JOHNSON v. COMMISSIONER

T.C. Summary Opinion 2005-47

UNITED STATES TAX COURT

JULIAN QUINTON JOHNSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20594-03S. Filed April 18, 2005.

Julian Quinton Johnson, pro se.

William J. Gregg, for respondent.

WHALEN, Judge: The instant petition, filed pursuant

to sections 6330(d) and 7463 in effect at the time the

petition was filed, asks the Court to review a notice

of determination concerning collection action(s) under

sections 6320 and/or 6330 (notice of determination) in

which an Appeals officer of the Internal Revenue Service

determined that respondent may proceed with the collection
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of petitioner’s 1991, 1996, 1998, and 1999 income tax

liabilities, aggregating approximately $10,000. The

decision to be entered in this case is not reviewable by

any other court, and this opinion should not be cited as

authority. Unless otherwise indicated, all subsequent

section references are to the Internal Revenue Code in

effect for the years in issue. All Rule references are

to the Tax Court Rules of Practice and Procedure.

The case is presently before the Court to decide

respondent’s motion for summary judgment. In that motion,

respondent asks the Court to summarily decide the case

in respondent’s favor on the ground that no abuse of

discretion can be found in the Appeals officer’s issuance

of the subject notice of determination, and respondent is

entitled to judgment as a matter of law.

The premise of respondent’s motion is that the Court’s

review of the notice of determination is governed by the

judicial review provisions of the Administrative Procedure

Act, particularly section 706, 5 U.S.C. sec. 706 (2000),

which “limit a court’s review for an abuse of discretion

to the administrative record.” Respondent argues that

the Court’s review in this case is limited to the

administrative record. Respondent asserts that, according
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to that record, “the Settlement Appeals Officer fully

responded to petitioner’s challenge to the proposed

collection action” and “fully complied with the

requirements of Code section 6330(c)” and “there was no

abuse of discretion”.

Background

The tax for each of the years in issue was assessed by

respondent before the notice of determination was issued.

For 1991, respondent assessed the tax after petitioner did

not respond to a notice of deficiency that respondent had

issued to petitioner. Petitioner had filed no return for

the year. With respect to the other taxable years involved

in this case, 1996, 1998, and 1999, petitioner did not pay

all of the tax reported on the return filed for each of

those years. Accordingly, respondent assessed the unpaid

amounts.

The record suggests that a notice of each of the

above assessments and a demand for payment were issued to

petitioner in accordance with section 6303(a). In due

course thereafter, respondent issued to petitioner a

final notice of intent to levy and notice of the right to

a hearing, pursuant to section 6330(a). A copy of that

notice is not included in the record.
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In response to the final notice of intent to levy

and notice of the right to a hearing, petitioner filed

a timely request for a collection due process hearing

(CDP hearing) on Internal Revenue Service Form 12153.

Associated with petitioner’s request is a letter from

petitioner which states as follows:

During the past 33 years of my life I was
addicted to mood altering substances, various
times of which I have held jobs due to my
chemical dependency I did not keep them long.
During this process I did not pay the taxes I
should have. I have lost everything my house,
my car I have nothing at this moment--I checked
into an intensive treatment center “Somes” So
That Others may Eat--for the last 4 months, I am
currently in the aftercare program to prepare me
for school and job placement. Attached is a
letter from the treatment program in addition to
the IRS Request Form No. 12153. I would like to
request a deferred payment plan be established
upon my returning to work. I would like to
request that you not place this on my credit
record as this would hinder me from obtaining
gainful employment.

In response to petitioner’s request for a CDP hearing,

the Appeals officer who was assigned to petitioner’s case

sent a letter to petitioner in which she outlined the

Internal Revenue Code provisions dealing with due process

for collections, she explained the collection alternatives

that are generally available, and she scheduled a hearing
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in the form of a face-to-face meeting with the Appeals

officer on a specific date. Petitioner failed to appear

for the hearing on the date specified, and he did not

contact the Appeals officer to schedule a hearing on

another date.

Several days later, the Appeals officer issued the

subject notice of determination. The following summary of

the Appeals officer’s determination is set forth therein:

We have determined that the Notice of Intent
to Levy issued on the periods listed above
[viz 1991, 1996, 1998, and 1999] is valid and
appropriate. All legal and procedural require-
ments were met in its issuance. No collection
alternatives were proposed, so levy is the only
means to collect the liability at this time.

The last sentence of the above summary appears to be

contradicted by an attachment to the determination letter

which contains a section entitled “Relevant issues raised

by the taxpayer”. In that section, the Appeals officer

states: “The taxpayer claimed [that] an installment

agreement would be proposed * * * [and] also claimed that a

wage levy would keep him from getting a job.” Apparently,

the Appeals officer derived those claims from the letter

submitted with petitioner’s request for CDP hearing, quoted

above. The Appeals officer states in the attachment that
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“an installment agreement cannot be entered into at this

time” because “the taxpayer is not in deposit compliance”.

The attachment dismisses petitioner’s concern about getting

a job on the ground that no wage levy would take place

until after he was employed, and once employed an employer

could not legally terminate him solely because a wage levy

was issued.

The attachment to the determination states that

petitioner “does not yet meet the compliance criteria for

an Installment Agreement or an offer [in compromise]”

because “Information on the Integrated Data Retrieval

System (IDRS) indicates the taxpayer has not filed an

income tax return for the period ending 12/31/2001 or

12/31/2002.” The attachment further states: “Although

the taxpayer’s average income for these periods is below

the filing requirement, he has made mortgage interest

payments during these years that would suggest that he is

also receiving self-employment income of some type.” Thus,

the Appeals officer appears to speculate that petitioner

received self-employment income during each of the years

2001 and 2002 in an amount sufficient to require that he

file a return. The Appeals officer concludes: “since the
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taxpayer does not appear to be in filing compliance, no

collection alternatives can be considered at this time.”

Finally, the attachment to the determination deals

with the issue of the balance between efficient collection

action and a taxpayer’s concern that any collection action

be no more intrusive than necessary. According to the

attachment, no alternatives to collection could be

considered at this time because “The taxpayer does not

appear to be in filing compliance”.

Petitioner filed a timely petition in this Court for

judicial review of the Appeals officer’s determination.

In paragraph 4 of the petition, which asks for “the relief

requested and the reasons why you are entitled to such

relief”, petitioner states as follows:

I’m homeless, not working and in recoverey [sic]
from drug abuse, but I’m in scool [sic] tring
[sic] to get back on track. I ask that the $60
fee be waive [sic], do [sic] to the fact I’m
homeless and have no job.

We highlight two aspects of the petition. First,

the petition does not raise an issue about petitioner’s

underlying tax liability for any of the years in issue.

In fact, petitioner appears to have conceded his underlying

tax liability when he stated in his request for the CDP
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hearing: “During this process I did not pay the taxes I

should have.”

Second, the petition states that petitioner is

“homeless”, but it lists a mailing address for petitioner

in Washington, D.C., and a telephone number with a

Washington, D.C., area code. Respondent’s motion for

summary judgment states that respondent’s counsel attempted

to contact petitioner and “left a message” for him about

the filing of the motion. We find that petitioner resided

in Washington, D.C., at the time the instant petition was

filed.

This case was set for trial at the session of the

Court that began in Washington, D.C., on October 4, 2004.

Respondent’s motion for summary judgment was also set for

hearing at the same time. When the case was called,

counsel for respondent appeared, but petitioner did not.

We note that the Court’s orders setting respondent’s

motion for summary judgment for hearing and reassigning

the case, both sent to petitioner by certified mail, were

returned to the Court. In the case of each order, the

envelope in which the order was sent had been stamped by

the Postal Service “Unclaimed”. Petitioner has not
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notified the Court of a change of address. Respondent does

not seek dismissal of the case for failure to prosecute.

Discussion

The purpose of summary judgment is to expedite

litigation and avoid unnecessary and expensive trials.

See, e.g., Keene v. Commissioner, 121 T.C. 8, 14 (2003);

Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).

Generally, we grant summary judgment if the pleadings,

answers to interrogatories, depositions, admissions, and

any other acceptable materials show that there is no

genuine issue of any material fact and a decision may be

rendered as a matter of law. Rule 121(b); see Sundstrand

Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17

F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C.

753, 754 (1988).

The moving party, respondent in this case, bears the

burden of proving that there is no genuine issue of

material fact. Dahlstrom v. Commissioner, 85 T.C. 812, 821

(1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982).

Factual inferences will be made in a manner most favorable

to the party opposing summary judgment, petitioner in this

case. Dahlstrom v. Commissioner, supra at 821.
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For the reasons set forth below, we conclude that

respondent has failed to prove that there is no genuine

issue of any material fact. Accordingly, we will deny

respondent’s motion.

We have previously summarized the rights of the

Commissioner to levy against the property or property

rights of a taxpayer and the protections afforded to such

a taxpayer in Lunsford v. Commissioner, 117 T.C. 183,

183-184 (2001), in which we stated as follows:

Section 6331(a) authorizes the Commissioner
to levy against property and property rights
where a taxpayer fails to pay taxes within 10
days after notice and demand for payment is made.
Section 6331(d) requires the Secretary to send
notice of an intent to levy to the taxpayer, and
section 6330(a) requires the Secretary to send a
written notice to the taxpayer of his right to a
hearing. Section 6330(b) affords taxpayers the
right to a “fair hearing” before an “impartial”
IRS Appeals officer. Section 6330(c)(1) requires
the Appeals officer to obtain verification that
the requirements of any applicable law or
administrative procedure have been met. Section
6330(c)(2)(A) specifies issues that the taxpayer
may raise at the Appeals hearing. The taxpayer
is allowed to raise “any relevant issue relating
to the unpaid tax or the proposed levy” including
spousal defenses, challenges to the appropriate-
ness of collection action, and alternatives to
collection. Sec. 6330(c)(2)(A). The taxpayer
cannot raise issues relating to the underlying
tax liability if the taxpayer received a notice
of deficiency or the taxpayer otherwise had
an opportunity to dispute the tax liability.
Sec. 6330(c)(2)(B).
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Section 6330(c)(3), provides that a
determination of the Appeals officer shall take
into consideration the verification under section
6330(c)(1), the issues raised by the taxpayer,
and whether the proposed collection action
balances the need for the efficient collection of
taxes with the legitimate concern of the person
that any collection action be no more intrusive
than necessary. Section 6330(d)(1) allows the
taxpayer to appeal a determination to the Tax
Court or a District Court. Section 6330(e)(1)
suspends the levy action until the conclusion
of the hearing and any judicial review of the
determination.

In order for a taxpayer to appeal a levy determination

to this Court, pursuant to section 6330(d), the Rules of

the Court require the taxpayer to file a petition for

review of the determination. See Rule 331. That petition

must contain clear and concise assignments of each and

every error which the taxpayer alleges to have been

committed in the determination, together with clear and

concise statements of the facts on which the taxpayer bases

each assignment of error. See Rule 331(b)(4) and (5).

The Rules warn that any issue that is not raised by the

taxpayer in the assignments of error shall be deemed

conceded. Rule 331(b)(4); Lunsford Commissioner, supra

at 190; Goza v. Commissioner, 114 T.C. 176, 178 (2000).
 - 12 -

If the underlying tax liability was properly at issue

in the CDP hearing and the taxpayer includes that matter in

the assignments of error in the petition for review, then

we review the Appeals officer’s determination as to that

issue de novo. See, e.g., Sego v. Commissioner, 114 T.C.

604 (2000); Goza v. Commissioner, supra. However, if

the underlying tax liability was not at issue in the CDP

hearing, or if the taxpayer does not raise that issue in

his or her petition for review, then we review the

determination using the abuse of discretion standard of

review. See, e.g., Sego v. Commissioner, supra at 610;

Goza v. Commissioner, supra at 182.

We described the abuse of discretion standard of

review in Robinette v. Commissioner, 123 T.C. 85, 93-94

(2004), as follows:

Under an abuse of discretion standard,
“we do not interfere unless the Commissioner’s
determination is arbitrary, capricious, clearly
unlawful, or without sound basis in fact or law.”
Ewing v. Commissioner, 122 T.C. 32, 39 (2004);
see also Woodral v. Commissioner, 112 T.C. 19,
23 (1999). Review for abuse of discretion
includes “any relevant issue relating to the
unpaid tax or the proposed levy”, including
“challenges to the appropriateness of collec-
tion actions” and “offers of collection
alternatives” such as offers in compromise.
Sec. 6330(c)(2)(A). Questions about the
appropriateness of the collection action include
 - 13 -

whether it is proper for the Commissioner to
proceed with the collection action as determined
in the notice of determination, and whether the
type and/or method of collection chosen by the
Commissioner is appropriate. See, e.g.,
Swanson v. Commissioner, 121 T.C. 111, 119
(2003) (challenge to appropriateness of
collection reviewed for abuse of discretion).

In order for petitioner to prevail under the abuse

of discretion standard, it is not enough for us to

conclude that we would not have authorized collection;

we must conclude that, in authorizing collection, the

Appeals officer has exercised her discretion “‘arbitrarily,

capriciously, or without sound basis in fact’”. Estate

of Jung v. Commissioner, 101 T.C. 412, 449 (1993) (quoting

Mailman v. Commissioner, 91 T.C. 1079, 1084 (1988)).

We agree with respondent that the subject

determination is to be reviewed using the abuse of

discretion standard of review. As to tax year 1991,

petitioner received a notice of deficiency, and, thus, he

was not eligible to challenge the existence or amount of

the underlying tax liability with respect to that year in

the CDP hearing. See sec. 6330(c)(2)(B). As to tax years

1996, 1998, and 1999, petitioner did not receive a notice

of deficiency, nor did he otherwise have an opportunity to

dispute his underlying tax liability for any of those
 - 14 -

years. Thus, it appears that petitioner could have

disputed the merits of his underlying tax liability for

those years at the CDP hearing. See Poindexter v.

Commissioner, 122 T.C. 280, 284 (2004); Montgomery v.

Commissioner, 122 T.C. 1, 9 (2004). However, petitioner

did not raise his underlying tax liability for any of those

years as an issue either in his request for the CDP hearing

or in his petition for review in this Court. Therefore,

petitioner’s underlying tax liability is not at issue in

this case. See Poindexter v. Commissioner, supra;

Lunsford v. Commissioner, 117 T.C. at 185-187; Davis v.

Commissioner, 115 T.C. 35, 39 (2000). As to all of the

years in issue in this case, the determination is to be

reviewed for abuse of discretion.

We do not agree with respondent that the Court’s

review of the Appeals officer’s levy determination is

governed by the judicial review provisions of the

Administrative Procedure Act, such that, in the words of

respondent’s motion, “its review may not go beyond the

administrative record.” To the contrary, in Robinette v.

Commissioner, supra at 95, the Court held that we were not

limited by the Administrative Procedure Act when reviewing

a levy determination for abuse of discretion and “our
 - 15 -

review is not limited to the administrative record.” See

also Ewing v. Commissioner, 122 T.C. 32 (2004).

Respondent’s motion for summary judgment in this case does

not cite Robinette and, thus, it gives us no reason to

distinguish that case or to conclude that its holding does

not govern our opinion here.

Absent special circumstances, in an appeal of a levy

determination we will consider only arguments, issues,

and other matters that were raised at the section 6330(b)

hearing or otherwise brought to the attention of the

Appeals Office. See Robinette v. Commissioner, supra

at 101-103; Ewing v. Commissioner, supra at 41; Magana v.

Commissioner, 118 T.C. 488, 493-494 (2002). Thus, while

the taxpayer may not be limited to the evidence contained

in the administrative record of the levy determination,

it must appear that the matters raised before this Court

were also raised before the Appeals Office. See Robinette

v. Commissioner, supra at 101-103.

In this case, the grounds for relief stated in

petitioner’s petition, as quoted above, are terse but

can be read as raising an issue about the appropriateness

of collection actions (i.e., the statement in the petition

that petitioner is “homeless, not working and in recoverey
 - 16 -

[sic] from drug abuse”), and an issue about the denial of

an alternative method of collection (i.e., the statement in

the petition that petitioner is “in scool [sic], tring

[sic] to get back on track”). Both of these issues were

raised in the letter attached to petitioner’s request for

a CDP hearing on Form 12153. In passing, we note that

respondent is not seeking dismissal of the case on the

ground that the petition does not raise justiciable issues

or that it raises issues that had not been presented to the

Appeals officer.

Respondent asks the Court for summary judgment and,

as mentioned above, bears the burden of proving that there

is no genuine issue as to any material fact. See Rule

121(b). At trial, the evidence will not be confined to

the evidence contained in the administrative record. See

Robinette v. Commissioner, 123 T.C. at 101-103. Petitioner

will have an opportunity to present other evidence in

support of the issues raised in his petition, described

above. We do not know what other evidence, if any,

petitioner will present at trial. Thus, we cannot know

at this time whether the evidence presented at trial will

raise a genuine issue as to a material fact. What we do

know is that respondent has failed to make the showing
 - 17 -

required by Rule 121 that there are no genuine issues of

material fact.

Moreover, even if the evidence at trial were confined

to the evidence in the administrative record, there appears

to be a genuine issue about whether petitioner was required

to file tax returns for 2001 and 2002. This fact is

material because the Appeals officer’s determination, as

indicated by the attachment to the determination, shows

that the Appeals officer rejected petitioner’s request for

an installment agreement because she “found no record of

the taxpayer filing his Form 1040 for the periods ending

12/31/2001 or 12/31/2002.”

The Appeals officer acknowledged in the attachment to

the determination that petitioner did not have sufficient

wage income to require the filing of a return, but she

asserted that “he has made mortgage interest payments

during these years that would suggest that he is also

receiving self-employment income of some type.” On the

other hand, petitioner asserted his request for a CDP

hearing: “I’ve lost everything my house, my car, I have

nothing at this moment”. This statement implies that

petitioner did not own the property on which the mortgage

interest payments were made and that petitioner did not
 - 18 -

make those payments. Furthermore, there is nothing in the

record to show that any such mortgage interest payments are

self-employment income earned by petitioner.

For the above reasons,

An appropriate order will

be issued denying respondent’s

motion for summary judgment.