T.C. Memo. 2009-161
UNITED STATES TAX COURT
GARY E. HUNTRESS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18574-08L. Filed July 1, 2009.
R issued to P a notice of filing of Federal tax
lien, and P timely requested a hearing under I.R.C.
sec. 6320. In that request P asked for a face-to-face
hearing and indicated that he desired an offer-in-
compromise or an installment agreement, but P never
made a concrete proposal of either. P did not submit
his financial information as requested and was not
current in his filing obligations. As a result, R
refused to hold a face-to-face conference as P had
requested. P did not participate in his telephone
collection due process conference, and R issued to P a
final notice of determination that R would sustain the
filing of the Federal tax lien. P appealed that
determination to this Court, arguing that he was
entitled to a face-to-face hearing whether or not he
had submitted his financial information or fulfilled
his filing obligations. R moved for summary judgment,
and P opposed R’s motion.
- 2 -
Held: R’s Office of Appeals did not abuse its
discretion in sustaining the filing of a Federal tax
lien when (1) P generally requested a collection
alternative, but made no concrete proposals, (2) P
failed to supply his financial information as
requested, and (3) P was not current with his filing
and/or payment obligations.
Gary E. Huntress, pro se.
Erika B. Cormier, for respondent.
MEMORANDUM OPINION
GUSTAFSON, Judge: This case is an appeal by petitioner Gary
E. Huntress, pursuant to section 6330(d),1 asking this Court to
review the notice of determination issued by the Internal Revenue
Service (IRS) sustaining the filing of a notice of Federal tax
lien to collect Mr. Huntress’s unpaid Federal income tax for tax
years 2000 and 2001. The case is currently before the Court on
respondent’s motion for summary judgment filed May 5, 2009.
Mr. Huntress filed an opposition to respondent’s motion on
June 9, 2009. The principal issue for decision is whether the
IRS’s Office of Appeals abused its discretion by denying
Mr. Huntress a face-to-face hearing. For the reasons explained
below, we will grant respondent’s motion.
1
Except as otherwise noted, all section references are to
the Internal Revenue Code (26 U.S.C.), and all Rule references
are to the Tax Court Rules of Practice and Procedure.
- 3 -
Background
The following facts are based on the documents in the record
of the IRS’s hearing held pursuant to section 6330(b) and (c).
Those documents are authenticated by the declaration of the IRS’s
settlement officer included with respondent’s motion. As is
discussed below, Mr. Huntress did not raise any genuine issue as
to these facts.
Mr. Huntress filed no tax returns for the years 2000 and
2001, the two years at issue. In June 2005 the IRS sent him a
statutory notice of deficiency for those years (and for the non-
suit years 2002 and 2003). He received the notice and wrote a
responsive letter to the IRS disputing it, but he did not file a
deficiency suit in this Court. The IRS therefore assessed the
deficiencies in November 2005.
In April 2006 the IRS sent Mr. Huntress a notice of its
intent to levy against him to collect his unpaid tax income tax
liabilities for 2000 and 2001. (This is not the collection
notice at issue in this suit.) That notice advised him of his
right to request a collection due process (CDP) hearing before
the Office of Appeals. He requested the hearing but did not
attend it, and in December 2006 the IRS issued a notice of
determination sustaining the proposed levy. Mr. Huntress did not
file in this Court a petition for review of that determination.
- 4 -
On February 14, 2008, the IRS sent Mr. Huntress a notice of
Federal tax lien, advising him that it had filed a notice of lien
against him with respect to his unpaid tax liabilities for 2000
and 2001 and advising him of his right to request a CDP hearing
before the Office of Appeals. He timely filed a Form 12153,
Request for a Collection Due Process or Equivalent Hearing, to
which was attached a document entitled “Attachment letter to CDPH
Request form (form no. 12153)”. The attachment is a laundry list
of potential defects in IRS procedure and arguments and requests
that a taxpayer might make in the CDP context. Mr. Huntress
placed an “X” in the blank by each item, even though some of them
are manifestly incorrect with respect to him (e.g., “I did not
receive a statutory Notice of Deficiency”) or do not apply to him
(e.g., a dispute about “the $500 frivolous [return] penalty” of
section 6702, which was not assessed against him).
On this attachment Mr. Huntress requested “collection
alternatives including Offer in Compromise (OIC) [and] payment
schedule” and requested that his hearing before the Office of
Appeals be a face-to-face hearing. In a letter of April 11,
2008, he repeated his request for a face-to-face hearing.
In a letter of April 25, 2008, the Office of Appeals
explained the hearing process, and explained that the IRS could
not consider an offer-in-compromise (OIC) or installment
agreement “unless a taxpayer has filed all tax returns for which
- 5 -
he/she is liable”. The letter requested that Mr. Huntress
provide: financial information about himself on Form 433-A,
Collection Information Statement for Wage Earners and Self-
Employed Individuals; copies of his returns for 2004, 2005, 2006,
and 2007; and proof of estimated tax payments or a wage statement
for 2008.
The Office of Appeals received no response from Mr. Huntress
to its letter of April 25, 2008. On May 20, 2008, it sent him
another letter, which scheduled a telephone conference (not a
face-to-face conference) for June 17, 2008, repeated the requests
of the April 25 letter (for Form 433-A, returns for 2005, 2006,
and 2007, and proof of estimated tax), and stated as follows:
Please be advised that Appeals does not provide a face-
to-face conference if the [sic] you are not eligible
for the collection alternative you are seeking. You
were provided an opportunity in a letter sent out on
April 25, 2008 to provide information to demonstrate
that you were eligible for a collection alternative.
We have received no response to that request and there-
fore we are not allowing you a face-to-face hearing.
Mr. Huntress responded with a letter dated June 13, 2008, in
which he stated that he did not want a telephone conference and
requested “a face to face hearing as prescribed by law”. He
disputed the right of the Office of Appeals to set preconditions
for a face-to-face hearing, and he stated:
Furthermore, pertaining to your request that I file the
delinquent tax returns from 2005 to 2007 and complete
Form 433-A, I respectfully decline to comply with this
request for two reasons: (1) you failed to state the
relevant law that would require me to file and/or
- 6 -
complete such returns and forms, and (2) this appears
to be an ex parte request for private and personal
information. Also, the U.S. Congress has no
precondition to filing Form 1040 or provide an Offer in
Compromise prior to any CDP Hearing.
Mr. Huntress did not participate in his telephone CDP
hearing scheduled for June 17, 2008. On June 30, 2008, the
Office of Appeals issued its notice of determination sustaining
the filing of the notice of Federal tax lien. On July 29, 2008,
Mr. Huntress timely filed his petition, which he supplemented on
October 14, 2008. At the time that he filed his petition,
Mr. Huntress resided in Massachusetts.
On May 5, 2009, respondent moved for summary judgment,
contending that no genuine issue of material fact remains for
trial and that judgment in respondent’s favor is warranted
because the determination by the Office of Appeals did not
constitute an abuse of discretion. On June 9, 2009, Mr. Huntress
opposed the motion for summary judgment and argued that he was
entitled to a face-to-face hearing, which he had been denied.
Discussion
I. Applicable Legal Principles
A. Summary Judgment Standards
Where the pertinent facts are not in dispute, a party may
move for summary judgment to expedite the litigation and avoid an
unnecessary (and potentially expensive) trial. Fla. Peach Corp.
v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may
- 7 -
be granted where there is no genuine issue as to any material
fact, and a decision may be rendered as a matter of law.
Rule 121(a) and (b); see Sundstrand Corp. v. Commissioner, 98
T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz
v. Commissioner, 90 T.C. 753, 754 (1988). The party moving for
summary judgment (here, respondent) bears the burden of showing
that there is no genuine issue as to any material fact, and
factual inferences will be drawn in the manner most favorable to
the party opposing summary judgment (here, Mr. Huntress).
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982). However, Rule 121(d)
provides,
When a motion for summary judgment is made and
supported as provided in this Rule, an adverse party
[such as Mr. Huntress] may not rest upon the mere
allegations or denials of such party’s pleading, but
such party’s response, by affidavits or as otherwise
provided in this Rule, must set forth specific facts
showing that there is a genuine issue for trial. * * *
In compliance with Rule 121(b), respondent made and supported a
showing of the facts of the case; but Mr. Huntress’s only
response is his unsworn, 1-1/2-page opposition, without
affidavits or other evidence, that does not contradict
respondent’s particular assertions but only argues about
Mr. Huntress’s supposed right to a face-to-face hearing.
Respondent’s statement of facts is therefore uncontroverted and
is accepted for purposes of ruling on the motion.
- 8 -
B. Collection Review Procedure
When a taxpayer fails to pay any Federal income tax
liability after demand, section 6321 imposes a lien in favor of
the United States on all the property of the delinquent taxpayer,
and section 6323(f) authorizes the IRS to file notice of that
lien. However, within five business days after filing a notice
of tax lien, the IRS must provide written notice of that filing
to the taxpayer. Sec. 6320(a). After receiving such a notice,
the taxpayer may request an administrative hearing before the
Office of Appeals. Sec. 6320(a)(3)(B), (b)(1). Administrative
review is carried out by way of a hearing before the Office of
Appeals pursuant to section 6330(b) and (c); and, if the taxpayer
is dissatisfied with the outcome there, he can appeal that
determination to the Tax Court under section 6330(d), as
Mr. Huntress has done.
For the agency-level CDP hearing before the Office of
Appeals, the pertinent procedures are set forth in section
6330(c):
First, the IRS’s appeals officer must obtain verification
from the Secretary that the requirements of any applicable law or
administrative procedure have been met. Sec. 6330(c)(1).2
2
In the case of the lien filed against Mr. Huntress, the
basic requirements, see sec. 6320, for which the appeals officer
was to obtain verification are: the issuance of a notice of
deficiency, sec. 6212; a timely assessment of the liability,
(continued...)
- 9 -
Although such issues appeared on the laundry list attached to
Mr. Huntress’s request for a hearing, respondent’s motion sets
forth the IRS’s compliance with these requirements, and
Mr. Huntress made no challenge to it in his opposition, so no
“verification” issues under section 6330(c)(1) are still at
issue.
Second, the taxpayer may “raise at the hearing any relevant
issue relating to the unpaid tax or the proposed levy,” including
challenges to the appropriateness of the collection action and
offers of collection alternatives. Sec. 6330(c)(2)(A).
Mr. Huntress’s principal contention--that he should have gotten a
face-to-face hearing in order to present an OIC or installment
agreement--pertains to that second set of issues, which we will
discuss below.
Additionally, the taxpayer may contest the existence and
amount of the underlying tax liability, but only if he did not
receive a notice of deficiency or otherwise have a prior
opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).
Mr. Huntress had that prior opportunity when the IRS sent him a
notice of deficiency, and he had the option of filing a
2
(...continued)
secs. 6201(a)(1), 6501(a); notice and demand for payment of the
liability, sec. 6303; and notice of the filing of the lien and of
the taxpayer’s right to a CDP hearing, secs. 6320(a) and (b).
- 10 -
deficiency suit in this Court. Therefore, issues of the
underlying liability for the tax are not at issue.
When the Office of Appeals issues its determination, the
taxpayer may “appeal such determination to the Tax Court”,
pursuant to section 6330(d)(1), as Mr. Huntress has done. In
such an appeal (where the underlying liability is not at issue),
we review the determination of the Office of Appeals for abuse of
discretion. That is, we decide whether the determination was
arbitrary, capricious, or without sound basis in fact or law.
See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469
F.3d 27 (1st Cir. 2006); Sego v. Commissioner, 114 T.C. 604, 610
(2000); Goza v. Commissioner, 114 T.C. 176 (2000).
II. Respondent’s Entitlement to Summary Judgment
Section 6320(b)(1) provides that a “hearing shall be held”
by the Office of Appeals. Contrary to Mr. Huntress’s argument,
the statute does not describe the nature of that hearing. As we
have previously observed,
Hearings at the Appeals level have historically been
conducted in an informal setting. * * * When Congress
enacted section 6330 * * *, Congress was fully aware of
the existing nature and function of Appeals. Nothing
in section 6330 or the legislative history suggests
that Congress intended to alter the nature of the
Appeals hearing * * *.
Davis v. Commissioner, 115 T.C. 35, 41 (2000). The regulations
implementing the CDP process provide as follows:
A face-to-face CDP conference concerning a collection
alternative, such as an installment agreement or an
- 11 -
offer to compromise liability, will not be granted
unless other taxpayers would be eligible for the
alternative in similar circumstances. For example,
because the IRS does not consider offers to compromise
from taxpayers who have not filed required returns or
have not made certain required deposits of tax, as set
forth in Form 656, “Offer in Compromise,” no
face-to-face conference will be granted to a taxpayer
who wishes to make an offer to compromise but has not
fulfilled those obligations. * * *
Sec. 301.6320-1(d)(2), Q&A-D8, Proced. & Admin. Regs. (26 C.F.R.)
(emphasis added).
This addresses Mr. Huntress’s principal contention (i.e.,
that he was supposedly entitled to a face-to-face hearing), but
his contention essentially puts the cart before the horse. Where
a taxpayer proposes a collection alternative such as an OIC, the
hearing (whether face-to-face or telephonic) is a means for the
Office of Appeals to consider the OIC. Where denial of a face-
to-face hearing would impede adequate consideration of an OIC,
then that denial might itself be an abuse of discretion.
However, the ultimate question is whether the Office of Appeals
abused its discretion by not agreeing to an OIC. We find that it
did not.
Mr. Huntress made three fatal omissions that doomed his
hopes for an OIC: He (1) never made a concrete proposal of
specific terms for an OIC, (2) never provided the financial
information to substantiate the proposal, and (3) never showed
his compliance with filing requirements (in particular, his
returns for 2005 through 2007, which he instead refused to file).
- 12 -
Any one of these failures justified the Office of Appeals’s
determination not to allow an OIC:
First, it was not an abuse of discretion for the Office of
Appeals to reject collection alternatives when none were proposed
by Mr. Huntress. See Cavazos v. Commissioner, T.C. Memo. 2008-
257 (citing Kendricks v. Commissioner, 124 T.C. 69, 79 (2005));
see also Nelson v. Commissioner, T.C. Memo. 2009-108 (Appeals did
not abuse its discretion in sustaining a lien when a taxpayer
requested an OIC generally but had not prepared one).
Second, it was not an abuse of discretion for the Office of
Appeals to reject collection alternatives and sustain the
proposed collection action on the basis of the failure of
Mr. Huntress to submit requested financial information. See
Prater v. Commissioner, T.C. Memo. 2007-241; Chandler v.
Commissioner, T.C. Memo. 2005-99; Roman v. Commissioner, T.C.
Memo. 2004-20. In doing so, the Office of Appeals simply
followed the requirements of section 301.6320-1(e)(1), Proced. &
Admin. Regs., and Rev. Proc. 2003-71, 2003-2 C.B. 517.
Third, it was not an abuse of discretion for the Office of
Appeals to consider Mr. Huntress ineligible for an OIC on the
ground that he had a history of noncompliance with the tax laws
and was not in compliance with current tax obligations. See
Giamelli v. Commissioner, 129 T.C. 107, 111-112 (2007). In doing
so, the Office of Appeals followed the requirements of the
- 13 -
regulations. See sec. 301.6320-1(d)(2), Q&A-D8, Proced. & Admin.
Regs. (“the IRS does not consider offers to compromise from
taxpayers who have not filed required returns or have not made
certain required deposits of tax”); see also Internal Revenue
Manual, pt. 5.8.3.4.1 (Sept. 1, 2005), 5.19.1.6.2(3) (June 27,
2005).
Conclusion
On these undisputed facts, we cannot hold that the decision
of the Office of Appeals to sustain the filing of the Federal tax
lien was arbitrary, capricious, or without sound basis in fact or
law. As a result, we conclude that the Office of Appeals did not
abuse its discretion, and we hold that respondent is entitled to
the entry of a decision sustaining the determination as a matter
of law.
To reflect the foregoing,
An appropriate order and
decision will be entered.