                        T.C. Memo. 2011-149



                      UNITED STATES TAX COURT



                  RODNEY SANCHEZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14551-09L.              Filed June 28, 2011.



     Rodney Sanchez, pro se.

     Brooke Laurie, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Petitioner seeks review of respondent’s

determination to sustain the filing of a notice of Federal tax

lien (NFTL) with respect to unpaid Federal income tax liabilities
                                   - 2 -

for 2003 and 2004 pursuant to sections 6320 and 6330(c), (d), and

(e).1       We must decide whether to sustain the determination.

                             FINDINGS OF FACT

        Some of the facts have been stipulated and are so found.

The stipulations of fact and facts drawn from stipulated exhibits

are incorporated herein by reference.       At the time the petition

was filed, petitioner resided in Texas.

        Petitioner timely filed joint Forms 1040, U.S. Individual

Income Tax Return, for 2003 and 2004 with his then wife, Analisa

Sanchez (Ms. Sanchez).       When petitioner and Ms. Sanchez filed the

returns, they did not fully pay the balances due shown on the

returns.       However, they subsequently paid them.

        Respondent examined the 2003 and 2004 returns.    By notice of

deficiency dated April 23, 2007, respondent determined an income

tax deficiency and a section 6662 accuracy-related penalty for

each year.       Separate copies of the notice of deficiency were sent

to petitioner and Ms. Sanchez at their last known address.         Ms.

Sanchez, who was residing at the last known address when the

notice of deficiency was mailed, received her copy.       Petitioner,

who had moved to a different residence, did not receive his copy;

his undelivered copy was returned to respondent.       Neither

petitioner nor Ms. Sanchez petitioned this Court regarding the



        1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended.
                                - 3 -

notice of deficiency.   After the period for petitioning this

Court expired, respondent assessed the deficiencies, penalties,

and interest for 2003 and 2004.

     On May 14, 2008, respondent sent Letter 1058, Final Notice

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

notice), to petitioner by certified mail.   Petitioner signed the

post office receipt confirming that he received the levy notice

on May 20, 2008.   On May 22, 2008, respondent sent Letter 3172,

Notice of Federal Tax Lien Filing and Your Right to a Hearing

Under IRC 6320 (lien notice), to petitioner by certified mail.

On July 7, 2008, respondent received petitioner’s request for a

collection due process hearing or equivalent hearing (hearing

request).   The envelope was postmarked June 30, 2008.   The

hearing request was timely as to the lien notice but was not

timely as to the levy notice.   Consequently, petitioner was

entitled to receive, and received, a section 6320/6330 hearing

with respect to the lien notice.   Petitioner received an

equivalent hearing with respect to the levy notice.

     Petitioner’s case was initially assigned to Settlement

Officer Shirley J. Rivers (SO Rivers) but was transferred to

Settlement Officer Bart A. Hill (SO Hill) after petitioner raised

an issue regarding the underlying liabilities.   On April 8, 2009,

SO Hill held a telephone hearing with petitioner that covered

both the lien notice and the levy notice.   SO Hill and petitioner
                               - 4 -

also communicated during the hearing process through

correspondence.   During the hearing process SO Hill requested the

following documentation from petitioner:   (1) A completed Form

433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals; (2) signed income tax returns for 2006

and 2007; (3) proof of estimated tax payments for 2008 and a

draft of petitioner’s 2008 return; and (4) documentation to

support petitioner’s challenges to the underlying liabilities.

Petitioner did not produce any of this documentation.2

     On May 7, 2009, respondent issued a notice of determination

that sustained the filing of the NFTL and confirmed that the

requirements of sections 6320 and 6330(c) and (d) had been

satisfied.   Petitioner filed a timely joint petition contesting

the determination, which contained his signature and the

purported signature of Ms. Sanchez.    However, because Ms. Sanchez




     2
      Petitioner declined to stipulate the complete
administrative record, but he made no argument that the
administrative record respondent identified was incomplete or
otherwise inaccurate. Respondent offered Exhibits 32 and 33,
consisting of declarations of SO Rivers and SO Hill with exhibits
attached, in order to introduce the complete administrative
record considered by the Appeals Office in making its
determination. Petitioner objected to the admission of the
exhibits, and we reserved ruling at trial. We now overrule
petitioner’s objections and admit the exhibits, which were
properly authenticated and which we admit for the purpose of
providing us with the complete administrative record and not for
the truth of the matters asserted therein. See Hoyle v.
Commissioner, 136 T.C. ___, ___ (2011) (slip op. at 17-18).
                                - 5 -

did not sign or ratify the petition,3 we granted respondent’s

motion to dismiss for lack of jurisdiction as to Ms. Sanchez.     We

also granted respondent’s motion to dismiss petitioner’s case

insofar as it relates to the equivalent hearing held with respect

to the levy notice.

     We subsequently held a trial at which petitioner testified.

Petitioner, a high school graduate, operated a sole

proprietorship, On the Level Foundation Repair, during 2003 and

2004.    When respondent issued the notice of deficiency,

petitioner was going through an acrimonious divorce and did not

reside in the marital home at 5410 Wooldridge Road, Corpus

Christi, Texas, the address respondent used in issuing the notice

of deficiency.    Respondent concedes that petitioner did not

receive the notice of deficiency for 2003 and 2004 and that

petitioner was entitled to contest the underlying liabilities for

2003 and 2004 during the section 6320/6330 hearing process.

However, petitioner failed to present any information during the

section 6320/6330 hearing or at trial to prove that the




     3
      Ms. Sanchez spoke with respondent’s counsel and confirmed
she did not sign the petition.
                                   - 6 -

underlying liabilities were incorrect4 or that the notice of

determination was erroneous.

                                  OPINION

I.     Collection Hearing Procedure

       Section 6321 imposes a lien on all property and property

rights of a taxpayer liable for taxes where a demand for the

payment of the taxes has been made and the taxpayer fails to pay

those taxes.       Section 6320(a) requires the Secretary to send

written notice to the taxpayer of the filing of a notice of lien

and of the taxpayer’s right to an administrative hearing on the

matter.       Section 6320(b) affords the taxpayer the right to a fair

hearing before an impartial hearing officer.       Section 6320(c)

requires that the administrative hearing be conducted pursuant to

section 6330(c), (d) (other than paragraph (2)(B) thereof), and

(e).       At the hearing, a taxpayer may raise any relevant issue,

including appropriate spousal defenses, challenges to the



       4
      The 2003 and 2004 income tax deficiencies are primarily due
to the disallowance of deductions for some but not all of
petitioner’s expenses reported on Schedule C, Profit or Loss From
Business. Although petitioner contends that the resulting
liabilities are too high, we have no evidence on which to base
such a finding. We encourage petitioner to pursue audit
reconsideration of the 2003 and 2004 liabilities and to produce
substantiation for his disallowed Schedule C deductions at that
time. We encourage respondent to work with petitioner if he
requests audit reconsideration and provides the necessary
documents and information to support his contention that the 2003
and 2004 tax liabilities are excessive. We remind petitioner of
what we told him at trial--his tax problems will only get worse
if he ignores them and continues his pattern of noncompliance.
                                - 7 -

appropriateness of the collection action, and collection

alternatives.   Sec. 6330(c)(2)(A).     A taxpayer is precluded,

however, from contesting the existence or amount of the

underlying tax liability unless the taxpayer did not receive a

notice of deficiency for the tax liability in question or did not

otherwise have an opportunity to dispute the tax liability.        Sec.

6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609

(2000).

     Following a hearing, the Appeals Office is required to issue

a notice of determination regarding the validity of the filed

Federal tax lien.    In making a determination, the Appeals Office

is required to take into consideration:      (1) The verification

presented by the Secretary that the requirements of any

applicable law and administrative procedure have been met, (2)

the relevant issues raised by the taxpayer, and (3) whether the

proposed collection action appropriately balances the need for

efficient collection of taxes with the taxpayer’s concerns

regarding the intrusiveness of the proposed collection action.

Sec. 6330(c)(3).    If the taxpayer disagrees with the Appeals

Office’s determination, the taxpayer may seek judicial review by

appealing to this Court.    Sec. 6330(d).    Where the underlying tax

liability is properly at issue, the Court reviews any

determination regarding the underlying tax liability de novo.

Sego v. Commissioner, supra at 610.      The Court reviews all other
                                - 8 -

determinations of the Appeals Office for abuse of discretion.

Lunsford v. Commissioner, 117 T.C. 183, 185 (2001); Sego v.

Commissioner, supra at 610; Goza v. Commissioner, 114 T.C. 176,

182 (2000).    The Appeals Office abuses its discretion if its

determination is made “arbitrarily, capriciously, or without

sound basis in fact.”    Mailman v. Commissioner, 91 T.C. 1079,

1084 (1988).

II.   Validity of Notice of Federal Tax Lien

      Petitioner made a vague argument at trial that respondent

failed to properly assess the underlying tax liabilities for 2003

and 2004 on the basis that he did not receive the notice of

deficiency.    Petitioner also argued that he did not receive a

notice of assessed tax that was signed and properly labeled.

However, petitioner’s principal argument is that he has not been

given a fair chance to resolve this tax case because he did not

receive the notice of deficiency or a notice of tax due.    He also

maintains that he has been burdened by personal and business

problems, that he simply has not had the time or the money to

deal with his tax problems, and that the assessed tax

deficiencies are erroneous and excessive.

      We have reviewed the record and can identify no procedural

or substantive defect that would justify a decision refusing to
                              - 9 -

uphold the filing of the NFTL.5   Respondent’s Appeals Office

verified that the requirements of any applicable law or

administrative procedure have been met as required by section

6330(c)(1); it considered the issues petitioner raised during the

administrative hearing as required by section 6330(c)(2),

including petitioner’s challenge to the underlying liabilities

for 2003 and 2004; and it appropriately balanced the need for

efficient tax collection with petitioner’s legitimate concern

that any collection action be no more intrusive than necessary as

required by section 6330(c)(3)(C).    Petitioner did not offer any

evidence during the administrative hearing or at trial to prove

that the underlying liabilities were too high, nor did he submit

the documentation regarding his financial condition and his tax

compliance that the Appeals Office reasonably requested during

the administrative hearing process.   Respondent did not abuse his

discretion in determining that the NFTL was properly filed, and

we sustain that determination.6




     5
      Petitioner does not dispute that respondent mailed a notice
of deficiency with respect to 2003 and 2004 to him and to Ms.
Sanchez at their last known address as required by sec. 6212(a)
and (b). Petitioner contends only that he did not receive the
notice of deficiency.
     6
      Because petitioner did not timely request a sec. 6330
hearing with respect to the levy notice, we do not consider
respondent’s action with respect to the levy notice as we have no
jurisdiction to do so.
                              - 10 -

     We are sympathetic to petitioner, who seemed genuinely

overwhelmed at trial by his tax and other problems.   We reiterate

that petitioner must become current in his tax filings and

estimated tax payments so that his tax problems do not worsen.

We encourage petitioner to request audit reconsideration of the

2003 and 2004 liabilities but only if he is prepared to provide

respondent with substantiation of his business expenses for those

years.   If petitioner is able to find a buyer for one or more of

the properties he owns,7 we also encourage him to work with

respondent to obtain a release or subrogation of the lien in

appropriate circumstances.

     We have considered all issues raised by the parties and, to

the extent they are not discussed herein, we conclude that they

are without merit or are unnecessary to reach.

     To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.




     7
      Petitioner stated at trial that he owns a commercial
building and his home but that the lien was impairing his ability
to sell the properties for a fair price.
