DETERMINATION LETTER AND TIMELY PETITION ENOUGH FOR TAX COURT JURISDICTION.

Anne W. Durning, for respondent.

[2] We decide as a matter of first impression whether the Court has jurisdiction under section 6330(d)(1), given that respondent has never issued to petitioner a notice of determination with respect to a hearing described in section 6330 (Hearing).² Respondent acknowledges that petitioner was entitled to and should have been given a Hearing. All the same, respondent argues, the Court has jurisdiction to decide this case. Respondent argues that respondent's failure to grant petitioner's timely request for a Hearing was harmless error because petitioner was offered and attended an "equivalent hearing" under section 301.6330-1(i), Proced. & Admin. Regs. (equivalent hearing), and received a decision letter (decision letter) as to the equivalent hearing.

[3] We hold that we have jurisdiction. Also, we shall grant respondent's motion for summary judgment, and we shall impose a $2,500 penalty against petitioner. Unless otherwise noted, section references are to the applicable versions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.

[4] Petitioner and his wife, Lorraine Craig (Ms. Craig), did not file timely Federal income tax returns for 1990 and 1991. On February 18, 1993, respondent prepared and filed substitutes for returns for those years under section 6020. In preparing the substitutes for returns, respondent relied on information received from the Bureau of Labor Statistics. On October 27, 1994, and on December 14, 1994, petitioner and Ms. Craig filed joint 1990 and 1991 Federal income tax returns, respectively. Those returns were treated by respondent as amended returns. On February 3, 1995, petitioner and Ms. Craig filed a joint 1992 Federal income tax return.

[5] On October 5, 1995, respondent issued a notice of deficiency to petitioner and Ms. Craig. The notice determined that petitioner and Ms. Craig were liable for deficiencies in their 1990, 1991, and 1992 Federal income taxes as follows:

                                Additions to Tax

[7] On May 5, 1997, on the basis of the stipulated decision, respondent assessed the 1990, 1991, and 1992 Federal income tax liabilities of petitioner and Ms. Craig.

B. Income Tax Return for 1995

[8] On December 4, 1997, petitioner filed a 1995 Federal income tax return. On the basis of this return, respondent assessed petitioner's tax liability for 1995 on January 12, 1998.

C. Request for a Hearing

[9] On February 22, 2001, respondent mailed to petitioner and Ms. Craig a letter, "Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing" (final notice), for 1990, 1991, and 1992. On the same day, respondent mailed to petitioner a final notice for 1995. Both final notices were signed by a chief of the IRS Automated Collection Branch in Ogden, Utah. These notices informed petitioner and Ms. Craig of (1) respondent's intent to levy upon their property pursuant to section 6331 and (2) their right under section 6330 to a Hearing with respondent's Office of Appeals (Appeals). Enclosed with the final notices were copies of Forms 12153, Request for a Collection Due Process Hearing. On March 17, 2001, petitioner requested timely the referenced Hearing for 1990, 1991, 1992, and 1995 by mailing to respondent a letter accompanied by two Forms 12153, the first for 1990, 1991, and 1992, and the second for 1995. Petitioner signed the letter, but he did not sign the Forms 12153. In that letter, petitioner requested a Hearing and stated the following disagreement with the proposed levy:

[13] On October 27, 2001, the Appeals officer issued to petitioner a "Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330" (i.e., the decision letter) for 1990, 1991, 1992, and 1995. The decision letter sustained the proposed collection action against petitioner. The decision letter stated that petitioner did not have the right to judicial review of the decision set forth in the decision letter. The decision letter stated:

[14] We decide for the first time whether we have jurisdiction under section 6330(d)(1) in the setting at hand. We conclude that we do. We set forth the relevant text of section 6330 in an appendix.

[15] Section 6330(d)(1) is the specific provision that governs our jurisdiction to review a proposed collection action. Our jurisdiction under that section depends upon the issuance of a valid notice of determination and a timely petition for review. E.g., Goza v. Commissioner, 114 T.C. 176, 182 (2000); see also Lunsford v. Commissioner, 117 T.C. 159, 161 (2001). See generally Offiler v. Commissioner, 114 T.C. 492, 498 (2000) (" The notice of determination provided for in section 6330 is, from a jurisdictional perspective, the equivalent of a notice of deficiency."). Here, petitioner has timely filed a petition with this Court.³ Thus, we are left to decide whether respondent has made a "determination" within the meaning of section 6330(d)(1) which we have jurisdiction to review.

[16] Respondent acknowledges that petitioner did not have the Hearing described in section 6330. All the same, respondent argues, the decision letter issued to petitioner as to the equivalent hearing reflects a "determination" sufficient to invoke the Court's jurisdiction under section 6330(d)(1). We agree. The Treasury Department regulations interpreting section 6330 recognize specifically that there are two types of hearings which may be conducted by Appeals in connection with section 6330; i. e., Hearings and equivalent hearings. As explained below, the Treasury Department regulations state that an Appeals officer will consider at an equivalent hearing the same issues as at a Hearing, and that the contents of the decision letter that results from an equivalent hearing will generally be the same as in the notice of determination that results from a Hearing.

[17] As to a Hearing, the statute provides that a taxpayer has a right to a Hearing with an Appeals officer before a levy may be made upon his or her property, if the Hearing is timely requested by the taxpayer. Sec. 6330(a)(1), (a)(2), (a)(3)(B), and (b)(1). The statute provides further that at the Hearing the taxpayer may raise any relevant matter set forth in section 6330(c) and that the Appeals officer shall make a "determination" as to those matters. Sec. 6330(c) and (d)(1); see also sec. 301.6330-1(f), Proced. & Admin. Regs. (regulations interpreting section 6330 provide that the Appeals officer must issue a "Notice of Determination" to any taxpayer who timely requests a Hearing).⁴ The statute gives a taxpayer the right to contest the Appeals officer's determination in the appropriate judicial forum, sec. 6330(d)(1), and precludes respondent from proceeding with the proposed levy that is the subject of the Hearing while the Hearing and any appeals thereof are pending, sec. 6330(e)(1). The statute provides that the applicable periods of limitation under sections 6502, 6531, or 6532 are suspended for the same period. Sec. 6330(e)(1).

[18] Whereas the above-stated rules for a Hearing are provided explicitly in the statute, the rules for an equivalent hearing have their genesis in the statute's legislative history and the regulations implementing Congressional intent as gleaned from that history. See H. Conf. Rept. 105-599, at 266 (1998); 1998-3 C. B. 1020 (in the event that a taxpayer does not timely request a Hearing, "The Secretary must provide a hearing equivalent to the hearing if later requested by the taxpayer"); cf. Johnson v. Commissioner, 86 AFTR 2d 2000-5225, 2000-2 USTC par. 50,591 (D. Or. 2000) ("'equivalent hearing' is provided for only by regulation and is not mandated by Section 6330 itself"). The scheme of the regulations as they apply to equivalent hearings generally follows the statutory scheme for Hearings.

[19] Under the regulations, any taxpayer who fails to timely request a Hearing may receive an equivalent hearing. Sec. 301.6330- 1(i)(1), Proced. & Admin. Regs. The equivalent hearing (like the Hearing) is held with Appeals, and the Appeals officer considers the same issues which he or she would have considered had the equivalent hearing been a Hearing. Id. The Appeals officer also generally follows the same procedures at an equivalent hearing which he or she would have followed had the equivalent hearing been a Hearing. Id. Although the Appeals officer concludes an equivalent hearing by issuing a decision letter, as opposed to a notice of determination, the different names which are assigned to these documents are merely a distinction without a difference when it comes to our jurisdiction over this case, where a Hearing was timely requested. The decision letter contains all of the information required by section 301.6630-1(e)(3), Q&A-E8, Proced. & Admin. Regs., to be included in a notice of determination but for the fact that the decision letter ordinarily states in regard to most issues that a taxpayer may not (as opposed to may) seek judicial review of the decision.⁵Id.; cf. sec. 301.6630-1(i)(2), Q&A- I5, Proced. & Admin. Regs. (taxpayer may in certain cases contest in court the Appeals officer's decision in an equivalent hearing to deny a claim for relief from joint liability under section 6015).

[20] Under the facts herein, where Appeals issued the decision letter to petitioner in response to his timely request for a Hearing, we conclude that the "decision" reflected in the decision letter issued to petitioner is a "determination" for purposes of section 6330(d)(1). Cf. Moorhous v. Commissioner, 116 T.C. 263, 270 (2001) (decision reflected in a decision letter was not a "determination" under section 6330(d)(1) where the taxpayer's request for a Hearing was untimely); Nelson v. Commissioner, T.C. Memo. 2002-264 (same); Lopez v. Commissioner, T.C. Memo. 2001-228 (same). The fact that respondent held with petitioner a hearing labeled as an equivalent hearing, rather than a hearing labeled as a Hearing, and that respondent issued to petitioner a document labeled as a decision letter, rather than a document labeled as a notice of determination, does not erase the fact that petitioner received a "determination" within the meaning of section 6330(d)(1). We hold that we have jurisdiction to decide this case.

B. Respondent's Motion for Summary Judgment

[21] Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences are drawn in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982).

[22] Petitioner has raised no genuine issue as to any material fact. Accordingly, we conclude that this case is ripe for summary judgment.

[23] Section 6331(a) provides that if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary may collect such tax by levy on the person's property. Section 6331(d) provides that at least 30 days before enforcing collection by levy on the person's property, the Secretary must provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

[24] Section 6330 generally provides that the Commissioner cannot proceed with collection by levy until the person has been provided with notice and the opportunity for an administrative review of the matter (in the form of a Hearing before Appeals) and, if dissatisfied, with judicial review of the administrative determination. Davis v. Commissioner, 115 T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. at 179. In the event of such a judicial review, the Court's standard of review depends on whether the underlying tax liability is at issue. The Court reviews a taxpayer's liability under the de novo standard where the validity of the underlying tax liability is at issue. The Court reviews the other administrative determinations for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000). A taxpayer's underlying tax liability may be at issue only if he or she "did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." Sec. 6330(c)(2)(B).

[25] With respect to 1990, 1991, and 1992, petitioner received a notice of deficiency and petitioned the Court with respect thereto. It follows that petitioner's underlying tax liability for 1990, 1991, and 1992 is not at issue. Accordingly, we review respondent's determination for these years for abuse of discretion.

[26] With respect to 1995, petitioner neither received a notice of deficiency nor had an opportunity to dispute the underlying tax liability. Whereas the Appeals officer did not allow petitioner to raise at the equivalent hearing the underlying tax liability for that year, respondent now recognizes that it was error to do so (i.e., to not allow petitioner to dispute the underlying tax liability for 1995). See Hoffman v. Commissioner, 119 T.C. 140 (2002). We review petitioner's underlying tax liability for 1995 on a de novo basis.

[27] Petitioner asserts in his petition the following allegations of error as to 1990, 1991, 1992, and 1995:

[28] First, petitioner alleges that the Appeals officer failed to obtain verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required by section 6330(c)(1). We disagree. Section 6330(c)(1) does not require the Appeals officer to rely upon a particular document (e.g., the summary record itself rather than transcripts of account) in order to satisfy this verification requirement. Kuglin v. Commissioner, T.C. Memo. 2002-51; see also Weishan v. Commissioner, T.C. Memo. 2002-88. Nor does it mandate that the Appeals officer actually give a taxpayer a copy of the verification upon which the Appeals officer relied. Sec. 6330(c)(1); sec. 301.6330-1(e)(1), Proced. & Admin. Regs.; see also Nestor v. Commissioner, 118 T.C. 162 (2002). Given the additional fact that petitioner was actually given copies of the relevant Forms 4340,⁶ which are a valid verification that the requirements of any applicable law or administrative procedure have been met, Roberts v. Commissioner, 118 T.C. 365 (2002); Mudd v. Commissioner, T.C. Memo. 2002-204; Howard v. Commissioner, T.C. Memo. 2002-81; Mann v. Commissioner, T.C. Memo. 2002-48, we hold that: (1) The assessments were valid, Kuglin v. Commissioner, supra; see also Duffield v. Commissioner, T.C. Memo. 2002-53; and (2) the Appeals officer satisfied the verification requirement of section 6330(c)(1), Yacksyzn v. Commissioner, T.C. Memo. 2002-99; cf. Nicklaus v. Commissioner, 117 T.C. 117, 120-121 (2001). Petitioner has not demonstrated in this proceeding any irregularity in the assessment procedure that would raise a question about the validity of the assessment or the information contained in Forms 4340.

[29] Second, petitioner alleges that no statutory notice and demand for payment was sent to him. We disagree. "The Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof." Sec. 6303(a). If mailed, this notice and demand is required to be sent to the taxpayer's last known address. Id. Forms 4340 show that respondent sent petitioner notices of balance due on the same dates that respondent made assessments against petitioner for the subject years. A notice of balance due constitutes a notice and demand for payment under section 6303(a). Schaper v. Commissioner, T.C. Memo. 2002-203. In addition, petitioner received numerous final notices (notices of intention to levy), as well as notices of deficiency, receipt of which petitioner does not dispute. These numerous notices were sufficient and met the requirements of section 6303(a). Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993); Hughes v. United States, 953 F.2d 531, 536 (9th Cir. 1992); Weishan v. Commissioner, supra. "The form on which a notice of assessment and demand for payment is made is irrelevant as long as it provides the taxpayer with all the information required under 26 U.S.C. § 6303(a)." Elias v. Connett, 908 F.2d 521, 525 (9th Cir. 1990).

[30] Third, petitioner alleges that the final notice is invalid because it was not signed by the Secretary or his delegate as required by section 6330(a)(1). We disagree. For purposes of section 6330(a), either the Secretary or his delegate (e. g., the Commissioner) may issue a final notice of intent to levy. Secs. 7701(a)(11)(B) and (12)(A)(i), 7803(a)(2); see also sec. 301.6330- 1(a)(1), Proced. & Admin. Regs. Here, the authority to levy on petitioner's property was delegated to the "Automated Collection Branch Chiefs pursuant to Delegation Order No. 191 (Rev. 2), effective October 1, 1999. Internal Revenue Manual, sec. 1.2.104, 102 (Nov. 24, 1999)." Wilson v. Commissioner, T. C. Memo. 2002-242. Consistent with this delegation of authority, the final notice on intent to levy in this case, which was executed by the chief of the Automated Collection Branch in Ogden, Utah, was valid.

[31] As to petitioner's remaining allegations, each allegation is a shop-worn, frivolous contention which "We perceive no need to refute * * * with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984). Suffice it to say:

1. the Internal Revenue Code establishes the existence of his underlying tax liability and requires him to pay income tax, Tolotti v. Commissioner, T.C. Memo. 2002-86;

2. petitioner is a taxpayer subject to the Federal income tax, see secs. 1(c), 7701(a)(1), (14);

3. compensation for labor or services rendered constitutes income subject to the Federal income tax, sec. 61(a)(1); United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981);

4. petitioner is required to file an income tax return, sec. 6012(a)(1); and

5. petitioner's failure to report tax on a return does not prevent the Commissioner from determining a deficiency in his Federal income tax, secs. 6211(a), 6212(a); see Monaco v. Commissioner, T.C. Memo. 1998-284.

[32] Petitioner has failed to raise a spousal defense, make a valid challenge to the appropriateness of respondent's intended collection action, or offer alternative means of collection. These issues are now deemed conceded. Rule 331(b)(4).

[33] For the foregoing reasons, we sustain respondent's determination as to the proposed levy as a permissible exercise of discretion.

C. Respondent's Motion To Impose a Penalty Against Petitioner

[34] We now turn to the requested penalty under section 6673. Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. We have repeatedly indicated our willingness to impose such penalties in lien and levy review proceedings. Roberts v. Commissioner, 118 T.C. 365 (2002); Hoffman v. Commissioner, T.C. Memo. 2000-198. Moreover, we have imposed penalties in such proceedings when the taxpayer has raised frivolous and groundless arguments as to the legality of the Federal tax laws. Yacksyzn v. Commissioner, T.C. Memo. 2002- 99; Watson v. Commissioner, T.C. Memo. 2001-213; Davis v. Commissioner, T.C. Memo. 2001-87.

[35] In accordance with the firmly established law set forth above, we conclude that petitioner's positions in this proceeding are frivolous and/or groundless.⁷ We also conclude from the record that petitioner has instituted and maintained this proceeding primarily for delay. Accordingly, pursuant to section 6673, we require him to pay to the United States a penalty of $2,500.

[36] We have considered all arguments and have found those arguments not discussed herein to be irrelevant and/or without merit. To reflect the foregoing,

[37] An appropriate order and decision will be entered for respondent.

²The parties and the Treasury regulations refer to the hearing described in sec. 6330 as a "collection due process hearing" (or a "CDP hearing" for short). That term is not used in either sec. 6330 or the legislative history underlying the promulgation of that section. The legislative history refers to the hearing as a "pre-levy hearing". H. Conf. Rept. 105-599, at 266 (1998); 1998-3 C. B. 747, 1020. We refer to it as a "Hearing".

³The decision letter was sent to petitioner on Oct. 27, 2001, and the petition was postmarked Nov. 21, 2001. Whereas the petition was actually filed by the Court when received on Dec. 28, 2001, the approximately 6-week delivery time was attributable to delays in the receipt of mail experienced by the Court because of anthrax.

⁴The regulations provide further that, in general, the notice of determination must set forth the Appeals officer's findings and decisions. Sec. 301.6330-1(e)(3), Q&A-E8, Proced. & Admin. Regs. More specifically, the notice of determination must: (1) State whether respondent met the requirements of any applicable law or administrative procedure; (2) resolve any issue appropriately raised by the taxpayer relating to the unpaid tax; (3) decide any appropriate spousal defenses raised by the taxpayer; (4) decide any challenge made by the taxpayer to the appropriateness of the collection action; (5) respond to any offers by the taxpayer for collection alternatives; (6) address whether the proposed collection action represents a balance between the need for the efficient collection of taxes and the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary; (7) set forth any agreements that Appeals reached with the taxpayer, any relief given the taxpayer, and any actions which the taxpayer or respondent are required to take; and (8) advise the taxpayer of the right to seek judicial review within 30 days of the date of the notice of determination. Id.

⁵Nor do we find a distinction for purposes of our jurisdiction in the fact that the Treasury Department's regulations provide that a taxpayer's request for an equivalent hearing neither automatically suspends the levy actions which are subject of the Hearing nor the running of any period of limitations under secs. 6502, 6531, or 6532. Sec. 301.6330-1(i)(2), Q&A-I1 and 2, Proced. & Admin. Regs.

⁶Federal tax assessments are formally recorded on a record of assessment. Sec. 6203. The summary record of assessment must "provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment." Sec. 301.6203-1, Proced. & Admin. Regs. The record shows that in addition to Forms 4340, petitioner received IMF MCC transcripts of account for 1990, 1991, 1992, and 1995. Those transcripts of petitioner's account for respective years also contained all the information required under section 301.6203-1, Proced. & Admin. Regs.

⁷The Appeals officer directed petitioner's attention to our decision in Pierson v. Commissioner, 115 T.C. 576 (2000), wherein taxpayers advancing frivolous and groundless claims and instituting proceedings under sec. 6330(d) for the purpose of delay were given an unequivocal warning that the Court would impose penalties. In addition, petitioner received a copy of our opinion in that case; that opinion was sent to him by the Appeals officer after the equivalent hearing.

(a) Requirement of Notice Before Levy. --