T.C. Summary Opinion 2006-178
UNITED STATES TAX COURT
KATHERINE ILOVAR RODRIGUEZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16172-05S. Filed November 2, 2006.
Katherine Ilovar Rodriguez, pro se.
Tamara L. Kotzker, for respondent.
DEAN, Special Trial Judge: This case was heard under the
provisions of section 7463 of the Internal Revenue Code as in
effect when the petition was filed. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code of
1986, as amended. The decision to be entered is not reviewable
by any other court, and this opinion should not be cited as
authority.
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The petition in this case was filed in response to a Notice
of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330 (notice of determination). Pursuant to section
6330(d), petitioner seeks review of respondent’s proposed levy
action with respect to her income tax liabilities for 1993, 1994,
and 1995. The issue for decision is whether respondent’s
determination to proceed with collection action was an abuse of
discretion.
Background
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. At the time the
petition was filed, petitioner resided in New York, New York.
Earlier Contact With the Internal Revenue Service
Petitioner failed to timely file her tax returns for 1993,
1994, and 1995, and she filed them without full remittance. In
addition to the years under consideration, petitioner has unpaid
tax liabilities for the period 1988 through 1992. Over several
years, beginning in 1994, petitioner submitted nine offers-in-
compromise (OIC) which were rejected for one reason or another.
Petitioner feels that many employees of the Internal Revenue
Service (IRS) with whom she came into contact were insulting,
incompetent, or “threatening”.
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Appeals Conference in 2003
In December of 2001 petitioner submitted her last OIC, along
with a request for abatement of penalties and interest. The OIC
and the request for abatement were rejected. The OIC was
rejected because it was determined that petitioner had sufficient
assets to fully pay her outstanding tax liabilities. Petitioner
appealed the rejection, and the appeal was assigned to an Appeals
team located in New York, New York. The Appeals team included a
settlement officer, Gilbert Breitberg, and a team manager, John
O’Dea. In May 2004 the Manhattan Appeals team rejected the OIC
as well as petitioner’s request for abatement of interest and
penalties.
In December 2003, while the Manhattan Appeals team was
considering petitioner’s requests, petitioner wrote a check for
$35,000 to the U.S. Treasury for “Payment for taxes: 1988, 1989,
1990, 1991, 1992, 1993, 1994, 1995”. Petitioner sent the check
despite her conclusion that when she offered to pay the taxes
during a meeting with Messrs. Breitberg and O’Dea, the Appeals
team paid “no mind to our presentation”. Initially, respondent
applied the check to the earliest taxes, including penalties and
interest.1 Petitioner wrote to respondent to complain that the
$35,000 was intended to be applied solely against her outstanding
1
Except with reference to deficiency procedures, under sec.
6601(e)(1), Interest Treated as Tax, references to underpaid
“tax” include interest on the tax. The term “tax” also includes
additions to the tax, additional amounts, and penalties. Sec.
6665(a)(2).
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“taxes”, not interest and penalties. The funds were reapplied
against the unpaid tax assessed for each year, leaving unpaid the
interest and penalties for each year.
Petitioner found the settlement officer to have been unfair,
discourteous, biased, and unprofessional, displaying an “attack
dog mentality”.
Notice of Intent To Levy
Respondent issued to petitioner for 1993, 1994, and 1995 a
Letter 1058, Final Notice of Intent to Levy and Notice of Your
Right to a Hearing, dated July 10, 2004. The letter advised
petitioner that the total amount due was $7,973.35. Petitioner
timely filed her Form 12153, Request for a Collection Due Process
Hearing, under section 6330. Petitioner stated that she did not
agree with the collection action because “The taxes for 1993,
1994, 1995 have been paid.” She attached to the request a copy
of the check for $35,000 dated December 2003.
Settlement Officer Carol Berger of the Manhattan office of
Appeals responded by letter to petitioner’s request for a hearing
under section 6330. Petitioner replied, strongly objecting to
having her case heard in the same Manhattan Appeals Office where
Mr. Breitberg, who had considered and rejected her OIC and her
request for abatement, was working.
Petitioner’s request for a section 6330 hearing was
reassigned from the Manhattan Appeals Office to the Appeals
Office in Hempstead, New York. Settlement Officer Elissa
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Dellosso of the Hempstead Appeals Office sent petitioner a letter
describing, on the basis of the case history, the expected scope
of the hearing and what petitioner would be required to show in
order to avoid the proposed collection action. Petitioner
replied by letter; she stated that she was “disturbed by the way
you have continued to be abusive to us taxpayers in the tone and
content of your letter.” She also stated that it was clear from
the letter that “you are working with Mr. Breitberg and you are
going to be unfair, partial, and abusive in dealing with our
case.” Respondent refused to further reassign petitioner’s case.
Notice of Determination
Respondent issued a notice of determination to petitioner,
finding that she had failed to raise a relevant issue under
section 6330 and had failed to offer an acceptable alternative to
the proposed collection action.
Discussion
Section 6330
Section 6330 generally provides that the Commissioner cannot
proceed with collection by way of a levy until the taxpayer has
been given notice and the opportunity for an administrative
review of the matter (in the form of an Appeals Office hearing),
and that, if dissatisfied, the taxpayer may obtain judicial
review of the administrative determination. See Davis v.
Commissioner, 115 T.C. 35, 37 (2000); Goza v. Commissioner, 114
T.C. 176, 179 (2000). The taxpayer requesting the hearing may
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raise any relevant issue with regard to the Commissioner’s
intended collection activities, including spousal defenses,
challenges to appropriateness of the collection action, and the
offers of collection alternatives. Sec. 6330(c); see Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,
supra at 180-181.
Where the validity of the tax liability is not properly part
of the appeal, the Court reviews the determination of the Appeals
officer for abuse of discretion. Sego v. Commissioner, supra at
609-610; Goza v. Commissioner, supra at 181-182.
The taxpayer may raise challenges “to the existence or
amount of the underlying tax liability”, however, only if he “did
not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability.” Sec. 6330(c)(2)(B).
Petitioner’s View of the Case
At trial, petitioner testified that Ms. Dellosso “violated
my due process rights by refusing to give me an opportunity to be
heard and have an accountant present so that we could present
appropriate collection alternatives.” Petitioner testified that
Ms. Dellosso was “impatient, abusive, capricious, argumentative,”
and did not properly consider her case. Petitioner asked that
Ms. Dellosso be “called to task” by the Court. Petitioner
testified that she wanted the Court to decide that her due
process rights had been violated by Ms. Dellosso.
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Petitioner then stated that she wanted to “settle” the case
immediately. When asked by the Court what she meant by using the
word “settle”, she explained that she wanted to pay the subject
amounts in full. She said she wanted to “concede” the case. She
testified that she had offered several times to fully pay the
outstanding amounts. According to petitioner, she made an offer
to Ms. Dellosso to fully pay the taxes for 1993, 1994, and 1995
but was rebuffed. Petitioner stressed that her offer to pay in
full was limited to the tax years before the Court.
Petitioner, while insisting that she wanted to “concede” her
case, nevertheless wanted her husband to testify, which testimony
the Court allowed. Petitioner’s husband testified that the
telephone communications among himself, petitioner, and Ms.
Dellosso were unpleasant. He also testified that Ms. Dellosso
refused to accept full payment for 1993, 1994, and 1995 and
refused to extend the time for a hearing so that their accountant
could be present.
Evidence of Respondent’s View
Ms. Dellosso was not called by either party to testify at
the hearing in this case. The parties, however, stipulated as an
exhibit a copy of her case activity records (case records). As
one might guess, Ms. Dellosso’s view of their interaction was
different from petitioner’s. According to the case records, on
the first occasion Ms. Dellosso spoke with petitioner by
telephone, petitioner was “irate and obnoxious” and “extremely
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rude and arrogant”, and she “ranted and raved” at her. But
petitioner did, eventually, request a conference.
Ms. Dellosso, according to the case records, advised
petitioner by a telephone message that petitioner was required to
submit a Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, and proof of income and
expenses. Ms. Dellosso informed petitioner that her check for
$35,000 had not fully paid her tax liabilities. She informed
petitioner that she had set aside both July 7 and 12, 2005, at 10
a.m. as alternative dates for a conference. Receiving no
response to her telephone message, Ms. Dellosso telephoned
petitioner again and left another message stating that if
petitioner failed to appear by the July 12, 2005, appointment,
Ms. Dellosso would issue her determination.
The case records indicate that petitioner responded to the
second telephone message. She asked by telephone that the
hearing be postponed until July 19, 2005. Petitioner stated that
she wanted the interest and penalties abated and wanted to
“settle” the case. Ms. Dellosso and her supervisor, who was also
on the line, informed petitioner that no OIC or installment
agreement could be accepted unless all unpaid years were
included. At this point, according to the case records,
petitioner began “shouting hysterically”, refusing to let Ms.
Dellosso speak. Ms. Dellosso terminated the telephone call.
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Petitioner did not appear at the date and time Ms. Dellosso
had set for a meeting with petitioner, July 12, 2005, at 10 a.m.
About 2 hours after the time of the appointment, petitioner
called Ms. Dellosso and stated that she was unable to make the
appointment. Petitioner asked for an opportunity to speak to her
accountant and was given 2 days to do so.
Petitioner called Ms. Dellosso 2 days following the canceled
appointment, stated that she had been unable to contact her
accountant, and requested an installment agreement only for 1993
through 1995. According to the case records, Ms. Dellosso
informed petitioner that although she could pay what she wanted,
all years had to be included in either an installment agreement
or an OIC. Ms. Dellosso terminated the call after an unpleasant
exchange of words.
The notice of determination was issued on July 27, 2005.
The Issue for the Court
The underlying tax liabilities are not at issue in this
case.2 The issue for the Court to decide is whether respondent
abused his discretion in determining to pursue the intended
collection action.
2
Petitioner conceded at trial the underlying tax liabilities
and with them the abatement of interest and penalties raised in
the petition. See sec. 6201; supra note 1. Had petitioner not
conceded the issues, she would be precluded from raising them.
See sec. 6330(c)(2)(B); sec. 301.6320-1(e)(3), Q&A-E2, Proced. &
Admin. Regs.
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An abuse of discretion is a decision that: (1) Rests on an
error of law or a clearly erroneous factual finding, or (2) a
decision not necessarily the product of legal error or a clearly
erroneous finding of fact but nevertheless is outside the range
of permissible decisions. Zervos v. Verizon N.Y., Inc., 252 F.3d
163, 169 (2d Cir. 2001).
Petitioner argued at trial that she was not given a hearing
at which she could be heard and have her accountant present. But
petitioner was offered two alternative dates for a hearing and a
2-day extension after she failed to appear at the hearing on the
second alternative date. Petitioner failed to request or make an
appointment between the 2-day extension and the issuance of the
notice of determination.
Once a taxpayer has been given an opportunity for a hearing
but fails to avail herself of that opportunity, the Appeals
officer may proceed in making a determination by reviewing the
case file. See Mann v. Commissioner, T.C. Memo. 2002-48; sec.
301.6330-1(d)(2), Q&A-D7, Proced. & Admin. Regs. When petitioner
did not appear for the hearing, Ms. Dellosso reviewed
petitioner’s case file and considered the sole issue raised by
petitioner in her request for a hearing, that she had “paid the
tax”. After the review, respondent issued the notice of
determination.
Petitioner alleges that she offered to pay the tax in full,
certainly a viable collection alternative, and the settlement
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officer refused to accept it. The case records indicate that Ms.
Dellosso refused to accept an installment agreement restricted to
the years for which petitioner had requested a section 6330
hearing, but advised petitioner that she could pay what she
wanted to pay. The case records also note that petitioner had
not provided a Form 433A disclosing her financial information.
Ms. Dellosso’s position on the installment agreement, as
recorded in the case records, is in accord with pertinent
provisions of the Internal Revenue Manual (IRM). See IRM sec.
5.14.2.2, sec. 5.14.1.5.1. The Court has generally upheld
collection determinations made by the Commissioner in accord with
the IRM. See Etkin v. Commissioner, T.C. Memo. 2005-245 (and
cases cited therein).
Petitioner has some prior experience in dealing with the
IRS, unpleasant though it may have been. Had petitioner wanted
to fully pay the outstanding liabilities for the 3 years at issue
here, she could have done so just as she did in making the
earlier $35,000 payment. If she has not done so already, she may
yet choose to pay the liabilities.
Conclusion
Because petitioner did not present viable alternatives to
collection, the Court finds that respondent’s determination to
pursue the intended collection action was not an abuse of
discretion.
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Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.