T.C. Memo. 2010-227
UNITED STATES TAX COURT
JOSEPH TOTH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6274-09L. Filed October 20, 2010.
Joseph Toth, pro se.
Timothy S. Murphy, for respondent.
MEMORANDUM OPINION
PARIS, Judge: On February 20, 2009, respondent mailed to
petitioner a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 which sustained a
proposed levy to collect an assessment of petitioner’s income tax
liability for tax year 2003. Petitioner timely filed a petition
with this Court and argued that respondent abused his discretion
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by denying him a face-to-face hearing where he could challenge
the underlying tax liability for tax year 2003 and by sustaining
a levy on his assets to collect his 2003 tax liability.
The issues for decision are: (1) Whether petitioner was
entitled to a face-to-face hearing and (2) whether respondent’s
determination to sustain the levy was an abuse of discretion.
Background
Some of the facts and exhibits have been stipulated and are
incorporated herein by reference. At the time the petition was
filed, petitioner resided and received his mail in Detroit,
Michigan.
Petitioner failed to file income tax returns for tax years
1999 and 2001 through the present.1 Consequently, respondent
filed a substitute for return for petitioner pursuant to section
6020(b)2 for tax year 2003. On May 24, 2005, respondent sent to
petitioner at his last known address a notice of deficiency for
tax year 2003. Petitioner did not respond to the notice, the tax
was assessed, and, pursuant to section 6330, respondent sent
petitioner a notice of intent to levy for that tax year.
1
Petitioner testified at trial that he was unsure of the
last year for which he filed a tax return but he thought it was
either tax year 1999 or 2001.
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended.
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Petitioner timely requested and was granted a collection due
process (CDP) levy hearing for tax year 2003.
As part of the CDP hearing, petitioner was assigned a
settlement officer (SO) who corresponded with petitioner
regarding potential collection alternatives. On December 31,
2008, the SO informed petitioner that to qualify for collection
alternatives he would need to file his income tax returns for tax
years 2004, 2005, 2006, and 2007 and submit a Form 433-A,
Collection Information Statement for Wage Earners and Self-
Employed Individuals, to assist the SO in determining feasible
collection alternatives. Petitioner neither filed any of the
income tax returns requested nor provided the SO with the
collection information statement. Instead, on January 6, 2009,
petitioner demanded a face-to-face hearing and requested that an
Appeals officer, not a SO, be assigned to him. Petitioner’s
request for a face-to-face hearing was denied on January 15,
2009.
During a telephone CDP hearing on February 12, 2009,
petitioner again demanded a face-to-face hearing and explained to
the SO that he would submit the information and arguments
concerning his underlying tax liabilities only at a face-to-face
hearing. Realizing that the parties were at a stalemate, the SO
concluded the hearing and ultimately issued a notice of
determination sustaining the levy on February 20, 2009.
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Petitioner then filed a timely petition with this Court on March
13, 2009.
Discussion
Petitioner argues that respondent abused his discretion by
denying petitioner a face-to-face hearing and by sustaining the
levy for tax year 2003.
A. Standard of Review
Under section 6331, if a person liable to pay any tax
neglects or refuses to pay the same within 10 days after notice
and demand, the Internal Revenue Service (IRS), before it may
collect that liability by a levy upon property or rights to
property of that taxpayer, must notify the taxpayer in writing of
its intention to make the levy. The taxpayer may appeal the
notice of intent to levy to the IRS under section 6330 by
requesting an administrative hearing. After the IRS issues its
notice of determination, the taxpayer is afforded the opportunity
for judicial review of that determination in the Tax Court
pursuant to section 6330(d). Petitioner seeks review of
respondent’s determination. Where the validity of the underlying
tax liability is properly at issue, the Court will review the
matter de novo. Davis v. Commissioner, 115 T.C. 35, 39 (2000).
Where the underlying tax liability is not properly at issue, the
Court will review the Commissioner’s administrative determination
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for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610
(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
The Court reviews respondent’s determination for abuse of
discretion. The Court has defined “abuse of discretion”, as
meaning arbitrary, capricious, or without sound basis in fact or
law. Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
B. Challenging the Underlying Liability
Section 6330(c)(2)(B) provides that at a CDP hearing, a
person may challenge the existence and amount of the underlying
tax liability “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.” Petitioner does not
argue that he never received the notice of deficiency or that he
has not had an opportunity to dispute his tax liability. Rather,
petitioner argues that he has not had an opportunity to dispute
his tax liability in a face-to-face hearing. Therefore, the
Court finds that petitioner may not challenge the underlying
liability.
C. Face-to-Face Hearings
Petitioner contends that he is entitled to a face-to-face
hearing with the appeals office regarding the proposed levy to
collect his tax liability for tax year 2003. The Court
disagrees. Because petitioner failed to take steps necessary to
qualify for collection alternatives, he is not entitled to a
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face-to-face hearing. See Lindberg v. Commissioner, T.C. Memo.
2010-67. There is no abuse of discretion in the IRS’ refusal of
a face-to-face hearing when a taxpayer refuses to present
nonfrivolous arguments, file past-due returns, and submit
financial statements. See Rice v. Commissioner, T.C. Memo. 2009-
169; Moline v. Commissioner, T.C. Memo. 2009-110, affd. 363 Fed.
Appx. 675 (10th Cir. 2010); Summers v. Commissioner, T.C. Memo.
2006-219. Petitioner neither filed an income tax return for 2003
or for any subsequent year nor submitted a Form 433-A; he was
ineligible for collection alternatives. The SO gave petitioner
the opportunity to provide the appropriate information in order
to qualify for a face-to-face hearing; however, petitioner did
not provide the requested information. Consequently, respondent
did not abuse his discretion when he denied petitioner a face-to-
face hearing.
D. Levy Action
It is not an abuse of discretion for Appeals to reject
collection alternatives where a taxpayer has not complied with
his current tax obligations. Giamelli v. Commissioner, 129 T.C.
107, 111-112 (2007). Respondent based his review on the case
file, including transcripts of petitioner’s account and prior
correspondence with petitioner. Respondent determined that
petitioner failed to file delinquent tax returns, failed to
provide a requested collection information statement, and did not
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qualify for any collection alternatives. Therefore, the Court
finds that respondent did not abuse his discretion when he
sustained the levy.
We have considered the remaining arguments of both parties,
and to the extent not discussed above, conclude those arguments
are irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.