Opinion
6223-22L
04-28-2023
CDC REPAIR & TOWING, LLC, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
ORDER AND DECISION
Tamara W. Ashford Judge
This section 6330(d)(1) appeal from a collection due process (CDP) determination is currently calendared for trial at the Session of the Court commencing on May 1, 2023, in Pittsburgh, Pennsylvania, and pending before the Court is respondent's Motion for Summary Judgment, filed February 24, 2023, pursuant to Rule 121. In the motion, respondent contends that no genuine dispute exists as to any material fact and that the determination of the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) approving a notice of intent to levy (levy notice) with respect to petitioner's unpaid employment tax liabilities for the tax periods ending March 31 and September 30, 2020 (tax periods at issue) should be sustained as a matter of law.
Unless otherwise indicated, all statutory references are to Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
By Order served on March 6, 2023, the Court ordered petitioner to file a response to respondent's motion no later than April 5, 2023. As of the date of this Order and Decision, neither petitioner nor his counsel of record have responded to either respondent's motion or the Court's Order.
Because no response to respondent's motion was filed despite the Court's Order directing petitioner to do so, the Court could enter a decision against petitioner for that reason alone. See Rule 121(d). We will nevertheless consider the motion on its merits.
Background
Petitioner failed to pay employment tax liabilities that the IRS had assessed against it despite the IRS having provided petitioner with notice and demand for payment. Consequently, the IRS sent petitioner a levy notice dated July 14, 2021, advising him that the IRS intended to levy to collect its outstanding liabilities for the tax periods at issue which, through July 24, 2021, totaled $22,135.85, and that petitioner had a right to a hearing to appeal the proposed collection action.
On August 13, 2021, in response to the levy notice, petitioner's authorized representative, William A. Buck (who is petitioner's counsel of record in this case), timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), on petitioner's behalf. The CDP hearing request did not challenge the underlying liabilities but did request the collection alternative of an installment agreement and that a CDP hearing be held with Mr. Buck. Additionally, as the reason for disputing the proposed levy action and requesting a CDP hearing, the CDP hearing request stated the following:
Taxpayer is requesting an installment agreement as a collection alternative. Any levy against Taxpayer will preclude Taxpayer from making payments against the outstanding balance for the periods at issue. Taxpayer is currently assembling information responsive to the request for [the] IRS to establish [an] installment agreement for the outstanding balance.
Appeals Officer Christopher L. Lazar (AO Lazar) sent petitioner a letter dated September 28, 2021 (with a copy to Mr. Buck), acknowledging receipt of its CDP hearing request and scheduling a telephonic CDP hearing on October 14, 2021. He also outlined the issues he had to consider during the hearing and informed petitioner that in order for him to consider collection alternatives it must provide him with the following documents: (1) a completed Form 433-B (OIC), Collection Information Statement for Businesses; (2) proof that all federal employment taxes for the current quarter were timely deposited; and (3) a detailed "Plan to Pay" with back up documents supporting Form 433-B. AO Lazar requested that petitioner provide the requested information within 14 days of his September 28, 2021, letter.
On October 13, 2021, AO Lazar received petitioner's completed Form 433-B with some bank and "UCC Financing Statement" information via "IRS EEFAX." Petitioner's Form 433-B reflected an offer to pay $1,000 per month.
On October 14, 2021, AO Lazar held a telephonic CDP hearing with Mr. Buck. During the hearing, Mr. Buck informed AO Lazar that petitioner wished to pay $750 per month in lieu of a levy. After the hearing on that same day, AO Lazar forwarded petitioner's Form 433-B along with the supporting documentation he had received to Revenue Officer Lindsey Wilson (RO Wilson) in IRS Collections for consideration.
RO Wilson reviewed petitioner's Form 433-B along with the supporting documentation that had been provided. In a memorandum to AO Lazar dated December 20, 2021, RO Wilson reported that petitioner did not appear to have any current equity in assets and that while she was able to verify petitioner's monthly gross income by reviewing petitioner's bank information, she was not able to verify petitioner's monthly expenses. According to RO Wilson, on December 10, 2021, she spoke with Mr. Buck via telephone and requested that petitioner's 2021 profit and loss statement and proof of secured debt payments be provided by December 17, 2021. As reflected in her memorandum, RO Wilson did not receive the requested information and thus she was unable to decide regarding petitioner's ability to pay.
On January 7, 2022, AO Lazar spoke with Mr. Buck via telephone, informing him of RO Wilson's memorandum (i.e., the lack of information and the deadline set and missed) and that he could not agree to an installment agreement at this time. In response, Mr. Buck said he would discuss the matter with petitioner. AO Lazar also faxed the memorandum to Mr. Buck and mailed it to petitioner.
On January 19, 2022, AO Lazar gave Mr. Buck "a last chance" to provide the information that RO Wilson had requested. On January 27, 2022, AO Lazar received certain 2021 quarterly employment tax return information for petitioner, including proof of federal tax deposits, via "IRS EEFAX." AO Lazar noted in his case activity record that this information would be of no help to RO Wilson to complete the analysis; therefore, the levy notice would be sustained and no installment agreement would be entered into because insufficient information to determine petitioner's ability to pay was provided after RO Wilson's request and after the additional time given for the information to be provided. Accordingly, on February 24, 2022, Appeals issued to petitioner (with a copy to Mr. Buck) a notice of determination sustaining the levy notice.
On March 25, 2022, petitioner timely filed a Petition with this Court for review of the notice of determination. At the time the Petition was filed, petitioner's principal place of business was in Pennsylvania. In its Petition, petitioner does not dispute its underlying liabilities, but states the following:
a. Petitioner provided sufficient evidence over time to demonstrate the current financial posture of the operations of its business, the impact of the COVID-19 pandemic, and the viability of the business going forward absent a mutually agreeable plan to pay.
b.The collectability of the outstanding liability by the IRS, and the continued viability of the Petitioner and its continued employment of taxpayers, is best achieved through a payment schedule over time.Additionally, petitioner states:
a. Petitioner provided a completed Form 433-B, evidence that federal employment taxes were timely deposited for the current quarter, together with back up documentation to support Form 433-B and Petitioner's proposed plan to pay.
b. Petitioner remains current on its deposits for federal employment taxes, together with all corresponding tax filings.
c. Petitioner has engaged a third-party to finalize and provide any additional back-up documentation on its financial condition to further substantiate that collectability of [the] outstanding liability and Petitioner's continued viability is best achieved through a payment schedule over time.
Discussion
The purpose of summary judgment is to expedite litigation and avoid unnecessary and expensive trials. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). The Court shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law." Rule 121(a)(2); see also 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 to demonstrate that there is no genuine dispute as to any material fact; consequently, factual inferences will be viewed in a light most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The nonmoving party may not rest upon the mere allegations or denials of its pleadings, but must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); Sundstrand Corp., 98 T.C. at 520. On the basis of the record in this case, we conclude that there is no genuine dispute as to any material fact. Consequently, we may render a decision as a matter of law.
Under section 6331(a), if any person liable to pay any tax neglects or refuses to do so after notice and demand, the Commissioner is authorized to collect the unpaid amount by way of a levy upon all property belonging to such a person upon which there is a lien. Pursuant to section 6330(a), the Commissioner must provide the person with written notice of an opportunity for an administrative hearing to review the proposed levy.
If an administrative hearing is requested in a levy case, the hearing is to be conducted by Appeals. § 6330(b)(1). At the hearing, the taxpayer may raise any relevant issues including spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. § 6330(c)(2)(A). Following the hearing, the Appeals officer must determine among other things whether the proposed collection action is appropriate. In reaching the determination, the Appeals officer must take into consideration: (1) whether the requirements of applicable law and administrative procedure have been met, (2) all relevant issues raised by the taxpayer, and (3) whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that collection be no more intrusive than necessary. § 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001).
Section 6330(d)(1) grants this Court jurisdiction to review the determination made by Appeals in a levy case. Where, as is the case here, the underlying liability is not at issue, we review Appeals' determination for abuse of discretion; that is, whether the determination was arbitrary, capricious, or without sound basis in fact or law. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008); Murphy v. Commissioner, 125 T.C. 301, 308 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); Goza v. Commissioner, 114 T.C. at 176, 182 (2000).
In submitting its CDP hearing request, petitioner's desire and focus has been to be granted the collection alternative of an installment agreement. It is not an abuse of discretion for Appeals to reject collection alternatives and sustain the collection action due to the taxpayer's failure to submit requested financial information. Scanlon v. Commissioner, T.C. Memo. 2018-51, at *24 (and cases cited thereat); see also Hartmann v. Commissioner, 638 F.3d 248, 250 (3rd Cir. 2011) ("[w]e agree with the Tax Court that the IRS did not abuse its discretion in sustaining the proposed levy where Hartmann failed to comply with the requirements for filing a proposed collection alternative."); Treas. Reg. § 301.6330-1(e)(1) ("Taxpayers will be expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing.").
After the telephonic CDP hearing with Mr. Buck, AO Lazar forwarded petitioner's Form 433-B and the bank and "UCC Financing Statement" information to RO Wilson for review. After reviewing this information, RO Wilson spoke with Mr. Buck via telephone and requested that certain additional financial information pertaining to petitioner's expenses be provided. Mr. Buck was also informed that a determination could not be made as to petitioner's ability to pay without that information. RO Wilson did not receive the requested information. Thereafter, on January 19, 2022, AO Lazar gave Mr. Buck "a last chance" to submit the requested information. On January 27, 2021, Mr. Buck sent AO Lazar certain 2021 quarterly employment tax return information for petitioner, including proof of federal tax deposits, but this information was patently not responsive to the request. Petitioner was thus afforded several opportunities to provide the requested information but failed to do so (and the information still could have been submitted for consideration after January 19, 2022, and up to February 24, 2022, when the notice of determination was issued to petitioner, see Dinino v. Commissioner, T.C. Memo. 2009-284, slip op. at 24 ("It is the policy of the Office of Appeals to consider financial information submitted past the deadline, and up to the time of the issuance of the notice of determination.")).
On the basis of our review of the administrative record, we find that AO Lazar considered all the requisite factors under section 6330(c)(3) when making his determination. The record shows that he (1) verified that all legal and procedural requirements were met, (2) considered all issues petitioner raised, and (3) determined that the proposed collection action appropriately balances the need for the efficient collection of taxes with the legitimate concern of petitioner that the collection action be no more intrusive than necessary. It cannot be said that AO Lazar abused his discretion in sustaining the levy notice, and we do not find that the notice of determination was arbitrary, capricious, or without a sound basis in fact or law. Accordingly, we grant respondent's motion and note that petitioner is of course free to continue to negotiate with the IRS concerning its liabilities for the tax periods at issue, but it is entitled to only one CDP hearing and Tax Court proceeding with respect to the proposed levy. See Ragsdale v. Commissioner, T.C. Memo. 2019-33, at *35 (citing Perrin v. Commissioner, T.C. Memo. 2012-22, slip op. at 8). Upon due consideration, it is hereby
ORDERED that respondent's Motion for Summary Judgment, filed February 24, 2023, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the collection action with respect to petitioner's unpaid employment tax liabilities for the tax periods ending March 31 and September 30, 2020, as described in the Notice of Determination Concerning Collection Actions Under Sections 6320 or 6330 of the Internal Revenue Code, dated February 24, 2022.