T.C. Summary Opinion 2009-113
UNITED STATES TAX COURT
CHERYL D. FLATHERS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24235-07S. Filed July 20, 2009.
Cheryl D. Flathers, pro se.
Fred E. Green Jr., for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when 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 Revenue Code.
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The petition was timely filed in response to a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 (notice of determination). Pursuant to section
6330(d), petitioner seeks review of respondent’s Final Notice of
Intent to Levy and Notice of Your Right to a Hearing (notice of
intent to levy) relating to her tax liabilities for 2002 and 2003
and civil penalties for 1999 through 2004.
Neither the underlying tax liabilities for 2002 and 2003 nor
the civil penalties for filing frivolous returns for 1999 through
2004 are in dispute. The issues for decision are whether:
(1) Petitioner was denied an opportunity for a fair and
meaningful section 6330 hearing; and (2) the Appeals officer
abused her discretion in failing to provide petitioner an
opportunity to present an offer-in-compromise (OIC) at a hearing
as required by section 6330(b) and (c)(2)(A)(iii).
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. When the petition was
filed, petitioner resided in Nevada.
Petitioner failed to file timely returns for 2002 and 2003.
Respondent prepared substitutes for returns and issued notices of
deficiency to petitioner for 2002 and 2003 on July 20, 2004, and
June 21, 2005, respectively. Petitioner did not petition the
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Court in response to the notices of deficiency. On January 12,
2007, respondent issued a notice of intent to levy, advising
petitioner that respondent intended to collect unpaid liabilities
for 2002 and 2003 and civil penalties for 1999 through 2004.
In response to the notice of intent to levy, petitioner
mailed Form 12153, Request for a Collection Due Process Hearing,
on February 8, 2007. On Form 12153 petitioner states: “These
charges have already been disputed and are currently in
litigation. The IRS is attempted [sic] to doubly collect. I
request a hearing to review records as to how these charges are
listed again”. Petitioner’s case was assigned to an Appeals
officer from respondent’s Appeals Office in Fresno, California
(Appeals Office).
On May 10, 2007, respondent sent petitioner a letter
acknowledging petitioner’s request for a section 6330 hearing.
In the letter the Appeals officer stated:
I have scheduled a * * * [telephone section 6330
hearing] for you on June 14, 2007 at 10:00 AM (PST). I
will call you at the date and time indicated above.
This call will be your primary opportunity to discuss
with me the reasons you disagree with the collection
action and/or to discuss alternatives to the collection
action. If this time is not convenient for you, or you
would prefer your * * * [section 6330 hearing] to be
held by correspondence, please let me know within
fourteen (14) days from the date of this letter.
* * * * * * *
You will be allowed a face-to-face conference on any
nonfrivolous issue(s); however you will need to provide
the nonfrivolous issue in writing or by calling me
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within 14 days from the date of this letter before a
face-to-face conference will be scheduled.
* * * * * * *
* * * For me to consider alternative collection methods
such as an installment agreement or offer in
compromise, you must provide any items listed below.
In addition, you must have filed all federal tax
returns required to be filed. [Emphasis added].
! Completed Collection Information Statement
Form 433-A for individuals
! Signed tax return(s) for the following tax
periods. Our records indicate they have
not been filed:
Type of Tax: 1040
Period or Periods: 2004 and 2005
! If you did not file a return because your
yearly income was below the amount for
which a return is required to be filed,
please let me know.
Please send me the items listed or checked above by May
25, 2007. I cannot consider collection alternatives at
your conference nor can I consider alternatives during
the hearing process without the information requested
above.
On May 22, 2007, petitioner sent a certified letter thanking
the Appeals officer for their telephone conservation, stating:
“it would not be feasible for [her] to deal with the Fresno
Office due to time and distance constraints.” She also requested
that her case be transferred to her local Appeals Office in Las
Vegas, Nevada.
On May 30, 2007, the Appeals officer notified petitioner
that her case did not qualify for transfer to her local Appeals
Office. The Appeals officer scheduled the telephone section 6330
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hearing for June 14, 2007, at 10 a.m., advised petitioner to
complete Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, and requested petitioner
to file tax returns for 2005 and 2006.1 The Appeals officer
emphasized that in order for collection alternatives, such as an
installment agreement or an OIC to be considered, petitioner had
to provide the requested information and file her 2005 and 2006
tax returns.
On June 10, 2007, petitioner sent a response to the Appeals
officer, stating that she did not understand why her case could
not be transferred to her local Appeals Office, and requesting
the specific reasons her case did not qualify for transfer.
Petitioner also stated that she was unable to receive personal
phone calls during the scheduled section 6330 hearing time, but
she was willing to proceed with a correspondence conference “once
[she] received the answers to [her] questions.”2
On June 14, 2007, the Appeals officer called petitioner for
the scheduled telephone hearing, but petitioner was unavailable.
1
Respondent’s May 10, 2007, letter refers to the filing of
petitioner’s 2004 and 2005 tax returns. However, in respondent’s
May 22, 2007, correspondence and pretrial memorandum, respondent
requests that petitioner file returns for 2005 and 2006.
Petitioner does not raise this issue.
2
Petitioner’s June 10, 2007, letter was received, stamped,
and dated by the Appeals Office on June 13, 2007, and stamped
received by the “Fresno Appeals Campus” on June 14, 2007.
However, in the Appeals officer’s case activity report, the
Appeals officer does not acknowledge receipt of the letter.
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The Appeals officer left a message for petitioner, asking her to
contact the Appeals Office.
On September 18, 2007, the Appeals officer issued to
petitioner a notice of determination regarding the proposed levy
action for 2002 and 2003. In the notice of determination the
Appeals officer stated that petitioner did not provide the
requested information.3 Also, the Appeals officer acknowledged
that although petitioner did respond to the Government’s attempts
to collect the balance owed, she offered no collection
alternatives during the appeals process, nor did she present
information that would warrant withdrawal of the filed notice of
intent to levy.
Discussion
Under section 6330(a), a taxpayer is entitled to notice and
opportunity for a hearing before levy action is taken by the
Commissioner in the process of collecting unpaid Federal taxes.
Upon request, a taxpayer is entitled to a fair section 6330
hearing conducted by an impartial Appeals officer. Sec.
6330(b)(1), (3). The section 6330 hearing does not need to be
conducted face to face; a taxpayer may receive a fair hearing by
telephone or through written correspondence. Sec. 301.6330-
1(d)(2), Q&A-D7, Proced. & Admin. Regs.
3
At trial petitioner admitted that during the appeals
process she had not provided the requested documentation.
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When conducting a section 6330 hearing, the Appeals officer
is required to: (1) Obtain verification from the Secretary that
the requirements of applicable law and administrative procedure
have been met; (2) consider certain issues raised by the taxpayer
such as collection alternatives; and (3) consider whether any
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.
Sec. 6330(c).
Section 6330(c) also prescribes the matters that a taxpayer
may raise at a section 6330 hearing. Under section
6330(c)(2)(A), the taxpayer may raise any relevant issue relating
to the unpaid tax or the proposed levy including: (1)
Appropriate spousal defenses; (2) challenges to the
appropriateness of collection actions; and (3) offers of
collection alternatives, which may include an OIC. “The decision
to entertain, accept or reject an offer in compromise is squarely
within the discretion of the appeals officer and the IRS in
general.” Kindred v. Commissioner, 454 F.3d 688, 696 (7th Cir.
2006).
Although section 6330(c)(2)(A) provides taxpayers faced with
lien or levy actions the right to offer collection alternatives
during the section 6330 hearing process, this right carries with
it certain obligations. See Kindred v. Commissioner, supra.
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Section 301.6330-1(e)(1), Proced. & Admin. Regs., requires
taxpayers to provide all relevant information requested by the
Appeals Office, including financial statements, for its
consideration of the facts and issues involved in a section 6330
hearing. Section 301.6330-1(d)(2), Q&A-D8, Proced. & Admin.
Regs., provides:
A face-to-face * * *[section 6330 hearing] concerning a
collection alternative, such as an installment
agreement or an * * * [OIC], will not be granted unless
other taxpayers would be eligible for the alternative
in similar circumstances. For example, because the IRS
does not consider * * * [OICs] 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 * * *
[OIC] but has not fulfilled those obligations. * * *
[Emphasis added.]
The Court has jurisdiction to review the Commissioner’s
determination. Sec. 6330(d). When the validity of the
underlying tax liability is not at issue, the Court reviews the
Appeals officer’s determination under the abuse of discretion
standard. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza
v. Commissioner, 114 T.C. 176, 181-182 (2000). In doing so, the
Court does not conduct an independent review of what would be an
acceptable OIC. Rather, the Court reviews only whether the
Appeals officer’s decision to issue the notice of determination
without reviewing petitioner’s proposed OIC was arbitrary,
capricious, or without sound basis in fact or law. See Woodral
v. Commissioner, 112 T.C. 19, 23 (1999).
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Petitioner argues that she was denied a section 6330 hearing
in direct violation of section 6330(b)(1) and therefore was not
allowed to offer collection alternatives such as an OIC. The
Appeals officer, however, advised petitioner that all requested
documents had to be received before consideration of petitioner’s
collection alternatives. Petitioner has a history of not timely
filing returns and not paying her Federal income taxes.
Consequently, because petitioner did not comply with the requests
to provide all required documentation, the Appeals officer was
not required to and did not transfer petitioner’s case to her
local Appeals Office or conduct a face-to-face hearing. Sec.
301.6330-1(d)(2), Q&A-D8, Proced. & Admin. Regs.
The Appeals officer sent a letter scheduling the telephone
section 6330 hearing for June 14, 2007. In her June 10 letter
petitioner requested a correspondence hearing, stating that she
was unable to receive personal phone calls at work and therefore
would be unavailable for the telephone section 6330 hearing. On
the date and time of the telephone section 6330 hearing, the
Appeals officer called petitioner, but she was unavailable.
Assuming arguendo that the Appeals officer was unaware4 that
petitioner was unable to receive phone calls during the scheduled
telephone section 6330 hearing time or that petitioner requested
a hearing by correspondence, her case was not administratively
4
See supra note 2.
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closed until 3 months after the scheduled telephone hearing.
Thus, petitioner had notice and ample opportunity to submit the
Form 433-A and to file her 2005 and 2006 tax returns before her
case was administratively closed, but she failed to do so. See
Roman v. Commissioner, T.C. Memo. 2004-20 (reasonable to issue
adverse section 6330 determination when, after 6 weeks, taxpayer
had failed to submit information requested with respect to an
OIC).
It is well within the Appeals officer’s discretion to
require that petitioner be in full compliance before accepting an
OIC. See Gregg v. Commissioner, T.C. Memo. 2009-19; Otto’s E-Z
Clean Enters., Inc. v. Commissioner, T.C. Memo. 2008-54; Corona
Pathology Servs., Inc. v. Commissioner, T.C. Memo. 2003-120. The
Appeals officer was under no obligation to consider petitioner’s
OIC without having received the requested documents.5 Thus,
there was a reasonable basis for the Appeals officer’s
determination. Therefore, the Court finds that petitioner was
afforded a fair and meaningful opportunity for a section 6330
hearing and that the Appeals officer did not abuse her
discretion. See Morlino v. Commissioner, T.C. Memo. 2005-203
(upholding the Commissioner’s determination to proceed by levy,
when the taxpayer was given a little over a month to provide the
5
Petitioner is still free, having provided the appropriate
information, to submit an offer-in-compromise.
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questionnaire and OIC form to the Appeals officer but failed to
do so).
The Appeals officer verified that all requirements of
applicable law or administrative procedure have been met and
balanced the need for the efficient collection of taxes with
petitioner’s legitimate concern that the collection action be no
more intrusive than necessary. See sec. 6330(c)(1), (3)(C);
Tufft v. Commissioner, T.C. Memo. 2009-59. Accordingly, the
Court holds that respondent’s proposed levy should be sustained.
Other arguments made by the parties and not discussed herein
were considered and rejected as irrelevant, without merit, or
moot.
To reflect the foregoing,
Decision will be entered
for respondent.