Opinion
209-22L
04-28-2023
THOMAS P. KAZAS, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
ORDER AND DECISION
Tamara W. Ashford Judge
This section 6330(d)(1) appeal from a collection due process (CDP) determination is currently calendared for trial at the Session of the Court commencing on May 1, 2023, in Pittsburgh, Pennsylvania, and pending before the Court is respondent's Motion for Summary Judgment, filed February 22, 2023, pursuant to Rule 121. In the motion, respondent contends that no genuine dispute exists as to any material fact and that the determination of the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) approving a notice of intent to levy (levy notice) with respect to petitioner's unpaid civil penalty liabilities for the 2011, 2014, and 2015 taxable years (years at issue) should be sustained as a matter of law.
Unless otherwise indicated, all statutory references are to Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
By Order served on February 24, 2023, the Court ordered petitioner to file a response to respondent's motion no later than March 28, 2023. As of the date of this Order and Decision, neither petitioner nor his counsel of record have responded to either respondent's motion or the Court's Order.
Because no response to respondent's motion was filed despite the Court's Order directing petitioner to do so, the Court could enter a decision against him for that reason alone. See Rule 121(d). We will nevertheless consider the motion on its merits.
Background
Petitioner failed to pay civil penalty liabilities that the IRS had assessed against him despite the IRS having provided him with notice and demand for payment. Consequently, the IRS sent petitioner a levy notice dated June 22, 2021, advising him that the IRS intended to levy to collect his outstanding liabilities for the years at issue which, through July 22, 2021, totaled $293,531.66, and that he had a right to a hearing to appeal the proposed collection action.
On July 22, 2021, in response to the levy notice, petitioner's authorized representative, William A. Buck (who is petitioner's counsel of record in this case), timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), on petitioner's behalf. The CDP hearing request did not challenge the underlying liabilities but did request the collection alternative of "I Cannot Pay Balance" and that a CDP hearing be held with Mr. Buck. Additionally, the following statement was attached to the CDP hearing request:
At this time, Taxpayer is not reasonably able to make any payment related to any assessed balance. Taxpayer was severely affected by COVID-19 in 2020. Taxpayer was required to seek significant medical treatment from Weill Cornell Medicine Hematology and Oncology in New York, New York.
As a result of the complications from COVID-19, Taxpayer, an independent contractor, was not in a position to provide any consulting services. Taxpayer believes that collection alternatives, including an installment agreement, present the best opportunity to ensure collection of the full amount of the outstanding tax liability.
Appeals Officer Darlene J. Macaulay (AO Macaulay) sent petitioner a letter dated September 1, 2021 (with a copy to Mr. Buck), acknowledging receipt of his CDP hearing request and scheduling a telephonic CDP hearing with him on September 28, 2021. She also outlined the issues she had to consider during the hearing and informed petitioner that in order for her to consider collection alternatives he must provide her with the following documents: (1) a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals; (2) signed federal income tax returns for 2016-2020; and (3) proof that estimated tax payments were paid in full for the year to date. AO Macaulay requested that petitioner provide the completed Form 433-A and estimated tax payment proof within 14 days of her September 1, 2021, letter, and the tax returns within 21 days of her September 1, 2021, letter.
On September 28, 2021, AO Macaulay held a telephonic CDP hearing with Mr. Buck. During the hearing she informed Mr. Buck that she had not received the requested information and that petitioner was not in filing compliance. In response, Mr. Buck stated that he thought the completed Form 433-A had already been faxed to her and he would have the form resent. Mr. Buck further stated that petitioner, in addition to not being able to work because of COVID-related issues, had no income except for some distributions taken and perhaps disability payments. AO Macaulay advised Mr. Buck that once she received the information she would need some time to review it and would call him back after her review.
On October 8, 2021, AO Macaulay received petitioner's Form 433-A with 48 pages of supporting documentation via "IRS EEFAX." On October 26, 2021, she reviewed the faxed submission, noting that (1) the form only showed cash on hand of $7,500 (with no other personal assets, monthly income and expenses, or employer listed) and (2) the only supporting documentation directly related to petitioner was a rental report dated July 26, 2017; the rest of the supporting documentation related to coffee companies for which petitioner had seemingly worked.
We note the form was unsigned.
On October 28, 2021, AO Macaulay spoke with Mr. Buck via telephone, informing him that petitioner's Form 433-A and supporting documentation were inadequate; she requested that the following be provided to her by November 8, 2021: (1) copies of bank statements for any account petitioner had, (2) documentation from a doctor stating that petitioner could not work, and (3) verification of petitioner's disability. On November 9, 2021, having received nothing in response to her October 28, 2021, request, AO Macaulay called Mr. Buck, leaving him a voicemail extending the deadline to November 12, 2021.
On November 15, 2021, having neither heard back from Mr. Buck nor having received the requested information in response to her November 9, 2021, voicemail, AO Macaulay noted in her case activity record that the case would be closed and the proposed levy sustained. Accordingly, on December 6, 2021, Appeals issued to petitioner (with a copy to Mr. Buck) a notice of determination sustaining the levy notice.
On January 5, 2022, petitioner, while residing in New York, timely filed a petition with this Court for review of the notice of determination. In his Petition, petitioner does not dispute his underlying liabilities, but indicates that he used retirement assets for living expenses during the years at issue, has been unable to work since approximately April 2020 due to COVID-related issues, was unable to obtain medical records supporting his CDP hearing request, and requested to be placed in non-collectible status given that he has no income and is ineligible for government assistance.
Discussion
The purpose of summary judgment is to expedite litigation and avoid unnecessary and expensive trials. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). The Court shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(a)(2); see also 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 to demonstrate that there is no genuine dispute as to any material fact; consequently, factual inferences will be viewed in a light most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The nonmoving party may not rest upon the mere allegations or denials of his pleadings, but must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); Sundstrand Corp., 98 T.C. at 520. On the basis of the record in this case, we conclude that there is no genuine dispute as to any material fact. Consequently, we may render a decision as a matter of law.
Under section 6331(a), if any person liable to pay any tax neglects or refuses to do so after notice and demand, the Commissioner is authorized to collect the unpaid amount by way of a levy upon all property belonging to such a person upon which there is a lien. Pursuant to section 6330(a), the Commissioner must provide the person with written notice of an opportunity for an administrative hearing to review the proposed levy.
If an administrative hearing is requested in a levy case, the hearing is to be conducted by Appeals. § 6330(b)(1). At the hearing, the taxpayer may raise any relevant issues including spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. § 6330(c)(2)(A). Following the hearing, the Appeals officer must determine among other things whether the proposed collection action is appropriate. In reaching the determination, the Appeals officer must take into consideration: (1) whether the requirements of applicable law and administrative procedure have been met, (2) all relevant issues raised by the taxpayer, and (3) whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that collection be no more intrusive than necessary. § 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001).
Section 6330(d)(1) grants this Court jurisdiction to review the determination made by Appeals in a levy case. Where, as is the case here, the underlying liability is not at issue, we review Appeals' determination for abuse of discretion; that is, whether the determination was arbitrary, capricious, or without sound basis in fact or law. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008); Murphy v. Commissioner, 125 T.C. 301, 308 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); Goza v. Commissioner, 114 T.C. 176, 182 (2000).
In submitting his CDP hearing request, petitioner's desire and focus has been to be granted the collection alternative of currently not collectible (CNC) status. As we have held, "[t]o justify suspension of collection on the ground that the account should be deemed CNC, petitioner must show that he cannot afford to pay the liabilities; and to do so he must show his financial circumstances, including the money that is available to him and the expenses that he bears." Wright v. Commissioner, T.C. Memo. 2012-24, slip op. at 7. It is not an abuse of discretion for Appeals to reject collection alternatives and sustain the collection action due to the taxpayer's failure to submit requested financial information. Scanlon v. Commissioner, T.C. Memo. 2018-51, at *24 (and cases cited thereat); see also Hartmann v. Commissioner, 638 F.3d 248, 250 (3rd Cir. 2011) ("[w]e agree with the Tax Court that the IRS did not abuse its discretion in sustaining the proposed levy where Hartmann failed to comply with the requirements for filing a proposed collection alternative."); Treas. Reg. § 301.6330-1(e)(1) ("Taxpayers will be expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing.").
Petitioner's CDP hearing request did reference in passing an installment agreement as an option to facilitate collection of his outstanding civil penalty liabilities for the years at issue, but no installment agreement was ever submitted.
During the telephonic CDP hearing, AO Macaulay requested that a completed Form 433-A for petitioner with supporting documentation still needed to be submitted to her. Mr. Buck, on petitioner's behalf, submitted an incomplete 433-A and with inadequate supporting documentation. AO Macaulay advised Mr. Buck of this during a telephone call on October 28, 2021, and requested that certain financial, medical, and disability information be provided to her by November 8, 2021, which date she later extended to November 12, 2021. After that October 28, 2021, telephone conversation, she never heard back from Mr. Buck or received the requested information. Petitioner was thus afforded several opportunities to provide AO Macaulay with the requested information but failed to do so (and the information still could have been submitted for AO Macaulay's consideration after the November 12, 2021, deadline and up to December 6, 2021, when the notice of determination was issued to petitioner, see Dinino v. Commissioner, T.C. Memo. 2009-284, slip op. at 24 ("It is the policy of the Office of Appeals to consider financial information submitted past the deadline, and up to the time of the issuance of the notice of determination.")).
On the basis of our review of the administrative record, we find that AO Macaulay considered all 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 petitioner raised, and (3) determined that the proposed collection action appropriately balances the need for the efficient collection of taxes with the legitimate concern of petitioner that the collection action be no more intrusive than necessary. It therefore cannot be said that AO Macaulay 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.
We are not unsympathetic to petitioner's circumstances (i.e., he has not been able to work since approximately April 2020), and thus petitioner should note that he may still pursue and discuss with the IRS a collection alternative, particularly should his financial situation continue to spiral downward; however, he is entitled to only one CDP hearing and Tax Court proceeding with respect to the proposed levy. See Ragsdale v. Commissioner, T.C. Memo. 2019-33, at *35 (citing Perrin v. Commissioner, T.C. Memo. 2012-22, slip op. at 8). In sum, petitioner has not given sufficient basis to deny summary adjudication in respondent's favor pursuant to Rule 121. Respondent having shown that no genuine dispute exists as to any material fact and that he is entitled to judgment as a matter of law, it is hereby
ORDERED that respondent's Motion for Summary Judgment, filed February 22, 2023, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the collection action with respect to petitioner's unpaid civil penalty liabilities for the 2011, 2014 and 2015 taxable years, as described in the Notice of Determination Concerning Collection Actions Under Sections 6320 or 6330 of the Internal Revenue Code, dated December 6, 2021.