T.C. Memo. 2007-77
UNITED STATES TAX COURT
WILLIAM J. AND LOIS J. DICINDIO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7029-03L. Filed April 2, 2007.
William J. and Lois J. DiCindio, pro se.
Donald M. Brachfeld, for respondent.
MEMORANDUM OPINION
COLVIN, Chief Judge: Respondent sent a Notice of
Determination Concerning Collection Action(s) Under Section 63201
and/or 6330 to petitioners in which respondent determined that it
1
Unless otherwise indicated, section references are to the
Internal Revenue Code as amended.
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was appropriate to sustain collection action with respect to
petitioners’ unpaid income taxes for 1985-89 and 1991-2001 (the
years in issue).2 Thereafter petitioners timely filed a petition
in which they requested our review of respondent’s determination.
The issue for decision is whether respondent’s determination to
reject petitioners’ offer-in-compromise (OIC) and proceed with
collection was an abuse of discretion. We hold that it was not.
Background
Some of the facts have been stipulated and are so found.
Petitioners are married and resided in Edison, New Jersey, at the
time the petition was filed.
Respondent issued a Final Notice of Intent to Levy and
Notice of Your Right to a Hearing to petitioners on September 5,
2002. Petitioners timely requested a collection due process
hearing on October 1, 2002. Petitioners’ outstanding tax
liability is $463,496 plus statutory additions. Petitioners did
not challenge the assessments or the underlying tax liabilities.
A settlement officer (SO) from respondent’s Appeals Office
(Appeals) spoke on the telephone with petitioners’ representative
on February 4, 2003. The SO told petitioners’ representative
that collection alternatives such as an OIC or an installment
2
In the petition, petitioners also disputed the collection
action for taxable year 1990. No notice of determination was
issued to petitioners for that year. By separate order, the
Court dismissed this case as it relates to taxable year 1990.
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agreement would not be considered because of petitioners’ poor
compliance record. Respondent issued the notice of determination
on April 8, 2003, sustaining the levy.
In the petition, petitioners alleged errors in the notice of
determination, specifically that Appeals failed to give them a
fair hearing and that Appeals failed to act properly with regard
to the collection activity. After the petition was filed,
counsel for respondent requested that Appeals discuss collection
alternatives with petitioners at a face-to-face hearing.
Petitioner3 and respondent’s SO met on September 9, 2003, and
discussed collection alternatives. Petitioners submitted an OIC
on November 6, 2003. On December 1, 2003, the SO sent
petitioners a letter requesting that they complete missing items
on the form and submit additional information.
This case was calendared for trial at the May 3, 2004,
session of this Court in New York, New York. Petitioners filed a
motion for continuance in which they stated that they would be
submitting an OIC. The Court granted the motion. The case was
then calendared for trial at the session of this Court beginning
on January 24, 2005. Petitioners filed another motion for
continuance in order to retain counsel. The Court granted the
motion and ordered petitioners to submit an OIC to respondent no
later than March 1, 2005. Petitioners filed a status report on
3
References to petitioner are to William J. DiCindio.
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March 1, 2005, stating that they had decided not to submit an OIC
because they would have no way of paying the debt. Trial was
held on September 19, 2005, in New York, New York.
Following trial, the Court ordered petitioners to provide
counsel for respondent a complete Form 656, Offer in Compromise,
and an updated Form 433-A, Collection Information Statement for
Wage Earners and Self-Employed Individuals. Counsel for
respondent received petitioners’ OIC on November 15, 2005, and
sent it to an offer specialist (OS) for consideration. In the
following months, the OS requested that petitioners provide
additional information by various deadlines. Petitioners did not
meet any of these deadlines.
In April 2006, petitioners requested that the Court keep the
pending OIC open for consideration until August 15, 2006, so that
petitioner could file his 2005 income tax return. The Court
denied petitioners’ request. Thereafter, respondent returned the
pending OIC to petitioners and closed their file because
petitioners had failed to provide additional information
necessary to determine the acceptability of their offer and they
failed to verify their compliance with the estimated income tax
requirements for 2005 and 2006.
Discussion
Petitioners contend that respondent’s refusal to consider
their offer-in-compromise submitted on November 15, 2005, for the
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years in issue was an abuse of discretion. We disagree. Section
7122(c)(1) provides that the Secretary shall prescribe guidelines
for the Internal Revenue Service (IRS) to use in determining
whether to accept an OIC. The decision to accept or reject an
OIC, as well as the terms and conditions to which the IRS agrees,
is left to the discretion of the Secretary. Sec. 301.7122-
1(c)(1), Proced. & Admin. Regs.
Petitioners contend that returning their OIC for additional
information was arbitrary and capricious. We disagree.
If an offer accepted for processing does not contain
sufficient information to permit the IRS to evaluate whether the
offer should be accepted, the IRS will request that the taxpayer
provide the needed additional information. Sec. 301.7122-
1(d)(2), Proced. & Admin. Regs. On three separate occasions,
respondent’s OS contacted petitioners to request additional
information. The OS explained that this additional information
was necessary to account for discrepancies between petitioners’
Form 433-A and the information they had previously submitted.
Petitioners failed to provide the requested information. If the
taxpayer does not submit the requested information to the IRS
within a reasonable time after a request, the IRS may return the
offer to the taxpayer. Id. The decision not to process
petitioners’ OIC on account of their failure to provide
additional information was consistent with the prescribed
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guidelines and was a reasonable exercise of respondent’s
discretion.
Petitioners contend that respondent’s rejection of their OIC
while a motion for reconsideration was pending before the Court
was an abuse of discretion. We disagree.
The granting of a motion to reconsider rests in the
discretion of the Court. Louisville & Nashville R. Co. v.
Commissioner, 641 F.2d 435, 443-444 (6th Cir. 1981), affg. on
this issue and revg. on other issues 66 T.C. 962 (1976); Estate
of Halas v. Commissioner, 94 T.C. 570, 574 (1990); Vaughn v.
Commissioner, 87 T.C. 164, 166-167 (1986). Motions to reconsider
will not be granted unless unusual circumstances or substantial
error is shown. Estate of Halas v. Commissioner, supra at 574;
Vaughn v. Commissioner, supra at 167. Petitioners submitted
their offer-in-compromise to respondent on November 15, 2005.
However, they failed to respond to respondent’s repeated requests
for additional information. In April 2006, petitioners requested
an extension until August 15, 2006, so that petitioner could file
his 2005 income tax return. The Court was not persuaded that
petitioners were entitled to an extension of any deadlines
related to respondent’s processing of the OIC and denied their
motion. In the interim, respondent rejected petitioners’ OIC.
We have no reason to believe that an extension to August
would have changed the disposition of petitioners’ offer-in-
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compromise. The reason for the requested extension was to file
petitioner’s 2005 income tax return. However, the filing of
petitioner’s 2005 income tax return was not a requirement of
respondent’s acceptance of the offer. The OS knew that
petitioner had requested an extension for filing his 2005 taxes.
The information that the OS needed, however, had to do with
additional information to verify and confirm the data on the
submitted OIC. Therefore, it was not an abuse of discretion to
reject petitioners’ OIC on account of their failure to submit
additional information before the Court ruled on petitioners’
pending motion for reconsideration.
We conclude that respondent may proceed with collection of
petitioners’ tax liabilities for 1985-89 and 1991-2001 because
respondent’s rejection of petitioners’ offer-in-compromise was
not an abuse of discretion.
Decision will be entered
for respondent.