Lunsford v. Comm'r

117 T.C. No. 17, 117 T.C. 183, 2001 U.S. Tax Ct. LEXIS 49

• Court: United States Tax Court
• Decided: November 30, 2001
• Docket: No. 18071-99L
• Status: Published

Opinions

OPINION

Ruwe, Judge:

This case arises from a petition for judicial review filed under section 6330(d)(1)(A).¹ We have previously decided that we have jurisdiction in this case. See Lunsford v. Commissioner, 117 T.C. 159 (2001). For convenience, we combine the facts, which are not in dispute, with our opinion.

Section 6331(a) authorizes the Commissioner to levy against property and property rights where a taxpayer fails to pay taxes within 10 days after notice and demand for payment is made. Section 6331(d) requires the Secretary to send notice of an intent to levy to the taxpayer, and section 6330(a) requires the Secretary to send a written notice to the taxpayer of his right to a hearing. Section 6330(b) affords taxpayers the right to a “fair hearing” before an “impartial” IRS Appeals officer. Section 6330(c)(1) requires the Appeals officer to obtain verification that the requirements of any applicable law or administrative procedure have been met. Section 6330(c)(2)(A) specifies issues that the taxpayer may raise at the Appeals hearing. The taxpayer is allowed to raise “any relevant issue relating to the unpaid tax or the proposed levy” including spousal defenses, challenges to the appropriateness of collection action, and alternatives to collection. Sec. 6330(c)(2)(A). The taxpayer cannot raise issues relating to the underlying tax liability if the taxpayer received a notice of deficiency or the taxpayer otherwise had an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).

Section 6330(c)(3), provides that a determination of the Appeals officer shall take into consideration the verification under section 6330(c)(1), the issues raised by the taxpayer, and whether the proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary. Section 6330(d)(1) allows the taxpayer to appeal a determination to the Tax Court or a District Court. Section 6330(e)(1) suspends the levy action until the conclusion of the hearing and any judicial review of the determination.

On April 30, 1999, respondent issued a notice of intent to levy to petitioners. The proposed levy was to collect unpaid income taxes of $83,087.85 for the taxable years 1993, 1994, and 1995. On May 24, 1999, petitioners filed a Form 12153, Request for a Collection Due Process Hearing,² and raised only the following issue: On September 2, 1999, the Appeals officer wrote a letter to petitioners indicating that the validity of the assessments had been verified and attached a Form 4340, Certificate of Assessments and Payments, which clearly shows that the assessments in question were made and remained unpaid. The Appeals officer concluded the letter stating: “If you wish to discuss other matters, such as resolution of the liability please contact me by September 16, 1999. Otherwise, we will issue a determination”. Petitioners made no response to this letter. No further proceedings or exchange of correspondence occurred prior to the Appeals officer’s determination.

I do not agree with the collection action of levy and notice of intent to levy 4-30-99. The basis of my complaint is what I believe to be the lack of a valid summary record of assessment pursuant to 26 CFR §301.6203-1. Without a valid assessment there is no liability. Without a liability there can be no levy, no notice of intent to levy, nor any other collection actions.[³]

On November 3, 1999, a notice of determination was sent to petitioners by the IRS Appeals Office which sustained the proposed levy. The notice of determination concluded: (1) All procedural, administrative, and statutory requirements were met; (2) the Form 4340 satisfied the requirements of section 6203;⁴ (3) petitioners failed to present any collection alternatives; and (4) the proposed levy was justified. On December 2, 1999, petitioners filed a timely petition to the Tax Court.

We must decide whether petitioners are entitled to any relief from the Appeals officer’s determination. Where the underlying tax liability is properly at issue in the hearing, we review that issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). However, where the underlying tax liability is not at issue, we review the determination to see whether there has been an abuse of discretion. Nicklaus v. Commissioner, 117 T.C. 117, 120 (2001). In this case, petitioners have not disputed the merits of the underlying tax liability.

Our Rules require petitioners to specify the facts upon which they rely for relief under section 6330. A petition filed under section 6330 must contain “Clear and concise lettered statements of the facts on which the petitioner bases each assignment of error”. Rule 331(b)(5). Any issue not raised in the assignments of error shall be deemed to be conceded. Goza v. Commissioner, supra at 183.⁵

In the entire course of this judicial proceeding, petitioners have raised only one substantive issue that they want to- be considered; i.e., whether there was a sufficient record showing that the taxes in issue were assessed under section 6203 and section 301.6203-1, Proced. & Admin. Regs. In their petition to the Tax Court, petitioners alleged the following facts in support of their position:

6. The facts upon which the Petitioner relies, as the basis of the Petitioner’s case, are as follows:

a) The appeals officer took the position that the assessment is valid without verifying that there was in fact an assessment.

b) The appeals officer stated that the courts have ruled that a certified transcript “contains all the documentation to which taxpayers are entitled under 26 U.S.C. §6203 without meeting his duty under 26 CFR §301.6320-T(e)(l) to verify the existence of the underlying documents.

c) Although the transcript listed an assessment date, the appeals officer did not verify that a 23C was actually prepared pursuant to his duty under 26 CFR §301.6320-T(e)(l) and the nonexistence of the properly prepared and signed certificate of assessment pursuant to 26 U.S.C. §6203 and 26 C.F.R. §301.6203-1 was placed in issue.

d) Without the assessment officer being identified from the assessment certificate neither Petitioner nor the appeals officer can inquire of the assessment officer for verification that he performed his proper function in determining that all conditions precedent, (procedural, administrative and statutory) to the assessment were performed.

Petitioners’ trial memorandum, which was filed on the day this case was called for trial, stated the issue as follows:

ISSUES:

Whether the hearing officer met the requirements of §6330 by making a determination without requiring the Service to furnish, as timely requested by Petitioner, the assessment document meeting the requirements of 26 CFR 301.6203-1, signed by an assessment officer and certified under oath by the records clerk or other authorized official.

Petitioners included a “Synopsis of Legal Authorities” in their trial memorandum. This synopsis similarly discussed only the issue of the existence of an assessment and its verification with a Form 4340.

When this case was called for trial, petitioners’ counsel gave no indication that petitioners wanted to contest anything other than the issue described in their pleadings and trial memorandum. The Court ordered both parties to file posttrial briefs. Petitioners did not file a posttrial brief.⁶ We recently discussed the consequences to a party who fails to advance arguments on brief. In Nicklaus v. Commissioner, 117 T.C. at 120 n.4, we stated: “We conclude that petitioners have abandoned those other arguments and contentions. See Ryback v. Commissioner, 91 T.C. 524, 566 n.19 (1988).”⁷ In the instant case, we think it is at least as clear that petitioners have abandoned any arguments that were not raised in their pleadings and trial memorandum.

The argument that petitioners made in their trial memorandum has already been rejected. In Davis v. Commissioner, 115 T.C. 35 (2000), the taxpayer argued that the collection action was improper because of the lack of a “valid” summary record of assessment. We held that it was not an abuse of discretion for the Appeals officer to rely on a Form 4340 to verify that a valid assessment existed.⁸ Id. at 40-41. Form 4340 provides at least presumptive evidence that a valid assessment of a tax has been made. Hefti v. IRS, 8 F.3d 1169, 1172 (7th Cir. 1993); Nicklaus v. Commissioner, supra at 121; Davis v. Commissioner, supra at 40. A Form 4340 is not conclusive proof of an assessment. For example, where the Form 4340 does not list a “23C date” (i.e., the date on which the actual assessment was made), further examination is required to determine whether an assessment was made. See Huff v. United States, 10 F.3d 1440, 1446 (9th Cir. 1993); Brewer v. United States, 764 F. Supp. 309, 315-316 (S.D.N.Y. 1991). However, where the taxpayer can point to no evidence of any irregularity in the assessment process, the presumption of a valid assessment remains intact. Nicklaus v. Commissioner, supra at 121; Guthrie v. Sawyer, 970 F.2d 733, 737-738 (10th Cir. 1992); Geiselman v. United States, 961 F.2d 1, 6 (1st Cir. 1992); Hughes v. United States, 953 F.2d 531, 535 (9th Cir. 1992); United States v. Chila, 871 F.2d 1015, 1017-1018 (11th Cir. 1989). In Davis v. Commissioner, supra, the taxpayer failed to demonstrate any irregularity in the assessment procedure, and we granted respondent’s motion for a judgment on the pleadings. We held further that Appeals hearings were intended by Congress to be informal and do not require testimony under oath or the compulsory attendance of witnesses or the production of all requested documents. Id. at 41-42.

In this case, petitioners were provided with a Form 4340 which showed the assessment date of the taxes in question. The Appeals officer relied on the Form 4340 to verify that section 6203 and the applicable regulations thereunder were satisfied. Petitioners have not pointed to any alleged facts or evidence to suggest that there were any irregularities in the assessment process.

The only substantive issue that petitioners have raised in this judicial proceeding is whether the Appeals officer properly relied on a Form 4340 to verify under section 6330(c)(1) that the taxes were properly assessed. We do not construe the instant appeal as being predicated on allegations that respondent failed to offer petitioners a hearing per se. Rather, the gist of petitioners’ claim is that the Appeals officer has incorrectly relied on Form 4340 for purposes of verifying the assessments and that the Appeals officer has improperly refused to afford petitioners certain alleged procedural rights with which to challenge the Form 4340. We have already decided those issues contrary to the position taken by petitioners. Davis v. Commissioner, supra. The only relief petitioners are seeking is a remand to Appeals to consider matters which we have previously ruled on. The prayer for relief contained in the petition states:

WHEREFORE, Petitioner prays that this case be remanded to the Appeals Office with the following instructions:

a) Perform a complete verification as required by 26 C.F.R. §301.6320-T(e)(l),

b) Furnish existence thereof to Petitioner including the documents requested in the due process hearing request and

c) Hold a meaningful due process hearing as required by law allowing Petitioner to examine all records used by Respondent and to cross examine those persons who created or otherwise relied upon those records to create the alleged assessment that begun the collection action,

so that Petitioner can be afforded due process of law prior to any taking.

We do not believe that it is either necessary or productive to remand this case to IRS Appeals to consider petitioners’ arguments. Thus, we shall decide this case by following our opinion in Davis v. Commissioner, supra.

Of course, there may be cases, where taxpayers were not given a proper opportunity for an Appeals hearing, where it will be appropriate for this Court to require that an Appeals hearing be held. However, we do not believe that this should be done where, as in this case, the only arguments that petitioners presented to this Court were based on legal propositions which we have previously rejected.

Procedurally, the case before us is similar to the situation we faced in Goza v. Commissioner, 114 T.C. 176 (2000). In that case the taxpayer objected to the notice of intent to levy, and the case was sent to Appeals for a determination under section 6330. Appeals refused to hear the taxpayer’s challenge to the underlying tax liability or to hear the taxpayer’s challenges based on frivolous constitutional arguments. The Appeals notice of determination stated:

“Summary of Determination:

It has been determined that the requirements of all applicable laws and administrative procedures have been met.

As you were advised in our letter dated July 6, 1999, challenges to the underlying liability may only be raised as an issue if you did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the liability. You did receive a statutory notice of deficiency in this case. You were also informed that a hearing is not available for constitutional issues such as those referenced in your reply to the final notice, and you failed to raise any issues that could be considered in a due process hearing pursuant to IRC section 6330.

It is therefore deemed that the proposed collection action balances the need for efficient collection of the taxes with the concern that the collection action be no more intrusive than necessary.”

[Goza v. Commissioner, supra at 178.]

The taxpayer raised the same issues in his petition, which included the following statement: “‘Petitioner reserves all rights under the federal Constitution and common law, the filing of this petition is not intended as a waiver of any of those rights.’ ” Id. at 179. We described petitioner’s constitutional claims as frivolous. Id. at 183. We then granted the Commissioner’s motion to dismiss for failure to state a claim upon which relief can be granted, stating:

Rule 331(b)(4) states that a petition for review of an administrative determination filed pursuant to section 6330 shall contain clear and concise assignments of each and every error which the petitioner alleges to have been committed in the levy determination and any issue not raised in the assignments of error shall be deemed to be conceded. Rule 331(b)(5) states that such a petition shall contain clear and concise lettered statements of the facts on which the taxpayer bases each assignment of error.

Petitioner failed to raise a valid challenge to respondent’s proposed levy before the Appeals Office. Petitioner continued to assert the same frivolous constitutional claims in his petition for review filed with the Court.

The validity of petitioner’s underlying tax liability is not properly at issue in this proceeding. Moreover, the petition does not assert (nor is there any basis in the administrative record for the Court to conclude) that respondent abused his discretion with respect to spousal defenses or collection matters. See sec. 6330(c)(2)(A). In the absence of a justiciable claim for relief in the petition for review filed herein, we shall grant respondent’s motion to dismiss for failure to state a claim upon which relief can be granted.

Ud.]

We have addressed all of the issues petitioners have raised in this judicial proceeding. We hold that the Appeals officer did not abuse her discretion by relying on the Form 4340 or by refusing to produce other requested documents or witnesses and that respondent may proceed with the proposed levy action.⁹

Respondent requests that we impose a section 6673(a)(1) penalty on petitioners. Under the circumstances of this case, we do not believe a penalty should be imposed on petitioners. Respondent’s request is denied.

An appropriate order and decision will be entered.

Reviewed by the Court.

Wells, Cohen, Swift, Gerber, Whalen, and Thornton, JJ., agree with this majority opinion.

1 Unless otherwise indicated, all section references are to the Internal Revenue Code currently in effect, and all Rule references are to the Tax Court Rules of Practice and Procedure.

2 Various IRS forms refer to the Appeals hearing that is contemplated by sec. 6330(b) as a “collection due process” or “CDP” hearing.

3 The Form 12153, Request for a Collection Due Process Hearing, was attached to a cover letter dated May 24, 1999, from petitioners’ representative, Thomas W. Roberts, which stated:

The basis of my complaint is the perceived lack of a valid summary record of assessment pursuant to 26 CFR §301.6203-1. Without a valid assessment there is no liability. I will need to receive a copy of the summary record of assessment signed by the assessment officer. You may send one to me or send me the necessary forms to subpoena the document along with the assessment officer’s name and address for delivery of the subpoena. Upon receipt of that document I will have several questions to ask the assessment officer. I assume this can be done in the form of interrogatories. Please forward the procedures for the interrogatories and subsequent depositions of any witnesses that I may wish to call.

Mr. Roberts also asked for copies of the ‘levy’ or ‘levies”. However, whether respondent can make such ‘levies” is the issue before us.

4 Sec. 6203 requires the Secretary to record the liability of the taxpayer and to furnish a copy of the record of assessment to the taxpayer on request. Sec. 301.6203-1, Proced. & Admin. Regs., provides that an assessment officer shall make the assessment and sign the “summary record of assessment. The summary record, through supporting records, shall provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment.”

5 See also Merriweather v. Commissioner, T.C. Memo. 2001-88; MacElvain v. Commissioner, T.C. Memo. 2000-320; Howard v. Commissioner, T.C. Memo. 2000-319; Van Fossen v. Commissioner, T.C. Memo. 2000-163.

6 Generally, where a party fails to file a brief on an issue before the Court, we have the authority to hold the party in default under Rule 123(a) and enter decision against the defaulting party or to dismiss the case under Rule 123(b) for failure to prosecute or for failure to comply with the Rules of this Court. See Rule 151(a) (“Briefs shall be filed” on order of the Court). On numerous occasions, we in essence have defaulted or dismissed issues for failure to brief them. Generally, we have accomplished this result by considering the issue waived or conceded. Stringer v. Commissioner, 84 T.C. 693, 704-708 (1985), affd. without published opinion 789 F.2d 917 (4th Cir. 1986); Furniss v. Commissioner, T.C. Memo. 2001-137; McGee v. Commissioner, T.C. Memo. 2000-308; Pace v. Commissioner, T.C. Memo. 2000-300; Hartman v. Commissioner, T.C. Memo. 1999-176.

7 We also note that in Nicklaus v. Commissioner, 117 T.C. 117 (2001), the taxpayers raised arguments similar to those raised by petitioners herein. In that case, we examined the pleadings and other documents submitted to this Court and concluded that the taxpayers’ arguments were without merit.

8 We note that the petition in this case is essentially the same as the petition filed with this Court in Davis v. Commissioner, 115 T.C. 35, 39 (2000). This is not surprising since the petition was filed by Thomas W. Roberts, who also filed the petition for the taxpayer in the Davis case. Mr. Roberts was disbarred from practice before this Court on June 18, 2001, and was removed as petitioners’ counsel on July 18, 2001.

9 See also Watson v. Commissioner, T.C. Memo. 2001-213; Serv. Engg. Trust u. Commissioner, T.C. Memo. 2001-181.