Opinion
1545-23L
10-11-2023
GREGORY N. BOGGS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
James S. Halpern Judge
This case is before us to review a Notice of Determination (Notice) sent by respondent's Independent Office of Appeals (Appeals) to petitioner sustaining respondent's notice of intent to collect from petitioner by levy assessed and unpaid federal income tax, penalties, and interest for petitioner's taxable (calendar) year 2019 (Levy Notice). We review the Notice pursuant to section 6330(d). Respondent has moved for summary adjudication in his favor (Motion) and petitioner objects our granting the Motion (Objection). We will grant the Motion.
All section references are to the Internal Revenue Code of 1986, as amended, regulation references are to the Code of Federal Regulations, and Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The following facts are based upon the parties' pleadings, motion papers, declarations, with attached exhibits, and the administrative record of the Collection Due Process (CDP) hearing accorded petitioner pursuant to section 6330. See Rule 121(b).
Residence
Petitioner resided in California when he filed the Petition.
Petitioner's 2019 Income Tax and Respondent's Levy Notice
Petitioner filed a 2019 federal income tax return but did not pay the amount of tax reported as owed.
To collect petitioner's unpaid 2019 tax, together with penalties and interest, all totaling $83,797.20, respondent, on August 30, 2021, sent petitioner a Notice CP90, Notice of intent to seize your assets and of your right to a hearing.
Request for a Collection Due Process (CDP) Hearing
In response, petitioner submitted to respondent a Form 12153, Request for a CDP or Equivalent Hearing. Petitioner requested a hearing and proposed, as a collection alternative, an Offer in Compromise. He stated that he "want[ed] a delay . . . in order to apply for a home equity loan or refinance and take cash out to make a cash payment." He did dispute his liability for the tax and other amounts owed.
CDP Hearing
By letter dated September 7, 2022, Settlement Officer (SO) Diane Saylor acknowledged petitioner's Form 12153 and requested that he send her certain documents necessary for her to consider any collection alternative. She requested a completed Form 656, Offer in Compromise, with attachments, a completed tax return for 2021, proof of estimated tax payments for 2022, and a detailed proposal for payment. She scheduled a hearing for October 5, 2022.
Because petitioner requested that the hearing be rescheduled, petitioner's case was transferred to another SO, SO Jennifer Hinderliter, who, on September 28, 2022, wrote to him rescheduling the hearing for November 8 and asking that he send her the documentation requested by SO Saylor.
During a telephone call from petitioner on October 24, she advised him that, if he wanted his account reviewed for the possibility of an installment agreement, he should send her an Internal Revenue Service (IRS) Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and three months of bank statements.
Petitioner had a telephone hearing with SO Hinderliter on November 8. Petitioner was not sure whether he wanted to ask for an installment agreement or to make an offer in compromise. SO Hinderliter explained the differences to him, and he decided he preferred the latter. She offered him two weeks to submit an offer. He responded that he would have to tap into equity in his property to make the offer. She responded that he would have to submit to her the completed Form 656 and all required attachments by December 8. If she did not receive back the requested information, she added, she would make a determination as to a collection alternative on the basis of the information in her file at the time of her closing review. Before the close of the hearing, SO Hinderliter had not received from petitioner the requested Form 433-A. She received it on November 8 after the hearing and, on review of it, concluded that, because he had substantial equity in his assets that was enough to fully pay his 2019 tax debt, he did not qualify for an installment agreement or to have his account classified as currently not collectible.
On December 16, SO Hinderliter received correspondence from petitioner stating that he would not be able to become current in his estimated tax payments for 2022 and would like to wait until 2023 to make his offer in compromise so that he could include his 2022 liability in the offer.
On December 20, petitioner called SO Hinderliter and requested more time to make his offer in compromise. She extended to him a final deadline of January 9, 2023.
On January 12, he called again, asking for more time to make his offer and to become current on estimated tax payments for 2022. SO Hinderliter told him that he had no more time to submit the offer to her but that did not preclude him from submitting an offer to the IRS Offer In Compromise Unit. SO Hinderliter told him she would review the file and make a determination on basis of the information therein.
Notice
The Notice is dated January 17, 2023, is signed by David R. Fuller, Appeals Team Manager, and lists SO Hinderliter as the person to contact with respect to the Notice. The Notice summarizes Appeals' (i.e., SO Hinderliter's) determination as follows:
The Final Notice of Intent to Levy was appropriate at the time it was issued. You requested an Offer in Compromise as a collection alternative. You did not submit Form 656, Offer in Compromise, to the Settlement Officer for consideration. You stated in the conference that you may want an installment agreement but did not propose an amount. You are not in compliance with current paying requirements. Our records indicate you have not made any of your 2022 Estimated Tax Payments. Based on the lack of current estimated tax payments along with equity in assets, you do not qualify for an installment agreement. Since you do not qualify for an installment agreement and did not provide the requested OIC package, no collection alternatives could be granted. As no viable alternative could be reached, the proposed levy action balances the need for efficient collection of the tax with concerns that collection action be no more intrusive than necessary.
An attachment to the Notice affirms that SO Hinderliter verified that the requirements of any applicable law or administrative procedure were met.
Petition
Petitioner timely petitioned the Court for review of the Notice, assigning error to the Notice on the grounds that SO Hinderliter's did not allow him an installment agreement and did not allow him additional time to secure a home equity loan in order to make a payment with respect to an offer in compromise.
Discussion
I. Sections 6331(a) and 6330
Section 6331(a) authorizes the Secretary to levy upon property and taxpayers' rights to property if the taxpayers are liable for taxes and fail to pay those taxes within 10 days after a notice and demand for payment is made. The Secretary is required to notify the taxpayers in writing of their right to a hearing before a levy is made. § 6330(a)(1).
Section 6330 provides procedures for administrative and judicial review of the IRS's proposed levy actions. Any person receiving a notice of proposed levy may request an administrative hearing with Appeals. Appeals, in turn, is obliged to verify that the requirements of any applicable law or administrative procedure have been met. § 6330(c)(1), (3)(A). The person may raise at the administrative hearing any relevant issue relating to the unpaid tax or the collection action, including challenges to the appropriateness of the collection action and offers of collection alternatives. § 6330(c)(2)(A), (3)(B). The person may also raise at the hearing challenges to the existence or amount of the underlying liability if the person did not receive a statutory notice of deficiency for the tax liability or did not otherwise have an opportunity to dispute it. § 6330(c)(2)(B). Finally, the Appeals Office must consider whether the collection action balances the need for efficient collection against the person's concern that collection be no more intrusive than necessary. § 6330(c)(3)(C).
II. Standard and Scope of Review
Where the existence or amount of the underlying tax liability is not at issue, as is the case here, the standard for our review of an Appeals' determination to sustain a levy notice or to deny a collection alternative is "abuse of discretion". See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). Abuse of discretion exists when a determination is "arbitrary, capricious, or without sound basis in fact or law." Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006).
The scope of our review of Appeal's determination is either governed by the so called "record rule", i.e., our review is limited to the administrative record compiled by Appeals, or it is de novo. In Robinette v. Commissioner, 123 T.C. 85, 95 (2004), rev'd, 439 F.3d 455 (8th Cir. 2006), we held that "when reviewing for abuse of discretion under section 6330(d), we are . . . not limited to the administrative record." Because petitioner resided in California when he filed the Petition, our decision in this case is appealable to the U.S. Court of Appeals for the Ninth Circuit, pursuant to section 7482(b)(1)(G)(i), absent the parties' stipulation to the contrary. That court has concluded that, when in a section 6330 case the standard of review is "abuse of discretion," the record rule applies. See Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009), aff'g in part T.C. Memo. 2006-166, and aff'g in part, rev'g in part decisions in related cases. We therefore follow that court's opinion. See Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971).
Rule 93(c) defines the term "administrative record," and Rule 93(a) says that, in the absence of a stipulated administrative record, the Commissioner may file with the Court the entire administrative record, certified as to its genuineness. Respondent has filed the administrative record, docket entry No. 11, certifying as to its genuineness. Petitioner not having moved pursuant to Rule 93(b) to complete or supplement the administrative record filed by respondent, we accept the filed record as genuine and complete, and the scope of our review is limited to that record.
III. Summary Adjudication
Either party may move for summary judgment upon all or any party of the legal issues in controversy. Rule 121(a)(1). Ordinarily, under Rule 121(a) 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. Van Bemmelen v. Commissioner, 155 T.C. 64, 78 (2020). The purpose of summary judgment is to avoid unnecessary trials. We deny summary judgment when there is a genuine factual dispute that requires a trial. Id. at 78. But, under the record rule, the scope of review is the administrative record compiled by the agency, and there will be no trial on the merits. Therefore, the summary judgment standard outlined in Rule 122 is not generally apt in a record-rule proceeding. See id. at 78. Nevertheless, notwithstanding that, in record rule proceeding, there will be no trial on the merits, "summary judgment serves as a mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. at 79. Therefore, the Motion is appropriate, and we proceed to consider its merits.
IV. Respondent's Arguments
Respondent points out that petitioner has not raised a challenge to his underlying liability for the 2019 tax, penalties, and interest that are the subject of the Levy Notice. Petitioner has only requested a collection alternative, initially asking to be allowed to make an offer in compromise and, later, considering asking for an installment agreement. Respondent argues that it was not an abuse of discretion for Appeals to deny petitioner his requested collection alternatives because (1) petitioner did not provide the necessary information that SOs Saylor and Hinderliter requested, (2) he was not in compliance with tax reporting requirements, and (3) his net worth was too great for him to qualify for an installment agreement.
In particular, respondent emphasizes petitioner's repeated failures to meet, first, SO Saylor's and, then, SO Hinderliter's requests for a Form 656, Offer in Compromise, along with supporting documents and proof of estimated tax payments for 2022. Initially requested in September 2022, petitioner had not provided the information by the time SO Hinderliter finished her consideration of his case in mid-January 2023. Taxpayers, respondent argues, are expected to meet reasonable deadlines set by Appeals to submit requested information, and it is not an abuse of discretion to issue the determination if the taxpayer fails to submit the requested items within the reasonable timeframe given by Appeals. See Pough v. Commissioner, 135 T.C. 344, 351 (2010).
Petitioner orally expressed interest in an installment agreement but never submitted a written proposal for such an agreement. Respondent argues that it was not an abuse of discretion for SO Hinderliter to disregard petitioner's expression of interest in an installment agreement in the absence of a written proposal. See Pough, 135 T.C. at 351. Nor, respondent argues, was it error for her to reject an installment agreement on the grounds that petitioner had sufficient equity in his assets to pay his 2019 tax. See id.
Respondent argues that it is not an abuse of discretion for Appeals to reject a collection alternative because a taxpayer is behind on tax liabilities at the time of application. See Giamelli v. Commissioner, 129 T.C. 107, 111-12 (2007) ("Reliance on a failure to pay current taxes in rejecting a collection alternative does not constitute an abuse of discretion.").
Finally, respondent argues, SO Hinderliter was an impartial employee who had no prior involvement with the unpaid tax in the case. See § 6330(b)(3). In determining that petitioner did not qualify for an collection alternative, she (A) verified that the requirements of applicable law and administrative procedures had been met, (B) considered relevant issues raised by the taxpayer, and (C) considered whether the proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection be no more intrusive than necessary. See § 6330(c)(3).
Respondent prays that we grant the Motion.
V. Petitioner's Arguments
Petitioner's Objection is brief. He opposes granting the Motion because (1) he was current in his tax obligations, (2) he proposed an installment obligation (in an unspecified amount) but SO Hinderliter did not tell him his proposal had to be in writing, and (3) respondent's counsel did not contact him and failed to return his phone calls. He wants us to remand his case to Appeals for consideration of an installment agreement as a collection alternative.
VI. Analysis
Petitioner claims that he was current in his tax obligations. The scope of our review is the administrative record submitted by respondent, and that record shows that petitioner was not current in his tax obligations. Petitioner points to nothing in the record to contradict that showing, and we accept it as true.
Petitioner argues that respondent failed to consider an installment agreement because he (petitioner) did not make a written proposal for such an agreement. There is no requirement that a taxpayer's initial request for an installment agreement be in writing although the Code and the regulations require an approved installment agreement to be in writing. Nutrition Formulators, Inc. v. Commissioner, T.C. Memo. 2016-60, at *21-22; § 6159(a); Treas. Reg. § 301.6159-1(c)(2). However, a taxpayer must properly request a collection alternative before the Commissioner can consider it. E.g., Nutrition Formulators, Inc., T.C. Memo. 2016-60, at *22. Here the record does not show that petitioner proposed an installment agreement. Moreover, it was not an abuse of discretion for SO Hinderliter to refuse to consider an installment agreement where petitioner was delinquent in his tax obligation and had equity in his assets sufficient to pay some or all of his 2019 tax debt. See, e.g., Scanlon v. Commissioner, T.C. Memo. 2018-51, at *18-28.
Finally, whatever failure (if any) there was in respondent's counsel responding to petitioner's calls, that does not go to the soundness of the Notice.
We will not remand the case. VII. Conclusion
We find that there was no abuse of discretion in Appeals determining to sustain the levy notice for unpaid 2019 taxes, penalties, and interest and in not according petitioner an installment agreement or accepting an offer in compromise. The administrative record shows that SO Hinderliter: (1) verified that all legal and procedural requirements were met, (2) considered all issues petitioner raised, and (3) determined that the completed and proposed collection actions appropriately balance the need for the efficient collection of taxes with the legitimate concern of petitioner that the collection actions be no more intrusive than necessary. Accordingly, we will grant the Motion.
To reflect the foregoing, it is
ORDERED that this case is stricken for trial from the Court's October 30, 2023, San Francisco, California, trial session. It is further
ORDERED that respondent's Motion for Summary Judgment is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the collection action for the taxable year 2019 as determined in the Notice of Determination Concerning Collection Actions Under IRS Sections 6320 or 6330 of the Internal Revenue Code, dated January 17, 2023, upon which this case is based.