Opinion
13134-22L
08-23-2023
MARSHA JEANETTE PARHAM-GREEN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Joseph W. Nega, Judge
This collection due process (CDP) case is presently calendared for an in-person trial at the session of the Court scheduled to commence on Monday, September 18, 2023, in Baltimore, Maryland. On July 19, 2023, respondent filed a Motion for Summary Judgment (respondent's motion). By Order issued July 20, 2023, the Court directed petitioner to respond to respondent's motion before August 21, 2023. As of August 23, 2023, petitioner has not filed a response.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
I. Background
Petitioner failed to file federal income tax returns for tax years 2014, 2016, and 2017. On February 19, 2019, respondent sent two notices of deficiency to petitioner for tax years 2014 and 2016, determining deficiencies of $19,602 and $18,357 and additions to tax under sections 6651(a)(1) and (a)(2) and section 6654. On October 21, 2019, respondent sent a notice of deficiency to petitioner for tax year 2017, determining a deficiency of $23,704 and additions to tax under sections 6651(a)(1) and (a)(2) and section 6654. Petitioner did not file a Petition to challenge these notices with the Court at that time.
On June 28, 2021, respondent issued to petitioner a LT11, Notice of Intent to Levy and Your Collection Due Process Right to a Hearing (notice of intent to levy), which corresponded to petitioner's federal income tax liability for tax years 2014, 2016, and 2017; interest; and sections 6651(a)(1) and (a)(2) and section 6654 additions to tax. July 28, 2021, petitioner timely submitted to respondent a Form 12153, Request for a Collection Due Process or Equivalent Hearing. On the Form 12153, petitioner did not request collection alternatives; petitioner did check the box for "Other" as to why she disagreed with the proposed levy and wrote: "paid all of my taxes, tax returns not filed due to missing information not yet received. Tax debt does not represent applicable deductions."
Petitioner's CDP case was assigned to Settlement Officer (SO) Keith McGee. On March 14, 2022, SO McGee mailed to petitioner a letter scheduling a telephone conference for April 5, 2022, and requesting additional information. Petitioner did not join the April 5, 2022 conference call, communicate with SO McGee at all, or provide any additional information. On April 5, 2022, SO McGee sent a follow up letter to petitioner requesting that petitioner contact SO McGee. Petitioner did not contact SO McGee as requested.
On May 11, 2022, respondent issued to petitioner a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (notice of determination), sustaining the proposed levy for unpaid tax liability for tax years 2014, 2016, and 2017. Petitioner timely filed a Petition with this Court on June 11, 2022. Petitioner checked the box on the Petition seeking review of notices of deficiency (issued in 2019) and mistakenly identified 2015 as one of the years for which respondent issued a notice of deficiency or notice of determination. The Court dismissed the Petition for lack of jurisdiction with respect to the notices of deficiency issued more than 6 months prior to the filing of the Petition, and with respect to all issues related to 2015, but retained jurisdiction over the Petition to the extent that it sought review of the notice of determination.
II. Discussion
A. Summary Judgment Standard
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C 678, 681 (1998). The Court may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe factual materials and draw inferences therefrom in the light most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. However, the nonmoving party may not rest upon mere allegations or denials of his pleadings but, rather, must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see Sundstrand Corp., 98 T.C. at 520.
B. Standard & Scope of Review
Section 6330(d)(1) grants this Court jurisdiction to review the SO's determination in connection with a CDP hearing. Section 6330(c)(2) prescribes the matters that a taxpayer may raise at a CDP hearing, including spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. The existence or amount of the underlying tax liability may be contested at a CDP hearing only if the taxpayer did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. See § 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 180- 81 (2000).
If the validity of the underlying tax liability is properly at issue, the Court will review the taxpayer's liability de novo. See Sego, 114 T.C. at 609-10. Where the validity of the underlying tax liability is not properly at issue, the Court will review the SO's determination for abuse of discretion. Id. at 610. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006).
C. Underlying Liability
A taxpayer may challenge the existence or amount of underlying tax liability in a CDP proceeding only "if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." § 6330(c)(2)(B). The phrase "underlying tax liability" includes the tax due, any additions to tax or penalties, and statutory interest. See Katz v. Commissioner, 115 T.C. 329, 339 (2000).
A properly completed Form 3877 that reflects the timely mailing of a notice of deficiency to a taxpayer to the taxpayer's correct address by certified mail, absent evidence to the contrary, establishes that the notice was properly mailed to the taxpayer. Diamond v. Commissioner, T.C. Memo. 2012-90, 103 T.C.M. (CCH) 1480, 1482. Compliance with Form 3877 mailing procedures raises a presumption of official regularity in favor of respondent that, where unrebutted, can establish that a taxpayer received the notice of deficiency. See Sego, 114 T.C. at 611.
Here, respondent produced a copy of the notices of deficiency for tax years 2014 and 2016 issued to petitioner on February 19, 2019 as well as the notice of deficiency for 2017 issued to petitioner on October 21, 2019. These notices were each properly sent by certified mail to the same address that petitioner listed on the Petition which was also petitioner's last known address at the times the notices were sent. Respondent has also produced a copy of a properly completed Form 3877 for each notice of deficiency with certified mailing numbers matching the numbers found on the notices and date-stamps matching the date of the notices. Respondent is thus entitled to a presumption of official regularity with respect to the mailing of the 2014, 2016, and 2017 statutory notices of deficiency. See, e.g., Klingenberg v. Commissioner, T.C. Memo. 2012-292, at *14-15 (finding presumption of official regularity raised where Commissioner established noticed of deficiency were sent by certified mail to petitioner's last known address); Crain v. Commissioner, T.C. Memo. 2012-97, 103 T.C.M. (CCH) 1533, 1536.
In addition to the requirement that a taxpayer did not have a prior opportunity to challenge the underlying liability, to preserve such a challenge, a taxpayer must actually raise the issue of the underlying liability during the CDP proceeding. See Giamelli v. Commissioner, 129 T.C. 107, 112-16 (2007); Treas. Reg. § 301.6330-1(f)(2) Q&A-F3.
Here, the record is clear that petitioner did not dispute the underlying liability during the CDP proceeding since petitioner did not attend the CDP hearing or communicate with SO McGee at all. Consequently, even assuming arguendo that petitioner did not receive the notices of deficiency, petitioner did not preserve a challenge to their underlying liability for review in this Court.
D. Abuse of Discretion
1. Issues Raised
We now turn to the remaining issues, which we review for abuse of discretion. Construing the pro se Petition liberally, petitioner alleges that SO McGee abused his discretion by closing the file and issuing a notice of determination after not hearing from petitioner at all between March 14, 2022 and May 11, 2022. On the administrative record before us, we see no abuse of discretion. See Belair v. Commissioner, 157 T.C. 10, 17 (2021) ("It is not an abuse of discretion for Appeals to move ahead with its final determination after an Appeals officer gives a taxpayer an adequate timeframe to submit requested items and the taxpayer fails to submit those items."). Petitioner also alleges that SO McGee abused his discretion by failing to consider collection alternatives. On the administrative record before us, it appears that petitioner neither requested collection alternatives in her request for a CDP hearing nor communicated any such request to SO McGee. We see no abuse of discretion. See DAF Charters, LLC v. Commissioner, 152 T.C. 250, 267 (2019) ("It is not an abuse of discretion for an Appeals officer to sustain a collection action and not consider collection alternatives when the taxpayer has proposed none.").
2. Verification & Balancing Obligations
We finish with the issues of verification and balancing, which we generally review regardless of whether raised by the taxpayer in the CDP proceeding. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Section 6330(c)(1) and (3) require that the SO: (1) properly verify that the requirements of applicable law or administrative procedure have been met and (2) consider whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection be no more intrusive than necessary. On the record before us, we are satisfied that SO McGee verified that petitioner's liability was properly assessed and that other relevant legal requirements were met. Finally, we conclude that SO McGee's determination to sustain the levy appropriately balanced the statutorily-prescribed interests, given petitioner's failure to comply with deadlines and lack of filing compliance for tax years 2014, 2016, and 2017. See Belair, 157 T.C. at 19; Pough v. Commissioner, 135 T.C. 344, 352 (2010).
III. Conclusion
Finding no abuse of discretion, we will grant respondent's motion.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed July 19, 2023, is granted. It is further
ORDERED AND DECIDED that the Notice of Determination Concerning Collection Actions Under IRS Sections 6320 or 6330 of the Internal Revenue Code, dated May 11, 2022, upon which this case is based, is sustained, and respondent may proceed with the collection action as determined for tax year 2014, 2016, and 2017.