T.C. Memo. 2011-13
UNITED STATES TAX COURT
MARK A. AND DINA S. ZELDEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17369-09L. Filed January 18, 2011.
William A. Neilson and Douglas L. Salzer, for petitioners.
John K. Parchman, for respondent.
MEMORANDUM OPINION
SWIFT, Judge: Under section 6320, petitioners challenge
respondent’s notice of determination rejecting petitioners’
proposed collection alternative of an installment agreement
relating to petitioners’ approximate total of $350,000 in
outstanding Federal income tax liabilities for 2000 through 2006.
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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.
Background
This case was submitted under Rule 122. The stipulated
facts are so found. At the time of filing the petition,
petitioners resided in Louisiana.
With the exception of petitioners’ 2000 and 2006 tax
returns, petitioners were late in filing their Federal income tax
returns for the years in issue. With the filing of their tax
returns, petitioners failed to pay the taxes reported due
thereon.
After making assessments, on December 11, 2007, respondent
filed a notice of Federal tax lien (NFTL) relating to the above
self-reported Federal income taxes. Respondent mailed
petitioners a copy of the NFTL and an explanation of petitioners’
right to a collection Appeals Office hearing under section 6320.
On January 10, 2008, petitioners filed with respondent a
Form 12153, Request for a Collection Due Process or Equivalent
Hearing, relating to the NFTL. Specifically, petitioners
proposed a collection alternative of an installment agreement.
On July 16, 2008, petitioners made an estimated Federal
income tax payment for the second quarter of 2008 (ending June
30, 2008).
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On July 23, 2008, respondent mailed petitioners a letter
scheduling a face-to-face collection due process (CDP) hearing
with petitioners’ counsel for August 27, 2008, relating to the
above NFTL. In this letter respondent’s Appeals officer (AO)
requested that petitioners, by August 12, 2008, submit, among
other things, a completed Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, a copy
of petitioners’ 2007 Federal income tax return, and a statement
of how the proposed installment agreement would be funded.
On August 14, 2008, petitioners provided respondent’s AO
with a copy of their 2007 Federal income tax return.
On August 26, 2008, petitioners provided respondent’s AO
with a completed Form 433-A that included a proposal that
petitioners would pay their total outstanding tax liability in
installments over 5 years.
On March 5, 2009, petitioners made late estimated Federal
income tax payments for the periods ending September 30 and
December 31, 2008. The estimated tax payments for these
quarterly periods were due on October 15, 2008, and January 15,
2009, respectively.
On June 24, 2009, respondent’s AO made a determination under
section 6320 and mailed to petitioners a notice thereof rejecting
petitioners’ proposed collection alternative. In this notice
respondent’s AO indicated that, among other reasons, because
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petitioners failed to pay timely their estimated Federal income
tax payments for the third and fourth quarters of 2008,
respondent’s NFTL was sustained.
Discussion
Petitioners do not contest the amounts of their 2000 through
2006 Federal income taxes. Where the validity of the underlying
tax liability is not properly at issue, under section 6320 the
Court will review the administrative determination of the AO only
for abuse of discretion. Goza v. Commissioner, 114 T.C. 176, 182
(2000). An abuse of discretion exists where the AO’s
determination is arbitrary, capricious, or without sound basis in
fact or law. Murphy v. Commissioner, 125 T.C. 301, 320 (2005),
affd. 469 F.3d 27 (1st Cir. 2006).
Petitioners argue that respondent abused his discretion by
failing to adequately consider petitioners’ proposed collection
alternative. Petitioners assert that by the time respondent
issued his notice of determination, they had demonstrated full
compliance with all tax filing and payment requirements and,
accordingly, that respondent’s rejection of their proposed
installment agreement was without sound basis in fact. We
disagree.
Petitioners’ history of noncompliance with their Federal
income tax obligations, the late filing of their Federal income
tax returns for years 2001 through 2005, and the late remittance
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of their estimated tax payments for the periods ending September
30 and December 31, 2008, among other things, establish a pattern
of noncompliance with their Federal income tax obligations. See
Orum v. Commissioner, 123 T.C. 1, 13 (2004), affd. 412 F.3d 819
(7th Cir. 2005); Londono v. Commissioner, T.C. Memo. 2003-99.
Respondent’s determination properly verified that all
requirements of applicable law and administrative procedure have
been met, that respondent’s AO considered the issues petitioners
raised in their CDP hearing, and that respondent’s AO balanced
the need for efficient collection of taxes with the legitimate
concern of petitioners that the collection action be no more
intrusive than necessary. See sec. 6330(c)(3).
We sustain respondent’s determination to reject petitioners’
proposed collection alternative of an installment agreement.
To reflect the foregoing,
Decision will be entered
for respondent.