T.C. Memo. 2014-166
UNITED STATES TAX COURT
ROBERT TRIOLA AND NANCY V. TRIOLA, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9313-13L. Filed August 14, 2014.
Robert Miles Stahl, for petitioners.
Elizabeth C. Mourges and Nancy M. Gilmore, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioners
seek review pursuant to sections 6320(c)1 and 6330(d)(1) of the determination by
1
All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all monetary amounts to the nearest dollar.
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[*2] the Internal Revenue Service (IRS or respondent) to uphold a notice of
Federal tax lien filing and a notice of intent to levy. Respondent has moved for
summary judgment under Rule 121, contending that there are no disputed issues of
material fact and that his determination to sustain the proposed collection actions
was proper as a matter of law. We agree and accordingly will grant the motion.
Background
The following facts are based on the parties’ pleadings and respondent’s
motions, including the attached affidavits and exhibits. See Rule 121(b). Peti-
tioners resided in Maryland when they filed their petition.
Petitioners filed their Federal income tax returns for 2008 and 2009 late and
failed to pay the full amounts of tax shown as due on those returns. The IRS as-
sessed the tax shown as due and commenced an examination of both returns. For
2008 the IRS made adjustments to petitioners’ tax on account of mathematical or
clerical errors on the return. See sec. 6213(b)(1). Petitioners’ return failed to
supply a Social Security number (SSN) for a claimed dependent and supplied an
incorrect SSN for petitioner-wife. On account of those errors, the IRS made
adjustments to the recovery rebate credit, dependency exemption deduction, child
tax credit, additional child tax credit, and earned income tax credit claimed on the
2008 return. Respondent mailed petitioners a Letter 474C, advising them of these
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[*3] adjustments on account of the missing and incorrect SSNs. This letter
advised petitioners that they had 60 days to request abatement of the additional tax
specified therein. IRS records show that petitioners failed to respond to the Letter
474C.
For 2009 the IRS sent petitioners a notice of deficiency determining a
deficiency of $36,958, a section 6662(a) penalty of $7,392, and a section
6651(a)(1) addition to tax of $9,240. Petitioners did not file a petition in the Tax
Court challenging the 2009 notice of deficiency.
The IRS assessed the additional tax for 2008 flowing from the mathematical
or clerical adjustments and, after petitioners failed to petition from the 2009 no-
tice, the IRS assessed the deficiency, penalty, and addition to tax determined for
2009. In an effort to collect these assessed amounts, the IRS sent petitioners, in
October 2012, a Final Notice of Intent to Levy and Notice of Your Right to a
Hearing for tax year 2009 and a Notice of Federal Tax Lien Filing and Your Right
to a Hearing for tax years 2008 and 2009. Petitioners timely submitted Form
12153, Request for a Collection Due Process or Equivalent Hearing, which
challenged both notices. In their request, petitioners did not seek a collection
alternative. Rather, they argued that they owed no tax for 2008 and that their
additional liability for 2009 was less than $3,000.
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[*4] On January 31, 2013, a settlement officer (SO) from the IRS Appeals Office
sent petitioners a letter scheduling a telephone CDP hearing for March 12, 2013.
The SO informed petitioners that they could not challenge their underlying tax
liability for 2009 because they had had an earlier opportunity to do so but had
failed to take advantage of it by filing a Tax Court petition. The SO informed
petitioners that they were entitled to challenge their additional liability for 2008
but that they needed to provide her, before the hearing, with valid SSNs for the
claimed dependent and for petitioner-wife. The SO informed petitioners that, if
they wished her to consider a collection alternative, they would need to provide
her with a copy of a completed Form 433-A, Collection Information Statement for
Wage Earners and Self-Employed Individuals, with supporting financial
information.
Neither petitioners nor their counsel provided the requested documentation
before the scheduled CDP hearing. Petitioners’ counsel did call in for the hearing,
but only to ask that it be rescheduled. He indicated that he had not read in its en-
tirety the letter scheduling the hearing and was thus unaware of the requirement
that the requested information be supplied at or before the hearing. The SO de-
clined to reschedule the hearing, noting that petitioners had already been allowed
14 more days than is generally permitted to supply the requested information. On
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[*5] March 26, 2013, the IRS issued petitioners a notice of determination
sustaining the proposed collection actions, and they timely sought review in this
Court.
Petitioners initially requested that this case be conducted under the Court’s
small tax case (S) procedures. On July 11, 2013, respondent filed a motion to re-
move the S designation because the total unpaid tax, penalty, and addition to tax
for 2008 and 2009 exceed $50,000. See sec. 7463(f)(2). The Court ordered peti-
tioners to respond to this motion before August 1, 2013. Petitioners failed to re-
spond, and the Court removed the S designation.
On February 27, 2014, respondent filed a motion for summary judgment.
The Court ordered petitioners to file a response by April 9, 2014. Petitioners have
responded neither to respondent’s motion nor to the Court’s order.
Discussion
A. Summary Judgment
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 (1988). Under Rule 121(b) 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. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
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[*6] (1992), aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant
summary judgment, we construe factual materials and inferences drawn from them
in the light most favorable to the nonmoving party. Ibid. However, the
nonmoving party “may not rest upon the mere allegations or denials” but instead
“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.
Because petitioners failed to respond to respondent’s motion for summary
judgment, the Court could enter a decision against them for that reason alone. See
Rule 121(d). We will nevertheless consider the motion on its merits. We con-
clude that there are no material facts in dispute and that this case is appropriate for
summary adjudication.
B. Standard of Review
Neither section 6320(c) nor 6330(d)(1) prescribes the standard of review
that this Court should apply in reviewing an IRS administrative determination in a
CDP case. The general parameters for such review are marked out by our prece-
dents. Where the validity of the underlying tax liability is at issue, the Court re-
views the Commissioner’s determination de novo. Goza v. Commissioner, 114
T.C. 176, 181-182 (2000). Where the underlying tax liability is not properly at
issue, the Court reviews the IRS decision for abuse of discretion. Id. at 182.
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[*7] Abuse of discretion exists when a determination is arbitrary, capricious, or
without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301,
320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006).
Section 6330(c)(2)(B) permits challenges to the existence or amount of the
underlying tax liability in a CDP proceeding only when the taxpayer did not
receive a notice of deficiency or otherwise have a prior opportunity to contest that
liability. Petitioners received a notice of deficiency for 2009 but failed to petition
the Court. They are thus precluded from challenging the underlying tax liability
for 2009, and we will accordingly review the SO’s action with respect to that year
for abuse of discretion only.
For 2008 the IRS made a summary assessment under section 6213(b)(1) on
account of mathematical or clerical errors. The SO concluded, and respondent
agrees, that petitioners did not have a prior opportunity to challenge this assess-
ment and hence that they were entitled to raise the underlying liability for 2008 at
their CDP hearing. See Internal Revenue Manual pt. 21.5.4.1(7) (Oct. 1, 2008).2
2
In Perkins v. Commissioner, 129 T.C. 58 (2007), the Court held that a
taxpayer in a CDP case was entitled to challenge the underlying tax liability
attributable to a summary assessment made by the IRS under section 6213(b)(1)
on account of a math error. See id. at 65 n.8 (“Respondent does not contend that
petitioner’s right to invoke deficiency procedures with respect to the asserted
liability pursuant to sec. 6213(b)(2)(A) [concerning requests for abatement of
(continued...)
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[*8] An issue is not properly raised at a CDP hearing, however, if the taxpayer
fails to present any evidence to the IRS Appeals Office concerning that issue after
being given a reasonable opportunity to do so. See sec. 301.6330-1(f)(2), Q&A-
F3, Proced. & Admin. Regs. A taxpayer may not dispute his underlying tax
liability in this Court if he did not properly raise that issue at the CDP hearing.
See Thompson v. Commissioner, 140 T.C. 173, 178 (2013).
Although the SO gave petitioners an opportunity to challenge their under-
lying tax liability for 2008 at the CDP hearing, petitioners failed to mount a proper
challenge because they submitted no evidence. The only information the SO re-
quested consisted of valid SSNs for petitioner-wife and for the individual claimed
as a dependent on petitioners’ 2008 return. This information, if it exists, is not
time consuming to supply. The SO gave petitioners more than a month to furnish
these SSNs, and they have not explained why they were unable to provide the
SSNs within that period. Indeed, when respondent filed his motion for summary
judgment--more than 11 months after the CDP hearing--the IRS had yet to receive
valid SSNs from petitioners. Given these facts, we conclude that petitioners did
not properly raise their underlying tax liability for 2008 at the CDP hearing and,
2
(...continued)
mathematical or clerical errors] constituted ‘an opportunity to dispute’ the liability
within the meaning of sec. 6330(c)(2)(B).”).
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[*9] hence, that they are barred from disputing that liability in this Court. We will
therefore review the SO’s determination for 2008, as well as for 2009, for abuse of
discretion only. See Goza, 114 T.C. at 182.
C. Analysis
The remaining question is whether the SO abused her discretion in sus-
taining the proposed collection actions. We review the record to determine whe-
ther: (1) the SO properly verified that the requirements of any applicable law or
administrative procedure have been met; (2) any issues raised by the taxpayer have
merit; and (3) “any proposed collection action balances the need for the efficient
collection of taxes with the legitimate concern of the person that any collection
action be no more intrusive than necessary.” Sec. 6330(c)(3).
As to the first point, this Court has authority to review an SO’s satisfaction
of the verification requirement regardless of whether the taxpayer raised that issue
at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 200-203 (2008).
However, petitioners did not allege in their petition to this Court that the 2008
summary assessment failed the requirements of section 6213(b) or was otherwise
improper. That issue is therefore deemed conceded. See Rule 331(b)(4) (“Any
issue not raised in the assignments of error shall be deemed to be conceded.”);
Busche v. Commissioner, T.C. Memo. 2011-285, 102 T.C.M. (CCH) 567, 572
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[*10] (2011); Coleman v. Commissioner, T.C. Memo. 2010-51, aff’d, 420 Fed.
Appx. 663 (8th Cir. 2011).
In any event, even if petitioners had properly preserved this issue, they have
set forth no specific facts showing that there is a genuine issue for trial concerning
the propriety of the 2008 summary assessment. Where an assessment arises from a
mathematical or clerical error on the return, a notice of deficiency is not required.
See sec. 6213(b). Instead, the IRS typically sends the taxpayer a Letter 474C.
This letter notifies the taxpayer that, on account of the mathematical or clerical
error, an amount of tax in excess of that shown on the return is due and that an
assessment of tax has been or will be made on the basis of what would have been
the correct amount of tax but for the mathematical or clerical error. Sec.
6213(b)(1). Within 60 days of this notice, the taxpayer may request abatement of
the assessment due to the mathematical or clerical error. Sec. 6213(b)(2)(A).
Upon receipt of such a request, the Commissioner must abate the assessment and,
if he subsequently reassesses the tax, review is available in this Court. Ibid.
In the instant case, the “mathematical or clerical error” consisted of peti-
tioners’ failure to provide a correct SSN for petitioner-wife and a valid SSN for
the dependent they claimed on their 2008 return. See sec. 6213(g)(2)(D) (defining
“mathematical or clerical error” to include “an omission of information which is
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[*11] required to be supplied on the return to substantiate an entry on the return”),
(F) (earned income credit), (I) (child tax credit). After discerning these errors, the
IRS sent petitioners a Letter 474C, advising them that their 2008 tax liability
would be adjusted in several respects because they had failed to supply these
SSNs. Petitioners did not request an abatement of this summary assessment, and it
was therefore valid under section 6213(b). Petitioners have set forth no specific
facts showing that there is a genuine issue for trial on this point.
Our review of the record establishes that the SO verified that all other re-
quirements of applicable law and administrative procedure had been satisfied, both
as to 2008 and as to 2009. We also find that, in sustaining the proposed collection
actions, the SO properly balanced “the need for the efficient collection of taxes
with the legitimate concern of * * * [petitioners] that any collection action be no
more intrusive than necessary.” Sec. 6330(c)(3). Petitioners did not request a
collection alternative, and they did not submit the financial information required
for consideration of a collection alternative.
Finally, none of the other issues raised by petitioners has merit. As ex-
plained above, petitioners may not challenge in this Court their underlying tax
liabilities for 2008 and 2009. Petitioners assert in their petition that they paid their
outstanding balance for 2008 and made a partial payment against their 2009 tax
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[*12] liability, leaving less than $3,000 owed. However, the IRS transcript of
their 2008 account shows a balance due, as of December 6, 2013, of $2,821
(including additional interest and penalty), and the IRS transcript of their 2009
account shows a balance due, as of December 6, 2013, of $53,487 (including
additional interest and penalty). If petitioners wanted to contend that these
account balances are incorrect, they were obligated to come forward with some
facts showing that they paid the liabilities in question. When confronted with a
motion for summary judgment, the nonmoving party “may not rest upon the mere
allegations or denials” but instead “must set forth specific facts showing there is a
genuine dispute.” Rule 121(d); see Sundstrand Corp., 98 T.C. at 520. Because
petitioners failed to respond to the IRS motion for summary judgment as ordered
by this Court, they have failed to show that there are any material facts in dispute
that would prevent the Court from granting summary judgment in respondent’s
favor.
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[*13] Finding no abuse of discretion in any respect, we will grant summary
judgment for respondent and affirm the proposed collection action. To reflect the
foregoing,
An appropriate order and decision
will be entered.