                        T.C. Memo. 2007-96



                      UNITED STATES TAX COURT


                NANCE EVA DEHRING, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21152-05L.              Filed April 23, 2007.


     Nance Eva Dehring, pro se.

     Kaelyn J. Romey, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     DEAN, Special Trial Judge:    The petition in this case was

filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (Notice of

Determination).   Pursuant to section 6330(d), petitioner seeks

review of respondent’s proposed levy with respect to her income

tax liabilities for 1994, 1995, 1996, and 1997.   The issue
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for decision is whether respondent’s determination to proceed

with collection action should be sustained.

                          FINDINGS OF FACT

     The stipulation of facts and the exhibits received into

evidence are incorporated herein by reference.      At the time the

petition in this case was filed, petitioner resided in Lafayette,

California.

     Petitioner failed to timely file her Federal income tax

returns for 1994, 1995, 1996, and 1997.      Respondent filed

substitutes for returns for each of those years.      During the

years at issue, petitioner was employed by the County of Contra

Costa, California (County).   She earned gross income from her

employment of $40,317 in 1994, $41,961 in 1995, $46,906 in 1996,

and $58,042.16 in 1997.

Collection Activity for Prior Tax Years

     Respondent, having previously warned petitioner of impending

wage attachments, sent notices of levy to the County with respect

to her Federal income taxes for 1990, 1992, and 1993.      The notice

of levy dated December 15, 1997, was in the amount of $4,605.49

and the notice of levy dated January 15, 1998, was in the amount

of $4,639.01.1   County technicians responsible for tracking

garnishments and wage assignments prepared contemporaneous


     1
      Both notices of levy concerned petitioner’s tax liabilities
for 1990, 1992, and 1993, but the second notice was for a
slightly larger amount due, apparently, to additional interest.
                               - 3 -

worksheets showing that wages were withheld from petitioner’s pay

on December 24, 1997, and January 10, 1998, to satisfy the first

levy.

     County technicians also prepared worksheets showing that

wages were withheld from petitioner’s pay on February 10 and 25,

and March 10, 1998, with reference to the second notice of levy.

Petitioner provided the Court with a copy of Form 668-D, Release

of Levy/Release of Property from Levy, that informed the County

that the levy on wages was being released as of the payment that

was withheld on March 10, 1998.

     The County initially treated the notices of levy as

cumulative rather than treating the second notice as superseding

the first.   The County worksheets show total net withholdings due

to the notices of levy of $4,658.23 (total withholdings of

$7,824.30 less “refunds” to petitioner of $1,685.29 on January 9,

1998, and $1,480.78 on March 10, 1998).

     Respondent’s records show that he applied a total of

$4,658.23 in levy proceeds to petitioner’s tax liabilities for

1990, 1992, and 1993.   Respondent’s records also show that

petitioner’s tax liabilities for 1990, 1992, and 1993 are fully

paid, and a zero balance is indicated for each year.   According

to respondent’s records:   (1) Levy proceeds of $314 were applied

to 1990 on January 21, 1998; (2) levy proceeds of $1,186, and

$733.89 were applied to 1992 on January 21 and March 20, 1998;
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and (3) levy proceeds of $1,935.23, and $489.11 were applied to

1993 on March 20, 1998.

Assessment Activity for 1994 Through 1997

     On November 10, 1998, respondent notified petitioner that

there was no record that she had filed Federal income tax returns

for the years at issue.   Respondent sent to petitioner on April

9, 1999, a notice of deficiency for 1994, 1995, and 1996 and a

notice of deficiency for 1997, all by certified mail.    The

notices of deficiency were addressed to petitioner at P.O. Box

1692, Lafayette, California 94549, the same address that is on

the petition in this case.

     On September 20, 1999, respondent sent to petitioner two

notices requesting payment for taxes for 1994 and 1995.    On

October 8, 1999, petitioner wrote to respondent to request a

hearing to “appeal the examination notices of Sept. 20, 1999, for

the years 1994, 1995, 1996 and 1997.”   Petitioner attached to the

letter a copy of a statement of account for each of the years at

issue.

     Appeals Officer Patricia Fu in a letter dated November 24,

1999, informed petitioner that her case had been assigned to the

Appeals Office in San Francisco, California.   Petitioner filed a

claim for refund of $42,839 of tax for the years at issue.

Appeals Officer Fu, after reviewing “IRP” documents, allowed a

partial adjustment of $7,858 for previously uncredited
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withholding taxes and a reduction to 1994 gross income due to

income reported on Form 1099 that belonged to another taxpayer.

Collection Activity for 1994 Through 1997

     Respondent sent to petitioner on February 8, 2005, Letter

1058, Final Notice of Intent to Levy and Notice of Your Right to

a Hearing, with respect to her tax liabilities for 1994 through

1997, which at that date totaled $65,677.82.     Petitioner timely

filed her Form 12153, Request For a Collection Due Process

Hearing.   Petitioner claimed in her Form 12153 that she never

received a notice of “determination and/or deficiency for 1994,

1995, 1996, 1997” and that she disagreed with the amounts

indicated.

     On May 23, 2005, the Appeals Office sent to petitioner a

letter requesting that she contact the office within 15 days to

set a date and time for a hearing.     The letter further advised

petitioner that if she wanted to offer any collection

alternatives, she should complete the enclosed Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals.   Petitioner did not submit a Form 433-A.

     On June 28, 2005, the Appeals Office sent to petitioner

another letter requesting that petitioner contact the office by

July 13, 2005, to arrange a convenient date and time for an

Appeals Office hearing.   Although a conference was later

scheduled by petitioner for July 14, 2005, petitioner failed to
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attend the scheduled conference.    Petitioner did send to Appeals

a letter dated July 14, 2005, in which she apologized for having

“missed our appointment for today.”

     Having received no information from petitioner, respondent

issued the Notice of Ddetermination on October 13, 2005.

                              OPINION

Section 6330

     Section 6330 generally provides that the Commissioner cannot

proceed with collection by way of a levy until the taxpayer 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, the person may obtain judicial review of

the administrative determination.   See Davis v. Commissioner, 115

T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179

(2000).   The taxpayer requesting the hearing may raise any

relevant issue with regard to the Commissioner’s intended

collection activities, including spousal defenses, challenges to

appropriateness of the collection action, and offers of

collection alternatives.   Sec. 6330(c); see Sego v. Commissioner,

114 T.C. 604, 609 (2000); Goza v. Commissioner, supra at 180.

     Where the validity of the tax liability is not properly part

of the appeal, the taxpayer may challenge the determination of

the Appeals officer for abuse of discretion.    Sego v.
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Commissioner, supra at 609-610; Goza v. Commissioner, supra at

181-182.

     The taxpayer may raise challenges “to the existence or

amount of the underlying tax liability”, however, only if she

“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).

     According to the Appeals officer who considered her case,

petitioner advised her in a telephone conversation on July 22,

2005, that she had not been allowed the deductions to which she

felt she was entitled.   She represented to the   Appeals officer

that she would prepare returns that would show what she thought

were the proper deductions.   She was, according to the Appeals

officer, given until August 31, 2005, to provide the information

but failed to follow through on her representation.

     At trial, petitioner introduced evidence that appears to be

aimed at showing that her income for 1997 was less than the

$58,042.16 that was shown on her Form W-2, Wage and Tax

Statement.   She concedes that she earned approximately $55,000

for the year but alleges that about $3,000 was levied from her

salary in August and December of 1997.   Petitioner’s position

suggests that she believes that her tax liability for 1997 should

be less than the amount assessed by respondent because the

alleged levies reduced the “income” she received.
                               - 8 -

     The record in this case indicates only one levy on

petitioner’s salary in 1997, and that was in December, in the

amount of $1,186.83.   Petitioner, however, must include her wages

for 1997 in gross income, including any portion that was withheld

and paid directly to the IRS for application against her

liability for the years 1990, 1992 and 1993.     Old Colony Trust

Co. v. Commissioner, 279 U.S. 716, 729 (1929).    Although her

salary was the subject of a levy, that does not mean the levied

amount is excluded from her income for Federal income tax

purposes.   Contrary to her belief, the levied amount is

includable in her gross income.

     Both of petitioner’s arguments, however, that she is

entitled to additional deductions and that her tax is less than

that assessed because her salary in 1997 is less than that shown

on her Form W-2, are precluded in this action.    The parties agree

that the statutory notices of deficiency for the years at issue

were sent by certified mail to petitioner’s then and present

address of record with the Internal Revenue Service.    Petitioner

did not argue or present any evidence at trial that she did not

receive the relevant statutory notices of deficiency.    Petitioner

is therefore precluded from challenging her underlying tax

liabilities, and those tax liabilities are not properly at issue

here.   Sec. 6330(c)(2)(B).
                              - 9 -

     Petitioner also attempted to show at trial that there was an

excess amount available from the December 1997 through March 1998

levies for prior periods that should have been applied to the tax

periods under consideration here.   A comparison of the records of

the County, and those of respondent, shows that the amount

ultimately withheld from her salary by the County (net of

“refunds”) was the same amount applied to satisfy her outstanding

tax liabilities for 1990, 1992, and 1993.   Respondent’s records

indicate that only the amount necessary to satisfy her

liabilities was received and applied.   In addition, it seems that

petitioner was given proper credit for withholding taxes for the

years at issue.

     As petitioner failed to raise any other relevant issues,

the Court finds that respondent’s determination in this case

should be sustained.

                                          Decision will be entered

                                    for respondent.
