                        T.C. Memo. 2004-44



                      UNITED STATES TAX COURT



           CHARLES P. DURRENBERGER JR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10712-02L.           Filed February 26, 2004.



     Charles P. Durrenberger, Jr., pro se.

     John D. Faucher, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:   On May 23, 2002, respondent sent petitioner

a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330, in which respondent determined that the
                                 - 2 -

filing of a tax lien relating to petitioner’s 1998 tax liability

was appropriate.1

      The sole issue for decision is whether respondent’s

determination that the filing of a tax lien relating to

petitioner’s 1998 tax liability was appropriate was an abuse of

discretion.   We hold that it was not.

                           FINDINGS OF FACT

A.   Petitioner and His 1998 Income Tax Return

      Petitioner resided in Houston, Texas, when he filed the

petition in this case.

      Petitioner reported on his 1998 income tax return that he

had no wages, other income, or tax liability, and that he had

taxes withheld of $2,935.30.    He claimed a refund of $2,935.30.

Petitioner attached a letter to his 1998 return in which he

contended that:     Wages are not income; petitioner is not required

by law to file a return or pay income tax; and respondent failed

to provide petitioner with a copy of the law requiring him to pay

income tax.

B.   Notice of Deficiency and Bankruptcy

      On September 8, 1999, respondent sent a notice of deficiency

for 1998 to petitioner at the address shown on petitioner’s 1998

return.   In it, respondent determined a deficiency in



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

petitioner’s 1998 tax of $7,754 and an accuracy-related penalty

under section 6662 of $963.80.    The notice of deficiency was

returned to respondent marked “not deliverable as addressed,

unable to forward”.    Petitioner had moved and left no forwarding

address, and so he did not receive the notice of deficiency.

Petitioner did not file a petition for redetermination of the

deficiency for 1998.

      Petitioner filed a petition in the U.S. Bankruptcy Court for

the Southern District of Texas on April 6, 2000.     The bankruptcy

court discharged petitioner’s debts on July 24, 2000.

C.   Notice of Federal Tax Lien and Notice of Intent To Levy

      On December 17, 2001, respondent issued to petitioner a

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

relating to his 1998 tax liability.      The notice was returned to

respondent marked “unclaimed”.    Petitioner did not request a

hearing under section 6330(b) in response to respondent’s notice

of proposed levy.   On February 1, 2002, respondent issued to

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

a Hearing Under IRC 6320 relating to petitioner’s unpaid taxes

for 1998.2




      2
        The notice of Federal tax lien also relates to a sec.
6702 frivolous return penalty assessed for 1999.
                                - 4 -

D.   Hearing Request Relating to the Lien

      On February 22, 2002, petitioner filed a Form 12153, Request

for a Collection Due Process Hearing, with respect to the notice

of Federal tax lien for tax year 1998.     In the request,

petitioner contended that the notice of Federal tax lien was

invalid because the Secretary had not delegated authority to the

person who issued the notice.   Petitioner attached to his request

for a hearing documents containing numerous frivolous arguments.

E.    The Levy

      Respondent levied upon petitioner’s wages from February 19

to April 4, 2002, to collect an amount equal to what respondent

had determined was petitioner’s 1998 tax liability.     Petitioner’s

employer made the following payments:     $993.33 on February 19,

2002; $1,712.16 on March 8, 2002; $1,013.10 on March 21, 2002;

and $8,095.54 on April 4, 2002.     Respondent now concedes that

petitioner is entitled to a refund with respect to tax year 1998.

F.   Hearing Relating to the Lien

      On a date not specified in the record, respondent’s Appeals

officer conducted a hearing relating to petitioner’s lien for tax

year 1998.   Petitioner asked to make an audio recording of the

hearing.   Respondent denied that request.    Petitioner attended

the hearing but did not record it.      On May 23, 2002, respondent

issued to petitioner a Notice of Determination Concerning

Collection Action(s) in which respondent determined that the
                                 - 5 -

filing of the tax lien was appropriate.   On June 25, 2002,

petitioner filed a petition for lien or levy action under section

6320(c) or 6330(d) in which he contended:   (1) There had been no

valid assessment of taxes; (2) he had not received a statutory

notice and demand for payment of the taxes at issue; (3) he had

not received a notice of deficiency; (4) respondent incorrectly

determined his underlying tax liability; and (5) respondent

improperly refused to permit him to record the section 6330(b)

hearing.

                              OPINION

1.   Whether Respondent’s Determination That the Filing of a Tax
     Lien Relating to Petitioner’s 1998 Tax Liability Was
     Appropriate Was an Abuse of Discretion

     Petitioner contends that respondent’s determination that the

filing of a tax lien relating to his 1998 tax liability was

appropriate was an abuse of discretion.   We disagree.

     Petitioner may challenge the existence or amount of his

underlying tax liability because he did not receive the notice of

deficiency.   Sec. 6330(c)(2)(B).   Since he had moved after filing

his latest tax return, his failure to receive the notice of

deficiency was not deliberate.    See Tatum v. Commissioner, T.C.

Memo. 2003-115 (the taxpayers should have been allowed to

challenge their underlying tax liabilities at section 6330(b)

hearing because their failure to claim the notice of deficiency
                                - 6 -

from the U.S. Postal Service was not a deliberate avoidance of

delivery); cf. Sego v. Commissioner, 114 T.C. 604, 611 (2000).

     Petitioner contends that, because his wages are exempt from

garnishment under Texas law, respondent may not levy on them.3

We disagree; Federal tax collection statutes supersede State-

created exemptions to tax collection.    United States v. Rodgers,

461 U.S. 677, 700-702 (1983).

     Petitioner contends that garnishment of his wages was

improper because the Fair Debt Collection Procedures Act (FDCPA),

Pub. L. 95-109, 91 Stat. 874 (1977), 15 U.S.C. sec. 1692 (2000),

prohibits garnishment without a signed court order.   Petitioner

fails to explain where or how the FDCPA so provides, and we find

no such prohibition in that act.

     Petitioner contends that section 334.24 of the Internal

Revenue Manual (IRM) does not require employers to honor notices

of levies.   We disagree.   The IRM provides that any person in

possession of property upon which a levy has been made shall,

upon demand, surrender such property unless the property is not

the property of the taxpayer, or the property is subject to prior

judicial attachment or execution.    The IRM also provides that a


     3
       Petitioner incorrectly cited Tex. Prop. Code Ann. sec.
63.004. It appears that Tex. Prop. Code Ann. sec. 42.001(b)(1)
(Vernon 2000) is the correct citation.
     4
       Sec. 334.2 of the Internal Revenue Manual has been
superseded by 2 Administration, Internal Revenue Manual (CCH),
sec. 5.17.3.3.3.1, at 17,918, effective Oct. 31, 2000.
                                 - 7 -

suit for failure to honor the levy is appropriate when a party

fails to respond or refuses to comply with a levy.

     Petitioner contends that respondent improperly garnished

more than 25 percent of his wages.       We disagree.   Section 6332(a)

allows garnishment of all nonexempt wages; wages are exempt to

the extent of the amount of the taxpayer’s standard deduction

plus personal exemptions, divided by the number of pay periods in

the year.   Sec. 6334(a)(9), (d)(2) and (3).

     Petitioner points out that the notice of Federal tax lien he

received was different from the notice of levy sent to his

employer, but petitioner does not explain how that fact suggests

that respondent’s determination that the filing of the tax lien

was appropriate was an abuse of discretion.       We conclude that the

fact that the notice of the lien differed from the notice of the

levy does not detract from the appropriateness of the lien.

     Petitioner also contends:    (1) The filing of the tax lien

was not appropriate because he is not liable for Federal income

taxes; (2) wages are not income; (3) levies apply only to Federal

employees; (4) sections 6320-6333 are unenforceable because there

are no implementing regulations; (5) respondent’s agents are not

authorized to make changes to petitioner’s return; and (6)

petitioner was not granted a jury trial.       These arguments are

frivolous, and we therefore perceive no need to further refute

them with somber reasoning and copious citation of precedent; to
                                - 8 -

do so might suggest that these arguments have some colorable

merit.   See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir.

1984).

2.   Whether Respondent’s Collection Actions Violated the
     Automatic Bankruptcy Stay

     Petitioner contends that respondent violated the automatic

stay provisions of the Bankruptcy Code, 11 U.S.C. section

362(a)(8), but does not specify how respondent did so.    We

disagree.    Once a taxpayer files a petition in bankruptcy, the

commencement or continuation of proceedings against that taxpayer

in the Tax Court is automatically stayed.    11 U.S.C. sec.

362(a)(8) (2000).    The stay began on April 6, 2000, when

petitioner filed his bankruptcy petition.

     The stay is lifted upon the earlier of the closing of the

case, the dismissal of the case, or the granting or denial of a

discharge.    11 U.S.C. sec. 362(c)(2) (2000); see Guerra v.

Commissioner, 110 T.C. 271, 275 (1998).     Thus, the stay was

lifted on July 24, 2000, when the bankruptcy court discharged

petitioner’s debts.    Respondent did not attempt to collect from

petitioner from April 6 to July 24, 2000.    Collection actions

began in December 2001 when respondent issued to petitioner a

notice of intent to levy relating to his 1998 tax liability.

Thus, the stay was lifted before respondent began collection

activities.
                                   - 9 -

       Petitioner contends that his 1998 tax liability was

discharged in bankruptcy.5      We disagree.   Income taxes are debts

not dischargeable in bankruptcy for taxable years for which

returns are due within 3 years before the filing of a petition in

bankruptcy.       11 U.S.C. secs. 523(a)(1)(A), 507(a)(8)(A)(i)

(2000).       Petitioner filed his bankruptcy petition on April 6,

2000, which is within 3 years of the time his 1998 return was

due.       Thus, petitioner’s 1998 tax liability is not dischargeable

in bankruptcy.       See id.

3.     Audio Recording

       A taxpayer has the right under section 7521(a)(1) to make an

audio recording of a section 6320 hearing with the Appeals Office

if the taxpayer makes an advance request and makes the recording

at the taxpayer’s expense with the taxpayer’s equipment.       Sec.

7521(a)(1); Keene v. Commissioner, 121 T.C. 8, 16, 19 (2003).

However, it is not necessary or productive to remand a case to

Appeals merely to provide the taxpayer a recorded hearing where

(1) the taxpayer previously attended and participated in an

Appeals Office hearing, and (2) we can properly decide all of the

issues pleaded by the taxpayer.       Keene v. Commissioner, supra at




       5
        We have jurisdiction in lien proceedings under sec. 6320
to decide whether income tax liabilities have been discharged in
bankruptcy. Washington v. Commissioner, 120 T.C. 114, 121,
(2003).
                              - 10 -

19; Kemper v. Commissioner, T.C. Memo. 2003-195; see also

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

4.   Procedural Issues Relating to the Levy

     Petitioner contends that the levy was improper.     Petitioner

argues that section 6330(e), which provides for suspension of

levies when levy cases are pending under section 6330, also

applies by cross-reference to lien cases under section 6320.

Sec. 6320(c).

     Respondent collected by levy more than petitioner owed for

tax year 1998 and concedes petitioner is entitled to a refund

(with interest, see sec. 6621(a)(1)) for 1998.6    Having addressed

that point, we need not address petitioner’s procedural objection

to the levy because, even if he prevailed on this point, the net

effect on his tax payments would be nil.   We rejected

petitioner’s arguments relating to his underlying tax liability

above.   Thus, his liability is now established.   We see no reason

to order a refund of levied funds (with interest) and then to

require petitioner to repay amounts he owes (plus interest).    See

Lunsford v. Commissioner, supra at 189.




     6
        Respondent filed a motion to dismiss this case for
mootness because, as a result of the levy, respondent collected
more than respondent had determined petitioner owed for 1998.
We will deny respondent’s motion because petitioner is entitled
to a refund with respect to 1998.
                             - 11 -

5.   Conclusion

     We conclude that respondent’s determination that the filing

of the tax lien was appropriate was not an abuse of discretion.

     Accordingly,

                                             An appropriate order

                                        will be issued.
