T.C. Memo. 2009-129
UNITED STATES TAX COURT
THOMAS B. AND LABELLE D. LANCE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18373-07L. Filed June 4, 2009.
Thomas B. and Labelle D. Lance, pro sese.
Brenda M. Fitzgerald, for respondent.
MEMORANDUM OPINION
GERBER, Judge: Respondent sent petitioners notice of his
determination to collect petitioners’ 1996 and petitioner Thomas
Lance’s 1999 and 2001 income tax liabilities by levy.
Petitioners administratively appealed, and respondent sustained
the determination to proceed with the levy. Petitioners
petitioned this Court seeking to forestall the levy action,
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stating in their petition that respondent did not properly
consider petitioners’ offer to compromise their 1996 tax
liability. After the pleadings were complete, respondent moved
for summary judgment.1
Background
Petitioners resided in Georgia at the time their petition
was filed. Respondent audited petitioners’ 1996 Federal income
tax return and proposed adjustments. Petitioners appealed to
respondent’s Office of Appeals and reached agreement with respect
to the 1996 income tax liability. The parties entered into an
agreement on Form 870, Waiver of Restrictions on Assessment and
Collection of Deficiency in Tax and Acceptance of Overassessment,
defining the income tax deficiency for 1996. Subsequently,
however, Mrs. Lance sought innocent spouse relief with respect to
the 1996 income tax liability, and she was notified by certified
mail on October 30, 2002, that relief would not be granted. Mrs.
Lance did not petition this Court with respect to the
disallowance of innocent spouse relief.
Mr. Lance was sent and received a statutory notice of
deficiency for his 1999 tax year on November 7, 2001, but he did
1
Petitioners were given ample opportunity over an extended
period to respond to respondent’s summary judgment motion. On
several occasions petitioners sought an extension of time to
respond, but they did not respond. Because adequate time for a
response has been afforded to petitioners, we proceed to address
respondent’s motion.
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not file a petition with this Court. Mr. Lance was also sent and
received a statutory notice of deficiency for his 2001 tax year
on January 26, 2004, and he, likewise, did not file a petition
with this Court. During the period 2003 through the beginning of
2006 petitioners had a great deal of interaction with respondent,
and numerous pieces of correspondence were exchanged.
Petitioners suggested an installment agreement, offers-in-
compromise, and other collection approaches during that period.
In letters dated February 6, 2006, respondent notified
petitioners of his intent to levy with respect to their joint
1996 tax liability and Mr. Lance’s 1999 and 2001 tax liabilities.
In those same letters respondent notified petitioners of their
right to a hearing.
On March 22, 2006, respondent received a timely Form 12153,
Request for a Collection Due Process Hearing, with respect to
petitioners’ 1996 tax liability and Mr. Lance’s 1999 and 2001 tax
liabilities. In their request petitioners stated that they
believed that the penalties and interest for the 3 tax years
should be abated in part. No grounds were stated. Petitioners
sought a face-to-face hearing, and their hearing request was
transferred to the Atlanta Appeals Office.
On August 14, 2006, Settlement Officer Allen D. Powell (SO
Powell) sent petitioners a letter advising them that he had
scheduled a September 19, 2006, hearing, and he also enclosed a
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copy of Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals. SO Powell stated in the
letter that if petitioners wished consideration of collection
alternatives, such as an installment agreement or an offer-in-
compromise, the form had to be completed and returned within
14 days. On September 18, 2006, petitioners requested that the
hearing be rescheduled because of their son’s illness.
For the next several months, no action was taken because of
petitioners’ son’s illness. On January l8, 2007, SO Powell sent
petitioners a letter requesting an update on their
son’s health and further advising that petitioners contact SO
Powell to schedule a hearing if they still wished one. On
February 22, 2007, SO Powell sent petitioners a letter scheduling
a face-to-face conference for April 3, 2007, at 10 a.m. He
enclosed a second Form 433-A with that letter and advised
petitioners that if they wished to discuss any collection
alternatives they should provide him with a completed Form 433-A
at least 7 days before the hearing.
The hearing scheduled for April 3, 2007, did not take place
and was rescheduled at petitioners’ request to May 15, 2007.
Petitioners were advised by SO Powell that this was their final
opportunity for a hearing. On May 13, 2007, petitioners left a
voice mail message for SO Powell requesting another hearing date.
On May 15, 2007, SO Powell advised the petitioners that he
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would not reschedule but that they were welcome to submit
information for his consideration on or before May 28, 2007.
In a May 24, 2007, letter, petitioners suggested an offer-
in-compromise. Petitioners also enclosed copies of
correspondence that had been sent to and received from
respondent, but no financial information to support an offer-in-
compromise or other collection alternative was included with
petitioners’ correspondence. Petitioners mailed the letter and
enclosed documents to SO Powell on May 28, 2007, but did not
include a completed Form 433-A. On June 1, 2007, SO Powell
reviewed and considered the information that petitioners
provided. On July 12, 2007, SO Powell decided to sustain the
proposed levy based upon all available information. Because
petitioners did not provide a completed Form 433-A, SO Powell was
unable to evaluate collection alternatives. On July 16, 2007,
respondent issued a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 for each of petitioners’
1996 tax year and Mr. Lance’s 1999 and 2001 tax years.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. See Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted when there is no genuine issue of material fact and a
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decision may be rendered as a matter of law. Rule 121(b);2
Sundstrand Corp. v Commissioner, 98 T.C. 518, 520 (1992), affd.
17 F.3d 965 (7th Cir. 1994). The opposing party cannot rest upon
mere allegations or denials in his pleadings and must “set forth
specific facts showing that there is a genuine issue for trial.”
Rule 121(d). The moving party bears the burden of proving that
there is no genuine issue of material fact, and factual
inferences will be read in a manner most favorable to the party
opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C.
812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344
(1982).
Respondent has provided all documents from the
administrative record, and petitioners have not come forward to
dispute or deny any portion thereof.3 Therefore, we are in a
position to render a decision, as a matter of law, as to whether
respondent abused his discretion in sustaining the proposed levy
action.
We first consider whether petitioners were entitled to
question the underlying tax liabilities for the 1996, 1999,
and/or 2001 tax years. The merits of the underlying tax
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
3
Because this is a summary judgment motion with no facts in
dispute, we need not consider the ramifications of sec. 7491.
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liability are proper issues in an Appeals Office hearing if the
“person 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).
Petitioners were not entitled to dispute the underlying tax
liability for 1996 because they had a prior opportunity, before
the Office of Appeals, to dispute the tax liability and entered
into a Form 870 agreement for the tax deficiency. Taxpayers who
execute a Form 870 consenting to the immediate assessment and
collection of the deficiency waive their right to receive a
notice of deficiency and, hence, the right to contest the
underlying liability in a subsequent collection action. Sec.
6330(c)(2)(B); Estate of Deese v. Commissioner, T.C. Memo. 2007-
362; A-Z Optics, Inc. v. Commissioner, T.C. Memo. 2007-27.
Accordingly, petitioners could not contest the underlying tax
liability for the year 1996. Aguirre v. Commissioner, 117 T.C.
324, 327 (2001); Sego v. Commissioner, 114 T.C. 604, 610 (2000);
Goza v. Commissioner, 114 T.C. 176, 180-181 (2000).
Similarly, Mr. Lance was not entitled to dispute his
underlying 1999 and 2001 tax liabilities because he received a
statutory notice of deficiency for each year and, accordingly,
had a prior opportunity to dispute those tax liabilities. Sec.
6330(c)(2)(B); Nestor v. Commissioner, 118 T.C. 162, 165-166
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(2002); Sego v. Commissioner, supra at 610; Goza v. Commissioner,
supra.
In view of those circumstances, we proceed to decide whether
there was an abuse of discretion when respondent sustained the
proposed levy action. See Sego v. Commissioner, supra at 610.
Petitioners, although requested to do so on several
occasions, failed to provide financial information to SO Powell,
rendering him unable to evaluate collection alternatives.
Hearings were scheduled for several dates over an extended
period, and petitioners sought rescheduling on each occasion.
The first letter setting a hearing date was sent on August 14,
2006, and SO Powell did not issue his determinations until
July 16, 2007. Throughout that period petitioners did not
submit complete financial information, nor did they submit a
completed Form 433-A.
A financial statement is not required of taxpayers who make
offers-in-compromise based solely on doubt as to liability.
Sec. 7122; sec. 301.7122-1(d) Proced. & Admin. Regs. However,
financial information is required of taxpayers who seek
collection alternatives on other bases, including offers-in-
compromise based upon doubt as to collectibility. Additionally,
taxpayers who submit offers based on doubt as to collectibility
or based on effective tax administration are required to provide
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the Commissioner with a completed collection information
statement.
In this case the lack of financial information rendered any
intended offer incomplete and prevented respondent from
considering collection alternatives. When a hearing officer is
unable or refuses to consider collection alternatives because of
a taxpayer’s failure to provide financial information, courts
have held that there was no abuse of discretion. Schwersensky v.
Commissioner, T.C. Memo. 2006-178. We hold that the settlement
officer’s actions were appropriate and not an abuse of
discretion.
A settlement officer must take into consideration: (1) The
verification that the requirements of applicable law and
administrative procedures have been met, (2) the issues raised by
taxpayers, and (3) the legitimate concern of the person(s) that
any collection be no more intrusive than necessary. Sec.
6330(c)(3). The settlement officer in this case met those
requirements. In addition, SO Powell responded to
petitioners’ request for rescheduling of hearing dates and was
responsive to all of petitioners’ requests.
In view of the foregoing, we hold that there was no abuse of
discretion in respondent’s decision to proceed with collection by
levy. Accordingly, respondent’s motion for summary judgment will
be granted.
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To reflect the foregoing,
An appropriate order and
decision will be entered.