T.C. Memo. 2007-67
UNITED STATES TAX COURT
JAMES J. AND VERONICA L. CRISAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15942-05L. Filed March 22, 2007.
James J. Crisan, pro se.
Denise A. Diloreto, for respondent.
MEMORANDUM OPINION
HAINES, Judge: Petitioners filed a petition with this Court
in response to a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (notice of
determination) for 2001 and 2002 (years at issue).1 Pursuant to
1
Unless otherwise indicated, all section references are to
(continued...)
- 2 -
section 6330(d), petitioners seek review of respondent’s
determination. The issue for decision is whether respondent
abused his discretion by sustaining the filing of a Federal tax
lien.
Background
The parties submitted this case fully stipulated pursuant to
Rule 122. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Warren, Ohio, when they filed their petition.
Petitioners filed their Forms 1040, U.S. Individual Income
Tax Return, for 2001 and 2002 on October 20 and December 1, 2003,
respectively, and the amounts reported as due for those years
were assessed. A notice and demand for payment was mailed to
petitioners within 60 days of each assessment as required under
section 6303.
On November 4, 2004, Letter 1058, Final Notice of Intent to
Levy and Your Right to a Hearing (notice of levy), was mailed to
petitioners with respect to the years at issue. The notice of
levy indicated that a Federal tax lien could be filed at any
time. Petitioners acknowledged receipt of the notice of levy on
November 23, 2004, but failed to request a hearing.
1
(...continued)
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
- 3 -
In late January 2005, the Government levied against the
wages of James J. Crisan (petitioner). Petitioner immediately
contacted respondent’s Collection Division (Collections) and
began discussing payment options to satisfy the tax liabilities
for the years at issue. Collections released the levy against
petitioner’s wages and informed him that no collection action
would be taken if he and his wife continued to work towards a
payment arrangement. Collections gave petitioners until February
21, 2005, to submit financial information and arrange an
installment agreement.
February 21, 2005, was a Federal holiday. It was not until
February 23, 2005, that petitioner was able to reach Collections
by telephone to discuss the terms of an installment agreement.
The installment agreement between petitioners and respondent
became effective March 21, 2005. In accordance with the
agreement, petitioner made an initial payment of $5,000 on March
30, 2005, and was to make monthly payments of varying amounts
until the liability was paid in full.
On March 2, 2005, respondent mailed each petitioner a Notice
of Federal Tax Lien Filing and Notice of Your Right to a Hearing
Under IRC 6320 (notice of Federal tax lien), with respect to the
years at issue. The notice of Federal tax lien advised
petitioners of an April 7, 2005, deadline to file a request for a
- 4 -
hearing. The notice of Federal tax lien was recorded on March 7,
2005, with the Recorder of Trumbull County in Warren, Ohio.
On April 4, 2005, petitioners submitted Form 12153, Request
for a Collection Due Process Hearing, in which they claimed the
notice of Federal tax lien should not have been filed because of
representations made by Collections personnel that no further
collection action would take place while they were negotiating an
installment agreement. Petitioners also claimed that the notice
of Federal tax lien would impair their credit, making it
impossible to obtain financing.
On July 13, 2005, a hearing was held by telephone between
petitioner and Settlement Officer Marlene M. Okajima-Garcia (Ms.
Okajima-Garcia), who had earlier mailed petitioners a letter
which listed the statutory requirements to obtain a withdrawal of
a notice of Federal tax lien pursuant to section 6323(j). During
the hearing, petitioner argued that the Federal tax lien was
filed prematurely at the time he was negotiating an installment
agreement with Collections and, because petitioners entered into
an installment agreement, the notice of Federal tax lien should
be withdrawn.
On July 22, 2005, respondent’s Appeals Office issued
petitioners the notice of determination sustaining the filing of
the notice of Federal tax lien and finding that none of the
statutory requirements for withdrawal pursuant to section 6323(j)
- 5 -
had been met. In response to the notice of determination,
petitioners timely mailed their petition to this Court on August
22, 2005, and it was filed on August 29, 2005. See sec.
6330(d)(1); sec. 301.6330-1(f), Proced. & Admin. Regs.
OPINION
I. Standard of Review
Because the underlying tax liability is not at issue, this
Court’s review under section 6330 is for abuse of discretion.
See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Commissioner, 114 T.C. 176, 182 (2000). This standard requires
the Court to decide whether respondent’s rejection of
petitioner’s request to have the Federal tax lien withdrawn was
arbitrary, capricious, or without sound basis in fact or law.
See Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Keller v.
Commissioner, T.C. Memo. 2006-166; Fowler v. Commissioner, T.C.
Memo. 2004-163.
II. Withdrawal of Notice of Federal Tax Lien
The Federal Government obtains a lien against “all property
and rights to property, whether real or personal” of any person
liable for Federal taxes upon demand for payment and failure to
pay. Sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293
(2004). The lien arises automatically on the date of assessment
and continues until the tax liability is satisfied or the statute
of limitations bars enforcement of the lien. Sec. 6322; Iannone
- 6 -
v. Commissioner, supra at 293. The notice of Federal tax lien is
filed with the appropriate State office or other government
office in order to validate the lien against any purchaser,
holder of a security interest, mechanic’s lienor, or judgment
lien creditor. See sec. 6323(a); Lindsay v. Commissioner, T.C.
Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th Cir. 2003).
Section 6323(j)(1) provides in pertinent part:
SEC. 6323(j). Withdrawal of Notice in Certain
Circumstances.--
(1) In general.--The Secretary may withdraw a
notice of a lien filed under this section * * * if the
Secretary determines that--
(A) the filing of such notice was
premature or otherwise not in accordance with
administrative procedures of the Secretary,
(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the
tax liability for which the lien was imposed
by means of installment payments, unless such
agreement provides otherwise,
(C) the withdrawal of such notice will
facilitate the collection of the tax
liability, or
(D) with the consent of the taxpayer or
the National Taxpayer Advocate, the
withdrawal of such notice would be in the
best interests of the taxpayer (as determined
by the National Taxpayer Advocate) and the
United States.
Petitioners contend the Appeals officer, Ms. Okajima-Garcia,
abused her discretion by failing to withdraw the notice of
Federal tax lien (1) under section 6323(j)(1)(A) because the
- 7 -
filing of the notice was premature; (2) under section
6323(j)(1)(B) because it was filed after an installment agreement
had been agreed to; and (3) under section 6323(j)(1)(D) because
it serves no useful purpose other than to damage petitioners’
credit rating.
The notice of Federal tax lien was not filed prematurely.
Income tax liabilities were assessed against petitioners for the
years at issue on October 20 and December 1, 2003, respectively.
A notice and demand for payment was mailed to petitioners within
60 days of each assessment date. See sec. 6303. Respondent
issued a notice of levy on November 4, 2004, to which petitioners
did not respond. A notice of Federal tax lien filing was mailed
to petitioners on March 2, 2005, and the lien was recorded on
March 7, 2005. Filing of the Federal tax lien took place after
assessment and notice and demand, and at each step petitioners
were properly notified.
Entering into an installment agreement does not preclude the
filing of a Federal tax lien, nor is the Commissioner required to
withdraw a Federal tax lien after an installment agreement has
become effective. See Ramirez v. Commissioner, T.C. Memo. 2005-
179; Stein v. Commissioner, T.C. Memo. 2004-124. Section
6323(j)(1) is permissive. The Commissioner “may” withdraw a
Federal tax lien pursuant to section 6323(j)(1), but respondent’s
- 8 -
failure to do so in this case is not an abuse of discretion.
Ramirez v. Commissioner, supra; Stein v. Commissioner, supra.
Petitioners did not produce any evidence to support their
contention that the filing of the notice of Federal tax lien
would impair their ability to pay their outstanding liabilities.
On the basis of the facts presented, this Court holds that
respondent did not abuse his discretion in sustaining the filing
of the notice of Federal tax lien.
In reaching these holdings, the Court has considered all
arguments made and, to the extent not mentioned, concludes that
they are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be
entered for respondent.