T.C. Summary Opinion 2005-92
UNITED STATES TAX COURT
MICHAEL PATRICK AND LYDIA BREWER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5381-04S. Filed July 19, 2005.
Michael Patrick Brewer and Lydia Brewer, pro sese.
Ric Hulshoff, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of sections 6330(d) and 7463 in effect
at the time the petition was filed.1 The decision to be entered
is not reviewable by any other court, and this opinion should not
be cited as authority.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended. All Rule references are
to the Tax Court Rules of Practice and Procedure.
- 2 -
This collection review case is before the Court on
respondent’s motion for summary judgment. Respondent issued
petitioner a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (notice of
determination) for unpaid Federal income taxes and related
liabilities for 1992, 1994, 1996, and 2000. The notice of
determination relates to a notice of Federal tax lien filed on
April 10, 2003, for the above years in the approximate amount of
$9,027.
The issue for decision is whether, in the context of
respondent’s motion for summary judgment, respondent’s
determination to proceed with the filing of a Federal tax lien
was an abuse of discretion.
Background
Petitioners resided in Tucson, Arizona, at the time the
petition was filed.
Petitioners filed 1992, 1994, 1996, and 2000 Federal income
tax returns. The respective amounts of payments and credits
relating to the returns in issue were less than the tax
liabilities reported. Accordingly, there is a balance due and
owing with respect to each of the years in issue. Petitioner,
Michael Brewer (hereinafter petitioner) is a U.S. Marine Corps
veteran. He suffers from post traumatic stress disorder from his
- 3 -
military service in Vietnam. The Department of Veterans Affairs
has concluded that he is 100-percent service disabled.
In November 1999, petitioners submitted an offer in
compromise (OIC) to respondent. According to petitioner, the OIC
forms were revised by respondent and petitioners submitted a new
or revised OIC in May 2000. By letter dated October 5, 2000, the
IRS advised petitioners that the OIC was still awaiting
assignment to an appropriate IRS representative. The offer was
apparently rejected by respondent on January 31, 2002. The
record does not contain copies of the OIC or a rejection of the
OIC. Respondent’s case activity record indicates that the OIC
was rejected for failure to submit required financial
information.
On April 10, 2003, respondent filed a notice of Federal tax
lien with respect to the tax liabilities for the taxable years
1992, 1994, 1996, and 2000; and on April 15, 2003, respondent
issued to petitioners a Notice of Federal Tax Lien Filing and
Your Right to a Hearing Under IRC 6320. The notice reflects a
balance owed of $9,027.02 for said years. Petitioners timely
requested a hearing on Form 12153, Request for a Collection Due
Process Hearing, with the IRS Office of Appeals. Petitioners
explained in the request:
There are two reasons. One is that I knew I would
soon be 100% disabled and never able to pay. Second,
Mrs. Holmes in Phoenix told us we went to the
“uncollectable status”.
- 4 -
* * * * * * *
We are requesting a hearing for the following
reasons.
1) Knowing that I was going to be awarded a 100%
disability by the VA, we attempted to effecutuate an
OFFER IN COMPROMISE on three (3) separate occasions.
The first one was requested in 1999.
We were told by a variety of local CPA’s that the
IRS was not staffed properly to administrate the OIC
Program. We informed the Taxpayer Advocate office in
Phoenix of the forth coming Disability Rating and that
we would appreciate an answer. It took 3 years to get
a response.
One Mrs. Holmes stated to me that we were “placed
in UNCOLLECTIBLE STATUS” and that there “would be no
liens”. So it appears we were misguided.
Ms. Holmes also stated, quite succinctly, that
“given the mountain of offers they are processing”,
“your amount owed is not even worth setting up for
payment plans” That is a quote and it was recorded
with acknowledgment.
I am now 100% Disabled Permanent and Total, as a
result of fighting for the system that we all
represent. Since the rating I have developed
additional medical problems, total knee replacement,
and shingles.
My dear IRS officials, I made a due diligent
attempt to pay you, and begged to process my offer
sooner. “Time is of the Essence” concept apparently
has no play when it comes to the IRS.
I believe I need professional assistance at this
Hearing, so I have requested the accounting firm of
Moran & Quick CPA’s to represent me. The accountants
name is Mark DeBenedetti CPA.
By letter dated February 2, 2004, an IRS Appeals officer
scheduled a conference with petitioners. The letter also
- 5 -
suggested that petitioners complete Form 433-A, Collection
Information Statement for Individuals, with supporting
documentation reflecting financial information. The Appeals
officer advised that such information was required to consider
“currently not collectible” (CNC) status.
On the same date as the scheduled conference, petitioner
asked if he could record the conference. The Appeals officer
indicated that petitioner could not record if the conference was
conducted on that day, since the Appeals officer had received
insufficient notice of the request to record. A telephone
hearing was conducted by the Appeals officer with petitioner and
his representative, Mark DeBenedetti. Petitioners and Mr.
DeBonedetti did not submit any additional financial information
to the Appeals officer. Petitioner advised the Appeals officer
that he had been told by a representative of the Taxpayer
Advocate Service that the joint tax liability would be placed in
CNC status and that as a result, no notice of Federal tax lien
would be filed.
IRS records do not reflect that petitioners’ account was
ever placed in CNC status. The Appeals officer explained to
petitioner and Mr. DeBenedetti that the notice of Federal tax
lien would remain in place, even if petitioners were placed in
CNC status. The Appeals Officer also advised petitioner that
petitioners could submit another OIC.
- 6 -
Respondent issued the aforementioned notice of determination
on February 19, 2004.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
This Court has jurisdiction under section 6330 to review the
Commissioner’s administrative determinations. Sec. 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, 183 (2000).
Under section 6330, a taxpayer is entitled to a hearing in
which he or she may raise any relevant issue relating to the
unpaid tax or notice of lien filing, including spousal defenses,
challenges to the Commissioner’s intended collection action, and
- 7 -
alternative means of collection such as an offer in compromise.
Sec. 6330(b) and (c)(2).2
In this case, petitioners submitted an OIC, which was
rejected by respondent. There is no information concerning the
contents of the OIC or the rejection thereof. Given this
circumstance, we cannot conclude that the rejection of the OIC
was an abuse of discretion by respondent. Van Vlaenderen v.
Commissioner, T.C. Memo. 2003-346; Crisan v. Commissioner, T.C.
Memo. 2003-318.
While petitioners wanted their tax liabilities placed in
CNC status and IRS procedures indicate that such status is a
collection alternative in response to a levy action, see 2
Administration, Internal Revenue Manual (CCH), sec. 5.16.1.2.1 at
17,804, we note that there is no levy in this case. In addition,
it is clear that respondent asked petitioners on more than one
2
Petitioners complain that the Appeals officer improperly
prohibited a recording of the Appeals hearing. Sec. 7521(a)(1)
provides that “upon advance request” of the taxpayer an IRS
officer or employee shall permit the taxpayer to make an audio
recording. Keene v. Commissioner, 121 T.C. 8 (2003).
Petitioners do not appear to dispute respondent’s assertion that
petitioners did not comply with the statute and IRS guidelines
requiring advance notice of intent to record. See Notice 89-51,
1989-1 C.B. 691. Given that the hearing occurred, and that
petitioners do not assert that they raised collection
alternatives that were not considered by, or were not reflected
in the case activity records of, the Appeals officer, we do not
consider the issue of recording to be relevant to our
consideration. Petitioners simply have not claimed or shown any
prejudice in the failure to permit recording. See Frey v.
Commissioner, T.C. Memo. 2004-87; Durrenberger v. Commissioner,
T.C. Memo. 2004-44; Brashear v. Commissioner, T.C. Memo. 2003-
196; Kemper v. Commissioner, T.C. Memo. 2003-195.
- 8 -
occasion to complete the proper financial forms for consideration
of CNC status, and petitioners failed to do so. We are satisfied
that respondent has otherwise satisfied the requirements of
sections 6320 and 6330.
On the basis of this record, we conclude as a matter of law
that respondent did not abuse his discretion, and we sustain
respondent’s determination that the filing of a notice of Federal
tax lien was appropriate.3
Reviewed and adopted as the report of the Small Tax Case
Division.
To give effect to the foregoing,
An appropriate order and
decision will be entered for
respondent.
3
While we sympathize with petitioners’ situation,
particularly issues relating to health and disability, we note
that this is a lien action, in contrast to a levy action.
Respondent advised that he was seeking to protect the IRS
position as against other creditors in the filing of a notice of
Federal tax lien. Should respondent seek to levy on petitioners’
assets, petitioners will have an opportunity to seek alternatives
to such collection action. As one alternative, petitioners may
seek CNC status in response to a levy action. 2 Administration,
Internal Revenue Manual (CCH), sec. 5.16.1.2.1, at 17,804.