Opinion
14402-23L
08-21-2024
BRANDON CRAWFORD, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Diana L. Leyden Special Trial Judge
On September 8, 2023, petitioner timely filed a Petition in this case. Petitioner seeks review of a Notice of Determination Concerning Collection Actions Under IRS Sections 6320 or 6330 of the Internal Revenue Code (notice of determination), dated August 9, 2023. The notice of determination sustained a proposed levy with respect to petitioner's unpaid federal income tax liability for 2019.
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.
On March 19, 2024, pursuant to Rule 93(a) respondent filed a Notice of Filing of Administrative Record, a Certificate as to the Genuineness of the Administrative Record, and the Administrative Record. Petitioner did not file a motion to complete or supplement the administrative record.
On March 20, 2024, respondent filed a Motion for Summary Judgment (motion) under Rule 121. By Order served March 21, 2024, the Court directed petitioner to respond to the motion. Petitioner has not filed a response to respondent's motion.
Upon review of the record on respondent's motion, the Court concludes that there are not any genuine issues of material facts, and that respondent is entitled to judgment as a matter of law.
Background
The record on respondent's motion establishes and/or the parties do not dispute the following. Petitioner resided in Indiana at the time the Petition was filed with the Court.
Petitioner filed a federal individual income tax return for 2019 on April 15, 2020, showing a balance due of $6,193. Petitioner's return reported income tax withholding of $334. On August 17, 2020, the IRS assessed an addition to tax for underpayment of estimated tax of $178.02, an addition to tax for failure to timely pay tax of $58.59, and interest of $15.87. The IRS sent a notice and demand for the unpaid balance on August 17, 2020.
On August 16, 2021, the IRS issued to petitioner a Notice of intent to seize your assets and of your right to a hearing (notice of intent to levy). The notice of intent to levy advised petitioner of petitioner's right to request a collection due process (CDP) hearing.
Petitioner timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, to challenge the proposed levy with respect to petitioner's unpaid tax liability for 2019. Petitioner checked the box for an installment agreement and "I Cannot Pay Balance" as collection alternatives.
Petitioner's CDP hearing request was assigned to an Appeals Officer (AO) with the IRS Independent Office of Appeals (Appeals Office). The AO verified that did not have prior involvement with petitioner for the tax or tax year at issue in this case.
By letter dated May 22, 2023, the AO informed petitioner that a CDP telephone conference was scheduled for July 11, 2023, and requested that petitioner send a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, three months of bank statements for all accounts, verification of 401k account statements, income verification (pay stubs/profit & loss statement), verification of living expenses, mortgage statements/payments, utility bills/payments, etc. within 14 days of the date of the letter. The AO also requested that petitioner send within 21 days of date of the letter signed federal income tax returns for 2018, 2020, 2021, and 2022.
Petitioner did not submit the requested documents and did not attend the scheduled CDP hearing. Nevertheless, the AO sent petitioner another letter dated July 14, 2023, and provided him 14 days to contact the AO and provide the information. In that letter the AO notified petitioner that the AO would make a determination once the 14 days had passed and would base it on any information provided or hearing petitioner attended within those 14 days. Petitioner did not respond to this letter.
Discussion
A. Summary Judgment
Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Either party may move for summary judgment upon all or any part of the legal issues in controversy. Rule 121(a). The Court may grant summary judgment only if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 121(a)(2).
Respondent, as the moving party, bears the burden of proving that not any genuine dispute exists as to any material fact and that respondent is entitled to judgment as a matter of law. See FPL Grp., Inc. v. Commissioner, 115 T.C. 554, 559 (2000); Bond v. Commissioner, 100 T.C. 32, 36 (1993); Naftel v. Commissioner, 85 T.C. 527, 529. In deciding whether to grant summary judgment, the factual materials and inferences drawn from them must be considered in the light most favorable to the nonmoving party. FPL Grp., Inc., 115 T.C. at 559; Bond, 100 T.C. at 36; Naftel, 85 T.C. at 529. The party opposing summary judgment must set forth specific facts which show that a question of genuine dispute as to a material fact exists and may not rely merely on allegations or denials in the pleadings. Rule 121(d); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988); King v. Commissioner, 87 T.C. 1213, 1217 (1986).
B. Hearings Under Section 6330
Section 6331(a) authorizes the Commissioner to levy upon property and property rights of a taxpayer liable for taxes who fails to pay those taxes within 10 days after notice and demand for payment. Section 6331(d) provides that the levy authorized by section 6331(a) may be made with respect to any unpaid tax only after the Commissioner has notified the person in writing of his intention to make the levy at least 30 days before any levy action is begun. Section 6330 elaborates on section 6331 and provides that the written notice must inform the taxpayer of her right to request a CDP hearing. I.R.C. § 6330(a)(3)(B); Treas. Reg. § 301.6330-1(b)(1).
If a CDP hearing is requested, the hearing is to be conducted by the Appeals Office. I.R.C. § 6330(b)(1). At the hearing, the AO conducting it must verify that the requirements of any applicable law or administrative procedure have been met. I.R.C. § 6330(c)(1). The taxpayer may raise at the CDP hearing "any relevant issue relating to the unpaid tax or the proposed levy," including appropriate spousal defenses; challenges to the appropriateness of collection actions; and offers of collection alternatives. I.R.C. § 6330(c)(2)(A). Within 30 days after the Appeals Office issues a notice of determination the taxpayer may appeal the determination to the Court. I.R.C. § 6330(d)(1).
In reviewing an IRS administrative determination in a CDP case, if the underlying tax liability is properly in dispute, the Court reviews the determination regarding the underlying tax liability de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006).
Our review of CDP cases is limited to issues that taxpayers raised during their CDP hearings. Giamelli v. Commissioner, 129 T.C. 107, 112-13 (2007); Magana v. Commissioner, 118 T.C. 488, 493 (2002); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3.
C. Abuse of Discretion
Petitioner has not challenged petitioner's underlying 2019 tax liability. Therefore, our review is limited to whether the AO abused his discretion in sustaining the proposed levy.
In deciding whether the AO abused his discretion in sustaining the collection action the Court considers whether the AO: (1) properly verified that the requirements of applicable law and administrative procedure had been met; (2) considered any relevant issues petitioner raised; and (3) considered "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the * * * [taxpayer] that any collection action be no more intrusive than necessary." See I.R.C. § 6330(c)(3).
D. Collection Alternatives
In determining whether there was an abuse of discretion the Court does not conduct an independent review and substitute its judgment for that of the settlement officer. Murphy, 125 T.C. at 320. If the AO follows all statutory and administrative guidelines and provides a reasoned, balanced decision, the Court will not reweigh the equities. Thompson v. Commissioner, 140 T.C. 173, 179 (2013).
This Court has held on numerous occasions that it is not an abuse of discretion for the AO to reject collection alternatives and sustain the proposed collection action due to the taxpayer's failure to submit requested financial information. See, e.g., McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Pough v. Commissioner, 135 T.C. 344, 351 (2010); Kendricks v. Commissioner, 124 T.C. 69, 79 (2005); Orum v. Commissioner, 123 T.C. 1, 13 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005).
1. Installment Agreement
Section 6159(a) authorizes the Commissioner to enter into written agreements allowing taxpayers to pay tax in installments if he deems that the "agreement will facilitate full or partial collection of such liability." See also Thompson v. Commissioner, 140 T.C. at 179. The decision to accept or reject installment agreements lies within the discretion of the Commissioner. Id.; see also Treas. Reg. § 301.6159-1(a), (c)(1)(i). Petitioner did not provide any financial information to support the request for an installment agreement and because petitioner did not submit outstanding unfiled federal income tax returns he was not in filing compliance, a requirement for the AO to permit an installment agreement. See Giamelli, 129 T.C. at 111-12.
2. Currently Not Collectible
The Internal Revenue Manual (IRM) provides guidance for determining whether a tax account should be placed in currently not collectible status. A tax account may be placed in currently not collectible status for a variety of reasons, including for hardship. See IRM pt. 5.16.1.2.9(1) (April 13, 2021). "A hardship exists if a taxpayer is unable to pay reasonable basic living expenses." Id. A hardship determination is made based on the taxpayer's assets, equity in those assets, income, and expenses generally reported on Form 433-A. Id. Hardship cases generally involve taxpayers with no income or assets, no equity in assets, or insufficient income to make any payments without causing hardship. Id. The IRM further provides that "[a]n account should not be reported as CNC [(currently not collectible)] if the taxpayer has income or equity in assets, and enforced collection of the income or assets would not cause hardship." Id. Because petitioner did not provide the requested financial information petitioner did not prove that petitioner would experience an economic hardship if the levy were sustained.
E. Verification
The record shows that the Appeals Office properly verified that the requirements of all applicable laws and administrative procedures were met in the processing of petitioners' case and that the proposed levy balances the Government's need for the efficient collection of taxes with petitioners' concerns that the collection action be no more intrusive than necessary.
It is well established that a Form 4340 or a computer printout of a taxpayer's transcript of account, absent a showing of irregularity, provides sufficient verification of the taxpayer's outstanding liability to satisfy the requirements of section 6330(c)(1) (requirement that the Appeals officer conducting a CDP hearing obtain verification "that the requirements of any applicable law or administrative procedure had been met"). See, e.g., Davis v. Commissioner, 115 T.C. 35, 40-41 (2000); Roberts v. Commissioner, T.C. Memo 2004-100; Tornichio v. Commissioner, T.C. Memo 2002-291. Petitioner has not demonstrated any irregularity in the preparation of the foregoing transcripts, and the Court sees no reason to depart from that principle in this case. See Davis, 115 T.C. at 41; Tornichio, T.C. Memo 2002-291.
F. Conclusion
In sum the Court concludes that there is not any genuine dispute as to any material fact and that respondent is entitled to judgment as a matter of law. The Court concludes that the notice of determination, as supplemented, upon which this case is based, should be sustained.
Premises considered, it is
ORDERED that respondent's motion for summary judgment, filed March 20, 2024, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the proposed levy in respect of petitioner's tax liability for 2019 as determined in the notice of determination dated August 9, 2023, upon which this case is based.