Opinion
12822-23L
07-31-2024
JOHN B. GIBBONS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Courtney D. Jones, Judge
In this collection due process (CDP) case, petitioner John B. Gibbons asks the Court to review a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (Notice of Determination). The Notice of Determination was issued by the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) on July 11, 2023, and sustained a proposed levy to collect unpaid federal income tax for taxable year 2014.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulatory 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.
This matter is before the Court on respondent's Motion for Summary Judgment (Motion) pursuant to Rule 121, filed February 14, 2024. Respondent contends that there are no disputed issues of material fact and that the Notice of Determination does not constitute an abuse of discretion. Mr. Gibbons filed an Opposition on March 25, 2024.
The issue for decision is whether Appeals abused its discretion by (1) issuing the Notice of Determination to sustain the proposed levy notice; and (2) rejecting Mr. Gibbons's request for collection alternatives. For the reasons set forth below, we agree that Appeals did not abuse its discretion. We will therefore grant respondent's Motion.
Background
The following background information is drawn from the parties' pleadings, the Administrative Record, and the Motion and accompanying Declaration of Appeals Officer Michael B. Siahaan (AO Siahaan) with attached exhibits. See Rules 93, 121(c).
This background is stated solely for the purpose of resolving the present Motion and not as findings of fact in this case. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). Mr. Gibbons resided in Ohio when he filed the Petition.
On April 16, 2018, the Commissioner issued a Notice of Deficiency for taxable year 2014, but Mr. Gibbons did not seek review of the Notice of Deficiency in this Court. On July 2, 2019, the IRS issued a Notice of Federal Tax Lien Filing and Your Right to A Hearing Under IRC 6320 (Notice of Lien) in connection with Mr. Gibbons's liability for taxable year 2014. Mr. Gibbons had an opportunity for a CDP hearing in connection with the Notice of Lien.
On November 22, 2021, the Commissioner issued Notice CP90, Notice of Intent to Seize Your Assets and of Your Right to a Hearing to Mr. Gibbons for taxable year 2014. In response, Mr. Gibbons submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing, which was received by the IRS on December 20, 2021. On the form, Mr. Gibbons checked the boxes to request an "Installment Agreement" (IA) or "Offer in Compromise" (OIC) collection alternative. He also stated that (1) he was unable to ascertain the taxable year in question; (2) the incorrect amount was cited on the lien notice; (3) the principle and interest were incorrectly calculated; and (4) he was not responsible for penalties.
Mr. Gibbons's spouse also signed Form 12153. However, she is not a party to this action.
Mr. Gibbons's CDP hearing was assigned to AO Siahaan. On March 16, 2023, AO Siahaan verified that he had no prior involvement with Mr. Gibbons for the type of taxes and taxable years at issue. On March 22, 2023, AO Siahaan mailed Letter 4837, Substantive Contact Letter, and scheduled a telephonic CDP conference.
In the letter, AO Siahaan informed Mr. Gibbons that he had a prior opportunity to dispute liability through a separate CDP hearing for a notice of federal tax lien. The letter also requested that Mr. Gibbons submit additional documents, including (1) a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals (Form 433-A); (2) a completed Form 656, Offer in Compromise, and any documentation required for its completion; and (3) proof of filing compliance for subsequent tax years, among other documents.
The letter also indicated that the CDP conference would occur on April 11, 2023, but the notes in the Case Activity Record indicated that the conference would occur on April 13, 2023. Thus, AO Siahaan called Mr. Gibbons on April 7, 2023, and left a voicemail providing the correct conference date and time.
Mr. Gibbons did not submit any documentation to AO Siahaan, nor did he appear for the CDP hearing. Thus, on April 14, 2023, AO Siahaan issued Letter 4000, Last Chance Letter, directing Mr. Gibbons to provide the requested documentation by April 28, 2023. The letter again noted that the CDP conference had been scheduled for April 11, 2023, instead of the correct date of April 13, 2023. The letter also requested that Mr. Gibbons provide the requested documentation and complete Form 433-A and Form 656.
On May 1, 2023, AO Siahaan reviewed the file and observed that Mr. Gibbons had not provided the requested documentation. On May 25, 2023, AO Siahaan once again reviewed the case file, observed that no new documents had been received, and confirmed that all legal and procedural requirements prior to the proposed levy action had been taken. He also decided to sustain the proposed levy because Mr. Gibbons did not respond to Appeals and did not provide any information to consider a collection alternative. Appeals Team Manager Donald Richardson (ATM Richardson) reviewed and approved the determination on June 13, 2023.
On July 11, 2023, Appeals issued the Notice of Determination. In the Notice of Determination, AO Siahaan observed that Mr. Gibbons was not in filing compliance and therefore the IA could not be considered. The Notice of Determination also stated that no information was provided, and therefore Appeals could not consider any collection alternatives. The Petition to this Court followed.
Discussion
I. General Principles
A. Summary Judgment Standard
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We may grant summary judgment when there is no genuine dispute of material fact and a decision may be rendered as a matter of law. See Rule 121(a)(2); Sundstrand Corp., 98 T.C. at 520. In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520 . The nonmoving party may not rest upon mere allegations nor denials in their pleadings and must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Based on the record before the Court, we find that this case is appropriate for summary adjudication.
B. The Administrative Record
The parties did not file a stipulated Administrative Record. Instead, respondent filed the Administrative Record (Doc. 23) and Certificate as to the Genuineness of the Administrative Record (Certificate, Doc. 24) on April 29, 2024. The Certificate was signed by AO Siahaan. Mr. Gibbons has not argued that the Administrative Record is incomplete or should be supplemented, nor has he filed a motion to complete or supplement the Administrative Record pursuant to Rule 93(b). Therefore, we accept the Administrative Record filed by respondent.
C. Standard of Review
This court has jurisdiction to review the administrative determination made by Appeals. See § 6330(d)(1). Where the underlying liability was not properly at issue, we will review the Appeals determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). An abuse of discretion occurs if the Appeals officer exercises discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999); see also Giamelli v. Commissioner, 129 T.C. 107, 111 (2007); Murphy v. Commissioner, 125 T.C. 301, 320 (2005). Where the underlying tax liability was properly at issue in the CDP hearing, we will review the determination de novo. Lunsford v. Commissioner, 117 T.C. 183, 185 (2001) (citing Goza, 114 T.C. at 181-82).
On Form 12153, Mr. Gibbons challenged his underlying liability. The term "underlying liability" includes any tax deficiency, additions to tax or penalties, and statutory interest. See Katz v. Commissioner, 115 T.C. 329, 338-39 (2000). However, Mr. Gibbons previously received a Notice of Deficiency for taxable year 2014, but he failed to petition this Court. He also previously received a Notice of Lien for the same tax year at issue, and he had an opportunity to challenge liability through a CDP hearing in connection with that Notice of Lien. Thus, Mr. Gibbons has had a prior opportunity to challenge his underlying liability for taxable year 2014. Therefore, he is precluded from challenging his underlying liability in this case. McCullar v. Commissioner, T.C. Memo. 2014-150, at *8 (citing section 6330 (c)(2)(B)). Moreover, Mr. Gibbons failed to participate in his CDP hearing, and he is precluded from challenging his underlying liability on this basis as well. See Thompson v. Commissioner, 140 T.C. 173, 178 (2013) ("A taxpayer is precluded from disputing the underlying liability if it was not properly raised in the CDP hearing.").
Accordingly, we will review the Appeals determination for abuse of discretion. See Goza, 114 T.C. at 182. In doing so, "[w]e judge the propriety of the determination . . . on the grounds invoked by the Office of Appeals." Serna v. Commissioner, T.C. Memo. 2022-66, at *8 (quoting Elkins v. Commissioner, T.C. Memo. 2020-110, at *24); see also SEC v. Chenery Corp., 332 U.S. 194, 196 (1947); Antioco v. Commissioner, T.C. Memo. 2013-35, at *25 ("Applying Chenery in the CDP context means that we [cannot] uphold a notice of determination on grounds other than those actually relied upon by the Appeals officer."). "[W]e look to the reasons offered in the notice of determination, as further unspooled in the settlement officer's contemporaneous rejection memorandum and case activity notes." Serna, T.C. Memo. 2022-66, at *8.
II. Analysis
A. Statutory Framework
We review AO Siahaan's determinations for abuse of discretion, and we consider whether he (1) properly verified that the requirements of any applicable law or administrative procedure were met; (2) considered any relevant issues raised by Mr. Gibbons; and (3) considered whether the proposed collection actions balance the need for the efficient collection of taxes with the legitimate concern of Mr. Gibbons that any collection action be no more intrusive than necessary. See § 6330(c)(3); Sego, 114 T.C. at 609.
B. Verification Requirement
First, this Court has authority to review satisfaction of the verification requirement regardless of whether the taxpayer raised that issue at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Mr. Gibbons alleged in the Petition that the hearing examiner erred when he "determined that the IRS followed all legal and procedural requirements." (Doc. 1 at PDF pg. 2). But he has not set forth any specific facts as to this matter, nor did he raise this issue in the Opposition. See Rules 121(d), 331(b)(4). In any event, our review of the record shows that AO Siahaan reviewed the record and properly verified that the requirements of any applicable law or administrative procedure have been met.
C. Issues Raised by the Taxpayer
Second, at a CDP hearing, a taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy," including challenges to the appropriateness of collection actions and offers of collection alternatives. See § 6330(c)(2)(A). On Form 12153, Mr. Gibbons checked the boxes for "Installment Agreement" and "Offer in Compromise."
1. Installment Agreement
Section 6159(a) authorizes the Commissioner to enter into a written agreement allowing a taxpayer to pay a liability in installments if the "agreement will facilitate full or partial collection of such liability." The decision to accept or reject an IA lies within the discretion of the Commissioner. See Thompson v. Commissioner, 140 T.C. 173, 179 (2013) (first citing Kuretski v. Commissioner, T.C. Memo. 2012-262, at *9, aff'd, 755 F.3d 929 (D.C. Cir. 2014); and then citing Treas. Reg. § 301.6159-1(a), (c)(1)(i)).
Generally, IAs "should reflect taxpayers' ability to pay on a monthly basis throughout the duration of agreements." IRM 5.14.1.4(4) (Sept. 22, 2021). Namely, the settlement officer should analyze a taxpayer's income and allowable expenses to determine the amount of disposable income the taxpayer has available for payment under an IA; this is the minimum amount that a settlement officer may accept under an IA. See Boulware v. Commissioner, T.C. Memo. 2014-80, at *29, aff'd, 816 F.3d 133 (D.C. Cir. 2016). The IRM also provides that settlement officers are advised to analyze all relevant facts in considering acceptance of an IA, including the taxpayer's compliance history, ability to pay, and equity in assets. IRM 8.22.7.5(5) (Aug. 26, 2020).
2. Offer in Compromise
The Commissioner is authorized to compromise an outstanding tax liability on multiple grounds, including doubt as to liability, doubt as to collectibility, and effective tax administration. See § 7122(a); Treas. Reg. § 301.7122-1(b). Generally, an Appeals officer is directed to reject any offer substantially below the taxpayer's reasonable collection potential, unless special circumstances justify acceptance of such an offer. See Mack v. Commissioner, T.C. Memo. 2018-54, at *10 (first citing Rev. Proc. 2003-71, § 4.02(2), 2003-2 C.B. 517, 517; and then citing Johnson v. Commissioner, 136 T.C. 475, 485-86 (2011), aff'd 502 Fed.Appx. 1 (D.C. Cir. 2013)). However, a taxpayer must submit Form 656 as a requisite for consideration of an OIC. See Pough v. Commissioner, 135 T.C. 344, 351 (2010); Lipka v. Commissioner, T.C. Memo. 2022-116, at *10.
3. AO Siahaan's Reasoning
AO Siahaan rejected both collection alternatives. First, he stated that Mr. Gibbons was "not in filing compliance; therefore an installment agreement could not be considered." AO Siahaan also stated that Mr. Gibbons "did not supply any information to consider any type of collection alternative" and, therefore, "Appeals could not consider any collection alternatives."
The record establishes that AO Siahaan gave Mr. Gibbons multiple opportunities to provide requested documentation. In Letter 4837, AO Siahaan outlined the various documents and information he needed to consider a collection alternative. AO Siahaan also noted that IRS records showed that Mr. Gibbons was not in filing compliance for tax periods 2017 through 2021. When Mr. Gibbons did not call for the CDP conference or otherwise provide any information, AO Siahaan sent Letter 4000 and once again requested the documentation so that a collection alternative could be considered. And he again informed Mr. Gibbons that there was no evidence of filing compliance for tax years 2017 through 2021. Nonetheless, Mr. Gibbons never responded to AO Siahaan's requests for information and never provided any requested documentation.
A taxpayer's failure to file all required returns, standing alone, is sufficient to justify an Appeals officer's rejection of a collection alternative. Giamelli, 129 T.C. at 111 (stating that a taxpayer must be current with filing requirements to qualify for an IA). Therefore, we hold that it was not an abuse of discretion for AO Siahaan to reject Mr. Gibbons's request for an IA on the basis of his failure to file all required returns or being in filing compliance. See id. at 110-11. Additionally, it was not an abuse of discretion for AO Siahaan to reject Mr. Gibbons's request for collection alternatives on the basis of his repeated failure to provide the requested information to Appeals. See, e.g., Pough, 135 T.C. at 351. Thus, on the record before us, we discern no abuse of discretion.
We are mindful that the letters from AO Siahaan listed incorrect dates for the CDP conference. Nonetheless, AO Siahaan left a voicemail for Mr. Gibbons, informing him of the correct date and time. Moreover, there is no evidence that Mr. Gibbons ever called to express confusion about the CDP conference date, nor did he ever attempt to contact AO Siahaan about the CDP conference. Thus, we do not find this typographical error to amount to an abuse of discretion. See, e.g., Grace Found. v. Commissioner, T.C. Memo. 2014-229, at *13 (observing that typographical error on notice of determination did not mislead taxpayer). Moreover, Mr. Gibbons has not raised the date and time error in the Opposition. Accordingly, he has waived any such argument. See Rules 121(d), 331(b)(4); Shuman v. Commissioner, T.C. Memo. 2018-135, at *21 n.13 (citing Mendes v. Commissioner, 121 T.C. 308, 312-13 (2003)), aff'd, 774 Fed.Appx. 813 (4th Cir. 2019).
In the Opposition, Mr. Gibbons raised several grounds for denying summary judgment, including that (1) he could not discern the taxable year in question; and (2) he has various challenges to the underlying liability. Both arguments are without merit. For starters, the date of the taxable year is listed on the face of the Notice of Determination under a heading labeled "Tax Periods ended" with "12/2014" listed under the heading. Mr. Gibbons attached the Notice of Determination to the Petition. Moreover, the Petition-which was signed by Mr. Gibbons-lists 2014 as the tax year for the Notice of Determination. Thus, the tax period at issue is not a mystery.
Moreover, as we noted above, liability is not properly at issue in this case because Mr. Gibbons had a prior opportunity to dispute his underlying liability. See Part II.A, supra; see also McCullar, T.C. Memo. 2014-150, at *8. Further, he failed to participate in the CDP conference. Thompson, 140 T.C. at 178. Accordingly, we hold that it was not an abuse of discretion for AO Siahaan to reject Mr. Gibbons's request for collection alternatives.
D. Balancing Analysis
Mr. Gibbons did not allege in the Petition that AO Siahaan failed to consider "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." See § 6330(c)(3)(C). In the Petition, Mr. Gibbons stated in a conclusory fashion that he disagreed with Appeals that "the action[s] taken or proposed were appropriate under the circumstances and the balancing analysis was concluded and conducted incorrectly." (Doc. 1 at p. 2) But he does not give a "[c]lear and concise assignment[] of each and every error" allegedly related to AO Siahaan's balancing analysis. See Rule 331(b)(4); see also Ansley v. Commissioner, T.C. Memo. 2019-46, at *19. Moreover, he did not raise the balancing analysis in the Opposition and therefore has waived any such argument. See 121(d); Shuman, T.C. Memo. 2018-135, at *21 n.13.
In any event, AO Siahaan concluded in the Notice of Determination that the proposed levy action balanced the need for the efficient collection of taxes with Mr. Gibbons's legitimate concern about the intrusiveness of such action. We see no abuse of discretion. III. Conclusion
There are no disputes of material fact, and judgment may be rendered as a matter of law. Finding no abuse of discretion, we will grant respondent's Motion and sustain the Appeals determination to uphold the proposed levy action to collect Mr. Gibbons's unpaid income tax for taxable year 2014. We have considered all arguments made by the parties and, to the extent they are not addressed herein, we deem them to be moot, irrelevant, or without merit.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment (Doc. 10), filed February 14, 2024, is granted. It is further
ORDERED AND DECIDED that respondent's Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code, dated July 11, 2023, upon which this case is based, is sustained.