Klika v. Comm'r

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.