Charles I. Covey v. USA

1The Honorable Peter J. Panuthos, Chief Special Trial Judge, United States Tax
Court.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-3521
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Xavier J. R. Avula; Sulochana D. *
Avula, *
*
Appellants, *
* On Appeal from the United States
v. * Tax Court.
*
Commissioner of Internal Revenue, * [UNPUBLISHED]
*
Appellee. *
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Submitted: July 8, 2004
Filed: July 27, 2004 (Corrected: August 4, 2004)
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Before WOLLMAN, LAY, and MELLOY, Circuit Judges.
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PER CURIAM.
Xavier J.R. Avula and Sulochana D. Avula (“Taxpayers”) appeal the Tax
Court’s 1 order granting summary judgment in favor of the Commissioner of Internal
Revenue (“Commissioner”) and upholding the Commissioner’s determination of
collection action to be taken with respect to income tax assessments against
Taxpayers for the 1991, 1992, 1994, and 1995 tax years. After de novo review of the

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record, we affirm. See Cox v. Comm’r, 121 F.3d 390, 391 (8th Cir. 1997) (standard
of review).
On January 29, 1998, the Commissioner issued Taxpayers a notice of
deficiency for the tax years in question. Taxpayers thereafter petitioned the Tax
Court for a redetermination of the deficiencies. Following a trial on November 13,
1999, the court entered a decision holding Taxpayers liable for deficiencies in
income, additions to tax, and accuracy-related penalties. Taxpayers did not appeal
this decision. The Commissioner then issued a notice of intent to levy followed by
a determination that the proposed levy action should proceed. Taxpayers petitioned
the Tax Court for a collection due process hearing (“CDP”) on the Commissioner’s
decision to proceed with the collection of their income tax liabilities. However,
Taxpayers challenged only their underlying tax liabilities, not the collection actions.
The Tax Court granted summary judgment to the Commissioner, concluding
Taxpayers were not entitled to challenge their underlying tax liabilities in the CDP
hearing.
We find no error in the Tax Court’s decision. The Internal Revenue Code
(“Code”) grants a taxpayer the right to a hearing on a proposed levy action and allows
the taxpayer to raise any relevant issue relating to the unpaid tax or collection actions,
including spousal defenses, challenges to the appropriateness of the intended
collection activities, and possible alternative means of collection. See 26 U.S.C.
§ 6330(a)(3)(B) & (c)(2)(A). However, the Code allows a taxpayer to challenge the
existence or amount of an underlying tax liability only if the taxpayer “did not receive
any statutory notice of deficiency for such tax liability or did not otherwise have an
opportunity to dispute such tax liability.” Id. § 6330(c)(2)(B); see also Katz v.
Comm’r, 115 T.C. 329, 339 (2000). In this case, Taxpayers received a statutory
notice of deficiency for their tax liabilities in 1998 and litigated the merits of their
liabilities in the Tax Court in 1999. At the CDP hearing and on appeal, Taxpayers
challenge only their underlying tax liabilities. Because they are precluded from doing

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so, the Tax Court did not err in granting summary judgment in favor of the
Commissioner.
Accordingly, we affirm the Tax Court’s decision.
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