Opinion
22829-22L
03-27-2024
GLEN A. LEWIS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Elizabeth Crewson Paris Judge
This case is before the Court on a petition for review of a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. In the Notice of Determination, respondent rejected petitioner's proposed Offer in Compromise (proposed OIC) but declined to sustain the proposed action to collect petitioner's outstanding tax liabilities for 2010, 2016, and 2018 because petitioner entered into an Installment Agreement to repay the liabilities. Petitioner filed a Petition arguing that the Settlement Officer should have accepted the proposed OIC. On October 5, 2023, respondent filed a Motion for Summary Judgment (Motion), docket entry 23, and Declaration of Nchekube Onyima in Support of Motion for Summary Judgment, docket entry 24. Respondent filed a First Amendment to Motion for Summary Judgment, docket entry 25, on October 11, 2023. Petitioner filed a Response to Motion for Summary Judgment, docket entry 29, on November 20, 2023, and a First Amendment to Response to Motion for Summary Judgment (Amended Response), docket entry 30, on December 8, 2023. In the Motion, respondent contends that there are no genuine issues of material fact and that the determination should be upheld as a matter of law.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The following facts are based on the parties' pleadings and motion papers, the attached declaration, and exhibits which comprise the administrative record. The facts stated are not findings of fact by this Court and are stated herein solely for the purpose of resolving the present Motion. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). Petitioner resided in California when he filed the Petition.
For tax years 2010 and 2018, petitioner failed to pay self-reported tax liability shown on his income tax returns. For tax year 2016, petitioner failed to pay liability shown on his 2016 return and additionally failed to report taxable income reported on Form 1099-MISC, and respondent determined a deficiency and accuracy related penalty pursuant to section 6662(a). Respondent issued a notice of deficiency with respect to the unreported income, and petitioner did not file a petition with this Court to contest the adjustment. Accordingly, respondent assessed the deficiency on November 12, 2018.
On November 23, 2018, respondent filed a Notice of Federal Tax Lien (NFTL) with respect to an outstanding tax liability for petitioner's tax year 2015, and on November 30, 2020, respondent filed an NFTL with respect to petitioner's tax years 2010, 2016, 2017, and 2018.
On August 16, 2021, respondent issued petitioner Notice CP90, Notice of Intent to Seize your Assets and of Your Right to a Hearing (levy notice). In response, petitioner timely submitted Form 12153, Request for Collection Due Process or Equivalent Hearing (CDP Hearing Request), on which he requested an Offer in Compromise and Lien Subordination. Along with the CDP Hearing Request, petitioner attached Form 14134, Application for Certificate of Subordination of Federal Tax Lien.
On September 9, 2021, respondent's Offer in Compromise Unit (OIC Unit) received petitioner's proposed OIC for tax years 2009, 2010, 2015, 2016, 2017, 2018, and 2019. By letter dated January 11, 2022, the Settlement Officer assigned to petitioner's Collection Due Process case contacted petitioner to inform him that his hearing would be delayed pending a determination on his proposed OIC.
On June 21, 2022, respondent's OIC Unit issued a letter preliminarily rejecting petitioner's proposed OIC on the basis that petitioner had the ability to fully pay the liability within the time permitted by law and that the special circumstances claimed by petitioner did not warrant a hardship. The OIC Unit forwarded petitioner's proposed OIC to the Settlement Officer to review along with petitioner's Collection Due Process case.
The Settlement Officer scheduled the conference for September 13, 2022. Petitioner was granted a Collection Due Process hearing with respect to the levy notice issued for tax years 2010, 2016, and 2018, and an equivalent hearing with respect to the NFTL filed for tax years 2010, 2016, 2017, and 2018. In the letter scheduling the hearing, the Settlement Officer advised that the OIC Unit had preliminarily rejected petitioner's Offer in Compromise and requested documentation on specific issues petitioner disputed within 14 days of the hearing.
Prior to the Collection Due Process hearing, the Settlement Officer verified that the requirements of applicable law and administrative procedure were met, that assessment was properly made, that notice and demand for payment was mailed to petitioner's last known address, that a balance was due when the levy notice was issued, and that she had no prior involvement with respect to the tax periods at issue.
At the designated time, petitioner and his power of attorney called the Settlement Officer for the hearing. During the hearing, the participants discussed the rejection of the proposed OIC, and the Settlement Officer explained that, based on the information provided, petitioner had the ability to fully pay his liability within the time permitted by law and that his circumstances did not warrant a hardship. Petitioner did not provide any documentation or other information to support reconsideration of the proposed OIC.
During the hearing, petitioner expressed his interest in lien subordination but, on the advice of his power of attorney, agreed to pursue the lien subordination outside of the Collection Due Process context.
Petitioner also questioned why a balance remained due for tax year 2010, as a prior Offer in Compromise (prior OIC) had been accepted with respect to that liability. The Settlement Officer explained that petitioner had defaulted on the prior OIC and, consequently, the 2010 liability was recalculated.
The Settlement Officer proposed an Installment Agreement of $2,865 per month, beginning October 28, 2022. Petitioner requested to begin making payments in November 2022, and the Settlement Officer explained that the change in date would require the payment amount increase to $2,874 per month. Petitioner agreed to the adjustment and submitted a signed Form 433-D, Installment Agreement, on September 16, 2022.
On September 30, 2022, respondent issued the Notice of Determination, declining to sustain the proposed levy because petitioner had entered into an Installment Agreement to pay the tax liabilities. Petitioner timely filed the Petition with this Court.
Discussion
I. Summary Judgment
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The moving party bears the burden of proving that there is no genuine issue of material fact. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). 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 other acceptable materials, together with affidavits or declarations, if any, show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law. See Rule 121(a)(2). Facts are viewed in the light most favorable to the nonmoving party. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994).
II. Section 6330 Hearing
Section 6331(a) authorizes the Secretary to levy upon property and rights to property of a taxpayer liable for any tax who fails to pay within 10 days after notice and demand for payment. Section 6331(d) provides that the levy authorized by section 6331(a) may be made with respect to any unpaid tax only after the Secretary has notified the person in writing of his intention to make the levy at least 30 days before any levy action is begun. Section 6330 elaborates on section 6331 and provides that the written notice must inform the taxpayer of his right to request a Collection Due Process hearing. § 6330(A)(3)(B).
If a Collection Due Process hearing is requested, the hearing is to be conducted by the IRS Independent Office of Appeals. § 6330(b)(1). During the hearing, the Settlement Officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. § 6330(c)(1). The taxpayer may raise at the hearing any relevant issue relating to the unpaid tax or the collection action, including challenges to the appropriateness of the collection action and offers of collection alternatives. § 6330(c)(2)(A), (3)(B). The taxpayer may also raise at the hearing challenges to the existence or amount of the underlying liability if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute it. § 6330(c)(2)(B). Finally, Appeals must consider whether the collection action balances the need for efficient collection against the taxpayer's concern that the collection be no more intrusive than necessary. § 6330(c)(3)(C).
The Court has jurisdiction to review determinations concerning collection actions when the taxpayer timely petitions for review. § 6330(d)(1). Where the validity of a taxpayer's underlying liability is properly at issue, the Court reviews the determination with respect to that issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182. Because petitioner did not challenge the underlying tax liabilities during the CDP hearing or in the Petition, the Court reviews the determination only for abuse of discretion.
The record in this case includes copies of petitioner's account transcripts for the years at issue. Such transcripts may be used to satisfy the verification requirements of section 6330(c)(1). Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), aff'd 239 F.3d 1224 (11th Cir. 2003). The transcripts of account and other documents in the record show that the Settlement Officer properly verified that the requirements of applicable law or administrative procedure have been met.
The Settlement Officer also addressed all of the issues raised by petitioner. Petitioner questioned why a balance remained due for 2010, after he had paid approximately $27,000 following the acceptance of the prior OIC. The Settlement Officer explained that the prior OIC had been defaulted because petitioner incurred additional tax liabilities and, as a result, the 2010 balance was recalculated. Petitioner also challenged the rejection of the proposed OIC. The Settlement Officer explained that the OIC Unit preliminarily determined to reject petitioner's proposed OIC on the basis that petitioner had the ability to fully pay the liability within the time permitted by law and that the alleged special circumstances did not warrant a hardship, but permitted petitioner to provide additional documentation if he wanted reconsideration. Petitioner did not do so. The Court has consistently held that it is not an abuse of discretion to reject a collection alternative where the taxpayer has failed, after being given sufficient opportunity, to supply required information. See, e.g., McMurtry v. Commissioner, T.C. Memo. 2019-22, at *7-8; Huntress v. Commissioner, T.C. Memo. 2009-161; Prater v. Commissioner, T.C. Memo. 2007-241.
The record additionally shows, and petitioner does not contest, that the Settlement Officer considered whether the collection action (i.e., petitioner's Installment Agreement) "balances the need for efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." § 6330(c)(3)(C). Petitioner voluntarily agreed to the proposed Installment Agreement, subject to a small adjustment in timing and amount, and the Settlement Officer accordingly did not sustain the proposed levy action. The Court finds no abuse of discretion.
III. Conclusion
Based on the record, the Court concludes that there is no genuine issue of material fact and holds that respondent is entitled to the entry of a decision sustaining the Notice of Determination as a matter of law. In reaching this decision, the Court has considered all arguments made and, to the extent not addressed herein, concludes that they are moot, irrelevant, or otherwise without merit.
Upon due consideration and for cause, it is ORDERED that respondent's Motion for Summary Judgment, as amended is granted. It is further
ORDERED AND DECIDED that respondent's Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, upon which this case is based, is sustained.