T.C. Memo. 2015-166
UNITED STATES TAX COURT
CHRIS JOHN SCHUMACHER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 28267-13L. Filed August 24, 2015.
Chris John Schumacher, pro se.
Ric D. Hulshoff, for respondent.
MEMORANDUM OPINION
BUCH, Judge: This collection due process (CDP) case is calendared for
trial during the Court’s trial session beginning September 28, 2015, in Las Vegas,
Nevada. Mr. Schumacher seeks withdrawal of a lien; the Internal Revenue
Service (IRS) has already placed his case in “currently not collectible” status. On
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[*2] May 20, 2015, respondent filed a motion for summary judgment under Rule
1211 and a supporting declaration with exhibits. Subsequently, Mr. Schumacher
filed an opposition to the motion for summary judgment, arguing that the motion
should be denied on the basis of general allegations that the lien interferes with his
finding gainful employment. Because respondent has shown that there is no
genuine dispute as to any material fact and petitioner has failed to show otherwise,
we will grant respondent’s motion.
Background
Mr. Schumacher failed to timely file Form 1040, U.S. Individual Income
Tax Return, for 2007. Subsequently, respondent prepared a substitute for return
under section 6020(b) and issued a statutory notice of deficiency to Mr.
Schumacher.
Mr. Schumacher disputed the deficiency and timely petitioned the Tax
Court. On March 13, 2012, a trial was held in Schumacher v. Commissioner, T.C.
Dkt. No. 7803-11 (Mar. 22, 2012) (bench opinion), in Las Vegas, Nevada. After
reviewing the evidence, receiving the parties’ concessions, and hearing oral
testimony from Mr. Schumacher, the Court rendered a bench opinion sustaining
1
Unless otherwise indicated, all section 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.
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[*3] respondent’s determination on the remaining issues and entered an order and
decision reflecting the deficiency amount and the addition to tax under section
6651(a)(1).2
Following assessment, the IRS began collection efforts. Respondent timely
mailed Mr. Schumacher a copy of Form 668(Y)(c), Notice of Federal Tax Lien
(NFTL), notifying him of respondent’s lien filing stemming from an unpaid 2007
tax liability. Respondent also mailed Mr. Schumacher a Notice of Federal Tax
Lien Filing and Your Right to a Hearing Under IRC 6320.
In response Mr. Schumacher timely submitted a Form 12153, Request for a
Collection Due Process or Equivalent Hearing (CDP hearing request). On the
request Mr. Schumacher marked “I Cannot Pay Balance” as a collection
alternative. With respect to the lien, Mr. Schumacher marked “Subordination”
2
Although respondent claimed in his motion for summary judgment that Mr.
Schumacher had agreed to the additional tax assessment following an
examination, that claim was in error. In fact, the tax was assessed after this Court
entered an order and decision. With his motion, respondent included a Certificate
of Assessments, Payments, and Other Specified Matters transcript that shows both
a statutory notice of deficiency and a legal suit, as well as an “additional tax
assessed by examination agreed audit deficiency prior to 30 or 60 day letter”. That
inconsistency likely explains respondent’s error in his motion. But we will take
judicial notice of the proceeding in Schumacher v. Commissioner, T.C. Dkt. No.
7803-11 (Mar. 22, 2012) (bench opinion), in which a decision was entered
concerning Mr. Schumacher’s 2007 tax liability. See Rule 143; Fed. R. Evid. 201;
see also sec. 7453; Fed. R. Evid. 1101.
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[*4] because of “child support”. Mr. Schumacher neither requested lien
withdrawal nor disputed the underlying liability. The settlement officer mailed
Mr. Schumacher a letter confirming receipt of the CDP hearing request.
The settlement officer scheduled a telephone conference for September 26,
2013, and requested various documents including tax returns and a completed
Form 433-A, Collection Information Statement for Wage Earners and Self-
Employed Individuals, with supporting documents. That letter was returned by the
U.S. Postal Service. Using the address provided on the return label, which was
also the address that Mr. Schumacher provided on his CDP hearing request form,
the settlement officer mailed another letter requesting that Mr. Schumacher
complete Form 8822, Change of Address. The settlement officer also mailed Mr.
Schumacher a followup letter asking that he provide the requested information by
October 10, 2013. The settlement officer stated that if Mr. Schumacher did not
send the requested information, the IRS Appeals Office would issue a
determination letter. Mr. Schumacher did not provide any further information to
the IRS other than a fax stating that he could not provide the information within
14 days as the letter had requested. On November 4, 2013, the settlement officer
issued the Notice of Determination Concerning Collection Action(s) Under
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[*5] Section 6320 sustaining the lien filing because Mr. Schumacher had failed to
provide any information.
While residing in Nevada, Mr. Schumacher timely filed a petition for review
of the notice of determination. In his petition he asserted for the first time that he
disagreed with the NFTL because the lien was “an unnecessary burden upon * * *
[his] search for gainful employment” and that the tax was “not collectible”. In
support of his contentions Mr. Schumacher stated that “[p]rospective employers
imply a direct correlation between suitability for employment and credit scores
and other publically available derogatory information.” Further, he asserted that
the “lien is subordinate to an active child support order”. However, respondent
and Mr. Schumacher filed a joint motion to remand because of uncertainty
whether Mr. Schumacher had received notice of the CDP hearing at his new
address. The Court granted the motion for remand, and the case was returned to
the IRS Appeals Office.
On remand, the settlement officer scheduled a telephone conference with
Mr. Schumacher. Before the telephone conference Mr. Schumacher provided the
settlement officer with various documents, including the collection information
statement with supporting documents and a child support order. During the
telephone conference Mr. Schumacher again explained that he could not pay the
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[*6] balance due. He further stated that the notice of lien filing prevented him
from securing employment. He did not, however, pursue lien subordination;
rather he argued that his child support obligation was already superior to the
Federal tax lien and sought lien withdrawal. Because the collection information
statement showed expenses greater than income, the settlement officer placed Mr.
Schumacher’s account into currently not collectible status; however, the settlement
officer did not withdraw the notice of lien filing. Following the conference the
settlement officer received additional documents from Mr. Schumacher regarding
background screening for job applications. After reviewing the documents the
settlement officer determined that the information Mr. Schumacher provided did
not demonstrate that he was denied employment because of the lien filing. She
called Mr. Schumacher and left him a message informing him that the information
he provided did not warrant lien withdrawal and that the IRS would not withdraw
the notice of lien filing.
The settlement officer issued a Supplemental Notice of Determination
Concerning Collection Action(s) Under Section 6320 sustaining the lien filing
because Mr. Schumacher failed to provide information that demonstrated just
cause for withdrawing the notice of lien filing.
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[*7] On May 20, 2015, respondent filed a motion for summary judgment under
Rule 121 and a supporting declaration with exhibits. The Court issued an order
directing Mr. Schumacher to respond to respondent’s motion. Subsequently, Mr.
Schumacher filed an opposition to the motion for summary judgment, arguing that
the motion should be denied because the lien is “debilitating” and “influence[s]
hiring decisions.” He also argues that he is not required to “prove a negative” in
securing testimony or evidence to show that the notice of lien filing influenced
hiring decisions because that burden would be “overbearing”.
Discussion
I. Summary Judgment
Either party may move for summary judgment regarding all or part of the
legal issues in controversy.3 The purpose of summary judgment is to expedite
litigation and avoid unnecessary and expensive trials.4 However, summary
judgment is not a substitute for trial and should not be invoked in proceedings
where the facts are disputed.5 We may grant summary judgment only if “there is
3
Rule 121(a).
4
RSW Enters., Inc. v. Commissioner, 143 T.C. 401, 404 (2014); Fla. Peach
Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
5
Shiosaki v. Commissioner, 61 T.C. 861, 862 (1974).
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[*8] no genuine dispute as to any material fact and * * * a decision may be
rendered as a matter of law.”6
The moving party bears the burden of proving that no genuine dispute exists
as to any material fact.7 In deciding whether to grant summary judgment, any
factual inferences will be treated in a manner that is most favorable to the
nonmoving party.8 Although this burden falls on the moving party, the
nonmoving party “may not rest upon the mere allegations or denials of such
party’s pleading, but * * * must set forth specific facts showing that there is a
genuine dispute for trial.”9
II. Collection Due Process Overview
In a CDP hearing a taxpayer may raise any relevant issue, including
challenges to the appropriateness of collection actions and offers of collection
alternatives.10 However, when a taxpayer seeks this Court’s review of the notice
of determination, that taxpayer generally may raise only issues that were properly
6
Rule 121(b); see Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
7
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).
8
Dahlstrom v. Commissioner, 85 T.C. at 821.
9
Rule 121(d).
10
Secs. 6320(c), 6330(c)(2)(A).
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[*9] raised in the CDP hearing.11 An issue is not properly raised when the
taxpayer does not request consideration of the issue by the IRS Appeals Office or
requests consideration of an issue but fails to provide any evidence on that issue
after being given a reasonable opportunity to do so.12
The appropriate standard of review must be applied. Where the underlying
tax liability is properly at issue, we review the Commissioner’s determination as to
that issue de novo.13 In contrast, where the validity of the tax liability is not at
issue, we review the Commissioner’s determination for abuse of discretion.14 A
settlement officer abuses his or her discretion if a determination is arbitrary,
capricious, or without sound basis in fact or law.15
Mr. Schumacher does not contest the underlying liability in this case.
Rather, he contends that the settlement officer should have withdrawn the notice
11
Giamelli v. Commissioner, 129 T.C. 107, 113 (2007); sec. 301.6320-
1(f)(2), Q&A-F3, Proced. & Admin. Regs.
12
Sec. 301.6320-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
13
Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,
114 T.C. 176, 181-182 (2000).
14
Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C.
at 181-182.
15
See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d
27 (1st Cir. 2006); see also Keller v. Commissioner, 568 F.3d 710, 716 (9th Cir.
2009), aff’g in part T.C. Memo. 2006-166.
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[*10] of lien filing. Accordingly, we will consider only whether respondent
abused his discretion in sustaining the notice of lien filing. We need not address
whether we can look outside the administrative record in this case because Mr.
Schumacher did not offer or propose to offer any evidence that is outside the
administrative record.
When a settlement officer makes a determination, that officer must (1)
verify that the requirements of the applicable law and administrative procedure
have been met; (2) consider the issues raised by the taxpayer; and (3) consider
whether any proposed collection action balances the need for efficient collection
with the legitimate concern of the taxpayer that any collection action be no more
intrusive than necessary.16 We find that the settlement officer did not abuse her
discretion in sustaining the notice of lien filing because she properly based her
determination on these factors.
III. Collection Alternatives
Because the underlying liability is not at issue, we review the Appeals
officer’s determination for abuse of discretion.17
16
See secs. 6320(c), 6330(c).
17
Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C.
at 181-182.
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[*11] When a taxpayer neglects to pay his or her Federal tax liability after notice
and demand, a lien in favor of the United States arises on all of that taxpayer’s
property and rights to property.18 Section 6323 authorizes the Commissioner to
file notice of that lien, establishing the lien’s priority over certain persons. A lien
is usually a less intrusive collection mechanism than a levy because it allows the
agency to wait for the taxpayer to acquire property that might be used in satisfying
the tax liability rather than taking property.19
A. Lien Subordination
A settlement officer does not abuse his or her discretion by failing to
consider an issue under section 6330(c)(2) that was never raised at the CDP
hearing.20 A taxpayer must raise such an issue at a CDP hearing to preserve it for
this Court’s consideration.21
18
Sec. 6321.
19
Cunningham v. Commissioner, T.C. Memo. 2014-200.
20
Giamelli v. Commissioner, 129 T.C. at 113-114; sec. 301.6320-1(f)(2),
Q&A-F3, Proced. & Admin. Regs.; cf. Hoyle v. Commissioner, 131 T.C. 197, 201
(2008) (a settlement officer must verify compliance with applicable law and
administrative procedure under section 6330(c)(1) regardless of whether the
taxpayer raised the issue at the CDP hearing).
21
Perkins v. Commissioner, 129 T.C. 58, 63 (2007); Magana v.
Commissioner, 118 T.C. 488, 493 (2002).
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[*12] Although Mr. Schumacher initially raised lien subordination on his CDP
hearing request, he failed to address lien subordination at the CDP hearing. Mr.
Schumacher referred to lien subordination only by arguing that the notice of lien
filing should be withdrawn because it was already subordinate to his child support
obligations. Therefore, we find that Mr. Schumacher did not properly raise lien
subordination.
B. Lien Withdrawal
A notice of lien filing may be withdrawn under section 6323(j) when certain
circumstances are present: the filing of the notice is premature, an installment
agreement has been entered to satisfy the liability, the withdrawal will facilitate
collection of tax liability, or the National Taxpayer Advocate consents to the lien
withdrawal because it is in the best interest of the taxpayer and the United States.22
Although section 6323(j) allows the Commissioner to withdraw an NFTL for any
of the reasons outlined above, that authority is discretionary. Mr. Schumacher
argues that respondent abused that discretion.
Rule 121(d) provides that the party opposing summary judgment cannot rest
on mere allegations but must set forth specific facts showing a genuine dispute for
trial. Mr. Schumacher argues that the settlement officer abused her discretion in
22
Sec. 6323(j).
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[*13] sustaining the notice of lien filing because the lien is “debilitating” and
“influence[s] hiring decisions.” However, he argues that he is not required to
“prove a negative” in securing testimony or evidence to show that the notice of
lien filing influenced hiring decisions because that burden would be
“overbearing”. This argument runs counter to Rule 121(d), which requires that
Mr. Schumacher set forth specific facts showing that he was denied employment
because of the notice of lien filing. Mr. Schumacher failed, in this instance, to
present or offer to present any evidence that he was adversely affected or denied
employment because of the notice of lien filing. Moreover, we have previously
held that mere speculation about the effect of a lien on finding gainful
employment is simply not enough.23 Accordingly, we find that the settlement
officer did not abuse her discretion in sustaining the notice of lien filing.
IV. Conclusion
Mr. Schumacher has not provided any evidence of a genuine dispute as to
any material fact. Further, Mr. Schumacher has not provided any evidence that the
23
See Cunningham v. Commissioner, T.C. Memo. 2014-200.
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[*14] settlement officer abused her discretion in sustaining the notice of lien
filing. Accordingly, we will grant respondent’s motion for summary judgment.
To reflect the foregoing,
An appropriate order and decision
will be entered.