T.C. Memo. 2011-269



                      UNITED STATES TAX COURT



            JIHAD N. AND JOY A. AHMAD, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8805-07L.                 Filed November 15, 2011.



     Jihad N. and Joy A. Ahmad, pro sese.

     G. Chad Barton, for respondent.



                        MEMORANDUM OPINION


     PARIS, Judge:   This case is before the Court on a petition

for review of a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination).   See sec. 6330(d).1   Petitioners seek judicial

     1
      Unless otherwise indicated, all section references are to
                                                   (continued...)
                                 - 2 -

review of respondent’s determination to proceed with a filed lien

and proposed levy.   These collection actions concern petitioners’

outstanding Federal income tax liability for taxable year 2003.

The issues for decision are:

     (1) Whether petitioners are precluded from contesting their

underlying liability for taxable year 2003; and

     (2) whether respondent’s determination to sustain the filing

of the lien and proposed collection by levy constitutes an abuse

of discretion.

                            Background

     The parties submitted this case for decision fully

stipulated.   See Rule 122(a).   The stipulation of facts filed and

supplemented on September 14, 2009, and the attached exhibits are

incorporated herein by this reference.   Petitioners resided in

Oklahoma at the time their petition was filed.

     Petitioners filed a joint Federal income tax return for

taxable year 2003.   On December 5, 2005, respondent issued to

petitioners a notice of deficiency in which he determined a

deficiency in petitioners’ 2003 income tax and an accuracy-




     1
      (...continued)
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                               - 3 -

related penalty under section 6662(a).   Petitioners failed to

file a timely petition to contest this notice of deficiency.2

     On April 17, 2006, respondent assessed petitioners’ 2003 tax

liability on the basis of the notice of deficiency issued on

December 5, 2005.   On April 27, 2006, respondent issued to

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

Right to a Hearing advising them that he intended to levy to

collect the unpaid liability for taxable year 2003.   On May 4,

2006, respondent issued to petitioners a Notice of Federal Tax

Lien Filing and Your Right to a Hearing, reflecting that a notice

of Federal tax lien for the 2003 liability had been filed on

April 27, 2006.

     On May 23, 2006, petitioners filed Form 12153, Request for a

Collection Due Process or Equivalent Hearing.   On September 11,

2006, petitioners delivered a letter to the Oklahoma City Appeals

Office detailing their dispute regarding the underlying income

tax liability for taxable year 2003.   On November 22, 2006,

respondent’s Appeals Office sent petitioners a letter

acknowledging the receipt of petitioners’ request for a




     2
      Petitioners attempted to dispute the notice of deficiency
for taxable year 2003 in the petition filed at docket No. 8804-
07S. However, the notice of deficiency was dated Dec. 5, 2005,
and the petition was not filed until Apr. 19, 2007. Accordingly,
that case was dismissed for lack of jurisdiction on the ground
that the petition was not timely filed under sec. 6213(a).
                                 - 4 -

collection due process (CDP) hearing and scheduling a telephone

conference for December 20, 2006.

     The November 22, 2006, letter advised petitioners that they

could not dispute respondent’s determination of their underlying

liability for taxable year 2003 because they had had a prior

opportunity to do so.   The letter further stated that for the

Appeals Office to consider collection alternatives, petitioners

would be required to provide:    (1) A completed Form 433-A

Collection Information Statement for Wage Earners and Self-

Employed Individuals; (2) signed tax returns for taxable years

1996, 1997, and 2005; and (3) proof of estimated tax payments

made for taxable year 2006.   Petitioners failed to meet these

requirements.

     On December 20, 2006, a telephone CDP hearing was held

between Settlement Officer Silverhorn (SO Silverhorn) and

petitioner Jihad Ahmad.3   No collection alternatives were

discussed during this phone conference and SO Silverhorn informed

petitioners that the requirements for consideration of such

alternatives had not been met.    On March 29, 2007, SO Silverhorn

issued to petitioners a notice of determination.    On April 19,


     3
      Contemporaneous with the CDP hearing process, petitioners
were actively pursuing an audit reconsideration which indeed
substantially reduced but did not negate the outstanding assessed
balance. Consequently, SO Silverhorn was justified in proceeding
with the CDP hearing since there remained an unpaid assessed
balance due.
                                 - 5 -

2007, petitioners filed a petition with this Court for review of

SO Silverhorn’s determination.

                             Discussion

A. Standard of Review

     Under section 6321, if a person liable to pay any tax

neglects or refuses to pay the same after demand, the amount

(including any interest, additional amount, addition to tax, or

assessable penalty, together with any costs that may accrue in

addition thereto) shall be a lien in favor of the United States

upon all property, whether real or personal, belonging to such

person.    In order for a lien under section 6321 to be valid

against any purchaser, holder of a security interest, mechanic’s

leinor, or judgment lien creditor, such a lien must be filed in

accordance with the requirements of section 6323(f).    Sec.

6323(a).    A taxpayer may appeal a lien filed under section 6323

by requesting an administrative hearing with the IRS under

section 6320(b).

     Similarly, under section 6331, if a person liable to pay any

tax neglects or refuses to pay the same within 10 days after

notice and demand, it shall be lawful for the Secretary to

collect such tax by levy upon all property and rights to property

belonging to such person.    A taxpayer may appeal the proposed

levy to the IRS under section 6330 by requesting an

administrative hearing.
                               - 6 -

     When practicable, an administrative hearing for a lien will

be held in conjunction with an administrative hearing for a

proposed levy for the same taxable year.    See sec. 6320(b)(4).

If an adverse determination is reached on either issue, the

taxpayer is afforded the opportunity for judicial review of the

determination in the Tax Court pursuant to section 6330(d).

Petitioners seek review of respondent’s determination.

     Where the validity of the underlying tax liability is

properly at issue, the Court will review the matter de novo.

Davis v. Commissioner, 

, 39 (2000).    Where the

underlying tax liability is not properly at issue, the Court will

review the Commissioner’s administrative determination for abuse

of discretion.   Sego v. Commissioner, 

, 610 (2000);

Goza v. Commissioner, 

, 181-182 (2000).    An

abuse of discretion is any action that is arbitrary, capricious,

or without sound basis in law or fact.     Woodral v. Commissioner,

, 23 (1999).

     The underlying tax liability may be properly at issue at a

collection due process hearing only when the taxpayer has not

received a notice of deficiency or has not otherwise had an

opportunity to challenge the liability.    Sec. 6330(c)(2)(B).

Where the taxpayer has received a notice of deficiency, the

taxpayer must file a petition for redetermination of the notice
                                - 7 -

of deficiency within 90 days of the date such notice was mailed.

Sec. 6213(a).   Petitioners were issued a notice of deficiency on

December 5, 2005.   Petitioners do not assert that they did not

receive the notice of deficiency.    Petitioners failed to file a

petition within 90 days of this date.    Because petitioners had

forgone a prior opportunity to challenge the notice of deficiency

for taxable year 2003, the underlying liability is not properly

at issue in this case.   Accordingly, the applicable scope of

review is for abuse of discretion.

B. Abuse of Discretion

     Sections 6320 and 6330 require the Commissioner to give the

taxpayer notice of a filed lien or proposed levy and notice of

the right to a fair hearing before an impartial officer of the

IRS Appeals Office.   Secs. 6320(a) and (b), 6330(a) and (b).    At

the hearing, the taxpayer may raise appropriate spousal defenses,

challenge the appropriateness of collection actions, and offer

collection alternatives.    Sec. 6330(c)(2)(A).    Additionally, the

taxpayer may challenge the existence or amount of the underlying

tax liability only if the taxpayer did not receive a notice of

deficiency or did not otherwise have an opportunity to challenge

the underlying liability.    Sec. 6330(c)(2)(B).

     At the hearing, generally, the Appeals officer must consider

the above-stated issues raised by the taxpayer, verify that the
                                 - 8 -

requirements of applicable law and administrative procedure have

been met, and consider whether “any proposed collection action

balances the need for efficient collection of taxes with the

legitimate concern of the * * * [taxpayer] that any collection

action be no more intrusive than necessary.”    Sec. 6330(c)(3).

Underlying liability, and other section 6330(c)(2) issues, must

be raised at the Appeals hearing to be properly raised before

this Court.     Giamelli v. Commissioner, 

, 115 (2007).

     It is not an abuse of discretion for an Appeals officer to

sustain a collection action where the taxpayer fails to provide

requested information necessary to consider collection

alternatives.    See Dinino v. Commissioner, T.C. Memo. 2009-284;

Prater v. Comissioner, T.C. Memo. 2007-241; Chandler v.

Commissioner, T.C. Memo. 2005-99.    The only issue petitioners

raised at their CDP hearing was the amount of their underlying

liability for tax year 2003.    However, petitioners were precluded

from challenging their 2003 liability as they had forgone a prior

opportunity to do so.    See sec. 6330(c)(2)(B).4




     4
      The Court recognizes that petitioners have achieved
substantial reduction of their outstanding liability through
audit reconsideration. The Court further recognizes that at the
time of trial petitioners continued to seek further abatements of
accrued interest. However, these considerations are outside the
scope of the Court’s jurisdiction in review of the CDP
determination process.
                              - 9 -

     Petitioners did not present any spousal defenses or

challenge the appropriateness of the proposed collection actions.

Petitioners also failed to provide SO Silverhorn with the

requested financial information necessary for him to consider any

applicable collection alternatives.    Accordingly, SO Silverhorn

did not abuse his discretion in sustaining the lien and proposed

levy actions.

     The Court has considered all of the arguments made by the

parties and, to the extent they are not addressed herein, they

are considered unnecessary, moot, irrelevant, or without merit.

     To reflect the foregoing and respondent’s concessions,


                                           An appropriate decision

                                      will be entered.