Lang v. Comm'r

(A) In general.—The*189 person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including—

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

(B) Underlying liability.—The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the *192 person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

Once the Appeals officer has issued a determination regarding the disputed collection action, section 6330(d) allows the taxpayer to seek judicial review in the Tax Court. In considering whether taxpayers are entitled to any relief from the Commissioner's determination, this Court has established the following standard of review: "[W]here the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly*190 at issue, the Court will review the Commissioner's administrative determination for abuse of discretion." Sego v. Commissioner, 114 T.C. 604, 610 (2000).

Section 6330(c)(2)(B) permits challenges to the existence or amount of the underlying liability in collection proceedings only where the taxpayer did not receive a notice of deficiency or otherwise have an opportunity to challenge the liability. Petitioner asserts that she never had an opportunity to dispute her underlying tax liabilities. She contends that she never received notices of deficiency for the tax years at issue. Respondent contends that the notices were properly mailed by certified mail to petitioner's last known address. We examine *193 first whether petitioner received notices of deficiency for the taxable years 2003, 2006, and 2007 and thus had a prior opportunity to contest her tax liabilities for those years. We conclude she did.

In the absence of clear evidence to the contrary, the presumptions of official regularity and delivery justify the conclusion that the statutory notice was sent and that attempts to deliver were made. Sego v. Commissioner, 114 T.C. at 611; see also United States v. Zolla, 724 F.2d 808, 809-810 (9th Cir. 1984). Proper mailing includes mailing by certified mail to the taxpayer's last known address. Sego v. Commissioner, 114 T.C. at 611. If the*191 presumption applies, this Court may find that a taxpayer received the notice if he fails to rebut the presumption. See Conn v. Commissioner, T.C. Memo. 2008-186. A taxpayer's self-serving testimony that he did not receive the notice of deficiency, standing alone, is generally insufficient to rebut the presumption. See Klingenberg v. Commissioner, T.C. Memo. 2012-292, at *12; Casey v. Commissioner, T.C. Memo. 2009-131, 2009 WL 1606226, at *4. The Court's determination of whether a taxpayer has received a notice of deficiency so as to preclude a challenge to the underlying tax liability under section 6330(c)(2)(B) is made "[on] the preponderance of the evidence". Sego v. Commissioner, 114 T.C. at 611; *194 Figler v. Commissioner, T.C. Memo. 2005-230, 2005 WL 2444045, at *4; see also Casey v. Commissioner, T.C. Memo. 2009-131, 2009 WL 1606226, at *4.

Respondent has shown that the notices of deficiency for 2003, 2006, and 2007 were mailed to petitioner's last known mailing address, which is also her current mailing address, via United States Postal Service certified mail. The notices of deficiency were not returned to respondent as undeliverable. Petitioner has regularly received mail from the IRS at that same address and resided there when the Tax Court petition was filed. Therefore, respondent is entitled to the presumption of official regularity. Petitioner has not produced any evidence, other than her own unsubstantiated claims, to rebut the presumption of official regularity. We conclude that she received the notices of deficiency and*192 thus had a prior opportunity to contest her liabilities for the tax years 2003, 2006, and 2007.

We next ask whether petitioner had had a prior opportunity to contest her 2004 tax liability when she received the Final Notice of Intent to Levy and Your Right to a Hearing for the year 2004, precluding her from challenging her liability for that year. We conclude she did.

Under section 6330(c)(2)(B) petitioner is precluded from contesting her underlying liability in a CDP hearing and in this proceeding if she already had a prior opportunity to contest her liability. Section 301.6320-1(e)(3), Q&A-E7,

*195 Proced. & Admin. Regs., reflects the same interpretation and application of the statutory provision section 6330(c)(2)(B).^4*193 The regulation provides that where the taxpayer previously received a CDP notice under section 6330 with respect to the same tax and tax period and did not request a CDP hearing with respect to that earlier CDP notice, the taxpayer already had an opportunity to dispute the existence or amount of the underlying tax liability. See Bell v. Commissioner, 126 T.C. 356 (2006); sec. 301.6320-1(e)(3), Q&A-E7, Proced. & Admin. Regs.

Petitioner received a Final Notice of Intent to Levy and Your Right To A Hearing for year 2004. She took no action in response to it. Because petitioner could have filed an appeal of respondent's notice of intent to levy and therein *196 challenged her underlying Federal income tax liability for the year 2004, we conclude that she had a prior opportunity to challenge her underlying tax liability for that year and is now precluded from challenging it in this Court.

Because the validity of the underlying tax liabilities are not properly at issue, we will review respondent's administrative determination for abuse of discretion. See Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). In reviewing for abuse of discretion, we will reject the determination of the Appeals Office only if petitioner establishes that the determination was arbitrary, capricious, or without sound basis in fact or law. SeeRule 142(a); Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). We do not normally substitute our judgment for that of the Appeals Office, and we do not decide independently whether we believe the lien notice filing should be withdrawn. See Murphy v. Commissioner, 125 T.C. at 320. Instead, we consider whether, in the course of making its determination, the Appeals Office (1) verified that the requirements of applicable law and administrative procedure have been met, (2) considered any relevant issue raised by the taxpayer that relates to the unpaid tax or the proposed levy, and (3) determined whether any proposed collection action balances the need for the *197 efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary. Sec. 6330(c)(1), (2), and (3).

Petitioner contends that her hearing was not fair and impartial because*195 she was denied a face-to-face hearing. Although a section 6330 hearing may consist of a face-to-face hearing, a proper hearing may also occur by telephone or by correspondence under certain circumstances. Katz v. Commissioner, 115 T.C. 329, 335-338 (2000); Barry v. Commissioner, T.C. Memo. 2011-127, 2011 WL 2260418, at *5; sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. The regulations also explain that a face-to-face hearing will not be granted if the request for a hearing or other taxpayer communications indicates that the taxpayer wishes only to raise irrelevant or frivolous issues. Sec. 301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs.; see also Lunsford v. Commissioner, 117 T.C. 183, 189 (2001); Lindberg v. Commissioner, T.C. Memo. 2010-67, 2010 WL 1330343, at *9. Furthermore, a face-to-face hearing to consider a collection alternative will not be granted unless the taxpayer has filed the past-due returns and submitted the required financial statements. See Giamelli v. Commissioner, 129 T.C. 107, 111-112 (2007) (stating that Appeals officer did not abuse her discretion in rejecting proposed installment agreement (a collection alternative) *198 and sustaining proposed collection action because taxpayer was not in compliance with his current tax obligations); Lindberg v. Commissioner, T.C. Memo. 2010-67, 2010 WL 1330343, at *9. Thus, we have repeatedly held that there is no abuse of discretion in the IRS' refusal of a face-to-face hearing where a taxpayer has failed to present nonfrivolous arguments, file past-due returns, and submit financial statements as prerequisites to a collection*196 alternative. See Seaver v. Commissioner, T.C. Memo. 2012-55, 2012 WL 638736, at *2; Zastrow v. Commissioner, T.C. Memo. 2010-215, 2010 WL 3981771, at *3.

Petitioner never raised any nonfrivolous issues. She repeatedly demanded that Ms. Masters explain and verify the procedures and laws that were followed and argued that she did not have the opportunity to contest the underlying liabilities. Petitioner, however, never presented any evidence that the underlying liabilities were incorrect, nor did she suggest a collection alternative or satisfy respondent's requests for her to complete and submit a Form 433-A and file her delinquent tax returns. Accordingly, the Appeals Office did not abuse its discretion in denying petitioner a face-to-face collection due process hearing.

Petitioner has not advanced any argument or introduced any evidence that would allow us to conclude that the determination to sustain the levy was arbitrary, capricious, or without sound basis in fact or law. The Appeals Office *199 correctly precluded petitioner from challenging the underlying liabilities. Petitioner did not comply with Ms. Masters' requests to submit tax returns or submit a Form 433-A or any other financial information. The Appeals Office determined that the requirements of applicable law and administrative procedure had been met and*197 concluded that the lien notice filing appropriately balanced the need for efficient collection of taxes with petitioner's concerns regarding the intrusiveness of the collection action. Therefore, we hold that the Appeals Office did not abuse its discretion when it issued a notice of determination upholding the proposed collection action.

Section 6673(a)(1) authorizes the Court to require the taxpayer to pay a penalty not in excess of $25,000 when it appears to the Court that, inter alia, proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in the proceeding is frivolous or groundless. In Pierson v. Commissioner, 115 T.C. 576, 581 (2000), we warned that taxpayers who abuse the protections afforded by sections 6320 and 6330 by bringing dilatory or frivolous lien or levy actions will face sanctions under section 6673. We have, in the past, imposed a section 6673 penalty in cases premised on arguments akin to those petitioner raised. In Klingenberg v. Commissioner, T.C. Memo. 2012-292*200 , the taxpayer repeatedly demanded that the settlement officer explain the procedures or laws that were followed and argued that he did not have the opportunity to contest the underlying liabilities, without presenting any evidence that the*198 underlying liabilities were incorrect. The taxpayer also argued that the Commissioner did not provide him with a face-to-face CDP hearing that he had specifically requested, while failing to submit any of the requested financial information or income tax returns. This Court concluded that the taxpayer had not raised any nonfrivolous issue and imposed a section 6673 penalty for raising frivolous arguments and instituting proceedings primarily for delay. See id. at *20.

We are convinced that petitioner instituted this proceeding primarily for delay. Petitioner repeatedly advanced contentions and demands previously and consistently rejected by this Court. We consider it an abuse of our process that "[t]axpayers with genuine controversies were delayed while we considered this case." Solomon v. Commissioner, T.C. Memo. 1993-509, aff'd without published opinion, 42 F.3d 1391 (7th Cir. 1994).

Nevertheless, we have decided to exercise restraint given that petitioner may not have received a prior warning concerning the imposition of a section 6673 penalty. Petitioner did not appear at calendar call, and respondent made a *201 joint motion to submit the cause under Rule 122. But we have stated that cases submitted under Rule 122 could still give rise to a section 6673 penalty. See, e.g., Crites v. Commissioner, T.C. Memo. 2012-267. Petitioner may not have received that warning and*199 did ultimately timely prosecute her case by means of the Rule 122 procedures. Consequently, we exercise restraint in this case. But we caution petitioner that if she insists on continuing to waste the time of this Court, by not voluntarily filing her required Federal income tax returns, by making frivolous arguments, or by unreasonably delaying any future case, we will be inclined to impose a section 6673 penalty.

The Court has considered all of petitioner's contentions, arguments, requests, and statements. To the extent not discussed herein, the Court concludes that they are meritless, moot, or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.