                  T.C. Summary Opinion 2004-67



                     UNITED STATES TAX COURT



                  LAURA G. COOK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17532-02S.               Filed May 17, 2004.



     Laura G. Cook, pro se.

     Scott Thomas Welch, for respondent.



     COUVILLION, Special Trial Judge:    This case was heard

pursuant to section 7463 of the Internal Revenue Code in effect

at the time the petition was filed.1    The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.   Petitioner seeks a review under section


     1
          Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
years at issue.
                                 - 2 -


6330(d) of respondent’s decision to proceed with collection of

petitioner’s Federal income tax liabilities for 1993 and 1994.

     Some of the facts were stipulated.       Those facts, with the

annexed exhibits, are so found and are made part hereof.

Petitioner’s legal residence was Reserve, Louisiana, at the time

the petition was filed.

     Petitioner filed Federal income tax returns for the years

1993 and 1994 reporting head-of-household filing status and

claiming deductions for a personal exemption for herself and five

dependency exemptions for her sister and four “foster” children.

The latter were children of petitioner’s friend, Joann Louise

Kleibert.

     Upon examination of the returns, respondent disallowed the

five claimed dependency exemption deductions and determined that

petitioner’s filing status was married filing separately instead

of head-of-household.    Respondent also determined that petitioner

was liable for income taxes on unreported community property

income.     A notice of deficiency was issued to petitioner for the

years 1993 and 1994 in which the following determinations were

made:


     Year           Deficiency           Sec. 6662(a) Penalty

     1993             $1,447                     $289
     1994              1,297                      259
                                 - 3 -


On October 26, 1995, petitioner signed Form 5564, Notice of

Deficiency Waiver, consenting to the immediate assessment of the

deficiencies and penalties.2   No petition was ever filed by

petitioner in this Court or in any other court challenging her

1993 and 1994 tax liabilities.

     Respondent assessed petitioner for the amounts determined in

the notice of deficiency on December 4, 1995.   Thereafter, in

1997, petitioner filed amended returns claiming refunds for 1993

and 1994.   The refund claims were based on the exemptions and

filing status that petitioner had claimed on her original returns

that were disallowed in the notice of deficiency and assessed.

She based her position on the advice of her cousin, Chester J.

Victor, Sr., who claimed to have expertise in this area.3

Respondent denied the refund requests on October 12, 1998.

     On December 17, 2001, respondent issued to petitioner a

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

Hearing in connection with the assessed balance of income taxes



     2
          Also on Oct. 26, 1995, petitioner offered to pay     the
deficiencies through an installment agreement by signing a     Form
9465, Installment Agreement Request. However, because she      was
not current in filing her 1999 through 2001 Federal income     tax
returns at the time of her collection due process hearing,
petitioner was not eligible for an installment agreement.
     3
          Mr. Victor later assisted petitioner by signing as her
authorized representative Form 12153, Request for a Collection
Due Process Hearing, signing her petitions, and testifying at
trial.
                               - 4 -


and statutory additions.   Petitioner received the notice.      On

January 13, 2002, on Form 12153, Request for a Collection Due

Process Hearing, she requested a hearing with respondent’s

Appeals Office for the years 1993 through 1998.4    The request

asserted that the respondent's findings were incorrect.     No

spousal defenses or collection alternatives were alleged.

     In due course, an Appeals Office hearing was held with

petitioner by telephone on September 10, 2002.     Respondent

thereafter denied relief and issued a Notice of Determination

Concerning Collection Actions Under Section 6320 and/or 6330 on

October 15, 2002.   The notice summarized the determination as

follows:   “Our determination is that the proposed levy action is

appropriate.”   An attachment to the notice, Relevant Issues

Presented by the Taxpayer, addressed petitioner’s position as

follows:


          The sole issue you raised was that you disagree with
     the IRS audit assessments.

           You had a previous opportunity for an Appeals
     conference after your administrative claims were denied.
     Because you had a previous opportunity for an Appeals
     conference concerning both liabilities, § 6330 precludes you
     from challenging the underlying tax liabilities in this
     case.




     4
          The petition challenges only the 1993 and 1994 tax
liabilities. The record does not reflect the status of the other
years for which petitioner requested a hearing.
                              - 5 -


          You raised no other issues and spousal defenses are not
     applicable.


The attachment also stated that an Appeals officer who had no

prior involvement with the tax liabilities conducted the hearing

and verified that all applicable legal and administrative

procedures were properly followed in issuing the notice of intent

to levy.

     Petitioner contends that she was entitled to head-of-

household filing status, the claimed dependency exemption

deductions, and was not subject to the community property law

because she and her husband were living separate and apart during

the 2 years in question; that she provided more than 80 percent

of the support of the dependents claimed on the returns; and that

she occupied her own place of residence from which she provided a

household for the claimed dependents.

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

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

notice and demand for payment, the Secretary is authorized to

collect such tax by levy on the person's property.   Section

6331(d) provides that, at least 30 days before enforcing

collection by levy on the person's property, the Secretary is

required to provide the person with a final notice of intent to

levy, including notice of the administrative appeals available to

the person.
                               - 6 -

     Section 6330 generally provides that the Commissioner cannot

proceed with collection by levy until the person has been given

notice and the opportunity for an administrative review of the

matter (in the form of an Appeals Office hearing) and, if

dissatisfied, with judicial review of the administrative

determination.   See Davis v. Commissioner, 115 T.C. 35, 37

(2000); Goza v. Commissioner, 114 T.C. 176, 179-180 (2000).

Section 6330(d) provides for judicial review of the

administrative determination in the Tax Court or a Federal

District Court, as may be appropriate.

     Section 6330(c) prescribes what an affected taxpayer may

assert or claim at an Appeals Office hearing.   Section

6330(c)(2)(A) provides that a person may raise collection issues

such as spousal defenses, the appropriateness of the

Commissioner's intended collection action, and possible

alternative means of collection.   Sego v. Commissioner, 114 T.C.

604, 609 (2000); Goza v. Commissioner, supra.   In addition,

section 6330(c)(2)(B) sets out the circumstances where a taxpayer

may challenge the existence or amount of the underlying tax

liability.   In general, this is allowable only if the taxpayer

“did not receive any statutory notice of deficiency for such tax

liability or did not otherwise have an opportunity to dispute

such tax liability.”   Sec. 6330(c)(2)(B); see also sec. 301.6330-

1(e), Proced. & Admin. Regs.   The term “underlying tax liability”
                                - 7 -

includes additions to tax and statutory interest that are the

subject of the Commissioner’s collection activities.     Katz v.

Commissioner, 115 T.C. 329, 339 (2000).     If the underlying tax

liability is at issue, the Court reviews that taxpayer’s

liability de novo.   The Court reviews other administrative

determinations based on whether or not there was an abuse of

discretion by respondent.   Sego v. Commissioner, supra at 610.

     Petitioner primarily contends that respondent erred by not

allowing her to challenge the merits of the underlying tax

liability.   She claims that she did not know what the notice of

deficiency waiver was when she signed it.    However, petitioner

did not allege or establish that she was incompetent to sign the

Form 5564, cf. Horn v. Commissioner, T.C. Memo. 2002-207, or that

respondent perpetrated fraud, duress, or misrepresentation in

garnering her signature, cf. Whitman v. Commissioner, T.C. Memo.

1985-537.

     The Court finds that petitioner’s waiver is valid and

effective.   The act of signing the consent to immediate

assessment constituted her assent to the contents of that form

even if she may have been confused by its terms, a conclusion the

Court declines to reach.    Kronish v. Commissioner, 90 T.C. 684

(1988).   Moreover, it is clear to the Court that petitioner had

ample opportunity to dispute her underlying tax liability.    She

admitted receiving the notice of deficiency; she did not litigate
                               - 8 -

or judicially challenge the determinations therein; she even

offered to pay the tax liabilities under the installment method.

Petitioner, therefore, fully understood the consent to the

assessment.   The Court lacks jurisdiction to consider the

underlying tax liability under section 6330(d)(1).   The only

issue is whether respondent committed an abuse of discretion in

determining that collection of petitioner’s 1993 and 1994 tax

liabilities should proceed.   There is an abuse of discretion

where respondent’s action is arbitrary, capricious, or without

sound basis in fact or law.   Woodral v. Commissioner, 112 T.C.

19, 23 (1999).

     Petitioner’s sole contention was that she does not owe the

taxes at issue.   She did not, at the hearing, offer any

collection alternatives and asserted no spousal defenses.    She

received an appropriate hearing for purposes of section

6330(b)(1).   Day v. Commissioner, T.C. Memo. 2004-30; Leineweber

v. Commissioner, T.C. Memo. 2004-17; Dorra v. Commissioner, T.C.

Memo. 2004-16; sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin.

Regs.   Respondent properly verified that the requirements of

applicable law and administrative procedures were met, and

respondent balanced the need for efficient collection of taxes

with the legitimate concern of petitioner that the collection

action be no more intrusive than necessary.   On this record, the

Court holds that there was no abuse of discretion in sustaining
                                - 9 -

the notice of intent to levy.   Respondent, therefore, is

sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                             An appropriate order and

                                        decision will be entered.
