Opinion
16010-18L
01-13-2022
Francis C. Onyenezi & Bernice C. Onyenezi Petitioners v. Commissioner of Internal Revenue Respondent
ORDER AND DECISION
Kathleen Kerrigan Judge
The petition in this case was filed in response to a Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330 dated July 17, 2018, upholding a proposed levy collection action for unpaid tax liabilities for 2007, 2008, and 2009 (years at issue). All section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. This matter is before the Court on respondent's motion for summary judgment pursuant to Rule 121, filed September 21, 2021. To date petitioner has not filed a response to respondent's motion.
Background
Petitioners resided in California when they timely filed their petition. On May 20, 2013, the Court entered a decision in petitioners' deficiency case for the years in issue. On July 22, 2013, respondent made assessments for the years in issue. On February 5, 2018, respondent sent petitioners a notice of intent to levy and notice of your right to hearing for their joint tax liabilities for the years in issue.
On February 26, 2018, petitioners sent a Form 12153, Request for a Collection Due Process or Equivalent Hearing, on which they checked "I cannot pay balance." Petitioner's CDP hearing was assigned to a settlement officer that verified the underlying tax liabilities for the years at issue has been assessed properly. On May 4, 2018, the settlement officer sent petitioners a letter scheduling a CDP hearing for June 5, 2018. The letter requested that petitioners provide a form 433-A, Collection Information Statement for Individuals.
The settlement officer held a CDP with petitioner husband on June 14, 2018. The following day the settlement officer received an unsigned and undated Form 433-A and activity records for two bank accounts with Chase Bank. The settlement officer reviewed respondent's master file online which showed that petitioner law firm owed taxes pursuant to Form 941, Employer's Quarterly Federal Tax Return, for all four quarters of 2011 and 2012, for the first, third, and fourth of 2013, and the first quarter of 2014; and Federal unemployment taxes for 2009, and 2011-13.
On July 17, 2018, respondent sent separate notices of determination to petitioners. On August 16, 2018, petitioners filed a petition with this Court. On September 4, 2019, respondent filed a motion to remand because the notice of determination was issued prior to the deadline petitioners were given to pay their income tax liabilities. The Court granted respondent's motion to remand.
A second settlement officer was assigned, and he sent a letter to petitioner requesting a face-to-face meeting which was held with petitioner husband on December 18, 2019. At this meeting petitioner husband informed the settlement officer of petitioner wife's bank account with Bank of America. He also provided a Form 433-A which only had his signature and provided no information about the account at Bank of America.
At the meeting the settlement officer asked petitioner husband for the following information: Bank of America account statements; year to date pay stubs for petitioner wife; fair market value and payoff balance for their 2015 Lexus; a form 433-A that is updated with net business income and both their signatures; and updated cash surrender value of his life insurance. On January 9, 2020, the settlement officer received information from petitioners. He received additional information on January 27, 2020.
The settlement officer calculated petitioners have monthly expenses of $7,365 and a monthly income of $9,115. He concluded that they could make a monthly payment of $1,750. With the use of respondent's Integrated Automation Technologies (IAT) payment calculator, he concluded that a $1,750 monthly payment would satisfy the employment tax and unemployment tax liabilities of petitioner husband's law firm, but would not satisfy in full the income tax liabilities for the years in issue. He concluded petitioners qualified for a partial payment installment agreement.
The settlement officer and petitioner husband had an additional meeting at which the settlement officer inquired about petitioner wife's individual retirement account (IRA). On February 26, 2020, the settlement officer became aware of petitioner wife's wage income of $104,311 for 2019. He revised the monthly payment to $1,278. Petitioners did not respondent to the settlement officer's request for information about petitioner wife's IRA.
On June 15, 2020, respondent sent petitioners a supplemental notice of determination. The second settlement officer stated that he had verified that the requirements of applicable law and procedure had been followed. He concluded that petitioner could pay more than the $1,000 maximum monthly payment that they requested, and they did not provide information about petitioner wife's IRA account.
Discussion
Summary judgment may be granted where the pleadings and other materials show 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); 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 (in this case, respondent) to demonstrate that there is no genuine dispute as to any material fact and that he or she is entitled to judgment as matter of law. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In all cases, the evidence is viewed in the light most favorable to the nonmoving party. Bond v. Commissioner, 100 T.C. 32, 36 (1993). The nonmoving party may not rest upon mere allegations or denials in his or her pleadings but must set forth specific facts showing there is a genuine dispute for trial. Sundstrand Corp. v. Commissioner, 98 T.C. at 520.
Petitioners have failed to show that there is a genuine issue for trial. Rule 121(d). Consequently, we conclude that there is no dispute as to any material fact and that a decision may be rendered as a matter of law.
Section 6330 requires the Secretary to furnish a person notice and opportunity for a hearing before an impartial officer or employee of the Internal Revenue Service Independent Office of Appeals (Appeals) before levying on the person's property. The person may challenge the existence or the amount of the underlying tax liability for any period only if the person did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000).
Following a hearing, the Appeals officer must determine whether proceeding with the proposed levy action is appropriate. In making that determination, the Appeals officer is required to take into consideration: (1) whether the requirements of any applicable law or administrative procedure have been met; (2) any issues appropriately raised by the taxpayer; and (3) whether the proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. Sec. 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). Where, as here, the taxpayer does not challenge the underlying liability because they have already done so, our review is for abuse of discretion. Sego v. Commissioner, 114 T.C. at 610. An abuse of discretion occurs if Appeals exercises its discretion "arbitrarily, capriciously, or without sound basis in fact or law". Woodral v. Commissioner, 112 T.C. 19, 23 (1999). The Court does not conduct an independent review and substitute its judgment for that of the settlement officer. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). If the Appeals officer follows all statutory and administrative guidelines and provides a reasoned, balanced decision, the Court will not reweigh the equities. Link v. Commissioner, T.C. Memo. 2013-53, at *12.
The second settlement officer verified that all legal and procedural requirements had been met before respondent issued the notice of determination. The second settlement officer did not abuse his discretion by concluding that actions taken in the notice of determination balanced the need for the efficient collection of taxes with the legitimate concern that the collection action be no more intrusive than necessary.
Section 6159 authorizes the Commissioner to enter into an installment agreement if the agreement will facilitate full or partial collections of a taxpayer's unpaid liability. See Thompson v. Commissioner, 140 T.C. 173, 179 (2013). Generally, the decision to accept or reject an installment agreement lies within the Commissioner's discretion. See Rebuck v. Commissioner, T.C. Memo. 2016-3; sec. 301.6159-1(a), (c)(1)(i), Proced. & Admin. Regs.
A settlement officer may accept, at a minimum, a monthly payment equal to the excess of a taxpayer's monthly income over the taxpayer's allowable expenses. See Friedman v. Commissioner, T.C. Memo. 2013-44. We find that the settlement officer did not abuse his discretion in rejection petitioners' monthly offer of $1,000. Furthermore, the settlement officer did not abuse his discretion because petitioners failed to provide requested financial information. See Pough v. Commissioner, 135 T.C. 344, 351 (2010).
Therefore, the second settlement officer did not abuse his discretion by rejecting petitioner's proposed installment agreement. For premises considered, it is
ORDERED that respondent's motion for summary judgment filed, September 21, 2021, is granted. It is further
ORDERED and DECIDED that respondent's notice of determination dated July 17, 2018, as supplemented on June 15, 2020, upon which this case is based, is sustained.