Opinion
22266-19L
11-29-2022
AARON ELLISON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Courtney D. Jones Judge
In this collection due process (CDP) case, petitioner, Aaron Ellison (Mr. Ellison), challenges a Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 (notice of determination) issued by the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) on November 20, 2019. The notice of determination sustained the proposed levy action to collect unpaid federal income taxes assessed against Mr. Ellison for taxable year 2017.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
This case is before the Court on respondent's Motion for Summary Judgment, filed on October 12, 2022. The issue for decision is whether Appeals abused its discretion by sustaining the proposed levy action concerning taxable year 2017. On October 17, 2022, the Court ordered Mr. Ellison to file an opposition to respondent's Motion for Summary Judgment on or before November 10, 2022, but the Court has not received a response from Mr. Ellison. For the reasons elaborated upon below, we will grant respondent's Motion.
Background
The following background is drawn from the parties' pleadings, motion papers, and associated exhibits and declarations. They are stated solely for the purpose of resolving the present Motion and not as findings of fact in this case. See Rule 1(b). Mr. Ellison resided in Maryland when he filed his Petition.
Mr. Ellison is liable for unpaid individual federal income tax and additions to tax assessments based on a self-filed joint return for taxable year 2017. Mr. Ellison's former spouse was granted innocent spouse relief for the taxable year 2017 tax liabilities. On June 20, 2019, the IRS issued a Final Notice of Intent to Levy and Notice of Your Rights to a Hearing concerning the taxable year 2017 liabilities. On July 13, 2019, Mr. Ellison timely submitted Form 12153, Request for Collection Due Process or Equivalent Hearing. Mr. Ellison checked the box "I cannot pay balance," attached a letter to his Form 12153 stating that he could not pay the balance due, and provided a list of his debts. Mr. Ellison did not, however, provide any information about his income, assets, or provide any substantiation.
Additionally, Mr. Ellison checked the box "Innocent Spouse relief," and next to the box he wrote the words "already filed." At the time Mr. Ellison submitted his Form 12153, his spouse had submitted a request for innocent spouse relief, but there is no evidence that Mr. Ellison had filed any such request on his own behalf. Mr. Ellison did not include with his CDP request his own Form 8857, Request for Innocent Spouse Relief, or an equivalent written statement, as is necessary for the IRS to consider such relief. See Stanley v. Commissioner, T.C. Memo. 2016-26, at *18 ("A taxpayer generally must submit Form 8857 or a written statement containing the same information as Form 8857."); see also Treas. Reg. § 1.6015-5(a).
Mr. Ellison's case was assigned to Settlement Officer Cynthia Covey (SO Covey) on August 6, 2019. On that same day, SO Covey verified that she had no prior involvement with Mr. Ellison for the types of taxes and tax years at issue. On September 4, 2019, SO Covey reviewed the case, verified that all legal procedures were followed, that Mr. Ellison's rights were not violated, and that the notice and demand were made within 60 days of assessment. On September 5, 2019, SO Covey mailed a letter to Mr. Ellison, scheduling a telephone conference for October 23, 2019. SO Covey's letter also requested that, within 14 days, Mr. Ellison submit: (1) a completed Form 433-A, Collection Information Statement for Individuals, (2) proof of current estimated tax payments for 2019, (3) three months of bank statements, and (4) three months' proof of household income. The letter also requested that, within 21 days, Mr. Ellison submit a signed and complete federal income tax return for taxable year 2018. SO Covey did not receive any of the documents she requested, nor a request for additional time to provide the requested information.
On October 23, 2019, SO Covey held a telephone conference with Mr. Ellison. During the telephone conference Mr. Ellison agreed that his rights had not been violated by the issuance of the levy notice and that the underlying liability was not at issue, but stated that his ability to pay was an issue. Mr. Ellison did not advance any arguments pertaining to innocent spouse relief. SO Covey advised Mr. Ellison that she could not consider collection alternatives without the requested financial information, a complete and signed income tax return for taxable year 2018, and proof of estimated payments for taxable year 2019. SO Covey explained that because Mr. Ellison had over 30 days to submit the requested documentation and none had been received, she was going to advise that the levy notice be sustained.
On November 20, 2019, SO Covey's Appeals Team Manager issued a Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 to Mr. Ellison that sustained the levy notice. On December 8, 2019, after issuance of the notice of determination, Mr. Ellison submitted the requested financial information. On December 16, 2019, Mr. Ellison filed a Petition with this Court and attached the notice of determination thereto and another copy of the aforementioned list of debts. In response to the Court's December 19, 2019 order, Mr. Ellison filed an Amended Petition, mailed on January 31, 2020, and received by the Court on February 7, 2020. In his Amended Petition, Mr. Ellison checked the box that he disputes a "Notice of Determination Concerning Collection Action" for taxable year 2017, and wrote: "[n]eed an affordable payment plan according to my debt."
Discussion
I. General Principles
A. Summary Judgment Standard
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We may grant summary judgment when there is no genuine dispute of material fact, and a decision may be rendered as a matter of law. See Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party. Id. The nonmoving party may not rest upon mere allegations nor denials in their pleadings and must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). We find that summary judgment is appropriate in this case.
B. Standard of Review
This Court has jurisdiction to review the administrative determination made by Appeals. § 6330(d)(1). Where the underlying liability was not properly at issue, as is the case here, we will review the determination for an abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). An abuse of discretion occurs if the Appeals officer or employee conducting the hearing exercises their discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999); see also Giamelli v. Commissioner, 129 T.C. 107, 111 (2007).
II. Analysis
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 6330(a) provides that the levy authorized in section 6331(a) may be made only if the Secretary has notified such person in writing of the right to an administrative hearing before the levy is enforced. Upon timely request, the person is entitled to an administrative hearing before the Appeals Office. § 6330(b)(1).
In deciding whether SO Covey abused her discretion in sustaining the collection action, we consider whether she: (1) properly verified that the requirements of applicable law or administrative procedure were met, (2) considered any relevant issues raised by Mr. Ellison, and (3) considered whether any proposed collection action balances the need for the efficient collection of taxes with Mr. Ellison's legitimate concern that any collection action be no more intrusive than necessary. See § 6330(c)(1), (3). Our review of the record establishes that SO Covey properly discharged all of her responsibilities under section 6330(c).
First, this Court has authority to review satisfaction of the verification requirement regardless of whether the taxpayer raised that issue at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Mr. Ellison did not allege in his Petition that SO Covey failed to satisfy this requirement and has set forth no specific facts as to this matter. See Rules 121(d), 331(b)(4) ("Any issue not raised in the assignments of error shall be deemed to be conceded."). In any event, our review of the record shows that SO Covey reviewed and verified that all applicable requirements were met.
Second, in his Petition, Mr. Ellison only stated "Need an affordable payment plan according to my debt," and he did not raise any other arguments relating to spousal relief or any other issues. On his Form 12153, Mr. Ellison requested "currently not collectible" (CNC) status by checking the box "I cannot pay balance." CNC status may be available if the taxpayer can demonstrate that, on the basis of his assets, equity, income, and expenses, he has no apparent ability to make payments on the outstanding tax liability. See Siebert v. Commissioner, T.C. Memo. 2021-34, at *31 (citing Foley v. Commissioner, T.C. Memo. 2007-242, 94 T.C.M. (CCH) 210, 212 (2007)). In determining whether a taxpayer qualifies for CNC status, a settlement officer will calculate a taxpayer's ability to make payments by determining the excess of income over necessary living expenses. Id. (citing Rosendale v. Commissioner, T.C. Memo. 2018-99, at *9). A "[t]axpayer[] [is] [] expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing." Treas. Reg. § 301.6330-1(e)(1), see also IRM 5.16.1.2.9(1) (Sept. 18, 2018).
To the extent that Mr. Ellison's Form 12153 indicates that he was interested in requesting innocent spouse relief for himself, and not referencing his wife's already-filed request for innocent spouse relief, he has conceded the issue. Mr. Ellison did not submit Form 8857 or an equivalent written statement, and he did not pursue innocent spouse relief in any way during the pendency of the CDP hearing. See Stanley, T.C. Memo 2016-26, at *18. He also did not mention innocent spouse relief in his Petition and has therefore conceded the issue. See Rule 331(b)(4); see also Jackson v. Commissioner, T.C. Memo. 2022-50, at *8, n. 6.
SO Covey asked Mr. Ellison to provide the requested financial information within 14 days, and a signed copy of his 2018 tax return within 21 days. Although Mr. Ellison submitted a list of his debts with his Form 12153, that list did not provide any information about his income, assets, or provide any substantiation. Mr. Ellison failed to timely satisfy SO Covey's request for the financial information necessary to consider his request, including: (1) Form 433-A, (2) proof of current estimated tax payments for 2019, (3) three months of bank statements, (4) three months' proof of income, and (5) a signed and completed federal income tax return for taxable year 2018.
Mr. Ellison did not provide the requested information within the reasonable time allotted by SO Covey, during the appeals conference, or at any time prior to the issuance of the notice of determination, and he did not ask for an extension to provide such information. See Shanley v. Commissioner, T.C. Memo. 2009-17, 2009 WL 195929 at *5. It is well settled that it is not an abuse of discretion for a settlement officer to issue a notice of determination if the taxpayer fails to submit the requested items within the reasonable timeframe given by Appeals, as the failure to provide such information prevents Appeals from being able to evaluate his qualification for CNC status. See, e.g., Pough v. Commissioner, 135 T.C. 344, 351 (2010); Sullivan v. Commissioner, T.C. Memo 2012-337, at *19-20.
Finally, Mr. Ellison did not allege in his Petition or argue at any point that SO Covey failed to consider "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." See § 6330(c)(3)(C). Thus, Mr. Ellison has conceded this issue. See Rules 121(d), 331(b)(4); see also Ansley v. Commissioner, T.C. Memo. 2019-46, at *19.
III. Conclusion
The record demonstrates that SO Covey did not abuse her discretion and that she properly discharged all of her responsibilities under section 6330(c). In reaching our decision, we have considered all arguments made and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed October 12, 2022, is granted. It is further
ORDERED AND DECIDED that respondent's Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330, dated November 20, 2019, upon which this case is based, is sustained.