Opinion
11913-20SL
09-21-2021
JOSEPH ALLEN HUFF, Petitioner v. Commissioner of Internal Revenue, Respondent
ORDER AND DECISION
Kathleen Kerrigan, Judge.
This case is set for trial at the Court's September 27, 2021, Denver, Colorado, trial session. On July 27, 2021, respondent filed a motion for summary judgment. Respondent seeks to sustain a Notice of Determination Concerning Collection Actions under Section 6320 or 6330 (notice of determination) dated August 25, 2020, upholding respondent's levy actions. By Order served August 5, 2021, we directed petitioner to file a response to respondent's motion for summary judgment on or before August 24, 2021. Petitioner has not filed a response.
There are no genuine issues of material fact in this case, and we conclude that respondent is entitled to judgment as a matter of law provided herein.
Unless otherwise indicated, 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.
Background
Petitioner resided in Colorado when he timely filed his petition.
Respondent's records indicate that on November 13, 2017, respondent issued petitioner a notice of deficiency for 2015. The notice of deficiency included, in part, an unreported retirement income distribution and the 10% additional tax on an early retirement account distribution. Petitioner did not file a petition with this Court in response to the notice of deficiency. Respondent assessed the deficiency amounts along with an accuracy-related penalty and interest.
On June 3, 2019, respondent mailed petitioner a CP92, Seizure of your state tax refund and notice of your right to a hearing (levy notice). Petitioner timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, in response to the levy notice. On the Form 12153, petitioner disputed his outstanding tax liability and indicated that he was interested in a collection alternative.
On April 24, 2020, the settlement officer reviewed the copy of the notice of deficiency in the case file and respondent's Integrated Data Retrieval System (IDRS) transcripts to verify that the address on the notice of deficiency was petitioner's last known address at the time that the notice of deficiency was issued.
On May 1, 2020, a settlement officer sent petitioner a Letter 4837. In the letter the settlement officer advised petitioner that she was scheduling a telephone hearing for June 3, 2020. She requested that petitioner: (1) complete and return a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, along with supporting records, in order for the settlement officer to consider a collection alternative; and (2) provide documents supporting his argument as to the disputed liability. The settlement officer requested that petitioner provide the documents within 14 days from the date of the letter. The settlement officer also attached a copy of the notice of deficiency to the letter.
On May 12, 2020, the settlement officer received a voicemail from petitioner requesting more time to secure the requested documents. The settlement officer left a voicemail with petitioner stating that petitioner could have additional time, including, if needed, after the CDP hearing.
On June 3, 2020, the settlement officer held a telephone CDP hearing with petitioner. During the CDP hearing petitioner disputed his tax liability, stating that he believed that his retirement plan was not subject to the 10% additional tax on early distributions. Petitioner again requested additional time to secure documents in support of this argument. The settlement officer allowed the additional time and asked petitioner to provide an update on the documents by June 24, 2020. Petitioner also discussed a proposed installment agreement and agreed to contact the settlement officer about this option by June 5, 2020.
On June 5, 2020, the settlement officer received a voicemail from petitioner in which petitioner requested more time to secure the documents. Petitioner also said that he would like to discuss the option of an installment agreement.
On June 10, 2020, the settlement officer returned petitioner's call and left a voicemail asking petitioner to call back to discuss the installment agreement option. On July 6, 2020, the settlement officer left a voicemail with petitioner telling him that his case would be closed if he did not respond.
On July 10, 2020, the settlement officer received a voicemail from petitioner in which he expressed interest in the installment agreement and requested more time to secure documents regarding his retirement distribution. On July 14, 2020, the settlement officer left a voicemail with petitioner proposing a newly calculated installment agreement. Petitioner did not respond.
On August 25, 2020, respondent issued petitioner a notice of determination sustaining the levy on his state refund and a proposed levy.
On September 28, 2020, petitioner timely filed a petition challenging the notice of determination. In his petition, petitioner disputed his underlying tax liability.
Discussion
Summary judgment may be granted where the pleadings and other materials show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). The burden is on the moving party (in this case, respondent) to demonstrate that there is no genuine dispute as to any material fact and that he or she is entitled to judgment as a matter of law. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In all cases, the evidence is viewed in the light most favorable to the nonmoving party. Bond v. Commissioner, 100 T.C. 32, 36 (1993). The nonmoving party may not rest upon mere allegations or denials in his or her pleadings but must set forth specific facts showing there is a genuine dispute for trial. Sundstrand Corp. v. Commissioner, 98 T.C. at 520.
Petitioner has failed to demonstrate, by affidavits or other acceptable materials, that there is a genuine issue for trial. Consequently, we conclude that there is no dispute as to any material fact and that a decision may be rendered as a matter of law.
Section 6331(a) authorizes the Secretary to levy upon the property and property rights of a taxpayer who fails to pay a tax within 10 days after notice and demand. Before the Secretary may levy upon the taxpayer's property, the Secretary must notify him or her of the Secretary's intention to make the levy. Sec. 6331(d)(1). The Secretary must also notify the taxpayer of his or her right to a CDP hearing. Sec. 6330(a)(1).
If the taxpayer requests a CDP hearing, the hearing is conducted by the Appeals Office. Sec. 6330(b)(1). At the hearing the taxpayer may raise any relevant issue relating to the unpaid tax or the proposed levy. Sec. 6330(c)(2)(A). Once the settlement officer makes a determination, the taxpayer may appeal the determination to this Court. Sec. 6330(d)(1).
A taxpayer may challenge the underlying tax liability during a CDP hearing if the taxpayer did not receive a statutory notice of deficiency for such liability or otherwise did not have the opportunity to dispute the liability. Sec. 6330(c)(2)(B); see also Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). The Court considers an underlying tax liability on review only if the taxpayer properly raised the issue during the CDP hearing. Sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.; see also Giamelli v. Commissioner, 129 T.C. 107, 114-115 (2007). A taxpayer did not properly raise an underlying tax liability if he or she failed to present the settlement officer with any evidence regarding the liability after being given a reasonable opportunity to present such evidence. See sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
Petitioner did not present any evidence regarding his underlying tax liability during the telephone CDP hearing or during the additional time provided by the settlement officer. Therefore, petitioner's underlying tax liability is not properly before us.
The Court reviews administrative determinations by the Appeals Office regarding nonliability issues for abuse of discretion. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008), supplemented by 136 T.C. 463 (2011); Goza v. Commissioner, 114. T.C. 176, 182 (2000). In determining abuse of discretion, we consider whether the determination was 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); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Following a CDP hearing the settlement officer must determine whether to sustain the filing of the proposed levy. In making that determination, section 6330(c)(3) requires the settlement officer to consider (1) whether the requirements of any applicable law or administrative procedure have been met; (2) any issues appropriately raised by the taxpayer; and (3) whether the proposed levy action balances the need for the efficient collection of taxes and the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. Lunsford v. Commissioner, 117 T.C. 183, 184 (2001); Diamond v. Commissioner, T.C. Memo. 2012-90, slip op. at 6-7.
As part of the duty to verify that the requirements of any applicable law or administrative procedure have been met, the settlement officer must verify that the IRS made a valid assessment. See sec. 6330(c)(1); Hoyle v. Commissioner, 131 T.C. at 202-203. An assessment is not valid unless it is duly preceded by the mailing of a notice of deficiency to the taxpayer's last known address. Sec. 6213(a). The settlement office reviewed the IDRS to verify the validity of an assessment from a notice of deficiency and this is consistent with IRS guidance. See Internal Revenue Manual pt. 8.22.5.4.2.1.1(2) (Nov. 8, 2013) Petitioner did not raise any issues of regularity pertaining to the mailing of the notice of deficiency.
We note the settlement officer properly based her determination on the required factors. The settlement officer (1) verified that all legal and procedural requirements had been met, (2) considered the issues petitioner raised, and (3) determined that the proposed collection action appropriately balanced the need for the efficient collection of taxes with the legitimate concern of petitioner that the collection action be no more intrusive than necessary.
We have held that it is not an abuse of discretion to sustain a levy when a taxpayer fails to submit all required documentation. See, e.g., Cavazos v. Commissioner, T.C. Memo. 2008-257, slip op. at 11. A settlement officer may ask a taxpayer to provide requested documents and information within an adequate amount of time. Pough v. Commissioner, 135 T.C. 344, 351 (2010) (citing Shanley v. Commissioner, T.C. Memo. 2009-17). We have held that a 14-day deadline is an adequate amount of time. Shanley v. Commissioner, T.C. Memo. 2009-17. The settlement officer's May 1, 2020, letter provided petitioner with 14 days to submit documents. The settlement officer also gave petitioner additional time to submit the documents after the CDP hearing. Petitioner did not submit the documents. Therefore, the settlement officer did not abuse her discretion.
Upon due consideration, it is ORDERED that respondent's motion for summary judgment dated July 27, 2021, is granted. It is further
ORDERED that this case is stricken from the Court's Denver, Colorado, session commencing September 27, 2021. It is further
ORDERED AND DECIDED that respondent's notice of determination dated August 25, 2020, upon which this case is based, is sustained.