Opinion
7055-22L
04-14-2023
JULIAN A. MYERS, 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 April 17, 2023, in Winston-Salem, North Carolina, and pending before the Court is respondent's Motion for Summary Judgment, filed January 30, 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 federal income tax liabilities for the 2014, 2016, and 2017 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. Some monetary amounts are rounded to the nearest dollar.
By Order served on February 7, 2023, the Court ordered petitioner to file a response to respondent's motion no later than March 9, 2023. As of the date of this Order and Decision, petitioner has not responded to either respondent's motion or the Court's order.
Because petitioner failed to respond to respondent's motion despite the Court's order directing him 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 did not file federal income tax returns for the years at issue.Accordingly, the IRS prepared substitutes for return for petitioner for the years at issue pursuant to section 6020(b), and issued notices of deficiency to him determining deficiencies in his federal income tax and additions to tax under sections 6651(a)(1) and (2) and 6654 for the years at issue. Petitioner did not file a petition with this Court for redetermination of the deficiencies and the additions to tax. Consequently, the IRS made assessments against petitioner in the following amounts:
Petitioner also did not file federal income tax returns for 2015, 2019 and 2020.
Additions to tax
Year
Deficiency
2014
$24,441
$4,910
$5,455
$387
2016
70,014
15,000
11,333
1,585
2017
66,498
8,719
6,975
854
When petitioner failed to pay the assessed liabilities despite the IRS providing him with notice and demand of the balances due, the IRS sent petitioner a levy notice dated June 28, 2021.
The levy notice advised petitioner that the IRS intended to levy to collect his outstanding liabilities for the years at issue, which through the date of the levy notice, totaled $222,548, and that he had a right to a hearing to appeal the proposed collection action.
Petitioner, in response to the levy notice, timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request). As the reason for his disagreement with the proposed levy action, petitioner checked the box on his CDP hearing request for "I Cannot Pay Balance." Additionally, in further support of his disagreement with the proposed levy action and request for a CDP hearing, petitioner stated on his CDP hearing request the following:
We note that petitioner erroneously checked the box on his CDP hearing request that he was disagreeing with a filed notice of federal tax lien.
I am not liable for all or part of the taxes. As a fulltime employee of IBN Global Consulting Inc. during these years (Taxid [Redacted]), ALL income payments were were [sic] made directly to the business and I was paid only a fraction of this income amount. I am not an owner nor did receive any special payment or benefit of any kind for the income
they received. I was an employee of the company and only paid a portion of the contracts. Corp to Corp was not possible with these contracts so W2 was the only option. I would like to request a hearing to dispute this matter and have IBN Global Consulting (Taxid [Redacted]) provide W2's for the necessary adjustments needed as well as have the necessary tax payments made in a timely manner. I can gather bank records of everything I was paid from IBN Global Consulting during these years as a fulltime employee as i [sic] was never provided W2's.
The IRS acknowledged receipt of petitioner's CDP hearing request by letter dated August 24, 2021, and the request was forwarded to Appeals where it was assigned to Settlement Officer Donna Connolly (SO Connolly).
On October 27, 2021, SO Connolly sent petitioner a letter wherein she scheduled a telephonic CDP hearing with petitioner on December 2, 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 2015, 2019, and 2020; (3) proof that estimated tax payments were paid in full for the year to date; and (4) signed federal income tax returns for the years at issue if he wished for the IRS to reconsider the assessments made for those years. SO Connolly requested that petitioner provide the completed Form 433-A and estimated tax payment proof within 14 days of her October 27, 2021, letter, and the tax returns within 21 days of her October 27, 2021, letter. Finally, she informed petitioner that if he preferred to reschedule the hearing or have a face-to-face conference he should call or write her also within 14 days of her October 27, 2021, letter.
On December 2, 2021, petitioner did not call SO Connolly at the appointed time for the telephonic CDP hearing, and he did not provide any of the documents she requested. On December 8, 2021, respondent sent petitioner a follow-up letter wherein she requested that he call her and provide any other information in addition to the already requested information within 14 days from the date of her December 8, 2021, letter, and if he did not, Appeals would make a determination by reviewing his administrative file and whatever other information he had provided. On December 17, 2021, in response to SO Connolly's December 8, 2021, letter, petitioner called SO Connolly and notified her that he had a new certified public accountant (CPA) working on his federal income tax returns but the CPA was out until the new year, and therefore he would get in touch with the CPA in the new year and would let her know by January 6, 2022, what progress they had made.
Additionally, on January 7, 2022, petitioner called SO Connolly and left a voicemail requesting more time. SO Connolly attempted to call petitioner back at his cell phone number, but was unable to leave a voicemail as his voicemail box was full.
She then called him at the home phone number he provided on his CDP hearing request and left a voicemail, stating that if she did not hear from him within two weeks she would close the case.
On February 1, 2022, having received nothing from petitioner and having not heard from him again, SO Connolly noted in her case activity record that the levy notice was sustained. Accordingly, on February 17, 2022, Appeals issued to petitioner a notice of determination sustaining the levy notice.
A summary detailing the matters SO Connolly considered was attached to the notice of determination.
On March 18, 2022, petitioner, while residing in North Carolina, timely filed a petition with this Court for review of the notice of determination. In his petition, petitioner states four grounds for disagreeing with the notice of determination:
1) The return [sic] for these years need to be amended. They are missing the proper deductions.
2) Taxes have been paid with no W4 withholdings for the past few years unfiled. These need to be submitted as well to determine official balance, if any.
3) As the provider for a family of five that currently has another garnishment in place, another levy would constitute financial hardship for me and my family.
4) Infant and Spouse covid challenges and family bereavements have impacted Appeals communication deadlines.
On December 7, 2022, pursuant to the Court's Order served on November 8, 2022, the parties filed a Stipulation of Facts; the Exhibits attached to the Stipulation of Facts comprise the complete administrative record of the CDP administrative proceeding in this case.
Discussion
The purpose of summary judgment is to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted where the moving party shows through "the pleadings, . . . admissions, and any other acceptable materials, together with the affidavits and declarations, if any, . . . 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); 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. 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 the underlying liability is properly at issue, the Court reviews any determination regarding the underlying liability de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). Where the underlying liability is not properly 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, 114 T.C. at 182.
Petitioner's primary complaint it seems throughout the CDP administrative proceeding and now before this Court has been directed towards his underlying liabilities for the years at issue (as well as other years over which the Court does not have jurisdiction). However, a taxpayer is precluded from disputing his underlying liability in this Court if he failed to properly raise the merits of that underlying liability as an issue during the CDP hearing. Giamelli v. Commissioner, 129 T.C. 107, 115 (2007). The merits of the underlying liability are not properly raised if the taxpayer challenges his underlying liability but fails to present Appeals with any evidence with respect to that liability after being given a reasonable opportunity to present such evidence. Treas. Reg. § 301.6330-1(f)(2) Q&A-F3. The administrative record in this case confirms that petitioner was given several opportunities over a period of approximately three months to submit the information SO Connolly requested, but he failed to do so. This Court has consistently held that Appeals is not required to negotiate indefinitely or wait any specific amount of time before issuing a notice of determination. See, e.g., Gazi v. Commissioner, T.C. Memo. 2007-342, slip op. at 19 ("There is no requirement that the Commissioner wait a certain amount of time before making a determination as to a proposed levy."); Clawson v. Commissioner, T.C. Memo. 2004-106, slip op. at 17 ("[T]here is neither requirement nor reason that the Appeals officer wait a certain amount of time before rendering his determination[.]"); see also Treas. Reg. § 301.6330-1(e)(3) Q&A-E9. Thus, petitioner's underlying liabilities for the years at issue are not properly before this Court and we will review Appeals' determination for abuse of discretion only.
On the basis of our review of the administrative record, we find that SO Connolly 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 properly 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. Thus, it cannot be said that SO Connolly 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. Accordingly, we grant respondent's motion and note that petitioner is of course free to continue to negotiate with the IRS concerning his liabilities for the years at issue, but 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). Upon due consideration, it is hereby
ORDERED that respondent's Motion for Summary Judgment, filed January 30, 2023, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the collection action with respect to petitioner's unpaid federal income tax liabilities for the 2014, 2016, and 2017 taxable years, as described in the Notice of Determination Concerning Collection Action(s) Under Sections 6320 or 6330, dated February 17, 2022.