Opinion
33578-21L
10-24-2023
THOMAS ENDRIZZI, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Elizabeth A. Copeland, Judge.
Currently pending before the Court is Respondent's Motion for Summary Judgment (Motion), filed August 24, 2023, as supplemented on September 25, 2023, with related Declarations of Francesca Chou also filed. Petitioner filed his opposition to the Motion on August 29, 2023. Respondent seeks to sustain a February 21, 2023, Supplemental Notice of Determination Concerning Collection Action(s) under Section 6320 or 6330 of the Internal Revenue Code upholding a Notice of Federal Tax Lien (NFTL) filing for unpaid liabilities for tax years 2014 and 2015 (years at issue). This case was calendared for trial on October 23, 2023, at the Trial Session of the Court in New York, New York. Both parties appeared and agreed to the Court's consideration of the written submissions.
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.
Background
The following background is derived from the pleadings, the Stipulation as to the Administrative Record and attached Exhibits, the Declaration of Francesca Chou and attached Exhibits, and the Supplemental Declaration of Francesca Chou and attached Exhibits. It is stated solely for the purpose of ruling on the Motion and not as findings of fact. Petitioner, Thomas Endrizzi, resided in the state of New York when the petition was filed.
I. Mr. Endrizzi's Tax Liabilities
On October 31, 2016, Mr. Endrizzi filed a Form 1040, U.S. Individual Income Tax Return, for taxable year 2015 that reported a tax due of $0. He filed his 2014 Form 1040 on November 7, 2016, and reported a tax due of $0. On May 14, 2019, the IRS issued Mr. Endrizzi a Notice of Deficiency for tax years 2014 and 2015. For tax year 2014, the Internal Revenue Service (IRS) determined a deficiency of $856,915.00, an addition to tax under section 6651(a)(1) for late filing of his return of $210,530.25, and an accuracy-related penalty under section 6662(a) of $171,383.00. For tax year 2015, the IRS determined a deficiency of $623,822.00, an addition to tax under section 6651(a)(1) of $153,620.25, and an accuracy-related penalty under section 6662(a) of $124,764.40. The Notice of Deficiency was addressed to Mr. Endrizzi at the address that he listed in the Petition in this case. After the taxes for the years at issue were assessed, the IRS was unsuccessful in collecting such amounts from Mr. Endrizzi; thus on November 27, 2020, it mailed by certified mail to Mr. Endrizzi's last known address a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under I.R.C. 6320 (the "Lien Notice"). November 27, 2020, was the same day as the Notice of Federal Tax Lien (NFTL) was filed.
II. Collections Due Process (CDP) Proceedings
A. The First CDP Hearing
Mr. Endrizzi responded to the Lien Notice by timely submitting Form 12153, Request for a Collection Due Process or Equivalent Hearing by mail, with a postmark date of December 3, 2020. The Postal Service returned the letter because it was not deliverable as addressed. Mr. Endrizzi then resent Form 12153 by mail with an accompanying cover letter dated December 14, 2020, which the IRS received. On that Form, Mr. Endrizzi indicated that he was seeking an "Installment Agreement." The IRS then assigned Settlement Officer (SO) Jasmine Jacobs of the Independent Office of Appeals (Appeals) to Mr. Endrizzi's case. SO Jacobs sent Mr. Endrizzi a letter acknowledging his request for a CDP Hearing. In that letter, SO Jacobs scheduled a telephonic CDP Hearing for June 3, 2021, and asked Mr. Endrizzi to provide her with (1) a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, along with all required supporting documents including three months of bank statements, current statements for all mortgages held, current statements for all life insurance policies, 401Ks, and stock portfolios, current statements for any personal property owned, and copies of any expenses for Mr. Endrizzi's household that were claimed on the Form 433-A but not reflected on the bank statements; (2) a completed Form 433-B, Collection Information Statement for Businesses, with six months of bank statements for all correlating business accounts; and (3) Mr. Endrizzi's signed income tax return for 2019. Mr. Endrizzi did not provide any of the requested documents prior to the June 3, 2021, CDP Hearing.
Both Mr. Endrizzi and his attorney, Glenn Ripa, attended the CDP Hearing. At the hearing, SO Jacobs explained that she did not receive the requested documents and that Mr. Endrizzi had not filed income tax returns for 2019 and 2020. Mr. Endrizzi responded that he filed his 2019 return and filed an extension for his 2020 return. He asked for an installment agreement. SO Jacobs replied that she could not consider an installment agreement until Mr. Endrizzi provided her with the 2019 return and the 2020 extension. Mr. Endrizzi agreed to provide those items by July 6, 2021.
Mr. Endrizzi then raised the issue of the underlying tax liabilities for 2014 and 2015. SO Jacobs explained that because he had not filed a timely petition with this Court as to the Notice of Deficiency, he was precluded from raising the underlying tax liabilities in his CDP Hearing. She told Mr. Endrizzi that she would confirm that the IRS sent the Notice of Deficiency to Mr. Endrizzi's last known address and that the IRS obtained the proper managerial approval for the 6662(a)(1) accuracy-related penalty. SO Jacobs informed Mr. Endrizzi that he did not meet the criteria for NFTL withdrawal pursuant to the limited circumstances set forth in section 6323(j), such as where a withdrawal will facilitate the collection of tax. Mr. Endrizzi raised no other issues.
SO Jacobs received none of the requested materials by July 6, 2021. She conducted a follow-up call with Mr. Ripa on July 7, 2021. SO Jacobs began by stating that she had confirmed that proper managerial approval for the 6662(a)(1) accuracy-related penalty was acquired prior to the issuance of the 2014 and 2015 Notice of Deficiency, and that the Notice of Deficiency was mailed to Mr. Endrizzi's last known address. Thus, she explained, the issue of Mr. Endrizzi's underlying tax liability could not be raised in his CDP Hearing. Mr. Ripa asked for more time to gather the requested information. SO Jacobs advised Mr. Ripa that she could not extend the deadline any further and that she would issue her Notice of Determination based on the information available to her.
Nonetheless, on July 16, 2021, Mr. Ripa called SO Jacobs to tell her that he had mailed her the 2019 return as well as proof that the 2020 extension was filed. SO Jacobs replied that she had not received the materials and requested that he fax them to her by July 23, 2021. She never received the mailed documents, nor did she receive the documents by fax. On September 23, 2021, SO Jacobs issued her first Notice of Determination sustaining the NFTL filing.
Mr. Endrizzi subsequently petitioned this Court on October 7, 2021. In his petition, Mr. Endrizzi contended that he had inadvertently provided the documents requested in the CDP Hearing to Revenue Officer (RO) Philippe M. Bonne Annee rather than SO Jacobs. Mr. Endrizzi's case was calendared for trial on September 19, 2022. Before trial, Respondent determined that Mr. Endrizzi had submitted financial documentation to RO Bonne Annee and that the documents were not forwarded to SO Jacobs. On August 26, 2022, Respondent filed a Motion to Remand Mr. Endrizzi's case to Appeals. We granted Respondent's Motion to Remand on August 30, 2022.
It is not clear from the administrative record what documents RO Bonne Annee received.
B. The Second CDP Hearing
In a letter dated October 3, 2022, SO Jacobs informed Mr. Endrizzi that his case was remanded to Appeals and scheduled the second telephonic CDP Hearing for October 27, 2022. She requested that he submit (1) Form 433-A along with supporting documentation including six months of bank statements for accounts on which Mr. Endrizzi was a signatory along with copies of canceled checks, current statements for all mortgages held, current statements for all life insurance policies, 401Ks, and stock portfolios, current statements for any personal property owned, and copies of any expenses for Mr. Endrizzi's household that were claimed on the Form 433-A but not reflected on the bank statements; and (2) a Form 433-B for each business he had an interest in and additional documentation including six months of bank statements for any business accounts held along with copies of canceled checks, current profit and loss statements for the past six months, and bills and statements confirming amounts claimed on the profit and loss statements but not reflected on the bank statements. Mr. Endrizzi did not submit the requested materials prior to the second CDP Hearing.
Mr. Endrizzi was in compliance with filing requirements by the time this case was remanded to appeals. Therefore, submission of his 2019 tax return and proof of his 2020 extension were no longer necessary.
Neither Mr. Endrizzi nor Mr. Ripa attended the second telephonic CDP Hearing on October 27, 2022. SO Jacobs called Mr. Ripa and left a voicemail in which she stated that she did not receive the requested documentation and asked Mr. Ripa to call her back by November 1, 2022. She also provided her fax number so that Mr. Ripa could fax her the requested documents. Mr. Ripa left SO Jacobs a voicemail on November 1, 2022, in which he stated that he had not received the October 3, 2022, letter. SO Jacobs returned Mr. Ripa's call on the same day and left a voicemail in which she requested Mr. Ripa's fax number so that she could send him a copy of the October 3, 2022, letter with the list of required documentation. In that same voicemail, SO Jacobs requested a call back by November 4, 2022.
On November 8, 2022, SO Jacobs received a faxed Form 433-A without any of the supporting documents requested in the October 3, 2022, letter. After reviewing the Form 433-A, SO Jacobs wrote a note in the Case Activity Record that reads "[t]axpayer requested remand for an IA [installment agreement] but provided financials with no monthly ability to pay however equity in assets as provided by the taxpayer, are sufficient to almost full pay the balances due." SO Jacobs called Mr. Ripa on November 8, 2022, and left a voicemail stating that she had received Form 433-A without the required supporting documentation. In the voicemail, she requested bank statements for Mr. Endrizzi's personal and business accounts beginning April 2022 through October 2022, and stated that if she did not receive the statements by November 22, 2022, she would issue a supplemental notice of determination based upon the information available to her. Neither Mr. Endrizzi nor Mr. Ripa responded to SO Jacobs' voicemail. SO Jacobs issued her Supplemental Notice of Determination Concerning IRS Collection Actions under Internal Revenue Code Section 6320 or 6330 on February 21, 2023, sustaining the NFTL filing. In the Supplemental Notice of Determination, SO Jacobs explained that Mr. Endrizzi provided no information during the second CDP Hearing to warrant withdrawal of the lien pursuant to section 6323(j) and that his failure to supply the requested financial documents precluded the possibility of an installment agreement. In addition, she stated that the information Mr. Endrizzi provided indicated that he had the ability to partially pay his tax liabilities by liquidating equity in his assets.
Discussion
I. Summary Judgment
Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). Generally, we may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); see also 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, we view the factual materials and inferences drawn from them in the light most favorable to the nonmoving party, Mr. Endrizzi in this case. See Sundstrand Corp., 98 T.C. at 520 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). After reviewing Respondent's Motion and the supporting documents, we find that this case is ripe for summary adjudication and that, for the reasons detailed below, Respondent is entitled to judgment as a matter of law.
II. Standard of Review
Sections 6320(c) and 6330(d)(1) grant this Court jurisdiction to review a Settlement Officer's determination after a CDP Hearing. When this Court remands a case to Appeals, we review the position taken by Appeals in the determination as supplemented and we need not consider Appeal's position stated in prior notices of determination. See Kelby v. Commissioner, 130 T.C. 79, 86 (2008). Our standard of review in CDP cases depends on whether the validity of the underlying tax liability is properly at issue. Taxpayers who did not receive a Notice of Deficiency or did not otherwise have a prior opportunity to contest their tax liability may contest that liability, including a self-assessed liability, at their CDP Hearing. I.R.C. § 6330(c)(2)(B); Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). In that instance, we review the Supplemental Notice of Determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). Otherwise, we review the Supplemental Notice of Determination for abuse of discretion. Id.
Mr. Endrizzi does not dispute that he received the Notice of Deficiency or otherwise argue that he lacked a prior opportunity to contest his underlying tax liability. By statute, therefore, he cannot challenge his underlying tax liability again in the CDP hearing or before us. See I.R.C. §§ 6320(c), 6330(c)(2)(B). Thus, we review the actions of SO Jacobs for abuse of discretion.
III. Abuse of Discretion
In reviewing for abuse of discretion, we must uphold the Notice of Determination unless it is arbitrary, capricious, or without sound basis in fact or law. See, e.g., Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); Taylor v. Commissioner, T.C. Memo. 2009-27, 97 T.C.M. (CCH) 1109, 1116. We consider whether SO Jacobs (1) properly verified that the requirements of any applicable law or administrative procedure have been met; (2) considered any relevant issues raised by Mr. Endrizzi; and (3) determined whether "any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of [Mr. Endrizzi] that any collection action be no more intrusive than necessary." I.R.C. § 6630(c)(3); Ludlam v. Commissioner, T.C. Memo. 2019-21, at *9-10, aff'd per curiam, 810 Fed.Appx. 845 (11th Cir. 2020).
A. Verification
Before issuance of a Notice of Determination, a Settlement Officer is required to verify that all requirements of applicable law and administrative procedure have been met. I.R.C. § 6330(c)(1), (3)(A). We have the authority to review satisfaction of this requirement regardless of whether the taxpayer raised a verification issue at the CDP Hearing. See Hoyle v. Commissioner, 131 T.C. 197, 200-03 (2008), supplemented by 136 T.C. 463 (2011).
It is well established that a Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, 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). See Davis v. Commissioner, 115 T.C. 35, 40-41 (2000); Roberts v. Commissioner, T.C. Memo 2004-100, 87 T.C.M. (CCH) 1228, 1233. Mr. Endrizzi has not demonstrated any irregularity in the transcripts provided by Respondent, and we see no reason to doubt their veracity. See Davis, 115 T.C. at 41; Tornichio v. Commissioner, T.C. Memo 2002-291, 84 T.C.M. (CCH) 578, 581. On the record before us, we are satisfied that SO Jacobs verified that the requirements of all applicable laws and administrative procedures were met in the processing of Mr. Endrizzi's case.
On August 24, 2023, Respondent filed the Declaration of Attorney Francesca Chou in support of its Motion with this Court, attaching as exhibits Mr. Endrizzi's 2014 and 2015 Account Transcripts. In her declaration, Ms. Chou explains the process by which she obtained Mr. Endrizzi's Account Transcripts for tax years 2014 and 2015 from the IRS's Transcript Delivery System. She states that an Account Transcript retrieved from the IRS's Transcript Delivery System "sets forth substantially the same information as Form 4340 . . . and account transcripts retrieved from IDRS [Respondent's Integrated Data Retrieval System]."
B. Issues Raised
A Settlement Officer is also required to consider any relevant issues raised by the taxpayer during a CDP Hearing. I.R.C. § 6330(c)(2)(A), (c)(3)(B). A taxpayer in a CDP Hearing also has the right to request a collection alternative, such as an offer in compromise (OIC) or an installment agreement. See I.R.C. § 6330(c)(2)(A)(iii). If a taxpayer requests a collection alternative, the taxpayer is "expected to provide all relevant information requested by [the Settlement Officer], including financial statements, for [the Settlement Officer's] consideration of the facts and issues involved in the hearing." Treas. Reg. § 301.6330-1(e)(1). A Settlement Officer cannot consider a taxpayer for a collection alternative unless the taxpayer provides the Settlement Officer with adequate financial information, such as a current Form 433- A with relevant financial documents attached. See Rev. Proc. 2003-71, § 4.03, 2003-2 C.B. 517, 518. In general, it is not an abuse of discretion for a settlement officer to deny a collection alternative and sustain the proposed collection action if the taxpayer did not provide financial information during the CDP Hearing. See Radeke v. Commissioner, T.C. Memo. 2012-319, at *10 (citing Olsen v. United States, 414 F.3d 144 (1st Cir. 2005)); Cavazos v. Commissioner, T.C. Memo. 2008-257, 96 T.C.M. (CCH) 341, 343.
Mr. Endrizzi sought an installment agreement in his initial request for a CDP Hearing. Mr. Ripa then erroneously sent the documentation requested by SO Jacobs to RO Bonne Annee, which resulted in SO Jacobs issuing the Notice of Determination sustaining the proposed lien and rejecting Mr. Endrizzi's request for an installment agreement. In his Petition, Mr. Endrizzi asked us to remand his case "back to the IRS Office of Appeals for reconsideration." After Mr. Endrizzi's case was remanded to Appeals, and both he and Mr. Ripa failed to appear at the second CDP Hearing, Mr. Endrizzi was provided several additional opportunities to submit the requested documents as well as a submission deadline extension. While Mr. Endrizzi eventually submitted a Form 433-A, he failed to submit any supporting documentation. We therefore conclude that SO Jacobs did not abuse her discretion in sustaining the collection action in her Supplemental Notice of Determination.
C. Balancing
Mr. Endrizzi did not allege in his Petition or contend at any later point that SO Jacobs failed to consider "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of [Mr. Endrizzi] that any collection action be no more intrusive than necessary." I.R.C. § 6330(c)(3)(C). In any event, our review of the record reveals nothing to disturb SO Jacobs' conclusion that the balancing test was satisfied.
D. Issues Raised in Mr. Endrizzi's Opposition to Respondent's Motion for Summary Judgment
On October 29, 2023, Mr. Ripa filed an Opposition to Motion for Summary Judgment raising two issues. First, Mr. Ripa states that he erroneously faxed "requested financial information" to RO Bonne Annee, instead of SO Jacobs, "prior to the issuance of [SO Jacobs'] Determination." Mr. Ripa then contends that "had [RO Bonne Annee] timely forwarded the documents in question to [SO Jacobs], it would have altered [SO Jacobs'] determination." At no point does Mr. Ripa acknowledge the second CDP Hearing or the Supplemental Notice of Determination. The second CDP Hearing provided Mr. Endrizzi the opportunity to submit to SO Jacobs updated financial documents similar to the one's Mr. Ripa erroneously faxed to RO Bonne Annee during the first CDP Hearing. Mr. Endrizzi chose not to take advantage of that second opportunity. Likewise, Mr. Endrizzi, on both occasions, failed to provide Forms 433-B for the approximately ten business entities he owned. Moreover, even without supporting documentation, Mr. Endrizzi's Form 433-A disclosed substantial unencumbered equity in assets with no explanation as to why loans could not be secured against such assets for the reduction or elimination of his tax liability. Also unexplained, was the implausible living expense of $8,051 per month with zero monthly income to sustain such lifestyle. SO Jacobs did not abuse her discretion in determining that Mr. Endrizzi does not qualify for an installment agreement.
Second, Mr. Ripa states that "[Mr. Endrizzi] has filed Form 843's Claims for Refunds and Requests for Abatements for both 2014 and 2015 tax years, reflecting that the liabilities in question for both years are erroneous and there are no additional tax liabilities for said years." Nowhere in the Opposition to Respondent's Motion for Summary Judgment does Mr. Ripa contend that Mr. Endrizzi lacked a prior opportunity to contest his 2014 and 2015 tax liabilities. Mr. Endrizzi is precluded from disputing his underlying tax liability in this case because he had a prior opportunity to do so. See infra Discussion Part II (explaining that Mr. Endrizzi does not dispute that he received the Notice of Deficiency or otherwise argue that he lacked a prior opportunity to contest his underlying tax liability; he is therefore statutorily barred from now raising the issue). We will sustain SO Jacobs' Supplemental Notice of Determination.
IV. Conclusion
In conclusion, our review of the record shows no abuse of discretion in sustaining the proposed lien action at issue. We will therefore grant Respondent's Motion for Summary Judgment.
To reflect the foregoing, it is
ORDERED that Respondent's Motion for Summary Judgment, filed August 24, 2023, is granted. It is further
ORDERED AND DECIDED that the determination set forth in the Supplemental Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 of the Internal Revenue Code, dated February 21, 2023, validating Respondent's recording of a Federal Tax Lien affecting Petitioner's 2014 and 2015 tax years, is sustained.