T.C. Memo. 2003-34
UNITED STATES TAX COURT
DRINA L. MCCORKLE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10330-02L. Filed February 14, 2003.
Deborah R. Jaffe and Robert M. McCallum, for petitioner.
Julie L. Payne, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on
respondent’s motion for summary judgment.
Rule 121(a)1 provides that either party may move for summary
judgment upon all or any part of the legal issues in controversy.
1
Unless otherwise indicated, all Rule references are to
the Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code.
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Full or partial summary judgment may be granted only if it is
demonstrated that no genuine issue exists as to any material
fact, and a decision may be entered as a matter of law. Rule
121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), affd. 17 F.3d 965 (7th Cir. 1994).
We conclude that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law.
Background
Petitioner is a self-employed realtor. Petitioner filed
delinquent Federal income tax returns for 1997 and 1999.
Petitioner failed to pay the taxes due on those returns.
On August 13, 2001, respondent issued to petitioner a Final
Notice, Notice of Intent to Levy and Notice of Your Right to a
Hearing, regarding her income tax liabilities for 1997 and 1999
(notice of intent to levy). As of the date of the notice of
intent to levy, petitioner’s 1997 and 1999 income tax
liabilities, including penalties and interest, totaled $50,536.43
and $93,936.36, respectively. As of the date of the notice of
intent to levy, petitioner had not filed her income tax return
for 2000, had made insufficient estimated tax payments toward her
year 2000 tax liability, and had not made any estimated tax
payments toward her year 2001 tax liability.
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On August 30, 2001, petitioner signed a Form 433-A,
Collection Information Statement for Individuals, and sent it to
respondent.
On September 6, 2001, petitioner submitted a Form 12153,
Request for a Collection Due Process Hearing, regarding her 1997
and 1999 tax years (hearing request). Petitioner stated that she
disagreed with respondent’s decision to levy because she was
unable to pay the assessments in full at that time. Petitioner,
however, did not dispute the amount of the liabilities. She
requested that respondent consider an installment payment plan in
lieu of enforced collection action.
On January 23, 2002, petitioner sent respondent spreadsheets
showing the sales she closed and commissions she earned during
2001 and two pages of claimed business expenses.
On the basis of all of the information provided by
petitioner, respondent prepared a monthly income and expense
analysis. Respondent concluded that petitioner had the ability
to pay $5,599 per month toward her outstanding 1997 and 1999 tax
liabilities.
On March 19, 2002, respondent assigned Appeals Officer
Denise Mountjoy to petitioner’s hearing request. Appeals Officer
Mountjoy reviewed the administrative file and obtained
transcripts of petitioner’s account for 1997 and 1999. The
administrative file and transcripts of account confirmed the
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assessments against petitioner and that all required collection
notices had been issued. Appeals Officer Mountjoy contacted
petitioner’s counsel to schedule an administrative hearing
(hearing).
On March 25, 2002, the hearing was held. At the hearing,
petitioner’s counsel noted that petitioner’s income fluctuates
considerably and proposed a “pay as she can” installment
agreement for petitioner’s 1997 and 1999 tax liabilities. The
proposed installment plan suggested that several months of
expenses would be deducted from each commission check petitioner
received and that a percentage of the remaining amount would be
paid to respondent (proposed installment plan). Appeals Officer
Mountjoy stated that she would consider the proposed installment
plan and would get back to petitioner’s counsel.
Appeals Officer Mountjoy considered the proposed installment
plan and determined it was unacceptable. The reasons underlying
Appeals Officer Mountjoy’s decision were that (1) it would be
difficult for respondent to monitor; (2) it would not necessarily
provide for full payment of petitioner’s 1997 and 1999 tax
liabilities within the periods of limitations on collection; and
(3) petitioner’s failure to make adequate estimated payments for
taxable year 2001 suggested a continuing compliance problem.
On May 1, 2002, Appeals Officer Mountjoy spoke with
petitioner’s counsel. Petitioner’s counsel advised Appeals
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Officer Mountjoy that he no longer believed that petitioner was
entitled to an installment agreement because she was not in
compliance with her filing and paying requirements for 2001. The
conversation reconfirmed Appeals Officer Mountjoy’s prior
conclusion that it was not in the Government’s interest to accept
the proposed installment plan.
On May 10, 2002, respondent issued a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330 to
petitioner regarding her 1997 and 1999 tax years (notice of
determination). In the notice of determination, respondent
determined that the issuance of the notice of intent to levy and
proposed collection action were appropriate. In the attachment
to the notice of determination, respondent explained: “Since you
are not in compliance with the current filing and paying
requirement for current taxes [2001], you do not qualify for an
installment payment plan.”
On June 17, 2002, petitioner timely filed a petition for
lien or levy action under Code section 6320(c) or 6330(d) seeking
review of respondent’s determination to proceed with collection
of petitioner’s 1997 and 1999 tax liabilities.2
On November 20, 2002, respondent filed a motion for summary
judgment. On November 21, 2002, the Court ordered petitioner to
2
At the time she filed the petition, petitioner resided
in Anacortes, Washington.
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file any objection to respondent’s motion for summary judgment on
or before December 12, 2002. On December 16, 2002, petitioner
filed a response to respondent’s motion for summary judgment
(response).
Discussion
Petitioner’s only argument is that respondent’s refusal of
the proposed installment plan constituted an abuse of discretion.
Where the validity of the underlying tax liability is not
properly in issue, we review respondent’s determination for an
abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610
(2000); Black v. Commissioner, T.C. Memo. 2002-307 (reviewing the
Commissioner’s determination regarding an installment agreement
proposed at a section 6330 hearing under an abuse of discretion
standard); Schulman v. Commissioner, T.C. Memo. 2002-129.
One reason respondent did not accept the proposed
installment plan was because petitioner was not in compliance
with her current filing and paying obligations. See Internal
Revenue Manual, pt. 5.14.1.4.1 (July 1, 2002), pt. 5.14.9.3(5)
(Mar. 30, 2002), pt. 5.19.1.3.3.1(1) and (5) (Oct. 1, 2001), pt.
5.19.1.5.4.10(1)-(2) (Oct. 1, 2001). In her response, petitioner
admits that as of the date of the notice of determination, May
10, 2002, she had not filed her 2001 return and had not fully
paid her tax liability for 2001.
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Petitioner, however, claims that she has now filed her
return and fully paid her tax liability for 2001.3 Even if this
is so, it does not appear that respondent abused his discretion
in determining to proceed with collection. After the section
6330 hearing and prior to issuing the notice of determination,
Appeals Officer Mountjoy spoke with petitioner’s counsel, and he
advised Appeals Officer Mountjoy that he believed that petitioner
was not entitled to an installment agreement.
Additionally, respondent’s determination was based on the
financial information provided to him by petitioner. See
Schulman v. Commissioner, supra. Respondent allowed certain
expenses in amounts greater than those originally claimed by
petitioner.4 On the basis of all the information provided by
petitioner, respondent prepared a monthly income and expense
analysis and determined that petitioner had income net of
necessary living expenses of $5,599 per month that could be
applied to petitioner’s outstanding 1997 and 1999 tax
liabilities.
3
Petitioner attached a Form 1040 for 2001 to the response.
This return is not signed or dated by petitioner or the paid
preparer listed on the form, and there is no evidence of any
payment made by petitioner. Additionally, there is no evidence
that petitioner submitted this return to the Internal Revenue
Service. Furthermore, in the petition petitioner admitted that
she had not paid her 2001 tax liability in full.
4
Petitioner listed her total monthly living expenses to be
$8,607; however, respondent calculated petitioner’s total
allowable monthly expenses to be $17,174.
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Respondent also determined that the proposed installment
plan would be difficult to monitor. We agree. Because
petitioner’s net income fluctuates monthly, respondent would be
forced to audit continually the correctness of the income and
deductions petitioner claimed. Furthermore, the proposed
installment plan left uncertain whether petitioner would fully
pay her outstanding liabilities within the periods of limitations
on collection. We conclude that respondent gave due
consideration to the proposed installment plan, and his
determination was reasonable.
Petitioner has failed to raise a spousal defense or make a
valid challenge to the appropriateness of respondent’s intended
collection action. These issues are now deemed conceded. Rule
331(b)(4). Accordingly, we conclude that respondent did not
abuse his discretion by refusing to accept the proposed
installment plan, and we sustain respondent’s determination to
proceed with collection with respect to petitioner’s 1997 and
1999 tax years.
To reflect the foregoing,
An appropriate order and
decision will be entered.