T.C. Summary Opinion 2009-31



                     UNITED STATES TAX COURT



          KENYETTA EUYVONNE GILES HAYNES, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 7337-07S, 7341-07S.    Filed March 5, 2009.



     Kenyetta Euyvonne Giles Haynes, pro se.

     Karen Lynne Baker, for respondent.



     GOLDBERG, Special Trial Judge:    These related cases were

heard pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect at the time the petitions were filed.

Pursuant to section 7463(b), the decisions to be entered are not

reviewable by any other court, and this opinion shall not be

treated as precedent for any other case.   Unless otherwise

indicated, subsequent section references are to the Internal
                               - 2 -

Revenue Code, and all Rule references are to the Tax Court Rules

of Practice and Procedure.

     These cases challenge the outcome of a January 19, 2007,

Internal Revenue Service (IRS) Appeals collection hearing

addressing the filing of a Federal tax lien pertaining to

petitioner’s unpaid Federal income tax liabilities for 1996,

1997, and 1999.   As a result of the hearing on January 31, 2007,

the IRS sent two notices of determination sustaining the lien,

one notice combining 1996 and 1997 and the other for 1999.

Petitioner timely filed petitions for 1996 and 1997 at docket No.

7337-07S and for 1999 at docket No. 7341-07S.   After this Court

granted respondent’s motion to dismiss as to 1997 for mootness,

the issues remaining for decision are:    (1) Whether respondent is

entitled to a summary adjudication with respect to sustaining the

lien for 1996, (2) whether respondent abused his discretion in

sustaining the lien for 1999, and (3) whether petitioner can

raise the issue of her underlying income tax liability for 1999.

                             Background

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

addition, some undisputed facts are contained in the declaration

of the settlement officer in support of respondent’s motion for

summary judgment at docket No. 7337-07S, and likewise they are

also found.   The stipulation of facts, the attached exhibits, and

the declaration of the settlement officer are incorporated herein
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by this reference.   Petitioner resided in Illinois when she filed

her petitions.

     Petitioner’s tax liabilities arose in the following manner.

With respect to 1996, petitioner timely filed her 1996 Federal

income tax return reporting an overpayment of $4,072.   The IRS

applied $2,479 of the overpayment to petitioner’s unpaid income

tax liabilities for 1991, 1992, and 1993 and refunded the

remaining $1,593.

     Regarding 1997, petitioner timely filed her 1997 income tax

return reporting an overpayment of $4,096, which the IRS

refunded.

     The IRS examined petitioner’s 1996 and 1997 returns and

mailed a notice of deficiency dated September 22, 2000, to

petitioner.   The notice determined deficiencies in petitioner’s

Federal income taxes of $4,704 and $4,582 for 1996 and 1997,

respectively, and accuracy-related penalties pursuant to section

6662(a) for 1996 and 1997 of $2.80 and $198.40, respectively.

Petitioner did not file a petition with this Court seeking

redetermination of the deficiencies and the accuracy-related

penalties.

     Thereafter, on February 19, 2001, respondent assessed taxes,

penalties, and interest for 1996 and 1997.   The IRS sent

petitioner levy collection notices during 2001 and 2003

attempting to collect the unpaid income tax liabilities for 1996
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and 1997.   On or about October 23, 2003, petitioner entered into

an installment agreement for 1996 and 1997 with the IRS.     From

October 2003 to August 2005 petitioner made installment payments

of usually $200 but occasionally $176, and the IRS credited the

payments to petitioner’s 1996 and 1997 unpaid income tax

liabilities.1

     With regard to 1999, on or about April 15, 2000, petitioner

timely filed an extension that extended the due date of her 1999

income tax return until August 15, 2000.     However, petitioner did

not meet the extended filing date.     On April 28, 2005, the IRS

prepared a substitute 1999 income tax return based on Form W-2,

Wage and Tax Statement, and Forms 1099-MISC, Miscellaneous

Income, that respondent had received.     Respondent calculated

income tax of $35,717 before credit for Federal income tax

withholding.

     On July 19, 2005, the IRS mailed a notice of deficiency to

petitioner determining a deficiency in income tax of $35,717 for

1999, together with the following additions to tax:     Section

6651(a)(1) (failure to file a return), section 6651(a)(2)

(failure to pay tax shown on return), and section 6654 (failure

to pay estimated income tax) of $5,816.70, $6,463, and $178,


     1
      The record is silent as to why petitioner stopped making
installment payments after August 2005 with unpaid balances
remaining for 1996 and 1997. However, as explained below,
respondent sent petitioner a notice of deficiency for 1999 in
July 2005.
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respectively.   Respondent could not produce either a copy of the

notice of deficiency mailed to petitioner or a certified mailing

list showing the mailing of a notice of deficiency to petitioner.

However, at trial the Court received into evidence a certified

Form 4340, Certificate of Assessments, Payments, and Other

Specified Matters, showing that respondent mailed to petitioner

the notice of deficiency on July 19, 2005.   Petitioner did not

petition this Court for redetermination of the deficiency and the

additions to tax.   Consequently, on December 26, 2005, respondent

assessed the above amounts and accrued interest of $13,157.31.

     Earlier, on December 12, 2005, the IRS office in Chicago,

Illinois, received petitioner’s 1999 joint income tax return

reporting income tax of $21,684 before withholding credit, which

is $14,033 less than the income tax that the IRS calculated on

the substitute income tax return.   Petitioner’s tax preparer

dated the return May 2, 2001.   Petitioner and her husband also

signed the return, but they did not date their signatures.

     As noted above, on January 31, 2006, respondent filed a

Federal tax lien for petitioner’s unpaid income tax liabilities

of $2,794.09, $5,050.18, and $52,477.87 for 1996, 1997, and 1999,

respectively.   On February 1, 2006, respondent sent petitioner a

notice of Federal tax lien filing, which notified petitioner of

the lien filing and her right to a collection hearing under

section 6320 to appeal the collection action and to discuss
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payment method options.   Petitioner timely submitted Form 12153,

Request for a Collection Due Process Hearing, requesting a

hearing to appeal the notice of Federal tax lien pertaining to

all 3 years, 1996, 1997, and 1999.

     In the ensuing weeks petitioner conducted telephone

discussions with respondent to discuss her 1999 tax liability.

The IRS accepted petitioner’s late-filed 1999 joint income tax

return which resulted in the IRS’s abating $14,033 of income tax

liability, which in turn caused proportional abatements of

additions to tax under section 6651(a)(1) and (a)(2) of $3,157.43

and $3,508.25, respectively.   Respondent also abated $6,822.79 in

interest.

     With regard to petitioner’s request for a hearing,

respondent assigned the case to a settlement officer, who

scheduled an appointment for a collection hearing on November 21,

2006, in Chicago.

     Petitioner filed 2004 and 2005 joint Federal income tax

returns claiming overpayments on both.   On or about July 17,

2006, respondent applied $3,717 and $1,698 of petitioner’s 2004

and 2005 overpayments, respectively, to the unpaid tax liability

for 1997 which reduced petitioner’s 1997 liability to zero.

     Petitioner arrived on November 20, 2006, at the IRS Chicago

Appeals Office 1 day before the collection hearing, and spoke to

the acting Appeals team manager.   Petitioner explained that she
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was unable to keep the conference appointment scheduled for the

next day.   The IRS rescheduled the hearing for January 19, 2007.

     In the interim, on December 13, 2006, petitioner faxed to

the IRS an amended joint income tax return for 1999 reporting

less income for 1999.

     On January 19, 2007, petitioner met face to face with the

settlement officer and an assisting Appeals officer who attended

to provide technical assistance.    Neither officer had any prior

involvement in the case before petitioner’s request for a

collection hearing.

     At the hearing, petitioner raised as an issue the underlying

income tax liability for 1999.    Petitioner’s argument is as

follows.    Petitioner’s father died in 1998 owning two individual

retirement accounts (IRAs) totaling $50,146 with petitioner as

his designated beneficiary.   During 1999 petitioner requested

distributions of the entire $50,146, and she arranged transfer of

the funds into her checking account.     Petitioner kept or spent a

portion of the funds for herself and sent a portion to her

brother and mother.   On her 1999 tax return petitioner included

the $50,146 in income.   However, petitioner now maintains that

the amounts she sent to relatives should not be includable as

income, thereby reducing the 1999 income she previously reported.

This argument is the basis for petitioner’s preparation of an

amended income tax return for 1999.
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     The assistant Appeals officer rejected petitioner’s argument

regarding the noninclusion of the IRA income distributions.

Petitioner did not discuss any matters pertaining to the lien,

and she did not raise collection alternatives or any other

issues.   The hearing then came to a close.

     In two separate but otherwise identical notices of

determination dated February 23, 2007, one for 1996 and 1997 and

the other for 1999, the settlement officer sustained the filing

of the lien for 1996, 1997, and 1999.   On March 29, 2007,

petitioner timely filed two separate but otherwise identical

petitions with the Court, one for 1996 and 1997 at docket No.

7337-07S and the other for 1999 at docket No. 7341-07S.    On both

petitions petitioner checked two boxes indicating the relief she

is seeking:   (1) “Petition for Redetermination of a Deficiency”,

and (2) “Petition for Lien or Levy Action”.

     However, from the record it is clear that petitioner

intended to file the petitions to contest the underlying

liability for 1999 and to argue that respondent abused his

discretion by not releasing the lien covering all 3 years.

     These cases were calendared for trial at the Court’s trial

session in Chicago beginning February 25, 2008.

     With respect to docket No. 7337-07S, on December 3, 2007,

respondent filed a motion for summary judgment pursuant to Rule

121 requesting an adjudication in respondent’s favor for 1996 and
                                - 9 -

1997.    Respondent argued specifically that petitioner did not

raise any material facts disputing that the IRS had complied with

all the procedural requirements for conducting a collection

hearing.    The declaration of the settlement officer stated that

at the collection hearing petitioner discussed only her

underlying liability for 1999 and did not propose any collection

alternatives.    In summary, respondent alleges that because no

material facts are in dispute with respect to 1996 and 1997,

respondent is entitled to a summary adjudication as a matter of

law.    The Court gave petitioner an opportunity to file a response

before trial, which she did not do.

       The cases were called from the trial calendar on February

25, 2008.    Both petitioner and respondent appeared and were

heard.    The Court heard arguments with regard to respondent’s

motion for summary judgment for 1996 and 1997 and conducted a

trial with regard to 1999.

       On April 1, 2008, petitioner filed an objection to

respondent’s motion for summary judgment regarding 1996 and 1997,

requesting that the Court deny respondent’s motion because:     (1)

Her 1997 liability is now paid in full; and (2) her unpaid

liability for 1996 has become “a material fact in dispute”

because respondent did not apply credits for overpayments to the

oldest year first; i.e., in this instance, to 1996 before 1997.
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     On April 21, 2008, respondent filed a response to

petitioner’s objection to the motion for summary judgment and

filed a motion to dismiss as to 1997 as moot because petitioner

no longer had an unpaid liability for the year and respondent

would no longer take collection action regarding 1997.    In an

order dated April 28, 2008, this Court granted respondent’s

motion to dismiss as to 1997 on the ground of mootness.

                            Discussion

     Section 6320 provides generally that the Commissioner may

not proceed with the collection of taxes by filing a Federal tax

lien until the Commissioner has given the taxpayer notice of the

filing and the opportunity for a fair hearing with an impartial

Appeals officer.   Section 6320(c) provides that for the purposes

of conducting a hearing, “subsections (c), (d) (other than

paragraph (2)(B) thereof), and (e) of section 6330 [a hearing for

a levy collection action] shall apply”.

     Section 6330(c)(1) requires that the Appeals officer obtain

verification that the Commissioner has met the requirements of

applicable laws or administrative procedures, such as timely

notice.   Section 6330(c)(2)(A) provides that the taxpayer may

raise any relevant issue related to the unpaid tax including

spousal defenses, challenges to the appropriateness of collection

actions, and alternatives to collection.   The taxpayer may also

raise challenges to the existence or amount of the underlying tax
                               - 11 -

liability, but only if he did not receive a notice of deficiency

with respect to the underlying tax liability or did not otherwise

have an opportunity to dispute that liability.     Sec.

6330(c)(2)(B); Behling v. Commissioner, 

, 576 (2002).

     Section 6330(c)(3) provides that in making a determination,

the Appeals officer must take into consideration the procedural

verifications under section 6330(c)(1) mentioned above, the

issues raised by the taxpayer, and whether the proposed

collection action properly 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.

If the taxpayer is dissatisfied with the Appeals officer’s

determination, the taxpayer may seek judicial review of the

determination, such as the review petitioner sought in these

cases.    See generally Goza v. Commissioner, 

, 179-181

(2000).

     Where the taxpayer challenges a collection hearing

determination, the Court will review the matter for abuse of

discretion.   Hoyle v. Commissioner, 131 T.C. __, __ (2008) (slip

op. at 5-6); Sego v. Commissioner, 

, 610 (2000); Goza

v. Commissioner, supra at 181-182.      To prevail under abuse of

discretion, the taxpayer must prove that the Commissioner

exercised his discretion arbitrarily, capriciously, or without
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sound basis in fact or law.    Sego v. Commissioner, supra at 610;

Woodral v. Commissioner, 

, 23 (1999).

       Respondent has moved for summary judgment for 1996.   When

the pertinent facts are not in dispute, a party may move for

summary judgment to expedite the litigation and avoid an

unnecessary and potentially expensive trial.    Fla. Peach Corp. v.

Commissioner, 

, 681 (1988).    The Court may grant

summary judgment where no genuine issue exists as to any material

fact, and where the Court may render a decision as a matter of

law.    See Rule 121(b); Sundstrand Corp. v. Commissioner, 

, 520 (1992), affd. 

(7th Cir. 1994); Zaentz v.

Commissioner, 

, 754 (1988).    The party moving for

summary judgment (in this instance, respondent) bears the burden

of showing that no genuine issue exist as to any material fact

and the Court will draw factual inferences in the manner most

favorable to the party opposing summary judgment (here,

petitioner).    New Millennium Trading, L.L.C. v. Commissioner, 131

T.C. __, __ (2008) (slip op. at 6); Dahlstrom v. Commissioner, 

, 821 (1985); Jacklin v. Commissioner, 

, 344

(1982).

       Respondent demonstrated that the settlement officer did not

have previous involvement in the case, complied fully with the

applicable requirements of sections 6320 and 6330, and reasonably

concluded that the lien was no more intrusive than necessary.
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Petitioner on the other hand brought up no new facts at the

collection hearing.   The only issue that she raised at the

hearing was her underlying liability for 1999.    She did not

discuss the lien, did not raise collection alternatives, did not

claim spousal defenses, and did not assert financial hardship.

Rule 121(d) provides that “an adverse party may not rest upon the

mere allegations or denials” but instead “must set forth specific

facts showing that there is a genuine issue for trial.”

Petitioner has simply not shown that respondent abused his

discretion.

     We hold that petitioner’s argument with respect to

respondent’s application of credits from the 2004 and 2005

overpayments to 1997 instead of 1996, raised in her objection to

respondent’s motion, is without merit.    Section 6402(a)

authorizes the Commissioner to apply overpayments against any

income tax liabilities of the taxpayer.    See sec. 301.6402-1,

Proced. & Admin. Regs. (the Commissioner may credit any

overpayment of tax against any outstanding liability that the

taxpayer making the overpayment owes); N. States Power Co. v.

United States, 

, 767 (8th Cir. 1996) (holding that

under section 6402, the Commissioner clearly may credit an

overpayment against any liability); Pettibone Corp. v. United

States, 

, 538 (7th Cir. 1994) (holding that the
                              - 14 -

statute grants the Commissioner discretion to apply overpayments

to delinquencies or to refund them to the taxpayer).

     Accordingly, drawing all factual inferences against

respondent as the moving party, we find that no genuine issue of

material fact exists that requires a trial for 1996.   We hold as

a matter of law that respondent is entitled to summary

adjudication for 1996.

     With respect to 1999, under the same rationale we find that

respondent’s determination to sustain the lien was not arbitrary,

capricious, or without a sound basis in fact or law.

     Regarding petitioner’s right to contest her 1999 underlying

tax liability, petitioner contends that she never received a

notice of deficiency for 1999.   However, when petitioner arrived

on November 20, 2006, 1 day early for the collection hearing, the

acting Appeals team manager asked petitioner whether she had

received a notice of deficiency for 1999 and petitioner stated

that she had received one.   Additionally, respondent’s certified

Form 4340 is a self-authenticating document providing sufficient

evidence that respondent mailed a notice of deficiency to

petitioner.   See United States v. Ryan, 

, 239-240

(7th Cir. 1992); Craig v. Commissioner, 

, 262 (2002);

Roberts v. Commissioner, 

, 371 (2002), affd. 

(11th Cir. 2003); Davis v. Commissioner, 

, 40

(2000).
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     Accordingly, because we find that petitioner received a

notice of deficiency for 1999 and did not timely petition the

Court for redetermination, the issue of petitioner’s underlying

liability for 1999 is not properly before the Court.   See Behling

v. Commissioner, 

.

     We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we conclude they

are without merit, irrelevant, and/or moot.

     To reflect our disposition of the issues,


                              An appropriate order and decision

                         will be entered for respondent in docket

                         No. 7337-07S, and decision will be

                         entered for respondent in docket No.

                         7341-07S.