T.C. Memo. 2015-112
UNITED STATES TAX COURT
IFEANYI OBIAKOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 28466-13L. Filed June 18, 2015.
P was an officer and responsible person of C, which failed to
pay its employment taxes for several calendar quarters. R mailed P a
notice of intent to assess trust fund recovery penalties pursuant to
I.R.C. sec. 6672, but P did not receive such notice. R then assessed
the penalties. P did not satisfy them, and R issued a final notice of
intent to levy. P filed a request for an administrative hearing. R’s
settlement officer ultimately sustained the proposed levy. P then filed
a petition for judicial review, challenging the underlying liabilities
and alleging abuse of discretion by the settlement officer. In due
course the case was submitted for decision fully stipulated under Rule
122, Tax Court Rules of Practice and Procedure.
Held: P is liable for the trust fund recovery penalties. See
Rules 122(b), 142(a), Tax Court Rules of Practice and Procedure.
Held, further, R’s determination to proceed with the levy is
sustained in the absence of abuse of discretion by the settlement officer.
-2-
[*2] Gregory J. Brosnan, for petitioner.
Sze Wan Florence Char, for respondent.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This case is before the Court on a petition
for review of a Notice Of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination).1 Petitioner seeks review of
respondent’s determination to proceed with a proposed levy to collect trust fund
recovery penalties (TFRPs) assessed pursuant to section 6672 for the four calendar
quarters ended December 31, 2006, and March 31, June 30, and December 31,
2007 (taxable periods in issue).
The issues for decision are as follows: (1) Whether petitioner is entitled to
challenge the existence or amount of the underlying liabilities, and, if so, the
existence or amount of those liabilities; (2) whether the settlement officer of the
Internal Revenue Service (IRS) Appeals Office abused her discretion by not
allowing a collection alternative, by the manner in which the administrative
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect at all relevant times. All Rule references
are to the Tax Court Rules of Practice and Procedure.
-3-
[*3] hearing was conducted, or otherwise; and (3) whether collection of
petitioner’s outstanding liabilities would create an undue hardship. As discussed
below, we resolve these issues in a way that permits respondent’s proposed
collection action to proceed.
This case was submitted fully stipulated under Rule 122, and the stipulated
facts are so found. We incorporate by reference the parties’ stipulation of facts
and accompanying exhibits.
Background
Petitioner resided in the State of New York at the time that the petition was
filed.
Petitioner is a physician and has been in practice for over 20 years. He
graduated from the St. Louis University School of Medicine, is board certified in
obstetrics and gynecology, and is affiliated with New York Methodist Hospital.
During the taxable periods in issue petitioner was one of two members, as
well as an officer, of Chunel Management Services Organization LLC (Chunel).
Chunel is an entity that is part of a state-of-the-art medical practice that operates a
multi-specialty medical facility in Brooklyn, New York.
-4-
[*4] Chunel incurred, but failed to pay, employment taxes for the taxable periods
in issue. Petitioner concedes that he was a responsible person for the trust fund
portion of those taxes during those periods. See sec. 6672.
In February 2009 respondent sent petitioner a preliminary notice (section
6672(b) notice) of respondent’s intent to assess TFRPs. The section 6672(b)
notice, which was in the form of standard Letter 1153, Trust Funds Recovery
Penalty Letter, notified petitioner of respondent’s intent to assess TFRPs pursuant
to section 6672 relating to the trust fund portion of Chunel’s employment taxes for
the taxable periods in issue. The Letter 1153 further stated that petitioner could
request a hearing with the IRS Appeals Office and administratively challenge the
proposed TFRPs.
The Letter 1153 was properly sent to petitioner by certified mail at his last
known address. Inexplicably, it was returned to respondent in March 2009 as
“undeliverable”.
Chunel’s employment tax liabilities for the taxable periods in issue
remained unpaid. Accordingly, in June 2009 respondent assessed TFRPs against
petitioner for those periods and sent him notice and demand for payment. See sec.
6303.
-5-
[*5] Respondent’s Efforts To Collect Petitioner’s TFRP Liabilities
On March 15, 2013, respondent sent petitioner a Final Notice/Notice Of
Intent To Levy And Notice Of Your Right To A Hearing regarding his TFRP
liabilities for the taxable periods in issue. See sec. 6330(a). In response,
petitioner timely filed a Form 12153, Request For A Collection Due Process Or
Equivalent Hearing.2 Therein, petitioner stated that he sought a collection
alternative, checking the boxes for “installment agreement” and “cannot pay
balance”. In addition, petitioner included with the Form 12153 an addendum that
stated as follows:
The taxpayer is currently facing significant economic
hardships, which is why they have not been able to pay their taxes.
Taxpayer’s business has significantly deteriorated due to the current
economic climate.
There are substantial questions as to the proper calculation of
the penalties assessed. We would like to propose a different way to
pay the outstanding balance owed, such as an installment agreement
or offer in compromise.
2
The Form 12153 was signed and submitted by petitioner’s authorized
representative, an attorney, who continued to represent petitioner throughout the
administrative phase of this case (and who, coincidentally, is also admitted to
practice before this Court). A second attorney, but from the same law firm as the
first, later subscribed the petition that commenced the judicial phase of this case,
and that second attorney continues to represent petitioner. In short, petitioner has
been represented by counsel at all relevant times.
-6-
[*6] In response to the Form 12153, the assigned Appeals settlement officer (SO)
sent petitioner a letter dated June 28, 2013. Among other things, the SO scheduled
a telephone conference call for July 25, 2013, and explained that petitioner could
at that time discuss collection alternatives, challenge the appropriateness of the
proposed collection action, and contest the amount owed “but only if you have not
otherwise had an opportunity to dispute it with Appeals or did not receive a
statutory notice of deficiency.” The SO also stated that for her to consider
collection alternatives, “you must have filed all federal tax returns required to be
filed” and provide a variety of specified documents, including a completed Form
433-A, Collection Information Statement For Wage Earners And Self-Employed
Individuals, and signed tax returns for calendar years for which returns had not
been filed. The SO further stated that respondent’s records indicated that
petitioner had failed to file Forms 1040, U.S. Individual Income Tax Return, for
2006 through 2012. The SO also asked petitioner to “[p]lease send me the items
requested * * * within 14 days from the date of this letter [as] I cannot consider
collection alternatives at your conference without this information.”
Petitioner failed to provide any of the documents requested by the SO in her
June 28, 2013 letter by the deadline and did not request an extension of time to do
so.
-7-
[*7] On July 24, 2013, the day before the scheduled telephone conference, the
SO received by facsimile a Form 433-A, together with three bills from various
utility and other service providers. Although the Form 433-A was signed, it was
incomplete. For example, the section for monthly household income was blank,
whereas the section for monthly household expenses listed specific items totaling
$5,535. Further, although the Form 433-A acknowledged both personal and
business checking accounts with JP Morgan Chase, no account numbers or
balances were provided. In addition, the Form 433-A listed only one tangible
asset, a 2010 Mercedes GL450 with a current market value of $35,000 and no loan
balance.
Telephone Hearing
As agreed, the hearing was conducted by telephone on July 25, 2013.
During the hearing the SO inquired whether petitioner wished to submit an offer-
in-compromise as a collection alternative. Although petitioner did not propose
either an installment agreement or an offer-in-compromise, his counsel stated that
petitioner was considering doing so and was also contemplating filing for
bankruptcy.3 At the end of the hearing the SO requested a number of documents,
3
The Court has not been notified by either party that petitioner has at any
time filed a petition in bankruptcy so as to require a stay of proceedings in the
(continued...)
-8-
[*8] including copies of relevant bank records, and specified August 15, 2013, as
the deadline.
Also on July 25, 2013, but after the telephone hearing had concluded, the
SO received by mail unsigned income tax returns for 2006 through 2011 and a
Form 4868, Application For Automatic Extension Of Time To File U.S. Individual
Tax Return, for 2012. The SO advised petitioner’s representative by telephone
that the returns could not be processed because they were unsigned. Thereafter,
signed copies of the returns for 2006 and 2007, the calendar years coinciding with
the taxable periods in issue, were provided.
Subsequent Communications
The parties continued to communicate, generally by facsimile. Thus, on
August 15, 2013, petitioner’s representative sent the SO bank statements for April,
May, and June 2013 for one of petitioner’s bank accounts.
In September 2013 the SO reviewed available documents, analyzed income
and expense, and prepared an Income And Expense Table (the Table). The Table
reflected that petitioner’s total monthly income was $14,721; the Table also
reflected that petitioner’s total monthly expenses were $6,442, an amount greater
3
(...continued)
instant case. See 11 U.S.C. sec. 362 (2012).
-9-
[*9] than that listed by petitioner on his Form 433-A (i.e., $5,535). Thus, the
Table reflected monthly disposable income of $8,279 (i.e., $14,721 minus $6,442).
On September 12, 2013, the SO faxed the Table with explanation to
petitioner’s representative and stated:
If you wish a collection alternative or want to supply additional
documentation please respond by September 26, 2013.
No response will result in closing case and sustaining the collection
action.
Petitioner did not respond to the Table, nor did he provide additional
documents.
At no time during the administrative phase of this case did petitioner present
to the SO any specific proposal for either an installment agreement or an offer-in-
compromise. Further, at no time during the administrative phase of this case did
petitioner expressly address, by way of argument or documentation, what he had
characterized in the addendum to his Form 12153 as “substantial questions as to
the proper calculation of the penalties assessed.”
Notice of Determination and the Judicial Case
On November 6, 2013, the IRS New York Appeals Office sent to petitioner
a Notice Of Determination Concerning Collection Action(s) Under Section 6320
- 10 -
[*10] and/or 6330 (notice of determination), sustaining the proposed levy. The
Attachment to the notice of determination included the following:
During CDP [Collection Due Process, i.e., the administrative hearing]
a liability may be raised * * * provided that a taxpayer did not:
• Receive a notice of deficiency or
• Sign a consent to assessment or
• Have a prior opportunity to dispute the tax liability.
The Letter 1153 allowed the taxpayer the opportunity to dispute the
tax liability which prohibited the liability issue to be raised during the
CDP hearing.
In response to the notice of determination, petitioner appealed to this Court.
See sec. 6330(d)(1).
In his petition, as well as in subsequent filings, petitioner has alleged that
“[t]he I.R.S. has not applied all credits and adjustments as required by law and has
improperly calculated interest and penalties and interest on penalties.” Petitioner
has also alleged that the SO abused her discretion by not considering collection
alternatives and by imposing “artificially short time frames for document
production and responses to complex issues”.
- 11 -
[*11] On brief petitioner argues that “there are a plethora of genuine issues of fact
that warrant denial of Respondent’s motion” and that the Court should “at a
minimum” remand this case to the IRS Appeals Office “for a proper review.”4
Discussion
I. Burden of Proof
Generally, the burden of proof in cases before this Court is on the taxpayer.
Rule 142(a); see sec. 7453. Section 7491(a), which shifts the burden of proof to
the Commissioner under certain circumstances, is inapplicable in TFRP cases.
Mason v. Commissioner, 132 T.C. 301, 323 (2009).
As previously stated, this case was submitted to the Court by the parties
fully stipulated under Rule 122. Paragraph (b) of that Rule deals with burden of
proof and states: “The fact of submission of a case, under paragraph (a) of this
Rule, does not alter the burden of proof, or the requirements otherwise applicable
with respect to adducing proof, or the effect of failure of proof.” See Rule 142(a);
Titsworth v. Commissioner, T.C. Memo. 2012-12, 2012 WL 86670, at *6.
Accordingly, petitioner bears the burden of proof.
4
Earlier in the history of this case respondent filed a motion for summary
judgment, but it was denied by the Court in October 2014. The case is now before
the Court fully stipulated pursuant to Rule 122. In short, there is no pending
motion.
- 12 -
[*12] II. Administrative Hearings Under Section 6330 and Judicial Review
Section 6331(a) authorizes the Commissioner to levy upon property and
rights to property of a taxpayer who is liable for taxes and who fails to pay those
taxes within 10 days after notice and demand for payment is made. Section
6331(d) provides that the levy authorized in section 6331(a) may be made only if
the Commissioner has given notice to the taxpayer no less than 30 days before the
day of the levy.
Section 6330(a) reiterates the requirement of notice before levy and confers
on the taxpayer the right to request a prelevy administrative hearing. Sec.
6330(a)(3)(B), (b); see Davis v. Commissioner, 115 T.C. 35, 37 (2000); Goza v.
Commissioner, 114 T.C. 176, 179 (2000). If such a hearing is requested, the
hearing is to be conducted by the IRS Appeals Office. Sec. 6330(b)(1).
At a section 6330 hearing the taxpayer may raise any relevant issue,
specifically including offers of collection alternatives, such as an installment
agreement or an offer-in-compromise. Sec. 6330(c)(2)(A)(iii). A taxpayer may
also challenge the existence or amount of the underlying tax liability but only if
the taxpayer did not receive a statutory notice of deficiency with respect to the
underlying tax liability or did not otherwise have an opportunity to dispute that
liability. Sec. 6330(c)(2)(B).
- 13 -
[*13] A determination made by the IRS Appeals Office under section 6330 to
sustain a proposed levy and proceed with collection may be reviewed by this
Court. Sec. 6330(d)(1); see Rules 330-334. Where the underlying tax liability is
properly at issue, we review the determination de novo. Goza v. Commissioner,
114 T.C. at 181-182. Where the underlying tax liability is not at issue we review
the determination for abuse of discretion. Id. at 182; see also Sego v.
Commissioner, 114 T.C. 604, 610 (2000).
III. Trust Fund Recovery Penalties
A. In General
An employer is required to withhold various taxes from an employee’s
wages and then pay over to the Commissioner the withheld income tax, see secs.
3402(a)(1), 3403, the employee’s share of Social Security tax, see secs. 3101(a),
3201(a), and Medicare tax, see secs. 3101(b)(1), 3201(a). The withheld taxes are
“held to be a special fund in trust for the United States.” Sec. 7501(a). As a
result, they are known as “trust fund taxes”. See Slodov v. United States, 436 U.S.
238, 241 (1978); see also Pollock v. Commissioner, 132 T.C. 21, 25 n.10 (2009).
One of the means of ensuring that trust fund taxes are collected and paid
over to the Government is section 6672. See United States v. Rem, 38 F.3d 634
(2d Cir. 1994); Purcell v. United States, 1 F.3d 932, 936 (9th Cir. 1993). Section
- 14 -
[*14] 6672(a) provides that any person required to collect, truthfully account for,
and pay over any tax who willfully fails to do so is liable for a TFRP. Fiataruolo
v. United States, 8 F.3d 930, 938 (2d Cir. 1993). The Commissioner is authorized
to impose a TFRP on any “officer or employee of a corporation, or a member or
employee of a partnership who as such officer, employee, or member is under a
duty to perform” the duties referred to in section 6672. Sec. 6671(b); Winter v.
United States, 196 F.3d 339, 344-345 (2d Cir. 1999); Conway v. Commissioner,
137 T.C. 209, 214 (2011), aff’d sub nom. Nakano v. Commissioner, 552 Fed.
Appx. 724 (9th Cir. 2014).
B. Assessment of TFRPs
Where an assessment to be made against a taxpayer is a TFRP, the
Commissioner does not issue or mail a notice of deficiency. See sec. 6212(a).
Rather, before a TFRP may be assessed, the Commissioner must mail a section
6672(b) notice, such as standard Letter 1153, to the responsible person at such
person’s last known address notifying him or her that a TFRP may be assessed.
Sec. 6672(b)(1). This letter provides a taxpayer with the requisite notice and a
means of protesting the proposed TFRP by administratively appealing to the IRS
Appeals Office. Mason v. Commissioner, 132 T.C. at 317-318, 322; Giaquinto v.
- 15 -
[*15] Commissioner, T.C. Memo. 2013-150; Lepore v. Commissioner, T.C.
Memo. 2013-135.
If the person timely protests the proposed assessment, the period for
assessing the TFRP does not expire before “the date 30 days after the Secretary
makes a final administrative determination with respect to such protest.” Sec.
6672(b)(3)(B). If the person fails to protest, or after a timely protest and the
making of a final determination, the Commissioner may assess the TFRP. A
TFRP is assessed and collected in the same manner as tax. Sec. 6671(a).
The Court has held that the mailing of a section 6672(b) notice to a taxpayer
at the taxpayer’s last known address is sufficient to satisfy the notification
requirements of section 6672(b)(1) even if such notice is not received by the
taxpayer. See Hickey v. Commissioner, T.C. Memo. 2009-2. In the instant case,
respondent’s issuance of the Letter 1153 by certified mail, which was properly
sent to petitioner at his last known address, satisfies this requirement. See Mason
v. Commissioner, 132 T.C. at 322-323. Thus, the TFRP assessments against
petitioner are valid.
C. Post-assessment Challenges to TFRPs
The receipt of a Letter 1153 by a taxpayer constitutes an opportunity to
dispute the taxpayer’s liability within the meaning of section 6330(c)(2)(B). See
- 16 -
[*16] Lengua v. Commissioner, T.C. Memo. 2013-197, at *8. On the other hand,
a Letter 1153 that was not received, but was not deliberately refused, by a taxpayer
does not constitute an opportunity to dispute the taxpayer’s liability. See Mason v.
Commissioner, 132 T.C. at 317-318.
On February 25, 2009, respondent properly sent by certified mail a Letter
1153 to petitioner at his last known address notifying him of respondent’s intent to
assess TFRPs for the taxable periods in issue. For some inexplicable reason, the
Letter 1153 was returned to respondent as “undeliverable”. Respondent does not
argue, and there is nothing in the record to suggest, that petitioner refused or
deliberately failed to claim the letter. See Morris v. Commissioner, T.C. Memo.
2012-217; Swanton v. Commissioner, T.C. Memo. 2010-140. Accordingly, the
Court concludes that petitioner did not have a prior opportunity to challenge the
underlying liabilities, see Mason v. Commissioner, 132 T.C. at 317-318, and was
therefore not barred from doing so during the administrative phase of this case.
In the addendum to his Form 12153 petitioner alleged that “[t]here are
substantial questions as to the proper calculation of the penalties assessed”, which
allegation is arguably a challenge to the existence or amount of his underlying
liabilities. However, at no time during the administrative phase of this case did
petitioner expressly address such “substantial questions”, either by way of
- 17 -
[*17] argument or documentation. The relevant regulation and case law make
clear that if a taxpayer fails to challenge the existence or amount of the taxpayer’s
underlying liabilities during the administrative phase of a case, the taxpayer may
not do so upon appeal of a notice of determination to this Court. See Giamelli v.
Commissioner, 129 T.C. 107, 115 (2007); sec. 301.6330-1(f)(2), Q&A-F3, Proced.
& Admin. Regs.; see also Ligman v. Commissioner. T.C. Memo. 2015-79, at *6.
On the other hand, the SO appears to have been under the erroneous
impression that petitioner was barred from challenging the existence or amount of
the underlying liabilities simply because of the issuance of the Letter 1153, even
though petitioner did not receive it. It is possible (although petitioner does not
expressly argue the point) that petitioner was therefore prejudiced by the SO’s
closing her mind to the issue. Accordingly, although the record includes no
evidence of any attempted proffer by petitioner regarding the liability issue, and
although he was at all times represented by counsel, we shall for the sake of
expediency proceed on the basis that he was prejudiced by the SO’s mistake of law
such that he is not barred in the judicial proceeding from raising the liability
issue.5 See Mason v. Commissioner, 132 T.C. at 320-321.
5
Were we to conclude that petitioner had in fact been prejudiced by the
SO’s mistake of law, remand of this case to the IRS Appeals Office for
(continued...)
- 18 -
[*18] D. Underlying Liabilities
A responsible person will be held liable for a TFRP only when the failure to
collect and pay over withholding tax was willful. Sec. 6672(a); Kalb v. United
States, 505 F.2d 506, 511 (2d Cir. 1974); Mason v. Commissioner, 132 T.C. at
324. A “willful” failure means “a voluntary, conscious and intentional failure to
collect, truthfully account for, and pay over the taxes withheld from the
employees.” Mason v. Commissioner, 132 T.C. at 324-325; see also Winter v.
United States, 196 F.3d at 345; Kalb v. United States, 505 F.2d at 511. If a person
is a “responsible person”, then the burden is on that person to disprove willfulness.
Malloy v. United States, 17 F.3d 329, 331 (11th Cir. 1994); Hochstein v. United
States, 900 F.2d 543, 548 (2d Cir. 1990); Romano-Murphy v. Commissioner, T.C.
Memo. 2012-330.
In the instant case, petitioner concedes that he was a responsible person for
the trust fund portion of Chunel’s employment taxes for the taxable periods in
5
(...continued)
consideration of the liability issue would serve no useful purpose because, as
discussed above, the Court reviews de novo a taxpayer’s underlying tax liability
when such liability is properly at issue. Goza v. Commissioner, 114 T.C. 176,
181-182 (2000). Clearly, petitioner had the opportunity of making a record and
arguing the liability issue in the judicial phase of this case. We therefore proceed
in accordance with the submission of this case by the parties under Rule 122 and
decide the merits of the issue on the record before us.
- 19 -
[*19] issue. Notably, petitioner does not expressly argue that his failure to collect
and pay over the employment taxes was not willful within the meaning of section
6672, and the record before us does not permit a finding that his failure was not
willful.
Certain Courts of Appeals recognize a very limited “reasonable cause”
exception that may allow a taxpayer to overcome willfulness and thereby avoid
liability for a trust fund penalty. See Winter v. United States, 196 F.3d at 345;
Logal v. United States, 195 F.3d 229, 233 (5th Cir. 1999); Newsome v. United
States, 431 F.2d 742, 746-747 (5th Cir. 1970). The Court of Appeals for the
Second Circuit, to which an appeal would lie absent a stipulation to the contrary,
see Golsen v. Commissioner, 54 T.C. 742 (1970), aff’d, 445 F.3d 985 (10th Cir.
1971), recognizes such an exception, see Winter v. United States, 196 F.3d at 345;
United States v. Rem, 38 F.3d at 643; Kalb v. United States, 505 F.2d at 509, 511.
Thus, reasonable cause is sufficient to excuse a responsible person’s failure to pay
over withholding taxes if such person believed that the taxes were in fact being
paid, so long as that belief was, under the circumstances, a reasonable one. Winter
v. United States, 196 F.3d at 345; United States v. Rem, 38 F.3d at 643. Petitioner
has not made any argument that this exception applies, and again the record before
us does not permit a finding that it does.
- 20 -
[*20] Finally, to the extent that petitioner may suggest that he is not liable for the
TFRPs for the taxable periods in issue, or that he is liable but only for amounts
less than those assessed by respondent, the fact remains that petitioner has made
no cogent argument, and the record before us does not appear to support such an
argument.
In sum, petitioner is liable for the TFRPs arising from Chunel’s failure to
pay its employment taxes for the taxable periods in issue. See Rules 122(b),
142(a).
IV. Whether Respondent’s Settlement Officer Abused Her Discretion
Regarding matters other than the underlying tax liabilities, our review of a
settlement officer’s determination is generally based on whether there has been an
abuse of discretion. In that regard, the determination of the settlement officer is
not an abuse of discretion unless the determination is arbitrary, capricious, or
without sound basis in law or fact. Giamelli v. Commissioner, 129 T.C. at 111;
see Titsworth v. Commissioner, 2012 WL 86670, at *6 (holding that the taxpayer
bears the burden of proving abuse of discretion even when the case is submitted to
the Court fully stipulated); see also Link v. Commissioner, T.C. Memo. 2013-53.
Petitioner argues that the SO abused her discretion by not considering
collection alternatives and by imposing “artificially short time frames for
- 21 -
[*21] document production and responses to complex issues”. However, the fact
of the matter is that at no time during the administrative phase of this case did
petitioner present to the SO any specific proposal for either an installment
agreement or an offer-in-compromise. In this regard courts have consistently held
that it is not an abuse of discretion for the settlement officer to decline to consider
a collection alternative when no specific proposal is ever presented. E.g., Kindred
v. Commissioner, 454 F.3d 688, 696 (7th Cir. 2006); Kendricks v. Commissioner,
124 T.C. 69, 79 (2005).6 Stated otherwise, it is the obligation of the taxpayer, not
the reviewing officer, to start negotiations regarding a collection alternative by
making in the first instance a specific proposal and supporting it. Lyons v.
Commissioner, T.C. Memo. 2014-32, at *11.
Regarding petitioner’s other point concerning the conduct of the
administrative hearing, the fact of the matter here is that from the date of the SO’s
first letter in June 2013 to the issuance of the notice of determination in November
6
Given petitioner’s failure to make a specific proposal of a collection
alternative, we need not consider the sufficiency vel non of the financial
information actually furnished by him to the settlement officer. See, e.g., Kindred
v. Commissioner, 454 F.3d 688, 697 (7th Cir. 2006); Olsen v. United States, 414
F.3d 144, 151 (1st Cir. 2005); Murphy v. Commissioner, 125 T.C. 301, 315
(2005), aff’d, 469 F.3d 27 (1st Cir. 2006); Wright v. Commissioner, T.C. Memo.
2012-24 (regarding the imperative that a taxpayer support a request for a
collection alternative with financial information sufficient for a settlement officer
to evaluate the taxpayer’s ability to pay).
- 22 -
[*22] 2013, petitioner had over four months in which to provide relevant
information and documentation to respondent. See Gazi v. Commissioner, T.C.
Memo. 2007-342, slip op. at 19 (“There is no requirement that the Commissioner
wait a certain amount of time before making a determination as to a proposed * * *
[collection procedure].”). Section 301.6330-1(e)(3), Q&A-E9, Proced. & Admin.
Regs., provides: “Appeals will * * * attempt to conduct a CDP hearing and issue a
Notice of Determination as expeditiously as possible under the circumstances.” In
addition, there is nothing in the record to suggest that petitioner ever sought an
extension of time to produce additional information and documentation.
In conclusion, the SO did not abuse her discretion by not allowing a
collection alternative or by the manner in which she conducted the administrative
hearing.
V. Whether Collection Would Create an Undue Hardship
A determination that the collection of a taxpayer’s outstanding liabilities
would create an undue hardship necessarily requires an evaluation of the
taxpayer’s ability to pay. Wright v. Commissioner, T.C. Memo. 2012-24.
In the instant case, the SO reviewed available documents, analyzed income
and expenses, and prepared an Income And Expense Table that reflected monthly
disposable income of $8,279 for petitioner. The SO furnished the Table with an
- 23 -
[*23] explanation to petitioner’s representative and invited a response. However,
neither a response nor additional documents were forthcoming that might have
demonstrated that the SO’s analysis was faulty. Under these circumstances, the
Court cannot conclude that collection of petitioner’s outstanding liabilities would
create an undue hardship. See supra note 6 (regarding the need for financial
information sufficient for a settlement officer to evaluate the taxpayer’s ability to
pay).
VI. Other Issues Raised by Petitioner
A. Application of Credits and Adjustments
Petitioner alleges that respondent improperly applied credits and made
adjustments to petitioner’s TFRP liabilities. The Court has previously held that a
challenge to the proper crediting of checks to a particular tax year is not a
challenge to the underlying liability because such an inquiry does not raise a
question regarding the amount of tax for a particular taxable period but instead
presents the question whether the liability remains unpaid. Kovacevich v.
Commissioner, T.C. Memo. 2009-160. Petitioner’s challenge to respondent’s
application of credits, payments, and adjustment similarly raises the question of
the amount of tax liability remaining unpaid. We therefore review the crediting of
petitioner’s accounts for abuse of discretion. See Concert Staging Servs., Inc. v.
- 24 -
[*24] Commissioner, T.C. Memo. 2011-231; see also Davis v. United States, 961
F.2d 867, 878 (9th Cir. 1992); Orian v. Commissioner, T.C. Memo. 2010-234;
Kovacevich v. Commissioner, T.C. Memo. 2009-160.
Although petitioner has repeatedly alleged that respondent improperly
applied credits, payments, and adjustments, petitioner has not explained how such
credits, payments, and adjustments should have been applied or whether any
payments were designated payments. Accordingly, the Court concludes that there
was no abuse of discretion in the manner in which credits, payments, and
adjustments were applied against petitioner’s liabilities for the taxable periods in
issue.
B. Abatement of Interest
On brief petitioner requests, for the first time, that interest be abated “for
reasonable cause”. However, the general rule in this Court is that on appeal of a
collection determination, judicial review is limited to those issues properly raised
during the administrative hearing. Giamelli v. Commissioner, 129 T.C. at 114-
115; Magana v. Commissioner, 118 T.C. 488, 493 (2002). In this regard,
petitioner failed to properly raise the issue of interest abatement at any time during
the administrative hearing by either submitting a Form 843, Claim For Refund
And Request For Abatement, or otherwise making a request for interest abatement.
- 25 -
[*25] Accordingly, this issue may not now be considered in the judicial
proceeding. See Day v. Commissioner, T.C. Memo. 2014-215, at *11; see also
sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.; cf. sec. 6404(e), (h);
Rules 280-284.
C. Request for Remand
Finally, petitioner requests that the Court remand this case for further
review. However, on the basis of the record before us, we conclude that remand
would be neither appropriate nor helpful, nor, as discussed supra in section III.D.
of this opinion regarding the Court’s de novo review of petitioner’s underlying tax
liabilities, would remand serve any purpose. See Lunsford v. Commissioner, 117
T.C. 183, 189 (2001).
VII. Conclusion
In view of the foregoing, the Court sustains the determination of the IRS
Appeals Office to proceed with the proposed levy in respect of petitioner’s
outstanding TFRP liabilities for the taxable periods in issue.
- 26 -
[*26] Finally, the Court has considered all of petitioner’s contentions and, to the
extent not specifically discussed herein, concludes that they are without merit,
moot, or irrelevant.
To reflect the foregoing,
Decision will be entered for
respondent.