                           T.C. Memo. 2008-54



                         UNITED STATES TAX COURT



            OTTO’S E-Z CLEAN ENTERPRISES, INC., Petitioner v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 6139-07L.             Filed March 5, 2008.



        Karen Lynne Baker, for respondent.



                           MEMORANDUM OPINION


        MARVEL, Judge:   This matter is before the Court on

respondent’s motion for summary judgment filed pursuant to Rule

121.1




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

                                 Background

       This is an appeal from respondent’s determination to proceed

with the collection of petitioner’s unpaid employment tax; i.e.,

unpaid withholding and FICA tax liabilities with respect to its

Form 941, Employer’s Quarterly Federal Tax Return, for the

quarter ending December 31, 2005, and unpaid FUTA tax liabilities

with respect to its Forms 940, Employer’s Annual Federal

Unemployment Tax Return, for 2003, 2004, and 2005.2             Petitioner’s

principal place of business was in Rockford, Illinois, when its

petition was filed.

       Petitioner operates a vacuum cleaner retail sales and

service business for Oreck products.          Petitioner failed to file

its Form 941 for the quarter ending December 31, 2005, and its

Forms 940 for 2003, 2004, and 2005.          Pursuant to section 6020(b),

respondent prepared substitute returns for petitioner for the

quarter and years mentioned above and made assessments against

petitioner as follows:

       Quarter/                           Additions to Tax
Form   Tax year Amount of tax Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6656

941    12/31/05   $6,568.93     $1,478.01        $197.07      $985.33
940      2003      1,243.78        254.99         169.99        -0-
940      2004      2,170.00        459.22         183.69        -0-
940      2005      2,170.00        488.25          65.10        -0-




       2
      We use the term “employment tax” to refer to taxes under
the Federal Insurance Contributions Act (FICA), secs. 3101-3128,
the Federal Unemployment Tax Act (FUTA), secs. 3301-3311, and
income tax withholding, secs. 3401-3406 and 3509.
                                - 3 -

     On September 11, 2006, respondent issued petitioner a Final

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

connection with petitioner’s unpaid Form 940 and Form 941 tax

liabilities.    Petitioner timely submitted a Form 12153, Request

for a Collection Due Process Hearing.    In its request, petitioner

stated that “no explanation has been provided of the reason for

the levy nor a computation of amount for which a levy is

intended.”

     On January 17, 2007, Settlement Officer Marilyn Ganser

(Appeals officer) held a telephone hearing with petitioner’s

representative, Donald A. Statland (Mr. Statland).    At the

hearing, the Appeals officer informed Mr. Statland that

petitioner had failed to file its Form 941 tax returns for the

quarters ending June 30 and September 30, 2006.    The Appeals

officer also explained that petitioner had filed no Form 1120,

U.S. Corporation Income Tax Return, since the inception of its

business.    Additionally, the Appeals officer noted that

petitioner’s president, Andrew Otto, had not filed a Form 1040,

U.S. Individual Income Tax Return, since 1998.    The Appeals

officer gave petitioner a January 31, 2007, deadline to provide a

current financial statement and to file all of the above-

mentioned delinquent returns.    After the hearing, the Appeals

officer sent Mr. Statland copies of the returns respondent

prepared under section 6020(b).    Petitioner did not file the
                               - 4 -

requested tax returns or submit a current financial statement to

the Appeals officer by the January 31, 2007, deadline.

     On February 15, 2007, the Appeals officer issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 sustaining the proposed levy.

     On March 14, 2007, petitioner timely filed its petition.

Petitioner argues that there is no proposed deficiency as set

forth in the notice of determination.   Petitioner further alleges

that the Appeals officer’s determination was erroneous because it

contravened the applicable Code provisions, rules, and

regulations.   However, petitioner states that the basis of its

allegations “cannot be fully set forth at this time given the

unclear basis for the Commissioner’s conclusions.”   Lastly,

petitioner contends it was improperly denied the right to an in-

person section 6330 hearing.

     On October 4, 2007, we issued petitioner a notice setting

its case for trial during the Court’s March 10, 2008, Chicago,

Illinois, trial session.   On November 21, 2007, respondent filed

his motion for summary judgment.   On December 7, 2007, Mr.

Statland submitted a motion to withdraw as petitioner’s

representative, citing petitioner’s refusal to cooperate and

failure to respond to his repeated communication attempts.     Mr.

Statland also submitted a motion requesting additional time for

petitioner to obtain new counsel and/or respond to respondent’s
                               - 5 -

summary judgment motion.   On December 12, 2007, we granted both

of Mr. Statland’s motions and gave petitioner until January 16,

2008, to file a response to respondent’s summary judgment motion.

Petitioner did not submit a response by the extended deadline.

                             Discussion

A.   Summary Judgment

     Summary judgment is a procedure designed to expedite

litigation and avoid unnecessary, time-consuming, and expensive

trials.   Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681

(1988).   Summary judgment may be granted with respect to all or

any part of the legal issues presented “if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law.”   Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   The moving party bears the burden of proving that

there is no genuine issue of material fact, and factual

inferences will be drawn in a manner most favorable to the party

opposing summary judgment.   Dahlstrom v. Commissioner, 85 T.C.

812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344

(1982).   The nonmoving party, however, cannot rest upon the

allegations or denials in his pleadings but must “set forth
                                  - 6 -

specific facts showing that there is a genuine issue for trial.”

Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821.

B.   Section 6330

      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

before the levy is made.     If the person makes a request for a

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

employee of the Internal Revenue Service (IRS) Office of Appeals.

Sec. 6330(b)(1), (3).     At the hearing, a taxpayer may raise any

relevant issue, including challenges to the appropriateness of

the collection action and collection alternatives.     Sec.

6330(c)(2)(A).      Taxpayers, however, are expected to provide all

relevant information requested by Appeals, including financial

statements, for its consideration of the facts and issues

involved in the hearing.     Sec. 301.6330-1(e)(1), Proced. & Admin.

Regs.   A taxpayer is precluded from contesting the existence or

amount of the underlying tax liability unless the taxpayer did

not receive a notice of deficiency for the tax 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 must make a

determination whether the proposed levy may proceed.     In so
                                - 7 -

doing, the Appeals Office is required to take into consideration:

(1) The verification presented by the Secretary that the

requirements of applicable law and administrative procedures have

been met, (2) the relevant issues raised by the taxpayer, and (3)

whether the proposed levy action appropriately balances the need

for efficient collection of taxes with a taxpayer’s concerns

regarding the intrusiveness of the proposed levy action.    Sec.

6330(c)(3).   A hearing officer may rely on a computer transcript

or Form 4340, Certificate of Assessments, Payments and Other

Specified Matters, to verify that a valid assessment was made and

that a notice and demand for payment was sent to the taxpayer in

accordance with section 6303.    Nestor v. Commissioner, 118 T.C.

162, 166 (2002); Schaper v. Commissioner, T.C. Memo. 2002-203;

Schroeder v. Commissioner, T.C. Memo. 2002-190.     Absent a showing

of irregularity, a transcript that shows such information is

sufficient to establish that the procedural requirements of

section 6330 have been met.     Nestor v. Commissioner, supra at

166-167.

     Section 6330(d)(1), as amended and applicable to this case,3

grants the Court jurisdiction to review the determination made by

the Appeals officer at the hearing.     The Court has jurisdiction

to review the Commissioner’s determination under section 6330


     3
       Sec. 6330(d)(1) was amended by the Pension Protection Act
of 2006, Pub. L. 109-280, sec. 855, 120 Stat. 1019, effective for
determinations made after Oct. 16, 2006.
                                - 8 -

regardless of the type of tax giving rise to the underlying tax

liability.    Sec. 6330(d)(1); Callahan v. Commissioner, 130 T.C.

___ (2008) (frivolous return penalty gave rise to underlying tax

liability).   Where the validity of the underlying tax liability

is properly at issue, the Court will review the underlying tax

liability de novo.    Sego v. Commissioner, supra at 610.    Where

the underlying tax liability is not properly at issue, the Court

will review the administrative determination 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 officer

abuses his discretion if his determination is exercised

“arbitrarily, capriciously, or without sound basis in fact.”

Mailman v. Commissioner, 91 T.C. 1079, 1084 (1988).

     Petitioner alleged in its petition that respondent’s

determination to sustain the proposed levy was in error.

Specifically, petitioner alleged that it was improperly denied a

face-to-face section 6330 hearing.      However, petitioner did not

respond to respondent’s motion for summary judgment and did not

provide any affidavit or other documentation to refute

respondent’s determination that a proper section 6330 hearing was

held.

     While a hearing may consist of a face-to-face meeting, a

proper section 6330 hearing may also occur by telephone or
                               - 9 -

correspondence under certain circumstances.     Katz v.

Commissioner, 115 T.C. 329, 337-338 (2000); sec.

301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs.     The undisputed

facts establish that petitioner’s representative agreed to

participate and did participate in a telephone section 6330

hearing with the Appeals officer.4

     Petitioner did not respond to respondent’s motion for

summary judgment and, consequently, has offered no discernable

argument with regard to the alleged error in respondent’s

determination.   In the petition petitioner does not mention any

specific Code provisions, rules, or regulations that respondent’s

determination allegedly violates, and petitioner does not set out

any specific facts.   Rule 331(b)(4) and (5) requires that a

petition in a levy action contain “Clear and concise assignments

of each and every error which the petitioner alleges to have been

committed in the notice of determination” as well as      “Clear and

concise lettered statements of the facts on which the petitioner

bases each assignment of error.”     The petition must contain

sufficient allegations of fact to permit the Court to determine

whether the Commissioner can proceed with the collection of the

taxpayer’s tax liabilities.   See Poindexter v. Commissioner, 122

T.C. 280, 285 (2004), affd. 132 Fed. Appx. 919 (2d Cir. 2005).


     4
       We note that the exhibits attached to the motion for
summary judgment do not establish that petitioner at any time
requested a face-to-face sec. 6330 hearing.
                              - 10 -

If the petition fails to set forth the factual basis for the

claims of error, summary judgment in favor of the Commissioner is

warranted.   Id. at 286.

     Because petitioner fails to describe in any detail why

respondent’s determination is erroneous and fails to provide any

factual basis to support its allegation, we are precluded from

further assessing whether respondent’s determination is erroneous

as petitioner claims.   While petitioner contends in the petition

that it cannot present its arguments because the basis for

respondent’s claim is unclear, this assertion is baseless.    The

notice of intent to levy and the notice of determination describe

in detail the basis for respondent’s determination, and Mr.

Statland participated in a telephone section 6330 hearing with

respondent’s Appeals officer at which the parties discussed

petitioner’s unpaid tax liabilities.

     On the basis of the undisputed information submitted in

support of respondent’s motion, we conclude that respondent

satisfied all of the requirements of section 6330.   The Appeals

officer verified that all requirements of applicable law or

administrative procedures were met.    The Appeals officer verified

that the proper assessments were made and that notice and demand

for payment was sent to petitioner’s last known address.   In

response to petitioner’s request, the Appeals officer conducted a

section 6330 hearing with petitioner’s representative, Mr.
                               - 11 -

Statland.   At the hearing, the Appeals officer requested a

current financial statement from petitioner and stated that no

collection alternatives could be discussed until petitioner filed

its delinquent returns.    The Appeals officer’s position is

reasonable; it is consistent with established IRS policy that a

taxpayer must be in compliance with current filing and estimated

tax payment requirements to be eligible for collection

alternatives.   See Londono v. Commissioner, T.C. Memo. 2003-99.

Petitioner did not respond to the Appeals officer or provide the

requested information by the deadline set.    The Appeals officer

concluded that the proposed levy action balanced the need for

efficient collection of taxes with petitioner’s concerns that the

collection action be no more intrusive than necessary.

Accordingly, we conclude that the undisputed facts establish that

the Appeals officer did not abuse her discretion in sustaining

the proposed levy action.5

     On this record, we conclude that there is no genuine issue

of material fact requiring a trial, and we hold that respondent

is entitled to the entry of a decision sustaining the proposed

levy as a matter of law.




     5
       To the extent petitioner’s sec. 6330 hearing request and
petition can be construed as containing arguments pertaining to
its underlying tax liability, we dismiss these assertions given
that petitioner has provided no legal or factual support for
challenging its underlying tax liability.
                        - 12 -

To reflect the foregoing,


                                 An appropriate order and

                            decision will be entered.
