                            126 T.C. No. 11



                       UNITED STATES TAX COURT



         MICHAEL A. ZAPARA AND GINA A. ZAPARA, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket No. 9480-02L.              Filed April 25, 2006.



          R moved for reconsideration of our Opinion
     reported in Zapara v. Commissioner, 124 T.C. 223 (2005)
     (Zapara I). Finding that R failed to comply with Ps’
     written request to liquidate Ps’ levied-upon stock
     accounts as required by sec. 6335(f), I.R.C., Zapara I
     held that Ps were entitled to a credit for the value of
     their seized stock as of the date by which it should
     have been sold under the statute. R contends that Ps’
     citation of sec. 6335(f), I.R.C., on reply brief
     constituted the untimely raising of a new issue and
     that the evidence does not show that Ps made sufficient
     written request pursuant to sec. 6335(f), I.R.C. R
     also contends that this Court lacks jurisdiction to
     order the relief provided in Zapara I, which R
     characterizes as an award of damages pursuant to sec.



     *
       This Opinion supplements our prior Opinion in Zapara v.
Commissioner, 124 T.C. 223 (2005) (Zapara I).
                               - 2 -

     7433, I.R.C., which R contends is the exclusive remedy
     for a violation of sec. 6335(f), I.R.C.

          Held: Ps’ citation of sec. 6335(f), I.R.C., on
     reply brief did not raise a new issue but appealed to
     the correct application of law. Held, further, Ps’
     request to sell the stock complied with the
     requirements of sec. 6335(f), I.R.C. Held, further,
     the relief provided in Zapara I was not an award of
     damages but specific relief to provide Ps the credit to
     which they would have been entitled if R had complied
     with Ps’ request to sell the stock. Held, further, by
     failing to adhere to the statutory mandate of sec.
     6335(f), I.R.C., R frustrated Ps’ ability to use the
     stock to defray their tax liabilities and increased
     their risk with respect to the stock; accordingly, R is
     treated as assuming the risk of loss with respect to
     the stock. United States v. Barlows, Inc., 767 F.2d
     1098 (4th Cir. 1985), and United States v. Pittman, 449
     F.2d 623 (7th Cir. 1971), followed; Stead v. United
     States, 419 F.3d 944 (9th Cir. 2005), distinguished.
     Held, further, sec. 7433, I.R.C., does not preclude the
     specific relief provided in Zapara I.



     Michael A. Zapara and Gina A. Zapara, pro sese.

     Deborah A. Butler, for respondent.


                        SUPPLEMENTAL OPINION

     THORNTON, Judge:   Respondent has moved for reconsideration

of our prior Opinion in Zapara v. Commissioner, 124 T.C. 223

(2005) (Zapara I).   In Zapara I, we held, among other things,

that in this action pursuant to section 6330(d) to review

respondent’s jeopardy levy of certain stock accounts, petitioners

are entitled to a credit for the value of their seized stock as

of the date by which the stock should have been sold under

section 6335(f); i.e., 60 days after petitioners requested
                                 - 3 -

respondent in writing to sell the stock and apply the proceeds to

their outstanding tax liabilities.2      We remanded the case to the

Appeals Office for the purpose of establishing the value of the

stock accounts as of 60 days after August 23, 2001.3

                            Background

     We adopt the findings of facts in Zapara I.      For convenience

and clarity, we repeat here the facts necessary to understand the

discussion that follows, and we supplement the facts as

appropriate.

     On June 1, 2000, respondent made a jeopardy levy with

respect to certain nominee stock accounts held on petitioners’

behalf.   Respondent’s collection division took the position that

these stock accounts had a value of approximately $1 million--

more than enough to pay off fully petitioners’ then-outstanding

1993-98 tax liabilities of about $500,000.

     By letter dated June 21, 2000, petitioners requested a

section 6330 Appeals hearing with respect to the jeopardy levy.

During the pendency of their Appeals Office case, petitioners

became concerned about a possible decline in the value of their

levied-upon stock (the stock).    Petitioners’ then-representative,



     2
       Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure; all section references
are to the Internal Revenue Code in effect for the years in
issue.
     3
       After receiving respondent’s motion for reconsideration,
we stayed our Order remanding this case to the Appeals Office.
                               - 4 -

Steven R. Mather (Mr. Mather), requested respondent’s revenue

officer to liquidate the stock accounts and apply the proceeds to

petitioners’ outstanding tax liabilities.   The revenue officer

directed Mr. Mather to get the Appeals officer’s approval for the

stock sale.   Consequently, on August 23, 2001, Mr. Mather faxed

to the Appeals officer a request for her approval of the stock

sale.   The fax (which is not in evidence) is described in the

Appeals officer’s contemporaneous case activity records as

“asking me for a letter to say okay to release stock for sale”.

     On September 7, 2001, the Appeals officer called Mr. Mather

about this request.   An entry in the Appeals officer’s case

activity records dated September 7, 2001, states:

     Called rep [Mr. Mather]-re sale of stock that had been
     levied under jeopardy assessment although no move had
     been made to sell stock because of CDP hearing. Per
     rep-tp [taxpayer] wants to sell stock while it still
     has value and have proceeds appkied [sic] to tax. Told
     rep that I would like him to put his request in writing
     and send to me w/cc to RO [revenue officer] since he is
     still working with the RO. He said he will do.
     Informed rep that I was going to talk to RO about stock
     sale-he was okay with me doing that-rep had already
     talked to him about too [sic].

     That same day, the Appeals officer called the revenue

officer, who indicated that petitioners had “a lot” of shares of

stock that were not widely traded and that he wanted to determine

the fair market value and have all proceeds applied to

petitioners’ deficiency.   The Appeals officer’s contemporaneous

case activity records state that this “is what I also want”.
                                - 5 -

That same day, the Appeals officer made inquiries of other IRS

personnel about a possible stock sale and was advised that “if

FMV [fair market value] is determinate we can sell, but if FMV is

not determinate, then per IRM [Internal Revenue Manual] we have

to sell at auction”.

     In an entry in her case activity records dated September 12,

2001 (1 day after the terrorist attacks of September 11, 2001),

the Appeals officer indicated that she would “continue to

research/work with rep on possible sale of stock he has requested

to happen”.

     A September 13, 2001, entry in the Appeals officer’s case

activity records states:   “rep called-wants to sell stock-I

previously talked to RO-he has no problems with it-have to

determine FMV-rep to submit info to me in writing-and to RO who

will verify and let me know.”   An entry dated October 11, 2001,

states:   “Need to call rep-re status of Appeal * * * funds have

been levied under jeopardy levy-tp wanted to sell them while they

still had value-RO does not object-will oversee-then 9-11 attack-

market fell-therefore, believe sale of stock has not happened.”

An entry dated January 22, 2002, repeats this language verbatim.

Finally, an entry dated February 12, 2002, indicates that the

Appeals officer called Revenue Agent F. Stevens who “stated he

did not know status of case, and that rep did not provide stock
                              - 6 -

information to him to be able to sell stock to pay tax.

Apparently it may not have been worth much.”4

     The Appeals officer’s Appeals Case Memo (undated, but

attached to Form 5402-c, Appeals Transmittal and Case Memo,

signed May 7, 2002) states in pertinent part:

     The representative indicated in discussions with the
     Appeals Officer that his goal in resolving the issue in
     this case was to sell the stock seized by the IRS and
     apply it to the deficiencies owed, in addition to
     getting the audit assessments reduced on appeal in
     District Court. He believed if this was done, the
     amount owed would be resolved and possibly full paid
     through the stock sale.

     The request to sell the stock was made during
     consideration of this case. The taxpayers believed
     that the stock would become worthless while the Appeal
     was pending, due to the downturn in the market. The
     taxpayers wanted to liquidate the stock so that some
     credit could be applied to the balance due IRS. The
     taxpayers contended that while [sic] the Revenue
     officer seized the stock, the value of the stock (if
     liquidated) was greater than the balance of the
     liabilities and that it had declined to the point where
     the value is only a fraction of the balance due. The
     representative was supposed to address this request in
     writing to Appeals in order for consideration [sic] to
     sell the stock. The Revenue Officer was in agreement
     to the stock sale if it was sold at fair market value,
     and all proceeds were applied to the deficiencies owed.
     No request was received in writing from the
     representative as requested.

     On May 8, 2002, a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (the notice

of determination) was issued to petitioners.    In the notice of

determination, the Appeals Office determined that petitioners


     4
       The record does not otherwise reveal the role of Revenue
Agent F. Stevens in this case.
                                 - 7 -

were precluded from challenging their underlying tax liabilities

for 1993, 1994, and 1995, and that respondent’s jeopardy levy

would not be withdrawn.     The notice of determination does not

expressly address petitioners’ request to sell the stock.

                              Discussion

         The granting of a motion for reconsideration rests within

the Court’s discretion.     Estate of Quick v. Commissioner, 110

T.C. 440, 441 (1998); see Lucky Stores, Inc. v. Commissioner,

T.C. Memo. 1997-70, affd. 153 F.3d 964 (9th Cir. 1998).       A motion

for reconsideration will be denied absent a showing of unusual

circumstances or substantial error.      Estate of Quick v.

Commissioner, supra; see Alexander v. Commissioner, 95 T.C. 467,

469 (1990), affd. without published opinion sub nom. Stell v.

Commissioner, 999 F.2d 544 (9th Cir. 1993); Vaughn v.

Commissioner, 87 T.C. 164, 166-167 (1986).

Whether Application of Section 6335(f) Was an Untimely New Issue

     Petitioners cited section 6335(f) only in their reply brief.

Respondent suggests that he therefore lacked adequate opportunity

to present evidence and legal argument regarding the application

of section 6335(f).     We disagree.   Before, during, and after

trial, petitioners repeatedly raised the claim that respondent

had wrongly refused to comply with their request to liquidate the

seized stock accounts and to give them appropriate credit.5


     5
         As respondent notes in his motion for reconsideration,
                                                     (continued...)
                               - 8 -

Clearly, respondent had fair warning of this issue.   In fact,

respondent’s pretrial memorandum--submitted to the Court about 2

weeks before trial--specifically addressed this issue, although

without reference to section 6335 or any other legal authority.

Similarly, in his opening and reply briefs, respondent addressed

this issue (again without citation to any legal authority),

arguing that the Appeals officer properly refused to comply with

petitioners’ request to sell the stock because petitioners failed

to submit certain information in writing as requested by the

Appeals officer.

     We believe that petitioners’ citation to section 6335(f) on

reply brief does not raise a new issue but appeals to the

application of the correct law, based upon the record presented

and in support of a claim of which respondent was well aware.

“Neither party can avoid the application of the correct law to

the facts of the case by failing to plead or argue it.   That is

the province of the Court.”   Concord Consumers Hous. Coop. v.

Commissioner, 89 T.C. 105, 126 (1987) (Körner, J., concurring),

(citing Park Place, Inc. v. Commissioner, 57 T.C. 767, 769


     5
      (...continued)
petitioners did not expressly raise this issue in their petition.
Nevertheless, because at trial respondent (having previously
addressed the issue in his pretrial memorandum) acquiesced in the
introduction of evidence on this issue without objection, it was
tried with at least the implied consent of respondent.
Accordingly, we treat the issue in all respects as if it had been
raised in the pleadings. See Rule 41(b); LeFever v.
Commissioner, 103 T.C. 525, 538-539 (1994), affd. 100 F.3d 778
(10th Cir. 1996).
                                 - 9 -

(1972)); cf. Ware v. Commissioner, 92 T.C. 1267 (1989) (holding

that the Commissioner was not precluded from raising for the

first time on brief the applicability of section 751), affd. 906

F.2d 62, 65-66 (2d Cir. 1990).    Respondent was no less well

situated than these pro sese petitioners to be aware of the

relevant statutory provisions.    Respondent had adequate

opportunity to present pertinent evidence at trial regarding

petitioners’ claim and the defense thereto that he had asserted

even before trial and that constitutes a mainspring of his motion

for reconsideration; i.e., that petitioners failed to make an

adequate written request for the Appeals officer to sell the

stock.6

     In his motion for reconsideration, although he complains

that we should have held additional evidentiary hearings on the

application of section 6335(f), respondent has not expressly

requested that we now hold additional evidentiary hearings or

described what additional evidence he might now wish to offer.7



     6
       We note that in his pretrial memorandum, respondent
indicated that he expected to call various witnesses, including
the Appeals officer, to testify. At trial, however, respondent
called no witnesses and offered into evidence only selective
portions of the administrative record.
     7
       Similarly, respondent has not expressly requested the
opportunity for additional briefing regarding the application of
sec. 6635(f). In his 16-page memorandum of law in support of
motion for reconsideration of Opinion, respondent has included
extensive legal argument regarding this matter. Petitioners have
filed a response. We conclude that additional briefing would not
be helpful to the Court.
                                - 10 -

The record contains sufficient facts to permit us to decide this

case based on the application of section 6335(f).     Particularly

in light of our conclusion that petitioners have not raised a new

issue, we conclude that additional evidentiary proceedings are

unnecessary.

Whether Petitioners Made Sufficient Request To Sell the Stock

     In his motion for reconsideration, respondent argues that

the evidence does not support the finding in Zapara I that the

August 23, 2001, fax met the requirements of sec. 301.6335-

1(d)(2)(ii), Proced. & Admin. Regs.      In Zapara I, we acknowledged

that because the parties did not stipulate the complete

administrative record or offer the August 23, 2001, fax into

evidence, “we are unable to determine whether the fax contained

all the information specified” in the applicable regulations.

Zapara v. Commissioner, 124 T.C. at 240 n.12.      We concluded,

however:    “Considering the Appeals officer’s subsequent response,

we believe that the fax was sufficient for purposes of sec.

6335(f).”    Id.   We reached this conclusion on the basis of all

the evidence in the administrative record that was presented to

the Court.     That evidence convinces us (as discussed in greater

detail infra), that the Appeals officer treated the August 23,

2001, fax as a request to sell the stock; that she acquiesced in

the sale of the stock, subject to petitioners’ submitting

information about the stock’s fair market value--information that

we concluded is not required by the applicable section 6335(f)
                                - 11 -

regulations; that she ultimately relegated responsibility for the

stock sale to the revenue officer whose involvement with

petitioners’ request predated the August 23, 2001, fax; and that

for a period of some months in late 2001 and early 2002, the

Appeals officer was uncertain as to whether or not the stock sale

had taken place.

     Although the administrative record does not show that the

Appeals officer expressly determined that the August 23, 2001,

fax met the requirements of the section 6335(f) regulations, it

also does not show that she expressly made any contrary

determination.8    In fact, the administrative record does not

contain the slightest indication that the Appeals officer was

even aware of, much less based her actions on, the directives of

section 6335 or the regulations thereunder.      This circumstance

has complicated our task of evaluating the Appeals officer’s

response to petitioners’ request to sell the stock, but it does

not relieve respondent of his duty to comply with the directives

of section 6335, which we briefly review below.

     Section 6335 requires the Secretary, “as soon as

practicable” after seizing property, to publish notice of sale.

Sec. 6335(b).     The sale must occur no more than 40 days after

such public notice.     Sec. 6335(d).    If the owner of the levied-

upon property believes the IRS is taking too long to publish


     8
         The final determination contains no reference to this
issue.
                               - 12 -

notice of sale, section 6335(f) provides a remedy.    See Anderson

v. United States, 44 F.3d 795, 800 (9th Cir. 1995).     The owner

may request the sale to take place within 60 days, and the

Secretary “shall comply with such request”, unless the Secretary

determines (and notifies the owner within the requisite 60 days)

that the sale would not be in the best interests of the United

States.   Sec. 6335(f).   The Federal courts “have always required

strict compliance by the government with § 6335”.     Anderson v.

United States, supra at 800.

     The regulations under section 6335(f) prescribe the form in

which the section 6335(f) request is to be made.    We have no

occasion here to question respondent’s ability to insist upon

strict adherence to those regulatory requirements in the first

instance when a taxpayer requests respondent to sell seized

property.   But where, as in this case, respondent’s agents and

officers themselves appeared unaware of either the statutory or

regulatory requirements under section 6335(f), and received and

processed petitioners’ request to sell the seized property,

insisting only upon conditions that lie outside the regulatory

requirements, and the facts do not indicate that respondent

otherwise lacked the information necessary to comply with

petitioners’ request, respondent cannot be heard to complain in

hindsight that petitioners’ request was insufficient.

     Respondent contends that the Appeals officer did not abuse

her discretion in “finding that petitioners did not make a
                              - 13 -

written request to sell the stock”.9   It is undisputed, however,

that petitioners did make a written request on August 23, 2001,

in the fax from Mr. Mather to the Appeals officer.   On the basis

of all the evidence, we have concluded that the fax constituted a

request to sell the stock, consistent with the manner in which

the Appeals officer treated it.10   Consequently, if we were to


     9
       This Court has held that in exercising judicial review
pursuant to sec. 6330(d), we review respondent’s determinations
de novo where the validity of the underlying tax liability is at
issue but otherwise review respondent’s determinations for abuse
of discretion. See, e.g., Sego v. Commissioner, 114 T.C. 604,
610 (2000). At least one court has held that in a sec. 6330
collection case, procedural challenges, as opposed to challenges
to the correctness of the administrative determination, should be
reviewed de novo rather than for abuse of discretion. Cox v.
United States, 345 F. Supp. 2d 1218, 1220 (W.D. Okla. 2004). The
instant case presents a mix of a sec. 6335(f) procedural
challenge and a correctness challenge as to underlying factual
matters. The standard of review is further complicated by the
fact that the final determination does not expressly address
petitioners’ request to sell the stock. Because we would
conclude that respondent erred in failing to comply with
petitioners’ request even under the more restrictive abuse of
discretion standard, we need not and do not decide whether a de
novo standard of review applies to the procedural challenge
presented by this case.
     10
       In a footnote to his legal memorandum in support of his
motion for reconsideration, respondent quibbles over whether the
fax represented an “express request by petitioners to sell the
stock”, postulating that it “can also be construed as a request
to release the levy on the stock or to release the stock back to
petitioners”. The administrative record clearly shows, however,
that the Appeals officer treated the fax as a request by
petitioners to sell the stock. In fact, her first documented
action after receiving the fax was to call Mr. Mather “re sale of
stock that had been levied”. Immediately thereafter, the Appeals
officer spoke to the revenue officer and other IRS personnel
about a possible sale of petitioners’ stock. The following week,
she made a note in her case activity records that she would
“continue to research/work with rep on possible sale of stock he
                                                   (continued...)
                               - 14 -

agree with respondent that the Appeals officer found “that there

was no written request submitted by the taxpayers for the sale of

the stock”, we would conclude that such a finding was an abuse of

discretion, as being without sound basis in fact.

     Respondent leans heavily on a statement in the Appeals

officer’s Appeals Case Memo:   “No request was received in writing

from the representative as requested”.   The administrative record

shows, however, that what the Appeals officer ultimately

requested from Mr. Mather, and conditioned the sale of the stock

upon, was information in writing as to the fair market value of

the stock.11   This conclusion is consistent with the context of


     10
      (...continued)
has requested to happen”. A day later, she spoke by phone to Mr.
Mather, who, according to her notes, “wants to sell stock”. The
Appeals officer’s case activity notes indicate that she would
continue to work with Mr. Mather, “on possible sale of stock he
has requested to happen”. In her Appeals Case Memo, the Appeals
officer states: “The request to sell the stock was made during
the consideration of this case.”
     11
       According to a Sept. 7, 2001, entry in her case activity
records, the Appeals officer, in her first telephone conversation
with Mr. Mather after receiving the Aug. 23, 2001, fax, told him
that she “would like” him to put his request “in writing”, with a
copy to the revenue officer. According to the Appeals officer’s
own characterization of it, then, this directive was precatory;
there is no indication that the Appeals officer made her
consideration of Mr. Mather’s faxed request (which was
necessarily in writing) conditional on his submitting an
additional written request. To the contrary, the case activity
records show that immediately after speaking with Mr. Mather, the
Appeals officer spoke with the revenue officer, who was not only
already familiar with Mr. Mather’s request but acquiesced in it,
subject to ascertaining the stock’s fair market value. Other IRS
personnel to whom she spoke reiterated concerns about determining
the stock’s fair market value.
                                                   (continued...)
                             - 15 -

the Appeals officer’s complete discussion of this matter in the

Appeals Case Memo and with the parties’ fact stipulations, which

state in pertinent part:

          33. During the course of petitioners’ collection
     due process case, petitioners’ representative raised
     the following issues: * * * (3) that petitioners
     wished to sell stock in the possession of a Revenue
     Officer and apply the proceeds to their outstanding tax
     liabilities * * *.

          34. With respect to the sale of stock, the
     Appeals Officer informed petitioners’ representative


     11
          (...continued)

     On Sept. 13, 2001 (less than a week after her prior
conversation with Mr. Mather), the Appeals officer spoke with Mr.
Mather again. This time, her request was for information about
the fair market value of the stock; this information was to be
submitted to the revenue officer for his verification. After
this, the Appeals officer seems to have relegated the matter of
the stock sale to the revenue officer and to a revenue agent.

     In identical entries in her case activity records dated
Oct. 11, 2001, and Jan. 22, 2002, the Appeals officer noted that
petitioners wished to sell their levied-upon stock and that the
revenue officer “does not object-will oversee-then 9-11 attack-
market fell-therefore, believe sale of stock has not happened”.
(Emphasis added.) The final germane entry is dated Feb. 12,
2002, and indicates that the Appeals officer called Revenue Agent
F. Stevens (otherwise unidentified in the record), who stated:
“he did not know status of case, and that rep did not provide
stock information to him to be able to sell stock to pay tax.
Apparently it may not have been worth much.”. These entries
suggest several things: Namely, that the Appeals officer was
aware that petitioners’ request to sell the stock had been (and
possibly still was) under active consideration; that the stock
sale was held up because of continued lack of information about
its fair market value and not because of any question as to
whether petitioners had otherwise made sufficient written
request; and that for a period of some months between late 2001
and early 2002 the Appeals officer, having relegated
responsibility for the stock sale to the revenue officer and the
revenue agent, was uncertain as to whether the sale might have
already occurred.
                              - 16 -

     that he needed to submit information regarding the
     stock, such as the fair market value, in writing and
     that a revenue officer would make a determination
     regarding the sale of the stock. Petitioners did not
     submit the required information regarding the fair
     market value of the stock. [Emphasis added.]

     As we discussed in Zapara I, neither section 6335(f) nor the

regulations thereunder require the owner to include

information about fair market value in a request to sell seized

property.   Accordingly, it was an abuse of discretion for the

Appeals officer to insist on petitioners’ providing such

information before complying with the statutory mandate of

section 6335(f) to comply with the request to sell the seized

property.

     In his motion for reconsideration, respondent argues that

petitioners failed to identify or describe the stock contained in

the seized stock accounts and so did not satisfy the requirements

of section 301.6335-1(d)(2), Proced. & Admin. Regs.   As pertinent

to this line of argument, the regulations require a request for

sale of seized property to contain:    “A description of the seized

property that is the subject of the request”.   Sec. 301.6335-

1(d)(2)(ii)(B), Proced. & Admin. Regs.   In the instant case, the

seized property was three stock accounts at Travis Morgan

Securities, Inc., as described in the notices of levy upon which

this case is based and which are part of the administrative

record.   The notices of levy gave the Commissioner the rights to

all the property in the stock accounts and created a custodial
                               - 17 -

relationship between the IRS and Travis Morgan Securities, Inc.,

such that the stock came into the constructive possession of the

Government.   See United States v. Natl. Bank of Commerce, 472

U.S. 713, 720 (1985).12   Accordingly, we do not believe that

respondent lacked the ability to know the identity of the stocks

in the levied-upon stock accounts as necessary to comply with

petitioners’ request to sell the stock.   More to the point, the

administrative record does not suggest that the Appeals officer

was ever in doubt as to the identity of the seized property that

was the subject of petitioners’ request, that the Appeals officer

ever expressly requested further information in this regard

(other than as might be incidental to her request for fair market

value information), or that any failure by petitioners to provide

such information was the reason for respondent’s failure to

comply with petitioners’ request to sell the stock.

     In his memorandum in support of his motion for

reconsideration, respondent contends that we should remand this

case to the Appeals officer “for a determination as to whether

petitioners’ request that respondent sell the stock was

sufficient” under the section 6335(f) regulations.    In light of

the foregoing discussion, we do not believe it is necessary,

productive, or appropriate to remand this case to the Appeals

officer to reconsider, in hindsight, her compliance with section


     12
       In their stipulations of fact, the parties have described
the stock as being “in the possession of a Revenue Officer”.
                              - 18 -

6335(f).   See Lunsford v. Commissioner, 117 T.C. 183, 189 (2001).

We believe that the highly predictable outcome of such a remand

would only necessitate further judicial review at a later date.

Whether This Court Has Authority To Grant Petitioners Relief

     In Zapara I, we held that because respondent neither

complied with petitioners’ request to sell the stock nor

determined and notified petitioners that selling the stock would

not be in the United States’ best interests, “petitioners are

entitled to a credit for the value of the stock accounts as of

the date by which the stocks should have been sold under section

6335(f); i.e., 60 days from August 23, 2001.”   Zapara v.

Commissioner, 124 T.C. at 242.   Citing United States v. Barlows,

Inc., 53 Bankr. 986 (E.D. Va. 1984), affd. 767 F.2d 1098 (4th

Cir. 1985), we held that respondent could not claim any interest

or accrue penalties on this credited amount after such date.       Id.

We noted that if the value of the stock presently exceeds its

value as of 60 days from such date, then respondent should sell

the stock and give petitioners appropriate credit.     Id. n.15.

     In his motion for reconsideration, respondent contends that

this Court lacked jurisdiction to order such relief,

characterizing it as an award of “damages”:

          Petitioners’ request for a credit on their taxes
     due to the delayed sale of the stock caused by
     respondent’s alleged disregard of section 6335(f) is a
     claim for damages. Pursuant to section 7433(a), the
     United States District Court may only grant relief
     because of respondent’s reckless, intentional, or
     negligent disregard of the Internal Revenue Code or
                               - 19 -

     regulations. Section 7433(a) is the exclusive remedy
     for a taxpayer seeking damages against the United
     States for such conduct.

     Respondent is correct that this Court lacks jurisdiction to

award damages pursuant to section 7433.    See Williams v.

Commissioner, T.C. Memo. 2005-94; Chocallo v. Commissioner, T.C.

Memo. 2004-152.   Respondent is incorrect, however, that we have

awarded damages to petitioners pursuant to section 7433.     Rather,

we have provided petitioners specific relief.    The distinction

between damages and specific relief has been explained thus:

“‘Damages are given to the plaintiff to substitute for a suffered

loss, whereas specific remedies are not substitute remedies at

all, but attempt to give the plaintiff the very thing to which he

was entitled.’”    Bowen v. Massachusetts, 487 U.S. 879, 895 (1988)

(quoting Md. Dept. of Human Res. v. Dept. of Health and Human

Servs., 763 F.2d 1441, 1446 n.21 (D.C. Cir. 1985)).    In Zapara I,

we did not award petitioners damages to substitute for any

suffered loss.    In fact, we did not endeavor to ascertain whether

petitioners have suffered any loss.     Instead, we ordered specific

relief that attempts to give petitioners the credit to which they

would have been entitled had respondent complied with their

request to sell the stock as required by section 6335(f).13


     13
       Our holding in Zapara I requires that if the value of the
stock is presently no greater than it was as of the last date it
should have been sold under sec. 6335(f), petitioners are
entitled to a credit against their tax liability for the value of
the stock as of that date; otherwise, respondent is to sell the
                                                   (continued...)
                              - 20 -

     We have provided petitioners this specific relief in the

exercise of this Court’s inherent equitable powers.   As the

United States Court of Appeals for the Ninth Circuit (to which

this case is appealable) has observed, the Tax Court possesses

“within its statutorily defined sphere * * * the authority to

apply the full range of equitable principles generally granted to

courts that possess judicial powers.”   Estate of Branson v.

Commissioner, 264 F.3d 904, 908 (9th Cir. 2001), affg. 113 T.C. 6

(1999); see Estate of Ashman v. Commissioner, 231 F.3d 541, 545

(9th Cir. 2000) (“Even if the tax court does not have far-

reaching general equitable powers, it can apply * * * equitable

powers within its own jurisdictional competence.”), affg. T.C.

Memo. 1998-145; Buchine v. Commissioner, 20 F.3d 173, 178 (5th

Cir. 1994) (concluding that the Tax Court is empowered to apply

the equitable principle of reformation to a case over which it

already has jurisdiction), affg. T.C. Memo. 1992-36; Chocallo v.

Commissioner, supra (requiring the Commissioner to return to the

taxpayer, with interest, the amount collected by levy where the

levy had been made without following the hearing procedures

required under section 6330(b)).

     Clearly, this case falls within this Court’s “statutorily

defined sphere”.   Estate of Branson v. Commissioner, supra.


     13
      (...continued)
stock and give petitioners appropriate credit. Either
contingency results in a credit to petitioners equal to the value
of the stock rather than an award for any suffered loss.
                                 - 21 -

Section 6330(d) broadly gives the Tax Court jurisdiction “with

respect to such matter” as constitutes the subject of the

taxpayer’s appeal from an Appeals Office determination, at least

so long as the underlying tax liability is of a type over which

the Tax Court has jurisdiction (as it is in the instant case).

This jurisdictional grant encompasses review of a jeopardy levy,

such is at issue here.   See Dorn v. Commissioner, 119 T.C. 356

(2002).   In the exercise of this jurisdiction, this Court has the

authority to review for error respondent’s compliance with

petitioners’ request to sell the seized stock, inasmuch as this

matter is properly part of the subject of petitioners’ appeal

from the administrative determination.    It would be anomalous if

this Court’s authority were limited to finding such error and did

not extend to redressing it.14

Whether the Equitable Remedy Provided in Zapara I Was Appropriate

     In Zapara I, we treated respondent as having assumed the

risk of loss with respect to the stock by failing to adhere to


     14
       This Court has recognized limits to its ability to
provide relief in sec. 6330 collection cases. For instance, in
Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), this Court
held that it lacks jurisdiction in a sec. 6330 proceeding to
determine an overpayment or to order a refund or credit of taxes
paid. The decision in Greene-Thapedi was predicated partly on a
long jurisdictional history that militated against this Court’s
assuming refund jurisdiction without express legislative
provision and partly on the absence in sec. 6330 of limitations
corresponding to the limitations in sec. 6511 on claims for
credits or refunds of overpayments of tax. Such concerns are not
presented by the instant case, which does not involve any claim
of an overpayment of taxes and does not involve any refund or
credit with respect to an overpayment of taxes.
                                - 22 -

the section 6335(f) mandate to comply with petitioners’ request

to sell it.    In evaluating the circumstances under which the

Government should be considered to assume the risk of loss with

respect to seized property, three appellate court cases are

especially instructive.    Two of these cases, United States v.

Barlows, Inc., 767 F.2d 1098 (4th Cir. 1985), and United States

v. Pittman, 449 F.2d 623 (7th Cir. 1971), were discussed in

Zapara I.     In these two cases, the Government was held to have

assumed the risk of loss with respect to seized property; the

taxpayers were afforded the same type of equitable relief that we

have provided petitioners.     The third case, Stead v. United

States, 419 F.3d 944 (9th Cir. 2005), decided after our opinion

in Zapara I (and after the filing of respondent’s motion for

reconsideration), concluded that the risk of loss did not pass to

the Government.     A comparison of the facts and analyses of these

three cases convinces us that the result in the instant case

properly aligns with the result in Barlows and Pittman.

     The courts in Barlows and Pittman held that the Government

assumed the risk of loss with respect to levied-upon properties

(an account receivable in Barlows, real estate in Pittman) where

it exercised dominion and control over the properties, having

failed to publish notice of sale “as soon as practicable”, as

required by section 6335(b).     In each case, the Government’s

actions impeded the taxpayer’s ability to use the levied-upon

property to defray outstanding tax liabilities and increased the
                             - 23 -

taxpayer’s risk with respect to the levied-upon property.15    In

each case, the court held that the taxpayer was entitled to

equitable relief in the form of credit against tax liability for

the value of the property seized.

     Because current section 6335(f) had not yet been enacted

when Barlows and Pittman were decided, those cases necessarily

did not consider the effect of the Government’s failure to adhere

to the mandate of section 6335(f) to comply with the owner’s

request to sell the seized property (absent a determination and

notification to the owner that the sale would not be in the best

interests of the United States).    Confronted with that issue in

this case, we have concluded that the consequences to petitioners



     15
       The Court of Appeals in United States v. Pittman, 449
F.2d 623, 627 (7th Cir. 1971), noted that had the Government
followed the requirements of sec. 6335(b) to advertise and sell
the seized real estate, there would have been no question that
the taxpayer’s liability would have been reduced to reflect the
seizure. As the court observed, the Government “did not follow
through and sell the property, as required by the Code. Instead,
it held it and permitted it to deteriorate in value”. Id. at
628. Consequently, the court concluded: “We do not conceive
that the error of the Government and any loss resulting from it
are attributable to the taxpayer.” Id.

     The Court of Appeals in United States v. Barlows, Inc., 767
F.2d 1098 (4th Cir. 1985), affirmed on the basis of the District
Court’s opinion, which stated in part:

     the IRS assumed the risk of * * * [the third-party
     debtor’s] default when the IRS acted inconsistently
     with the statute [sec. 6335(b)], thereby increasing
     Barlows’ risk in the property and precluding Barlows
     from proceeding against the account itself. [United
     States v. Barlows, Inc., 53 Bankr. 986, 989 (E.D. Va.
     1984), affd. 767 F.2d 1098 (4th Cir. 1985).]
                              - 24 -

of respondent’s failure to comply with section 6335(f) are

sufficiently similar to the consequences of the Government’s

wrongful actions in Barlows and Pittman as to demand an

equivalent remedy, for reasons explained in more detail below.

     As previously noted, the very object of section 6335(f) is

to provide a remedy when the taxpayer believes the IRS is taking

too long to publish notice of sale.    Anderson v. United States,

44 F.3d at 800.   By failing to comply with the mandate of section

6335(f), respondent thwarted petitioners’ statutory remedy.

Respondent’s wrongful action was, in its consequences to

petitioners, tantamount to respondent’s exercising dominion and

control while failing to adhere to section 6335(b), as in Barlows

and Pittman.   As in Barlows and Pittman, respondent’s wrongful

action frustrated petitioners’ ability to use the levied-upon

property to defray their tax liabilities and increased

petitioners’ risk with respect to the levied-upon property.    In

these circumstances, we do not believe it is dispositive whether

respondent’s wrongful action might be said to have constituted

the exercise of dominion and control.16   Here, as in Barlows and

Pittman, any loss resulting from respondent’s wrongful action is

not attributable to petitioners and should, we believe, be

assumed by respondent.   Accordingly, we have followed Barlows and


     16
       In Zapara I, we concluded that the record did not
establish that respondent had exercised dominion and control over
petitioners’ seized stocks. Zapara v. Commissioner, 124 T.C.
223, 237 (2005).
                                - 25 -

Pittman in assigning the risk of loss to respondent with respect

to the seized property and in providing petitioners corresponding

equitable relief.

     By contrast, in Stead v. United States, supra, the IRS did

nothing to assume the risk of loss with respect to the levied-

upon property.    Unlike the instant case, Stead involved neither a

taxpayer’s request to sell levied-upon property nor the

application of section 6335(f).    In Stead, the IRS had levied

upon a bank account controlled by the taxpayers.    Subsequently,

the levied-upon funds disappeared from the bank account but were

neither returned to the taxpayers nor remitted to the IRS.

Petitioners paid their outstanding tax liability and filed a

claim for refund, arguing in essence that they had paid their

taxes twice.    Affirming summary judgment for the Government, the

Court of Appeals for the Ninth Circuit cited Zapara I with

apparent approval for the proposition that “Under most

circumstances, a tax is ‘paid’ when the Government becomes the

owner of the property”.    Stead v. United States, 419 F.3d at

948.17    Citing Barlows and Pittman, the Court of Appeals




     17
       The Court of Appeals for the Ninth Circuit did not
otherwise address the analysis or holdings of Zapara I.
                                 - 26 -

acknowledged that the risk of loss might pass to the Government

if it exerted dominion and control over the levied property.18

Id.    Because the Government had taken no action with respect to

the taxpayers’ bank account aside from levying upon the funds

within it, however, the Court of Appeals held that the risk of

loss did not pass to the Government.      Id. at 949.

      In confirming that the risk of loss might pass to the

Government as a consequence of its exercising dominion and

control over seized property, the Court of Appeals in Stead did

not foreclose the possibility that the risk of loss might pass to

the Government for other reasons.     To the contrary, in dicta, the

Court of Appeals suggested that the risk of loss might have

passed to the Government if the taxpayers had shown that the




      18
           The Court of Appeals stated:

           There are situations in which the government
      exerts such extensive dominion and control over a
      levied property that it should bear the risk of any
      loss. See, e.g., United States v. Pittman, 449 F.2d
      623, 628 (7th Cir. 1971)* * *; United States v.
      Barlows, Inc., 767 F.2d 1098, 1100 * * * . A levy,
      without more, is not sufficient to transfer the risk of
      loss to the government. Unless the government takes
      affirmative action to administer the levied upon
      property as it did in Pittman and Barlows, Inc., a tax
      levy does not in and of itself equate to payment of tax
      liability. * * * [Stead v. United States, 419 F.3d
      944, 948-949 (9th Cir. 2005).]
                               - 27 -

Government acted with “affirmative negligence” in serving as

custodian of the levied-upon property.19   Id. at 948.

Whether Section 7433 Is the Exclusive Remedy

     By failing to comply with section 6335(f), respondent denied

petitioners the benefit of the statutory remedy whereby they

sought to protect themselves against future losses in the stock’s

value.    Respondent suggests, however, that because section

6335(f) specifies no remedy for respondent’s noncompliance, there

can be no remedy other than as might arise from a civil cause of




     19
       Citing United States v. Whiting Pools, Inc., 462 U.S. 198
(1983), the Court of Appeals analogized the remedies available to
the IRS under secs. 6331 and 6332 to the remedies available to
private secured creditors under Article 9 of the Uniform
Commercial Code. Stead v. United States, 419 F.3d at 948. The
Court of Appeals noted that U.C.C. sec. 9-207(a) requires a
secured creditor in possession to use “reasonable care in serving
as custodian of the property” and suggested that the taxpayers
might have been entitled to credit against their tax liability if
they could have shown “affirmative negligence” by the Government
in this regard. Id.

     The Court of Appeals in Stead had no occasion to consider
the application of this standard of reasonable care to a
situation, like the instant case, where the debtor demands the
secured party to liquidate the collateral. We note, however,
that pursuant to U.C.C. sec. 9-207(a): “If the secured party
negligently fails to liquidate the collateral after a demand to
that effect has been made, the secured party will be held liable
for the resultant loss without regard to the presence in the
contract of a clause exempting the secured party from liability.”
9 Anderson, Uniform Commercial Code, sec. 9-207:10, at 11 (3d ed.
1999). Because we have grounded the specific relief in Zapara I
on respondent’s violation of sec. 6335(f), we need not and do not
decide whether respondent’s employees acted negligently in this
regard or whether such negligent conduct might constitute a
separate ground for providing petitioners credit against their
tax liability.
                                - 28 -

action for damages pursuant to section 7433.   For the reasons

discussed below, we disagree.

     Section 7433(a) provides that (except as provided in section

7432) a civil action brought by a taxpayer against the United

States “shall be the exclusive remedy for recovering damages

resulting from” unauthorized collection actions.   (Emphasis

added.)   Respondent apparently would have us read the underscored

language out of the statute.    Fundamental principles of statutory

construction preclude us from reading the statute in such a way

as to render statutory language mere surplusage.   See, e.g.,

United States v. Campos-Serrano, 404 U.S. 293, 301 (1971).

     Moreover, incongruities between the mandate of section

6335(f) and the scope of the section 7433 cause of action for

damages suggest that section 7433 was not intended to occupy or

encroach upon the field of available judicial remedies for

respondent’s violation of section 6335(f).   Most notably, section

7433 predicates a cause of action for damages on culpable conduct

by the Commissioner’s officers or employees; i.e., negligent,

reckless, or intentional disregard of statutory or regulatory

provisions.   The statutory mandate of section 6335(f), on the

other hand, does not turn on culpability or the lack thereof.    A

violation of section 6335(f) (arising, for example, from a legal

misunderstanding by respondent’s employees) is no less a

violation because it is not negligent, reckless, or intentional;

yet, under respondent’s view (which we cannot characterize as
                              - 29 -

disinterested) such a violation apparently would be without

remedy, either in the form of damages or specific relief.20

     The provisions currently found in sections 6335(f) and 7433

were enacted as part of the Technical and Miscellaneous Revenue

Act of 1988, Pub. L. 100-647, 102 Stat. 3342.   Both provisions

are included in a set of provisions known as the “Taxpayer Bill

of Rights” intended, as the name connotes, to “promote and

protect taxpayer rights”.   S. Rept. 100-309, at 1 (1988).    In

light of these broader purposes of the Taxpayer Bill of Rights

and the specific remedial nature of section 6335(f), we do not

believe that Congress intended section 7433 to displace equitable

remedies for violations of section 6335(f).21

     In a footnote to his memorandum in support of his motion for

reconsideration, respondent suggests that he is not authorized to

credit petitioners’ account as contemplated in Zapara I.     Citing

section 6402(a), respondent states that he “is not generally


     20
       Similarly, there are other gaps in the scheme of relief
under sec. 7433, insofar as it might provide a remedy for a
violation of sec. 6335(f). For instance, whereas sec. 6335(f)
entitles the “owner” of levied-upon property (who may or may not
be the same person as the taxpayer) to request sale of the
property, sec. 7433(a) limits a cause of action for damages to
the “taxpayer”. Furthermore, the damages available under sec.
7433 are capped at $100,000 for negligent disregard of law and
$1,000,000 for reckless or intentional disregard of law.
     21
       The legislative history of sec. 7433 gives the “Reasons
for change” in toto as follows: “The committee believes that
taxpayers should be provided a civil cause of action to
compensate them for damages that arise out of unlawful actions or
inaction of IRS employees that occur during the determination or
collection of Federal taxes.” S. Rept. 100-309, at 15-16 (1988).
                              - 30 -

authorized to credit a taxpayer’s account without an

overpayment”.   Section 6402(a) merely provides a procedure

whereby respondent may credit a taxpayer’s overpayment against an

outstanding tax liability before refunding the balance.    Neither

section 6402(a) nor any other provision of law forecloses

respondent from giving petitioners proper credit as ordered by

this Court in the exercise of its authority pursuant to section

6330(d).22

     To reflect the foregoing,


                                         An order will be issued

                                    denying respondent’s motion

                                    for reconsideration.




     22
       The amount, if any, of credit due to petitioners will
depend upon findings this Court has ordered respondent’s Appeals
Office to make upon remand.
