Opinion
23708-22L
04-17-2024
GAIL ELLEN KROTH, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Cary Douglas Pugh Judge
This case was called from the calendar at the Court's trial session in Phoenix, Arizona, on October 16, 2023. There was no appearance by or on behalf of petitioner. Counsel for respondent appeared and stated that petitioner advised them that she would not be appearing at the calendar.
On July 21, 2023, respondent filed the Administrative Record in this case. On August 17, 2023, respondent filed a Motion to Dismiss as to Tax Year 2008 as moot and a Motion for Summary Judgment, with attachments. By Order dated August 22, 2023, we directed petitioner to file a response to both Motions by September 21, 2023. To date, she has not.
We could grant respondent's Motion for Summary Judgment and enter a decision against petitioner because she failed to respond under Rule 121(d). And we could dismiss petitioner's case entirely pursuant to Rule 123(b) because she failed to respond to our August 22, 2023, Order and failed to appear when the case was called from the calendar and therefore is in default. We also can, and will, grant the Motions on their merits for the reasons summarized below.
Unless otherwise indicated, all statutory references are to the 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.
Background
The following facts are derived from the parties' pleadings and motion papers, including accompanying exhibits. See Rule 121(c)(1). Petitioner resided in Arizona when she filed her Petition.
The Internal Revenue Service (IRS) issued to petitioner a Notice CP90, Notice of Intent to Seize Your Assets and of Your Right to a Hearing (levy notice), regarding unpaid income taxes for tax years 2007 and 2008. Petitioner timely requested an administrative hearing.
In her administrative hearing request, petitioner disputed her underlying tax liability, but did not indicate that she was interested in a collection alternative. After submitting her request but before the administrative hearing, she fully paid her 2008 tax liability.
The IRS Independent Office of Appeals (Appeals) assigned Appeals Officer June Lee (AO Lee) to conduct the administrative hearing. AO Lee acknowledged receipt of petitioner's request and scheduled a telephonic hearing. AO Lee asked petitioner to provide a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and a Form 1040, U.S. Individual Income Tax Return, for tax year 2007. Petitioner did not submit the requested information (despite being given an extension of time). She raised no other issues at the administrative hearing. Appeals then issued to petitioner the notice of determination sustaining the levy notice.
Discussion
I. Motion to Dismiss
Because an unpaid liability for 2008 upon which a collection action could be based no longer exists, this case is moot with respect to that year. See Kelby v. Commissioner, 130 T.C. 79, 84 (2008). "In a case where . . . the liability that is the subject of the proposed lien or levy has been fully satisfied, we have held that a proceeding under section 6330 challenging the proposed collection action is moot." Id. We accordingly dismiss the 2008 tax year on grounds of mootness.
II. Motion for Summary Judgment
When a motion for summary judgment is made pursuant to Rule 121 "[t]he nonmovant must respond, setting forth specific facts and supporting those facts as required by Rule 121(c), to show that there is a genuine dispute of fact for trial. If the nonmovant does not so respond, a decision may be entered against that party." Rule 121(d). Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
Where the amount of a taxpayer's underlying tax liability is properly at issue in a collection case, we review the appeals officer's determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). Section 6330(c)(2)(B) permits taxpayers to challenge the existence or amount of their underlying tax liability only if they did not receive a notice of deficiency or otherwise have a prior opportunity to contest that liability.
An issue is not properly raised if consideration is requested but the taxpayer fails to present to Appeals any evidence after being given a reasonable time to do so. Treas. Reg. § 301.6330-1(f)(2), Q&A-F3. Petitioner failed to properly raise the merits of her underlying tax liability. See Giamelli v. Commissioner, 129 T.C. 107, 115 (2007) ("[W]e do not have the authority to consider . . . issues that were not raised before the Appeals Office."). She therefore cannot challenge her underlying tax liability in this case. See § 6330(c)(2)(B); Giamelli, 129 T.C. at 115.
Where the underlying tax liability is not properly at issue, we review the appeals officer's determinations regarding nonliability issues for abuse of discretion. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008), supplemented by 136 T.C. 463 (2011); Goza, 114 T.C. at 182. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). The burden is on the taxpayer to prove that the appeals officer abused her discretion. Rules 142(a), 122(b); see Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
The U.S. Court of Appeals for the Ninth Circuit has held that when de novo review is not appropriate, the scope of review in a collection case is confined to the administrative record. See Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009), aff'g in part T.C. Memo. 2006-166, and aff'g in part, vacating in part decisions in related cases. The Ninth Circuit is the appellate venue for this case absent stipulation by the parties. See § 7482(b)(1)(G).
In deciding whether AO Lee abused her discretion in sustaining the collection action we consider whether she: (1) properly verified that the requirements of any applicable law or administrative procedure have been met; (2) considered any relevant issues petitioner raised; and (3) determined whether "any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of [petitioner] that any collection action be no more intrusive than necessary." See § 6330(c)(3).
The record shows that AO Lee examined petitioner's account transcripts and verified that the requirements of applicable law and administrative procedure were followed. AO Lee properly balanced the need for efficient collection of taxes with petitioner's legitimate concern that the collection action be no more intrusive than necessary. Sustaining this collection action cannot be an abuse of discretion because petitioner failed to timely supply the requested information or propose a collection alternative. See Lem v. Commissioner, T.C. Memo. 2023-110, at *9 ("No abuse of discretion exists when a settlement officer . . . sustains the proposed collection action where the taxpayer fails, after being given sufficient time, to supply the settlement officer with the required forms and supporting financial information."); Cavazos v. Commissioner, T.C. Memo. 2008-257, 2008 WL 4907491, at *4 ("It is not an abuse of discretion for an appeals officer to sustain a levy and not consider any collection alternatives when the taxpayer has proposed none.").
III. Conclusion
On the basis of the record before us, we conclude that this case is moot with respect to tax year 2008, and there is no genuine dispute as to any material fact, and respondent is entitled to a decision as a matter of law as to tax year 2007. Therefore, upon due consideration and for cause, it is
ORDERED that respondent's Motion to Dismiss as to Tax Year 2008, filed August 17, 2023, is granted, and tax year 2008 is dismissed as moot. It is further
ORDERED that respondent's Motion for Summary Judgment, filed August 17, 2023, is granted. It is further
ORDERED and DECIDED that respondent may proceed with the collection action as determined in the Notice of Determination dated September 20, 2022, for tax year 2007.