Opinion
12831-20L
01-05-2022
Deanna Renee Torres Garcia, Petitioner v. Commissioner of Internal Revenue, Respondent
ORDER AND DECISION
Elizabeth A. Copeland Judge
This is a collection due process (CDP) case filed by petitioner, Deanna Renee Torres Garcia, pursuant to section 6330(d)(1). On July 13, 2021, respondent filed with the Court a Motion for Summary Judgment; a Declaration of Dijana Sikman in Support of Motion for Summary Judgment; and a Declaration of Michael S. Rapijko in Support of Motion for Summary Judgment. On August 18, 2021, Ms. Garcia, filed with the Court her Response to Motion for Summary Judgment which indicates her opposition to respondent's Motion for Summary Judgment. On September 1, 2021, respondent filed a First Supplement to Motion for Summary Judgment. A hearing on respondent's motion, as supplemented, was held on September 13, 2021, wherein both parties appeared and were heard.
All section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise indicated. All dollar amounts are rounded to the nearest dollar.
The issue before the Court is whether Dijana Sikman, a Settlement Officer (SO) in the Internal Revenue Service Independent Office of Appeals (Appeals Office), abused her discretion in sustaining the Final Notice, Notice of Intent to Levy and Notice of your Rights to a Hearing, Letter 1058, dated October 17, 2019.
Respondent has moved for summary judgment under Rule 121, contending that there is no genuine dispute as to any material fact, and that the Appeals Office did not abuse its discretion in sustaining the proposed levy. At the hearing on September 13, 2021, Ms. Garcia indicated that she no longer opposed respondent's motion for summary judgment, as supplemented. As discussed below, we grant respondent's motion for summary judgment, as supplemented.
Background
The following background is derived from the pleadings, the parties' motion papers, and the supporting exhibits attached thereto. We note that the background is stated solely for purposes of ruling on the pending motion for summary judgment and is not a finding of facts. Ms. Garcia resided in New Jersey when her petition was timely filed.
For her 2011 tax return, Ms. Garcia filed a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return on or before April 15, 2012, which extended the due date for filing the return to October 15, 2012. However, Ms. Garcia never filed her 2011 return. On or about September 10, 2018, the Internal Revenue Service (IRS) prepared a Substitute for Return (SFR) for Ms. Garcia's 2011 tax year and notified her of the same. The 2011 SFR showed a tax due of $19,676, and credited Ms. Garcia with withholding of $14,730.
In response, on March 29, 2019, Ms. Garcia signed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, in an attempt to resolve the SFR based tax liability. On her Form 433-A, Ms. Garcia noted that she worked for Delta. She wrote "6" for her number of withholding allowances. However, at that time Ms. Garcia was living with her parents at her parent's residence. Ms. Garcia's children were living with her spouse in the family home. On March 29, 2019, she met with a revenue officer from the IRS. Ms. Garcia explained to that revenue officer that she was helping support her children and pay expenses for the family home but admitted that the family home was deeded to her spouse. Furthermore, she explained that she wanted to move back in with her children in the family home once her spouse moved out. The revenue officer explained that because these actions had not yet taken place, a determination of her ability to pay the 2011 taxes would be based on a household of one. The revenue officer then requested that she provide additional financial documentation and asked her to become compliant with her return filings. Ms. Garcia did not provide the requested documents and failed to become compliant with her return filings.
The IRS then issued Ms. Garcia a statutory notice of deficiency dated April 16, 2019 for the 2011 tax year; which was sent to Ms. Garcia's last known address. Ms. Garcia did not petition the Court related to that notice of deficiency and the tax was assessed. The IRS next sent Ms. Garcia a notice of intent to levy on October 17, 2019. On November 6, 2019, Ms. Garcia timely requested a CDP hearing by filing Form 12153, Request for a Collection Due Process or Equivalent Hearing. On January 10, 2020, Ms. Garcia's CDP hearing request was assigned to SO Dijana Sikman (SO Sikman).
On February 5, 2020, SO Sikman sent Ms. Garcia a Letter 4837, which acknowledged receipt of her request for a CDP hearing and scheduled a telephonic CDP hearing for March 18, 2020. However, on March 13, 2020, Ms. Garcia called SO Sikman to reschedule the CDP hearing for March 19, 2020.
On March 19, 2020, SO Silkman held the hearing and told Ms. Garcia that based on her review, she had determined that the notice of intent to levy met all legal and procedural requirements and that the assessment was valid. Furthermore, SO Sikman pointed out that Ms. Garcia was not current on her tax filing including for tax years 2013, 2015, 2016, 2017, and 2018. Ms. Garcia did not raise her underlying tax liability at the CDP hearing but raised the issue of hardship. SO Sikman instructed that if Ms. Garcia disagreed with the SFR that she could file a return for 2011. Next, SO Sikman addressed the issues raised by Ms. Garcia including her inability to pay and her request for delay of enforcement. SO Sikman advised Ms. Garcia that based on her Form 433-A and the verification completed by the IRS, that she did not meet the criteria for financial hardship. Ms. Garcia mentioned that a change in her financial condition could happen due to COVID-19, but as of the date of the CDP hearing she had no new information. SO Sikman advised Ms. Garcia that she did not qualify for hardship or other collection alternatives.
SO Sikman determined that the levy should be sustained because Ms. Garcia did not meet the currently not collectible status requirements and because she was not compliant with her return filing obligations. She was likewise ineligible for other collection alternatives. SO Sikman then issued a Notice of Determination dated September 28, 2020, related to Ms. Garcia's 2011 tax year.
In her timely petition to this Court, Ms. Garcia noted that, since the time of her CDP hearing, her financial situation has changed due to COVID-19. She indicated that her financial information was out of date and that her current circumstances were different. In her response to the motion for summary judgment, other than claiming COVID-19 had changed her financial situation, she provided no further details. At her hearing she provided no documents, testimony or other evidence of a change in financial circumstance. In fact, she indicated that she no longer opposed the motion.
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, the petitioner in this case. See Sundstrand Corp. v. Commissioner, 98 T.C. at 520 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). However, a nonmoving party may not rest upon the mere allegations or denials in its pleadings but must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
After reviewing respondent's motion for summary judgment, petitioner's response, and all of the documents submitted in support of these filings. We find that this case is ripe for summary adjudication.
II. Jurisdiction and Standard of Review
A. Jurisdiction
The IRS issued Ms. Garcia a notice of intent to levy on October 17, 2019, related to her 2011 tax year. On her Form 12153, petitioner indicated that she could not pay the balance due because of financial hardship and also requested a lien withdrawal even though no tax lien had been filed.
Section 6330(a) requires respondent to furnish the taxpayer with a notice of intent to levy no later than 30 days before the day of the first levy. Section 6330(b) provides that a taxpayer may request a CDP hearing with respect to the notice of intent to levy and that the hearing is to be conducted consistent with the procedures set forth in section 6330. Section 6330(d) then gives us jurisdiction to review any notice of determination made concerning the notice of intent to levy after that CDP hearing has been held.
Here, the IRS issued a notice of intent to levy for tax year 2011. Ms. Garcia requested a CDP hearing with respect to that notice, a hearing was held, and a determination to sustain the levy was made. Ms. Garcia then timely petitioned this Court to review that determination. Accordingly, we will review the SO's determination. See secs. 6330(d)(1).
B. Standard of Review
Our standard of review in a CDP case depends on whether the validity of the underlying tax liability is properly at issue. A taxpayer who did not receive a statutory notice of deficiency or did not have a prior opportunity to contest the tax liability may contest such liability at the CDP hearing. Sec. 6330(c)(2)(B). Where the validity of the underlying tax is properly at issue, we review the SO's determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). "Where the taxpayer's underlying liability is not before us, we review the IRS' decision for abuse of discretion." Klein v. Commissioner, 149 T.C. 341, 348 (2017) (citing Goza v. Commissioner, 114 T.C. 181-182 (2000)).
Ms. Garcia does not dispute the validity of their underlying tax liability. SO Sikman informed Ms. Garcia that she could file a 2011 return to replace the SFR the IRS created on her behalf if she disagreed with the SFR. Ms. Garcia acknowledged this, but did not do so and did not dispute the underlying liability at the CDP hearing or in this proceeding. Therefore, the underlying liability is not before us, and as such, we will review the SO's determination for abuse of discretion. Giamelli v. Commissioenr, 129 T.C. 107, 113-116 (2007).
III. Abuse of Discretion
In reviewing for abuse of discretion, we must uphold the SO's 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 (2009). We consider whether the SO: (1) properly verified that the requirements of any applicable law or administrative procedure have been met; (2) considered any relevant issues raised by the petitioner; and (3) determined whether "any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the * * * [petitioner] that any collection action be no more intrusive than necessary." See sec. 6330(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 and Balancing
Verification under section 6330(c)(1) requires that the SO independently confirm the validity of assessments, including determining whether the notice of deficiency was properly issued, even if the taxpayer does not raise the validity of the assessment as an issue. See Hoyle v. Commissioner, 131 T.C. 197, 202-203 (2008). SO Sikman reviewed the petitioner's file, IRS records, and the information provided by Ms. Garcia and confirmed that Ms. Garcia's tax liability had been properly assessed. Ms. Garcia has not challenged SO Sikman's satisfaction of the verification requirement. Our review of the record establishes that SO Sikman verified that all requirements of applicable law and administrative procedure were likewise met and properly balanced the need for the efficient collection of taxes with Ms. Garcia's legitimate concerns.
B. Issues Raised and Collection Alternatives
At a CDP hearing, a taxpayer may raise any relevant issue including spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. Sec. 6330(c)(2)(A). Furthermore, a SO must determine "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 6330(c)(3)(c). On her Form 12153, Ms. Garcia checked the box marked "I Cannot Pay Balance." Ms. Garcia noted that she was under financial hardship and unable to pay the full amount. At the CDP hearing Ms. Garcia also brought up that COVID-19 might impact her job. SO Sikman addressed the issues raised by Ms. Garcia on her Form 12153 and asked if she had any new information regarding the impact on her job from COVID-19, but Ms. Garcia did not provide any new information to establish a change in circumstances. Furthermore, at the time SO Sikman made her decision, Ms. Garcia was not compliant with her tax filings. A SO may not consider a collection alternative unless the taxpayer has provided adequate financial information, such as a current Form 433-A. See Rev. Proc. 2003-71, sec. 4.03, 2003-2 C.B. 517, 518. Furthermore, an SO does not abuse her discretion if she rejects a collection alternative on the basis of the taxpayer's failure to submit the requested financial information. See Shanley v. Commissioner, T.C. Memo. 2009-17. At the time SO Sikman made her decision, Ms. Garcia was not compliant with her tax filings and she had not provided new information to establish a change in circumstances. Furthermore, Ms. Garcia did not qualify for currently not collectable status. As such we find no abuse of discretion.
C. Conclusion
On the basis of our review of the record, we find that SO Sikman considered all of the requisite factors under section 6330(c)(3) when making her determination. The record shows that she (1) verified that all legal and procedural requirements were met, (2) considered all issues Ms. Garcia properly raised, and (3) determined that the proposed collection action appropriately balances the needs for the efficient collection of taxes with legitimate concerns of Ms. Garcia that the collection action be no more intrusive than necessary. Thus, it cannot be said that SO Sikman abused her 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. Upon due consideration, it is hereby
ORDERED that respondent's motion for summary judgment, filed July 13, 2021, as supplemented on September 1, 2021, is granted. It is further
ORDERED and DECIDED that respondent's notice of determination dated September 28, 2020, upholding the intent to levy is sustained.