SNYDER v. COMMISSIONER

T.C. Summary Opinion 2006-115

UNITED STATES TAX COURT

CHARLES MICHAEL SNYDER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20546-03S. Filed July 18, 2006.

Charles Michael Snyder, pro se.

Kelley A. Blaine and Wesley F. McNamara, for respondent.

PANUTHOS, Chief 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. The

decision to be entered 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 at relevant times, and all Rule references

are to the Tax Court Rules of Practice and Procedure.
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This proceeding arises from a petition for judicial review

filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (notice of

determination) sent to petitioner on October 31, 2003. The issue

for decision is whether respondent abused his discretion in

determining that the proposed levy action to collect petitioner’s

unpaid Federal income tax for 1994 through 1999 should proceed.

Background

The facts have been stipulated, and they are so found. This

case was submitted fully stipulated pursuant to Rule 122. At the

time his petition was filed, petitioner resided in Portland,

Oregon.

Petitioner filed Federal income tax returns for the taxable

years 1994 through 1999 but did not pay in full the tax he

reported. Respondent assessed the taxes shown on petitioner’s

returns, but eventually designated his account “currently not

collectible”, meaning that respondent would suspend enforced

collection of petitioner’s outstanding tax liabilities. After

petitioner failed to file his 2001 tax return, however,

respondent removed the “currently not collectible” designation

and proceeded with collection efforts.

In March 2003, respondent sent petitioner a Final Notice Of

Intent To Levy And Notice Of Your Right To A Hearing with respect

to the taxable years 1994 through 1999. Petitioner timely
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submitted a Form 12153, Request for a Collection Due Process

Hearing. His case was assigned to an Appeals officer, who sent

petitioner a letter requesting information and scheduling an

administrative hearing for October 8, 2003. Petitioner did not

attend the hearing.

The Appeals officer and petitioner thereafter exchanged

correspondence. Petitioner initially raised a spousal defense

under section 6015, but abandoned this argument because he did

not file joint tax returns for the years at issue. Petitioner

indicated that he was unable to pay his tax liabilities but did

not provide financial information that the Appeals officer had

requested. Petitioner also sought to challenge his underlying

tax liabilities, asserting that the tax reported on his 1994

through 1999 tax returns was incorrect. Petitioner made various

contentions about losses incurred in connection with oil and gas

interests in Texas; however, he did not provide the Appeals

officer with information concerning these interests. The Appeals

officer informed petitioner that if he wished to dispute his

underlying tax liabilities, he should file amended returns.

Petitioner did not file an amended return for any of the years at

issue.

Respondent issued petitioner a notice of determination on

October 31, 2003, sustaining the proposed levy action. The

notice of determination stated that the requirements of
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applicable law or administrative procedure had been met, and that

the levy action balanced the need for the efficient collection of

tax with the concern that any collection action be no more

intrusive than necessary.

Discussion

Section 6331(a) authorizes the Secretary to levy upon

property and property rights of a taxpayer liable for tax who

fails to pay the tax within 10 days after the notice and demand

for payment is made. Section 6331(d) provides that the levy

authorized in section 6331(a) may be made with respect to unpaid

tax only if the Secretary has given written notice to the

taxpayer 30 days before the levy. Section 6330(a) requires the

Secretary to send a written notice to the taxpayer of the amount

of the unpaid tax and of the taxpayer’s right to a section 6330

hearing at least 30 days before the levy is made.

If a section 6330 hearing is requested, the hearing is to be

conducted by the Office of Appeals, and, at the hearing, the

Appeals officer conducting it must verify that the requirements

of any applicable law or administrative procedure have been met.

Sec. 6330(b)(1) and (c)(2). The taxpayer may raise at the

hearing “any relevant issue relating to the unpaid tax or the

proposed levy”. Sec. 6330(c)(2)(A). The taxpayer may also raise

challenges to the existence or amount of the underlying tax

liability at a hearing if the taxpayer did not receive a
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statutory notice of deficiency with respect to the underlying tax

liability or did not otherwise have an opportunity to dispute

that liability. Sec. 6330(c)(2)(B); Montgomery v. Commissioner,

122 T.C. 1, 8-9 (2004).

This Court has jurisdiction under section 6330 to review the

Commissioner’s administrative determinations. Sec. 6330(d);

Iannone v. Commissioner, 122 T.C. 287, 290 (2004). We review

nonliability administrative determinations for abuse of

discretion, and we review determinations as to the underlying tax

liability de novo. Fishbach v. Commissioner, T.C. Memo. 2005-38

(citing Hoffman v. Commissioner, 119 T.C. 140, 144-145 (2002),

and Sego v. Commissioner, 114 T.C. 604, 610 (2000)). Whether an

abuse of discretion has occurred depends upon whether the

exercise of discretion is without sound basis in fact or law.

See Freije v. Commissioner, 125 T.C. 14, 23 (2005);

Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C. 367, 371

(1995). In reviewing for abuse of discretion, we generally

consider only arguments, issues, and other matters that were

raised at the administrative hearing or otherwise brought to the

attention of the Office of Appeals. Magana v. Commissioner, 118

T.C. 488, 493 (2002); sec. 301.6320-1(f)(2), Q&A-F5, Proced. &

Admin. Regs.
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Petitioner did not receive a notice of deficiency for any of

the years at issue. He therefore may challenge his underlying

tax liabilities. We review respondent’s determination of

petitioner’s underlying tax liabilities de novo. We review

respondent’s nonliability administrative determinations for abuse

of discretion. See Fishbach v. Commissioner, supra.

1. Petitioner’s Underlying Tax Liabilities

Petitioner raises two challenges with respect to his

underlying tax liabilities, both of which focus on the burden of

proof. First, petitioner notes the liabilities at issue are

self-assessed; i.e., they are based on petitioner’s tax returns.

Because petitioner now disputes the accuracy of his returns, he

appears to argue that the validity of his assessed tax

liabilities is called into question. Petitioner believes

respondent therefore must prove that the underlying tax

liabilities are correct. We disagree.

The Secretary shall assess all taxes determined by a

taxpayer as shown on the taxpayer’s return. See sec. 6201(a)(1).

Where a taxpayer later disputes his underlying tax liability in a

lien or levy proceeding, the taxpayer generally bears the burden

of proof. See Poindexter v. Commissioner, 122 T.C. 280, 286

(2004), affd. 132 Fed. Appx. 919 (2d Cir. 2005); Horn v.

Commissioner, T.C. Memo. 2002-207. Thus, respondent properly
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assessed the tax shown on petitioner’s returns, and petitioner

bears the burden of proving his returns are inaccurate.

Petitioner’s second argument is that his tax returns do not

reflect losses incurred in connection with his oil and gas

interests. Petitioner concedes that he does not have records to

support the claimed losses. Petitioner asserts that the parties

involved in the litigation of his oil and gas interests have

refused to provide him with any information, thereby making it

impossible for him to provide substantiation. For reasons that

are not clear, however, petitioner insists that respondent has or

should have such information in respondent’s administrative file.

Petitioner therefore believes that respondent has evidence of the

losses and should reduce petitioner’s outstanding tax liabilities

accordingly.

Deductions are a matter of legislative grace, and a taxpayer

generally bears the burden of proving that he is entitled to the

deductions claimed. See Rule 142(a); INDOPCO, Inc. v.

Commissioner, 503 U.S. 79 (1992). A taxpayer bears the burden of

proving a deductible loss, as well as the extent and amount of

the loss. Citron v. Commissioner, 97 T.C. 200, 207 (1991).

In this case, petitioner has not produced any credible

evidence that he sustained a deductible loss in connection with

his oil and gas interests. Petitioner believes that respondent

has relevant information that petitioner has been unable to
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obtain. Petitioner has not explained the basis for this belief,

nor does the record support his contention. Petitioner may be

arguing that respondent is required to compel the parties to the

litigation to provide petitioner with relevant information.

Assuming this is the case, petitioner is mistaken. The

Commissioner is not obligated to obtain records from third

parties on the taxpayer’s behalf. See Poindexter v.

Commissioner, supra at 282-286 (Commissioner’s refusal to

subpoena records on taxpayer’s behalf did not relieve taxpayer of

his burden of proof); Horn v. Commissioner, supra; see also sec.

6001 (taxpayer is required to maintain adequate records). We

conclude that petitioner has failed to prove his underlying tax

liabilities should be reduced.

2. Petitioner’s Proposed Collection Alternatives

Petitioner asserts that he is unable to pay his tax

liabilities. Petitioner did not provide financial information to

substantiate this assertion, however, nor did he offer a credible

explanation for his failure to do so. Petitioner contends that

he submitted an offer-in-compromise (OIC) several years ago to an

Internal Revenue Service office in Utah. The OIC was not made

part of the record, and petitioner does not argue that he

submitted an OIC to the Appeals officer in connection with the

proposed levy action. Thus, it appears that petitioner did not

raise an OIC or other collection alternative with the Office of
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Appeals. See sec. 6330(c)(2); Magana v. Commissioner, 118 T.C.

at 493.

Even if petitioner had raised an OIC as a collection

alternative, the result in this case would not change. Where a

taxpayer is noncompliant with Federal tax laws or does not

provide current financial information, the Commissioner’s refusal

to process an OIC is not an abuse of discretion. Roman v.

Commissioner, T.C. Memo. 2004-20; Rodriguez v. Commissioner, T.C.

Memo. 2003-153. Petitioner’s failure to file his 2001 tax return

and provide respondent with current financial information would

therefore preclude us from finding an abuse of discretion.

On the basis of our review of the record, we conclude that

respondent satisfied the requirements of section 6330 and did not

abuse his discretion in sustaining the proposed collection action

against petitioner. Respondent’s determination therefore is

sustained. In reaching our holding, we have considered all

arguments made, and, to the extent not mentioned, we conclude

that they are moot, irrelevant, or without merit.

Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect the foregoing,

Decision will be entered for

respondent.