T.C. Memo. 2011-170
UNITED STATES TAX COURT
JEFFREY S. AND NICOLE JUNGSTAND KURTZ, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10234-10L. Filed July 13, 2011.
Jeremy Bell, for petitioners.
Michael T. Shelton, for respondent.
MEMORANDUM OPINION
LARO, Judge: Petitioners, while residing in Illinois,
petitioned the Court under section 6330(d) to review a
determination of respondent’s Office of Appeals (Appeals)
sustaining a proposed levy upon petitioners’ property.1
1
Section references are to the Internal Revenue Code, and
(continued...)
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Respondent proposed the levy to collect a $24,624 deficiency in
petitioners’ 2006 Federal income tax, a $2,603 addition to tax
under section 6651(a)(1), and a $4,925 accuracy-related penalty
under section 6662(a). Respondent has filed with the Court a
motion for summary judgment under Rule 121. Although ordered to
do so, petitioners did not file a response to respondent’s
motion. We shall grant respondent’s motion.
Background
Respondent selected petitioner Jeffrey S. Kurtz’s (Mr.
Kurtz) 2005 Federal income tax return for audit. As a result of
that audit, respondent issued to Mr. Kurtz a notice of deficiency
dated August 7, 2008 (first notice of deficiency). In the first
notice of deficiency, respondent determined a $20,532 deficiency
in Mr. Kurtz’s 2005 Federal income tax, a $4,106 addition to tax
under section 6651(a)(1), and a $4,106 accuracy-related penalty
under section 6662.
Respondent also selected petitioners’ 2006 and 2007 Federal
income tax returns for audit. As a result of that audit,
respondent issued to petitioners a second notice of deficiency
dated August 7, 2008 (second notice of deficiency). In the
second notice of deficiency, respondent determined deficiencies
of $24,624 and $18,956 in petitioners’ 2006 and 2007 Federal
1
(...continued)
Rule references are to the Tax Court Rules of Practice and
Procedure. Some dollar amounts are rounded.
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income taxes, respectively, accuracy-related penalties under
section 6662(a) of $4,925 and $3,791, respectively, and a $2,603
addition to tax under section 6651(a)(1) related to petitioners’
2006 Federal income tax return.
By letter dated March 15, 2009, petitioners’ representative
acknowledged receipt of the first and second notices of
deficiency. Mr. Kurtz did not petition the Court to challenge
respondent’s determinations in the first notice of deficiency.
Nor did petitioners petition the Court to challenge respondent’s
determinations in the second notice of deficiency. Respondent
assessed the liabilities determined in the first and second
notices of deficiency in due course.
On April 9, 2009, respondent sent to Mr. Kurtz a Letter
1058, Final Notice of Intent to Levy and Notice of Your Right to
a Hearing (final levy notice), with respect to (1) his 2005
Federal income tax liability, and (2) petitioners’ 2006 and 2007
Federal income tax liabilities. The final levy notice informed
Mr. Kurtz that respondent intended to levy upon his property to
collect unpaid tax liabilities for 2005, 2006, and 2007. The
final levy notice also advised Mr. Kurtz that he was entitled to
a hearing with Appeals to review the propriety of the proposed
levy.
In response to the final levy notice petitioners sent to
respondent Form 12153, Request for a Collection Due Process or
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Equivalent Hearing, for the 2005, 2006, and 2007 Federal income
tax liabilities. On that Form 12153 petitioners aggregated Mr.
Kurtz’s 2005 Federal income tax liability with petitioners’ 2006
and 2007 Federal income tax liabilities. Petitioners asserted
that the proposed levy was inappropriate because respondent’s
auditor did not evaluate the documentation which they had
submitted in connection with the audit of their 2005, 2006, and
2007 Federal income tax returns. Petitioners did not request an
installment agreement or an offer-in-compromise on that Form
12153.
On March 19, 2010, a settlement officer in Appeals held a
face-to-face collection due process (CDP) hearing with
petitioners’ representative. The settlement officer determined
that petitioners had been provided with several opportunities to
dispute their 2005, 2006, and 2007 Federal income tax liabilities
but were unable to convince respondent’s auditor that they were
not liable for those taxes. Following the CDP hearing Appeals
issued to petitioners three separate notices of determination,
one for each of the years 2005, 2006, and 2007. By notice of
determination dated April 6, 2010 (notice), Appeals sustained the
proposed collection action for 2006.2
2
Appeals sustained the proposed collection action for
petitioners’ 2005 and 2007 Federal income tax liabilities by
separate notices of determination dated Apr. 6 and 13, 2010,
respectively.
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The notice stated that Appeals had verified or received
verification that the requirements of applicable law and
administrative procedure for the proposed levy had been met.
That notice stated that collection alternatives were discussed
but none was initiated. That notice determined that petitioners
had been given several prior opportunities to dispute their 2006
Federal income tax liability but failed to do so. Finally, the
notice balanced the proposed collection action with the concern
that such action be no more intrusive than necessary. In
response to the notice petitioners petitioned the Court on May 4,
2011.3
Discussion
We decide whether to grant respondent’s motion for summary
judgment in this collection review proceeding.4 Summary judgment
may be granted with respect to any part of the legal issue in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials * * *
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.” Rule 121(a)
3
Mr. Kurtz also petitioned the Court in response to the
notice of determination for 2005, and petitioners petitioned the
Court in response to the notice of determination for 2007.
4
Respondent has filed a separate motion for summary judgment
with respect to each petition filed in response to the 2005,
2006, and 2007 collection actions. We address these motions in
separate Memorandum Opinions because these cases were not
consolidated.
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and (b); Craig v. Commissioner, 119 T.C. 252, 259-260 (2002). As
the moving party, respondent bears the burden of establishing
that there is no genuine issue of material fact. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,
79 T.C. 340, 344 (1982). Although factual inferences will be
drawn in a light most favorable to petitioners as the nonmoving
party, petitioners cannot merely rest upon the allegations or
denials in their pleadings but must “set forth specific facts
showing that there is a genuine issue for trial.” See Rule
121(d); Dahlstrom v. Commissioner, supra at 820-821.
Respondent supports his motion for summary judgment with the
pleadings, a declaration from the Appeals manager who supervised
petitioners’ CDP hearing, and various exhibits. Petitioners, in
failing to respond to respondent’s motion for summary judgment,
have failed to raise any genuine issue of material fact. We
therefore conclude that this case is ripe for summary judgment.
Section 6331(a) authorizes the Commissioner to levy upon a
taxpayer’s property where that taxpayer is liable for taxes but
neglects or refuses to pay that liability within 10 days after
notice and demand for payment. Section 6330 generally provides
that the Commissioner may not proceed with collection by levy
until the taxpayer has been given written notice and an
opportunity for a hearing with an impartial Appeals officer. See
sec. 6330(a) and (b); Davis v. Commissioner, 115 T.C. 35, 37
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(2000). Following the CDP hearing Appeals must issue a notice of
determination which sets forth its findings and decisions. See
sec. 6330(c)(3); see also sec. 301.6330-1(e)(3), Q&A-E8, Proced.
& Admin. Regs. Section 6330(d)(1) allows for judicial review of
Appeals’ determination where the taxpayer files a timely petition
with the Court.
A taxpayer may generally challenge the existence or amount
of an underlying tax liability only if he or she did not receive
a statutory notice of deficiency for such liability or did not
otherwise have an opportunity to dispute that tax liability.
Sego v. Commissioner, 114 T.C. 604, 609 (2000); see also sec.
6330(c)(2)(B). Where the underlying tax liability is not at
issue, we review the Commissioner’s administrative determination
for abuse of discretion. Lunsford v. Commissioner, 117 T.C. 183,
185 (2001); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
Abuse of discretion exists where Appeals acted arbitrarily,
capriciously, 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); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Petitioners received a notice of deficiency for 2006 and
acknowledged receipt of that notice of deficiency through a
letter from their representative. Because petitioners did not
file a petition for redetermination within 90 days, they are
precluded from challenging their 2006 tax liability. See
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Martinez v. Commissioner, T.C. Memo. 2010-181. We thus review
Appeals’ determination to sustain the proposed levy for abuse of
discretion. Goza v. Commissioner, supra.
Under section 6330(c)(3), the determination of an Appeals
officer must consider (A) the verification that the requirements
of applicable law and administrative procedure have been met, (B)
any relevant issues relating to the unpaid tax or proposed levy,
and (C) whether the proposed levy balances the need for efficient
collection of tax with the taxpayer’s legitimate concern that the
collection action be no more intrusive than necessary. Here, the
Appeals settlement officer addressed each of these requirements.
She reviewed the Internal Revenue Service’s transcripts and
computer records of petitioners’ account to determine that the
requirements of applicable law and administrative procedure had
been met. See Neugebauer v. Commissioner, T.C. Memo. 2003-292;
Hack v. Commissioner, T.C. Memo. 2002-243. The Appeals
settlement officer considered the issues petitioners raised but
determined that petitioners could not contest the validity or
amount of their underlying tax liability because they had been
given a prior opportunity to do so. See Martinez v.
Commissioner, supra. Finally, the Appeals settlement officer
balanced the need for efficient collection of taxes against
petitioners’ legitimate concern that the proposed collection
action be no more intrusive than necessary.
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We conclude that Appeals did not abuse its discretion in
sustaining the proposed levy on petitioners’ property to satisfy
their 2006 Federal income tax liability. Accordingly, we will
grant respondent’s motion for summary judgment.
To reflect the foregoing,
An appropriate order and
decision will be entered.