Opinion
17120-19SL
03-24-2022
SHIPRA BHANSALI D.B.A. SCRUM TECHNOLOGIES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Peter J. Panuthos Special Trial Judge
This collection due process (CDP) case is before the Court on respondent's Motion for Summary Judgment, with a supporting declaration, filed October 8, 2020, pursuant to Tax Court Rule 121. Respondent seeks to sustain a notice of determination concerning a notice of lien filing and proposed levy action to collect petitioner's unpaid tax liabilities for taxable year 2015. Although petitioner was directed to file a response to respondent's motion, petitioner failed to do so.
Unless otherwise indicated, all rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code, as amended, in effect at all relevant times.
The notice of determination included both a notice of lien filing and proposed levy. While petitioner did not request lien withdrawal, the settlement officer (SO) in the CDP hearing considered lien withdrawal. Since petitioner does not appear to raise issues with respect to the levy action and we conclude that respondent is entitled to summary judgment, we do not opine on the proposed levy action.
Background
The following background information is derived from the parties' filings. Petitioner's place of business was located in the state of Minnesota when the petition was filed.
Petitioner failed to timely file a Form 941, Employer's Quarterly Tax Return for the fourth quarter of 2015 (period in issue). The IRS subsequently prepared a substitute return pursuant to Section 6020(b) and determined petitioner owed $37, 467.19. Respondent assessed penalties and interest for late filing and late 1 payment for the period in issue. Petitioner later filed a Form 941, after which the IRS abated the tax and penalties and applied a credit, resulting from a previous federal tax deposit. On January 26, 2018, petitioner filed a Form 941-X for the period in issue. After processing, the IRS determined a balance due for the Form 941 taxes for the period in issue in the amount of $15, 165.63. The IRS subsequently filed a Notice of Federal Tax Lien.
On August 1, 2018 respondent received petitioner's timely request for a CDP hearing indicating interest in an Offer in Compromise (OIC) and requesting lien withdrawal. Petitioner also claimed that overpayments in the first and second quarter of 2014 had not been applied to subsequent quarters.
On January 31, 2019, a Settlement Officer (SO), sent petitioner a letter acknowledging receipt of the CDP hearing request and scheduled a hearing for March 7, 2019. The letter requested that petitioner provide, on or before February 14, 2019:
(1) a completed Form 433-B, Collection Information Statement for Businesses; and (2)a completed Form 656, Offer in Compromise, with supporting documentation.
The SO received several documents from petitioner in advance of the CDP hearing, alleging overpayments from previous periods. In reviewing these documents, the SO discovered that the Form 941 taxes for the third quarter of 2015, should have been fully abated. The SO informed petitioner of her intent to request full abatement of taxes for the Form 941 taxes for the third quarter of 2015. In reviewing the other claims by petitioner, the SO determined that an alleged unapplied overpayment credit had actually already been applied. Similarly, petitioner's various other claims of overpayments or credits from previous periods were found to be mistaken and without merit.
The SO also reviewed petitioner's OIC and Form 433-B, Collection Information Statement for Businesses. Petitioner's OIC was incomplete, did not identify the taxpayer, failed to provide correct information about tax liabilities, and failed to indicate the reason for the offer. The SO noted that petitioner should have filed a Form 433-A, because of her status as a sole proprietor.
After rescheduling multiple times, the CDP hearing was held on March 21, 2019, with petitioner's POA. The parties agreed to wait for the processing of an abatement of the 941 taxes for the third quarter of 2015 before consideration of an OIC.
After an abatement, a balance remained outstanding for Form 941 taxes for the fourth quarter of 2015, the tax period at issue in this case. On May 8, 2019, the SO suggested to petitioner's POA, a 72-month streamlined installment agreement with monthly payment of $180.00. The SO initially requested a response to the proposed installment agreement by May 10, 2019. Subsequently, the SO extended 2 the response deadline to June 21, 2019. Petitioner did not respond by either deadline, but continued to request transcripts and supporting documents for the estimate of taxes due.
This payment amount accounts for an outstanding 940 tax liability for tax year 2015 that was not part of the CDP proceeding in this case.
On August, 142019, the IRS Office of Appeals (Appeals) issued petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 of the Internal Revenue Code sustaining the lien and the proposed levy with respect to petitioner's liabilities for 2015. On September 16, 2020, petitioner timely petitioned this Court for review of the notice of determination.
Discussion
1. Summary Judgment
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Florida 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 facts and a decision may be rendered as a matter of law. Rule 121(b); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
The moving party bears the burden of showing that there is no genuine issue of material fact. Celotex Cord. v. Catrett, 477 U.S. 317, 323 (1986). In deciding whether to grant summary judgment, we view the factual materials and the inferences drawn from them in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby. Inc. 477 U.S. 242, 255 (1986). The party opposing the summary judgment must set forth specific facts which show that a question of genuine material fact exists and may not rely merely on allegations or denials in the pleadings. Rule 121(d); Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988).
Under Rule 121(d), if the adverse party does not respond to the motion for summary judgment, then this court may enter a decision where appropriate against that party. See King v. Commissioner, 87 T.C. at 1217; Shepherd v. Commissioner, T.C. Memo. 1997-555. Petitioner has not responded to the motion for summary judgment. The Court could grant respondent's motion on that ground alone. However, even if the Court did not rely on that basis, the record in this matter shows that respondent is entitled to summary judgment on the merits of the case.
2. Hearing under Section 6330
During a CDP hearing a taxpayer may challenge the existence or amount of its underlying tax liability if the taxpayer did not otherwise have an opportunity to do so. Sec. 6330(c)(2)(B). Where a taxpayer's underlying liability is properly at issue, this Court reviews any determination regarding the underlying liability de novo. Goza v. Commissioner, 114 T.C. 176, 182 (2000).
Petitioner contended the IRS erred in applying claimed overpayment credits from previous years that would offset the balance of the amount of tax due for the 3 period in issue. This Court has held previously that the question of "whether the IRS properly credited a payment is not a challenge to a tax liability; i.e. the amount of tax imposed by the Code for a particular year. It is instead a question of whether the liability remains unpaid". Melasky v. Commissioner, 151 T.C. 89, 92 (2018). Therefore, the underlying tax liability is not properly at issue in this case.
Where the underlying tax liability is not at issue, the Court will review respondent's determination for abuse of discretion. See Goza v. Commissioner, 114 T.C. at 182. That is, we review the determination to see if it was arbitrary, capricious, or without sound basis in fact or law. See Giamelli v. Commissioner, 129 T.C. 107 (2007). In deciding whether the SO abused his discretion in sustaining the proposed collection action, we consider whether the SO: (1) properly verified that the requirements of any applicable law or administrative procedure had been met; (2) considered any relevant issues petitioner raised; and (3) determined whether the "proposed collection action balances the need for the efficient collection of taxes with the legitimate concern * * * that any collection action be no more intrusive than necessary." Sec. 6330(c)(3).
No particular form of verification is required, and transcripts of account may be used to satisfy the requirements of section 6330(c)(1). See Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), aff'd 329 F.3d 1224 (11th Cir. 2003). The record shows that the SO verified that the requirements of applicable law and administrative procedure were met. The SO stated in her case activity report that in reviewing petitioner's claims for overpayment credits, she had reviewed petitioner's account transcripts and confirmed that assessments were properly made.
A taxpayer in a CDP proceeding has the right to request a collection alternative, such as an offer in compromise or an installment agreement. See sec. 6330(c)(2)(A)(iii). In its discretion, the IRS may accept an installment agreement if it determines that doing so will facilitate full or partial collection of a tax liability. See sec. 6159(a). This Court has consistently held that it is not an abuse of discretion for Appeals to reject a collection alternative where the taxpayer has failed to submit requested financial information. See, e.g. McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Pough v. Commissioner, 135 T.C. 344, 351 (2010); Kendricks v. Commissioner, 124 T.C. 69, 79 (2005).
Petitioner's initial CDP hearing request indicated interest in an OIC. However petitioner's submitted OIC did not correctly identify the taxpayer, failed to provide correct information about tax liabilities, failed to indicate the reason for the offer, and erroneously reported financial information on Form 433-B. After the hearing, the SO proposed an installment agreement. Petitioner did not provide a response, even after an extension of the deadline, and did not submit further documents to pursue a collection alternative.
We therefore conclude that the SO balanced the need for efficient collection of taxes with petitioner's legitimate concern that the collection action be no more intrusive than necessary. Finding no abuse of discretion, in any respect, we conclude 4 that respondent is entitled to judgment as a matter of law, and we sustain the notice of determination issued August 14, 2019, with respect to petitioner's liabilities for taxable year 2015.
To reflect the foregoing, it is
ORDERED that respondent's Motion for Summary Judgment, filed October 8, 2020, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the collection action as determined in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 of the Internal Revenue Code, dated August 14, 2019, upon which notice this case is based. 5