Opinion
3582-23L
03-15-2024
RICARDO LLOYD JOHNSON & VALERIE J. JOHNSON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Elizabeth Crewson Paris Judge
This case is before the Court on a petition for review of a Notice of Determination Concerning Collection Action(s) under Sections 6320 and/or 6330 sustaining a notice of intent to levy for petitioners' 2016 tax year. On December 22, 2023, docket entry 15, respondent filed a Motion for Summary Judgment (Motion), pursuant to Rule 121, contending that there are no disputed issues of material fact and that his determination to sustain the proposed levy action was proper as a matter of law. On February 21, 2024, docket entry 18, petitioners filed a Response to Motion for Summary Judgment. For the reasons set forth below, the Court will grant the Motion.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
This background is derived from the parties' pleadings, motion papers, and exhibits which comprise the administrative record. It is stated solely for purposes of deciding respondent's 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). Petitioners resided in Florida when they timely filed the Petition.
On August 31, 2021, respondent issued petitioners Letter 1058-A, Notice of Intent to Levy and Notice of Your Rights to a Hearing to collect unpaid self-reported federal income tax liability for petitioners' 2016 tax year. Petitioners timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP Hearing Request) to request a collection due process (CDP) hearing. On the CDP Hearing Request, petitioners indicated that they sought an Offer in Compromise as a collection alternative and also checked the box "I cannot pay balance."Petitioners additionally stated that they had requested an Offer in Compromise but had not received a reply. Petitioners did not dispute the underlying tax liability.
On the CDP Hearing Request, submitted September 22, 2021, petitioners selected as the basis for hearing request both "Filed Notice of Federal Tax Lien" and "Proposed Levy or Actual Levy." Respondent did not file a Notice of Federal Tax Lien with respect to petitioners' 2016 tax year until October 12, 2021. Accordingly, petitioners' request as to the Notice of Federal Tax Lien was premature, and the lien was not considered during the CDP hearing.
Petitioners' CDP Hearing Request was received by Revenue Officer C.A. Nix. On October 25, 2021, Revenue Officer Nix spoke to Mr. Johnson by telephone. During the call, she requested a completed Form 656, Offer in Compromise, a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and supporting financial records and other documentation. Petitioners provided the requested information. After reviewing petitioners' Offer in Compromise, Revenue Officer Nix additionally requested petitioners' unfiled tax returns for 2014, 2017, and 2020. Petitioners provided those returns within the timeframe requested by Revenue Officer Nix.
In January 2022, petitioners' case was transferred to the Independent Office of Appeals and assigned to Settlement Officer Marianne Asher. Settlement Officer Asher forwarded petitioners' Offer in Compromise to respondent's Centralized Offer in Compromise (COIC) Unit and informed petitioners that their CDP hearing would be held in abeyance until the COIC Unit made an initial decision on their Offer in Compromise. On August 12, 2022, the COIC Unit returned petitioners' Offer in Compromise as nonprocessable because petitioners did not include with their Offer in Compromise the required application fee or initial payment and did not qualify for an exemption under the low-income certification requirements.
Following the return of petitioners' Offer in Compromise, Settlement Officer Asher scheduled petitioners' CDP hearing for November 17, 2022. In the letter scheduling the CDP hearing, Settlement Officer Asher requested that petitioners either submit documentation to support their qualification for low-income certification or submit a new Offer in Compromise with the required payments. Prior to the CDP hearing, Settlement Officer Asher verified that an assessment was properly made, notice and demand for payment was mailed to petitioners' last known addresses, there was a balance due when the levy notice was issued, and that she had no prior involvement with respect to the specific tax period at issue.
Petitioners did not attend the scheduled CDP hearing on November 17, 2022. By letter dated November 17, 2022, Settlement Officer Asher requested that petitioners contact her within 14 days to reschedule. The letter additionally requested that petitioners provide information and documentation necessary to consider an Installment Agreement or Offer in Compromise.
On December 1, 2022, Mr. Johnson called Settlement Officer Asher to conduct the CDP hearing. During the CDP hearing, Mr. Johnson took the position that petitioners met the low-income certification requirements for their Offer in Compromise. Settlement Officer Asher explained that petitioners reported an adjusted gross income of $428,351 on their 2020 tax return and, moreover, that the deadline for reconsideration had passed. She further explained that petitioners could submit a new Offer in Compromise or that she would consider an Installment Agreement, but in either case, petitioners would need to file their 2021 tax return, which had not yet been filed, and provide her with updated financial documentation. Mr. Johnson stated that he would work on getting the return filed.
Petitioners did not file their 2021 tax return or provide Settlement Officer Asher with the requested financial documentation. On February 17, 2023, Settlement Officer issued the Notice of Determination, upholding the proposed levy action.
Petitioners timely petitioned this Court for review.
Discussion
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant summary judgment when there is no genuine dispute of material fact, and a decision may be rendered as a matter of law. Rule 121(a)(2); Sundstrand Corp., 98 T.C. at 520. The moving party bears the burden of proving that there is no genuine issue of material fact. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). In deciding whether to grant a motion for summary judgment, the Court construes factual materials and inferences drawn from them in a light most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. The nonmoving party may not rest upon mere allegations or denials in its pleadings and must set forth specific facts showing there is a genuine dispute for trial. Rule 121(d); see also Celotex Corp. v. Catrett, 427 U.S. 317, 324 (1986).
The Court has jurisdiction to review determinations concerning collection actions when the taxpayer timely petitions for review. § 6330(d)(1). Where the validity of a taxpayer's underlying liability is properly at issue, the Court reviews the determination with respect to that issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182. Because petitioners do not dispute the underlying tax liability, the Court reviews the determination only for abuse of discretion.
In reviewing the Settlement Officer's determination for abuse of discretion, the Court considers whether she (1) properly verified that the requirements of applicable law or administrative procedure have been met, (2) considered any relevant issues raised during the hearing, and (3) considered whether the proposed collection action balances the Government's need for the efficient collection of taxes with the taxpayer's legitimate concern that any collection action be no more intrusive than necessary. § 6330(c).
Section 6330(c)(1) requires the Settlement Officer to "obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." The Court has authority to review satisfaction of the verification requirement regardless of whether petitioner raised that issue at the hearing. Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Petitioners did not challenge the verification requirement, and the Court concludes that Settlement Officer Asher properly verified that the legal and procedural requirements were met. Rule 331(b)(4); see also Ansley v. Commissioner, T.C. Memo. 2019-46, at *19.
The Settlement Officer is required to consider any relevant issue raised by the taxpayer during the hearing. § 6330(c)(2)(A), (3)(B). In their Collection Due Process Hearing Request, petitioners requested an Offer in Compromise and check the box "I cannot pay balance." Petitioners submitted an Offer in Compromise, which was reviewed by respondent's COIC Unit and returned because petitioners did not include the application fee or required initial payment. Settlement Officer Asher provided petitioners an opportunity to document their qualification for low-income certification or file a new Offer in Compromise, but petitioners did not do so. She also advised that she would consider an Installment Agreement, but needed petitioners to provide their financial information and submit their unfiled 2021 tax return in order for her to do so. Petitioners did not provide her with the financial information or the 2021 tax return and, after more than two months, she issued the Notice of Determination.
No abuse of discretion exists when a Settlement Officer rejects a taxpayer's collection alternative and sustains a proposed collection action where the taxpayer fails, after being given sufficient time, to supply the Settlement Officer with required forms or supporting information. Wright v. Commissioner, T.C. Memo. 2010-24, 2012 WL 204181, at *3. Nor is it an abuse of discretion for a Settlement Officer to reject a collection alternative where the taxpayer is not in compliance with ongoing filing obligations. See, e.g., Wolfson v. Commissioner, T.C. Memo. 2022-46; Hull v. Commissioner, T.C. Memo. 2015-86. Accordingly, the Court concludes that Settlement Officer Asher did not abuse her discretion in not granting the requested collection alternatives.
Petitioners do not allege that Settlement Officer 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." § 6330(c)(3)(C). The Court concludes that Settlement Officer Asher properly considered the balancing obligation as required by section 6330(c)(3)(C).
Respondent has shown that there is no genuine dispute as to any material fact and that Settlement Officer Asher did not abuse her discretion in sustaining the proposed levy action. Accordingly, the Court will grant summary judgment in favor of respondent and sustain the proposed collection action.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed December 22, 2023, is granted. It is further
ORDERED AND DECIDED that the determination set forth in the Notice of Determination Concerning Collection Action under Sections 6320 and/or 6330, upon which this case is based, is sustained.