Michael E. Nestor v. Commissioner

118 T.C. No. 10

• Court: United States Tax Court
• Decided: February 19, 2002
• Docket: 5372-00L
• Status: Unknown

Opinion

118 T.C. No. 10

UNITED STATES TAX COURT

MICHAEL E. NESTOR, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5372-00L. Filed February 19, 2002.

This opinion addresses petitioner’s (P) 1992 through 1997 (1992-97) tax years.

Respondent (R) issued notices of deficiency to petitioner (P) for tax years 1990 through 1997 (1990- 97). P received the notices of deficiency for tax years 1992-97 but did not file a petition for redetermination with the Court. R issued to P a notice of intent to levy with respect to P’s taxes due for tax years 1990-97. P requested and R held a hearing pursuant to sec. 6330(b), I.R.C., relating to P’s tax years 1990-97. In his request for a hearing, P requested that R provide him copies of the assessment records. At the hearing, R did not permit P to challenge his underlying tax liability for tax years 1990-97. After the hearing, R sent a notice of determination to P stating that collection of his tax liability for 1990-97 would proceed. R provided assessment records to P after the hearing and before the trial in this case. - 2 -

Held: P may not contest his underlying tax liability for tax years 1992-97 because P received notices of deficiency for those years. Sec. 6330(c)(2)(B).

Held, further, R’s determination to proceed with collection with respect to P’s tax years 1992-97 was not an abuse of discretion.

Michael E. Nestor, pro se.

David C. Holtz, for respondent.

COLVIN, Judge: On April 7, 2000, respondent sent petitioner

a Notice of Determination Concerning Collection Action(s) Under

Sections 6320 and/or 6330 (the lien or levy determination), in

which respondent determined to proceed with collection of

deficiencies in petitioner’s income tax, additions to tax,

interest, and the frivolous return penalty1 for 1990 through 1997

(1990-97).

In this opinion, we decide:

(1) Whether petitioner may contest his underlying tax

liability for tax years 1992-97. We hold that he may not.

(2) Whether respondent’s determination to proceed with

collection with respect to petitioner’s tax years 1992-97 was an

abuse of discretion. We hold that it was not.

1 We will dismiss for lack of jurisdiction the portion of this case that relates to the frivolous return penalties for tax years 1992-97. Van Es v. Commissioner, 115 T.C. 324, 328-329 (2000). - 3 -

Section references are to the Internal Revenue Code as

amended.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

Petitioner resided in California when he filed the petition in

this case.

A. Petitioner’s Tax Returns and the Notices of Deficiency

Petitioner filed purported Federal income tax returns for

1990-96 in May 1997, and he timely filed a purported 1997 return

on April 15, 1998.2 On each return, he reported that he had no

wages, other income, or tax liability. After petitioner filed

those tax returns and before October 1999 (when respondent issued

the notice of intent to levy discussed at paragraph B, below),

respondent assessed the frivolous return penalty under section

6702 for 1990-97.

Respondent issued notices of deficiency to petitioner for

each of his 1990-97 tax years determining deficiencies and

additions to tax as follows:

2 Petitioner’s 1997 return bears the date “04-14-97". The parties stipulated that petitioner filed his 1997 return on or before Apr. 15, 1998. - 4 -

Additions to Tax Year Deficiency Sec. 6651(a) Sec. 6654

1990 $2,006 $493.00 $129.46 1991 1,834 455.75 104.73 1992 2,201 550.25 -0- 1993 2,021 493.75 -0- 1994 1,954 254.02 -0- 1995 2,899 202.93 -0- 1996 2,951 29.49 156.93 1997 2,996 89.88 -0-

Petitioner received the notices of deficiency for 1992-97,

but he did not file a petition for redetermination of the

deficiencies for 1992-97.

B. The Lien and Levy Proceeding

On October 21, 1999, respondent issued to petitioner a

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

relating to petitioner’s 1990-97 tax years. On November 17,

1999, petitioner filed a Request for a Collection Due Process

Hearing, Form 12153, for tax years 1990-983 in which he

contended: (1) There was “no valid, underlying assessment” of

taxes; (2) he did not receive the “statutory ‘notice and demand’”

for payment of the taxes at issue; (3) he did not receive a valid

notice of deficiency; and (4) he had no underlying tax liability.

In his request for a hearing, petitioner asked that the Appeals

officer have at the hearing: (1) Verification that “the

3 The record is silent as to why petitioner requested a hearing with respect to tax year 1998. Because respondent’s notice of intent to levy did not include 1998, that year is not in issue here. - 5 -

requirements of any applicable law or administrative procedure

have been met”, for example, a copy of the statutory notice and

demand for payment; (2) a copy of Form 23C, Summary Record of

Assessment, and the “pertinent parts of the assessment which set

forth the name of the taxpayer, the date of the assessment, the

character of the liability assessed, the taxable period, and the

amount assessed”; (3) delegation of authority from the Secretary

to the person (other than the Secretary) who signed the

verification required under section 6330(c)(1); and (4) proof

that notices of deficiency were sent to petitioner.

C. The Section 6330 Hearing and Respondent’s Notice of Determination

On December 28, 1999, respondent’s Appeals Office conducted

a hearing in petitioner’s case for tax years 1990-97. Petitioner

attended the hearing. He was not given an opportunity to

challenge his underlying tax liability for 1990-97 at the

hearing. At the hearing, he asked the Appeals officer to provide

verification that the requirements of any applicable law or

administrative procedures had been met, to give him copies of a

notice and demand for payment, and to show him “anything that

indicated [he] owed income tax” or that he was required to pay

Federal income tax. The Appeals officer did not comply with

petitioner’s requests and told petitioner that the hearing was

limited to alternatives to collection. At the hearing,

petitioner did not challenge the appropriateness of the intended - 6 -

method of collection, offer an alternative means of collection,

or raise a spousal defense to collection.

On April 7, 2000, respondent sent petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (the determination letter), in which respondent

stated that all applicable laws and administrative procedures had

been met and that collection from petitioner of his tax liability

for 1990-97 would proceed. On May 8, 2000, petitioner filed a

petition for lien or levy action under section 6320(c) or

6330(d).

OPINION

A. Whether Petitioner May Contest His Underlying Tax Liabilities for 1992-97

Petitioner contends that he was improperly precluded at the

section 6330 hearing from challenging his underlying tax

liability for tax years 1992-97. He bases this on the claim that

the notices of deficiency he received were not valid because they

were not prepared or issued by the Secretary and because the

Director of the Service Center who prepared and issued them did

not give petitioner a copy of the order delegating authority from

the Secretary to her.

Petitioner’s contention lacks merit. The Secretary or his

delegate may issue notices of deficiency. Secs. 6212(a),

7701(a)(11)(B) and (12)(A)(i). The Secretary’s authority to

issue notices of deficiency was delegated to the District - 7 -

Director and also to the Director of the Service Center who

issued the notices of deficiency in this case. See Stamos v.

Commissioner, 95 T.C. 624, 630-631 (1990), affd. without

published opinion 956 F.2d 1168 (9th Cir. 1992); Kellogg v.

Commissioner, 88 T.C. 167, 172 (1987); Perlmutter v.

Commissioner, 44 T.C. 382, 385 (1965), affd. 373 F.2d 45 (10th

Cir. 1967); secs. 301.6212-1(a), 301.7701-9(b), Proced. & Admin.

Regs. A taxpayer may contest the existence or amount of the

underlying tax liability at the section 6330(b) hearing only if

the taxpayer did not receive a notice of deficiency for such tax

liability or did not otherwise have an opportunity to dispute

such tax liability. Sec. 6330(c)(2)(B). Section 6330(c)(2)(B)

bars petitioner from contesting the existence or amount of his

tax liabilities for 1992-97 because he received notices of

deficiency for those years.

B. Whether Respondent’s Determination To Proceed With Collection as to Petitioner’s 1992-97 Tax Years Was an Abuse of Discretion

The Appeals officer verified that the Internal Revenue

Service (IRS) had met the requirements of any applicable laws and

administrative procedures. See sec. 6330(c)(1); sec. 301.6330-

1(e)(1), Proced. & Admin. Regs. The second sentence of section

6203 provides that the Secretary shall, upon request of the

taxpayer, provide the taxpayer a copy of the record of

assessment. - 8 -

Petitioner points out that the Appeals officer did not have

at the hearing the documents (the notice and demand for payment,

verification that the requirements of applicable law or

administrative procedure have been met, Form 23C, other

assessment records, and the delegation order to the person other

than the Secretary who signed the verification) that petitioner

had requested in his request for a section 6330(b) hearing.

Petitioner contends that he was entitled to receive assessment

records under section 6203. Petitioner also contends that the

Appeals officer’s verification was incorrect, and that the

assessments were invalid, because he did not receive those

documents at the hearing. The Appeals officer used Forms 4340,

Certificate of Assessments and Payments, to verify the

assessments. Even though petitioner specified Form 23C, it was

not an abuse of discretion for the Appeals officer to use Forms

4340 for purposes of complying with section 6330(c)(1). Davis v.

Commissioner, 115 T.C. 35, 41 (2000).

Section 6330(c)(1) does not require the Appeals officer to

give the taxpayer a copy of the verification that the

requirements of any applicable law or administrative procedure

have been met. Section 301.6330-1(e)(1), Proced. & Admin. Regs.,

supra, requires that the Appeals officer obtain verification

before issuing the determination, not that he or she provide it

to the taxpayer. There is no requirement under internal revenue

laws or regulations that the Appeals officer give the taxpayer a - 9 -

copy of the delegation of authority from the Secretary to the

person (other than the Secretary) who signed the verification

required under section 6330(c)(1).

The Appeals officer did not give petitioner a copy of the

record of assessment at or before the hearing as petitioner had

requested. Respondent gave petitioner copies of the Forms 4340

prior to the trial in this case. The Forms 4340 that respondent

gave petitioner before trial showed that the amounts at issue

were properly assessed, and petitioner did not show at trial any

irregularity in the assessment procedure that would raise a

question about the validity of the assessments. Requiring the

Appeals officer to provide petitioner with a second copy of

petitioner’s Forms 4340 at this time would delay disposition of

this case. Petitioner was not prejudiced in any way by the fact

that he first received copies of those records after the section

6330 hearing. Thus, whether or not the second sentence of

section 6203 is an “applicable law or administrative procedure”

referred to in section 6330(c)(1), it is clear that no bona fide

interest would be served by further delaying the collection of

petitioner’s tax liability for 1992-97.

Petitioner contends that the notice of intent to levy

improperly failed to identify the Code sections which establish

his alleged tax liability. He contends that the assessment of

tax was improper because he filed tax returns for 1990-97 which

showed that he owed no income taxes for those years. He also - 10 -

asserts that respondent may not assess tax because section 6201

provides for self-assessment and only petitioner can determine

what tax he owes.

Petitioner’s contentions are frivolous. There is no

requirement that the notice of intent to levy identify the Code

sections which establish the taxpayer’s liability for tax,

additions to tax, or penalties.

Section 6330(c)(2)(A) permits a taxpayer to challenge the

appropriateness of the intended method of collection, offer

alternatives to collection, or raise a spousal defense to

collection. Petitioner gives no bona fide basis for his claim

that the collection action was not appropriate. We conclude that

respondent’s determination to proceed with collection of the tax

liabilities assessed against petitioner for those years was not

an abuse of discretion.4

Accordingly,

An appropriate order

will be issued.

Reviewed by the Court.

WELLS, COHEN, GERBER, RUWE, WHALEN, HALPERN, and THORNTON, JJ., agree with this majority opinion.

MARVEL, J., concurs in result only.

4 We also hold herein that petitioner’s contentions discussed in par. B (slip op. pp. 7-10) lack merit for years 1990-91. - 11 -

SWIFT, J., concurring: Arguably, the majority opinion

treats all “assessment records” as if they are the same, and

states overly broadly (majority op. p. 8) that “Section

6330(c)(1) does not require the Appeals officer to give the

taxpayer a copy of the verification that the requirements of any

applicable law or administrative procedure have been met.” The

quoted language is susceptible of being read to mean that Appeals

officers need not give or show to taxpayers copies of

computerized transcripts of account or Forms 4340.

Surely, we need not so hold in this case. Petitioner is not

making that argument. At the Appeals hearing herein, the Appeals

officer had a copy of the computerized transcript of account or

Forms 4340 relating to petitioner, and nothing in the opinion

suggests that the Appeals officer refused to provide petitioner

with a copy of those specific documents.1

1 Repeatedly, in connection with the Appeals hearing and the litigation herein, petitioner insisted that he be provided not with a transcript of account or a Form 4340, but rather with a Form 23C and with the Summary Record of Assessment “as provided for in sec. 301.6203-1, Proced. & Admin. Regs.” At the Appeals hearing, petitioner was not interested in obtaining from respondent a copy of the transcript of account or the Form 4340. Like many other tax protesters, petitioner does not regard a computerized transcript of account or a Form 4340 as satisfying either the verification requirements of sec. 6330(c)(1) or the documentation provisions of sec. 301.6203-1, Proced. & Admin. Regs. E.g., Lunsford v. Commissioner, 117 T.C. 183, 187-189 (2001); Davis v. Commissioner, 115 T.C. 35, 40-41 (2000). - 12 -

As we noted in Davis v. Commissioner, 115 T.C. 35, 41

(2000), procedures in collection hearings under section 6330 were

intended by Congress to be handled in a manner similar to

procedures used in traditional Appeals hearings. For years, as

far as I know without exception and long before enactment of

sections 6320 and 6330, respondent’s audit and Appeals

representatives, in all collection contexts, have provided to

taxpayers copies of transcripts of account and of Forms 4340

relating to the taxpayers. I hope that this opinion will not be

read to suggest that such documents, easily and routinely

obtained by respondent’s collection personnel and by respondent’s

Appeals officers, need no longer be made available to taxpayers

and to their representatives, particularly in collection

contexts. The new collection procedures under sections 6320 and

6330 should not be interpreted to change the routine availability

to taxpayers from respondent's representatives of transcripts of

account and of Forms 4340.

In light of comments made in Judge Foley’s dissenting

opinion regarding the relationship of the verification

requirements of section 6330(c)(1) with taxpayers’ rights under

section 6203 (and the related regulations) to obtain from

respondent a copy of the “record of the assessment”, some further

comments are appropriate regarding those two quite different - 13 -

statutory provisions. In collection hearings, respondent has

certain specified verification requirements under section

6330(c)(1) relating to proposed collection activity. We held in

Davis v. Commissioner, supra at 41, that, absent irregularities,

the verification requirement with regard to the existence of an

assessment (an “applicable” administrative procedure) is

satisfied if the Appeals officers obtain Forms 4340 or

transcripts of account which corroborate the relevant assessment

information regarding the taxpayers.

Under section 6203, taxpayers have a right to request and to

receive a copy of “the record of assessment”, and if not

delivered to the taxpayers by respondent, taxpayers may have a

right to sue respondent under the Freedom of Information Act,

5 U.S.C. sec. 552 (2001), and section 601.702(c)(11), Statement

of Procedural Rules, to require respondent to provide the

documents requested. See, e.g., Dickstein v. IRS, 846 F.2d 1382

(9th Cir. 1988). In my opinion, that right of taxpayers under

section 6203 is not part of respondent’s verification

requirements under section 6330(c)(1).

Further consideration of other provisions of section 6330

buttresses this analysis. It is helpful to look closely at the

specific language not only of section 6330(c)(1), but also of

section 6330(c)(2) and (3). Section 6330(c)(1) imposes the - 14 -

affirmative verification requirements on respondent with regard

to “applicable law or administrative procedure”. The

verification requirements are independent of any issue raised by

taxpayers. In this case, any holding that respondent has not

satisfied that duty would be inconsistent with Davis v.

Commissioner, supra.

Section 6330(c)(2) then provides that taxpayers may raise at

collection hearings any “relevant” issue. It does not say that

taxpayers may raise “any” issue or that the Appeals officers

should guess as to what issues the taxpayers might have raised.

Section 6330(c)(3) provides similar, express language

limiting the scope of collection hearings. Section 6330(c)(3)(B)

states that Appeals officers need only consider the “issues

raised” by taxpayers, and section 6330(c)(3)(C) states that only

“legitimate” concerns of taxpayers need be taken into account in

considering the need for efficient collection action.

Accordingly, and particularly where taxpayers are making tax

protester arguments, in collection hearings under section 6330(b)

and in subsequent court proceedings, only issues that are

actually raised by taxpayers and that constitute relevant,

legitimate, and good faith issues need be considered by Appeals

officers and by the courts.

The referenced statutory language suggests strongly to me, - 15 -

and I would so hold, that issues not raised, as well as tax

protester issues, need not be considered by Appeals officers in

collection hearings under section 6330(b) and that tax protester

issues may and should be summarily dismissed by the courts.

Further, Appeals officers and the courts need not speculate about

what issues taxpayers might have raised were they not tax

protesters or were they represented by other lawyers.2

Petitioner herein is a flagrant tax protester. Petitioner

did not file his 1990-96 income tax returns until 1997. On the

late-filed tax returns petitioner reflected no financial

information. Petitioner claimed his wages were not income. At

the evidentiary hearing before the Court, petitioner asserted:

“Since income taxes are based on self assessment, under Code

section 6201, I, alone, can determine what I owe”.

At the Appeals hearing and at the hearing before the Tax

Court in this case, petitioner raised no relevant, legitimate, or

good faith issue, and we have no business speculating as to

whether petitioner may ever raise any such issue. The maxim,

“Justice delayed is justice denied”, applies not only to cases

eventually decided in favor of taxpayers but also to cases to be

2 In the final regulations under sec. 6330, the position is taken that taxpayers may raise in court only issues that actually were raised by the taxpayers at the Appeals hearings. T.D. 8979, 2002-6 I.R.B. 466; T.D. 8980 Q&A-F5, 2002-6 I.R.B. 477, 487. - 16 -

decided in favor of respondent, particularly those involving a

postponement of tax collection.

Respectively, in my opinion, arguments made by taxpayers in

administrative and court hearings under sections 6320 and 6330

that implicate only frivolous arguments and that implicate the

postponement of the collection of taxes owed, should be dealt

with by respondent’s Appeals Office and by this Court summarily

and decisively. - 17 -

HALPERN, J., concurring: I agree with the majority that, if

in determining to proceed with collection, respondent erred in

informing petitioner that all applicable laws and administrative

procedures had been met, such error was harmless error. I write

separately to express my views as to why the majority is correct.

I. Introduction

Petitioner requested and received a so-called collection due

process hearing. At that hearing, the Appeals officer was

required to obtain verification that the requirements of any

applicable law or administrative procedure had been met. Sec.

6330(c)(1). Following the hearing, the Appeals officer informed

petitioner that all applicable laws and administrative procedures

had been met and that collection from petitioner of his tax

liability for 1990 through 1997 would proceed. Petitioner

contends that he was entitled to receive assessment records under

section 6203.1 The majority finds:

The Appeals officer did not give petitioner a copy of the record of assessment at or before the hearing as

1 Sec. 6203 provides:

SEC. 6203. METHOD OF ASSESSMENT.

The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment. [Emphasis added.] - 18 -

petitioner had requested. Respondent gave petitioner copies of the Forms 4340 prior to the trial in this case. The Forms 4340 that respondent gave petitioner before trial showed that the amounts at issue were properly assessed, and petitioner did not show at trial any irregularity in the assessment procedure that would raise a question about the validity of the assessments. * * * Petitioner was not prejudiced in any way by the fact that he first received copies of those records after the section 6330 hearing. * * * [Majority op. p. 9; emphasis added.]

As will be shown, a person seeking judicial review of agency

actions bears the burden of demonstrating prejudice from any

error. Since petitioner did not show prejudice, the “rule of

prejudicial error” is applicable, and petitioner is entitled to

no relief.

II. Administrative Procedure Act

I have previously stated my belief that various provisions

of the Administrative Procedure Act, 5 U.S.C. secs. 551-559, 701-

706 (1994) (hereafter, sections of which are cited as 5 U.S.C.),

inform our authority under section 6330(d)(1)(A) to review a

determination made by an Appeals officer pursuant to section

6330(c)(3). Lunsford v. Commissioner, 117 T.C. 159, 165, 167-168

(2001) (Halpern, J., concurring).

Among the applicable APA provisions is 5 U.S.C. sec. 706,

which, in pertinent part, provides:

Scope of review

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and - 19 -

statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall--

(1) compel agency action unlawfully withheld or unreasonably delayed; and

(2) hold unlawful and set aside agency action, findings, and conclusions found to be--

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

* * * * * * *

(D) without observance of procedure required by law;

In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error. [Emphasis added.]

The “rule of prejudicial error” (otherwise the doctrine of

harmless error), as applied to an administrative action, provides

that the reviewing court shall disregard procedural errors unless

the complaining party was prejudiced thereby. As recently

summarized by the Court of Appeals for the First Circuit:

The doctrine of harmless error is as much a part of judicial review of administrative action as of appellate review of trial court judgments. Indeed, the Administrative Procedure Act, 5 U.S.C. § 706, says that in reviewing agency action, the court “shall” take due account of “the rule of prejudicial error,” i.e., whether the error caused actual prejudice. And while many of the decisions involve harmless substantive mistakes, no less an authority than Judge Friendly [in Kerner v. Celebrezze, 340 F.2d 736, 740 (2d Cir. 1965)] has applied the harmless error rule to procedural error, as has the circuit [Court of Appeals for the - 20 -

District of Columbia Circuit] that most often reviews agency action. [Save Our Heritage, Inc. v. F.A.A., 269 F.3d 49, 61 (1st Cir. 2001); fn. ref. omitted.]

The Court of Appeals added:

Obviously, a court must be cautious in assuming that the result would be the same if an error, procedural or substantive, had not occurred, and there may be some errors too fundamental to disregard. But even in criminal cases involving constitutional error, courts may ordinarily conclude that an admitted and fully preserved error was “harmless beyond a reasonable doubt.” Agency missteps too may be disregarded where it is clear that a remand “would accomplish nothing beyond further expense and delay.” [Id. at 61–62; emphasis added; citations omitted.]

The party seeking judicial review of an agency action bears

the burden of demonstrating prejudice from any error. DSE, Inc.

v. United States, 169 F.3d 21, 31 (D.C. Cir. 1999) (“Under the

APA, we will not set aside agency action unless the party

asserting error can demonstrate prejudice from the error”

(internal quotation marks and brackets omitted)).2

It is no bar to application of the doctrine of harmless

error that the agency error complained of is the omission of a

statutory prerequisite. See, e.g., Hydro Engg., Inc. v. United

2 In certain circumstances, sec. 7491(a) imposes on the Commissioner the burden of proof in connection with factual issues relevant to determining the liability of the taxpayer for any income, estate, or gift tax. See sec. 7491(a)(1). Even if sec. 7491(a) is applicable to the determination of whether petitioner has demonstrated prejudice, petitioner has failed to introduce credible evidence of prejudice and, thus, must carry the burden of proof. See sec. 7491(a)(1). - 21 -

States, 37 Fed. Cl. 448, 477 (1997) (“The standard of review for

the denial of a procedural right at the agency level, even one

that is statutory, is harmless error.” (Emphasis added.)). The

reviewing court must consider whether deviation from the

requirements of the statute would affect the interests that the

statute is designed to protect and must take into account the

general principle that public rights should not be prejudiced

because of immaterial errors on the part of public servants.

Intercargo Ins. Co. v. United States, 83 F.3d 391, 395 (Fed. Cir.

1996) (citing Brock v. Pierce County, 476 U.S. 253, 260 (1986),

in which the Court said: “We would be most reluctant to conclude

that every failure of an agency to observe a procedural

requirement voids subsequent agency action, especially when

important public rights are at stake.”).

III. Discussion

Section 6203 provides that, on request of the taxpayer, the

Secretary shall furnish the taxpayer a copy of the record of

assessment. Section 6203 does not provide any remedy for the

Secretary’s failure to comply. In United States v. James Daniel

Good Real Prop., 510 U.S. 43, 63 (1993), in connection with

agency disregard of statutorily imposed timing requirements, the

Supreme Court stated: “We have held that if a statute does not

specify a consequence for noncompliance with statutory timing

provisions, the federal courts will not in the ordinary course

impose their own coercive sanction.” The Court relied on United - 22 -

States v. Montalvo-Murillo, 495 U.S. 711, 717 (1990) (failure to

comply with Bail Reform Act's prompt hearing provision) for the

following proposition: “There is no presumption or general rule

that for every duty imposed upon the court or the Government and

its prosecutors there must exist some corollary punitive sanction

for departures or omissions, even if negligent.” See also Diaz

v. Dept. of the Air Force, 63 F.3d 1107, 1109 (Fed. Cir. 1995)

(“An agency’s violation of a statutory procedural requirement

does not necessarily invalidate the agency action, especially

where Congress has not expressed any consequences for such a

procedural violation.”).

In effect, section 6330(c)(3)(A) provides that, prior to

making his determination to proceed with collection, an Appeals

officer shall obtain verification that all applicable laws or

administrative procedures have been met. See sec. 6330(c)(1),

(3)(A). As Judges Foley’s and Swift’s separate opinions in this

case show, it is debatable whether section 6203 is an applicable

law. Assuming that it is, however, the majority has concluded

that petitioner was not prejudiced in any way by the delay in

providing him with the required record. The Appeals officer’s

verification that all applicable laws had been met may have been

in error; nevertheless, the majority has, in effect, concluded

that it was harmless error. Given the lack of a specific remedy - 23 -

in section 6203 and respondent’s eventual compliance with the

statute (without demonstrable prejudice to petitioner), I agree

with the majority’s conclusion: “Requiring the Appeals officer

to provide petitioner with a second copy of petitioner’s Forms

4340 at this time would [needlessly] delay disposition of this

case.” Majority op. p. 9.

IV. Conclusion

If the Appeals officer committed error at all, it was

harmless. Petitioner has failed to show that the Appeals

officer’s determination would have differed in the slightest if

petitioner had been provided the assessment record prior to or at

the Appeals hearing. The majority is correct.

WHALEN and THORNTON, JJ., agree with this concurring opinion. - 24 -

BEGHE, J., concurring: The majority acknowledge that

section 6203 requires the Secretary, upon request of the

taxpayer, to furnish the taxpayer a copy of the record of the

assessment but observe that neither section 6330(c)(1) nor the

regulations thereunder require the Appeals officer to furnish

“the taxpayer a copy of the verification that the requirements of

any applicable law or administrative procedure have been met.”

Majority op. p. 8. Nor, I would add, does section 6330(c)(1) by

its terms require the Appeals officer to furnish a copy of the

record of the assessment at the hearing. However, as the dissent

points out, it is difficult to see how the Appeals officer could

have verified that the requirements of all applicable laws had

been met when respondent had not complied with section 6203.

In any event, it should be standard procedure in collection

cases for the Appeals officer, no later than the commencement of

the hearing, to furnish the taxpayer a Form 4340 confirming the

assessment. In so doing, the Appeals officer will provide the

taxpayer minimum assurance that the amounts claimed by the

Service in the lien or levy proceeding notice are due and owing.

By furnishing the taxpayer a Form 4340 at or before the hearing,

the Service will remove any excuse of the taxpayer for not coming

to grips with the relevant issues described in section

6330(c)(2).

In the case at hand, the Appeals officer’s failure to

furnish the taxpayer a Form 4340 at or before the hearing was - 25 -

harmless error. As the majority correctly hold, no purpose would

be served by remanding this case for a hearing when the only

defect was the Appeals officer’s failure to provide a document

that has now been provided, and which conclusively establishes

the obligation that the Service seeks to enforce.

Because petitioner has already shown a penchant for causing

delay and taking frivolous and groundless positions, this is not

an appropriate case for imposing any sanction on respondent for

delay in furnishing the Form 4340. However, a taxpayer who could

show that he suffered genuine harm as a result of the Service’s

delay in furnishing the Form 4340 should be entitled to a remedy.

Cf. Shea v. Commissioner, 112 T.C. 183, 207-209 (1999). For

example, a taxpayer who shows that respondent’s delay in

furnishing Form 4340 caused the taxpayer to incur additional

interest, and that no significant aspect of the delay can be

attributed to the taxpayer, might be entitled to an abatement of

interest under section 6404(e) from the date of the

administrative hearing until the Service furnishes the taxpayer

Form 4340. By providing evidence of the assessment at or before

the hearing as a matter of course, the Service satisfies section

6203, and avoids unnecessary delay and expense and any possible

sanction.

I dissented in dismay in Johnson v. Commissioner, 117 T.C. - 26 -

204, 218 (2001), from the Court’s continued abstention from

taking jurisdiction in collection disputes over the $500 section

6702 frivolous return penalty. Our decision in Johnson required

that the case be dismissed, entitling a taxpayer patently seeking

delay to achieve his goal by refiling in the District Court. I

concur that the Johnson precedent requires us to dismiss the

portion of the case at hand that relates to the frivolous return

penalties. This will allow petitioner to refile the frivolous

return penalty issue for all years (1990-1997) in the District

Court, even as collection of the assessed deficiencies in

petitioner’s income tax, additions to tax, and interest for the

years 1992-1997, goes forward. The resultant splitting of what

should have been and remained one collection proceeding will

entail an absurd waste of time and other resources.

I renew my plea for congressional enactment of an explicit

grant of jurisdiction to this Court to provide one-stop shopping

in all cases under sections 6320 and 6330. A possible model is

the amendment of section 6214(a) by the Tax Reform Act of 1986,

Pub. L. 99-514, sec. 1554(a), 100 Stat. 2754, which furnished

jurisdiction to the Tax Court to review the Commissioner’s

determination to collect the addition to tax under section

6651(a)(2). See Downing v. Commissioner, 118 T.C. ,

(2002) (slip op. at 7). - 27 -

LARO, J., concurring in result: The majority holds that

“respondent’s determination to proceed with collection of the tax

liabilities assessed against petitioner for those [1992-1997]

years was not an abuse of discretion.” Maj. op. p. 10. On the

basis of this Court’s opinion in Lunsford v. Commissioner,

117 T.C. 183 (2001) (Lunsford II), a decision with which I

dissented and continue to disagree, but for which I shall

respectfully follow as the view of this Court, I agree with the

majority’s holding.1 As was true in Lunsford II, petitioner has

failed to advance in this proceeding any bona fide argument that

makes it “either necessary or productive to remand this case to

IRS Appeals to consider”. Id. at 189. A holding for respondent

is therefore appropriate.

I also write to clarify my understanding of the Court’s

rejection of petitioner’s argument that the Appeals officer

1 I note in passing, however, that Lunsford II appears to have been sapped of some of its vitality by the Treasury Department’s recent release of final regulations under sec. 6330. The majority in Lunsford II did not require the Office of Appeals (Appeals) to conduct a face-to-face collection due process (CDP) hearing with the taxpayers even though the taxpayers had alleged in their petition that they wanted such a face-to-face hearing and that the absence of a face-to-face hearing deprived them of their right to present their case. Lunsford v. Commissioner, 117 T.C. 183, 191 (2001) (Laro, J., dissenting). Whereas the final regulations under sec. 6330 observe that a CDP hearing need not be held face-to-face, the regulations indicate that the taxpayer may demand that a CDP hearing be scheduled face-to-face. The regulations mandate that a taxpayer who requests a face-to- face CDP hearing “must be offered an opportunity for a hearing at the Appeals office closest to the taxpayer’s residence or, in the case of a business taxpayer, the taxpayer’s principal place of business.” Sec. 301.6330-1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs. - 28 -

failed to verify that the requirements of any applicable law or

administrative procedures had been met. Maj. op. p. 8. As was

true here, and as was true in Davis v. Commissioner, 115 T.C. 35,

41 (2000), the case upon which the majority relies to reject that

argument, the Court did not hold that an Appeals officer’s

reliance on Form 4340, Certificate of Assessments and Payments,

was sufficient to meet section 6330(c)(1)’s requirement that “The

appeals officer shall at the hearing obtain verification from the

Secretary that the requirements of any applicable law or

administrative procedure have been met.” In Davis v.

Commissioner, supra at 40-41, and as was true here, majority op.

p. 8, the narrow holding of the Court was that an Appeals officer

may at the hearing rely on Form 4340 to verify that the taxes in

question were assessed.

The fact that Form 4340 is insufficient compliance with

section 6330(c)(1) in its entirety is seen by a plain reading of

the relevant legislative history. The Senate Finance Committee

report provides that

During the hearing, the IRS is required to verify that all statutory, regulatory, and administrative requirements for the proposed collection action have been met. IRS verifications are expected to include (but not be limited to) showings that:

(1) the revenue officer recommending the collection action has verified the taxpayer’s liability; - 29 -

(2) the estimated expenses of levy and sale will not exceed the value of the property to be seized;

(3) the revenue officer has determined that there is sufficient equity in the property to be seized to yield net proceeds from sale to apply to the unpaid tax liabilities; and

(4) with respect to the seizure of the assets of a going business, the revenue officer recommending the collection action has thoroughly considered the facts of the case, including the availability of alternative collection methods, before recommending the collection action. [S. Rept. 105-174, at 68 (1998), 1998-3 C.B. 537, 604.2]

Form 4340 simply does not meet each of these verification

requirements. Form 4340 was sufficient both here and in Davis

because the only irregularity alleged as to the verification

requirement concerned the proper assessment.

VASQUEZ and GALE, JJ., agree with this concurring in result opinion.

2 The fact that this quoted text relates solely to the verification requirement of sec. 6330(c)(1) is seen not only by reading the quoted text but by reading the text that appears immediately thereafter. That text, which relates to sec. 6330(c)(2), provides:

The taxpayer (or affected third party) is allowed to raise any relevant issue at the hearing. Issues eligible to be raised include (but are not limited to): (1) challenges to the underlying liability as to existence or amount; (2) appropriate spousal defenses; (3) challenges to the appropriateness of collection actions; and (4) collection alternatives, which could include the posting of a bond, substitution of other assets, an installment agreement or an offer-in-compromise. [S. Rept. 105-174, at 68 (1998), 1998-3 C.B. 537, 604.] - 30 -

FOLEY, J., dissenting: In the Internal Revenue Service

Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,

sec. 3401, 112 Stat. 746, Congress enacted sections 6320 and 6330

to provide safeguards for persons subject to collection actions.

Sections 6320 and 6330 generally provide that respondent cannot

proceed with collection until the taxpayer has been given notice

and the opportunity for an Appeals Office hearing. See sec.

6330(a)(1), (b)(1), (e)(1). “In the case of any hearing

conducted under * * * [section 6330] the appeals officer shall at

the hearing obtain verification from the Secretary that the

requirements of any applicable law or administrative procedure

have been met.” Sec. 6330(c)(1).

Petitioner contends that respondent’s verification was

incorrect because respondent did not, at the section 6330

hearing, provide him with proof of assessments. I agree.

Despite respondent’s purported verification that all statutory or

administrative procedures were met, respondent did not satisfy

section 6203's requirement that the Secretary provide a copy of

the record of assessment (e.g., Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters (Form 4340))

to the taxpayer upon his request. Accordingly, respondent’s

verification was erroneous.

Section 6203 provides that “The assessment shall be made by

recording the liability of the taxpayer in the office of the

Secretary in accordance with rules or regulations prescribed by - 31 -

the Secretary. Upon request of the taxpayer, the Secretary shall

furnish the taxpayer a copy of the record of the assessment.”

The majority choose not to decide “whether * * * the second

sentence of section 6203 is an ‘applicable law or administrative

procedure’ referred to in section 6330 (c)(1)”. Majority op. p.

9. Section 6203, in its entirety, is such a law. Assessment is

an integral part of the collection process, and the method by

which respondent makes an assessment is prescribed in section

6203. In addition, regulations promulgated by respondent provide

that “If the taxpayer requests a copy of the record of

assessment, he shall be furnished a copy of the pertinent parts

of the assessment which set forth the name of the taxpayer, the

date of assessment, the character of the liability assessed, the

taxable period, if applicable, and the amounts assessed.” Sec.

301.6203-1, Proced. & Admin. Regs. Furnishing Form 4340 to the

taxpayer satisfies the requirements of section 6203. See, e.g.,

Huff v. United States, 10 F.3d 1440, 1445 (9th Cir. 1993).

Respondent, however, failed to adhere to section 6203 and section

301.6203-1, Proced. & Admin. Regs. Thus, the Appeals officer

incorrectly determined that the requirements of applicable laws

were met. See sec. 6330(c)(1).

Prior to the section 6330 hearing, respondent did not

provide petitioner with Forms 4340. Moreover, at the hearing,

respondent did not allow petitioner to discuss the assessments. - 32 -

Thus, respondent deprived petitioner of his right to raise

relevant issues relating to the assessments. See sec.

6330(c)(2). The appropriate remedy is to have a further hearing

on this matter. The majority may wonder what “bona fide interest

would be served”. In short, the “bona fide interest” served is

compliance with the provisions of section 6330.

CHIECHI, J., agrees with this dissenting opinion.