Opinion
21419-22L
09-27-2023
RONALD D. SCHIVO & CAROL SCHIVO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Joseph Robert Goeke, Judge
Pending before the Court in this collection due process (CDP) case is respondent's Motion for Summary Judgment, filed March 30, 2023. Petitioners timely filed a Petition pro se for review of a determination to sustain a levy under section 6330(d)(1). In his Motion respondent informed the Court that petitioners objected to the granting of the Motion. The Court ordered petitioners to respond but they did not do so by the deadline set by the Court.
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.
Background
The background is based on the parties' pleadings, respondent's Motion papers, Declaration, and attached Exhibits and is stated solely for the purpose of ruling on respondent's Motion. Petitioners concede that they have unpaid tax.
On May 18, 2021, respondent sent to each petitioner a notice of intent to levy (levy notice) that stated that they owed tax of approximately $240,000 as of May 28, 2021. The levy notices did not specify the type of tax owed or the taxable years for which petitioners owed tax. Petitioners timely requested a CDP hearing and listed that the taxable years at issue were 2005, 2015, 2016, and 2017 for Form 1040, U.S. Individual Income Tax.
On December 21, 2021, the settlement officer (SO) in the IRS Independent Office of Appeals who was assigned to the hearing request sent a letter to petitioners that acknowledged receipt of the request and specified that there were three taxable years at issue, 2005, 2015, and 2017. Before the CDP hearing the SO recognized that there was confusion over the taxable years for which petitioners owed tax. He wrote in his activity log that the levy notices did not list the tax periods for which petitioners owed tax and that the levy notices were missing a page that would have listed the taxable periods. He determined that petitioners owed tax for 2014, added 2014 to the CDP hearing, and requested a freeze on petitioners' account for 2014. He apparently determined that petitioners did not owe tax for 2016 even though petitioners included 2016 in the CDP hearing request. There is nothing in the part of the administrative record before the Court that establishes to our satisfaction which taxable years petitioners owed tax.
The SO conducted the CDP hearing by telephone with Carol Schivo on February 1, 2022. After consideration of the substantive issues that petitioners raised with respect to collection alternatives, the SO determined to sustain the levy. On August 19, 2022, respondent issued a notice of determination to each petitioner that purported to sustain levy notices for 2005, 2014, 2015, and 2017. The attachment to each notice of determination states "[a]n assessment was properly made for each tax and period listed on the CDP notice." However, as we stated above, the types of tax and taxable periods were not specified on the levy notices.
Standard for Summary Judgment
We may grant summary judgment where there is no genuine dispute of material fact and a decision may be rendered as a matter of law. See Rule 121(a)(2); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). We construe the facts and draw all inferences in the light most favorable to the nonmoving party to decide whether summary judgment is appropriate. See Rule 121(d); Bond v. Commissioner, 100 T.C. 32, 36 (1993).
Petitioners have not contested their underlying tax liabilities in this case. Accordingly, we limit our review to the administrative record and review the determination to sustain the levy for abuse of discretion. Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009), aff'g in part T.C. Memo. 2006-166; Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000); Starcher v. Commissioner, T.C. Memo. 2021-144, at 7. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. See Belair v. Commissioner, 157 T.C. 10, 17 (2021); Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006).
Petitioners resided in California when they filed the Petition. Absent an agreement to the contrary, our decision in this case is appealable to the U.S. Court of Appeals for the Ninth Circuit, see § 7482(b)(1)(G)(i), (2), which has held that absent a proper challenge to the underlying tax liability, the scope of our review is confined to the administrative record.
The SO is required to verify that the requirements of all applicable law and administrative procedures were met. § 6330(c)(1). We have authority to review whether the verification requirement was satisfied regardless of whether the taxpayer raised the issue at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 200-03 (2008), supplemented by 136 T.C. 463 (2011). All applicable requirements of the law and administrative procedures were not met in the issuance of the levy notices to petitioners. Specifically, the levy notice is required to "specify each tax and tax periods that will be or was included in the levy." Treas. Reg. § 301.6330-1(a)(3), Q&A-A3. The levy notices did not specify the taxable years for which petitioners owed tax, the amount of tax owed for each year, or the type of tax that they owed.
While the SO attempted to clarify the confusion over the taxable years for which petitioners owed tax, this is not sufficient to satisfy the verification requirement. The SO did not properly verify that all applicable law and administrative procedures were met in the issuance of the levy notices. Accordingly, respondent is not entitled to summary judgment that there was no abuse of discretion in the determination to sustain the levy.
The levy notices that fail to specify the taxable periods for which the taxpayers owe tax are invalid. Petitioners have not moved to dismiss this case on the ground that the levy notices were invalid. If they chose to do so, the Court would entertain such a Motion.
Upon due consideration, it is
ORDERED that respondent's Motion for Summary Judgment, filed March 30, 2023, is denied. It is further
ORDERED that this case is calendared for trial at the San Francisco, California Special Session of the Court scheduled to commence on April 8, 2024, at a time and date certain of 1:00 p.m., on Monday, April 8, 2024, in Room 2-1409, Burton Federal Bldg. & U.S. Courthouse, 450 Golden Gate Avenue, San Francisco, California 94102. It is further
ORDERED that the Clerk of the Court is directed to attach a copy of the Court's Standing Pretrial Order for the April 8, 2024, San Francisco, California, Special Session to this Order.
This Order constitutes official notice of its contents to the parties.