T.C. Memo. 2012-225
UNITED STATES TAX COURT
GEORGE PETER KLIKA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16334-10L. Filed August 6, 2012.
George Klika, pro se.
Jonathan Ono, 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 (determination notice). The sole issue for decision is
1
All section references are to the Internal Revenue Code, and all Rule
references are to the Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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[*2] whether respondent’s determination to proceed with the proposed collection
action was an abuse of discretion. We hold it was not.
Background
This case was submitted fully stipulated under Rule 122. The stipulation of
facts and the accompanying exhibits are incorporated by this reference. Petitioner
resided in Hawaii when he filed the petition.
Petitioner is an attorney over 65 years old and does not travel long distances
well, restricting his travel from the Big Island of Hawaii to Honolulu on Oahu.
Petitioner filed an individual income tax return for 2003 but failed to pay the
tax shown on the return. Respondent thereafter assessed petitioner’s reported tax
liability for 2003 along with related penalties and interest. Respondent sent
petitioner a Form 1058, Final Notice of Intent to Levy and Notice of Your Right to a
Hearing, regarding the outstanding tax liability for 2003. Petitioner timely requested
a collection due process hearing (hearing), seeking an installment agreement or an
offer-in-compromise, and lien withdrawal as collection alternatives. Petitioner
claimed in the letter that he suffered from a financial hardship due to a physical
disability affecting his ability to work and earthquake damage to his home.
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[*3] Respondent assigned Settlement Officer Karen O’Neal (Ms. O’Neal) to
conduct petitioner’s hearing. Ms. O’Neal sent petitioner a letter scheduling a
telephone hearing. The letter informed petitioner that he needed to notify
respondent’s Appeals Office if he preferred a face-to-face hearing. The letter also
informed petitioner that, if he wanted collection alternatives considered, he needed
to file an income tax return for 2009 and provide a completed Form 433-A,
Collection Information Statement for Wage Earners and Self-Employed Individuals,
or Form 433-B, Collection Information Statement for Businesses, along with
supporting documentation.
Petitioner requested a face-to-face hearing. Ms. O’Neal notified petitioner
that to qualify for a face-to-face hearing he had to file the 2009 income tax return
and provide a completed Form 433-A with supporting documents. Petitioner sent
Ms. O’Neal his 2009 tax return and a letter questioning whether Form 433-A must
be submitted as a condition to receiving a face-to-face hearing. Ms. O’Neal
responded to petitioner by letter. She reiterated the requirements to qualify for a
face-to-face hearing. Petitioner in response sent Ms. O’Neal a letter declining to
provide the financial information. Petitioner requested in that same letter that Ms.
O’Neal place a moratorium on collection for one year to allow him to find
employment.
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[*4] Without any further documentation, Ms. O’Neal sent petitioner the
determination notice sustaining the proposed collection action.
Petitioner timely filed a petition.
Discussion
We are asked to decide whether Ms. O’Neal abused her discretion in
determining the proposed levy action was appropriate to collect petitioner’s unpaid
tax liability for 2003. We begin with the general rules that apply to collection
actions.
The Commissioner may collect a tax by levy upon the property of the
taxpayer liable if the taxpayer neglects or refuses to pay the tax liability within 10
days after notice and demand for payment. Sec. 6331(a). The Commissioner
generally must provide the taxpayer written notice of the right to a hearing before
the levy is made. Sec. 6330(a). The taxpayer is entitled, upon request, to a
hearing before the Appeals Office. Sec. 6330(b)(1). The taxpayer may raise at
that hearing any relevant issues relating to the unpaid tax or the proposed
collection action. Sec. 6330(c)(2). Relevant issues include any appropriate
spousal defenses, challenges to the appropriateness of collection and possible
alternative means of collection such as an installment agreement or an
offer-in-compromise. Sec. 6330(c)(2)(A). Taxpayers are expected to provide all
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[*5] relevant information requested by the Appeals officer for consideration of the
facts and issues involved in the hearing. Sec. 301.6330-1(e)(1), Proced. & Admin.
Regs.
After the hearing, the Appeals officer is required to make a determination that
addresses relevant issues the taxpayer raised, verify that all requirements of
applicable law and administrative procedure have been met and balance the need for
the efficient collection of taxes with the legitimate concern of the person that any
collection action be no more intrusive than necessary. Sec. 6330(c)(3).
We now turn to the standard of review. Where, as is the case here, the validity
of the underlying tax liability is not properly placed at issue, the Court
will review the Commissioner’s determination for abuse of discretion.2 Goza v.
Commissioner, 114 T.C. 176, 182 (2000). We must consider whether the
Commissioner’s actions were arbitrary, capricious or without sound basis in fact in
reviewing an administrative determination for abuse of discretion. See Woodral v.
Commissioner, 112 T.C. 19, 23 (1999). The taxpayer bears the burden of proving
2
The 2003 tax liability was self-reported, and petitioner did not contest the
existence or amount of his underlying tax liability at the hearing. We therefore need
not address on a de novo basis whether petitioner is liable for the liability. See
Giamelli v. Commissioner, 129 T.C. 107 (2007).
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[*6] abuse of discretion. Rule 142(a); Titsworth v. Commissioner, T.C. Memo.
2012-12.
Petitioner did not file a pretrial memorandum or a posttrial brief.
Consequently, we look to the petition and the stipulation of facts to discern
petitioner’s challenges to the determination notice. We now turn to petitioner’s
challenges.
I. Consideration of Relevant Issues
Petitioner contends in the petition that Ms. O’Neal abused her discretion by not
considering issues he raised during the hearing. Those issues include (1) whether Ms.
O’Neal considered petitioner’s purported financial hardship, (2) whether respondent
wrongfully levied on petitioner’s Social Security benefits, (3) whether respondent
wrongfully denied petitioner’s appeal of a terminated installment agreement and (4)
whether respondent provided petitioner inaccurate advice concerning appealing a
rejected offer-in-compromise. We find that Ms. O’Neal did not abuse her discretion.
First, petitioner contends that Ms. O’Neal did not consider his financial
hardship. The determination notice indicates that Ms. O’Neal did consider
petitioner’s purported financial hardship. Petitioner made only bare allegations
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[*7] that he had a financial hardship. Moreover, petitioner declined to provide any
financial information for an independent determination.
Second, petitioner contends that Ms. O’Neal did not consider whether
respondent wrongfully levied on his Social Security benefits or whether respondent
wrongfully denied his appeal of a terminated installment agreement.3 A taxpayer
must request that an issue be considered and present evidence to Appeals on an issue
for it to be properly raised during a hearing. Sec. 301.6320-1(f)(2), Q&A-F3, Proced.
& Admin. Regs. Moreover, only issues properly raised at a collection due process
hearing can be a part of an Appeals officer’s determination. Giamelli v.
Commissioner, 129 T.C. 107, 113 (2007).
Here, petitioner failed to request during the hearing that Ms. O’Neal
consider whether respondent wrongfully levied on his Social Security benefits. He
first requested consideration of this issue in the petition. Moreover, the record
does not reflect that petitioner offered Ms. O’Neal credible evidence
demonstrating that respondent wrongfully levied on his Social Security benefits,
3
The record reflects that a Final Notice Before Levy on Social Security
Benefits was sent to petitioner during the hearing. The record, however, does not
reflect that respondent actually levied on petitioner’s Social Security benefits while
collection was suspended. If there was a levy, it is more likely to have been
regarding another taxable year as collection is suspended while this case is
outstanding. Additionally, there is nothing in the record to show that respondent
wrongfully terminated an installment agreement with petitioner.
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[*8] even assuming he had requested consideration. Thus, petitioner failed to
properly raise this issue.
Petitioner did contend during the hearing that respondent had wrongfully
denied his appeal of a terminated installment agreement. Petitioner did not properly
raise the issue at the hearing, however, because he failed to introduce credible
evidence with respect to the issue.
Finally, petitioner contends that Ms. O’Neal did not consider whether
respondent provided inaccurate advice to him concerning appealing a rejected offer-
in-compromise.4 It is unfortunate when a taxpayer receives inaccurate information.
We have recognized, however, that incorrect legal advice from an IRS employee does
not have the force of law and cannot bind the Commissioner or this Court. See
Schwalbach v. Commissioner, 111 T.C. 215, 228 n.4 (1998); Richmond v.
Commissioner, T.C. Memo. 2009-207; Atkin v. Commissioner, T.C. Memo. 2008-93.
Accordingly, any past representations by respondent to petitioner are not relevant to
the proposed collection action and need not have been considered by Ms. O’Neal.
4
We note that, besides petitioner’s self-serving claim, there is nothing in the
record indicating that respondent provided petitioner any advice on appealing the
rejection of an offer-in-compromise.
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[*9] II. Collection Alternatives
Petitioner argues that Ms. O’Neal abused her discretion in determining that
petitioner failed to present any collection alternatives. Petitioner argues that he
did present a collection alternative by asking for a 1-year moratorium on collection.
We disagree. We have consistently held that it is not an abuse of discretion to sustain
a collection action where the taxpayer has failed to provide requested financial
information that would have permitted consideration of collection alternatives. See
Long v. Commissioner, T.C. Memo. 2010-7; Huntress v. Commissioner, T.C. Memo.
2009-161; Nelson v. Commissioner, T.C. Memo. 2009-108; Prater v. Commissioner,
T.C. Memo. 2007-241.
Here, Ms. O’Neal informed petitioner that he had to submit Form 433-A along
with supporting documentation for collection alternatives to be considered. Ms.
O’Neal thereafter gave petitioner several chances to provide the requested financial
information before issuing the determination notice. Petitioner declined to submit the
requested financial information. We therefore find that Ms. O’Neal did not abuse her
discretition by determining that petitioner failed to qualify for collection alternatives.
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[*10] III. Lien Withdrawal Request
Petitioner contends that Ms. O’Neal abused her discretion by not granting him
lien withdrawal relief.5 The Commissioner may withdraw a notice of Federal tax
lien (NFTL) if (1) he determines the filing of the NFTL was premature or not in
accordance with administrative procedures; (2) the taxpayer has entered into an
installment agreement, unless the agreement provides otherwise; (3) withdrawal will
facilitate collection; or (4) with the taxpayer’s consent the lien’s withdrawal would be
in the best interests of the taxpayer and the United States. Sec. 6323(j).
Petitioner has not presented any credible evidence that the NFTL was filed
prematurely or contrary to administrative procedure. Nor had petitioner entered into
an installment agreement when the determination notice was issued. Accordingly, we
focus on whether lien withdrawal would have facilitated collection or would have
been in the best interests of petitioner and the United States.
5
The record reflects that a Federal tax lien arose in 2007 with respect to
petitioner’s unpaid tax liability for 2003. The record is unclear, however, whether
respondent ever filed a notice of Federal tax lien with respect to petitioner’s unpaid
tax liability for 2003 (or any other year). Nevertheless, we consider whether
petitioner is entitled to lien withdrawal relief for 2003 with respect to any notice of
Federal tax lien that may have been filed for that year.
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[*11] Petitioner did not submit any evidence to demonstrate that lien withdrawal
would either facilitate collection or be in the best interests of petitioner and the United
States. Petitioner simply asserts that the NFTL respondent filed negatively affects his
credit rating and ability to obtain employment. Petitioner’s bare assertion is
insufficient to establish that lien withdrawal would facilitate collection and would be
in the United States’ best interests. Moreover, we generally have no authority to
grant relief based on a taxpayer’s claim that a lien adversely affected his or her credit
rating or employment prospects. See Gerakios v. Commissioner, T.C. Memo.
2004-203.
IV. Face-to-Face Hearing Request
Petitioner appears to argue in the petition that Ms. O’Neal abused her
discretion by denying him a face-to-face hearing. This Court and other courts have
held that a face-to-face hearing is not required under section 6330. Katz v.
Commissioner, 115 T.C. 329 (2000); Williamson v. Commissioner, T.C. Memo.
2009-188; Stockton v. Commissioner, T.C. Memo. 2009-186; Leineweber v.
Commissioner, T.C. Memo. 2004-17. We have also held that an Appeals officer’s
denial of a face-to-face hearing does not constitute an abuse of discretion when a
taxpayer refuses to provide requested financial information. See Rice v.
Commissioner, T.C. Memo. 2009-169; Moline v. Commissioner, T.C. Memo.
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[*12] 2009-110, aff’d, 363 Fed. Appx. 675 (10th Cir. 2010); Summers v.
Commissioner, T.C. Memo. 2006-219.
Here, Ms. O’Neal twice notified petitioner that he must submit Form 433-A
with supporting documentation to qualify for a face-to-face hearing. Petitioner failed
to submit the requested information after being provided a reasonable opportunity to
do so.
V. Conclusion
Petitioner did not raise any other meritorious challenges to Ms. O’Neal’s
determination to sustain the collection action. Nor did petitioner otherwise introduce
any credible evidence or persuasive arguments that would convince us that the
determination to sustain the levy was arbitrary, capricious or without foundation in
fact or law.
In conclusion, the record reflects that Ms. O’Neal verified that all requirements
of applicable law and administrative procedure had been met, considered relevant
issues (e.g., collection alternatives) petitioner raised and balanced the need for the
efficient collection of taxes with petitioner’s legitimate concern that any collection
action be no more intrusive than necessary. We therefore conclude that Ms. O’Neal
did not abuse her discretion by sustaining the proposed levy action to collect
petitioner’s outstanding tax liabilities for 2003.
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[*13] 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.