T.C. Summary Opinion 2004-48
UNITED STATES TAX COURT
CAROLYN D. RAMIREZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14154-02S. Filed April 12, 2004.
Carolyn D. Ramirez, pro se.
Trent D. Usitalo, for respondent.
WOLFE, Special Trial Judge: This case was heard pursuant to
the provisions of sections 6330(d) and 7463 of the Internal
Revenue Code in effect when the petition was filed. Unless
otherwise indicated, all subsequent section references are to the
Internal Revenue Code in effect at relevant times. The decision
to be entered is not reviewable by any other court, and this
opinion should not be cited as authority. The sole issue for
decision is whether respondent abused his discretion in failing
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to consider petitioner’s offer in compromise at a hearing as
required by section 6330(b) and (c)(2)(A)(iii).
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. When she filed her
petition, petitioner resided in Fresno, California.
On February 8, 2002, respondent issued to petitioner a
Notice of Intent to Levy under IRC 6330 (notice) with regard to
petitioner’s unpaid Federal income tax liability for 1999. In
response to the notice, petitioner filed a Form 12153, Request
for a Collection Due Process Hearing (CDP hearing), on February
16, 2002. Petitioner stated on the Form 12153 that she wanted to
explore an offer in compromise. Petitioner’s case was assigned
to an Appeals officer (the Appeals officer) from respondent’s
Appeals office in Fresno, California (the Appeals office). On
June 13, 2002, the Appeals officer wrote petitioner the following
letter:
This is to advise you that I have been assigned your
request for a Collection Due Process Hearing. I have
scheduled your hearing for Wednesday July 10, 2002 at
10:00 AM. The Collection Due Process hearing may be
conducted via telephone, correspondence or in a personal
conference. To facilitate our discussions, I am
enclosing an explanation of the Appeals process for
Collection Due Process cases.
I suggest we conduct the hearing by telephone. Please
call me at the scheduled date and time. * * * If you
would like to conduct the hearing in a different way,
such as in person or by correspondence please let me
know before the hearing date. If the date and time is
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not convenient please notify me prior to the hearing
date as to the day of the week (Monday - Thursday) and
time (between 9:00 AM and 3:00 PM) in which a hearing
may be held.
I have included a Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed
Individuals. If you wish to propose collection
alternatives, please complete this financial statement
and return it to me at least 10 days prior to the
Hearing * * * If I do not receive the Form 433A at least
10 days prior to the Hearing I can only assume that you
do not wish to propose a collection alternative. * * *
On July 10, 2002, petitioner did not call in for her
scheduled CDP hearing, and, as of that date, she had not
contacted the Appeals officer to reschedule the CDP hearing and
had not returned a completed Form 433-A. Following petitioner’s
failure to appear for her CDP hearing, the Appeals officer sent
to petitioner the following letter, dated July 10, 2002:
Your Collection Due Process Hearing was scheduled for
Wednesday July 10, 2002 at 10:00. Since I didn’t
receive a call from you I can only assume you no longer
desire a Hearing. I have enclosed Form 12257 which is
a waiver of review of a collection due process
determination. If you sign and return that form you
will save us some work and speed up the closing of your
case. In the event you still desire a hearing please
notify me of this on or before the close of business
Monday July 22, 2002. In the event there is no
response a determination will be made based on
available information and a Determination Letter will
be issued. I am usually in the office Monday -
Thursday from 8:30 - 6:00.
Petitioner telephoned the Appeals officer on or about July
11, 2002. Petitioner told the Appeals officer that she had been
out of the country and still wanted a hearing. Petitioner and
the Appeals officer discussed her case, and petitioner concluded
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that she still wanted to propose an offer in compromise. The
Appeals officer asked petitioner to submit a completed
Form 433-A.
On August 5, 2002, the Appeals officer still had not
received a Form 433-A from petitioner and had not heard from her
since July 11, 2002. On August 5, 2002, the Appeals officer
administratively closed petitioner’s case for a determination
based upon the information in her file. On August 8, 2002, the
Appeals officer received a package from petitioner containing a
completed Form 433-A and related financial documents (the offer
in compromise materials). The Appeals officer considered the
offer in compromise materials to be late, and he did not review
the information. On August 12, 2002, the Appeals officer issued
a Notice of Determination. The Notice of Determination stated
that petitioner did not have an offer in compromise pending at
this time and set forth the following rationale for preceding
with the levy:
Although a levy is intrusive, since the information
related to the taxpayer’s financial specifics were not
provided so that we might evaluate the collection
alternative, the proposed collection action balances
the need for the efficient collection of the taxes with
the legitimate concern of the taxpayer that any
collection action be no more intrusive than necessary.
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By letter dated August 13, 2002, the Appeals officer sent
petitioner the following explanation of his decision in issuing
the Notice of Determination:
On August 5, 2002 I closed your case for issuance of
our Determination Letter. On August 12, 2002 that
letter was mailed. I will place the information you
recently sent us in the administrative file and ask
that someone in our Automated Collection System (ACS)
Department take a look at it for purposes of
considering the next collection step.
You have a choice concerning our Determination Letter.
You can file a petition with the United States Tax
Court and ask either the government’s attorney or the
Judge to have someone look at your information or you
can do nothing and let someone with our ACS Department
look at it once your case is returned to them.
Upon receiving the Notice of Determination, petitioner wrote
the following letter to the Appeals officer on August 22, 2002:
I received your notice dated August 12, 2002. I have
two concerns: (1) when we spoke on July 11, 2002, I
distinctly remember the due date being July 31, 2002.
I remember we went back & forth on the due date but
this was the date we decided on * * * (2) I submitted
all the information on July 31, 2002. I dropped it in
the box at the main post office. The mail handler had
to [purchase] 11 -37¢ stamps on the envelope. That
envelope was returned - see attached.
Attached to petitioner’s letter was a copy of a notice from the
Postal Service, which bore a postmark dated in August 2002. The
copy submitted to the Court is difficult to read, and the date in
August is illegible. The Postal Service notice states:
We regret that your mail is being returned to you because
of heightened security measures. All domestic mail,
weighing 16 ounces or over, that bears stamps * * *
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MUST be presented to a retail clerk at a post office.
Postage that is affixed to the return mail may be used
for re-mailing the item.
On the notice from the Postal Service was the following
handwritten message from a Postal Service employee: “You dropped
a large priority envelope in the drop box - it was returned, but
I cancelled the stamps for you and sent it on - to avoid further
delay.” The notation “8-2” is handwritten on the envelope in
which petitioner mailed her materials to the Appeals officer.
Petitioner timely filed a petition with this Court under
section 6330(d). After petitioner’s case was set for trial, in
the words of the stipulation of the parties, “As a courtesy to
Petitioner, Respondent’s counsel forwarded * * * [her file] to an
Offer Specialist to review in an effort to determine if the case
could possibly be settled by way of an offer in compromise.” The
settlement negotiations were unsuccessful.
The underlying tax liability is not in dispute in this case.
Following a Stipulation of Settled Issues filed with the Court on
June 9, 2003, the sole issue to be decided is whether the Appeals
officer properly considered an offer in compromise raised by
petitioner.
Discussion
Under section 6330, a taxpayer is entitled to notice and an
opportunity for a hearing before certain lien and levy actions
are taken by the Commissioner in the process of collecting unpaid
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Federal taxes. Upon request, a taxpayer is entitled to a “fair
hearing” conducted by an impartial officer from the Office of
Appeals. Sec. 6330(b)(1), (3). Such a hearing need not be
conducted face-to-face; a taxpayer may receive a fair hearing by
telephone or through written correspondence. Sec. 301.6330-
1(d)(2) Q&A-D7, Proced. & Admin. Regs. At the hearing, the
Appeals officer is required to: (1) Obtain verification from
the Secretary that the requirements of applicable law and
administrative procedure have been met, (2) consider certain
issues raised by the taxpayer such as collection alternatives
including an installment agreement or an offer in compromise, and
(3) consider whether any proposed collection action balances the
need for the efficient collection of taxes with the legitimate
concern of the taxpayer that any collection action be no more
intrusive than necessary. Sec. 6330(c).
This Court has jurisdiction to review the Commissioner’s
administrative determination under section 6330(d). Where, as
here, the validity of the underlying tax liability is not at
issue, we review the determination for abuse of discretion. Sego
v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,
114 T.C. 176, 181-182 (2000). In doing so, under the
circumstances of this case, we do not conduct an independent
review of what would be an acceptable offer in compromise.
Rather, we review only whether the Appeals officer’s decision to
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issue a Notice of Determination without reviewing petitioner’s
proposed offer in compromise was arbitrary, capricious, or
without sound basis in fact or law. See Woodral v. Commissioner,
112 T.C. 19, 23 (1999).
In the present case the Appeals officer actually was in
possession of petitioner’s offer in compromise before the Notice
of Determination was mailed. Petitioner testified that she
believed that she was to contact the Appeals officer by July 31,
2002, and that she mailed her offer in compromise materials to
him on that date. She expected prompt delivery of the materials,
but they were delayed because of security procedures in effect
with respect to mail at the time in question. Nevertheless,
petitioner’s offer in compromise was received by the Appeals
office on August 8, 2002, and the Notice of Determination was not
mailed until August 12, 2002. The Appeals officer closed
petitioner’s case for a determination based upon petitioner’s
file on August 5, 2002, and he did not review petitioner’s offer
in compromise because it was received after he administratively
closed her case. The unusual circumstance here is that the
Appeals officer had petitioner’s offer in compromise material on
his desk before the Determination Letter was mailed. The record
indicates that he could have examined her material and conducted
the Appeals office hearing. Instead, he refused to examine
petitioner’s materials and referred her to the “Automated
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Collection System”. Under these circumstances, we believe the
Appeals officer’s decision not to review petitioner’s offer in
compromise was an abuse of his discretion and denied petitioner
her right to a fair hearing under section 6330.
Where a taxpayer is not afforded a proper opportunity for a
hearing under section 6330, the Court can remand the case to the
Appeals office to hold a hearing if we “believe that it is either
necessary or productive”. Lunsford v. Commissioner, 117 T.C.
183, 189 (2001); Day v. Commissioner, T.C. Memo. 2004-30. In the
present case, petitioner claims that she has evidence that her
assets are of lower value than the Commissioner previously
believed and that she should not be required to pay her tax
obligations in full immediately. We believe there is a
possibility that a productive result may occur from remanding
petitioner’s case to the Appeals office for a proper hearing and
review of petitioner’s offer in compromise.
To reflect the foregoing,
An appropriate order
will be issued.