T.C. Memo. 2015-132
UNITED STATES TAX COURT
KENNETH A. MCRAE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10233-14L. Filed July 20, 2015.
Kenneth A. McRae, pro se.
Kris H. An, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to sections 6320(c) and 6330(d)(1)1 of a determination by
1
All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all monetary amounts to the nearest dollar.
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[*2] the Internal Revenue Service (IRS or respondent) to sustain the filing of a
notice of Federal tax lien (NFTL). Respondent has moved for summary judgment
under Rule 121, contending that there are no disputed issues of material fact and
that his determination to sustain this collection action was proper as a matter of
law. We agree and accordingly will grant the motion.
Background
The following facts are based on the parties’ pleadings and the affidavits
and exhibits attached to the pleadings and respondent’s motion. See Rule 121(b).
Petitioner resided in California when he filed his petition. The lien at issue relates
to petitioner’s Federal income tax liabilities for 2004, 2006, and 2008.
Petitioner filed a timely return for 2004. The IRS conducted an examination
of that return and the record reflects issuance of a notice of deficiency based on
this examination; petitioner does not dispute that he received this notice and did
not contest the deficiency by filing a petition in this Court. The IRS then assessed
the tax and interest due from petitioner for 2004, totaling $1,053.
Petitioner filed a late return for 2006. The IRS received this return on April
17, 2009, ruled it frivolous, and assessed a $5,000 penalty against petitioner under
section 6702(a). The IRS thereafter prepared a substitute for return (SFR) meeting
the requirements of section 6020(b). The record reflects issuance of a notice of
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[*3] deficiency based on this return; petitioner does not dispute that he received
this notice and did not contest the deficiency by filing a petition in this Court. The
IRS then assessed the tax and interest due from petitioner for 2006, totaling
$3,315. Petitioner later filed an amended return for 2006; the IRS likewise deter-
mined that return to be frivolous and assessed a second $5,000 penalty under
section 6702(a). The total assessment under section 6702(a) for 2006, including
interest, is $10,901.2
Petitioner did not file a Federal income tax return for 2008. The IRS pre-
pared an SFR meeting the requirements of section 6020(b). The record reflects
issuance of a notice of deficiency based on this return; petitioner does not dispute
that he received this notice and did not contest the deficiency by filing a petition in
this Court. The IRS subsequently assessed the tax and interest due, as well as
additions to tax for failure to pay timely under section 6651(a)(2) and failure to
pay estimated tax under section 6654(a), for a total assessment of $12,014.
On May 7, 2013, in an effort to collect these outstanding liabilities, the IRS
sent petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing.
Petitioner timely requested a CDP hearing. In fact, he demanded four separate
2
On March 25, 2012, petitioner submitted a check to the IRS in purported
payment of his 2004 and 2006 liabilities. This check was returned and, on April
30, 2012, the IRS assessed a penalty for dishonored payment under section 6657.
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[*4] CDP hearings--one for each year at issue and a fourth hearing for the
frivolous return penalties.
On August 6, 2013, a settlement officer (SO) from the IRS Appeals Office
wrote petitioner, scheduling a single CDP hearing by telephone for September 10,
2013. Petitioner was asked to notify the SO within 14 days if he wished to have a
face-to-face conference. The SO informed petitioner that she could not consider
collection alternatives unless petitioner submitted, within 14 days, a completed
Form 433-A, Collection Information Statement for Wage Earners and Self-
Employed Individuals, and proof of filing tax returns for 2011 and 2012.
Petitioner did not propose a collection alternative, provide the requested
financial information, or submit a copy of a tax return for 2011 or 2012. On
September 10, 2013, petitioner and the SO participated in the scheduled telephone
conference. Petitioner provided no meaningful information during this conference
but insisted on a face-to-face hearing. The SO referred this request to the IRS
Appeals Office in Los Angeles.
On November 5, 2013, a settlement officer from the IRS Appeals Office in
Los Angeles (SO2) sent petitioner a letter scheduling a telephone CDP hearing for
March 5, 2014. This letter acknowledged petitioner’s request for a face-to-face
conference. SO2 explained, however, that petitioner would first have to submit
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[*5] the required financial information (Form 433-A and tax returns for 2011 and
2012) in order to qualify for a face-to-face conference.
On February 12, 2014, petitioner wrote SO2 reiterating his demand for a
face-to-face hearing. Petitioner disputed the necessity of providing any specific
documents in order to obtain such a hearing. According to petitioner, whether he
was required to file Forms 1040, U.S. Individual Income Tax Return, for 2011 and
2012 “was a matter to be determined at the CDP hearing.” Petitioner apparently
intended to argue that he was relieved of the duty to file Federal income tax
returns when the IRS did not sufficiently respond to his Freedom of Information
Act requests demanding documents detailing the legal basis for such filing
requirement.
SO2 contacted petitioner by telephone, explaining once again that petitioner
did not qualify for a face-to-face conference. SO2 nevertheless offered to meet
with petitioner in the Los Angeles IRS Appeals Office on March 5, 2014, at the
time already scheduled for the telephone conference. Petitioner declined this offer
of a face-to-face meeting.
On March 5, 2014, SO2 called petitioner for the scheduled CDP hearing.
Petitioner did not answer the phone or call back. Later that day, SO2 mailed peti-
tioner a “last chance letter” stating that, if he did not hear from petitioner within
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[*6] 14 days, he would make his decision based on the existing administrative file.
On March 10, 2014, petitioner wrote SO2 reiterating his demand for a face-to-face
hearing but provided none of the requested documents.
At this point SO2 reviewed the administrative file and confirmed that the
tax, interest, additions to tax, and penalties for 2004, 2006, and 2008 had been
properly assessed and that all requirements of applicable administrative procedure
had been met. SO2 concluded that petitioner did not qualify for a collection
alternative because he had not requested such an alternative and in any event had
failed to submit the required financial information. SO2 accordingly closed the
case and, on April 1, 2014, sent petitioner a notice of determination sustaining the
tax lien filing.
Petitioner timely sought review in this Court. The sole allegation of error
set forth in his petition is that SO2’s denial of a face-to-face hearing violates sec-
tion 6330(b)(1) and the Due Process Clause of the U.S. Constitution. Respondent
moved for summary judgment. Petitioner replied to this motion with a one-page
objection; he did not address the relevant facts or law but simply insisted that the
case be remanded to the IRS Appeals Office “for a meaningful hearing.”
Petitioner signed that document as “Private Citizen Kenneth A. McRae, Republic
State of California.”
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[*7] Discussion
A. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid
unnecessary and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). The Court may grant summary judgment when there is no
genuine dispute as to any material fact and a decision may be rendered as a matter
of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),
aff’d, 17 F.3d 965 (7th Cir. 1994). Where the moving party properly makes and
supports a motion for summary judgment, “an adverse party may not rest upon the
mere allegations or denials of such party’s pleading,” but must set forth specific
facts showing that there is a genuine dispute for trial. Rule 121(d).
In directing petitioner to respond to the summary judgment motion, the
Court instructed him to “point out the specific facts in dispute.” His one-page
response refers to no facts at all, much less any facts in dispute. We conclude that
this case is appropriate for summary adjudication.
B. Standard of Review
Where the amount of a taxpayer’s underlying tax liability is properly at
issue in a CDP case, we review the Commissioner’s determination de novo. Goza
v. Commissioner, 114 T.C. 176, 181-182 (2000). We review the settlement offi-
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[*8] cer’s determinations regarding nonliability issues for abuse of discretion.
Hoyle v. Commissioner, 131 T.C. 197, 200 (2008); Goza, 114 T.C. at 182. Abuse
of discretion exists when a determination is arbitrary, capricious, or without sound
basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005),
aff’d, 469 F.3d 27 (1st Cir. 2006).
Petitioner was entitled to contest the frivolous return penalties at his CDP
hearing because he “did not otherwise have an opportunity to dispute such tax
liability.” Sec. 6330(c)(2)(B). This Court may consider such a challenge, how-
ever, only if the taxpayer properly raised it before the settlement officer, Giamelli
v. Commissioner, 129 T.C. 107, 115 (2007), and again in his petition to this Court,
see Rule 331(b)(4) (“Any issue not raised in the assignments of error shall be
deemed to be conceded.”). An issue is not properly raised at the Appeals Office if
the taxpayer fails to request consideration of the issue or fails to present any
evidence after being given a reasonable opportunity to do so. Sec. 301.6320-
1(f)(2), Q&A-F3, Proced. & Admin. Regs.; see Thompson v. Commissioner, 140
T.C. 173, 178 (2013) (citing Giamelli, 129 T.C. at 114).
In order to raise in this Court his liability for the frivolous return penalties,
petitioner was required to contest those penalties explicitly at the CDP hearing and
present evidence concerning his liability for them. Our review of the record estab-
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[*9] lishes that petitioner did not clearly do the former and definitely did not do
the latter. Indeed, the only argument that he clearly advanced at the Appeals
Office or in this Court was his supposed entitlement to a face-to-face hearing.
Because petitioner did not properly raise his underlying tax liability at the CDP
hearing or in his petition, we may not consider it. We will accordingly review
SO2’s determination for abuse of discretion only.
C. Analysis
In deciding whether a settlement officer abused his discretion in sustaining
an NFTL, we consider whether he: (1) properly verified that the requirements of
any applicable law or administrative procedure have been met; (2) considered any
relevant issues petitioner raised; and (3) determined whether “any proposed col-
lection action balances the need for the efficient collection of taxes with the
legitimate concern of * * * [petitioner] that any collection action be no more
intrusive than necessary.” Sec. 6330(c)(3).
Assuming arguendo that we may properly consider the verification
requirement, our review of the administrative record establishes that SO2 properly
verified that the IRS fulfilled all legal and regulatory requirements for assessment,
notification, and collection of the underlying liabilities. See Dinino v.
Commissioner, T.C. Memo. 2009-284 (citing Rule 331(b)(4) for the proposition
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[*10] that the Court is required to consider the verification requirement under
section 6330(c)(1) only if the taxpayer has adequately raised the issue in his
petition); see also Triola v. Commissioner, T.C. Memo. 2014-166, at *9.
Additionally, we conclude that SO2 appropriately balanced the need for efficient
collection with petitioner’s interests. Petitioner failed to propose any collection
alternative or present the necessary documents to be eligible for one. We have
repeatedly held that a settlement officer does not abuse his discretion when he
declines to consider a collection alternative under these circumstances. See
McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Kendricks v.
Commissioner, 124 T.C. 69, 79 (2005); Orum v. Commissioner, 123 T.C. 1, 13
(2004), aff’d, 412 F.3d 819 (7th Cir. 2005).
Petitioner’s sole contention is that SO2 abused his discretion in not pro-
viding him a face-to-face hearing. The regulations provide that a “CDP hearing
may, but is not required to, consist of a face-to-face meeting.” Sec. 301.6330-
1(d)(2), Q&A-D6, Proced. & Admin. Regs. We have repeatedly held that a face-
to-face CDP hearing is not required. Katz v. Commissioner, 115 T.C. 329, 337-
338 (2000); Williamson v. Commissioner, T.C. Memo. 2009-188; Stockton v.
Commissioner, T.C. Memo. 2009-186. The denial of a face-to-face hearing does
not constitute an abuse of discretion where (as here) a taxpayer fails to present
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[*11] relevant evidence and refuses to provide requested financial information.
Toth v. Commissioner, T.C. Memo. 2010-227; Zastrow v. Commissioner, T.C.
Memo. 2010-215; Moline v. Commissioner, T.C. Memo. 2009-110, aff’d, 363
Fed. Appx. 675 (10th Cir. 2010). If a face-to-face meeting is not held, a hearing
conducted by telephone, correspondence, or review of documents will suffice. See
sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs.
Petitioner was repeatedly advised that he had to provide relevant docu-
mentation (Form 433-A and completed tax returns for 2011 and 2012) in order to
be eligible for a face-to-face hearing. He repeatedly refused to submit these docu-
ments. SO2 would not have abused his discretion by denying him a face-to-face
hearing outright. Nonetheless, SO2 offered petitioner a face-to-face hearing at the
date and time already scheduled for the telephone hearing, and petitioner declined
that offer. Finding no abuse of discretion in any respect, we will grant summary
judgment for respondent and sustain the proposed collection action.
To reflect the foregoing,
An appropriate order and decision
will be entered.