T.C. Memo. 2003-234
UNITED STATES TAX COURT
WILLIAM G. WELLS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 163-01L. Filed August 6, 2003.
William G. Wells, pro se.
Lorraine Y. Wu, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Pursuant to section 6330(d),1 petitioner
seeks review of respondent’s determination to proceed with
collection of his 1991 and 1992 tax liabilities.
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.
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FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time he filed the
petition, petitioner resided in Santa Monica, California.
Until August 1995, for a period of approximately 25 years,
petitioner was employed as the president of Fujita Corp.
In 1998, petitioner entered into an installment agreement
with respondent as a method of paying his outstanding 1991 and
1992 income tax liabilities (1998 installment agreement).
Pursuant to the 1998 installment agreement, instead of
petitioner’s receiving rental income payments from Miramar Hotel
Corp. (Miramar), respondent was to receive monthly payments
directly from the Miramar. Petitioner defaulted on the 1998
installment agreement when Miramar ceased making payments to
respondent.
On August 4, 1999, respondent issued to petitioner a Notice
of Defaulted Installment Agreement Under IRC 6159(b), Notice of
Intent to Levy Under IRC 6331(b) for 1991 and 1992 and a Final
Notice of Intent to Levy and Notice of Your Right to a Hearing
for 1991 and 1992. As of this date, petitioner owed
$1,387,786.98 for 1991 and $865,486.80 for 1992--a total of
$2,253,273.78.
On or about September 3, 1999, petitioner submitted to
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respondent a Form 12153, Request for a Collection Due Process
Hearing, regarding his 1991 and 1992 tax years (hearing request).
In explaining his disagreement with the proposed levy, petitioner
wrote “SEE ATTACHED LETTER”. Petitioner attached to his hearing
request a 2-page letter from his representative, Steven Toscher.
The attached letter stated:
As you are aware, Mr. Wells has not been able to
continue the installment obligation entered into in
July of 1998. The installment obligation was premised
on Mr. Wells receiving $24,969 in rental income from
Miramar Hotel leases. Unfortunately, as you are also
aware, Mr. Wells is involved in litigation with Fujita
USA which has caused the lessee to terminate the rental
payments. Thus, Mr. Wells has no ability to continue
to make said payments. Mr. Wells requests that IRS
modify the agreement based upon his current ability to
pay. A modification of an installment obligation will
facilitate collection of such liabilities.
Enclosed please find IRS Form 12153 where Mr. Wells
requests a due process hearing pursuant to I.R.C.
§6330(b) with respect to the IRS Notice of Intent to
Levy. As stated above, a modified installment
agreement or an Offer in Compromise are more
appropriate collection alternatives given Mr. Wells’
financial situation. Mr. Wells continues to explore
any and all alternatives in satisfying the IRS’
previous assessments. It will not be productive for
the IRS or Mr. Wells to levy on any of his “assets.”
Please have the Appeals Officer assigned to this case
call me to arrange a mutually convenient time to meet
and discuss this matter.
On July 6, 2000, Appeals Officer Richard William Bailey and
Mr. Toscher met to hold a section 6330 hearing (July 6, 2000,
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hearing).2 At the July 6, 2000, hearing, the issues raised by
Mr. Toscher were the possibility of full payment of petitioner’s
1991 and 1992 income tax liabilities, the renegotiation and
revision of the 1998 installment agreement, and the possibility
of an offer-in-compromise. Mr. Toscher had no information
regarding petitioner’s financial status to provide to Appeals
Officer Bailey. Appeals Officer Bailey agreed to meet with Mr.
Toscher again on November 9, 2000, to give petitioner the
opportunity to present his financial information to respondent.
Before November 9, 2000, Appeals Officer Bailey filled out a
“CDP Priority Case Action Plan”. He completed this form because
the case was over 180 days old and the total tax liability was
over $500,000. In the section entitled “Action plan”, Appeals
Officer Bailey wrote:
This taxpayer owes a lot of money and has many assets,
the representative now realizes that the taxpayer may
if [sic] fact have to full pay these deficiencies. I
have a 2nd hearing scheduled for 11/9/2000, at which
time the representative should have a full accounting
of the taxpayer’s assets and ability to pay. On that
date either arrangement for full payment will be made
or the taxpayer’s representative will present an offer-
in-compromise. Case delayed due to open related cases
in appeals. Representative wanted those concluded
first.
On November 9, 2000, Appeals Officer Bailey and Mr. Toscher
met regarding petitioner’s case (November 9, 2000, meeting). Mr.
2
Appeals Officer Bailey was not involved in the approval
of, or the notification of default on, the 1998 installment
agreement.
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Toscher still had no information regarding petitioner’s financial
status to provide to Appeals Officer Bailey.
On November 13, 2000, Mr. Toscher wrote to Appeals Officer
Bailey. The letter thanked Appeals Officer Bailey for meeting
with him, stated that Mr. Toscher understood that Appeals Officer
Bailey could no longer hold on to the case and needed to issue a
determination, and thanked Appeals Officer Bailey for his
consideration of this matter.
Appeals Officer Bailey prepared an “Appeals Case Memo”. In
it, he wrote:
The taxpayer has many holdings, both real estate and
businesses. * * * although the taxpayer’s corporate
businesses may be legally titled to the taxpayer’s
wife, these corporations owe the taxpayer sizable
amounts of money * * * . It appears now that the
taxpayer may be able to full pay all of the outstanding
taxes * * * . At Appeals last meeting with the
taxpayer’s representative on the CDP matter, such an
accounting was still in the process of being made and
the representative could not give Appeals a reasonable
date for the conclusion of such accounting.
On December 5, 2000, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 to petitioner regarding his 1991 and 1992 tax years
(notice of determination). In the notice of determination,
respondent determined that the proposed levy was appropriate.
The notice of determination explained:
Along with your Form 12153, Request for a Collections
Due Process Hearing, you offered no alternative to
enforced collection, but suggested that your defaulted
installment agreement might be renegotiated and
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reinstituted. At your due process hearing your
representative discussed disposition of the liabilities
through full payment or the possibility of making an
Offer-in-Compromise. However, your representative was
unable to provide a comprehensive accounting of your
assets so that a determination might be made with
regard to the necessity of full payment or the
feasibility of an offer (nothing was presented upon
which a legal sufficiency determination could be
based), nor was an Offer-in-Compromise presented. The
renegotiation and reinstatement of your installment
agreement is not possible because of the pending
assessments; your previous default; and, the amount of
the required payments considering all unpaid balance of
assessments will not pay the debt within the statute.
OPINION
At trial, petitioner stated the only relief he is seeking is
a remand to the Appeals Office for further proceedings.3 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).
Petitioner testified that he suffered from a stroke in 1995
and hearing loss shortly thereafter. As of April 1999,
petitioner began using hearing aids. By October 1999, petitioner
felt the hearing aids were functioning well for him.
In October 1999, petitioner was evaluated by Eugene H.
Freed, M.D.4 Dr. Freed was an Agreed Medical Examiner, a
3
Petitioner’s underlying tax liability is not in issue.
4
Although the record is unclear, this examination appears
to be part of petitioner’s litigation with Fujita Corp.
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Qualified Medical Examiner, and an Independent Medical Examiner.5
Based on a physical examination, Dr. Freed determined that
petitioner “was a well developed, sixty-seven year old well
nourished male not in acute distress,” and petitioner “was alert
and cooperative.” Dr. Freed concluded that petitioner’s hearing
aids were adequate for his current hearing loss.
At the trial, the Court asked petitioner if he could hear us
and respondent. He answered, “Yes”. Petitioner also stated that
his physical condition had improved.
Petitioner was represented by counsel at the July 6, 2000,
hearing and the November 9, 2000, meeting. Petitioner’s physical
condition was not discussed at the July 6, 2000, hearing or the
September 9, 2000, meeting. During 2000, Appeals Officer Bailey
was not aware of petitioner’s physical condition. See Magana v.
Commissioner, 118 T.C. 488 (2002).
Given the fact that respondent was not made aware of
petitioner’s 1995 stroke or hearing loss and that petitioner was
represented by counsel, 4 months was a reasonable amount of time
to allow petitioner to submit his financial information.
Furthermore, the evidence petitioner provided at trial does not
suggest that he was physically unable to compile his financial
5
The record does not contain an explanation of these
titles.
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records within this period of time, and there is no evidence that
petitioner was unable to assist his attorney.
Petitioner did not submit an offer-in-compromise or any
financial information to respondent. Respondent gave petitioner
a reasonable amount of time to submit information about his
financial condition.6 We conclude that respondent’s
determination was not an abuse of discretion.7
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).
In reaching all of our holdings herein, we have considered
all arguments made by the parties, and to the extent not
mentioned above, we find them to be irrelevant or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.
6
Additionally, petitioner provided no evidence of his
financial condition at trial that could allow us to conclude that
a remand of this case would prove to be helpful.
7
We note that respondent also considered the fact that
petitioner had defaulted on a prior installment agreement as an
additional reason to proceed with collection.