Pitts v. Comm'r

T.C. Memo. 2010-101

UNITED STATES TAX COURT

CHARLES PITTS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 6463-09L. Filed May 6, 2010.

P’s duly assessed income taxes for 1991, 1992, and
1993 were still unpaid in 2008. The IRS filed a notice
of Federal tax lien and gave P notice of the filing and
of his right to a collection due process (CDP) hearing
before R’s Office of Appeals (Appeals) under I.R.C.
sec. 6320(b). P requested a hearing. Appeals
scheduled a hearing and asked P to submit financial
information on Form 433-A, “Collection Information
Statement for Wage Earners and Self-Employed
Individuals”. P’s representative requested that P’s
liability be classified as “currently not collectible”
because of financial hardship, that the hearing take
place in P’s home because P is disabled, and that P be
excused from submitting Form 433-A because of his
hardship. Appeals offered to conduct the hearing by
telephone or correspondence and repeated the request
for Form 433-A. P did not provide the requested
information, and Appeals issued a notice of
determination sustaining the filing of the notice of
lien. P appealed to this Court pursuant to I.R.C. sec.
 - 2 -

6330(d)(1) and filed a motion for summary judgment. R
filed a cross-motion.

Held: Appeals did not abuse its discretion in
declining to conduct a face-to-face hearing in P’s
home.

Held, further, the Paperwork Reduction Act of
1995, 44 U.S.C. ch. 35 (2006), does not apply to CDP
hearings; and Appeals did not abuse its discretion in
requiring P’s financial information on Form 433-A.

Anthony M. Bentley, for petitioner.

Mimi M. Wong, for respondent.

MEMORANDUM OPINION

GUSTAFSON, Judge: This case is an appeal by petitioner

Charles Pitts, pursuant to section 6330(d)(1),1 asking this Court

to review the notice of determination issued by the Internal

Revenue Service (IRS) sustaining the filing of a notice of

Federal tax lien to collect Mr. Pitts’s unpaid Federal income tax

for tax years 1991, 1992, and 1993. The case is currently before

the Court on the parties’ cross-motions for summary judgment.

For the reasons explained below, we will deny petitioner’s motion

and grant respondent’s motion.

1
Except as otherwise noted, all section references are to
the Internal Revenue Code (26 U.S.C.), and all Rule references
are to the Tax Court Rules of Practice and Procedure.
 - 3 -

Background

The following facts are based on Forms 4340, “Certificate of

Assessments, Payments, and Other Specified Matters”, for

Mr. Pitts’s taxable years at issue; on the undisputed documents

submitted in support of the parties’ cross-motions; and on court

records of which we take judicial notice. Mr. Pitts did not

raise any genuine issue as to these facts.

Mr. Pitts’s non-payment of his taxes

Mr. Pitts filed no tax returns for the years 1991, 1992, and

1993. He has still not paid his income tax liabilities for those

years, the collection of which is now the subject of this

litigation. In September 1999 the IRS prepared substitutes for

return and thereafter sent Mr. Pitts a statutory notice of

deficiency pursuant to section 6212(a), determining deficiencies

and additions to tax for those years. Mr. Pitts challenged that

determination by filing a petition in the Tax Court in

March 2000, commencing Pitts v. Commissioner, docket No. 3187-00.

That case was concluded when Mr. Pitts agreed to the entry of a

stipulated decision on February 9, 2001; and on August 6, 2001,

the IRS assessed against Mr. Pitts the following amounts of tax

and additions to tax pursuant to that decision, as well as

interest thereon, totaling about $68,000:2

2
As of September 3, 2009--the latest date for which the
record gives Mr. Pitts’s balance due--he still owed $67,772.30
(continued...)
 - 4 -

Additions to Tax
Year Tax Sec. 6651(a)(1) Sec. 6654 Interest

1991 $9,463 $2,365.75 $540.80 $12,878.82
1992 9,782 2,445.50 426.66 11,480.56
1993 8,098 2,024.50 339.30 8,177.41
Total 27,343 6,835.75 1,306.76 32,536.79

In February 2003 Mr. Pitts filed a petition in the U.S.

Bankruptcy Court for the Southern District of New York,

commencing In re Pitts, No. 03-11021. That filing had the effect

of staying IRS collection of his liabilities, pursuant to

11 U.S.C. sec. 362(a) (2000). The IRS filed a proof of claim in

that proceeding that asserted Mr. Pitts’s liability for his 1991

to 1993 taxes; Mr. Pitts objected to the proof of claim; and the

bankruptcy court overruled the objection. We take judicial

notice of the records of the bankruptcy court, which show that

Mr. Pitts’s bankruptcy case was closed in August 2008.

The IRS’s notice of lien

On October 21, 2008, the IRS sent to Mr. Pitts a

Letter 3172, “Notice of Federal Tax Lien Filing and Your Right to

a Hearing Under IRC 6320.” The letter stated that the IRS had

filed a notice of lien against Mr. Pitts with respect to his

unpaid tax liabilities for 1991, 1992, and 1993, and that he had

2
(...continued)
for the three years. This balance appears not to include the
eight years’ worth of additional interest that had accrued since
August 2001 but had not yet been assessed.
 - 5 -

a right to request a so-called collection due process (CDP)

hearing before the IRS Office of Appeals.

Initial attempt to schedule the CDP hearing

Through his counsel, Anthony M. Bentley, Mr. Pitts timely

submitted to the IRS a Form 12153, “Request for a Collection Due

Process or Equivalent Hearing”. Mr. Pitts’s Form 12153 did not

indicate what relief or collection alternative he desired, but

the phrase “Bankruptcy Discharge” was written on the form.

In response to Mr. Pitts’s request, a Settlement Officer3 in

the IRS Office of Appeals sent him and Mr. Bentley a letter dated

December 30, 2008, which stated that Mr. Pitts’s CDP hearing had

been scheduled to be conducted as a telephone conference call on

January 29, 2009. The letter stated, “For me to consider

alternative collection methods * * *, you must provide any items

listed below”, which included a “completed Collection Information

Statement (Form 433-A * * *)”. A blank Form 433-A, “Collection

Information Statement for Wage Earners and Self-Employed

Individuals”, for Mr. Pitts to fill out was attached to the

letter.

3
Section 6330(b)(3) provides that the CDP hearing shall be
held before “an officer or employee” of the Office of Appeals.
Thereafter, the statute refers to this officer or employee as the
“appeals officer”. See sec. 6330(c)(1), (3). In the IRS Office
of Appeals, hearings are held before persons with the title
Appeals Officer and Settlement Officer. See Reynolds v.
Commissioner, T.C. Memo. 2006-192. In this instance, the
“officer or employee” who conducted the hearing had the title
Settlement Officer.
 - 6 -

Mr. Bentley replied by a letter that the IRS received on

January 14, 2009, which stated:

I am instructed by my client that the conference
would be preferred to be held face-to-face at his
home/business address, (the address to which you direct
his correspondence) with me in attendance as well as
the taxpayer, on 2/24/09 at 1530 hours, or at such
later date that may be mutually convenient.

The taxpayer requests that the Treasury Department
extend reasonable accommodation to him under the ADA in
meeting as indicated above, due to his disability which
makes him essentially homebound. He suffers from,
inter alia, acute COPD [chronic obstructive pulmonary
disease], his only income is Social Security (due to
his recent layoff[)], and his medical bills already
amount to more than he can afford, to the extent they
are over and above his Medicare benefits.

His principal issue he wishes to discuss with you
concerns the suspension of collection due to hardship
because of the above factors.

Although Mr. Bentley never submitted to the IRS (or to the Court)

substantiation of Mr. Pitts’s medical condition, we assume for

purposes of summary judgment that Mr. Pitts does suffer from COPD

and that he is “essentially homebound”. We also assume (as

Mr. Bentley stated at the hearing held January 11, 2010) that

Mr. Pitts lives in a fifth-floor walk-up apartment and that he is

a “hoarder”--i.e., “[s]omeone who has tons and tons of paper and

a variety of other things around that represent all of his

possessions”.
 - 7 -

Second attempt to schedule the CDP hearing

When the Settlement Officer received Mr. Bentley’s letter,

she attempted to phone him and left him a voice mail message

asking him to “compromise on a date and time” and offering to

hold a face-to-face conference at 290 Broadway, which was the

Office of Appeals location nearest to Mr. Pitts’s home.

Mr. Bentley responded to the voice mail with a letter dated

January 16, 2009, which stated:

It would appear that my letter to you received in
your office on January 14, 2009 has lacked clarity; it
requests the Department of the Treasury to render
reasonable accommodation to my client in having a face-
to face conference at his home due to his disability
which makes him substantially homebound.

My letter also requests a date specific for that
meeting as the date chosen by you, in the words of your
letter, “is not convenient” either to my client nor to
me, due to scheduling conflicts previously arranged,
and we have offered you, in my letter, any date post
2/24/09 should that date be inconvenient.

I have enclosed an edited version of my original
letter with emphasis on those terms which constitute
requests under the Americans with Disabilities Act for
“reasonable accommodation” which your voice mail
message appears to be refusing, and would ask you to
clarify your position.

The Settlement Officer again left a voice mail message for

Mr. Bentley, explaining that the Office of Appeals does not

conduct CDP hearings at taxpayers’ homes and that the CDP hearing

could be held by correspondence or by telephone. She asked that

Mr. Pitts choose the manner of hearing he would prefer and

propose a date and time.
 - 8 -

Decision to conduct the CDP hearing by correspondence

Mr. Bentley replied by a letter dated January 18, 2009:

I write responsive to your voice mail message of
January 16, 2009, which I found to be polite,
informative and helpful.

As a result of the information that you relayed in
your message, it seems that the only effective course
of action remaining to my client in view of his
disability would be to seek “hardship” relief in the
form of, initially, a temporary suspension of
collection activity.

Would you please be so kind as to inform me, or
provide me by mail, what steps need be taken by the
taxpayer to invoke this process?

I must advise that as I will be involved in a
series of medical procedures over the next weeks as
treatment for recently diagnosed stage three kidney
disease, I will be unable to telephone you as requested
in your last voice mail message during normal business
hours, but I will be able to proceed by correspondence,
which choice is also selected and approved by my client
for the balance of the Appeals process. [Emphasis
added.]

Second request for Form 433-A

On January 21, 2009, the Settlement Officer left a voice

mail message for Mr. Bentley, explaining that in order to seek

suspension of collection due to hardship, Mr. Pitts would need to

fill out the Form 433-A that had been enclosed with the

Settlement Officer’s letter of December 30, 2008. She asked that

the form be filled out and returned by January 29, 2009, so that

she could review the form and then discuss the case with

Mr. Bentley.
 - 9 -

Mr. Bentley replied by a letter dated January 22, 2009,

which stated:

I write responsive to your voice mail message of
January 21, 2009, which suggests that you have not read
the correspondence I have sent you despite your having
acknowledged its receipt.

For your convenience, therefore, I have enclosed
copies of my letters to you of January 13, 2009;
January 16, 2009, and January 18, 2009 which state the
position of my client.

As to your reference to your letter of
December 30, 2008, it, by its terms, excludes the
necessity of the taxpayer providing a 433A form if the
collection alternative sought is a hardship suspension
of collection.

To the extent the above was not your intended
meaning in your letter, I would call your attention to
Internal Revenue Service Release #IR-2009-2, Jan. 6,
2009 which states that “IRS assistors may be able to
suspend collection without documentation to minimize
burden [sic] on the taxpayer” and request that if you
are not so empowered, kindly transfer this case to an
"assistor" who is so authorized.

We will otherwise respond to your December letter,
as has been detailed to you in the enclosed prior
received correspondence, for the reasons stated
therein, not later than 2/24/09.

IRS News release IR-2009-02 (Jan. 6, 2009) attached to

Mr. Bentley’s letter included the following paragraph to which he

referred:

Postponement of Collection Actions: IRS employees will
have greater authority to suspend collection actions in
certain hardship cases where taxpayers are unable to
pay. This includes instances when the taxpayer has
recently lost a job, is relying solely on Social
Security or welfare income or is facing devastating
illness or significant medical bills. If an individual
has recently encountered this type of financial
 - 10 -

problem, IRS assistors may be able to suspend
collection without documentation to minimize burden on
the taxpayer.

Third request for Form 433-A

In response to Mr. Bentley’s letter, the Settlement Officer

sent him a “last chance” letter on January 29, 2009 (the date on

which the CDP hearing had originally been scheduled). This

letter is not in the record, but the Settlement Officer described

it in detail in her work notes:

SO composed last chance letter. Letter advised POA/TP
[i.e., Mr. Bentley (the “power of attorney”) and
Mr. Pitts (the taxpayer)] that IR-2009-02 referring to
postponement of collection actions, to suspend
collection actions in certain hardship cases, does
refer to the IRS to suspend collection without
documentation. These guidelines would also depend upon
the taxpayers situation. IR-2009-2 directs taxpayers
who are behind on tax payments & needs assistan[ce]
that when contacting IRS, there could be additional
help available for taxpayers facing unus[u]al hardship
situations. That to suspend collection actions if the
individual has recently encountered financial problems.
IRS manual indicates only partial financial analysis is
required prior to reporting an account as Cu[r]rently
Not Collectible (CNC) if the aggregate assessed
balance, including prior CNC accounts, is less than
$5,000. Balances above that amount require[] a full
financial analysis and the Collection Information
Statement with documentation is required. The taxpayer
balance is $67,772.30. Please keep in mind this does
not stop penalties and interest from accruing as long
as the assessed balance is still outstanding. As the
taxpayer did not file a tax return for 2005 and 2006
additional documentation is required. Taxpayer’s CDP
request was signed November 15, 2008. Appeals Contact
Letter [was] dated December 30, 2008 and allow[ed] the
taxpayer sufficient time to prepare for the conference
on January 29, 2009. Though the taxpayer is
‘essentially homebound’ a conference could not be
extended to date requested, February 24, 2009. Last
 - 11 -

chance composed and sent. F/U [follow-up] = 14 days =
02-12-2009 [i.e., February 12, 2009].

This “last chance” letter thus gave Mr. Pitts until February 12,

2009, to submit the requested information. This date was between

the date that the Settlement Officer had initially scheduled for

the CDP hearing (January 29, 2009) and the alternative date that

Mr. Bentley had proposed (February 24, 2009).

Issuance of the notice of determination

Petitioner does not dispute the fact that the “last chance”

letter was sent or the content of the letter. However,

Mr. Bentley made no response to the letter on behalf of

Mr. Pitts. Consequently, on February 25, 2009, the Office of

Appeals issued to Mr. Pitts a “Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330.” The notice

of determination sustained the filing of the notice of lien. An

attachment to the notice stated that “the liabilities were not

discharged in the taxpayer’s bankruptcy” and that “no collection

alternatives were available to the taxpayer as documentation was

not supplied.”

Tax Court proceedings

Mr. Bentley timely filed a petition in this Court on behalf

of Mr. Pitts, appealing the notice of determination. The

petition asserts that the Office of Appeals abused its discretion

in declining to suspend collection activity, and it asserts three

specific errors:
 - 12 -

(1) Respondent violated the ADA Amendments Act of 2008
[amending the Americans with Disabilities Act, 42 U.S.C.
chapter 126]

(2) Respondent violated Title 5 CFR § 1320.6 [implementing
the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35]

(3) Respondent declined to recognize underlying liability
included components discharged in bankruptcy

Petitioner moved for summary judgment on November 9, 2009;

respondent cross-moved on December 7, 2009; and the motions were

argued at a hearing on January 11, 2010.

Discussion

I. Applicable legal principles

A. Summary judgment standards

Where the pertinent facts are not in dispute, a party may

move for summary judgment to expedite the litigation and avoid an

unnecessary trial. Summary judgment may be granted where there

is no genuine issue as to any material fact and a decision may be

rendered as a matter of law. Rule 121(a) and (b). The party

moving for summary judgment bears the burden of showing that

there is no genuine issue as to any material fact, and factual

inferences will be drawn in the manner most favorable to the

party opposing summary judgment. Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994).

In his opposition to respondent’s motion, Mr. Pitts asserts

that “cross-examination of respondent is required to understand
 - 13 -

the reason for the blatant date alteration in respondent’s log

introduced in support of his motion for summary judgment.” He

apparently refers to respondent’s Exhibit L, “Case Activity

Record Print”, which reflects entries that the Settlement Officer

made to record her work on the case, including her contacts with

Mr. Pitts’s representative, Mr. Bentley. To the extent that

respondent’s assertion of a material fact in the case is based on

an entry in that record, if petitioner raises a genuine issue as

to that fact, then summary judgment would be precluded. However,

Rule 121(d) provides:

When a motion for summary judgment is made and
supported as provided in this Rule, an adverse party
[such as Mr. Pitts] may not rest upon the mere
allegations or denials of such party’s pleading, but
such party’s response, by affidavits or as otherwise
provided in this Rule, must set forth specific facts
showing that there is a genuine issue for trial. * * *

In compliance with Rule 121(b), respondent made and supported a

showing of the authenticity of the Case Activity Record Print and

of the facts of the case; but Mr. Pitts’s only response is his

unelaborated assertion about “blatant date alteration”. Most of

the dates in the chronology set out above are corroborated in

petitioner’s submissions, and he does not specify which dates

were altered, nor how the alterations would affect the outcome of

the case. We therefore hold that respondent’s factual assertions

are not controverted.
 - 14 -

In ruling on respondent’s motion, we draw all inferences in

favor of Mr. Pitts, and we find that there is no genuine issue as

to any material fact and respondent is entitled to judgment as a

matter of law.

B. Collection review procedure

1. In general

When a taxpayer fails to pay any Federal income tax

liability after demand, section 6321 imposes a lien in favor of

the United States on all the property of the delinquent taxpayer,

and section 6323 authorizes the IRS to file notice of that lien.

However, within five business days after filing a notice of tax

lien, the IRS must provide written notice of that filing to the

taxpayer. Sec. 6320(a). After receiving such a notice, the

taxpayer may request an administrative hearing before the Office

of Appeals. Sec. 6320(a)(3)(B), (b)(1). Administrative review

is carried out by way of a hearing before the Office of Appeals

pursuant to section 6330(b) and (c); and, if the taxpayer is

dissatisfied with the outcome there, he can appeal that

determination to the Tax Court under section 6330(d), as

Mr. Pitts has done.

2. Agency-level review in lien cases

In the case of a notice of lien, section 6320(c) provides

that the procedures for the agency-level CDP hearing before the

Office of Appeals are set forth in section 6330(c):
 - 15 -

First, the appeals officer must “obtain verification from

the Secretary that the requirements of any applicable law or

administrative procedure have been met.” Sec. 6330(c)(1).4 The

notice of determination set forth the IRS’s compliance with these

requirements, and Mr. Pitts made no challenge as to verification

in his petition (or in his motion), so no verification issues

under section 6330(c)(1) are at issue.

Second, the taxpayer may “raise at the hearing any relevant

issue relating to the unpaid tax or the proposed [lien or] levy,

including” challenges to the appropriateness of the collection

action and offers of collection alternatives. Sec.

6330(c)(2)(A). Mr. Pitts’s contentions pertain to collection

alternatives, which we will discuss below.

Additionally, the taxpayer may contest the existence and

amount of the underlying tax liability, but only if he did not

receive a notice of deficiency or otherwise have a prior

opportunity to dispute the tax liability. Sec. 6330(c)(2)(B).

Mr. Pitts did receive a notice of deficiency and did have prior

opportunities to challenge the underlying liabilities for 1991,

1992, and 1993 when he not only litigated them in his prior case

4
In the case of the lien filed against Mr. Pitts, the basic
requirements, see sec. 6320, for which the appeals officer was to
obtain verification are: assessment of the liability, secs.
6201(a)(1), 6501(a); notice and demand for payment of the
liability, sec. 6303; and notice of the filing of the lien and of
the taxpayer’s right to a CDP hearing, secs. 6320(a) and (b).
 - 16 -

(docket No. 3187-00)--in which his liabilities were determined by

stipulated decision--but also attempted to challenge them in his

bankruptcy case.5 He cannot now make a third challenge to that

determination in this CDP case. Mr. Pitts previously contended

(in the CDP hearing and in his petition in this case) that the

liabilities were subsequently discharged in bankruptcy; but he

did not assert this contention in his motion, in his opposition

to respondent’s motion,6 or at the hearing; and we find that he

has abandoned this bankruptcy discharge contention.

Finally, the appeals officer must determine “whether any

proposed collection action balances 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)(C). The notice of determination found “that the

filing of the NFTL [notice of Federal tax lien] balances the need

for efficient collection of taxpayer’s accounts with taxpayer’s

5
See Kendricks v. Commissioner, 124 T.C. 69, 77 (2005) (the
taxpayer had the opportunity to dispute the liability within
the meaning of section 6330(c)(2)(B) when the IRS submitted a
proof of claim for an unpaid tax liability in taxpayer’s
bankruptcy action).
6
Respondent’s motion asserted that the Office of Appeals
“determined that Petitioner’s bankruptcy filing did not discharge
his tax liabilities for the years at issue because Petitioner’s
objection to the IRS’s proof of claim was overruled and the IRS’s
proof of claim was allowed in full by the Bankruptcy Court” and
that the Office of Appeals did not abuse its discretion “in
determining that Petitioner’s bankruptcy did not discharge the
unpaid tax liabilities”.
 - 17 -

legitimate concerns that the collection action be no more

intrusive than necessary.” Mr. Pitts made no contention of any

defect in the balancing conducted by the Office of Appeals in

this case.

3. Tax Court review

When the Office of Appeals issues its determination, the

taxpayer may “appeal such determination to the Tax Court”,

pursuant to section 6330(d)(1), as Mr. Pitts has done. In such

an appeal (where the underlying liability is not at issue), we

review the determination of the Office of Appeals for abuse of

discretion. That is, we decide whether the determination was

arbitrary, capricious, or without sound basis in fact or law.

See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469

F.3d 27 (1st Cir. 2006).

II. Respondent’s entitlement to summary judgment

A. Mr. Pitts’s failure to produce financial information

The Office of Appeals determined not to grant Mr. Pitts’s

request to suspend collection activity against him on the ground

of financial hardship, and we review that determination for an

abuse of discretion. Suspension of collection activity is, in

CDP parlance, a “collection alternative” that the taxpayer may

propose, see sec. 6330(c)(2)(A)(iii), and that the Office of

Appeals must “take into consideration”, sec. 6330(c)(3)(B). The

Internal Revenue Manual (IRM) makes provision for a taxpayer’s
 - 18 -

account to be declared “currently not collectible” (CNC) in cases

of “hardship”. See IRM pts. 1.2.14.1.14 (Nov. 19, 1980) (Policy

Statement 5-71), 5.16.1.2.9 (May 5, 2009).

However, the regulations state that “[t]axpayers will be

expected to provide all relevant information requested by

Appeals, including financial statements, for its consideration of

the facts and issues involved in the hearing.” 26 C.F.R. Sec.

301.6320-1(e)(1), Proced. & Admin. Regs. It could hardly be

otherwise. For a taxpayer to justify suspension of collection on

the ground that the account should be deemed “currently not

collectible”--i.e., that he cannot afford to pay the liability--

he must of course show that he cannot afford to pay the

liability. To do so, he must show his financial circumstances--

i.e., the money that is available to him and the expenses that he

bears.7 Form 433-A is the means by which the IRS obtains this

financial information from the taxpayer--but Mr. Pitts failed to

submit this information despite three requests for it (on

December 30, 2008, January 21, 2009, and January 29, 2009). In

the absence of that information, the Office of Appeals did not

7
See Vinatieri v. Commissioner, 133 T.C. ___, ___ n.7 (2009)
(slip op. at 15) (“In Estate of Atkinson v. Commissioner, T.C.
Memo. 2007-89, we found reasonable [the] requirement[] that an
entity seeking collection alternatives to full payment, including
reporting an account as currently not collectible, * * * submit[]
a full financial statement”).
 - 19 -

abuse its discretion in declining to put Mr. Pitts’s account into

CNC status.

In his correspondence with Appeals, Mr. Bentley resisted the

IRS’s request that Mr. Pitts complete Form 433-A by citing the

recent IRS News release IR-2009-02, supra. Although he did not

cite that release or make the same contention in his petition or

his motion papers, we note that the contention was not well

grounded. Mr. Bentley seemed to read the news release as

creating an immunity from the obligation to produce financial

information. In fact, the release stated that “IRS assistors may

be able to suspend collection without documentation”. (Emphasis

added.) And as the Settlement Officer explained to Mr. Bentley,

the IRM makes provision for suspension of collection after “only

partial financial analysis” where the liability is less than

$5,000.8 Mr. Pitts’s unpaid liability was more than ten times

that amount.

Before his accounts could be treated as CNC, Mr. Pitts was

obliged to show his financial situation, and he failed to submit

8
See IRM pt. 5.16.1.2.9(3) (“Under certain conditions, a CIS
[Collection Information Statement] is not required before
reporting an account CNC. The aggregate unpaid balance of
assessments, including any prior CNC’s, must be less than the
amount in LEM 5.16.1.2.9(3)”). The LEM (law enforcement manual)
is a portion of the IRM that is not made available to the public.
See Roberts v. IRS, 584 F. Supp. 1241 (E.D. Mich. 1984).
 - 20 -

Form 433-A to make that showing.9 The Office of Appeals did not

abuse its discretion by requiring the submission of Form 433-A or

by denying CNC status in its absence.

B. Mr. Pitts’s contentions

Mr. Pitts asserts two errors10 by the Office of Appeals

that, he argues, constituted abuses of its discretion, and we

address them separately here.

1. Denial of a face-to-face hearing at
Mr. Pitts’s home

Mr. Pitts argues that because he is disabled as a result of

COPD, the Americans with Disabilities Act (ADA), 42 U.S.C.

chapter 126 (2006), required the Settlement Officer to make

reasonable accommodation for his disability by conducting a face-

to-face CDP hearing in his home. This contention fails for

multiple reasons.

9
The Form 433-A seeks not only information about a
taxpayer’s current income and expenses but also details of his
assets. Although Mr. Pitts represented that his only source of
income was Social Security benefits and alleged that he had
substantial medical expenses, he substantiated neither claim;
and, on the record before us, he made no representations whatever
about the presence or value of any assets--the other information
required by Form 433-A, which is necessary for evaluating his
ability to pay.
10
In his motion for summary judgment, Mr. Pitts asserts the
Paperwork Reduction Act (PRA) argument addressed here in
part II.B.2, and in his opposition to respondent’s cross-motion
he asserted the PRA argument and the Americans with Disabilities
Act argument addressed here in part II.B.1. As we noted above in
part I.B.2, Mr. Pitts abandoned his contention that the
liabilities were discharged in bankruptcy.
 - 21 -

First, Mr. Pitts chose to have his CDP hearing by

correspondence. After the Settlement Officer explained to

Mr. Bentley that the CDP hearing could be held by correspondence

or by telephone, Mr. Bentley stated in his letter of January 18,

2009, “I will be able to proceed by correspondence, which choice

is also selected and, approved by my client for the balance of

the Appeals process.” Having not objected to a non-face-to-face

hearing, and having rather chosen to have the hearing by

correspondence, Mr. Pitts cannot contend that the Office of

Appeals abused its discretion by proceeding on that basis.

Second, the statute does not require a face-to-face hearing.

Section 6320(b)(1) provides that a “hearing shall be held” by the

Office of Appeals. The statute does not describe the nature of

that hearing. As we have previously observed,

Hearings at the Appeals level have historically
been conducted in an informal setting. * * *

When Congress enacted section 6330 * * *, Congress
was fully aware of the existing nature and function of
Appeals. Nothing in section 6330 or the legislative
history suggests that Congress intended to alter the
nature of an Appeals hearing * * *.

Davis v. Commissioner, 115 T.C. 35, 41 (2000). Thus, the

regulations implementing the CDP process provide that a “CDP

hearing may, but is not required to, consist of a face-to-face

meeting, one or more written or oral communications between an

Appeals officer or employee and the taxpayer or the taxpayer’s
 - 22 -

representative, or some combination thereof.” 26 C.F.R. sec.

301.6320-1(d)(2), A-D6, Proced. & Admin. Regs.

Third, a face-to-face hearing could not have been held in

Mr. Pitts’s home. If a face-to-face CDP hearing was to be held,

the applicable regulations direct that such hearing take place

“at the Appeals office closest to the taxpayer’s residence.”

26 C.F.R. sec. 301.6320-1(d)(2), A-D7, Proced. & Admin. Regs.

Considerations of efficiency, taxpayer relations, and the safety

of IRS personnel surely entered into the formulation of that

policy. If there is a circumstance in which we would second-

guess the Office of Appeals in its adherence to that policy, it

is not present in this case.

Fourth, the ADA does not apply to the Federal Government.

The relevant portion of the act would be subtitle II, “Public

Services”, but the definition therein of a “public entity” to

which the statute applies does not include the Federal

Government. See 42 U.S.C. secs. 12131(1), 12132; Agee v. United

States, 72 Fed. Cl. 284, 289 (2006); Smith v. U.S. Court of

Appeals, No. C-08-1860 EMC, WL 2079189, *4 (N.D. Cal., May 15,

2008) (order dismissing complaint and granting application to

proceed in forma pauperis); Wilks v. FAA, No. C06-940P,

WL 1687765, *6 (W.D. Wash., June 8, 2007) (order of dismissal).

But if a taxpayer’s disability did impede his participation in a

CDP hearing, we assume arguendo that, notwithstanding the
 - 23 -

inapplicability of the ADA, the Office of Appeals would abuse its

discretion if it refused to make reasonable accommodations to

facilitate his participation. In this case, however, Appeals did

accommodate Mr. Pitts by its practice of allowing a hearing to be

held by telephone or by correspondence.11 Particularly in the

case of a taxpayer who has counsel, as Mr. Pitts has, the

conducting of the hearing by telephone or correspondence yields

no apparent prejudice to the taxpayer. The IRS has developed

routines for obtaining information in a manner that is

susceptible of being recorded, evaluated, and reviewed. The

Settlement Officer was not obliged instead to make a field trip

to Mr. Pitts’s apartment to learn his financial situation; she

was entitled rather to require Form 433-A, and Mr. Pitts has made

no showing that this method for evaluating his financial

situation imposed any particular hardship on him.

2. Paperwork Reduction Act

Mr. Pitts’s principal contention in this case is based on

the Paperwork Reduction Act (PRA), 44 U.S.C. chapter 35 (2006).

Section 3512(a) of Title 44 of the United States Code provides:

Notwithstanding any other provision of law, no person
shall be subject to any penalty for failing to comply
with a collection of information that is subject to
this subchapter if--

11
Cf. In re Winston, No. 07-20593-D-13L, 2007 WL 1394161
(Bankr. E.D. Cal., May 11, 2007) (memorandum decision indicating
that allowing a disabled debtor to participate by telephone in
bankruptcy proceedings constitutes a reasonable accommodation).
 - 24 -

(1) the collection of information does not
display a valid control number assigned by the Director
in accordance with this subchapter; or

(2) the agency fails to inform the person who is
to respond to the collection of information that such
person is not required to respond to the collection of
information unless it displays a valid control number.
[Emphasis added.]

In the income tax context, this provision of the PRA is most

often cited against the income tax return itself--an argument

that is thoroughly discredited--so that most of the caselaw

addressing the argument (and finding it frivolous) affirms that

the taxpayer’s obligation to file a return is not abrogated by

supposed violations of the PRA.12 Mr. Pitts addresses not the

tax return but Form 433-A, and he argues that the PRA applies to

(and invalidates) its use during the CDP hearing to obtain the

financial statement of the taxpayer. He argues that since the

request for a financial statement on Form 433-A is “a collection

of information”, the PRA applies; but that since Form 433-A

12
See, e.g., Wheeler v. Commissioner, 127 T.C. 200 (2006),
affd. 521 F.3d 1289 (10th Cir. 2008). Some of the opinions
holding the PRA inapplicable to tax returns are cited in Revenue
Ruling 2006-21, 2006-1 C.B. 745. With regard to tax returns we
have rebuffed the argument as recently as in Turner v.
Commissioner, T.C. Memo. 2010-44. In Moore v. Commissioner, T.C.
Memo. 2007-200, affd. 296 Fed. Appx. 821 (11th Cir. 2008), when
the taxpayer requested during the CDP hearing “that Settlement
Officer Feist ‘provide evidence verifying the U.S. Individual
Income Tax/Forms 1040 and Form 433-A in question are in
compliance with the specifications of the PAPERWORK REDUCTION ACT
(PRA) and have been issued current and valid control numbers from
the Office of Management and Budget’” (emphasis added), we
characterized the issue as “frivolous”.
 - 25 -

displays no “control number”, the form is invalid and taxpayers

need not comply with requests to fill it out and submit it.

Mr. Pitts’s argument fails to note the effect of 44 U.S.C.

section 3518(c)(1)(B)(ii):13

(c)(1) Except as provided in paragraph (2),
this subchapter shall not apply to the collection of
information-- * * *

(B) during the conduct of-- * * *

(ii) an administrative action or
investigation involving an agency against specific
individuals or entities * * *. [Emphasis added.]

13
The regulations promulgated under this statute are to the
same effect. 5 C.F.R. section 1320.4 (2010) provides (with
emphasis added):

(a) The requirements of this Part apply to all
agencies as defined in § 1320.3(a) and to all collections of
information conducted or sponsored by those agencies, as
defined in § 1320.3 (c) and (d), wherever conducted or
sponsored, but, except as provided in paragraph (b) of this
section, shall not apply to collections of information:

* * * * * * *

(2) during the conduct of a civil action to which the
United States or any official or agency thereof is a party,
or during the conduct of an administrative action,
investigation, or audit involving an agency against specific
individuals or entities;

* * * * * * *

(c) The exception in paragraph (a)(2) of this section
applies during the entire course of the investigation,
audit, or action, whether before or after formal charges or
complaints are filed or formal administrative action is
initiated, but only after a case file or equivalent is
opened with respect to a particular party. * * *
 - 26 -

Section 3518(c)(1) thus excludes administrative hearings--such as

CDP hearings that evaluate the propriety of a specific collection

action against a specific taxpayer--from the reach of the PRA.

Consistent with that exclusion, 44 U.S.C. section 3518(c)(2)

describes the “general investigations” that are included within

the reach of the PRA, and CDP hearings are not in that

description:

(2) This subchapter applies to the collection of
information during the conduct of general investigations
(other than information collected in an antitrust
investigation to the extent provided in subparagraph (C) of
paragraph (1)) undertaken with reference to a category of
individuals or entities such as a class of licensees or an
entire industry. [Emphasis added.]

Petitioner argues, however, that the PRA does reach CDP hearings

because the set of taxpayers who request CDP hearings constitute

(in the words of section 3518(c)(2)) a “category of individuals”

(emphasis added) who generally are asked to submit Form 433-A.

This interpretation is unwarranted.

The question under 44 U.S.C. section 3518(c)(2) is not

whether many individual taxpayers have CDP hearings (they do),

nor whether Form 433-A is used widely (it is), but whether a

given CDP hearing is a “general investigation”--and it is not.

Rather, a CDP hearing is “an administrative action,

investigation, or audit involving an agency [the IRS] against [a]

specific individual[]”--in this case, Mr. Pitts. Just as an IRS

audit of a specific individual taxpayer is not a general
 - 27 -

investigation,14 so a CDP hearing is an administrative action

involving a specific individual and is not a general

investigation. For that reason, the collection of information

during a CDP hearing is not subject to the PRA. The lack of a

control number on Form 433-A did not relieve Mr. Pitts from the

obligation to submit the form and does not relieve him of the

consequences of his failure to do so. When the Office of Appeals

did not receive financial information from Mr. Pitts, it was

entitled to deny his request to suspend collection of his long-

unpaid income tax liabilities for 1991, 1992, and 1993.

Conclusion

On the undisputed facts of this case, it is clear that the

Office of Appeals did not abuse its discretion when it denied

“currently not collectible” status to Mr. Pitts’s liabilities and

upheld the filing of a notice of lien. We hold that, as a matter

of law, respondent is entitled to the entry of a decision

sustaining the determination.

To reflect the foregoing,

An appropriate order and

decision will be entered.

14
See Lonsdale v. United States, 919 F.2d 1440, 1445
(10th Cir. 1990) (and cases cited thereat) (the PRA is
“inapplicable to ‘information collection request’ forms issued
during an investigation against an individual to determine his or
her tax liability” (citing 44 U.S.C. sec. 3518(c)(1)(B)(ii)).