Opinion
594-22SL
03-14-2023
GREGORY L. BLUE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Eunkyong Choi Special Trial Judge
Pending before the Court is respondent's Motion for Summary Judgment, filed December 22, 2022. Respondent moves for adjudication in his favor regarding the Notice of Determination issued by the Independent Office of Appeals (Appeals) on December 22, 2021. In the determination, Appeals sustained the Notice CP90 (Levy Notice) dated April 13, 2020, which notified petitioner of respondent's intention to seize petitioner's assets to satisfy petitioner's tax liability for taxable year 2016. In moving for summary judgment, in addition to his motion, respondent relies on the Declaration of Mehrin Bakht in Support of Motion for Summary Judgment, and the exhibits attached thereto, filed December 23, 2022.
The Court heard respondent's Motion for Summary Judgment at its January 17, 2023, Standalone Remote Trial Session. Mehrin Bakht appeared on behalf of respondent. Petitioner appeared on his own behalf.
For the reasons set forth below, respondent's motion is granted.
Background
The following facts are drawn from the parties' pleadings and motion papers, including the attached declaration and exhibits, and petitioner's testimony. See Rule 121. Petitioner resided in New York when he filed the Petition in this case.
All statutory references are to the Internal Revenue Code in effect at all relevant times, and all rule references are to the Tax Court Rules of Practice and Procedure.
On April 13, 2020, respondent issued a Levy Notice to petitioner. The liability underlying the proposed levy is for taxable year 2016. The liability for taxable year 2016 is the result of a Notice of Deficiency issued by respondent's Automated Underreporter (AUR) Program.
In response to the Levy Notice, petitioner submitted a Form 12153 Request for a Collection Due Process or Equivalent Hearing to Appeals, which Appeals received on April 21, 2020. On the form, petitioner checked the boxes for "Installment Agreement" and "Other," noting in the box for "Other" that there had been no examination of his 2016 federal income tax return under respondent's AUR program and that the income he received from his pension is excluded from gross income. Petitioner did not provide any documents to support his request for a collections alternative or his challenge to liability.
On July 26, 2021, Settlement Officer Joe Alvarado (SO Alvarado) sent petitioner a letter scheduling a telephone conference for August 25, 2021 and offering to reschedule the conference to a different date at petitioner's request. In the letter, SO Alvarado explained that petitioner's request for a hearing was timely. He further explained that for him to consider petitioner's proposed collection alternative, petitioner must file his federal income tax return for taxable year 2020. The letter also included information about what documentation petitioner would need to submit if he was experiencing financial hardship and a statement that if petitioner did not participate in the scheduled conference or respond to the letter, Appeals would make a determination based on the information available to it.
Petitioner did not participate in the hearing that was scheduled for August 25, 2021. SO Alvarado therefore sent petitioner a letter that same day requesting that petitioner make contact within 14 days. He advised that if he did not hear from petitioner Appeals would issue a determination. After not hearing from petitioner, on September 16, 2021, SO Alvarado determined to sustain the proposed levy.
Appeals transferred the case to settlement officer Eleanor Gaxiola (SO Gaxiola) on September 29, 2021. SO Gaxiola prepared the Notice of Determination sustaining the proposed levy. She verified compliance with the requirements of section 6330(c)(3) and noted that because petitioner failed to participate in the CDP hearing, Appeals was not able to consider a collection alternative.
SO Gaxiola further noted that petitioner did not dispute the liability for taxable year 2016. We disagree. Petitioner's statement in the Form 12153 alleging that his pension income should be excluded from gross income was a challenge to liability. Nevertheless, because respondent mailed the notice of deficiency for taxable year 2016 to petitioner's last known address, petitioner would not have been permitted to dispute liability for taxable year 2016 in the CDP hearing. See Sec. 6330(c)(2)(B) (the existence and amount of the underlying tax liability can be contested in a CDP hearing only if the taxpayer did not receive a notice of deficiency for the taxes in question or did not otherwise have an opportunity to be heard).
Petitioner contended during oral argument that there was no examination of his federal income tax return for taxable year 2016, arguing that the AUR Program audit was not an examination. Petitioner further argued that the income reported under the AUR Program was excludable from gross income, and he is therefore not liable for a deficiency for taxable year 2016. Respondent's counsel countered that petitioner received a notice of deficiency for taxable year 2016, but did not file a petition with the Court disputing the proposed liability.
Discussion
Summary Judgment may be granted where the pleadings and other materials show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d (7th Cir. 1994). The burden is on the moving party to demonstrate that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. FPL GRP., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In reviewing the facts in this case in a light most favorable to petitioner, the nonmoving party, we find that respondent is not entitled to a decision sustaining the NFTL.
Where the validity of the underlying tax liability is properly in issue, the Court reviews respondent's determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the validity of the underlying tax liability is not properly in issue, the Court will review the settlement officer's administrative determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000). Petitioner was not permitted to raise the validity of the underlying tax liability for 2016 at his CDP hearing because respondent mailed a notice of deficiency for taxable year 2016 to petitioner's last known address. See Sec. 6330(c)(2)(B) (the existence and amount of the underlying tax liability can be contested in a CDP hearing only if the taxpayer did not receive a notice of deficiency for the taxes in question or did not otherwise have an opportunity to be heard). We therefore review the determination in this case for abuse of discretion.
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). Issuing a determination that does not meet the requirements of section 6330(c)(3) is an abuse of discretion. See Thompson v. Commissioner, 140 T.C. 173, 178-79 (2013). Section 6330(c)(3) requires a settlement officer to (1) verify that the requirements of applicable law and administrative procedure have been met, (2) consider issues raised by the taxpayer, and (3) consider whether the proposed collection action balances the need for the efficient collection of taxes with the taxpayer's legitimate concern that any collection action be no more intrusive than necessary.
In reviewing the determination for abuse of discretion, we do not substitute our judgment for that of the settlement officer or make an independent determination of what would be an acceptable collection alternative. Thompson v. Commissioner, 140 T.C. at 179. If the settlement officer "followed all statutory and administrative guidelines and provided a reasoned, balanced decision," we "will not reweigh the equities." Id.
We find that the settlement officer in this case met the requirements of section 6330(c)(3). Petitioner does not allege in his petition that the settlement officer failed to properly verify that the requirements of applicable law and administrative procedure had been met, and therefore concedes this issue. See Rule 331(b)(4); see also Dinino v. Commissioner, T. C. Memo 2009-284, 2009 WL 4723652 (citing Rule 33`(b)(4) for the proposition that the Court is required to consider the verification requirement under sec. 6330(c)(1) only if the taxpayer has adequately raised the issue in the petition). Further, petitioner requested a collections alternative in the form of an installment agreement but failed to provide any financial information for the settlement officer to consider. See Treas. Reg. Sec. 301.7122-1(d)(1) (a request for a collections alternative requires submission of financial information) see also, Bergdale v. Commissioner, T. C. Memo. 2014-152 (no abuse of discretion in closing case where taxpayer failed to provide financial information in support of a proposed collections alternative). Finally, the settlement officer considered whether the proposed collection action balances the need for the efficient collection of taxes with the taxpayer's legitimate concern that any collection action be no more intrusive than necessary. Prior to sustaining the proposed levy, she gave petitioner multiple opportunities to provide the information necessary for her to consider a less intrusive means of collection, but he failed to do so.
Upon due consideration, it is
ORDERED that respondent's Motion for Summary Judgment, filed December 23, 2022, is granted. It is further
ORDERED and DECIDED that respondent's Notice of Determination, upon which this case is based, is sustained