Opinion
35865-21L
11-03-2022
ELDON K. BUGG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
RONALD L. BUCH JUDGE
This collection case comes before the Court as a review of a notice of determination pursuant to section 6330 in which the Commissioner sustained a notice of intent to levy for 2016. Before us is the Commissioner's motion for summary judgment filed pursuant to Rule 121. (Unless otherwise indicated, all section references are to the Internal Revenue Code, all regulatory references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), and all Rule references are to the Tax Court Rules of Practice and Procedure, in effect at all relevant times. All monetary amounts are rounded to the nearest dollar.)
The Commissioner is seeking to collect a liability from Mr. Bugg, but Mr. Bugg only disputes the amount of the liability. Because Mr. Bugg did not offer any collection alternatives, the settlement officer did not abuse her discretion when she upheld the Commissioner's collection action. We will grant the Commissioner's motion.
Background
Mr. Bugg has an outstanding tax liability for 2016. He did not file a federal income tax return for that year. On February 19, 2019, the Commissioner mailed Mr. Bugg a notice of deficiency, which he has not disputed. In the notice, the Commissioner noted that the deficiency was calculated "assuming a filing status of 'single' or 'married filing separate.'" (We note that these two statuses may yield different tax results. Compare I.R.C. § 1(c) and (d).) This is immaterial because we conclude that we cannot consider the underlying liability. The notice also included failure to file and failure to pay penalties. Mr. Bugg's deadline for filing a petition with the Tax Court was May 20, 2019. Mr. Bugg did not file a petition with the Tax Court challenging the notice of deficiency, and the Commissioner subsequently assessed the deficiency.
The Commissioner attempted to collect the liability. After failing to receive payment from Mr. Bugg, the Commissioner issued a Notice CP90, Intent to Seize Your Assets and Notice of Your Right to a Hearing, which was mailed to Mr. Bugg on July 13, 2020. At the time the Commissioner issued his notice of intent to levy, Mr. Bugg had a total liability of $5,265 for 2016.
Mr. Bugg requested a collection hearing. He submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing, challenging the levy, but he did not propose a collection alternative. And although the Commissioner issued him a notice of intent to levy, Mr. Bugg checked the boxes for "Discharge" and "Withdrawal" of a Notice of Federal Tax Lien. He also noted on the form that "NONE OF THE ABOVE BOXES APPLY HERE." He added a paragraph to the form in which he explained that he believed that the amount of the assessment was incorrect because the Commissioner calculated his tax using the individual rate and not the married filing jointly rate.
On March 31, 2021, the settlement officer who handled Mr. Bugg's case responded. She sent a letter to Mr. Bugg acknowledging receipt of his Form 12153 and setting a date for a telephonic conference. In the letter, the settlement officer also noted that Mr. Bugg did not propose a collection alternative and checked the boxes requesting withdrawal and discharge of a Notice of Federal Tax Lien, even though the "IRS [had] not filed a Notice of Federal Tax Lien." Moreover, the settlement officer noted that Mr. Bugg had not filed a tax return for 2015, 2017, 2018, or 2019, and that he would need to do so in order to be eligible for a collection alternative.
On May 12, 2021, the settlement officer and Mr. Bugg held a telephonic conference. During the call, Mr. Bugg explained that he had not received a copy of his administrative file and that he had prepared a draft of his 2016 return that resulted in no balance due, but that the expenses contained on the draft return were just approximations. Mr. Bugg faxed the draft to the settlement officer, who confirmed receipt but explained that she would not forward the return for processing because Mr. Bugg acknowledged its incompleteness. The settlement officer decided to reschedule the hearing, which ultimately occurred on August 20, 2021.
At the rescheduled hearing, Mr. Bugg contested his underlying liability on the basis that he would have filed a joint return with his wife, whereas the notice of deficiency calculated his liability using the individual filing status. The settlement officer explained that because Mr. Bugg acknowledged receiving the notice of deficiency for 2016, he had prior opportunity to challenge his underlying liability, and therefore he could not challenge it in the hearing. She further explained that Mr. Bugg could submit his original return to the IRS and gave Mr. Bugg the mailing address and fax number for submitting his return. The settlement officer also asked if Mr. Bugg wanted to pursue any collection alternatives, such as an offer in compromise, but Mr. Bugg declined. After verifying that the Commissioner complied with all requirements of applicable law and administrative procedure in proposing the levy action, the settlement officer proceeded to close the case. On November 2, 2021, the Commissioner issued Mr. Bugg a Notice of Determination Concerning Collection Action(s) Under I.R.C. Sections 6320 or 6330, sustaining the levy.
Mr. Bugg petitioned the Tax Court, challenging the notice of determination. In the petition, Mr. Bugg stated that he disagreed with the underlying tax liability, that he "fully advised [the Commissioner] as to the joint filer status with his wife," and that he "presented [the Commissioner] with a joint 1040 for 2016 showing a substantial refund."
Before us is the Commissioner's motion for summary judgment, in which he argues that Mr. Bugg is barred from contesting his underlying tax liability because he had prior opportunity to do so. Mr. Bugg has not responded to the Commissioner's motion.
Discussion
Under Rule 121(a), either party may move for summary judgment regarding all or any part of the legal issues in controversy. The purpose of summary judgment is 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 only if there is no genuine dispute as to any material fact. Rule 121(b); Naftel v. Commissioner, 85 T.C. 527, 528-29 (1985). The party moving for summary judgment bears the burden of demonstrating that there is no genuine dispute as to any material fact. 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, the Court must consider the facts and any inferences drawn from those facts in the light most favorable to the nonmoving party. FPL Grp., Inc. & Subs. v. Commissioner, 115 T.C. 554, 559 (2000).
When a motion for summary judgment is made and properly supported, the nonmoving party may not rest on mere allegations or denials, but instead must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d). Mr. Bugg has not disputed any fact that is material to the issues before us, and we do not find that any material factual disputes exist.
In a collection case, a taxpayer may raise any issue that is relevant to the appropriateness of the collection action and potential collection alternatives. § 6330(c) (2)(A). In addition, a taxpayer may challenge the existence or amount of the underlying tax liability, provided that the taxpayer either did not receive the notice of deficiency or did not otherwise have a prior opportunity to dispute it. § 6330(c)(2)(B). A taxpayer who receives a notice of deficiency and does not petition the Tax Court is considered to have had a prior opportunity to dispute the liability arising out of that notice. See Sego v. Commissioner, 114 T.C. 604, 610-11 (2000).
Here, the settlement officer properly declined to consider Mr. Bugg's underlying liability. While Mr. Bugg may have attempted to challenge his underlying liability in the collection hearing, he already had prior opportunity to do so. The notice of deficiency from which Mr. Bugg's underlying liability arises provided him that opportunity. Mr. Bugg has not disputed receiving the notice of deficiency and he did not petition the Tax Court to challenge the deficiency determination. As a result, the underlying liability is not properly in dispute here.
Because the underlying liability is not in dispute here, we review the Commissioner's collection determination for an abuse of discretion. Sego, 114 T.C. at 610; Goza v. Commissioner, 114 T.C. 176, 182 (2000). In reviewing for abuse of discretion, we do not conduct an independent review of the collection alternatives. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff 'd, 469 F.3d 27 (1st Cir. 2006). We do not substitute our judgment for that of the Commissioner; we only ensure that the Commissioner's decision was not arbitrary, capricious, or without sound basis in fact or law. Klein v. Commissioner, 149 T.C. 341, 348 (2017).
Generally, the Commissioner's determination must: (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 any proposed collection action reasonably balances the need for efficient tax collection with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. § 6330(c)(3). In confirming that these requirements have been met, an officer may rely on an account transcript. See Craig v. Commissioner, 119 T.C. 252, 262 (2002).
Here, the settlement officer complied with the three requirements of section 6330(c). During the collection hearing, the settlement officer reviewed Mr. Bugg's account transcript and the administrative record, determining that the Commissioner had complied with all legal and procedural requirements.
Collection hearings must be conducted by an impartial officer or employee who has no prior involvement with the unpaid tax. § 6330(b)(3). The settlement officer verified her impartiality, confirming that she had not previously participated in the Commissioner's assessment or collection activities with respect to Mr. Bugg.
The settlement officer did not consider collection alternatives because none were sought. Mr. Bugg did not request a collection alternative and, when asked whether he would like to discuss a collection alternative, he declined the offer. Mr. Bugg also did not file his 2015, 2017, 2018, or 2019 tax returns, which he would be required to do before becoming eligible for any collection alternative. Moreover, Mr. Bugg did not provide any financial information that would otherwise be necessary to consider a collection alternative. As such, the settlement officer did not abuse her discretion in sustaining the Commissioner's notice of intent to levy. See Stanwyck v. Commissioner, T.C. Memo. 2012-180, 103 T.C.M. (CCH) 1955, 1959.
The Commissioner did not abuse his discretion in upholding the notice of intent to levy for 2016. Accordingly, it is
ORDERED that the Commissioner's Motion for Summary Judgment filed August 2, 2022, is granted. It is further
ORDERED AND DECIDED that the determination set forth in the Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330 issued to petitioner on November 2, 2021, and upon which this case is based, is sustained.