respondent’s proposed

collection action remain in dispute, such as their contentions

regarding misapplication of payments.   Petitioners argue that the

Court has jurisdiction until it resolves all issues.

     Our jurisdiction under section 6330(d)(1) is generally

limited to reviewing whether a proposed collection action is

proper.   Greene-Thapedi v. Commissioner, 126 T.C. 1, 7 (2006).

Once the Commissioner concedes that there is no unpaid liability

for the disputed year upon which a lien or levy could be based,

the case is moot.   Id. at 7; Gerakios v. Commissioner, T.C. Memo.

2004-203; Chocallo v. Commissioner, T.C. Memo. 2004-152.     In

Greene-Thapedi v. Commissioner, supra at 8-13, we held that in a

section 6330 proceeding when a tax liability for a particular

year has been fully paid, we lack jurisdiction to determine an

overpayment or to order a refund or credit for that year.

     Respondent states that he no longer intends to proceed with

the levy for 1999 through 2004 as petitioners do not have any

unpaid 1999 through 2004 Federal income tax liabilities.    We

shall grant respondent’s motion and dismiss this case with

respect to 1999 through 2004, and all allegations in the petition

pertaining to these years shall be deemed stricken from the
                               - 14 -

petition.13   We do not have jurisdiction to determine

petitioners’ 1999 through 2004 Federal income tax liabilities or

to consider whether or how respondent should have applied to

those years any payments.   See id.

     We have considered all arguments raised by either party, and

to the extent not discussed, we find them to be irrelevant, moot,

or without merit.

     To reflect the foregoing,


                                      An appropriate order granting

                                 respondent’s motions will be

                                 issued.




     13
      We have jurisdiction with respect to 1998. Whether any
fact or issue with respect to 1996, 1997, and 1999 through 2004,
is relevant to 1998, within the meaning of sec. 6330(c)(2), is a
separate question that does not affect our consideration of
respondent’s motion. See Freije v. Commissioner, 125 T.C. at 25.
