Opinion
16247-23L
09-06-2024
WANRIETTA FAYE COURSEL, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Ronald L. Buch Judge.
Pending before us in this collection case brought pursuant to section 6330 is the Commissioner's Motion for Summary Judgment, filed May 1, 2024, in which the Commissioner asserts that he did not abuse his discretion in sustaining a levy for Ms. Coursel's unpaid liabilities for 2016 through 2019.
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. All monetary amounts are rounded to the nearest dollar.
Ms. Coursel challenged the Commissioner's collection activity and, throughout the administrative process, cooperated by promptly providing requested information, typically by mailing responses by the deadline set by the appeals officer. After the appeals officer requested additional information, she abruptly closed the case on the deadline she had set for submission of additional information after. Failure to give a meaningful opportunity to respond to requests for information after a taxpayer has established a pattern of prompt and responsive communication is an abuse of discretion. Given Ms. Coursel's established pattern of providing responsive information, the Commissioner abused his discretion by failing allow a reasonable time to receive Ms. Coursel's response by closing the case on the deadline without waiting to allow time for receipt of mailed information. Accordingly, we will deny the Commissioner's Motion for Summary Judgment and remand this case for further consideration.
Background
The Commissioner sought to collect income tax liabilities from Ms. Coursel for tax years 2016 to 2019 (years at issue). Ms. Coursel filed her tax returns for the years at issue but did not pay her liability in full. The Commissioner sent Ms. Coursel a letter CP90, Notice of Intent to Seize Your Assets and of Your Right to a Hearing (Notice of Intent to Levy), dated August 16, 2021, advising her of his intent to levy for her 2016, 2017, 2018, and 2019 tax liabilities. The letter included a deadline of September 15, 2021, to request a collection hearing. In response, on September 21, 2021, the Commissioner received a Form 12153, Request for Collection Due Process or Equivalent Hearing, from Ms. Coursel that was dated September 15, 2021. On that form, Ms. Coursel checked a box indicating that she would like an installment agreement and wrote "Installment Agreement was to reactivate and has not. Different way to pay."
The Commissioner scheduled a collection hearing for Ms. Coursel. An appeals officer sent Ms. Coursel a letter that scheduled a telephonic hearing for March 15, 2023. In the letter, the appeals officer requested a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to consider in evaluating any collection alternatives. On March 15, 2023, Ms. Coursel called the appeals officer and asked to reschedule the hearing and to have her administrative file sent to her. She was in a car accident the previous day that resulted in medical expenses and a total loss of her vehicle. The appeals officer mailed Ms. Coursel the administrative file and rescheduled the hearing for May 10, 2023.
Ms. Coursel attended the hearing during which she requested an installment agreement of $800 per month. She also stated during the hearing that the administrative file she received did not have the information she was seeking. The appeals officer calculated the minimum payment from Ms. Coursel of $980 per month, an amount Ms. Coursel said she could not afford. The appeals officer requested Ms. Coursel provide a Form 433-A to determine whether a different monthly payment would be appropriate. The appeals officer gave Ms. Coursel a deadline of May 24, 2023 to submit the additional information.
After not receiving a response, the appeals officer called Ms. Coursel on May 25 to check on a response. That same day, Ms. Coursel faxed a Form 433-A dated May 2, 2023. The appeals officer submitted it to Collection for review on May 30, 2023. The appeals officer sent the results of Collection's review by a letter dated July 24, 2023. The appeals officer informed Ms. Coursel that she did not meet the criteria for hardship status and requested she provide additional information by August 7, 2023, to set up a formal installment agreement. The letter Ms. Coursel alleges that she mailed to the appeals officer on August 7, 2023, contained such additional information. The administrative record does not indicate receipt or review of Ms. Coursel's additional hardship information.
But the appeals officer never had the opportunity to review that information. The appeals officer decided to close the case on August 7, 2023, the same day the information was due, and prepared the closing documents that week. The Commissioner issued Ms. Coursel a Notice of Determination dated September 8, 2023, sustaining the collection action for the years in issue and stating within the notice that Ms. Coursel failed to respond to the request for additional collection information.
While residing in Indiana, Ms. Coursel filed a Petition with the Court. In her Petition, Ms. Coursel challenged the Notice of Determination. She raised, among other things, the denial her proposed $800 per month installment agreement and the failure to consider the information she had provided. She also mentioned an incomplete administrative record and that "an abatement or request for some type of penalty and or interest relief could not be requested."
On May 1, 2024, the Commissioner filed a Motion for Summary Judgment. In his Motion he contends that he is entitled summary judgment because Ms. Coursel did not raise a genuine dispute as to any material fact and that the appeals officer did not abuse her discretion in denying relief. Ms. Coursel filed a response to the Commissioner's Motion stating a dispute of material fact exists. She argues that the appeals process was defective, that the administrative file she received was incomplete, and that the information she submitted on August 7, 2023, was not considered.
Discussion
Before the Court is the Commissioner's Motion for Summary Judgment in which he asks us to determine that the appeals officer did not abuse her discretion in sustaining the notice of intent to levy. In making this argument, the Commissioner argues that there is no genuine dispute as to any material fact. Because there is a dispute as to whether Ms. Coursel submitted the additional financial information on August 7, 2023, we must deny summary judgment. Regardless of this dispute, however, the appeals officer abused her discretion by closing the case without allowing sufficient time to receive the information. We will remand the case for further consideration.
I. Summary Judgment Standard
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)(2); 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, the Commissioner) to demonstrate that there is no genuine dispute as to any material fact. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). In deciding whether to grant summary judgment, the factual materials and the inferences drawn from them must be considered in the light most favorable to the nonmoving party (in this case, Ms. Coursel). Bond v. Commissioner, 100 T.C. 32, 36 (1993).
II. Standard of Review
Where the underlying liability is properly at issue in a collection case, we review the issue of underlying liability de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000). Where the underlying liability is not properly at issue, we review the Commissioner's collection determinations for an abuse of discretion. Id. Ms. Coursel did not raise her underlying liability in her Form 12153 or, from the records currently before the Court, at any other time during her collection hearing. Accordingly, we will review the Commissioner's collection determination for an abuse of discretion. See Giamelli v. Commissioner, 129 T.C. 107, 112-14 (2007); Magana v. Commissioner, 118 T.C. 488, 493 (2002); Goza v. Commissioner, 114 T.C. 176, 181-82 (2000).
An abuse of discretion occurs if the Commissioner exercises his discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999). To determine whether the Commissioner abused his discretion in issuing a notice of determination, we consider whether the Commissioner: (1) properly verified that all requirements of applicable law and administrative procedure were satisfied, (2) considered any relevant issues petitioner raised, and (3) considered whether the proposed collection action is no more intrusive than necessary. See I.R.C. § 6330(c)(1)-(3).
III. Judicial Review of Appeals Determination
A. Administrative Record
In this case, we are not constrained by the Commissioner's administrative record. Absent an agreement to the contrary, our decision in this case is appealable to the U.S. Court of Appeals for the Seventh Circuit. See § 7482(b)(1)(G)(i) and (2). We have previously held that we may consider evidence that is not part of the administrative record. Robinette v. Commissioner, 123 T.C. 85, 95 (2004), rev'd, 439 F.3d 455 (8th Cir. 2006). The Seventh Circuit has declined to address this issue. See Gyorgy v. Commissioner, 779 F.3d 466, 473 n.5 (7th Cir. 2015); Gillette v. Commissioner, 801 Fed.Appx. 398, 403 (7th Cir. 2020), aff'g T.C. Memo. 2018-195. Thus, we follow our own precedent and may consider evidence not presented by the taxpayer to Appeals at the collection hearing. See Golsen v. Commissioner, 54 T.C. 742, 756-57 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971). Moreover, there is also an exception to the record rule if a party makes a significant showing of an incomplete record. See Berenblatt v. Commissioner, 160 T.C. 534, 546 (2023). And the Court is not confined to the administrative record to determine the record's sufficiency in the event an incomplete record is alleged. See Neal v. Commissioner, T.C. Memo. 2020-138, at *18.
Ms. Coursel has alleged that the administrative record is incomplete in her Petition, during her collection hearing, and in response to the Commissioner's Motion. She also alleges that she submitted additional hardship information to the Commissioner on August 7, 2023, after her appeals hearing. This information is not present in the administrative record nor is it documented that it was either received or reviewed by the Commissioner. Thus, there is a genuine dispute as to whether the administrative record is complete.
B. Conduct of the Collection Hearing
The Commissioner is required to consider at a collection hearing any "relevant issue" raised by the taxpayer. I.R.C. § 6330(c)(2)(A). In making a determination, the appeals officer must take into consideration the relevant issues raised by the taxpayer in the hearing. See I.R.C. § 6330(c)(3). Ms. Coursel raised the following issues at her hearing: an incomplete administrative record, a request for an installment agreement, and economic hardship.
Ms. Coursel states in her Petition that "[a]n abatement or request for some type of penalty and or interest relief could not be requested." In her response to the Commissioner's Motion she also states that "[s]ome type of abatement may have been able to be talked about if I would have received my entire Administrative file." Ms. Coursel did not raise penalties or interest in her Form 12153 or from the records currently before the Court, during the collection hearing. Therefore, we will not consider penalties or interest.
The Commissioner may set and enforce reasonable deadlines. Ms. Coursel was given until August 7, 2023, to provide additional information for consideration or to set up a formal installment agreement. The Commissioner cites Pough v. Commissioner, 135 T.C. 344, 351 (2010), for the proposition that a "petitioner is expected to meet reasonable deadlines set by Appeals to submit requested information, and it is not an abuse of discretion to issue the determination if the petitioner fails to submit the requested items within the reasonable timeframe given by Appeals." We agree with this general proposition.
But that general proposition has its limits. An abrupt closure of a case after a pattern of prompt and responsive communication by the taxpayer is an abuse of discretion. See Long v. Commissioner, T.C. Memo. 2023-130, at *12 . In Long, the parties clearly established a pattern of responding to each other promptly, yet the Commissioner issued a notice of determination without allowing sufficient time for a response to a draft memorandum proposing to disallow an offer in compromise.
Similar to the taxpayer in Long, Ms. Coursel had demonstrated cooperation with the appeals officer and promptly responded to all communications with all requested information. Ms. Coursel attended her hearing and promptly provided requested information. And, according to Ms. Coursel, when the appeals officer requested additional information, she likewise mailed it on the due date. But the appeals officer closed the case on the date of the deadline. Ms. Coursel established a pattern of responsive communication with the appeals officer. Thus, an abrupt closure of the case without confirming whether Ms. Coursel had sent the requested information was an abuse of discretion by the appeals officer, particularly given the course of conduct of the parties.
We make no finding as to whether Ms. Coursel, in fact, provided the requested information on August 7, 2023. The administrative record neither establishes nor refutes the mailing of the requested additional information. But we need not resolve this question, because whether or not Ms. Coursel responded, the appeals officer abused her discretion in not allowing time for that response to arrive.
Conclusion
Ms. Coursel had established a pattern of promptly responding to requests for information by mailing it to the appeals officer by the date requested. The Commissioner's closing of this case on the same date the information was due without allowing time to receive a timely mailed response was an abuse of discretion. Accordingly it is
ORDERED that the Commissioner's Motion for Summary Judgment filed May 1, 2024, is denied. It is further
ORDERED that this case is remanded to the IRS Independent Office of Appeals for further consideration consistent with this Order. It is further
ORDERED that, by December 27, 2024, the Commissioner shall file a status report informing the Court of the status of this case and attaching any supplemental notice of determination that may have been issued. It is further
ORDERED that jurisdiction is retained by the undersigned.