Opinion
10471-23L
04-12-2024
SHOMARI A. MCCOY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Joseph W. Nega, Judge
This collection due process (CDP) case is presently calendared for an in-person trial at the session of the Court scheduled to commence on Monday, April 29, 2024, in Detroit, Michigan. On February 23, 2024, respondent filed a Motion for Summary Judgment (respondent's motion). By Order issued February 26, 2024, the Court directed petitioner to respond to respondent's motion on or before March 27, 2024. As of April 11, 2024, petitioner has not filed a response.
I. Background
Petitioner timely filed a federal income tax return for tax year 2017 and late-filed a federal income tax return for tax year 2018 on July 22, 2020. Petitioner's 2017 return indicated that he was owed a refund of $2,121, which he received in March 2018. On March 25, 2019, respondent issued to petitioner a notice of deficiency for tax year 2017 that determined a deficiency of $2,501 attributable to unreported unemployment income and a disallowed education credit. Petitioner did not challenge the notice of deficiency relating to tax year 2017. Petitioner's 2018 return indicated a tax liability of $3,455. Petitioner paid most of the 2018 tax liability through withholding over the course of the year but did not pay the remaining amount when petitioner filed the 2018 return.
On August 12, 2021, respondent issued to petitioner LT11, Notice of Intent to Levy and Your Collection Due Process Right to a Hearing (notice of intent to levy), which corresponded to petitioner's federal income tax liability for tax years 2017 and 2018; interest; and sections 6651(a)(1) and (a)(2) additions to tax. On September 6, 2021, petitioner timely submitted to respondent Form 12153, Request for a Collection Due Process or Equivalent Hearing. On the Form 12153, petitioner requested the collection alternative of an installment agreement and indicated that he was unable to pay the balance due to financial hardship. Petitioner did not dispute the underlying liability on the Form 12153, Request for a Collection Due Process or Equivalent Hearing.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation 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.
On March 16, 2022, respondent sent to petitioner a letter notifying petitioner that his request for an installment agreement could not be considered until petitioner filed a tax return for tax year 2019. Petitioner did not respond to this letter.
Petitioner's CDP case was assigned to Appeals Officer (AO) Justin Smith on or about June 9, 2022. On July 25, 2022, AO Smith unsuccessfully attempted to call petitioner. On July 26, 2022, AO Smith mailed to petitioner a letter scheduling a telephone conference for August 17, 2022. Petitioner did not attend the August 17, 2022, conference call. On August 17, 2022, AO Smith sent a follow up letter to petitioner requesting that petitioner contact AO Smith prior to August 31, 2022. Petitioner did not contact AO Smith as requested.
On September 1, 2022, petitioner left a voicemail with AO Smith. Also on September 1, 2022, AO Smith attempted to return petitioner's call but was unable to make contact and instead left a voicemail requesting a callback. AO Smith called petitioner again on December 16, 2022, and February 27, 2023, leaving a voicemail and requesting a call back each time. Petitioner never called AO Smith back, and AO Smith closed the case on May 23, 2023.
On June 7, 2023, respondent issued to petitioner a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (notice of determination), sustaining the proposed levy for unpaid tax liability for tax years 2017 and 2018. Petitioner timely filed a Petition with this Court on June 30, 2023.
II. Discussion
A. Summary Judgment Standard
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C 678, 681 (1998). The Court may grant summary judgment when there is no genuine dispute as to any material fact and 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). In deciding whether to grant summary judgment, we construe factual materials and draw inferences therefrom in the light most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. However, the nonmoving party may not rest upon mere allegations or denials of his pleadings but, rather, must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see Sundstrand Corp., 98 T.C. at 520.
B. Standard & Scope of Review
Section 6330(d)(1) grants this Court jurisdiction to review an AO's determination in connection with a CDP hearing. Section 6330(c)(2) prescribes the matters that a taxpayer may raise at a CDP hearing, including spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. The existence or amount of the underlying tax liability may be contested at a CDP hearing only if the taxpayer did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the tax liability. See § 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 180- 81 (2000).
If the validity of the underlying tax liability is properly at issue, the Court will review the taxpayer's liability de novo. See Sego, 114 T.C. at 609-10. Where the validity of the underlying tax liability is not properly at issue, the Court will review the SO's determination for abuse of discretion. Id. at 610. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006).
C. Underlying Liability
A taxpayer may challenge the existence or amount of underlying tax liability in a CDP proceeding only "if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." § 6330(c)(2)(B). The phrase "underlying tax liability" includes the tax due, any additions to tax or penalties, and statutory interest. See Katz v. Commissioner, 115 T.C. 329, 339 (2000). "A taxpayer is treated as not having had an opportunity to dispute a liability that is reported as due on a return." Perkins v. Commissioner, 129 T.C. 58, 62-63 (2007); see also Montgomery v. Commissioner, 122 T.C. 1, 9-10 (2004).
In this case, petitioner did not have an opportunity to dispute the liability shown on his 2018 tax return prior to the CDP hearing.
In addition to the requirement that a taxpayer did not have a prior opportunity to challenge the underlying liability, to preserve such a challenge, a taxpayer must actually raise the issue of the underlying liability during the CDP proceeding. See Giamelli v. Commissioner, 129 T.C. 107, 112-16 (2007); Treas. Reg. § 301.6330-1(f)(2) Q&A-F3.
In this case, petitioner is precluded from challenging the underlying liability for tax years 2017 and 2018 because petitioner did not dispute the underlying liability during the CDP proceeding. The record is clear that petitioner did not seek to challenge the underlying liability on the September 6, 2021, Form 12153 that petitioner submitted to initiate the CDP hearing; did not attend the scheduled CDP hearing on August 17, 2022; and did not communicate with AO Smith between August 17, 2022, and May 23, 2023, other than to leave a single voicemail. Since petitioner did not dispute the underlying liability with AO Smith, petitioner cannot dispute that liability before the Court.
D. Abuse of Discretion
1. Issues Raised
We now turn to the issues raised by petitioner, which we review for abuse of discretion. On the Petition, petitioner states that he disagrees with the IRS action because: "I've been unsuccessful in finding information related to the requested tax periods. Several challenges have prevented me from being able to do so successfully including a pending divorce." Petitioner has not described any facts that he relies on-stating on the Petition: "I explained this information on a voicemail (phone call) I left for the IRS agent assigned to my case some time ago." Construing the pro se Petition liberally, petitioner seems to allege that AO Smith abused his discretion by closing the file and issuing a notice of determination after receiving a voicemail from petitioner on September 1, 2022, and then not hearing from petitioner at all between September 2, 2022, and May 23, 2023, despite repeated attempts to make contact. On the administrative record before us, we see no abuse of discretion. See Belair v. Commissioner, 157 T.C. 10, 17 (2021) ("It is not an abuse of discretion for Appeals to move ahead with its final determination after an Appeals officer gives a taxpayer an adequate timeframe to submit requested items and the taxpayer fails to submit those items.").
2. Verification & Balancing Obligations
We finish with the issues of verification and balancing, which we generally review regardless of whether raised by the taxpayer in the CDP proceeding. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Sections 6330(c)(1) and (3) require that the AO: (1) properly verify that the requirements of applicable law or administrative procedure have been met and (2) 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 be no more intrusive than necessary. On the record before us, we are satisfied that AO Smith verified that petitioner's liability was properly assessed and that other relevant legal requirements were met. Finally, we conclude that AO Smith's determination to sustain the levy appropriately balanced the statutorily prescribed interests, given petitioner's failure to comply with deadlines and lack of filing compliance for tax year 2019. See Belair, 157 T.C. at 19; Pough v. Commissioner, 135 T.C. 344, 352 (2010).
III. Conclusion
Finding no abuse of discretion, we will grant respondent's motion.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed February 23, 2024, is granted. It is further
ORDERED and DECIDED that the Notice of Determination Concerning Collection Actions Under IRS Sections 6320 or 6330 of the Internal Revenue Code, dated June 7, 2023, upon which this case is based, is sustained, and respondent may proceed with the collection action as determined for tax years 2017 and 2018.