T.C. Memo. 2005-175
UNITED STATES TAX COURT
DONALD A. AND VIRGINIA M. SINGER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 147-04L. Filed July 18, 2005.
Donald A. Singer and Virginia M. Singer, pro sese.
Pamela L. Mable, for respondent.
MEMORANDUM OPINION
WELLS, Judge: Respondent issued petitioners a Notice of
Determination Concerning Collection Action(s) under Section 6320
and/or 6330 (notice of determination).1 In response to that
notice, petitioners timely filed a petition for lien or levy
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended.
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action under Code section 6320(c) or 6330(d). We review for
abuse of discretion respondent’s notice of determination.
Background
Some of the facts have been stipulated. The stipulation of
facts and the attached exhibits are incorporated herein by this
reference. Petitioners are husband and wife. At the time of
filing the petition, petitioners resided in Gainesville, Georgia.
On July 1, 2002, respondent sent petitioners a final notice
of intent to levy pursuant to section 6330 for taxable years 1997
and 1999. Subsequently, respondent received from petitioners a
timely Form 12153, Request for Collection Due Process Hearing.2
The handwritten Form 12153 stated: “WE DO NOT DISPUTE AMOUNTS
DUE, HOWEVER, DUE TO DIFFICULTIES IN GAINING INCOME ON THE PART
OF TAXPAYER DONALD A. SINGER, AND DIFFICULTY IN GAINING
EMPLOYMENT A TAX LIEN ON PROPERTY AT THIS TIME WOULD SEVERELY
HURT CHANCES OF GAINING EMPLOYMENT OR INCOME.”
On April 14, 2003, petitioners submitted Form 656, Offer in
Compromise, and Form 433-A, Collection Information Statement for
Individuals, setting forth an offer in compromise based on doubt
2
On Form 12153, petitioners incorrectly marked the line
contesting the filing of a notice of Federal tax lien, but later,
on May 9, 2003, petitioners sent a letter by facsimile correcting
the mistake and challenging the proposed levy action.
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as to collectibility.3 Petitioners offered to pay $10,000, with
$3,000 as an initial payment and 21 monthly payments of $333
thereafter. As of June 18, 2003, petitioners owed approximately
$33,006.31 in taxes, penalties, and interest for the years in
issue. Both the offer in compromise and the hearing request were
assigned to Settlement Officer Marilyn Q. Alls.
On July 7, 2003, a hearing was conducted by telephone
between Settlement Officer Alls and petitioner Donald A. Singer.
Settlement Officer Alls had no prior involvement with the taxes
that were the subject of the proceeding. In the hearing,
Settlement Officer Alls verified that all legal and procedural
requirements had been met. Amounts due had been properly
assessed, notice and demand had been made, the taxes were still
outstanding, and a levy source was identified and available.
Settlement Officer Alls verified that the proposed action
balanced the need for efficient collection of taxes with the
concern that any collection action be no more intrusive than
necessary.
In her review, Settlement Officer Alls determined that
petitioners had the ability to pay the liability in full over the
3
Petitioners did not check any of the boxes in sec. 6 of
Form 656 to indicate the offer was based on doubt as to
collectibility or otherwise. However, the statement attached to
petitioners’ Form 656 claims they are unable to pay and mentions
no exceptional circumstances, such as permanent disability, that
would merit compromise based on effective tax administration.
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life of the collection period. Consequently, the offer was
rejected.4
Settlement Officer Alls explained to petitioner Donald A.
Singer that the offer was rejected because petitioners had the
ability to pay their tax liability in full over the life of the
collection period. Settlement Officer Alls proposed a collection
alternative in the form of an installment plan requiring a
$10,000 downpayment and monthly payments of $275. She orally
requested that petitioners respond to her offer or propose an
alternative method for paying the full amount by July 31, 2003.
However, petitioners did not respond. They neither offered an
alternative payment plan nor submitted any additional information
regarding changed financial circumstances.
Having reached no agreement on an installment payment
amount, respondent issued the notice of determination to
petitioners by certified mail on December 5, 2003. Subsequently,
petitioners timely petitioned the Court in the instant lien or
levy action, requesting lower monthly installment payments on the
basis of changed financial circumstances. The petition stated:
Seek relief in the form of a reduction in the
monthly payment set forth in the notice of
determination dated 12/52003 [sic]. Since the
submission of our Offer In Compromise and the notice of
determination our monthly expenses have increased.
Monthly term life insurance premiums have increased
4
This determination was summarized in a “Rejection Narrative
Doubt as to Collectibility” dated Nov. 13, 2003.
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$50.00 on a five year renewable basis, prescription
drug co-payments have increased and city and county
property taxes on our home have increased. Also, no
consideration was given to the monthly interest
payments which we will incur on the $10,000 line of
credit we will need for the initial payment.
Discussion
Section 6330 provides that no levy may be made on any
property or right to property of a person unless the Secretary
first notifies the person in writing of the right to a hearing
before the Appeals Office. Section 6330(c)(1) provides that the
Appeals officer must verify at the hearing that applicable laws
and administrative procedures have been followed. At the
hearing, the person may raise any relevant issue relating to the
unpaid tax or the proposed levy, including appropriate spousal
defenses, challenges to the appropriateness of collection
actions, and collection alternatives. Sec. 6330(c)(2)(A).
However, the person may challenge the existence or amount of the
underlying tax liability only if the person did not receive any
statutory notice of deficiency for the tax liability or did not
otherwise have an opportunity to dispute the tax liability. Sec.
6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610 (2000).
In the instant case, petitioners do not dispute the
underlying tax liability. Rather, petitioners dispute
respondent’s rejection of the offer in compromise. Accordingly,
we review the administrative determination for abuse of
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discretion. See Sego v. Commissioner, supra at 610; Goza v.
Commissioner, 114 T.C. 176, 181-182 (2000).
Section 7122(a) authorizes the Secretary to compromise any
civil case arising under internal revenue laws. The Secretary
may compromise a liability for doubt as to collectibility when
“the taxpayer’s assets and income are less than the full amount
of the assessed liability.” Sec. 301.7122-1(b)(2), Proced. &
Admin. Regs.
Settlement Officer Alls reviewed petitioners’ submitted
financial information and determined that an offer in compromise
was not appropriate on the basis of doubt as to collectibility
because petitioners had the ability to pay the liability in full
over the life of the collection period.5 We conclude that
Settlement Officer Alls reasonably determined that petitioners
had sufficient income and assets to satisfy the tax liability.6
5
The “Rejection Narrative Doubt as to Collectibility”
prepared by Settlement Officer Alls shows that petitioners had
Net Realizable Equity consisting of bank accounts, a pension
account, and real estate totaling $12,054.38. Petitioners’
monthly gross income was $5,089.50 and allowable expenses only
$4,404.93, leaving a net difference of $684.57. This indicates
an ability to pay more than $50,000 over the life of the
collection period, exceeding the liability of $33,006.31.
6
We note that, at trial, petitioner presented no evidence of
increased expenses. Nevertheless, Settlement Officer Alls
testified that, at respondent’s request, she had reviewed
petitioners’ file before trial, and, even after she made
additional allowances for expenses, including interest on the
possible $10,000 line of credit and $50 more for insurance,
petitioners do not qualify for an offer in compromise based on
(continued...)
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Consequently, respondent’s refusal to enter into an offer in
compromise was not an abuse of discretion. See Crisan v.
Commissioner, T.C. Memo. 2003-318 (holding the Commissioner’s
refusal to enter into an offer in compromise was not an abuse of
discretion on the basis of a review of the financial information
submitted to the settlement officer).
On the basis of the foregoing, we conclude that all the
requirements of section 6330 have been satisfied, and respondent
may proceed with his proposed collection actions.
To reflect the foregoing,
Decision will be entered
for respondent.
(...continued)
doubt as to collectibility. Thus, we believe that it is neither
necessary nor productive to remand this case to IRS Appeals to
consider petitioners' arguments. See Lunsford v. Commissioner,
117 T.C. 183, 189 (2001).