T.C. Memo. 2010-7
UNITED STATES TAX COURT
SANDRA D. LONG, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12433-08L. Filed January 11, 2010.
Mark D. Allison, Alexander J. Saffi, and Brittany Harrison,
for petitioner.
Andrew M. Stroot, for respondent.
MEMORANDUM OPINION
KROUPA, Judge: This collection review matter is before the
Court in response to a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 63301
1
All section references are to the Internal Revenue Code,
(continued...)
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(determination notice) as supplemented in the Supplemental Notice
of Determination (supplemental determination) sustaining the
Notice of Federal Tax Lien (NFTL) to collect petitioner’s Federal
income tax liability for 2004. The sole issue for decision is
whether respondent’s determination to proceed with the proposed
collection activity was an abuse of discretion. We hold it was
not.
Background
This case was submitted fully stipulated pursuant to Rule
122, and the facts are so found. The stipulation of facts, the
supplemental stipulation of facts, and the accompanying exhibits
are incorporated by this reference. Petitioner resided in North
Carolina at the time she filed the petition.
Petitioner timely filed a Federal income tax return for
2004. Respondent thereafter examined petitioner’s return and
found that petitioner should have included $53,8602 of
cancellation of indebtedness income. Respondent determined a
$14,254 deficiency for 2004 and issued petitioner a deficiency
notice but petitioner failed to file a petition for
redetermination of the deficiency. Respondent thereafter
assessed the deficiency.
1
(...continued)
and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated.
2
All numerical amounts are rounded to the nearest dollar.
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Respondent issued petitioner a Final Notice of Intent to
Levy and Notice of Your Right to a Hearing, notifying petitioner
of her right to a collection due process (CDP) hearing with
respect to her 2004 tax liability. Petitioner submitted a one-
page Form 433-F, Collection Information Statement, with minimal
documentation a year after receiving the notice. Respondent
thereafter placed petitioner’s account in “Currently Not
Collectible” status. Respondent then filed the NFTL against
petitioner for the unpaid liability for 2004 and mailed
petitioner the notice of the lien filing in 2007. Petitioner
timely requested a CDP hearing as to the lien but not as to the
proposed levy.
Petitioner’s CDP hearing was assigned to Settlement Officer
Banks (SO Banks). SO Banks mailed several letters to petitioner
and her counsel to schedule the hearing. SO Banks requested a
Form 433-A, Collection Information Statement for Wage Earners and
Self-Employed Individuals,3 and Form 656, Offer in Compromise, to
support collection alternatives petitioner wanted SO Banks to
consider. Neither petitioner nor her counsel provided the
requested financial information or participated in the scheduled
conference because SO Banks erred in addressing the envelopes.
3
Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, is six pages compared to
the one-page Form 433-F, Collection Information Statement, that
petitioner had previously submitted.
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SO Banks then issued the determination notice to petitioner, with
a copy to her counsel, sustaining the filing of the NFTL. In
sustaining the lien filing, SO Banks relied solely on the
information in the collection file including the limited
financial information petitioner submitted with her CDP hearing
request.
Petitioner then filed a petition with the Court requesting
review of the determination notice. Petitioner and respondent
filed a joint motion to remand this case to Appeals for further
consideration. The Court granted their joint motion for a
supplemental hearing with Appeals and ordered a supplemental
determination be made.
SO Banks again asked petitioner and her counsel to provide
updated financial information and an offer in compromise (OIC) if
petitioner wanted her to consider any collection alternatives at
the supplemental hearing. SO Banks specifically requested that
petitioner submit financial information to support the issues
petitioner raised in her CDP hearing request. SO Banks also
requested that petitioner submit a completed tax return for 2007
before the supplemental hearing.
Neither petitioner nor her counsel submitted any information
or documents to SO Banks before the supplemental hearing. During
the scheduled supplemental hearing, which took place by
telephone, petitioner’s counsel advised SO Banks that petitioner
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was unable to pay the deficiency and wanted to submit an OIC. No
OIC was provided by either petitioner or her counsel nor was any
other financial information provided even though SO Banks
repeatedly requested the information before she made the
supplemental determination. SO Banks had only the limited
financial information petitioner submitted in 2007. SO Banks
determined that the limited financial information was outdated,
incomplete, and insufficient to show that petitioner was entitled
to a collection alternative regarding the unpaid tax liability
for 2004. Lacking any updated information from petitioner, SO
Banks prepared the supplemental determination, again sustaining
the filing of the NFTL.
Discussion
We now review whether respondent abused his discretion in
deciding to sustain the lien filing. See Sego v. Commissioner,
114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176,
181-182 (2000). Where, as is the case here, the validity of the
underlying tax liability is not properly placed at issue,4 the
Court will review respondent’s determination for abuse of
discretion. See Sego v. Commissioner, supra at 610. Petitioner
may prove abuse of discretion by showing that respondent
4
A taxpayer’s underlying tax liability may be at issue only
if the taxpayer did not receive a deficiency notice for the taxes
in question or did not otherwise have an earlier opportunity to
dispute the tax liability. Sec. 6330(c)(2)(B); Dalton v.
Commissioner, T.C. Memo. 2005-7.
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exercised his discretion arbitrarily, capriciously, or without
sound basis in fact or law. See Giamelli v. Commissioner, 129
T.C. 107, 111 (2007).
It is well established that the settlement officer must
address any relevant issues the taxpayer raises in the hearing
request, including spousal defenses, the appropriateness of the
collection action, and any collection alternatives. Sec.
6330(c)(2). A taxpayer may raise collection alternatives in a
CDP hearing that may include an installment agreement or an OIC.
Secs. 6320(c), 6330(c)(2)(A)(iii). An OIC is authorized under
section 7122(a). Taxpayers who wish to propose an OIC must
submit a Form 656. See Godwin v. Commissioner, T.C. Memo. 2003-
289, affd. 132 Fed. Appx. 785 (11th Cir. 2005). Petitioner
argues that SO Banks abused her discretion by not considering the
collection alternative of an OIC.
SO Banks requested that petitioner submit any information
regarding alternative collection procedures before the
supplemental hearing. Petitioner failed to submit a Form 656 or
any updated or other financial information to enable SO Banks to
consider collection alternatives. We have repeatedly and
consistently held that a settlement officer may sustain a
collection action where a taxpayer has failed to provide
requested information that would have permitted consideration of
collection alternatives. See Huntress v. Commissioner, T.C.
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Memo. 2009-161; Nelson v. Commissioner, T.C. Memo. 2009-108; Sapp
v. Commissioner, T.C. Memo. 2006-104; Picchiottino v.
Commissioner, T.C. Memo. 2004-231; Newstat v. Commissioner, T.C.
Memo. 2004-208. We have similarly held that the Commissioner has
not abused his discretion for failing to consider an OIC where a
taxpayer failed to submit an offer to the Appeals officer.
Kendricks v. Commissioner, 124 T.C. 69, 79 (2005). SO Banks
informed petitioner and her counsel that petitioner needed to
submit a completed OIC request if she wanted an OIC to be
considered at the supplemental hearing. Petitioner failed to
submit the appropriate Form 656 or updated financial information.
This Court has held that there is no abuse of discretion in
Appeals’ failing to consider an offer when there was no offer
before Appeals. Id. SO Banks had no OIC to consider. Thus,
there was no abuse of discretion by the Appeals Office in failing
to consider an OIC. See Nelson v. Commissioner, supra (holding
that the Appeals Office did not abuse its discretion in
sustaining a lien when a taxpayer expressed a desire for an OIC
but had not prepared one).
Petitioner also claims that, notwithstanding her failure to
submit an OIC or requested financial information for her
supplemental hearing in 2009, SO Banks should have considered the
financial information she submitted in 2007. We disagree. SO
Banks committed no abuse of discretion in discounting outdated
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financial information. See Internal Revenue Manual (IRM) pt.
5.8.5.3.2 (Sept. 23, 2008) (an Appeals officer reviewing
collection alternatives should not consider any financial
information more than 12 months old); IRM pt. 5.8.5.2.2 (Sept. 1,
2005); see also Lloyd v. Commissioner, T.C. Memo. 2008-15. A
taxpayer’s financial situation may change materially within a 1-
year period, so it is reasonable for the settlement officer to
request new financial information to determine a taxpayer’s
eligibility for collection alternatives. See Lloyd v.
Commissioner, supra. Here we note that SO Banks did review the
outdated financial information from 2007. She reviewed it when
she made her supplemental determination that the financial
information was incomplete and insufficient to qualify petitioner
for a collection alternative regarding the unpaid tax liability
for 2004.
Petitioner also argues that SO Banks failed to give her
adequate time to produce the requisite financial information and
it was SO Banks’ misaddressing the envelopes that caused the
originally scheduled CDP hearing to be continually rescheduled.
Again, we disagree that the supplemental determination was an
abuse of discretion. Any infirmity with the incorrect address
was rectified when the Court remanded the case for a supplemental
hearing. Petitioner had additional time to submit updated
financial information and an OIC. Despite this additional time,
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petitioner failed to submit the requested financial information.
Moreover, we note that neither petitioner nor her counsel
contacted the Court or SO Banks to request additional time before
the supplemental hearing.
We have reviewed the entire record and find that SO Banks
did not abuse her discretion in sustaining the lien filing. We
therefore conclude that the collection action may proceed as
described in the supplemental determination regarding
petitioner’s unpaid tax liability for 2004.
We have considered all arguments made in reaching our
decision, and, to the extent not mentioned, we conclude that they
are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.