T.C. Memo. 2006-217
UNITED STATES TAX COURT
IRVING AND ELAINE STEINBERG, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14135-05L. Filed October 16, 2006.
Gerald W. Kelly, Barry H. Cantor, and Cheryl R. Frank, for
petitioners.
Derek W. Kaczmarek, for respondent.
MEMORANDUM OPINION
SWIFT, Judge: This matter is before us under Rule 121 on
respondent’s motion for summary judgment.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
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all Rule references are to the Tax Court Rules of Practice and
Procedure.
Background
At the time the petition was filed, petitioners resided in
Las Vegas, Nevada.
For 1990, 1991, 1992, and 1993, petitioners filed with
respondent their joint Federal income tax returns. For these
years petitioners still owe respondent approximately $750,000 in
cumulative total Federal income taxes, including accrued
interest.
In November of 2003, petitioners sold their home and
purchased for $589,000 a new home in an expensive neighborhood of
Las Vegas, Nevada, paying $122,000 as a cash downpayment. None
of the proceeds from the 2003 sale of petitioners’ prior home was
used by petitioners to make a payment on petitioners’ outstanding
Federal income taxes for 1990, 1991, 1992, and 1993.
On March 8, 2004, in an effort to collect petitioners’
unpaid Federal income taxes, respondent mailed to petitioners a
notice of intent to levy on petitioners’ property.
On March 15, 2004, petitioners filed a request for a hearing
with respondent’s Appeals Office challenging respondent’s
proposed levy and seeking approval of an offer-in-compromise, in
which petitioners offered to make a total payment of $77,000 with
regard to their Federal income taxes for 1990 through 1993.
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Beginning September 9, 2004, petitioners, petitioners’
attorney, and respondent held a series of phone calls and written
correspondence relating to petitioners’ Appeals Office hearing.
Some financial information was submitted by petitioners, and
respondent’s Appeals officer reviewed that material and asked
petitioners for additional information.
Petitioners submitted some additional financial information
to respondent’s Appeals Office, but certain financial information
that had been requested by respondent’s Appeals officer was not
provided by petitioners. For example, petitioners never
submitted documents requested by respondent’s Appeals officer
that would have established the fact of payment of petitioners’
medical and drug expenses.
Based on the financial information petitioners submitted,
respondent’s Appeals officer determined that petitioners had
significantly more discretionary monthly income, equity in
assets, and realizable collection potential (RCP) than
petitioners would acknowledge. The figures petitioners and
respondent’s Appeals officer respectively calculated are set
forth below:
Petitioners Respondent
Discretionary Monthly Income $ 0 $ 2,937
Equity in Assets 82,853 319,535
RCP 127,087 460,511
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The disagreement between petitioners and respondent’s
Appeals officer focused on whether certain alleged life insurance
and medical and drug expenses should be treated as discretionary
or as nondiscretionary expenses and on whether petitioners had
adequately established that they actually were incurring and
paying the expenses being claimed. During the Appeals Office
hearing, petitioners did not submit the documentation necessary
to substantiate their payment of the disputed expenses.
The chart below sets forth the respective amounts
petitioners claim and respondent would allow for life insurance
and medical and drug expenses:
Type of Expenses Petitioners Respondent
Life Insurance $2,311 $ 500
Medical and Drug 1,553 1,200
Petitioners’ alleged life insurance expenses are based on
whole life insurance policies on the life of each petitioner.
Respondent’s offer-in-compromise guidelines allow taxpayers’
expenses only for term life insurance coverage. See
2 Administration, Internal Revenue Manual (CCH), sec. 5.15.1.10,
at 17,662 (May 1, 2004).
Under section 6330, where a taxpayer’s underlying tax
liability is not in dispute, our standard of review over
respondent’s Appeals Office’s determination on a taxpayer’s
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appeal of a notice of levy is whether respondent’s Appeals Office
abused its discretion. Lunsford v. Commissioner, 117 T.C. 183,
185 (2001). We are asked to affirm, as a matter of summary
judgment, respondent’s Appeals Office’s determination to reject
petitioners’ offer-in-compromise and to sustain respondent’s
notice of levy.
We may grant summary judgment where there remains no
material fact issue and where a party is entitled to judgment as
a matter of law. Rule 122(a); Dahlstrom v. Commissioner, 85 T.C.
812, 821 (1985); Espinoza v. Commissioner, 78 T.C. 412, 416
(1982).
The administrative file herein establishes that respondent’s
Appeals officer reviewed petitioners’ financial data that was
properly and timely submitted during the Appeals Office’s
consideration of petitioners’ appeal, that petitioners failed to
submit to respondent’s Appeals Office requested information on
time, and that petitioners spent over $100,000 in cash as a
downpayment to purchase an expensive new home at a time when they
had substantial Federal income taxes due.
Based on these facts, we conclude as a matter of law that
respondent’s Appeals Office did not abuse its discretion in
issuing the notice of determination rejecting petitioners’ offer-
in-compromise and sustaining respondent’s levy notice.
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The question before us is not whether respondent’s Appeals
Office would have decided differently had it received additional
information. Rather, the question before us is whether
respondent’s Appeals Office acted appropriately and within its
proper discretion based on information it received during the
Appeals Office consideration of petitioners’ appeal. The record
before us answers that question in the affirmative.
Petitioners now claim additional legal expenses,
transportation expenses, and income averaging in order to
establish that respondent’s calculation during the Appeals Office
hearing of petitioners’ RCP was too high.
These items constitute new issues and will not be allowed.
See Magana v. Commissioner, 118 T.C. 488, 493-494 (2002).
Furthermore, as we stated in Murphy v. Commissioner, 125 T.C.
301, 315 (2005), when Appeals officers make reasonable requests
for relevant documentation from taxpayers and taxpayers do not
produce the documentation in a reasonable time, the Appeals
officer commits no abuse of discretion in making a determination
without regard to the missing information.
For the reasons stated, we shall grant respondent’s motion
for summary judgment.
To reflect the foregoing,
An appropriate order and
decision will be entered for
respondent.