Opinion
21198-22L
07-24-2024
Dig This Inc., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Mark V. Holmes Judge
This case was on the Court's May 1, 2023 San Francisco, California trial calendar, and is an appeal from the Commissioner's determination to sustain enforced collection of petitioner's 2018 tax debt by imposition of a lien. The parties agreed on the contents of the administrative record.
The Commissioner moved for summary judgment. We gave petitioner two extensions of time to file an answer but a check of the docket showed it hadn't. This alone is grounds to grant a motion for summary judgment. See Rule 121(d), Tax Court Rules of Practice and Procedure.
We nevertheless prefer to rule on the merits. The major issue in the Commissioner's motion is whether the settlement officer abused her discretion in denying petitioner a collection alternative. On this issue our standard of review is abuse of discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). Our scope of review is the administrative record. Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009).
Background
This case arises from a notice of federal tax lien sent to petitioner in which the Commissioner stated he was imposing a lien on petitioner's property to collect its outstanding income liability for the 2018 tax year. Petitioner, a corporation with its principal place of business in California, asked for a collection due process (CDP) hearing shortly after. It selected every collection alternative available (i.e., installment agreement, offer in compromise, and currently uncollectible status) on its CDP hearing request. It also requested a lien withdrawal and stated that it wanted to challenge its underlying tax liability. In June 2022, a settlement officer (SO) sent a letter to petitioner telling it what forms and financial information it needed to send in for the IRS to consider a collection alternative. Petitioner didn't send any of the listed forms or information by the time of the hearing in mid-July.
Because Dig This Inc. is a California business, this case is appealable to the Ninth Circuit. See § 7482(b)(1)(G). (All section references are to the Internal Revenue Code and regulations in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless we say otherwise.)
Petitioner's counsel did attend that CDP hearing in mid-July and stated there that her client was working with a different part of the IRS-a "compliance team"in what was probably the Small Business/Self-Employed division-to negotiate an installment agreement that would include unpaid tax bills for 2011, 2012, and 2013 as well as for 2018. Petitioner explained that it didn't want to withdraw its CDP appeal until it worked things out for all years. The SO encouraged petitioner to continue to work with the compliance team to get current with its filing obligations and work out a settlement, but refused to hold open the CDP case without petitioner's submission of financial information or even the making of a specific offer in compromise.
The case activity record in the administrative record refers to "Compliance". We take judicial notice that "Compliance" in this context means an IRS "compliance team". See Camilla E. Watson, Tax Procedure and Tax Fraud 7 (W. Acad. Publ'g 6th ed. 2022) ("Each operative division has. . . its own compliance team"); see also Appeals Considers Risk of Going to Court (Hazards of Litigation), Taxpayer Advocate Services (Oct. 17, 2023), https://www.taxpayeradvocate.irs.gov/notices/hazards-oflitigation (last accessed July 23, 2024) ("Compliance employees are responsible for determining the correct tax liability, collecting delinquent taxes and securing delinquent tax returns through the fair and equitable application of the tax laws as prescribed by the Internal Revenue Code"). We infer, though it doesn't matter to our conclusion, that it was a compliance team in the Small Business/Self-Employed division given petitioner's size.
The SO kept the record open until late August, but never received an offer or any financial information. She mailed the notice sustaining the lien in early September.
Analysis
The Commissioner abuses his discretion when he makes an error of law, rests on a clearly erroneous finding of fact, or when he rules irrationally. Antioco v. Commissioner, 105 T.C.M. (CCH) 1234, 1237 (2013). We have long held that the Commissioner doesn't abuse his discretion if he rejects a request for a collection alternative because the taxpayer fails to submit its financial information. See, e.g., Sullivan v. Commissioner, 104 T.C.M. (CCH) 713, 718 (2012); see also Loveland v. Commissioner, 151 T.C. 78, 88 (2018) (citations omitted).
There is no abuse of discretion here.
We do note that in both its request for a CDP hearing, and in its petition, Dig This Inc. challenged its underlying tax liability for 2018, albeit with no specificity. But it did not pursue this issue at the CDP hearing or send anything to the SO relating to that liability. Without putting any proof of its 2018 tax liability in the record, that challenge is likewise foreclosed by our precedent. See Giamelli v. Commissioner, 129 T.C. 107, 113 (2007); Fleming v. Commissioner, 114 T.C.M. (CCH) 180, 182 (2017) (citing McRae v. Commissioner, 110 T.C.M. (CCH) 89, 91 (2015)); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3. Furthermore, petitioner's efforts to include its most recent tax liability in a new installment agreement didn't (procedurally) prevent the SO from sustaining the lien.
It is therefore
ORDERED that the Commissioner's motion for summary judgment is granted. It is also
ORDERED and DECIDED that the Commissioner may proceed with the collection of petitioner's federal income-tax liability for the tax year 2018 as described in the Notice of Determination Concerning Collection Actions under Section 6320 and/or 6330, dated September 2, 2022.