T.C. Memo. 2020-97



                        UNITED STATES TAX COURT



                   DUY DUC NGUYEN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 6602-17L.                         Filed June 30, 2020.



      Duy Duc Nguyen, pro se.

      Cameron W. Carr, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      PUGH, Judge: This case was commenced in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320 and/or 63301


      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986, as amended and in effect for the years in issue. Rule
                                                                      (continued...)
                                        -2-

[*2] (notice of determination) sustaining a notice of federal tax lien (NFTL) that

the Internal Revenue Service (IRS) filed to secure petitioner’s unpaid Federal

income tax liabilities for 2006, 2007, and 2008.

      After concessions made by respondent at trial,2 the issues for decision are

whether: (1) petitioner may challenge his underlying tax liabilities consisting of

the income tax and a section 6662(a) penalty respondent assessed for each year in

issue, (2) petitioner owes any of the underlying tax liabilities (if he may challenge

them before this Court), and (3) the IRS Office of Appeals (IRS Appeals) abused

its discretion in sustaining the NFTL filing. For the reasons discussed below we

conclude that petitioner may not challenge his underlying tax liabilities for the




      1
       (...continued)
references are to the Tax Court Rules of Practice and Procedure.
      2
         Respondent conceded several items at trial and in his posttrial briefs
related to petitioner’s underlying tax liabilities for the years in issue. He conceded
these items because petitioner substantiated them before trial. Respondent limited
these concessions, however, on the basis of whether we would permit petitioner to
challenge his underlying tax liabilities. We observed previously in Montgomery
v. Commissioner, 

, 10 (2004), that “the substantive and procedural
protections contained in sections 6320 and 6330 reflect congressional intent that
the Commissioner should collect the correct amount of tax”. (Emphasis added.)
Accordingly, we expect that respondent’s collection efforts will reflect his
concessions for items petitioner substantiated before trial regardless of whether we
permit petitioner to challenge his underlying tax liabilities.
                                         -3-

[*3] years in issue and IRS Appeals did not abuse its discretion in sustaining the

NFTL filing.

                               FINDINGS OF FACT

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

facts are incorporated in our findings by this reference. Petitioner resided in

California when he timely filed his petition.

      Petitioner untimely filed Forms 1040, U.S. Individual Income Tax Return,

for 2006, 2007, and 2008 on June 8, 2009, and February 163 and February 14,

2010, respectively. For each return petitioner listed the same home address in

Fremont, California (Fremont address).

      On October 3, 2014, the IRS sent, by certified mail, a notice of deficiency

for the years in issue to petitioner at his Fremont address. The notice included

section 6662(a) accuracy-related penalties.4 An IRS certified mail list bears a U.S.

Postal Service (USPS) stamp dated October 3, 2014, and the envelope addressed




      3
       On July 29, 2009, the IRS prepared a substitute for return for petitioner’s
2007 tax year.
      4
        The record includes a Revenue Agent Report dated July 17, 2013, and a
Civil Penalty Approval Form that lists sec. 6662(a) penalties for the years in issue
and bears the group manager’s signature dated July 17, 2013.
                                        -4-

[*4] to petitioner’s Fremont address was stamped by the USPS to show that the

item was unclaimed and the USPS was unable to forward it.

      Petitioner did not petition the Court within 90 days of the mailing of the

notice of deficiency.5 On May 18, 2015, respondent assessed the deficiencies and

penalties, along with statutory interest. Respondent filed the NFTL on August 25,

2016, and mailed to petitioner, at his Fremont address, a Notice of Federal Tax

Lien Filing and Your Right to a Hearing Under IRC 6320 on September 6, 2016.

      Respondent timely received from petitioner a Form 12153, Request for a

Collection Due Process or Equivalent Hearing, on September 16, 2016. Petitioner

checked the box labeled lien “Withdrawal” as the reason he disagreed with the

filing of the NFTL and added the following explanation: “I do not owe tax.

Please find explanation below & extra page.” He also checked the box labeled

“Other” and added that “[a]fter the audit for 2006, 2007 & 2008 Personal Income

return, I was advised to submit additional Amendments, which would provide

additional proof that I do not owe tax. I’m in the process & request for additional

      5
        On February 9, 2015, the IRS sent, by certified mail, a notice of deficiency
for tax years 2009 and 2010 to petitioner and his wife at his Fremont address.
They received that notice and timely filed a petition in this Court on May 7, 2015,
challenging respondent’s determinations in the notice, which was assigned docket
No. 11908-15. On April 6, 2017, the Court entered a stipulated decision that
reflected the parties’ agreement that petitioner was not liable for any deficiency or
penalty for 2009 or 2010.
                                       -5-

[*5] time to complete & gather evidence”.6 In an attachment petitioner stated that

he was seeking guidance on the amendments and the lien and gathering supporting

documents for tax years 2009 and 2010. On October 27, 2016, petitioner

submitted Forms 1040X, Amended U.S. Individual Income Tax Return, for 2007

and 2008 (initial amended returns) to the IRS office in Fresno, California (IRS

Fresno office).

      IRS Appeals Settlement Officer Natalie Krueger (SO Krueger) was assigned

the case and reviewed computerized case transcripts on January 3, 2017.7 She sent

petitioner a letter dated January 3, 2017, scheduling a telephone hearing on

February 1, 2017, and requesting any “additional information * * * [petitioner]

wish[ed] to be considered regarding * * * [his] request for a lien withdrawal.” She

gave petitioner a deadline of January 30, 2017, to provide the additional



      6
         The IRS case history includes a note dated September 9, 2016, indicating
that petitioner’s spouse and representative holding his power of attorney, Phuong
L. Tran, wanted to know why a lien was filed when petitioner was given one year
to file amended returns. She was advised that it had been over a year since the
audit.
      7
        The computerized transcripts SO Krueger reviewed included a TXMODA
transcript, which contains current account information from the IRS master file.
TXMODA is the command that IRS employees enter into the integrated data
retrieval system (IDRS) to obtain a transcript. See Crow v. Commissioner, T.C.
Memo. 2002-149, 

, at *4 n.6. IDRS is essentially the interface
between IRS employees and its various computer systems.

information and informed him that additional time to provide information

would not be granted after the hearing was held. SO Krueger included a copy of

Publication 3598, What Should You Know About the Audit Reconsideration

Process, with the letter. She did not receive any additional information from

petitioner by the deadline or before the hearing.

      SO Krueger called petitioner on February 1, 2017, for the hearing. During

the hearing petitioner informed her that he had filed the initial amended returns,

and he requested additional time to file additional amended returns for audit

reconsideration. SO Krueger responded that she did not have access to the initial

amended returns he had submitted in October and could not consider them because

petitioner did not provide them to her.8 She further responded that she had

afforded him ample time to provide her with additional information to consider.

SO Krueger indicated to petitioner that her determination was to sustain the NFTL

filing because it was the least intrusive collection method and none of the

conditions for withdrawal pursuant to section 6323(j) existed, and she advised him

      8
        The TXMODA transcripts for 2007 and 2008 both show transaction codes
“971-CD>010” and “971-CD>013”. The former indicates that an “[a]mended
return/claim [was] forwarded to Accounts Management”, while the latter indicates
that an “[a]mended return/claim [was] forwarded to Examination”. See IRS
Document 6209, ADP and IDRS Information, 8C-37 (2017). The transcript does
not contain transaction code “971-CD>012”, which would indicate that an
“[a]mended return/claim [was] forwarded to Collection”. See

to submit the additional amended returns and additional information to the

Examination Division for audit reconsideration as soon as possible. Petitioner did

not provide SO Krueger any additional information after the hearing.

      On February 16, 2017, respondent issued the notice of determination to

petitioner at his Fremont address. Petitioner timely petitioned the Court on March

20, 2017, to challenge the notice of determination. He then submitted to the IRS

Fresno office a second Form 1040X for 2007 on April 2, 2017, and a Form 1040X

for 2008 and a second Form 1040X for 2006 on April 7, 2017 (collectively,

additional amended returns). After petitioning the Court, petitioner filed amended

petitions, including one the week before trial.

                                      OPINION

I. Standard of Review

      If underlying tax liabilities are properly at issue, the Court reviews any

determination regarding those liabilities de novo; the Court reviews all other

administrative matters for abuse of discretion. Davis v. Commissioner, 

, 39 (2000); Sego v. Commissioner, 

, 610 (2000); Goza v.

Commissioner, 

, 181-182 (2000). The phrase “underlying tax

liabilities” includes the tax deficiency, any penalties and additions to tax, and

statutory interest. Katz v. Commissioner, 

, 338-341 (2000). Abuse
                                        -8-

[*8] of discretion exists when a determination is “arbitrary, capricious, or without

sound basis in fact or law.” Murphy v. Commissioner, 

, 320 (2005),

aff’d, 

(1st Cir. 2006); see also Keller v. Commissioner, 

,

716 (9th Cir. 2009), aff’g in part T.C. Memo. 2006-166, and aff’g in part, vacating

in part decisions in related cases.

      In Keller v. 

, the Court of Appeals for the

Ninth Circuit, to which this case is appealable under section 7482(b)(1)(A), held

that review of an administrative determination is limited to the administrative

record. See also Golsen v. Commissioner, 

, 757 (1970) (holding that

we generally “follow a Court of Appeals decision which is squarely in point where

appeal from our decision lies to the Court of Appeals and to that court alone”),

aff’d, 

(10th Cir. 1971). For these purposes the administrative record

includes not only material that the settlement officer reviewed but also material

that was available for review. Emery Celli Cuti Brinckerhoff & Abady, P.C. v.

Commissioner, T.C. Memo. 2018-55, at *21 (citing Thompson v. DOL, 

, 553-556 (9th Cir. 1989); West v. Commissioner, T.C. Memo. 2010-250, 

, at *4 n.11).

      Under a de novo standard of review, we may go beyond the administrative

record to consider all of the relevant evidence introduced at trial. See Jordan v.
                                         -9-

[*9] Commissioner, 

, 9 (2010) (“[B]ecause section 6330 requires a de

novo standard of review when the underlying liability is properly in issue, the

administrative record rule is not applicable to such a case.” (citing 5 U.S.C. sec.

554(a)(1) (2006))), supplemented by T.C. Memo. 2011-243.

       We proceeded with trial here to decide whether petitioner was entitled to

challenge his underlying tax liabilities at the administrative hearing because he

claimed that he did not receive the notice of deficiency. To evaluate this claim we

had to consider information outside the administrative record, namely his

testimony. Because we conclude that he did not receive the notice of deficiency,

see infra Part II.A, we then reviewed the administrative record to decide whether

he properly raised his underlying liabilities with the settlement officer. We

conclude, as explained infra Part II.B, that he did not. We then reviewed the

administrative record to decide whether SO Krueger abused her discretion in

sustaining the proposed collection action. We conclude infra Part III that she did

not.

II. Challenge to Underlying Tax Liabilities

       A. Receipt of Notice of Deficiency

       A taxpayer may raise challenges to his underlying tax liabilities at an

administrative hearing if he did not receive any statutory notice of deficiency or
                                        - 10 -

[*10] otherwise have an opportunity to dispute his tax liabilities. Sec.

6330(c)(2)(B). If a notice of deficiency is properly mailed to the taxpayer at his

last known address, the notice may be valid even if the taxpayer did not receive it.

See, e.g., United States v. Zolla, 

, 810 (9th Cir. 1984). So as part of

the settlement officer’s determination, she must verify that a valid notice of

deficiency was issued to the taxpayer at his last known address. Sec. 6330(c)(1);

Jordan v. Commissioner, 

; Hoyle v. Commissioner, 

,

200 (2008), supplemented by 

(2011). Even if the notice was

properly mailed, the taxpayer may be able to challenge the underlying tax

liabilities if he can establish that no notice was received. Hoyle v. Commissioner,

; Sego v. Commissioner, 

; Snodgrass v.

Commissioner, T.C. Memo. 2016-235, at *14-*15; cf. Lander v. Commissioner,

154 T.C. __, __ (slip op. at 28-33) (Mar. 12, 2020) (holding that a taxpayer who

did not receive a notice of deficiency could not challenge his underlying tax

liabilities before this Court when he had a prior opportunity to do so in an

administrative hearing with IRS Appeals).

      Petitioner does not dispute that the notice of deficiency was addressed to his

Fremont address or that this address was used for other IRS notices that he did

receive. Petitioner admitted that he had no explanation for his nonreceipt of the
                                         - 11 -

[*11] notice other than his speculation that the USPS notice of attempted delivery

of certified letter was misdirected. But he credibly testified that he did not receive

the USPS notice of attempted delivery of certified letter, and he has a record of

responding to notices that he did receive. We therefore will not treat him as

having received the notice of deficiency for the years in issue. See, e.g., Smith v.

Commissioner, T.C. Memo. 2008-229, 

, at *3 (allowing a

taxpayer to raise his underlying tax liabilities where “nonreceipt of the notice of

deficiency is not due to * * * [his] deliberate refusal of delivery or similar

misconduct”); see also Mason v. Commissioner, 

, 318-319 (2009)

(holding that a taxpayer did not deliberately avoid delivery of a notice of

deficiency when she had received and took appropriate action in response to the

Commissioner’s other mailed notices and documents); Tatum v. Commissioner,

T.C. Memo. 2003-115, 

, at *3-*4 (holding that the taxpayers

did not deliberately avoid delivery of a notice of deficiency when they credibly

testified that they did not receive the USPS notice of attempted delivery of

certified letter).

       B. Administrative Hearing

       We now must decide whether petitioner properly raised his underlying tax

liabilities at the administrative hearing. We consider a taxpayer’s challenge to his
                                         - 12 -

[*12] underlying tax liabilities in a collection action case only if he properly raised

the liabilities at an administrative hearing. Giamelli v. Commissioner, 

, 114-116 (2007); see sec. 301.6320-1(f)(2), Q&A-F3, Proced. & Admin.

Regs. An issue is not properly raised at the administrative hearing if the taxpayer

fails to request consideration of the issue or if he requests consideration but fails

to present any evidence after being given a reasonable opportunity to do so. See

Thompson v. Commissioner, 

, 178 (2013) (“A taxpayer is precluded

from disputing the underlying liability if it was not properly raised in the CDP

hearing.”); Giamelli v. Commissioner, 

; sec. 301.6320-1(f)(2),

Q&A-F3, Proced. & Admin. Regs.; see also Millen v. Commissioner, T.C. Memo.

2019-60, at *11-*12 (holding that the taxpayers did not properly challenge their

underlying tax liabilities when they failed to submit amended tax returns during a

CDP hearing stating what they believed their tax liabilities to be), aff’d, No. 19-

1646, 

(6th Cir. Nov. 19, 2019); McRae v. Commissioner, T.C.

Memo. 2015-132, at *8-*9 (holding that the taxpayer failed explicitly to contest

his underlying tax liabilities during the administrative hearing and failed to

provide any evidence concerning his liabilities); Zook v. Commissioner, T.C.

Memo. 2013-128, at *6-*7 (holding that the taxpayer failed to properly raise her
                                       - 13 -

[*13] underlying tax liabilities when she failed to provide any documentation of

the underlying tax liabilities).

      Petitioner failed to provide SO Krueger with any documentation to contest

his underlying tax liabilities. While he pointed to his original amended returns,

which he assumed that SO Krueger had, he also acknowledged that he told SO

Krueger at the hearing that he needed additional time to file additional amended

returns for audit reconsideration.9 On his Form 12153 and attachment, which

respondent received on September 14, 2016, he requested “additional time to

complete & gather evidence.” He failed to provide to SO Krueger any evidence

supporting his position in response to her January 3, 2017, letter. Her deadline

gave him until January 30, 2017, which was more than four months after he had

submitted his Form 12153, and three months after he had submitted his initial

amended returns to the IRS Fresno office. Petitioner promised additional evidence

but never provided it.




      9
         We note that a “grant of audit reconsideration is discretionary and any
audit is conducted outside the CDP process”. Durda v. Commissioner, T.C.
Memo. 2017-89, at *8 n.3. An IRS Appeals officer does not “abuse his discretion
by declining to delay his determinations to await the uncertain outcome of * * * [a
taxpayer’s] eleventh-hour request for audit reconsideration”. Jones v.
Commissioner, T.C. Memo. 2007-142, 

, at *2.
                                       - 14 -

[*14] Moreover, amended returns by themselves are not evidence supporting a

claim; they are “merely a statement of the * * * claim”. Roberts v. Commissioner,

, 837 (1974). Even were we to determine that SO Krueger erred in not

considering the initial amended returns as evidence, we would not find that she

abused her discretion in sustaining the NFTL filing. Petitioner told her at the

hearing that he intended to file additional amended returns for audit

reconsideration. Thus, the initial amended returns were no longer current

statements of petitioner’s claims. He failed to explain why SO Krueger should

have reviewed the amended returns rather than wait for the current information he

promised to provide her but never did. See Berglund v. Commissioner, T.C.

Memo. 2015-239, at *16 (citing Nestor v. Commissioner, 

, 167

(2002)). Under these circumstances we conclude that petitioner did not properly

raise his underlying tax liabilities before SO Krueger. Therefore, he is not entitled

to contest them now. See LG Kendrick, LLC v. Commissioner, 

, 39

(2016), aff’d, 684 F. App’x 744 (10th Cir. 2017); Pough v. Commissioner, 

, 349 (2010).

      Because petitioner’s underlying tax liabilities are not properly before us, we

review SO Krueger’s determination for abuse of discretion only. See Goza v.

Commissioner, 

.
                                        - 15 -

[*15] III. Abuse of Discretion

      Section 6321 imposes a lien in favor of the United States on all property and

property rights of a taxpayer liable for tax after a demand for the payment of the

tax has been made and the taxpayer fails to pay. The lien arises when the

assessment is made. See sec. 6322. The IRS files an NFTL to preserve priority

and put other creditors on notice. See sec. 6323. Section 6320(a) requires the

Secretary to send written notice to the taxpayer of the filing of the NFTL and of

the taxpayer’s right to request an administrative collection due process hearing on

the matter.

      The settlement officer conducting a collection due process hearing must

verify that the requirements of applicable law and administrative procedure were

met. Secs. 6320(c), 6330(c)(1).10 Section 6320(c) does not mandate that the

      10
          Sec. 6751(b)(1) applies to the sec. 6662(a) penalties in issue and requires
the initial determination of those penalties to be “personally approved (in writing)
by the immediate supervisor of the individual making such determination.” See
Graev v. Commissioner, 

, 492-493 (2017), supplementing and
overruling in part 

(2016); see also Belair Woods, LLC v.
Commissioner, 154 T.C. __, __ (slip op. at 23) (Jan. 6, 2020) (holding that the
initial determination of the penalty assessment was embodied in the letter “by
which the IRS formally notified * * * [the taxpayer] that the Examination Division
had completed its work and * * * had made a definite decision to assert
penalties”); Clay v. Commissioner, 

, 248 (2019).
        In a collection case, “[w]here the supervisory approval requirement of
section 6751(b)(1) applies, the Appeals officer should obtain verification that such
                                                                         (continued...)
                                         - 16 -

[*16] settlement officer “rely upon a particular document (e.g., the summary

record itself rather than transcripts of account) in order to satisfy this verification

requirement.” See Craig v. Commissioner, 

, 262 (2002); see also

Berglund v. Commissioner, at *13. She can rely on computerized transcripts to

satisfy the verification requirement, but “only if the taxpayer has not shown some

irregularity in the assessment procedures” that would raise questions about the

validity of the assessments or the information contained in the transcripts. See

Berglund v. Commissioner, at *14; see also Kubon v. Commissioner, T.C. Memo.

2011-41, 

, at *4, aff’d, 479 F. App’x 759 (9th Cir. 2012).

      The settlement officer also must consider the issues raised by the taxpayer

and whether the proposed collection action balances the Government’s need for

      10
        (...continued)
approval was obtained”. ATL & Sons Holdings, Inc. v. Commissioner, 

, 144 (2019). It is unclear whether SO Krueger verified that respondent
complied with this requirement. Regardless, petitioner did not allege in his
petition or in his posttrial briefs that SO Krueger failed to verify that respondent
complied with sec. 6751(b)(1). That issue therefore is deemed conceded. See
Rule 331(b)(4) (“Any issue not raised in the assignments of error shall be deemed
to be conceded.”); Lloyd v. Commissioner, T.C. Memo. 2017-60, at *7 n.3.
       Furthermore, even if petitioner had alleged that SO Krueger failed to verify
compliance with sec. 6751(b)(1), her error would be harmless as the record
includes the initial determination and the Civil Penalty Approval Form showing
that respondent complied with the requirement. See Clay v. Commissioner, 

; Nestor v. Commissioner, 

, 173 (2002) (holding that
“the reviewing court shall disregard procedural errors unless the complaining party
was prejudiced thereby”).
                                        - 17 -

[*17] the efficient collection of taxes with the taxpayer’s legitimate concern that

any collection action be no more intrusive than necessary. Sec. 6330(c)(3); Sego

v. Commissioner, 

. The taxpayer bears the burden of proving these

items. See Sego v. Commissioner, 

; Woodral v. Commissioner,

, 23 (1999).

      We turn first to petitioner’s request for lien withdrawal. Because lien

withdrawal is a collection alternative, see sec. 301.6320-1(e)(3), Q&A-E6, Proced.

& Admin. Regs., a taxpayer is required to provide the settlement officer with

relevant information for her to consider in determining whether the lien should be

withdrawn, see Roudakov v. Commissioner, T.C. Memo. 2017-121, at *11-*12. A

taxpayer’s failure to present the settlement officer with “any evidence regarding

* * * [his] entitlement to the withdrawal of the NFTL” means he did not properly

raise that issue at the administrative hearing. LG Kendrick, LLC v.

Commissioner, 

. Petitioner failed to present any evidence to SO

Krueger to support his request for lien withdrawal. It therefore was not an abuse

of discretion for SO Krueger to reject his request.

      We next turn to SO Krueger’s decision to sustain the NFTL filing. Our

review of the record establishes that she properly discharged all of her

responsibilities under section 6320(c). Petitioner argued at trial and in his posttrial
                                       - 18 -

[*18] briefs that SO Krueger did not act reasonably and failed to consider all the

issues he raised because she did not review the initial amended returns, but he did

not provide her with a copy of the returns or any other evidence related to his

underlying tax liabilities or withdrawal of the NFTL. A settlement officer is not

required to give a taxpayer additional time to submit documents or additional

amended returns when adequate time had been provided before the hearing. See

Glossop v. Commissioner, T.C. Memo. 2013-208, at *17. Accordingly, SO

Krueger acted reasonably and did not abuse her discretion when she sustained the

NFTL filing.

IV. Conclusion

      We hold that petitioner is not entitled to challenge his underlying tax

liabilities and that SO Krueger did not abuse her discretion in sustaining the NFTL

filing. Any contentions we have not addressed we deem irrelevant, moot, or

meritless.

      To reflect the foregoing,


                                                An appropriate order and decision

                                       will be entered.