                        T.C. Memo. 2008-59



                      UNITED STATES TAX COURT



                ROSE LYNN RICHMOND, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11405-04L.               Filed March 10, 2008.



     Robert M. Naiman, for petitioner.

     Mayer Y. Silber, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     GALE, Judge:   Petitioner invoked the Court’s jurisdiction

under section 6330 to review respondent’s determination to

proceed with a proposed levy to collect her unpaid income tax
                               - 2 -

liability for 1998.1   As explained in detail below, we shall

sustain respondent’s determination.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and attached exhibits are incorporated in our findings by

this reference.   Petitioner resided in Illinois at the time the

petition was filed.

Respondent’s 1998 Levy

     On April 3, 1998, respondent served a notice of levy on

petitioner’s retirement account (the 1998 levy).   At the time,

petitioner owed a total of $44,716.85 in Federal income tax for

1982, 1985, 1987, 1991, and 1993 to 1996.   On May 18, 1998,

respondent received an unspecified sum from petitioner’s

retirement account and applied $8,735.89 and $11,468.08 of those

funds to petitioner’s unpaid taxes for 1982 and 1985,

respectively.   Respondent also applied $11,179 collected from

petitioner’s retirement account as a credit against the income

tax petitioner would owe for 1998 on the amount withdrawn by the

levy from the account.

Petitioner’s Refund Claims for 1982 and 1985

     In September 1998, petitioner filed with respondent Forms

843, Claim for Refund and Request for Abatement, for the taxable



     1
        All section references are to the Internal Revenue Code
of 1986, as amended.
                               - 3 -

years 1982 and 1985.   Petitioner claimed she was entitled to

refunds on the ground that the period of limitations governing

collection for the taxable years 1982 and 1985 expired before

respondent collected funds from her retirement account in May

1998 as described above.

     Respondent considered petitioner’s refund claims and granted

petitioner partial relief for 1982.    Specifically, respondent

agreed that the period of limitations governing collection had

expired with regard to certain assessments for the taxable year

1982 that respondent recorded in 1983.    On February 7, 2000,

respondent refunded $6,320.86 to petitioner for 1982.

     In contrast, respondent disallowed so much of petitioner’s

refund claims as pertained to amounts that respondent collected

in May 1998 and applied against assessments for the taxable years

1982 and 1985 that were recorded in 1986.2   Respondent determined

that the period of limitations governing collection remained open

with regard to these later assessments because the limitations

period was tolled while respondent considered an offer-in-

compromise that petitioner and her husband submitted to

respondent for several taxable years including 1982 and 1985.

See sec. 301.7122-1(f), Proced. & Admin. Regs.


     2
        The record does not include a copy of a notice of claim
disallowance for the taxable years 1982 and 1985. However, a
transcript of petitioner’s account for the taxable year 1985
includes an entry dated Jan. 6, 2003, which states “CLAIM
DISALLOWED”.
                               - 4 -

     The parties’ disagreement whether the period of limitations

governing collection for the taxable years 1982 and 1985 remained

open in May 1998 turns on the specific date in 1990 that

petitioner and her husband submitted the offer-in-compromise in

question.   Relying on entries appearing in transcripts of

petitioner’s accounts, specifically Forms 4340, Certificate of

Assessments, Payments, and Other Specified Matters, for the

taxable years 1982 and 1985, and a Master File Transcript

(TAXMODA) for the taxable year 1985, respondent determined that

the offer-in-compromise was submitted on January 4, 1990, making

the 1998 levy timely.   Relying primarily on correspondence from

the revenue officer tasked with reviewing petitioner’s offer-in-

compromise, petitioner asserted that the offer was submitted on

November 29, 1990, in which case the 1998 levy was untimely.

There is no dispute that petitioner withdrew the offer-in-

compromise on June 28, 1991.

     In November 2000, petitioner requested the assistance of the

Internal Revenue Service Taxpayer Advocate Service (TAS) with

regard to her refund claims for the taxable years 1982 and 1985.

By letter dated September 11, 2001, TAS informed petitioner that

its review of the matter revealed that, as of May 1998--the date

respondent collected funds from petitioner’s retirement account--
                               - 5 -

the period of limitations governing collection remained open with

regard to assessments for the taxable years 1982 and 1985 that

were recorded in 1986.

     The record does not reflect whether petitioner filed a

refund suit in Federal District Court or the Court of Federal

Claims with regard to her refund claims for the taxable years

1982 and 1985.   See sec. 6532(a) (a taxpayer may file a refund

suit under section 7422 after 6 months from the date of filing a

claim for refund and within 2 years from the date of mailing of a

notice of disallowance).

Petitioner’s Tax Liability for 1998

     Petitioner failed to file a tax return for 1998.     On

February 5, 2001, respondent filed a substitute for return for

the taxable year 1998 on petitioner’s behalf.   On April 30, 2001,

respondent mailed to petitioner a notice of deficiency for 1998.

Petitioner filed a petition for redetermination with the Court

(assigned docket No. 9419-01) challenging the notice of

deficiency.

     The deficiency respondent determined for petitioner’s 1998

taxable year was $87,811.   The notice of deficiency included as

an attachment a tax calculation summary in which respondent

acknowledged that petitioner was entitled to a credit of $24,844

for tax withholding during 1998.   The $24,844 amount comprised

$13,665 withheld from petitioner’s wages and $11,179 withheld
                               - 6 -

from petitioner’s retirement account in connection with the 1998

levy (described above).

     In July 2001, petitioner submitted to respondent a Form

1040, U.S. Individual Income Tax Return, for 1998.   Petitioner

claimed that she was entitled to a prepayment credit of $53,290

for 1998--an amount that included the $24,844 figure for tax

withholding referred to in the notice of deficiency and the

$8,736 and $11,468 amounts respondent collected pursuant to the

1998 levy and applied to petitioner’s accounts for the taxable

years 1982 and 1985.

     On May 22, 2002, the Court entered an agreed decision at

docket No. 9419-01 which provided that petitioner was liable for

a deficiency of $34,163 for 1998, as well as additions to tax of

$2,097, $233, and $114 pursuant to sections 6651(a)(1) and (2)

and 6654, respectively.   The parties stipulated (below the

signature of the Judge who entered the decision) that (1)

petitioner was entitled to a prepayment credit of $24,844 for

1998, and (2) the deficiency of $34,163 was computed without

taking the prepayment credit into account.   No appeal was filed,

and the Court’s decision at docket No. 9419-01 is long since

final.   Secs. 7481(a)(1), 7483.

Collection Action for 1998

     Although respondent sent to petitioner a number of notices
                               - 7 -

of balance due for the taxable year 1998, petitioner failed to

remit payment.   On February 11, 2003, respondent mailed to

petitioner a Final Notice of Intent to Levy and Notice of Your

Right to a Hearing for 1998 in accordance with section 6330.

Petitioner timely submitted to respondent a Form 12153, Request

for a Collection Due Process Hearing, which stated:   “THE

DEFICIENCY IS DUE TO IRS AUDIT AND APPEALS HEARING.   THE CASE IS

CURRENTLY BEING DISCUSSED WITH TAXPAYER ADVOCATE IN CHICAGO,

ILLINOIS.   WE REQUEST THAT NO ADDITIONAL COLLECTION ACTIVITY BE

COMMENCED UNTIL AFTER RESOLUTION WITH TAXPAYER ADVOCATE.”

During the administrative proceedings that followed, the Appeals

officer assigned to the matter informed petitioner that the

Appeals Office did not have the authority to consider

petitioner’s claim for prepayment credits from the taxable years

1982 and 1985.

     On June 2, 2004, respondent mailed to petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 informing petitioner that respondent intended to

proceed with the proposed levy.   An Appeals case memo attached to

the notice of determination referred to petitioner’s claims for

prepayment credits and stated in pertinent part:

     The prepayment credits were withholdings and prior
     levies for the 1982 and 1985 tax years. An adjustment
     was made disallowing the levies at the Examination and
     Appeals level. The United States Tax Court rendered a
     decision that was entered on May 22, 2002 that decided
     that the prior levies would not be allowed as a
                               - 8 -

     prepayment credit. * * * Appeals at this time is not
     changing a decision by the Tax Court.

     Petitioner filed with the Court a timely petition seeking

review of respondent’s determination.    Petitioner asserts that

respondent erred in determining that she may not dispute the

amount of her unpaid tax for the taxable year 1998 by claiming

that she is entitled to prepayment credits from the taxable years

1982 and 1985.

                              OPINION

Collection Procedures

     Section 6330(a) provides the general rule that the Secretary

may not levy on any property or right to property of any taxpayer

unless the Secretary has provided 30 days’ advance notice to the

taxpayer of the right to an administrative hearing before the

levy is carried out.3   If a taxpayer makes a timely request for

an administrative hearing, a hearing shall be conducted by the

IRS Office of Appeals (Appeals Office) before an impartial

officer.   Sec. 6330(b)(1), (3).   The procedures for the

administrative hearing are set forth in section 6330(c).    First,

the Appeals officer must obtain verification from the Secretary

that the requirements of any applicable law or administrative



     3
        Sec. 6330 was enacted under the Internal Revenue Service
Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,
sec. 3401, 112 Stat. 746, and is effective with respect to
collection actions initiated more than 180 days after July 22,
1998, RRA 1998 sec. 3401(d), 112 Stat. 750.
                                - 9 -

procedure have been met.   Sec. 6330(c)(1).     Second, the taxpayer

may raise any issue relevant to the unpaid tax or proposed

collection action at the hearing, including spousal defenses,

challenges to the appropriateness of the collection action, and

offers of collection alternatives.      Sec. 6330(c)(2)(A).

Additionally, the taxpayer may contest the existence and amount

of the underlying tax liability, but only if he or she did not

receive a notice of deficiency or otherwise have an opportunity

to dispute the tax liability.   Sec. 6330(c)(2)(B).       Section

6330(c)(4) provides in pertinent part that a taxpayer may not

raise an issue at the hearing if the issue was raised and

considered at a previous administrative or judicial proceeding

and the taxpayer participated meaningfully in such proceeding.4


     4
         Sec. 6330(c)(4) provides:

          SEC. 6330(c). Matters Considered at Hearing.--In the
     case of any hearing conducted under this section–-

               *     *     *     *        *     *     *

                (4) Certain issues precluded.--An issue may not be
           raised at the hearing if--

                     (A) the issue was raised and considered at a
                previous hearing under section 6320 or in any
                other previous administrative or judicial
                proceeding; and

                     (B) the person seeking to raise the issue
                participated meaningfully in such hearing or
                proceeding.

           This paragraph shall not apply to any issue with
                                                    (continued...)
                               - 10 -

     In accordance with the foregoing, the Appeals Office must

make a collection determination after reviewing the matters

prescribed in section 6330(c)(1) and (2) and considering whether

the proposed collection action balances the need for efficient

collection of taxes with the legitimate concern of the taxpayer

that the collection be no more intrusive than necessary.    Sec.

6330(c)(3).

     After the Appeals Office makes a determination under section

6330(c), the taxpayer may petition the Tax Court for review.

Sec. 6330(d).    If the taxpayer’s underlying tax liability is

properly at issue, we review any determination regarding the

underlying tax liability de novo.    Sego v. Commissioner, 114 T.C.

604, 610 (2000).    We review any other administrative

determinations regarding the proposed collection action for abuse

of discretion.     Id.

Analysis

     As previously discussed, on May 22, 2002, the Court entered

an agreed decision at docket No. 9419-01 that petitioner was

liable for a deficiency of $34,163 for the taxable year 1998, as



     4
      (...continued)
          respect to which subsection (d)(2)(B) applies.

Sec. 6330(d)(2)(B) provides that the Office of Appeals retains
jurisdiction with respect to any determination made under sec.
6330 if the taxpayer requests a subsequent hearing, after
exhausting all administrative remedies, to raise an issue that a
change in his or her circumstances affects the determination.
                              - 11 -

well as various additions to tax.   The parties stipulated that

petitioner was entitled to a prepayment credit of $24,844 for

1998 and that the deficiency of $34,163 was computed without

taking that credit into account.

     Petitioner nevertheless contends that respondent should not

be permitted to proceed with the proposed levy at issue in this

case because she owes nothing for 1998.   Specifically, petitioner

avers that the period of limitations governing collection for the

taxable years 1982 and 1985 expired before respondent collected

funds from her retirement account in 1998 and, as a result,

respondent erred insofar as he applied those funds to her

accounts for the years 1982 and 1985.   As petitioner sees it, the

amounts so applied to her accounts for the taxable years 1982 and

1985 should have been applied instead as prepayment credits to

completely offset any amount that she owes for 1998.

     Respondent concedes, contrary to a statement in the notice

of determination, that the Court did not address petitioner’s

claim to prepayment credits from 1982 and 1985 in connection with

the agreed decision entered in petitioner’s deficiency case at

docket No. 9419-01.   On the other hand, respondent maintains that

petitioner is barred under section 6330(c)(4) from raising the

prepayment credits issue in this collection review proceeding

because petitioner already raised that issue in refund claims

that she submitted to respondent for the taxable years 1982 and
                               - 12 -

1985.    We agree with respondent that section 6330(c)(4) bars our

consideration of the issue.

     As a threshold matter, we note that respondent carried out

the 1998 levy before section 6330 became effective.      See supra

note 3.    Consequently, petitioner did not have an opportunity for

pre-levy administrative or judicial review before respondent

collected funds from her retirement account.      The record shows,

however, that petitioner promptly obtained post-levy

administrative review by filing with respondent claims for refund

for 1982 and 1985.   Respondent considered petitioner’s claims and

granted petitioner partial relief by abating some of the earlier

assessments recorded for the taxable year 1982 and issuing

petitioner a refund for that year.      Respondent disallowed a

relatively small portion of the remainder of petitioner’s claim

for refund for 1982 and her entire claim for refund for 1985.5

Undaunted, petitioner subsequently requested the assistance of

the TAS, but to no avail--the TAS concluded that petitioner was

not entitled to the refunds she sought.

     In an attempt to resurrect the issue a third time,

petitioner asserts that she is entitled to prepayment credits

from the taxable years 1982 and 1985 as a defense to respondent’s



     5
        Although it is   clear that petitioner’s refund claims were
disallowed as outlined   above, the record does not reflect whether
petitioner is eligible   to file a refund suit for the taxable
years 1982 and 1985 in   accordance with secs. 7422(a) and 6532.
                              - 13 -

efforts to collect her unpaid tax for 1998.   Notably, petitioner

does not seek to (nor could she) challenge the amount of her

underlying tax liability for 1998 as determined by the Court at

docket No. 9419-01.   Instead, petitioner insists that there is no

unpaid balance of tax due for 1998.

     Section 6330(c)(4) in relevant part precludes a taxpayer

from raising an issue in a section 6330 proceeding if the issue

was raised and considered in any other previous administrative or

judicial proceeding and the taxpayer participated meaningfully in

such proceeding.   We conclude that the issues concerning the

timeliness of the 1998 levy and petitioner’s related refund

claims for the taxable years 1982 and 1985 were raised and

considered in a previous administrative proceeding within the

meaning of section 6330(c)(4).   Moreover, on the basis of

petitioner’s submissions in the record and the other evidence

concerning the refund claims for 1982 and 1985, we are satisfied

that petitioner participated meaningfully in the previous

administrative proceeding concerning those claims.   Consequently,

consistent with the proscription contained in section 6330(c)(4),

we hold that petitioner is barred from reasserting her claims to

prepayment credits from the taxable years 1982 and 1985 in this

proceeding.6   See, e.g., Magana v. Commissioner, 118 T.C. 488,


     6
        Even if sec. 6330(c)(4) did not preclude consideration of
the issue, we observe that the weight of the evidence in this
                                                   (continued...)
                             - 14 -

492 (2002) (taxpayer barred under section 6330(c)(4) from raising

at hearing previously litigated statute of limitations issue).

     In the absence of a spousal defense, a proper challenge to

the appropriateness of the intended collection action, or an

offer of a viable collection alternative, we shall sustain

respondent’s determination to proceed with the proposed levy.

     To reflect the foregoing,

                                      Decision will be entered

                                 for respondent.




     6
      (...continued)
case supports respondent’s position that petitioner and her
husband submitted their offer-in-compromise on Jan. 4, 1990, and,
therefore, the 1998 levy was timely.
