T.C. Memo. 2015-154
UNITED STATES TAX COURT
JOE SEIPEL AND JEAN SEIPEL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7633-12L. Filed August 11, 2015.
Joe Seipel and Jean Seipel, pro sese.
Charles B. Burnett, Randall Craig Schneider, and Inga C. Plucinski-
Holbrook, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: This case arises from a petition for judicial review filed
in response to a Notice of Determination Concerning Collection Action(s) Under
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[*2] Section 6320 and/or 63301 with respect to petitioners’ Federal income tax
liabilities for 2003-05 (years in issue). The issues for decision as to the years in
issue are: (1) whether petitioners may challenge their underlying tax liabilities
and, if so, whether any adjustment is appropriate and (2) whether respondent
abused his discretion in sustaining the filing of the notice of Federal tax lien
(NFTL).
FINDINGS OF FACT
I. Background
Some of the facts have been stipulated and are so found. The stipulated
facts and exhibits are incorporated by this reference.
Mr. Seipel has a bachelor’s degree in forestry and business, a master’s
degree in business administration, and a doctorate in education. During the years
in issue Mr. Seipel was a real estate appraiser, doing business as “Market Research
Group”. During the years in issue Mr. Seipel neither hired a bookkeeper nor
maintained good business records.
Petitioners filed a joint Form 1040, U.S. Individual Income Tax Return, for
each of the years in issue. The Internal Revenue Service (IRS) selected
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code, and all Rule references are to the Tax Court Rules of Practice and
Procedure, in effect at all relevant times.
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[*3] petitioners’ returns for examination. The IRS determined deficiencies in
Federal income tax, additions to tax pursuant to section 6651(a)(1), and accuracy-
related penalties pursuant to section 6662(a) for the years in issue.
On May 6, 2008, the IRS mailed notices of deficiency for the years in issue
to petitioners. The notices of deficiency were returned to the IRS as “unclaimed”.
Petitioners did not file a petition with the Court contesting the deficiency
determinations, and the IRS assessed petitioners’ tax liabilities for the years in
issue.
On July 26, 2008 petitioners sent a letter to respondent seeking audit
reconsideration. By a letter dated January 22, 2010, respondent informed
petitioners that no changes would be made pursuant to the petitioners’ audit
reconsideration request. On February 15, 2010, petitioners sent a protest letter,
which was signed only by Mr. Seipel, to respondent. The protest letter did not,
however, comply with all of the requirements for a formal protest letter.
Petitioners were not granted an appeal.
II. Petitioners’ Collection Due Process (CDP) Hearing
On November 2, 2010, the IRS mailed petitioners Letter 3172, Notice of
Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, with
respect to their outstanding income tax liabilities for the years in issue. In
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[*4] response to Letter 3172, petitioners submitted Form 12153, Request for a
Collection Due Process or Equivalent Hearing, which was received by the IRS on
December 10, 2010. On Form 12153, petitioners indicated that the amounts listed
in the NFTL were incorrect and that the filing of the NFTL was premature because
the tax liabilities for the years in issue were still under consideration.
The IRS assigned petitioners’ CDP hearing to Settlement Officer Linda
Andrews on April 20, 2011. On January 5, 2012, Settlement Officer Andrews
mailed petitioners a letter scheduling a telephone CDP hearing. In the January 5,
2012, letter Settlement Officer Andrews instructed petitioners to submit a
completed Form 433-A, Collection Information Statement for Wage Earners and
Self-Employed Individuals, and documentation to support their contention that the
tax liabilities determined by the IRS were incorrect. Settlement Officer Andrews
attached to the January 5, 2012, letter copies of the notices of deficiency and
Forms 4549, Income Tax Examination Changes. Petitioners failed to submit the
requested documentation by the deadline.
Settlement Officer Andrews and Mr. Seipel conducted a CDP hearing on
February 15, 2012, via telephone. During the CDP hearing Settlement Officer
Andrews asked Mr. Seipel if he had additional information that he wanted Appeals
to consider regarding petitioners’ underlying tax liabilities for the years in issue.
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[*5] Mr. Seipel stated that all the information respondent had was wrong and that
he wanted to litigate the issue in Tax Court. Mr. Seipel neither proposed any
collection alternatives nor advanced any legitimate reason the NFTL should be
withdrawn.
On February 28, 2012, the IRS mailed petitioners a notice of determination
sustaining the NFTL filing.2 Petitioners, while residing in Montana, timely
petitioned this Court for review of the determination.
OPINION
I. Statutory Framework
Section 6321 imposes a lien in favor of the United States on all property and
rights to property of a taxpayer liable for tax when a demand for payment of the
tax has been made and the taxpayer fails to pay the tax. Section 6320(a) provides
that the Secretary shall furnish the taxpayer with a notice of NFTL filing within
five business days after the NFTL is filed.
If a taxpayer requests a hearing in response to an NFTL pursuant to section
6320, a hearing shall be held before an impartial officer or employee of Appeals.
Sec. 6320(b)(1), (3). The hearing under section 6320 generally shall be conducted
2
Before the notice of determination was issued, Settlement Officer
Andrews verified that all legal and administrative requirements for collection had
been met.
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[*6] in a manner consistent with the procedures set forth in section 6330(c), (d),
and (e). Sec. 6320(c). At the hearing the taxpayer may raise any relevant issue,
including spousal defenses, challenges to the appropriateness of the collection
action, and collection alternatives. Sec. 6330(c)(2)(A). In addition to considering
issues raised by the taxpayer under section 6330(c)(2), the Appeals officer must
verify that the requirements of any applicable law or administrative procedure
have been met. Sec. 6330(c)(1), (3).
A taxpayer is precluded from contesting the existence or amount of the
underlying tax liability unless the taxpayer did not receive a notice of deficiency
for the liability in question or did not otherwise have an earlier opportunity to
dispute the liability. Sec. 6330(c)(2); see also Sego v. Commissioner, 114 T.C.
604, 609 (2000).
Following a hearing Appeals must determine whether to sustain the filing of
the NFTL. In making that determination Appeals is required to take into
consideration: (1) the verification required by section 6330(c)(1); (2) relevant
issues raised by the taxpayer; and (3) whether the proposed lien appropriately
balances the need for efficient collection of taxes with the taxpayer’s concerns
regarding the intrusiveness of the proposed collection action. Sec. 6330(c)(3).
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[*7] Section 6330(d)(1) grants this Court jurisdiction to review Appeals’
determination in connection with a collection hearing. Where the validity of the
underlying tax liability is properly at issue, we review the taxpayer’s liability de
novo. See Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114
T.C. 176, 181-182 (2000). Where the underlying tax liability is not properly at
issue, we review the determination for abuse of discretion. Sego v. Commissioner,
114 T.C. at 610; Goza v. Commissioner, 114 T.C. at 182.
II. Challenges to the Underlying Liabilities
At the CDP hearing the taxpayer may raise any relevant issue relating to the
unpaid tax or the proposed collection method. Sec. 6330(c)(2)(A). Generally, a
taxpayer must raise an issue at a CDP hearing to preserve it for this Court’s
consideration. Giamelli v. Commissioner, 129 T.C. 107, 115 (2007); sec.
301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. The merits are not properly
raised if the taxpayer challenges the underlying tax liability but fails to present
Appeals with any evidence regarding that liability after being given a reasonable
opportunity to do so. See Delgado v. Commissioner, T.C. Memo. 2011-240; sec.
301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
Petitioners disputed their underlying liabilities on their Form 12153.
However, nothing in the record shows that petitioners provided any evidence to
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[*8] Settlement Officer Andrews to dispute respondent’s calculation of their
underlying liabilities. Settlement Officer Andrews gave petitioners multiple
opportunities to dispute their liabilities, but petitioners did not take advantage of
these opportunities. Mr. Seipel did not identify any specific error in respondent’s
calculations. Instead, during the CDP hearing Mr. Seipel simply made the
unsupported statement that all the information respondent had was wrong.
Accordingly, we find that petitioners did not properly raise their underlying
liabilities during the CDP hearing, and therefore they cannot dispute their
liabilities here.
III. Abuse of Discretion
Where, as here, the existence and amount of the taxpayers’ underlying tax
liabilities are not at issue, we review the Commissioner’s determination for abuse
of discretion. Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner,
114 T.C. at 182. Appeals abuses its discretion if its determination is “arbitrary,
capricious, or without sound basis in fact or law.” Giamelli v. Commissioner, 129
T.C. at 111. Petitioners have not advanced any argument or introduced any
evidence that would allow us to conclude that the determination to sustain the
NFTL filing was arbitrary, capricious, or without sound basis in fact or law.
Petitioners did not submit any financial information during the CDP hearing, nor
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[*9] did they offer any collection alternative. Appeals determined that the
requirements of applicable law and administrative procedure were met and
concluded that sustaining the NFTL filing appropriately balanced the need for
efficient collection of taxes with petitioners’ concerns regarding the intrusiveness
of the lien action. Accordingly, we hold that Appeals did not abuse its discretion
by sustaining the NFTL filing.
In reaching our holding, we have considered all arguments made, and to the
extent not mentioned, we consider them irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered for
respondent.