T.C. Memo. 2015-216



                         UNITED STATES TAX COURT



        MICCOSUKEE TRIBE OF INDIANS OF FLORIDA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 20785-13L.                          Filed November 4, 2015.



      William B. McCarthy, for petitioner.

      Brandon S. Cline and Kenneth Allan Hochman, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      NEGA, Judge: The Internal Revenue Service (IRS) Appeals Office sent

petitioner a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 (notice of determination) with respect to notices of

Federal tax lien (NFTLs) and a notice of intent to levy filed to collect petitioner’s
                                          -2-

[*2] unpaid tax liabilities for tax years ended December 31, 2000 through 2005.1

The sole issue for decision is whether the Appeals Office abused its discretion by

sustaining the lien and levy actions for these years. We hold that it did not.

                                FINDINGS OF FACT

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

facts and the attached exhibits are incorporated herein by this reference. Petitioner

is a federally recognized Indian tribe whose principal office is in Florida.

Respondent assessed civil penalties under sections 6721(e) and 6722 and

liabilities reported on Form 945, Annual Return of Withheld Federal Income Tax,

for petitioner’s tax years ended December 31, 2000 through 2005.

      On April 23, 2013, respondent mailed two Letters 3172, Notice of Federal

Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (notices of lien

filing), to petitioner. The first notice of lien filing covered Form 945 liabilities for

tax years ended December 31, 2000 through 2002, and civil penalties under

sections 6721(e) and 6722 for tax years ended December 31, 2000 through 2005.

The first notice of lien filing listed the “Kind[s] of Tax” at issue with their

corresponding “Unpaid Balance[s] of Assessment”. Spaces for “6721E” taxes,


      1
        All section references are to the Internal Revenue Code (Code) in effect at
all relevant times.
                                         -3-

[*3] under their corresponding “Unpaid Balance[s] of Assessment” were left

blank. The second notice of lien filing covered Form 945 liabilities for tax years

ended December 31, 2003 through 2005. Both notices of lien filing indicated that

the NFTLs were filed on April 23, 2013, and gave petitioner until May 30, 2013,

to request a collection due process (CDP) hearing. That same day respondent

mailed Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a

Hearing (notice of intent to levy), to petitioner with respect to the same civil

penalties and Form 945 liabilities.

      Respondent filed the NFTLs on April 26, 2013, at their respective filing

locations. The NFTLs that covered “6721E” taxes had blanks under “Unpaid

Balance[s] of Assessment” like the first notice of lien filing.

      Petitioner timely mailed Forms 12153, Request for a Collection Due Process

or Equivalent Hearing (CDP requests), in response to the notices of lien filing and

the notice of intent to levy. In the CDP requests petitioner asked for an

installment agreement and withdrawal of the liens, challenged the underlying

liabilities, and asserted that the liens and the levy were premature and

counterproductive and may negatively affect petitioner’s ability to obtain

financing. Petitioner also attached a document to the CDP request in response to

the notices of lien filing outlining what it believed to be errors in the notices of
                                         -4-

[*4] lien filing and the NFTLs. Specifically, petitioner indicated that the notices

of lien filing and the NFTLs had zero balances for the “6721E” “Kind of Tax” and

that the notices of lien filing had an incorrect date of filing for the NFTLs.

      Petitioner’s CDP requests were assigned to a settlement officer (SO) with no

prior involvement with the liabilities at issue. On June 25 and July 2, 2013, the

SO mailed letters to petitioner scheduling a telephone conference for July 30,

2013, to discuss the proposed levy and liens, respectively. The letters also

outlined conference procedures and requested specific financial documentation

(e.g., loan documents, bank statements, bills, depreciation schedules, etc. for the

last three months), to be submitted timely. The letters expressly stated that the SO

could not consider collection alternatives without the requested documentation.

Petitioner did not provide any of the requested documents.

      On July 30, 2013, the SO held a telephone conference with petitioner’s

attorney. During the telephone conference petitioner’s attorney raised only the

issue of petitioner’s underlying liabilities. Petitioner’s attorney also

acknowledged that he did not have any financial information to provide. He did

not address the issue of the discrepancies on the notices of lien filing and the

NFTLs during the conference.
                                         -5-

[*5] On August 7, 2013, the Appeals Office issued the notice of determination

sustaining the lien and levy actions for petitioner’s liabilities for tax years ended

December 31, 2000 through 2005. The notice determined that petitioner had not

provided the financial information necessary to properly evaluate its request for an

installment agreement.

      On September 6, 2013, petitioner filed its petition in this Court. In the

petition, petitioner argued that the SO abused her discretion by determining that

petitioner could not challenge the underlying liabilities in the CDP hearing.

Petitioner also argued that respondent did not comply with the requirements for

filing the NFTLs and issuing the notices of lien filing and the notice of intent to

levy. Petitioner believed that the SO incorrectly determined that the collection

actions were no more intrusive than necessary.

      On March 19, 2014, respondent filed a motion for summary judgment. On

May 5, 2014, the Court granted respondent’s motion for summary judgment in

part, precluding petitioner from raising its underlying liabilities in this proceeding.

      On February 10, 2015, a trial was held in this case in Miami, Florida.

                                      OPINION

      Where the underlying tax liability is not in issue, we review the

determination of the Appeals Office for abuse of discretion. See Sego v.
                                        -6-

[*6] Commissioner, 

, 610 (2000). In reviewing for abuse of

discretion, generally we consider only arguments, issues, and other matters that

were raised at the section 6330 hearing or otherwise communicated to the Appeals

Office. Magana v. Commissioner, 

, 493 (2002); see also sec.

301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. We will reject the

determination of the Appeals Office only if the determination was arbitrary,

capricious, or without sound basis in fact or law. See Murphy v. Commissioner,

, 320 (2005), aff’d, 

(1st Cir. 2006); Freije v.

Commissioner, 

, 23 (2005). The Court determined that petitioner’s

underlying liabilities are not properly at issue. Consequently, we review the

determination of the Appeals Office solely for abuse of discretion.

      When a taxpayer requests a hearing, the Appeals Office must verify that all

legal and procedural requirements have been met with respect to an NFTL filing

and/or a proposed levy. Secs. 6320(c), 6330(c)(1). The Appeals officer must also

determine whether the proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the taxpayer that any

collection action be no more intrusive than necessary. Secs. 6320(c), 6330(c)(3).

Finally, the Appeals Office must consider any issues raised by the taxpayer at the

hearing, including appropriate spousal defenses, challenges to the appropriateness
                                         -7-

[*7] of collection actions, and offers of collection alternatives such as an

installment agreement. Secs. 6320(c), 6330(c)(2) and (3). Sustaining an NFTL

filing or a proposed levy without proper verification renders the Appeals Office’s

determination an abuse of discretion. Freije v. Commissioner, 

.

      Petitioner argues that while the date inconsistencies on the Notices of Lien

Filing themselves constitute harmless error, these inconsistencies paired with the

zero amounts for the “6721E” “Kind of Tax” on both the notices of lien filing and

the NFTLs necessitate revised notices of lien filing and NFTLs. Essentially,

petitioner argues that in the decision to sustain the proposed collection activities

the SO abused her discretion by failing to consider these inconsistencies in both

documents. Petitioner requests that we remand the case to the Appeals Office for

a further hearing to fix these issues. Alternatively, petitioner argues in its CDP

requests for withdrawal of the liens.

      Pursuant to section 6321, the Federal Government obtains a lien against “all

property and rights to property, whether real or personal” of any person liable for

Federal taxes upon demand for payment and failure to pay. See Iannone v.

Commissioner, 

, 293 (2004). The lien arises automatically on the

date of assessment and persists until the tax liability is satisfied or becomes

unenforceable by reason of lapse of time. Sec. 6322; Iannone v. Commissioner,
                                         -8-

[*8] 

. The purpose of filing an NFTL is to protect the

Government’s interest in a taxpayer’s property against the claims of other

creditors. Berkery v. Commissioner, T.C. Memo. 2011-57. Filing an NFTL

validates the Government’s lien against a subsequent purchaser, holder of a

security interest, mechanic’s lienor, or judgment lien creditor. See sec. 6323(a);

Lindsay v. Commissioner, T.C. Memo. 2001-285, aff’d, 56 F. App’x 800 (9th Cir.

2003); Stein v. Commissioner, T.C. Memo. 2004-124.

      If the Commissioner chooses to file an NFTL, he must provide the taxpayer

with written notice not more than five business days after the filing. Sec. 6320(a).

The notice of lien filing is intended to inform the taxpayer of the right to a fair

hearing relating to the NFTL. See sec. 6320(a)(3)(B), (b). Section 6320(a)(3)

provides that such notification shall inform the person in simple and nontechnical

terms of (1) the amount of the unpaid tax, (2) the right of the person to request a

hearing before an impartial officer of the Appeals Office, (3) the administrative

appeals available to the taxpayer, and (4) the provisions relating to the release of

liens on property.

      We have previously held that when the Secretary sends a notice of lien

filing to a taxpayer before the NFTL is actually recorded and the taxpayer timely

requests a CDP hearing in response to the notice, the variance between the dates
                                        -9-

[*9] constitutes at most harmless error. See Graham v. Commissioner, T.C.

Memo. 2008-129; Golub v. Commissioner, T.C. Memo. 2008-122. In fact, the

earlier notice may even benefit the taxpayer because it affords the taxpayer a

longer period in which to request a hearing. See Golub v. Commissioner, T.C.

Memo. 2008-122. Petitioner was not adversely affected by the zero balances for

section 6721(e) penalties on the notices of lien filing because the unpaid balances

for this type of penalty were included in the overall outstanding liability. Minor

defects may be overlooked where the taxpayer knows of and pursues the right to

administrative and judicial review. Gilmer v. Commissioner, T.C. Memo. 2009-

296 (difference between outstanding balance shown on notice of lien filing and

taxpayer’s actual outstanding liability was not significant enough to invalidate

NFTL); Cyman v. Commissioner, T.C. Memo. 2009-144, slip op. at 5 n.5

(incorrect assessment dates on notice of lien filing did not invalidate NFTL).

      At trial the SO testified that on the basis of her 20 years of experience at the

IRS, she believed that the notices of lien filing and the NFTLs were correct. She

testified that the automated lien system, upon which both documents were

generated, aggregated the amounts of the section 6721(e) and 6722 civil penalties

together on the lines for section 6722 penalties, rather than breaking them down

separately by Code section. Therefore, she believed the total amounts of the
                                        - 10 -

[*10] unpaid tax liabilities on both documents were correct although there were

zero balances for 6721E “Kind[s] of Tax”. She testified that if there was no

penalty due, it would not be on a notice of lien filing or an NFTL.

      A senior revenue officer for respondent also testified. The revenue officer

was responsible for monitoring the case while it was in the Appeals Office and the

IRS counsel’s office. He testified that the automated lien system generally

aggregates the balances due from the civil penalty assessments when they are for

the same tax period. Since there were section 6721(e) and section 6722 civil

penalty assessments for tax years ended December 31, 2000 through 2005, the

revenue officer believed that both penalties were aggregated and reflected under

the section 6722 “Kind of Tax” for each tax period.

      Although the zero balances for section 6721(e) penalties on the notices of

lien filing are ambiguous, the notices taken as a whole meet the requirements of

section 6320(a)(3). That is, they correctly identify the total amount of unpaid tax,

they inform petitioner of the right to request a hearing before an impartial officer

of the Appeals Office, they inform petitioner of available administrative appeals,

and they identify the provisions relating to the release of liens on property.

Consequently, they are not deficient in any legal respects. Furthermore, a remand

to the Appeals Office for a further hearing on this issue is not “necessary” and
                                         - 11 -

[*11] would not be “productive”. See Perkins v. Commissioner, 

, 71

(2007); Lunsford v. Commissioner, 

, 189 (2001).

      The validity and priority of the NFTL is not conditioned on the taxpayer’s

receiving a lien notice pursuant to section 6320. See sec. 301.6320-1(a)(2), Q&A-

A12, Proced. & Admin. Regs. An NFTL is valid if it is filed on Form 668, Notice

of Federal Tax Lien Under Internal Revenue Laws, and includes the identity of the

taxpayer, the tax liability giving rise to the lien, and the date the assessment arose.

See sec. 6323(f)(3); sec. 301.6323(f)-1(d), Proced. & Admin. Regs. If these

requirements are met, the NFTL is valid notwithstanding any other provision of

law regarding the form or content of a notice of lien, including State law. Sec.

301.6323(f)-1(d), Proced. & Admin. Regs. Here, the NFTLs identified petitioner

as the taxpayer, the sections 6721(e) and 6722 civil penalties and Form 945

liabilities that gave rise to the NFTLs, and the respective dates of assessment.

Respondent complied with the terms of section 6323(f)(3) and the underlying

regulations; thus, the NFTLs are valid. Furthermore, the NFTLs served their

proper function because they put other creditors on notice regarding the

Government’s lien.
                                          - 12 -

[*12] Consequently, we find that the ambiguities in the notices of lien filing and

the NFTLs constitute at most harmless error.2 Therefore, the SO did not abuse her

discretion in failing to consider them.

      In its CDP requests petitioner also requested withdrawal of the NFTLs.

Pursuant to section 6323(j), an NFTL may be withdrawn without full payment and

without prejudice under the following conditions: (1) the filing of the NFTL was

premature or otherwise not in accordance with administrative procedures of the

IRS; (2) the taxpayer had entered into an installment agreement under section

6159 to satisfy the tax liability for which the NFTL was imposed by means of

installment payments, unless such agreement provides otherwise; (3) withdrawal

of the NFTL will facilitate collection of the tax liability; or (4) with the consent of

the taxpayer or the National Taxpayer Advocate (NTA), the withdrawal of such

notice would be in the best interests of the taxpayer (determined by the NTA or the

taxpayer) and the United States. See Skidmore v. Commissioner, T.C. Memo.

2012-328; sec. 301.6323(j)-1, Proced. & Admin. Regs. Even when the taxpayer

has shown that the withdrawal of the NFTL will facilitate collection of the tax

      2
        We do not find that respondent’s automated lien system properly
aggregated balances due for secs. 6721(e) and 6722 civil penalty assessments for
similar tax periods on the notices of lien filing and the NFTLs. We simply hold
that this method of reporting multiple civil penalty assessments is not detrimental
to the validity of the notices of lien filing and the NFTLs.
                                        - 13 -

[*13] liability, withdrawal of the NFTL is permissive, not mandatory. Sec.

6323(j); Berkery v. Commissioner, T.C. Memo. 2011-57.

      As discussed above, we hold that the filing of the NFTLs was in accordance

with IRS administrative procedures. Furthermore, petitioner has provided no

evidence that withdrawing the lien will facilitate payment of its tax liability.

Therefore, petitioner fails to meet the first and third conditions for withdrawal.

See sec. 6323(j); sec. 301.6323(j)-1(b), Proced. & Admin. Regs. The other two

conditions for withdrawal are plainly not satisfied in this case. Therefore, we

decline to discuss them. The record amply supports respondent’s contention that

the NFTLs are necessary to protect respondent’s interests in petitioner’s property.

See Hughes v. Commissioner, T.C. Memo. 2011-294. Consequently, we reject

petitioner’s argument regarding withdrawal of the NFTLs.

      It is clear from our review of the record that the SO verified that the

requirements of applicable law and administrative procedure were followed and

that in sustaining the filing of the NFTLs and the proposed levy the SO properly

balanced “the need for the efficient collection of taxes with the legitimate concern

of * * * [petitioner] that any collection action be no more intrusive than

necessary.” See sec. 6330(c)(3). Petitioner did not raise any valid challenge to the

appropriateness of the NFTL filings and the proposed levy. Furthermore,
                                       - 14 -

[*14] petitioner did not submit the financial information necessary for the SO to

consider an installment agreement. There is no abuse of discretion when a

settlement officer declines to consider collection alternatives under these

circumstances. See Giamelli v. Commissioner, 

, 115-116 (2007);

Tucker v. Commissioner, T.C. Memo. 2014-103; Taylor v. Commissioner, T.C.

Memo. 2009-27; see also sec. 301.6330-1(e)(1), Proced. & Admin. Regs.

(“Taxpayers will be expected to provide all relevant information requested by

Appeals, including financial statements, for its consideration of the facts and

issues involved in the hearing.”). Therefore, we hold that the SO’s determination

to sustain the filing of the NFTLs and proceed with the proposed levy was not an

abuse of discretion.

      We have considered the other arguments of the parties, and to the extent not

discussed above, find those arguments to be irrelevant, moot, or without merit.

      To reflect the foregoing,


                                                Decision will be entered

                                       for respondent.