T.C. Memo. 2014-32
UNITED STATES TAX COURT
ROBERT ALAN LYONS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19739-11L. Filed February 25, 2014.
Robert Alan Lyons, pro se.
Brock E. Whalen and Daniel N. Price, for respondent.
MEMORANDUM OPINION
GUY, Special Trial Judge: This collection review case is before the Court
on respondent’s motion for summary judgment filed pursuant to Rule 121.1
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect at all relevant times, and all Rule
(continued...)
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[*2] Petitioner filed a response in opposition to respondent’s motion. We
conclude that there is no genuine dispute of a material fact in this case, and
respondent is entitled to judgment as a matter of law sustaining the determination
of the Internal Revenue Service Office of Appeals (Appeals Office) to proceed
with a proposed levy to collect petitioner’s unpaid Federal income tax liabilities
for 2004, 2005, and 2006 (years in issue).
Background
The record establishes and/or the parties do not dispute the following.
Petitioner has failed to file Federal income tax returns for the taxable years
2004 to 2011. On July 29, 2008, respondent prepared substitutes for returns for
the years in issue. See sec. 6020(b).
On November 17, 2008, respondent mailed to petitioner by certified mail
separate notices of deficiency2 determining deficiencies in and additions to his
Federal income tax for the years in issue as follows:
1
(...continued)
references are to the Tax Court Rules of Practice and Procedure. All monetary
amounts are rounded to the nearest dollar.
2
The notices of deficiency were addressed to petitioner at the same address
that he listed as his current address in the petition that he filed to institute this
proceeding.
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[*3] Additions to tax
Sec. Sec. Sec.
Year Deficiency 6651(a)(1) 6651(a)(2) 6654
2004 $9,042 $1,359 $1,238 $164
2005 24,821 4,685 3,019 817
2006 38,533 8,220 3,105 1,718
Petitioner did not file a petition for redetermination with the Court pursuant to
section 6213(a).
On April 13, 2009, respondent entered assessments against petitioner for the
deficiencies and additions to tax determined in the notices of deficiency described
above, along with statutory interest, and issued to petitioner notices and demand
for payment for the years in issue. Petitioner failed to make any payments.
On July 1, 2010, respondent issued to petitioner a Final Notice of Intent To
Levy and Notice of Your Right to a Hearing for the years in issue. Petitioner
thereafter submitted to respondent a timely Form 12153, Request for a Collection
Due Process or Equivalent Hearing, stating: “The taxpayer wishes to resolve all
balances due through an Installment Agreement but must first determine the
accurate balance due, as those presently assessed represent ‘Substitute for Return’
assessments.”
Subsequently, the case was assigned to a settlement officer (SO) in the
Appeals Office. The case was soon reassigned to a different SO after petitioner
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[*4] complained that the SO first assigned to the case had failed to mail official
correspondence to him timely. During the course of the administrative
proceedings, the second SO and the Appeals team manager (ATM) requested that
petitioner submit a completed Form 433-A, Collection Information Statement for
Wage Earners and Self-Employed Individuals, and his delinquent tax returns for
several years, including the years in issue. The SO sent wage and income
transcripts to petitioner to assist him in preparing his delinquent tax returns for
2007 to 2009. During a telephone conference on June 7, 2011, petitioner informed
the SO that he was suffering from various medical conditions and that he did not
have the financial resources or the energy to prepare his delinquent tax returns.
Although petitioner remained in contact with the SO, he did not submit a Form
433-A or other financial statement, his delinquent tax returns, or documentation
that would aid in determining his correct tax liability for the years in issue.
On July 19, 2011, after consulting with her ATM, the SO issued to
petitioner a Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 sustaining the proposed levy action for the years in
issue. The record shows that the SO conducted a thorough review of transcripts of
petitioner’s account and verified that requirements of applicable law and
administrative procedure had been met by confirming the timeliness of assessment
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[*5] of the amounts in dispute and that appropriate collection notices had been
sent to petitioner.3 The SO balanced the need for efficient collection of taxes with
the legitimate concern of petitioner that any collection be no more intrusive than
necessary by finding that no alternative collection action would be available or
proper at that time given petitioner’s failure to submit financial information
relevant to such an alternative or to achieve current compliance with filing and
payment obligations.
On August 25, 2011, petitioner filed a timely petition commencing this
case.4 The petition states in relevant part: “The IRS did not have any information
regarding my business expenses, home office deductions, and the cost basis of my
stock sales for all 3 tax years.” After respondent filed an answer to the petition,
the parties filed a joint motion to remand the case to the Appeals Office for further
consideration of whether petitioner might qualify for an installment agreement.
The Court granted the parties’ motion and ordered them to cooperatively arrange a
further administrative hearing no later than July 5, 2012, and file status reports
with the Court no later than July 18, 2012.
3
The administrative record includes various transcripts of account, including
Forms 4340, Certificate of Assessments, Payments, and Other Specified Matters,
for the years in issue.
4
Petitioner resided in Texas at the time the petition was filed.
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[*6] On July 17, 2012, respondent filed a status report and attached thereto a
supplemental notice of determination in which the Appeals Office determined that
it was appropriate to proceed with the proposed levy action. Respondent’s status
report states that, while the case was on remand, petitioner failed to submit to the
Appeals Office a current Form 433-A or produce his delinquent income tax
returns. Petitioner did not file a status report.
The case was set for trial in San Antonio, Texas, on September 30, 2013.
Although there was no appearance by or on behalf of petitioner when his case was
called from the trial calendar, the Court later learned that petitioner was unable to
appear because of a medical emergency. Under the circumstances, the Court
continued the case and directed the parties to file status reports.
On December 13, 2013, respondent filed the motion for summary judgment
presently before the Court. Respondent’s motion is supported by declarations
executed by SO Sean P. Franklin5 and respondent’s counsel, Brock E. Whalen,
along with exhibits drawn from the administrative record. On January 10, 2014,
petitioner filed a response in opposition to respondent’s motion. Petitioner
5
SO Franklin was assigned to petitioner’s case after the Court remanded the
case to the Appeals Office for further consideration.
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[*7] attached exhibits to his response with the aim of challenging the amounts of
his tax liabilities for the years in issue.
Discussion
Summary judgment serves to “expedite litigation and avoid unnecessary and
expensive trials.” Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
Either party may move for summary judgment upon all or any part of the legal
issues in controversy. Rule 121(a). We may grant summary judgment only if
there are no genuine disputes or issues of material fact. Rule 121(b); Naftel v.
Commissioner, 85 T.C. 527, 529 (1985).
Respondent, as the moving party, bears the burden of proving that no
genuine dispute or issue exists as to any material fact and that he is entitled to
judgment as a matter of law. FPL Grp., Inc. & Subs. v. Commissioner, 115 T.C.
554, 559 (2000); Bond v. Commissioner, 100 T.C. 32, 36 (1993). In deciding
whether to grant summary judgment, the factual materials and the inferences
drawn from them must be considered in the light most favorable to the nonmoving
party. FPL Grp., Inc. & Subs. v. Commissioner, 115 T.C. at 559; Bond v.
Commissioner, 100 T.C. at 36. When a motion for summary judgment is made
and properly supported, the party opposing the motion “‘may not rest upon the
mere allegations or denials of his pleading, but * * * must set forth specific facts
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[*8] showing there is a genuine issue for trial.’” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986) (quoting Fed. R. Civ. P. 56(e)); see Rule 121(d); Grant
Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988).
I. Section 6330
Section 6331(a) authorizes the Secretary to levy upon property and property
rights of a taxpayer liable for taxes who fails to pay those taxes within 10 days
after a notice and demand for payment is made. Section 6331(d) provides that the
levy authorized in section 6331(a) may be made with respect to unpaid tax only if
the Secretary has given written notice to the taxpayer 30 days before the levy.
Section 6330(a) requires that the written notice include the amount of the unpaid
tax and the taxpayer’s right to an administrative hearing.
If an administrative hearing is requested, the hearing is to be conducted by
the Appeals Office. Sec. 6330(b)(1). In rendering an administrative determination
in a collection review proceeding, the Appeals Office must verify that the
requirements of any applicable law and administrative procedure have been met in
processing the taxpayer’s case. Sec. 6330(c)(1), (3)(A). The Appeals Office also
must consider any issues raised by the taxpayer relating to the collection action,
including offers of collection alternatives (such as an installment agreement),
appropriate spousal defenses, and challenges to the appropriateness of the
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[*9] collection action. Sec. 6330(c)(2)(A), (3)(B). A taxpayer may challenge the
existence or amount of his or her underlying tax liability only if the taxpayer did
not receive a notice of deficiency or did not otherwise have an earlier opportunity
to dispute such tax liability. Sec. 6330(c)(2)(B). Finally, the Appeals Office must
consider whether the collection action balances the need for efficient collection
against the taxpayer’s concern that collection be no more intrusive than necessary.
Sec. 6330(c)(3)(C).
This Court has jurisdiction under section 6330 to review the
Commissioner’s administrative determinations. Sec. 6330(d); see Iannone v.
Commissioner, 122 T.C. 287, 290 (2004). Where the underlying tax liability is
properly at issue, we review the determination de novo. Goza v. Commissioner,
114 T.C. 176, 181-182 (2000). Where the underlying tax liability is not at issue,
we review the determination for abuse of discretion. Id. at 182.
II. Petitioner’s Underlying Tax Liabilities
The record shows that, although respondent mailed notices of deficiency to
petitioner for the years in issue, petitioner failed to file a petition for
redetermination with the Court. See sec. 6213(a). Petitioner has not alleged at
any stage of these proceedings that he did not receive the notices of deficiency
and, under the circumstances, we assume that he did receive them. It follows that
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[*10] petitioner is barred from challenging the existence or amounts of his
underlying tax liabilities for the years in issue. Sec. 6330(c)(2)(B); see Sego v.
Commissioner, 114 T.C. 604, 610-611 (2000).
III. Collection Alternatives
Petitioner’s request for an administrative hearing included a statement that
he intended to propose an installment agreement.6 Section 6159 authorizes the
Commissioner to enter into written agreements allowing taxpayers to pay a tax
liability in installment payments if he deems that the “agreement will facilitate full
or partial collection of such liability.” The decision to accept or reject installment
agreements lies within the discretion of the Commissioner. See Thompson v.
Commissioner, 140 T.C. 173, 179 (2013) (citing Kuretski v. Commissioner, T.C.
Memo. 2012-262, at *9, and section 301.6159-1(a) and (c)(1)(i), Proced. &
Admin. Regs.). As a prerequisite for consideration or approval of an installment
agreement, it is generally incumbent upon the taxpayer to provide requested
financial information to permit an informed evaluation of his or her ability to pay.
See, e.g., secs. 6159, 7122; Kindred v. Commissioner, 454 F.3d 688, 697 (7th Cir.
6
We note that the petition filed to initiate this case contains nothing more
than a vague challenge to the amounts of petitioner’s underlying liabilities for the
years in issue. Although we might otherwise conclude that petitioner has
conceded the issue, we nevertheless will discuss his request for an installment
agreement for the sake of completeness.
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[*11] 2006); Olsen v. United States, 414 F.3d 144, 151 (1st Cir. 2005); Murphy v.
Commissioner, 125 T.C. 301, 315 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006).
Similarly, Internal Revenue Service (IRS) guidelines with respect to collection
alternatives direct that the taxpayer must be in compliance with filing and
estimated payment obligations. See Giamelli v. Commissioner, 129 T.C. 107,
111-112, 115-116 (2007). Moreover, it is not an abuse of discretion for the
Appeals Office to decline to consider an installment agreement where no specific
collection alternative proposal is ever placed before the reviewing officer. See
McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Kendricks v.
Commissioner, 124 T.C. 69, 79 (2005). Stated otherwise, it is the obligation of the
taxpayer, not the reviewing officer, to start negotiations regarding a collection
alternative by making a specific proposal.
The record reflects that, after the case was remanded to the Appeals Office
for further consideration, petitioner failed to submit the financial information
necessary to evaluate his ability to pay his tax liabilities by way of installment
payments. He likewise failed to submit his delinquent tax returns for taxable years
ending after the years in issue. The record amply demonstrates that the Appeals
Office provided clear instructions and multiple opportunities for petitioner to
remedy the situation so as to satisfy the conditions and open the door for
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[*12] consideration of collection alternatives generally. See, e.g., Murphy v.
Commissioner, 125 T.C. at 315 (“An appeals officer does not abuse her discretion
when she fails to take into account information that she requested and that was not
provided in a reasonable time.”); Dinino v. Commissioner, T.C. Memo. 2009-284
(noting consistency of Appeals officer’s approach with IRS guidelines stating that,
for purposes of good case management, no more than 14 days should be allowed
for submission of financial information); Gazi v. Commissioner, T.C. Memo.
2007-342 (“There is no requirement that the Commissioner wait a certain amount
of time before making a determination as to a proposed levy.”); see also sec.
301.6330-1(e)(3), Q&A-E9, Proced. & Admin. Regs. In sum, precedent
establishes that it is not an abuse of discretion for the Appeals Office to reject
collection alternatives and sustain proposed collection action on the basis of the
failure of taxpayers to submit requested financial information or to achieve current
compliance with filing obligations. See, e.g., Giamelli v. Commissioner, 129 T.C.
at 111-112, 115-116; Taylor v. Commissioner, T.C. Memo. 2009-27; Roman v.
Commissioner, T.C. Memo. 2004-20.
IV. Conclusion
The record shows that SO Franklin conducted a thorough review of
transcripts of petitioner’s account and verified that requirements of applicable law
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[*13] and administrative procedure had been met by confirming the timeliness of
assessment of the amounts in dispute and verifying that appropriate collection
notices had been sent to petitioner.7 Petitioner did not raise a spousal defense or
present a valid challenge to the appropriateness of respondent’s intended
collection action. These issues are now deemed conceded. See Rule 331(b)(4).
The SO also balanced the need for efficient collection of taxes with the legitimate
concern of petitioner that any collection be no more intrusive than necessary by
finding that no alternative collection action would be available or proper at that
time given petitioner’s failure to submit financial information relevant to such an
alternative or to achieve compliance with his filing and payment obligations.
Under the circumstances, we conclude the Appeals Office did not abuse its
discretion and respondent is entitled to judgment as a matter of law sustaining the
supplemental notice of determination issued July 16, 2012.
7
It is well settled that the Appeals Office may rely on Forms 4340 and
similar transcripts of account to satisfy the verification requirements of sec.
6330(c)(1). Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), aff’d, 329
F.3d 1224 (11th Cir. 2003); Nestor v. Commissioner, 118 T.C. 162, 166 (2002);
Lunsford v. Commissioner, 117 T.C. 183 (2001). The Forms 4340 attached as
exhibits to respondent’s motion and accompanying declarations, along with the
SO’s statements in the notice of determination, show that required assessment and
collection procedures were followed.
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[*14] To reflect the foregoing,
An appropriate order and decision
will be entered.