Sego v. Comm'r of Internal Revenue, 12313–99L.

• Citation: 114 T.C. No. 37,114 T.C. 604
• Decision Date: 30 June 2000
• Docket Number: No. 12313–99L.,12313–99L.
• Parties: Steven and Davina SEGO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: United States Tax Court

114 T.C. 604

114 T.C. No. 37

Steven and Davina SEGO, Petitioners

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 12313–99L.

United States Tax Court.

June 30, 2000.

Taxpayers petitioned for review of IRS' determination to proceed with collection on deficiencies for three taxable years. The Tax Court, Cohen, J., held that IRS did not abuse its discretion in allowing collection to proceed.

Decision for IRS. Ps commenced a proceeding in response to two Notices of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. P husband had received a notice of deficiency but returned it to the IRS with frivolous language written on it; he did not file a petition in response to the notice of deficiency. Attempts to deliver the notice of deficiency to P wife were made at Ps' residence, but the notice was returned unclaimed. Ps seek in this action to challenge the underlying merits of respondent's determination in the statutory notices of deficiency rather than challenging the appropriateness of the intended method of collection, offering an alternative means of collection, or raising spousal defenses to collection. Held, there was no abuse of discretion by respondent in allowing collection to proceed.Steven Sego and Davina Sego, pro se.

Thomas N. Tomashek, for respondent.

OPINION

COHEN, J.

The petition in this case was filed in response to two Notices of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue. The notice of determination sent to Steven Sego set forth the following:

Summary of Determination

The Service should proceed with the proposed levy action.

Matters Considered at your Appeals hearing

• The requirements of various applicable law or administrative procedures have been met based upon the best information available.

• No spousal defenses were raised.

• No offers of collection alternatives were made.

• Challenges to the existence or amount of liability were raised including additional challenges as to the appropriateness of the collection actions on the basis of moral, religious, political, constitutional, conscientious, or similar grounds.

• On August 13, 1997, the Service issued a notice of deficiency to you for taxable years ending December 31, 1993, 1994, and 1995. The notice of deficiency was mailed to your last known address. You failed to petition the Tax Court for redetermination and thus, the notice of deficiency was defaulted and the proposed deficiencies were assessed. The liability as reflected in the notice of deficiency was based upon the community property laws of the State of Idaho and your proportionate share of the community income.

• The assessments are deemed correct because you have failed to present any credible evidence to overcome the Commissioner's presumption of correctness. You have continued to procrastinate with regards to providing additional information or evidence to support your position. You have made numerous arguments based upon moral, religious, political, constitutional, conscientious, or similar grounds which Appeals believes are without merit.

• Appeals believes the proposed enforcement action balances the need for the efficient collection of taxes with your concerns as to the intrusiveness of the action to be taken.

The notice of determination sent to Davina Sego set forth the following:

Summary of Determination

The Service should proceed with the proposed levy action.

Matters Considered at your Appeals hearing

• The requirements of various applicable law or administrative procedures have been met based upon the best information available.

• No return was filed and thus, the spousal defense is not applicable.

• No challenges were raised to the appropriateness of the collection actions.

• No offers of collection alternatives were made.

• You believe the liability is invalid because you either (1) had no sources of income, or (2) had no filing requirements, or (3) did not receive a notice of deficiency.

• On August 13, 1997, the Service issued a notice of deficiency to you for taxable years ending December 31, 1993, 1994, and 1995. The notice of deficiency was mailed to your last known address. You failed to accept delivery of said notice of deficiency and you subsequently failed to timely petition the Tax Court for redetermination of the proposed liability. The liability as reflected in the notice of deficiency was based upon the community property laws of the State of Idaho and your proportionate share of the community income.

• Appeals believes the proposed enforcement action balances the need for the efficient collection of taxes with your concerns as to the intrusiveness of the action to be taken.

In the petition, it is alleged that, after a conference conducted with an Internal Revenue Service Appeals officer, petitioners received additional documents relating to disputed gains on sales transactions and that petitioners “found that the IRS had created income to Petitioners based on statistics, and this was unknown to Petitioners until after the conference”. The petition also contains various accusations concerning the credibility of the statements in the above-quoted notices of determination.

Respondent contends that section 6330(c)(2)(B) precludes petitioners from challenging the existence or amount of their income tax liability for 1993, 1994, and 1995, because petitioners had received statutory notices of deficiency for that liability.

Background

Statutory notices with respect to 1993, 1994, and 1995 were sent to each petitioner on August 13, 1997. Duplicate originals were sent to Steven Sego; one of those was sent by certified mail to an address in Spirit Lake, Idaho, and one was sent by regular mail to the address in Rathdrum, Idaho, that is the address used on the petition in this case. The statutory notice sent to Steven Sego in Spirit Lake, Idaho, was returned undelivered by the Postal Service. The statutory notice sent to Steven Sego by regular mail was returned to respondent on October 10, 1997. Handwritten across the first page of the returned statutory notice were the words “This presentment Dishonored at UCC 1–207”. At the time the notice was returned to respondent by Steven Sego, there remained 31 days for Steven Sego to petition the Tax Court. He did not do so.

With respect to Davina Sego, respondent asserts that a statutory notice of deficiency was sent to her for 1993, 1994, and 1995 at the Rathdrum, Idaho, address, as shown by the postmark stamped on the executed Application for Registration or Certification, U.S. Postal Service Form 3877, a copy of which is in the record. Respondent contends that, after leaving two notices of certified mail in petitioners' mailbox on August 18, 1997, and on August 25, 1997, the notice of deficiency was returned to respondent by the Postal Service.

The record contains other documents that respondent asserts are indicative of Steven Sego's “deliberate practice of refusing to accept mail sent by respondent, including (a) the ‘Refusal to Accept Service of Form 668–(Y)(c)’ stated in a document entitled ‘Final Declaration—Form 668(Y)(c) Refused for Cause without Dishonor & Notice of Default’ dated July 12, 1998”. Respondent further alleges:

A document entitled “Witnessed Notice & Refusal” dated July 12, 1998, confirms that petitioner Davina Sego shared in her husband's views and practices with regard to the refusal to accept mail from respondent. In that document Davina Sego referred to her husband's “Final Declaration—Form 668(Y)(c) Refused for Cause without Dishonor & Notice of Default” of the same date, and requested that it “be deemed as if I had stated it.” * * *

Respondent's position is that “The foregoing evidence leads to the conclusion that petitioner Davina Sego deliberately refused to claim the statutory notice of deficiency mailed to her on August 13, 1997.”

The Postal Service employee responsible for the postal route that includes petitioners' address testified that she attempted delivery of certified mail to Davina Sego on August 18, 1997, and left a second notice of attempted delivery on August 25, 1997. By reference to exhibits, she identified the certified mail as the August 13, 1997, statutory notice of deficiency.¹

Davina Sego testified that “I do not recall ever getting any yellow slips for—and I did not receive a statutory notice.” Her position is: “It's all—that has all been fabricated. My notice of deficiency, these certificates that the post office was supposed to try to mail me, everything has been fabricated. Because if I had received the certificates, it would have been replied to as we replied to [Steven Sego's notice].”

Discussion

The statutory background of proceedings such as this one is set forth in Goza v. Commissioner, 114 T.C. 176, (2000). For completeness and because of its direct relevance, we repeat here that portion of the discussion.

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 is authorized to collect such tax by levy upon property belonging to the taxpayer. Section 6331(d) provides that the Secretary is obliged to provide the taxpayer with notice, including notice of the administrative appeals available to the taxpayer, before proceeding with collection by levy on the taxpayer's property.

In the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Pub.L. 105–206, sec. 3401, 112 Stat. 685, 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide due process protections for taxpayers in tax collection matters. Section 6330 generally provides that the Commissioner cannot proceed with the collection of taxes by way of a levy on a taxpayer's property until the taxpayer has been given notice of and the opportunity...