T.C. Memo. 2009-1
UNITED STATES TAX COURT
ANTHONY J. MARTINO, JR. AND MIKELIN MARTINO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22063-07L. Filed January 5, 2009.
Anthony J. Martino, Jr., pro se.
Kristina Rico, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COHEN, Judge: This action was commenced in response to a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination) with respect
to petitioners’ 2005 Federal income tax liability. The issue for
decision is whether the settlement officer abused his discretion
in sustaining the proposed levy action against petitioners.
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Unless otherwise indicated, all section references are to the
Internal Revenue Code.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in Pennsylvania at the time their petition
was filed. Anthony J. Martino (petitioner) is an attorney and
has been practicing law for 22 years. Mikelin Martino is a
homemaker.
Petitioners filed a joint Federal income tax return for 2005
on October 18, 2006, and reported tax due of $49,127 (not
including a withholding credit of $4,135). The Internal Revenue
Service (IRS) timely assessed petitioners’ reported tax due on
November 27, 2006. Petitioners failed to pay the tax due.
The IRS sent a Notice of Intent to Levy and Notice of Your
Right to a Hearing to petitioners on April 2, 2007. Petitioners
made a timely request for an Appeals Office administrative
hearing (section 6330 hearing). In their request, petitioners
asked for relief from interest, penalties, and any lien to be
filed, as well as a delay in collection. With respect to the
levy, petitioners proposed a collection alternative that would
pay the tax liability within 1 year through a “refinance”.
Petitioners also proposed “an abatement” of Mikelin Martino’s tax
liability because she had no taxable income or separate assets.
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Petitioners, however, did not submit any forms, documentation, or
financial information to the Appeals Office concerning their
proposals, nor did they take any steps to obtain refinancing.
On August 29, 2007, a settlement officer held a telephonic
section 6330 hearing with petitioner. On September 14, 2007, the
settlement officer sent to petitioners the notice of
determination that is the basis of this case. In the notice of
determination, the settlement officer determined that: (1)
Petitioners did not challenge the levy action or raise any other
issues; (2) petitioners failed to submit Form 8857, Request for
Innocent Spouse Relief, that had been provided to them; and (3)
the assessment was valid. The notice of determination concluded
that the levy was the most efficient method of collection.
Petitioners have two other section 6330 cases pending before
this Court, docket Nos. 13912-06L and 8524-07L, with unpaid tax
liabilities for 1998 through 2004 in issue. In those cases,
petitioners challenge the rejection of an offer-in-compromise
they submitted on June 19, 2004, proposing a payment of $170,000
for the unpaid income taxes from 1998 through 2002. Petitioners
also have not paid the tax due on their 2006 and 2007 Federal
income tax returns.
OPINION
Our jurisdiction in this case is predicated upon section
6330(d)(1), which gives the Tax Court jurisdiction “with respect
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to such matter” as is set forth in the determination of the
Appeals Office. Greene-Thapedi v. Commissioner, 126 T.C. 1, 6
(2006). Where, as here, liability for the underlying tax is not
disputed, we review the settlement officer’s determination for
abuse of discretion. Goza v. Commissioner, 114 T.C. 176, 181-182
(2000).
Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy upon property belonging to the taxpayer.
Section 6331(d) provides that the Secretary is obliged to provide
the taxpayer with notice, including notice of the administrative
appeals available to the taxpayer, before proceeding with
collection by levy on the taxpayer’s property.
Section 6330 generally provides that the Commissioner cannot
proceed with the collection of taxes by way of a levy on a
taxpayer’s property until the taxpayer has been given notice of
and the opportunity for an administrative review of the matter
(in the form of a section 6330 hearing) and, if dissatisfied,
with judicial review of the administrative determination.
Section 6330(c)(2)(A) specifies the issues that the taxpayer may
raise at the hearing. The taxpayer is allowed to raise “any
relevant issue relating to the unpaid tax or the proposed levy”
including spousal defenses, challenges to the appropriateness of
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collection actions, and alternatives to collection. Sec.
6330(c)(2)(A). Section 6330(c)(3) provides that the
determination of the settlement officer shall take into
consideration the verification under section 6330(c)(1), the
issues raised by the taxpayer, and whether the proposed
collection action balances the need for the efficient collection
of taxes with the legitimate concern of the taxpayer that any
collection action be no more intrusive than necessary.
This is at least the third time that petitioners have
invoked the procedures of section 6330 to forestall collection of
tax liabilities unpaid over the last 10 years. They are well
aware of the applicable law. Respondent argues that petitioners
did not challenge the levy or offer any collection alternatives
at the section 6330 hearing. Respondent also points out that
petitioners failed to refinance any property or to submit the
innocent spouse relief request form, as they had proposed in
their request for a section 6330 hearing.
Petitioners argue that petitioner specifically challenged
the levy action at the section 6330 hearing and that he requested
that the settlement officer consider the offer-in-compromise and
all financial documents in issue in the earlier docketed cases.
Petitioners proposed incorporating the 2005 tax liability into
the preexisting offer-in-compromise as a “less intrusive
collection alternative”.
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In considering the settlement officer’s determination from
the section 6330 hearing, we review for abuse of discretion. See
Sego v. Commissioner, 114 T.C. 604, 610 (2000). To demonstrate
that there was an abuse of discretion in sustaining the levy,
petitioners would have to show that the settlement officer’s
determination was arbitrary, capricious, or without sound basis
in fact or law. See Giamelli v. Commissioner, 129 T.C. 107, 111
(2007). Petitioners have not done so.
Petitioners presented neither evidence nor argument showing
any arbitrary or capricious reasoning used by the settlement
officer in reaching his determination. Petitioners failed to
present any new financial information or collection alternative
with respect to their 2005 liability and relied instead on the
offer-in-compromise previously submitted for their 1998-2002 tax
liabilities. The settlement officer was not reasonably required
to consider the rejected offer-in-compromise that is being
litigated in the prior cases. We hold that the settlement
officer did not abuse his discretion in sustaining the levy.
To reflect the foregoing,
Decision will be entered for
respondent.