Opinion
26943-22L
09-09-2024
RODNEY BIGLOW, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
ZACHARY S. FRIED SPECIAL TRIAL JUDGE
This section 6330(d) case is before the Court on respondent's Motion for Summary Judgment, filed October 16, 2023. Respondent seeks to sustain a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (notice of determination) sustaining a proposed levy for unpaid federal income tax liabilities for 2012 through 2019 (underlying liabilities).
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
On December 4, 2023, petitioner filed his Opposition to Motion for Summary Judgment and Request for Remand, as supplemented on February 12, 2024. A hearing was conducted on respondent's motion in Washington, D.C., on December 19, 2023, during the trial session that started in that city on December 18, 2023. The parties appeared and were heard.
Background
The following facts are derived from the parties' pleadings and motion papers, including the administrative record and attached exhibits. See Rule 121(c).
The underlying liabilities were assessed in due course after petitioner's 2012 through 2019 federal income tax returns were filed. See sec. 6201(a)(1).
On November 17, 2020, respondent sent to petitioner a Final Notice of Intent to Levy and Notice of Your Rights to a Hearing, with respect to petitioner's underlying liabilities. On December 16, 2020, respondent received petitioner's Form 12153, Request for a Collection Due Process or Equivalent Hearing. In his request for an administrative hearing, petitioner did not challenge the underlying liabilities but did request to be considered for a collection alternative in the form of an installment agreement, offer-in-compromise (OIC), or currently not collectible (CNC) status.
Petitioner's case was assigned to Settlement Officer (SO) Anh Munson with the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals). On September 20, 2021, petitioner submitted an offer to compromise the underlying liabilities for $108,376 on the basis of doubt as to collectability. Petitioner's offer also included his federal income tax liability for 2020 that had accrued after he submitted his request for an administrative hearing.
In support of his requested collection alternatives, petitioner submitted to SO Munson Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals; Form 656, Offer in Compromise; financial information; proof of tax return filings; and a partial estimated tax payment for 2021.
Petitioner's OIC was sent to respondent's Centralized Offer in Compromise (COIC) Unit. Following submission of his OIC, petitioner began making monthly payments. The COIC Unit returned the OIC to petitioner upon finding that petitioner was not currently in compliance with his estimated tax payments for 2021 and 2022.
Thereafter, on August 2, 2022, petitioner's case was reassigned to SO Robert A. Carbaugh. SO Carbaugh determined that petitioner was not eligible for an installment agreement or an OIC due to petitioner's failure to make estimated tax payments for 2021 and 2022. SO Carbaugh reviewed petitioner's financial information and independently recalculated a monthly income and expense schedule for petitioner. Based on petitioner's income and allowable monthly expenses, SO Carbaugh determined that petitioner was ineligible for CNC status because he had net disposable monthly income after allowable living expenses.
On September 8, 2022, and on September 12, 2022, SO Carbaugh called and left a voicemail for petitioner's representative to discuss the returned OIC and SO Carbaugh's final determination in the collection due process (CDP) proceeding. Petitioner's representative never returned SO Carbaugh's calls, nor did petitioner's representative or petitioner provide proof of compliance with petitioner's outstanding 2021 and 2022 estimated tax payments. On September 19, 2022, SO Carbaugh submitted his determination to the Appeals Team Manager for review and approval. The determination was approved by the Appeals Team Manager on September 26, 2022.
On November 9, 2022, the notice of determination was issued sustaining the proposed levy with respect to the underlying liabilities. At the time the notice of determination was issued, petitioner's 2020 tax liability remained unpaid.
Shortly before the issuance of the notice of determination, petitioner came into full compliance with the outstanding 2021 and 2022 estimated tax payments, but petitioner did not communicate this new information to SO Carbaugh.
Discussion
I. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly, unnecessary, and time-consuming trials. See FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant summary judgment where there is no genuine dispute of material fact, and a decision may be rendered as a matter of law. Rule 121(a)(2); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). We construe all factual materials and inferences drawn therefrom in the light most favorable to the nonmoving party. See FPL Grp., Inc. & Subs., 116 T.C. at 75; Bond v. Commissioner, 100 T.C. 32, 36 (1993). The nonmoving party may not rest upon the mere allegations or denials of his pleading but must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). On the basis of our review of the record, we are satisfied that there is no genuine dispute of material fact, and this matter may be adjudicated summarily.
II. Standard of Review
We have jurisdiction to review Appeals' determination pursuant to sections 6320(c) and 6330(d)(1). See Murphy v. Commissioner, 125 T.C. 301, 308 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). Where the underlying liability of petitioner is properly at issue, we review respondent's determination de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-82. Where the validity of petitioner's underlying liability is not properly at issue, we review respondent's determination for abuse of discretion only. Goza, 114 T.C. at 182. A petitioner is precluded from disputing the underlying liability if it was not properly raised in the CDP hearing. Thompson v. Commissioner, 140 T.C. 173, 178 (2013); Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). Petitioner did not dispute the underlying liabilities during the CDP hearing nor challenge them in his proceeding before the Court. Accordingly, we will review the SO's determination for abuse of discretion only. See Goza, 114 T.C. at 182.
Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. Murphy, 125 T.C. at 320. Petitioner bears the burden of proving that an SO's actions constituted an abuse of discretion. See Rule 142(a); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
This Court has consistently held that an SO does not abuse his discretion in rejecting a collection alternative where he finds that the taxpayer is not in current compliance with tax laws. See Balsamo v. Commissioner, T.C. Memo. 2012-109, 2012 WL 1231985, at *4; Prater v. Commissioner, T.C. Memo. 2007-241, 2007 WL 2389549, at *2. Moreover, a SO has discretion to reject or deny a collection alternative that includes a current accrued liability. See Boulware v. Commissioner, T.C. Memo. 2014-80, at *10; Lipson v. Commissioner, T.C. Memo. 2012-252, at *3.
III. Review of SO Carbaugh's Determination
The record establishes that SO Carbaugh did not abuse his discretion in sustaining the collection action. Based on the information available to SO Carbaugh at the time the notice of determination was issued, petitioner was not eligible for an installment agreement or OIC because he had an unpaid liability for 2020 and was not in compliance with his estimated tax payment obligations for 2021 and 2022, despite SO Carbaugh providing ample time to petitioner to come into compliance.Further, we find that it was not an abuse of discretion for SO Carbaugh to conclude that petitioner was not eligible for CNC status because of petitioner's ability to make payments towards the underlying liabilities. See Siebert v. Commissioner, T.C. Memo. 2021-34, at *31.
We note that petitioner remains free to negotiate with the IRS as to his underlying liabilities, including his right to submit for consideration a future collection alternative, in the form of an installment agreement or OIC, supported by the requisite information.
Otherwise, the record shows that Appeals properly verified that the requirements of all applicable laws and administrative procedures were met, and that the collection action balances the government's need for the efficient collection of taxes with petitioner's concerns that the collection action be no more intrusive than necessary. Accordingly, the SO did not abuse his discretion in upholding the proposed levy.
Upon due consideration of the foregoing, it is
ORDERED that respondent's Motion for Summary Judgment, filed October 16, 2023, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with collection as determined in the notice of determination, dated November 9, 2022, a copy of which is attached to the Petition.