T.C. Summary Opinion 2011-69
UNITED STATES TAX COURT
KRISTEN KATHY BLACK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8608-10S. Filed June 14, 2011.
Kristen Kathy Black, pro se.
Nick G. Nilan, for respondent.
HAINES, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed.1 Pursuant to section 7463(b), the
decision to be entered is not reviewable by any other court, and
1
Unless otherwise indicated, section references are to the
Internal Revenue Code as amended.
- 2 -
this opinion shall not be treated as precedent for any other
case.
Petitioner filed a petition with this Court in response to a
Notice of Determination concerning Collection Action(s) Under
Sections 6320 and/or 6330 (notice of determination) for 2006.
Pursuant to section 6330(d), petitioner seeks review of
respondent’s determination that respondent’s settlement officer
did not abuse her discretion in sustaining the filing of a notice
of Federal tax lien and denying an installment agreement.
Background
Petitioner maintained her legal residence in the State of
Washington at the time her petition was filed.
Petitioner filed her 2006 Form 1040, U.S. Individual Income
Tax Return, on August 12, 2008, reporting tax due of $10,228.
Petitioner did not make any payments with her tax return for
2006, and the tax was assessed on September 15, 2008. Previously
petitioner had requested and received an extension of time to
file her 2007 Form 1040, extending the due date to October 15,
2008.
Petitioner attempted to resolve her 2006 tax liability
through the use of an installment agreement. An installment
agreement was entered into on September 10, 2008, but she
defaulted on the agreement and it terminated on March 2, 2009.
On that date, respondent issued a notice of intent to levy for
- 3 -
2006. Petitioner did not request a collection due process
hearing with respect to the notice of intent to levy.
On March 6, 2009, an Internal Revenue Service (IRS) employee
spoke with petitioner about the collection of her outstanding tax
liability. Petitioner informed the employee that she was not
working and could not pay off the tax liability. The employee
requested current financial information, but petitioner did not
have the information available at the time of the call. The
employee mailed petitioner a Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, and
advised her to call back no later than March 16, 2009. The
employee also informed petitioner that respondent had not
received her 2007 tax return. Petitioner was advised that she
needed to file her 2007 return and was warned of possible lien
and levy enforcement actions.
Levies were made with respect to petitioner’s 2006 tax
liability on May 22 and July 6, 2009, of $1,152.03 and $495.87,
respectively. On June 16, 2009, petitioner requested another
installment agreement to resolve her 2006 income tax liability.
She was informed that an installment agreement could not be
granted until the delinquent 2007 return was filed. A deadline
of July 16, 2009, was set for petitioner to file her delinquent
return. Petitioner was informed that this date would be the
ultimate deadline to file and was again warned of possible lien
- 4 -
and levy enforcement actions. Respondent did not receive
petitioner’s 2007 return until October 14, 2009, 3 months after
the July 16, 2009, deadline.
On October 2, 2009, a notice of Federal tax lien was filed
against petitioner with respect to the tax liability for 2006.
On October 6, 2009, respondent issued a Notice of Federal Tax
Lien Filing and Your Right to a Hearing Under IRC 6320 (CDP
notice). The CDP notice advised petitioner that a notice of
Federal tax lien had been filed and that she could request a
hearing with the IRS Office of Appeals.
Petitioner filed a Form 12153, Request for a Collection Due
Process or Equivalent Hearing, dated October 20, 2009. On the
Form 12153, petitioner checked the box for lien withdrawal and
for an installment agreement as a collection alternative.
Enclosed with petitioner’s Form 12153 was a Form 12412,
Operations Assistance Request, from Letitia Sanches of the
Taxpayer Advocate Service, requesting that Ms. Sanches be
contacted if anything additional was required.
On December 28, 2009, respondent’s settlement officer sent
petitioner a letter scheduling a telephone conference for January
19, 2010. The letter informed petitioner that withdrawal of the
notice of Federal tax lien could be considered during the hearing
and enclosed a Form 12277, Application for Withdrawal of Filed
Form 668(Y), Notice of Federal Tax Lien. The letter also advised
- 5 -
petitioner that in order for the settlement officer to consider
alternative collection methods, petitioner must have filed all
Federal tax returns required to be filed. In addition, the
letter specifically requested petitioner to provide a completed
Form 433-A and a copy of her 2008 tax return by January 11, 2010,
in order for the settlement officer to consider collection
alternatives. The settlement officer never requested or received
any additional information from Ms. Sanches regarding
petitioner’s hearing.
On January 22, 2010, the settlement officer sent a letter to
petitioner informing her that she had not received a telephone
call or any of the requested information for the hearing. The
letter requested petitioner to provide any information for
consideration within 14 days.
On February 18, 2010, petitioner faxed a letter to the
settlement officer explaining that she had recently been out of
the country. The letter informed the settlement officer that
petitioner would call on February 22, 2010, to discuss her case.
The settlement officer did not receive a telephone call or voice
message and did not receive petitioner’s delinquent 2008 tax
return or any of the requested financial information
On March 11, 2010, respondent’s Office of Appeals issued to
petitioner a notice of determination that sustained the filing of
the notice of Federal tax lien for 2006. In response to the
- 6 -
notice of determination, petitioner timely mailed her petition to
this Court on April 9, 2010, and it was filed on April 12, 2010.
See sec. 6330(d)(1); sec. 301.6330-1(f), Proced. & Admin. Regs.
Petitioner does not dispute the underlying tax liability for
2006.
Discussion
I. Standard of Review
Because the underlying tax liability is not at issue, this
Court’s review under section 6330 is for abuse of discretion.
See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Commissioner, 114 T.C. 176, 182 (2000). This standard requires
the Court to decide whether the settlement officer’s denial of
petitioner’s requests to withdraw the Federal tax lien and
consider an installment agreement was arbitrary, capricious, or
without sound basis in fact or law. See Woodral v. Commissioner,
112 T.C. 19, 23 (1999); Keller v. Commissioner, T.C. Memo. 2006-
166, affd. in part 568 F.3d 710 (9th Cir. 2009); Fowler v.
Commissioner, T.C. Memo. 2004-163.
II. Withdrawal of Notice of Federal Tax Lien
The Federal Government obtains a lien against “all property
and rights to property, whether real or personal” of any person
liable for Federal taxes upon demand for payment and failure to
pay. Sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293
(2004). The lien arises automatically on the date of assessment
- 7 -
and continues until the tax liability is satisfied or the statute
of limitations bars enforcement of the lien. Id. The notice of
Federal tax lien is filed with the appropriate State office or
other government office in order to validate the lien against any
purchaser, holder of a security interest, mechanic’s lienor, or
judgment lien creditor. See sec. 6323(a); Lindsay v.
Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th
Cir. 2003).
Section 6323(j)(1) provides in pertinent part:
SEC. 6323(j). Withdrawal of Notice in Certain
Circumstances.--
(1) In general.--The Secretary may withdraw a
notice of a lien filed under this section * * * if the
Secretary determines that--
(A) the filing of such notice was premature
or otherwise not in accordance with
administrative procedures of the Secretary,
(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the
tax liability for which the lien was imposed
by means of installment payments, unless such
agreement provides otherwise,
(C) the withdrawal of such notice will
facilitate the collection of the tax
liability, or
(D) with the consent of the taxpayer or
the National Taxpayer Advocate, the
withdrawal of such notice would be in the
best interests of the taxpayer (as determined
by the National Taxpayer Advocate) and the
United States.
- 8 -
An income tax liability was assessed against petitioner for 2006
on September 15, 2008. Respondent issued a notice of levy on
March 2, 2009, to which petitioner did not respond. A notice of
Federal tax lien was filed on October 2, 2009. Filing of the tax
lien took place after assessment and notice and demand, and at
each step petitioner was properly notified. Therefore, the
notice of Federal tax lien was not filed prematurely.
Entering into an installment agreement does not preclude the
filing of a Federal tax lien, nor is the Commissioner required to
withdraw a Federal tax lien after an installment agreement has
become effective. See Crisan v. Commissioner, T.C. Memo. 2007-
67; Ramirez v. Commissioner, T.C. Memo. 2005-179; Stein v.
Commissioner, T.C. Memo. 2004-124. There is no evidence
suggesting that the filing of the notice of Federal tax lien
would impair petitioner’s ability to pay her outstanding
liabilities.
Section 6323(j)(1) is permissive. The Commissioner “may”
withdraw a Federal tax lien pursuant to section 6323(j)(1), but
the settlement officer’s denial of petitioner’s request to have
the Federal tax lien withdrawn was not arbitrary, capricious, or
without sound basis in fact or law. On the facts presented, this
Court holds that the settlement officer did not abuse her
discretion in sustaining the filing of the notice of Federal tax
- 9 -
lien. See Crisan v. Commissioner, supra; Ramirez v.
Commissioner, supra; Stein v. Commissioner, supra.
III. Installment Agreement
Generally, a taxpayer must be in compliance with all filing
requirements and must provide requested financial information
before an installment agreement may be considered.2 See Giamelli
v. Commissioner, 129 T.C. 107, 111 (2007); Orum v. Commissioner,
123 T.C. 1, 13 (2004), affd. 412 F.3d 819 (7th Cir. 2005).
Petitioner has not shown that the filing requirements for all
required tax returns have been met, nor has she provided the
financial information necessary to support the granting of an
installment agreement. The settlement officer’s denial of an
installment agreement was not arbitrary, capricious, or without
sound basis in fact or law. Therefore, the settlement officer
did not abuse her discretion.
In reaching these holdings, the Court has considered all
arguments made and, to the extent not mentioned, concludes that
they are moot, irrelevant, or without merit.
2
Collection alternatives may be considered where a taxpayer
alleges that collection of the liability would create undue
hardship. Sec. 6343(a)(1)(D); Vinatieri v. Commissioner, 133
T.C. 392, 401 (2009). A taxpayer must submit complete and
current financial data to the Commissioner to prove undue
hardship. Vinatieri v. Commissioner, supra at 398. Petitioner
has not submitted complete and current financial data to
respondent.
- 10 -
To reflect the foregoing,
Decision will be entered
for respondent.