T.C. Memo. 2004-17
UNITED STATES TAX COURT
JOHN HUNTZ LEINEWEBER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12161-01L. Filed January 26, 2004.
John Huntz Leineweber, pro se.
Daniel J. Parent, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: Petitioner, under section 6330(d),1
petitioned this Court seeking a review of respondent’s
determination to proceed with a proposed levy to collect
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year under
consideration.
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petitioner’s unpaid Federal income taxes for 1997. The issues
for our consideration are: (1) Whether petitioner was granted an
opportunity for a hearing within the meaning of section 6330; and
(2) whether respondent’s determination to proceed with the
proposed collection activity was an abuse of discretion.
A trial was held at San Francisco, California, and
petitioner provided testimony and argument.
FINDINGS OF FACT2
Petitioner resided in Sacramento, California, at the time he
filed the petition in this case. Petitioner filed his 1997
Federal income tax return on October 2, 1998. On the return,
petitioner claimed an overpayment of $6,104. Respondent applied
the claimed overpayment to petitioner’s unpaid tax liability for
1987. Respondent later discovered that petitioner had failed to
report $6,022 of interest income for 1997. On February 9, 2000,
respondent mailed a statutory notice of deficiency to petitioner
with respect to his 1997 tax year. In the notice, respondent
determined a $2,198 income tax deficiency and a $220 addition to
tax under section 6651(a)(1). Petitioner received the notice but
did not file a petition with this Court to contest respondent’s
deficiency determination. Respondent assessed the additional
tax, penalty and interest on July 10, 2000.
2
The parties’ stipulation of facts is incorporated by
this reference.
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On February 9, 2001, respondent issued a Form 1058, Final
Notice--Notice of Intent to Levy and Notice of Your Right to a
Hearing. Petitioner timely submitted Form 12153, Request for a
Collection Due Process Hearing (administrative hearing).
Petitioner did not dispute his liability for the 1997 tax
deficiency. Instead, he disputed his responsibility to make
payment because he believed that the 1997 overpayment should have
been used to satisfy the 1997 income tax deficiency rather than
offset against his 1987 tax liability.
Specifically, petitioner claimed respondent erred in
applying the 1997 overpayment to his 1987 tax liability.
Petitioner mistakenly believed the collection period for his 1987
liability had expired in May 1997; however, the period did not in
fact expire until July 8, 2001. Under this erroneous belief,
petitioner claimed the 1997 overpayment should have been applied
to the 1997 tax liability.
In addition to requesting a hearing, petitioner requested
the assistance of the Taxpayer Advocate and his congressional
representatives in resolving this matter. The Taxpayer Advocate
conducted an investigation and determined the Commissioner was
correct in applying the 1997 credits to petitioner’s 1987
account. The Taxpayer Advocate verified that the 1987 collection
period expired on July 8, 2001, and could see no reason to issue
a refund from the 1987 account.
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In response to petitioner’s request for an administrative
hearing, the Appeals officer assigned to petitioner’s case
contacted petitioner by telephone on June 11, 2001. During this
telephone conversation, the Appeals officer asked petitioner to
schedule a conference date for a face-to-face, in-person, or
telephone conference. Petitioner stated that he wanted his
congressional liaison present at the meeting and the Appeals
officer expressed doubt as to the liaison’s attending as that was
not the standard practice. The Appeals officer further explained
that typically petitioner and the Appeals officer were expected
to attempt to resolve the case. Upon resolution, the Appeals
officer would notify the congressional liaison of the resolution.
At this point, petitioner took the Appeals officer’s number and
stated he would call him at a later time.
On June 12, 2001, the Appeals officer received a call from
petitioner’s congressional liaison concerning petitioner’s case.
The Appeals officer then telephoned petitioner and left a
recorded message asking petitioner to call him to schedule an
appointment. No further communication occurred until August
2001.
On August 21, 2001, the Appeals officer again telephoned
petitioner and offered the date of September 3, 2001. Petitioner
noted that September 3 was the Labor Day holiday. The Appeals
officer then offered alternative dates of September 4 or 5.
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Petitioner stated he could not access his calendar on his
computer and would have to get back to the Appeals officer with a
date.
After not hearing from petitioner, the Appeals officer
telephoned him again on August 28, 2001. During this
conversation the Appeals officer indicated that he was scheduling
a conference for September 5, 2001. Petitioner stated that he
refused to confirm that date. Petitioner did not give a reason
for refusing to confirm, nor did he offer alternative dates. On
this same day, the Appeals officer contacted the Taxpayer
Advocate who stated she would not attend any hearing and that
Appeals should proceed with the September 5, 2001, hearing. The
Taxpayer Advocate also contacted petitioner by telephone on
August 28, 2001, and told him that he needed to work with the
Appeals officer to resolve the 1997 dispute.
The Appeals officer, after consulting with his manager,
wrote a letter, dated August 28, 2001, to petitioner, informing
him that a conference was scheduled for 9:30 a.m. on September 5,
2001. In the letter, the Appeals officer indicated, “I reminded
you of the date this morning and you said that you didn’t confirm
it but didn’t offer an alternative date. I will proceed with a
correspondence hearing, if you don’t appear for the 9-5-01
hearing I have offered. I will make my decision from the
information in the administrative file.”
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Upon receiving the Appeals officer’s letter, petitioner did
not telephone the Appeals officer, but instead wrote a letter to
the Taxpayer Advocate, dated August 30, 2001, and sent a copy to
the Appeals officer. The letter was essentially a record of
petitioner’s contacts with the Internal Revenue Service regarding
his 1997 tax liability. At the end of this letter, petitioner
stated that the earliest he could meet with anyone would be
September 17, 2001, as he was seeking work and his schedule was
full. The Appeals officer’s copy of petitioner’s August 30,
2001, letter did not reach the Appeals officer until the
afternoon of September 5, 2001, which was after the 9:30 a.m.
time scheduled for the hearing that day.
When petitioner did not appear for the scheduled hearing,
the Appeals officer held a correspondence hearing. As a result
of this hearing, the Appeals officer determined the proposed levy
was legally and procedurally correct. That same day, the Appeals
officer sent petitioner a letter, dated September 5, 2001,
notifying him of the result of the hearing. Attached to this
letter was a transcript of petitioner’s 1997 tax liability. The
Appeals officer also stated in the letter that petitioner had not
proposed any collection alternatives, so the Appeals Office would
be issuing a determination letter and petitioner should call if
he had any questions.
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Petitioner did not attempt to call the Appeals Office or to
schedule a conference in response to the September 5, 2001,
letter. Further, petitioner did not attempt to raise any
collection alternatives. As a result, on September 14, 2001,
respondent’s Appeals Office issued a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330
(notice of determination) in which the proposed levy was
determined to be appropriate to collect petitioner’s unpaid tax
for 1997. Petitioner timely appealed to this Court for review of
respondent’s determination.
OPINION
The issues we consider arise from respondent’s determination
to proceed with collection under section 6330. Specifically we
must decide (1) whether petitioner was granted an opportunity for
a hearing within the meaning of section 6330; and (2) whether
respondent’s determination to proceed with the proposed
collection activity was an abuse of discretion.
Before the Commissioner may proceed to levy on a taxpayer’s
property or right to property, the taxpayer must be notified, in
writing of the Commissioner’s intent and of the taxpayer’s right
to a hearing. Secs. 6330(a), 6331(d). Section 6330 provides
that, upon request and in the circumstances described therein, a
taxpayer has a right to a hearing which consists of the following
elements: (1) An impartial officer will conduct the hearing; (2)
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the conducting officer will receive verification from the
Secretary that the requirements of applicable law and
administrative procedure have been met; (3) certain issues may be
heard such as spousal defenses and offers-in-compromise; and (4)
a challenge to the underlying liability may be raised if the
taxpayer did not receive a statutory notice of deficiency or
otherwise receive an opportunity to dispute the liability. Sec.
6330(c).
Petitioner received written notice of respondent’s intent to
levy and petitioner’s right to a hearing. In response,
petitioner timely filed his request for an administrative
hearing. An experienced Appeals officer was assigned to
petitioner’s case. The Appeals officer had no prior involvement
with respect to petitioner’s unpaid tax. This satisfies the
first element of petitioner’s right to a hearing with an
impartial officer. The second through fourth elements are
usually satisfied at the time of the hearing.
Petitioner claims he was not afforded the opportunity for a
hearing. The record, however, indicates that respondent provided
petitioner with ample opportunities, but that petitioner declined
such opportunities. On several occasions, petitioner was
telephonically contacted by the Appeals officer to schedule a
conference. Petitioner would not agree to any suggested dates
for a hearing and did not offer any alternative dates. When the
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Appeals officer decided to set a date, petitioner refused to
confirm that date and, again, did not offer an alternative date.
The Appeals officer mailed, and petitioner received,
written notice that a hearing was scheduled for September 5,
2001. The notice informed petitioner that if he did not attend
the hearing, the hearing would proceed without him. Accordingly,
the determination would be based on information in the
administrative file. After receiving this letter, petitioner did
not attempt to contact the Appeals officer or reschedule the
hearing.
Instead, petitioner wrote a letter to the Taxpayer Advocate
relating a history of his contacts with the Internal Revenue
Service. Toward the end of the letter petitioner mentioned that
he had a full schedule until September 17, 2001, but did not
propose an alternate date or time to meet. Petitioner sent a
copy of this letter to the Appeals officer; however it did not
reach the Appeals officer until after the time of the scheduled
hearing.
In determining whether petitioner received an opportunity
for a hearing, the Administrative and Procedural Regulations are
instructive. They provide:
Q-D7. If a taxpayer wants a face-to-face CDP
hearing, where will it be held?
A-D7. The taxpayer must be offered an
opportunity for a hearing at the Appeals
office closest to taxpayer’s residence, * *
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*. If that is not satisfactory to the
taxpayer, the taxpayer will be given an
opportunity for a hearing by correspondence
or by telephone. If that is not satisfactory
to the taxpayer, the Appeals officer * * *
will review the taxpayer’s request for a CDP
hearing, the case file, any other written
communications from the taxpayer * * * and
any notes of any oral communications with the
taxpayer or the taxpayer’s representative.
Under such circumstances, review of those
documents will constitute the CDP hearing for
the purposes of section 6330(b). [Sec.
301.6330-1(d)(2) Q-D7, A-D7, Proced. & Admin.
Regs.]
Petitioner had requested a face-to-face hearing, insisting
that the Taxpayer Advocate be present as well as his
congressional liaison. Petitioner was offered a hearing on
several occasions; however, none of the offers were satisfactory
to petitioner. It was not the responsibility of the Appeals
officer to arrange for petitioner’s congressional liaison and
Taxpayer Advocate to be present. Moreover, the Appeals officer
could not make any arrangements without petitioner agreeing to a
hearing date.
Petitioner received notice that if he did not appear at the
September 5, 2001, hearing, the Appeals officer would make a
determination based on the administrative file. When petitioner
refused to confirm a date and did not appear for the hearing, it
was appropriate for the Appeals officer to presume that
petitioner did not intend to have a face-to-face hearing of the
type normally offered by the Appeals Office. Petitioner has not
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shown that he is entitled to have the Taxpayer Advocate and/or
his congressional liaison present at a hearing under section
6330.
Accordingly, it was not an abuse of discretion for the
Appeals officer to proceed with a hearing based on the
administrative file and prior telephone conversations with
petitioner. Under these circumstances, the Appeals officer’s
review of these documents constituted the administrative hearing
for purposes of section 6330(b). Sec. 301.6330-1(d)(2)(A-D7),
Proced. & Admin. Regs.
Further, we have held that a face-to-face meeting is not
required. Katz v. Commissioner, 115 T.C. 329 (2000). Recently,
we decided a factually similar case, wherein a taxpayer claimed
he was denied a hearing under section 6330. Mann v.
Commissioner, T.C. Memo. 2002-48. In that case, the Appeals
officer scheduled a hearing and provided the taxpayer with
written notice of the hearing. Id. The taxpayer received the
notice, but did not attend the hearing and did not attempt to
reschedule the hearing. Id. We held in that case that the
taxpayer had been granted an opportunity for a hearing. Id.
The circumstances we consider here are less compelling for
petitioner than those in Mann v. Commissioner, supra. In that
case, the taxpayer was given one notice of the meeting and his
failure to appear was not equated with a failure to give him an
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opportunity for a hearing. Here, petitioner was given numerous
opportunities to establish a date for a section 6330 hearing, and
he declined on each occasion without offering an alternative
date. Finally, when a specific date was set, petitioner failed
to appear or provide the Appeals Office with a reasonable or
timely alternative. Accordingly, we hold that petitioner was
granted an opportunity for a hearing in accordance with section
6330.
Concerning the tax year under consideration, petitioner
received a statutory notice of deficiency and had an opportunity
to petition this Court. Petitioner did not file a petition with
respect to the notice of deficiency, nor does petitioner dispute
the existence or the amount of the underlying tax liability.
Rather, petitioner argues that the collection period for his 1987
liability had expired in May 1997. Petitioner, under this
belief, claims the 1997 overpayment was incorrectly applied to
his 1987 tax liability. Petitioner’s contention, however, is
erroneous.
Petitioner filed his 1987 Federal income tax return in
November 1988. Within 3 years of that date, on July 8, 1991,
respondent assessed petitioner’s income tax deficiency for 1987.
See sec. 6501(a). Under section 6502, a tax liability may be
collected by levy or proceedings begun within 10 years after the
assessment. The Taxpayer Advocate, therefore, was correct in
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determining that the 1987 collection period did not expire until
July 8, 2001. Accordingly, using the 1997 overpayment as an
offset to satisfy petitioner’s 1987 tax liability was proper.
What remains for our decision is whether respondent’s
determination to proceed with collection was an abuse of
discretion. Sec. 6330(d). The Appeals officer considered
petitioner’s argument that the 1997 overpayment should have been
used to satisfy petitioner’s 1997 income tax deficiency instead
of its use as an offset to satisfy petitioner’s 1987 tax
liability. Section 6402 allows the Secretary to credit the
amount of an overpayment against any liability in respect of an
internal revenue tax on the part of the person who made the
overpayment. Such offset does not preclude the Internal Revenue
Service from making a later determination or assessment with
regard to the overpayment year. Owens v. Commissioner, 50 T.C.
577, 583 (1968); Clark v. Commissioner, 158 F.2d 851 (6th Cir.
1946).
The Appeals officer verified that respondent had complied
with all legal and procedural requirements pertaining to the
proposed levy. Petitioner did not challenge the appropriateness
of the intended method of collection or offer a collection
alternative. Also, petitioner did not raise any other defenses
to collection. Consequently, the Appeals officer determined the
proposed levy was legally and procedurally correct. Petitioner
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received the notice of determination with an attached transcript
of his 1997 tax liability.
Accordingly, we hold there was no abuse of discretion in
respondent’s determination to proceed with collection of
petitioner’s 1997 tax liability. We have considered all of
petitioner’s arguments, and to the extent that they are not
mentioned herein, we find them to be moot, irrelevant, or without
merit.
To reflect the foregoing,
Decision will be entered
permitting respondent to proceed
with collection.