T.C. Summary Opinion 2008-127
UNITED STATES TAX COURT
JONATHAN L. HALL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 26741-06S. Filed September 22, 2008.
Jonathan L. Hall, pro se.
Innessa Glazman-Molot, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petition was filed.
Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this opinion shall not be
treated as precedent for any other case. Unless otherwise
indicated, subsequent section references are to the Internal
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Revenue Code as amended, and Rule references are to the Tax Court
Rules of Practice and Procedure.
This collection case is before the Court on respondent’s
motion for summary judgment filed pursuant to Rule 121 and
petitioner’s objection thereto. The issue for decision is
whether, as a matter of law, respondent’s determination
sustaining a levy action for tax year 2004 should be upheld.
Background
The following facts are uncontested or established by the
record. Petitioner lived in Virginia when he filed the petition.
Petitioner worked as a laborer in 2004 and received one or
more Forms 1099-MISC, Miscellaneous Income, reporting his income.
His Federal income tax return for 2004 reports no withholding and
no estimated tax payments and $2,452 in tax due, including $1,959
of self-employment tax. The Internal Revenue Service (IRS)
assessed the tax petitioner reported as due on his 2004 return,
together with interest and an addition to tax for failure to pay.
The IRS sent petitioner notice and demand for payment but did not
receive payment.
On April 15, 2006, the IRS mailed a Final Notice of Intent
to Levy and Notice of Your Right to a Hearing. Petitioner
requested a collection hearing to challenge the IRS’s intent to
levy to collect the tax due for 2004. In his hearing request
petitioner asserted that it was premature for the IRS to levy
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upon his property; that withdrawing the levy would facilitate
collection of the tax; and that withdrawal was in his and the
Government’s best interest.1
The IRS assigned a settlement officer (SO) to handle
petitioner’s collection hearing. The SO wrote to petitioner on
September 28, 2006, requesting certain documents as a condition
of her considering collection alternatives, informing petitioner
that he had to provide her with a copy of an amended return for
2004 if he wished to challenge the underlying tax liability, and
scheduling a telephone conference for October 31, 2006.
Petitioner wrote to the SO and asked for a delay (from October
31, 2006, to May 6, 2007) in the collection hearing for 2004. He
sought to postpone the 2004 levy hearing until after the Court
resolved his challenge to the result of his collection hearing
for tax years 2000 through 2003.2 He asserted that collecting by
levy would impose a hardship on him, asked for a hardcopy of the
Internal Revenue Manual (IRM), and requested a face-to-face
hearing. He did not provide the requested information.
1
Petitioner’s assertions mirror three of the four
circumstances provided in sec. 6323(j) for withdrawing a Federal
tax lien. See infra note 3.
2
Petitioner also claimed that his pending Tax Court case
“already encompasses Tax Year 2004 (‘if applicable’)”. The SO
determined that the pending case involved a notice of Federal tax
lien for 2000 through 2003 and verified that the Internal Revenue
Service (IRS) had not filed a Federal tax lien for 2004. She
concluded that the instant collection case was independent of
that case.
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The SO declined to postpone the hearing for 2004, explained
that the 2004 levy action was separate from the lien action for
2000 through 2003, informed petitioner that he could access the
IRM over the Internet, and asked him to submit a completed Form
433-A, Collection Information Statement for Wage Earners and
Self-Employed Individuals, and a copy of his 2005 return, with
evidence of filing, in order for her to evaluate his financial
situation and consider collection alternatives. The SO wrote
that she would conduct a face-to-face hearing only after
petitioner provided the information required to evaluate his
eligibility for collection alternatives. She also explained that
she was willing to place petitioner’s account in currently
noncollectible (CNC) status if warranted by the information
contained in the requested documents.
On October 31, 2006, petitioner sent a letter to the SO (by
facsimile and certified mail). He included a Form 433-A, without
supporting documentation and marked “DRAFT 10/31/06”. The draft
Form 433-A listed the following assets: (1) A truck used in
petitioner’s business and valued at $1,000; (2) furniture and
personal effects valued at $500; and (3) tools used in
petitioner’s business and valued at $500. Petitioner stated in
his letter:
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I have attached a “draft” of 433-A. It does not have
attachments, because they would take vastly too many
pages. * * * The information contained in the Form
433-A is a best reasonable rounded off guess-timate,
giving you an approximate snapshot of my current
financial situation, which is dire. In addition, I am
at least two months behind on my rent, and two months
behind on my credit card payments. With this
information you can probably make a reasonable decision
about my financial condition and accurately categorize
the levy as currently noncollectible and you may
“temporarily suspend collection action” at your
discretion.
If there is supporting paperwork you would like to
review, which would have otherwise been part of the
attachments requested, you may review those receipts,
bills, expenses, etc. at a face to face meeting. I do
not anticipate filing any further 1040s for any
additional tax years until the prior years [sic] issues
have been resolved.
Petitioner did not submit a copy of his 2005 return, and the
SO determined that no 2005 return had been filed as of November
2, 2006. The SO concluded that petitioner failed to document his
financial status adequately and that he was not in compliance
with his filing requirements. She further concluded from
petitioner’s not submitting an amended return for 2004 that he
did not contest the underlying tax liabilities.
Respondent’s Appeals Office (Appeals) issued a Notice of
Determination Concerning Collection Actions Under Sections 6320
and/or 6330 (notice), sustaining the intent to levy. The notice
recited that the SO verified that all applicable laws and
procedures were met, considered all issues raised, and balanced
the efficiency and intrusiveness of the proposed collection
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action. The notice described the SO’s instructing petitioner
that he had to submit completed financial information and his
2005 return in order for her to consider collection alternatives
and her later reiterating this requirement. The notice concluded
that petitioner was not eligible for Appeals consideration of
collection alternatives because he was not in filing compliance
and because he did not provide required financial information.
Petitioner filed a timely petition requesting judicial
review of respondent’s determination.3
Respondent filed a motion for summary judgment, asserting
that there are no genuine issues of material fact, that
petitioner did not develop any issue to challenge the underlying
tax liability before Appeals, that petitioner’s failure to submit
complete financial information and his noncompliance with filing
obligations precluded Appeals consideration of collection
alternatives, and that respondent is entitled to judgment as a
matter of law. Petitioner objects, arguing that respondent
abused his discretion in sustaining the intent to levy because
the SO denied him a face-to-face hearing, because she refused to
3
The relief petitioner requested and the reasons presented
in par. 4 of the petition are nearly identical to those included
in his petition relating to the collection action for 2000
through 2003, docket No. 11674-06S, which challenges the filing
of Federal tax liens for those years. To the extent that the
instant petition complains of the failure to withdraw a tax lien
under sec. 6323(j), that issue is not relevant to this levy case
and will not be addressed further.
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entertain his dispute over the underlying tax liability, and
because she ignored legal and procedural requirements related to
CNC status for low-income taxpayers claiming hardship.
Petitioner and respondent’s counsel appeared and were heard at a
hearing on the motion.
Discussion
Summary judgment “is intended to expedite litigation and
avoid unnecessary and expensive trials.” Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted where there is no genuine issue of material fact and a
decision may be rendered as a matter of law. Rule 121(a) and
(b). The moving party bears the burden of proving that there is
no genuine issue of material fact, and factual inferences are
viewed in the light most favorable to the nonmoving party. Craig
v. Commissioner, 119 T.C. 252, 260 (2002); Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,
79 T.C. 340, 344 (1982). The party opposing summary judgment
must set forth specific facts that show a genuine question of
material fact exists and may not rely merely on allegations or
denials in the pleadings. Grant Creek Water Works, Ltd. v.
Commissioner, 91 T.C. 322, 325 (1988); Casanova Co. v.
Commissioner, 87 T.C. 214, 217 (1986).
In reviewing the Commissioner’s decision to sustain
collection actions, where the validity of the underlying tax
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liability is properly at issue, the Court reviews the
Commissioner’s determination of the underlying tax liability de
novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Commissioner, 114 T.C. 176, 181-182 (2000). The Court reviews
any other administrative determination regarding proposed
collection actions for abuse of discretion. Sego v.
Commissioner, supra at 610; Goza v. Commissioner, supra at 182.
An abuse of discretion occurs when the exercise of discretion is
without sound basis in fact or law. Murphy v. Commissioner, 125
T.C. 301, 308 (2005). If the Court finds that a taxpayer is
liable for deficiencies, additions to tax, and/or penalties, then
the Commissioner’s administrative determination sustaining the
collection action will be reviewed for abuse of discretion. See
Downing v. Commissioner, 118 T.C. 22, 31 (2002); Godwin v.
Commissioner, T.C. Memo. 2003-289, affd. 132 Fed. Appx. 785 (11th
Cir. 2005).
Section 6330(a) provides that the Secretary shall furnish
taxpayers with written notice of their right to a hearing before
any property is levied upon. Section 6330(a) further provides
that the taxpayer may request administrative review of the matter
(in the form of a hearing) within a prescribed 30-day period.
Collection hearings are to be conducted by the
Commissioner’s Office of Appeals, and the Appeals officer
conducting the hearing must verify that the requirements of any
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applicable law or administrative procedure have been met. Sec.
6330(b)(1), (c)(1). Pursuant to section 6330(c)(2)(A), a
taxpayer may raise at the hearing any issue relevant to the
proposed collection activities, including spousal defenses,
challenges to the appropriateness of the intended collection
action(s), and alternative means of collection. Sego v.
Commissioner, supra at 609; Goza v. Commissioner, supra at 180.
If a taxpayer received a statutory notice of deficiency for the
year in issue or otherwise had the opportunity to dispute the
underlying tax liability, the taxpayer is precluded from
challenging the existence or amount of the underlying tax
liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, supra at
610-611; Goza v. Commissioner, supra at 182-183.
At the conclusion of the hearing, the Appeals officer must
determine whether and how to proceed with collection and shall
consider: (1) The verification that the procedural and statutory
requirements have been followed; (2) the relevant issues raised
by the taxpayer; (3) where permitted, the taxpayer’s challenges
to the underlying tax liability; and (4) whether the collection
action properly balances collection efficiency and intrusiveness.
Sec. 6330(c)(3).
The 2004 tax liability results from the tax reported as due
by petitioner on his 2004 Federal income tax return. The IRS did
not audit or adjust the return and did not issue a notice of
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deficiency.4 The record does not reflect that petitioner had any
other opportunity to contest the existence or amount of his self-
assessed tax liability for 2004. Accordingly, he was entitled to
challenge the liability during the collection hearing. The SO
invited petitioner to challenge the tax due for 2004 by
submitting an amended return. Petitioner did not submit an
amended return, nor did he challenge the underlying tax liability
during the collection hearing. Accordingly, we review
respondent’s determination for abuse of discretion.
The SO informed petitioner that she could not consider any
collection alternatives without a complete financial disclosure
from petitioner and that he was not eligible for consideration of
any collection alternatives unless he was current with his
Federal income tax filing obligations. Petitioner submitted a
draft Form 433-A, without supporting documentation. He did not
submit his 2005 Federal income tax return. The Commissioner’s
refusal to consider collection alternatives is not an abuse of
discretion where the taxpayer has failed to file all required tax
returns or to provide complete financial information. See Roman
v. Commissioner, T.C. Memo. 2004-20; Rodriguez v. Commissioner,
4
The IRS was not obliged to issue a notice of deficiency to
petitioner because the assessment was entered under sec.
6201(a)(1) based on the amount petitioner reported due on his
2004 tax return, along with statutory interest and additions to
tax. Moreover, sec. 6211(a) excludes from the definition of a
deficiency the tax that taxpayers report due on their returns.
Montgomery v. Commissioner, 122 T.C. 1, 8 (2004).
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T.C. Memo. 2003-153 (and cases cited therein). An Appeals
officer who fails to take into account information he requested
but that the taxpayer did not provide in a reasonable time has
not abused his discretion. Murphy v. Commissioner, supra at 315.
Thus, the SO did not abuse her discretion in refusing to consider
petitioner’s request to place his 2004 account in CNC status.5
The applicable regulation is clear that a face-to-face
collection hearing is not required by the Code. Sec. 301.6330-
1(d)(2), Q&A-D6, Q&A-D7, and Q&A-D8, Proced. & Admin. Regs.
Petitioner did not present the information required by the SO and
did not make any justiciable arguments or present any information
that properly addressed the merits of the underlying tax
liability, the validity of the assessment, the conduct of the
proceeding, or compliance with section 6330 requirements. Under
these circumstances, as a matter of law, the SO did not abuse her
5
Petitioner’s concern with the proposed levy was that the
Internal Revenue Service (IRS) would take his truck and with it
his ability to conduct his landscaping and window washing
business. In his draft collection information statement,
petitioner lists as assets: $500 of furniture and personal
effects, $500 of business tools, and a $1,000 truck, which he
used for his business.
It is noted that sec. 6334(a)(3) exempts from levy tools
necessary for a taxpayer’s business with an aggregate value far
greater than the tools petitioner claimed (including the value of
his truck). Furthermore, sec. 6334(a)(13)(B) exempts tangible
personal property (which would include petitioner’s truck, in the
event that sec. 6334(a)(3) did not) unless the IRS follows the
procedure outlined in sec. 6334(e)(2).
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discretion in not affording petitioner a face-to-face hearing.
See Davis v. Commissioner, T.C. Memo. 2007-160.
Finally, as stated in the notice of determination, the SO
verified that the procedural and administrative requirements had
been met and considered whether the proposed collection action
balanced intrusiveness and collection efficiency. See sec.
6330(c)(3).
Conclusion
Although petitioner was not statutorily barred from
challenging the existence or amount of his income tax liability
for 2004, he failed to raise any such challenge. Petitioner also
failed to raise a spousal defense or make a valid challenge to
the appropriateness of respondent’s intended collection action.
Petitioner failed to provide the documents required for
consideration of any alternative means of collection.6 These
issues are now deemed conceded. See Rule 331(b)(4).
6
Petitioner demonstrated that he was in filing compliance
and disclosed his financial status to a different settlement
officer (SO) on May 15, 2007, in connection with his 2000-03 lien
case. Respondent filed the instant motion on July 13, 2007, and
the SO handling the lien hearing on remand issued a supplemental
notice of determination in that case on Sept. 7, 2007, sustaining
the filing of the Federal tax liens for those years and
determining that petitioner’s account should be reported
currently noncollectible. This determination in September 2007
has no bearing on whether respondent abused his discretion in
this case in November 2006 or on whether there is a genuine issue
for trial in this case.
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Accordingly, we conclude that respondent is entitled to judgment
as a matter of law sustaining the notice of determination.
To give effect to the foregoing,
An appropriate order and
decision will be entered.