Opinion
12087-22L
01-09-2024
MICHAEL PATRICK BOYLE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Kathleen Kerrigan Chief Judge
On October 23, 2023, respondent filed a Motion for Summary Judgment. Respondent seeks to sustain a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) dated April 14, 2022. The notice of determination sustained a notice of federal tax lien (NFTL) filing issued with respect to petitioner's unpaid tax liabilities for 2008-10 and 2014-17 (years in issue). The Court ordered petitioner to respond to respondent's Motion and to date the Court has not received a response from petitioner.
There are no genuine issues of material fact in this case and we conclude that respondent is entitled to judgment as a matter of law as provided herein.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Background
Petitioner resided in California when he timely filed his Petition.
Respondent prepared substitutes for returns for petitioner for 2008-10, and petitioner filed returns for 2014-17. Respondent assessed income tax liabilities against petitioner for each year in issue.
On March 4, 2021, respondent sent petitioner a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. On July 22, 2019, respondent received petitioners timely Form 12153, Request for a Collection Due Process (CDP) or Equivalent Hearing. On Form 12153, petitioner checked boxes requesting withdrawal of the NFTL. Petitioner requested the collection alternatives "Installment Agreement", "Offer in Compromise" (OIC), and "I Cannot Pay Balance".
Petitioner's CDP hearing was assigned to a settlement officer. On July 1, 2020, the settlement officer sent petitioner a letter scheduling a CDP hearing. The letter requested that petitioner submit a signed tax return for 2013, a Form 433-A, Collection Information Statement, and a Form 656, Offer in Compromise, with documentation supporting the forms.
On August 12, 2020, the day the CDP hearing was scheduled, petitioner left a voicemail for the settlement officer requesting to reschedule the hearing. After unsuccessfully attempting to reach petitioner twice, the settlement officer mailed petitioner a Letter 4000, Collection Due Process Last Chance Letter, advising that if he did not respond within fourteen days of the date on the letter a determination would be made based on the administrative file, case history, and his Form 12153. On August 27, 2020, the settlement officer received petitioner's Form 433-A and an OIC in which he offered to pay $18,000 of his total liability of $330,828.
On July 16, 2021, respondent rejected petitioner's OIC and returned the file to the settlement officer. On October 8, 2021, petitioner and the settlement officer had a telephone conference in which the settlement officer explained that the OIC was rejected because it could be increased based on the reasonable collection potential calculated for petitioner.
On November 4, 2021, respondent determined petitioner could make payments of $5,061 and proposed an installment agreement by mailing to petitioner a letter detailing his income and expenses accompanied by Form 433-D, Installment Agreement and Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Levy Prohibition. On February 18, 2022, these documents were updated and mailed to petitioner's new address. Petitioner was further advised that a determination would be made based on the case file if he did not respond by March 4, 2022.
The settlement officer verified that all legal and procedural requirements were met. On April 14, 2022, respondent issued petitioner a notice of determination sustaining the filing of the NFTL. The notice of determination stated that petitioner did not meet any of the necessary criteria under section 6323(j)(1) to allow the Internal Revenue Service (IRS) to withdraw the filing of the NFTL.
In his Petition petitioner disputed the determination not to withdraw the lien and stated that due to his financial circumstances and the fact that he was approaching retirement, he would be unable to make payments of over $5,000 per month.
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(a); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). The burden is on the moving party (in this case, respondent) to demonstrate that there is no genuine dispute as to any material fact and that he or she is entitled to judgment as matter of law. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). The court will view any factual inferences in the light most favorable to the nonmoving party. Bond v. Commissioner, 100 T.C. 32, 36 (1993). The nonmoving party may not rest upon mere allegations or denials in his or her pleadings but must set forth specific facts showing there is a genuine dispute for trial. Sundstrand, 98 T.C. at 520.
Petitioner has failed to demonstrate, by affidavits or other acceptable materials, that there is a genuine issue for trial. Rule 121(d). Consequently we conclude that there is no dispute as to any material fact and that a decision may be rendered as a matter of law.
Pursuant to section 6321 if a taxpayer liable to pay any tax neglects or refuses to pay such after tax notice and demand for payment, a lien upon all of the taxpayer's property or rights to property shall arise in favor of the United States. Section 6320(a)(1) requires the Secretary to provide written notice to a taxpayer when the Secretary has filed an NFTL against the taxpayer's property or property rights. See also § 6323. The Secretary must also notify the taxpayer of his or her right to a CDP hearing. § 6320(a)(3); 6330(a).
If the taxpayer requests a CDP hearing, the hearing is conducted by the IRS Independent Office of Appeals (Appeals). § 6320(b)(1). At the hearing the taxpayer may raise any relevant issue relating to the unpaid tax or the NFTL. §§ 6320(c), 6330(c)(2)(A). Petitioner did not raise the issue of his underlying tax liability for the years in issue during the CDP hearing. His underlying tax liability is not properly before us. Treas. Reg. § 301.6330-1(f)(2), Q&A-F3; see also Giamelli v. Commissioner, 129 T.C. 107, 114-15 (2007).
The Court reviews administrative determinations by Appeals regarding nonliability issues for abuse of discretion. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008), supplemented by 136 T.C. 463 (2011). In determining whether there has been an abuse of discretion, we consider whether the determination by Appeals was arbitrary, capricious, or without sound basis in fact or law. See, e.g., Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); Woodral v. Commissioner, 112 T.C. 19, 23 (1999). The Court does not conduct an independent review and substitute its judgment for that of the settlement officer. Murphy, 125 T.C. at 320.
Section 6330(c)(3) requires that the determination of a settlement officer take into consideration: (1) whether the requirements of any applicable law or administrative procedure have been met; (2) any issues appropriately raised by the taxpayer; and (3) whether the collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary. § 6330(c); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). Our review of the record establishes that the settlement officer discharged all of their responsibilities under these provisions.
We do not conduct an independent review of what would be an acceptable offer in compromise. Murphy, 125 T.C. at 320. Nor do we recalculate a taxpayer's ability to pay or substitute our judgment for a settlement officer's. See O'Donnell v. Commissioner, T.C. Memo. 2013-247, at *15. Treasury Regulation § 301.7122-1 sets forth the limited grounds upon which the Secretary may compromise a civil tax liability. These include (1) doubt as to liability, (2) doubt as to collectability, and (3) to promote effective tax administration. Treas. Reg. § 301.7122-1(b); see also Murphy, 125 T.C. at 308-10. If a taxpayer establishes a basis for compromise, it is within the Secretary's discretion to accept or reject the OIC. Treas. Reg. § 301.7122-1(a)(1).
A taxpayer's ability to pay is determined by calculating the excess of income over necessary living expenses. Chavis v. Commissioner, 158 T.C. 175, 184 (2022). Petitioner's initial OIC proposed to pay only $18,000 of his $330,828 total liability. The settlement officer evaluated petitioner's reasonable collection potential on the basis of financial information provided by petitioner. The settlement officer reported her findings in an Offer in Compromise Financial Analysis Report in which she calculated that petitioner could pay $187,724 of his liability. The settlement officer advised petitioner that respondent cannot consider acceptance of an OIC of less than that amount. Because petitioner failed to establish a ground for compromise, the settlement officer could not have abused her discretion in rejecting the OIC.
Finding no abuse of discretion in any respect, we will grant summary judgment for respondent and sustain the collection action. We note that petitioner is free to submit to the IRS at any time, for its consideration and possible acceptance, a collection alternative in the form of an installment agreement or an OIC, supported by the necessary financial information.
Upon due consideration, it is ORDERED that respondent's motion for summary judgment dated October 23, 2023, is granted.
ORDERED and DECIDED that respondent's notice of determination dated April 14, 2022, upon which this case is based, is sustained.