Opinion
4809-19L
10-14-2021
Wendy Reiners & Kendall C. Hochman, Petitioners, v. Commissioner of Internal Revenue, Respondent
ORDER AND DECISION
Lewis R. Carluzzo, Chief Special Trial Judge.
This section 6330(d) case is before the Court on respondent's motion for summary judgment, filed October 15, 2019 (respondent's motion), and petitioners' cross-motion for summary judgment, filed December 5, 2019 (petitioners' motion). The objections that each party have to the other's motion are embodied in their respective responses.
Unless otherwise indicated, section references are to the Internal Revenue Code of 1986, as amended. Rule references are to the Tax Court Rules of Practice and Procedure, available on the Internet at www.ustaxcourt.gov.
Giving due regard to the statements contained in (1) the motions, and (2) the materials submitted in support of or opposition to each motion, we are satisfied that there are no material facts in dispute in this case, and that decision can be entered as a matter of law. That being so, resolving the matter upon summary judgment is appropriate, see Rule 121, and our reasons for doing so are summarized in the following paragraphs.
The petition in this case, filed March 8, 2019, challenges respondent's determination made in a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, dated February 8, 2019 (notice), that the filing of a Notice of Federal Tax Lien (NFTL) is an appropriate collection action with respect to petitioners' outstanding 2013, 2014, and 2016 Federal income tax liabilities (underlying liabilities).
2013 and 2014 Income Tax Liabilities
In a Form 4549, Income Tax Examination Changes, dated January 27, 2017, that followed respondent's examination of petitioners' 2013 and 2014 Federal income tax returns, petitioners (1) waived the right to contest their tax liabilities in the Tax Court, and (2) consented to the immediate assessment and collection of tax, and related amounts, for those years as shown on the Form. The Form 4549 was not signed by Mr. Hochman; Mrs. Reiners signed it on his behalf pursuant to a Durable Power of Attorney for Finances (POA) Mr. Hochman had previously executed, on August 8, 2016, appointing her as his agent with authority "to prepare, sign, and file separate or joint income, and other tax returns and other governmental reports and documents; to file any claim for tax refund; and to represent * * * [him] in all matters before the Internal Revenue Service."
2016 Income Tax Liability
Petitioners' outstanding 2016 income tax liability results from assessments made on the basis of income tax petitioners reported on their 2016 joint Federal income tax return, along with interest, and additions to tax for failure to pay estimated tax and failure to timely pay tax.
Collection Activity
Respondent sent by certified mail a Notice of Federal Tax Lien Filing and Your Right to a Hearing under I.R.C. § 6320 to petitioners on or about May 22, 2018, advising them that respondent had filed the NFTL with respect to the underlying liabilities. The notice advised petitioners that they had the right to request a hearing to appeal the collection action by completing a Form 12153, Request for a Collection Due Process or Equivalent Hearing, which they did in a timely manner indicating that they requested a lien withdrawal and an installment agreement as collection alternatives to the NFTL.
In a letter dated July 27, 2018, respondent's settlement officer (SO) acknowledged receipt of petitioners' request, and scheduled a telephone conference for September 17, 2018. The letter also requested that petitioners return within 14 days a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, along with certain supporting documents.
On September 17, 2018, respondent's SO held a telephone hearing with petitioners' representative during which petitioners' representative (1) requested a lien withdrawal based on Mrs. Reiners' work in the commodities field, and (2) challenged the underlying liabilities. Respondent's SO stated that because the underlying liabilities related to 2013 and 2014 were based on the Form 4549, petitioners were precluded from challenging them. Nonetheless, the SO gave petitioners an opportunity to submit documents for audit reconsideration for each year in issue. Although given adequate time to do so, petitioners did not provide a Form 433-A or other information requested by the SO to the SO. Instead, petitioners' representative argued that the assessments pursuant to the Form 4549 are void because Mrs. Reiners was not authorized to sign the form on behalf of Mr. Hochman.
Jurisdiction and Standard of Review
Section 6320(a)(1) obligates respondent to notify in writing a taxpayer described in section 6321 of the filing of an NFTL under section 6323. The notice must be sent not more than five business days after the NFTL is filed and must inform the taxpayer of the opportunity for an administrative hearing before respondent's Office of Appeals. Sec. 6320(a)(2)(C), (3).
If an administrative hearing is requested, section 6320(b) and (c) grants the taxpayer the right to a fair hearing before an impartial Appeals officer, generally to be conducted in accordance with the procedures described in section 6330(c), (d), and (e). At the administrative hearing the Appeals officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. Sec. 6330(c)(1); see sec. 6320(c). The taxpayer may raise at the hearing "any relevant issue relating to the unpaid tax", including appropriate spousal defenses, challenges to the appropriateness of the collection action, and offers of collection alternatives. Sec. 6330(c)(2)(A); see sec. 6320(c). Within 30 days after respondent's Office of Appeals issues a notice of determination, the taxpayer may appeal the determination to the Court. Sec. 6330(d)(1); see sec. 6320(c).
If the underlying tax liability is properly in dispute the Court reviews the issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182.
Petitioners' 2013 and 2014 Tax Liabilities
Relying upon various procedural guidelines issued by respondent, petitioners argue that the assessments made pursuant to the Form 4549 are invalid because Mrs. Reiners "lacked the proper authority to sign" the Form 4549 on behalf of her husband. Respondent disagrees and so do we.
The POA is governed and construed in accordance with the laws of Connecticut, which support Mrs. Reiners' authority as an agent of Mr. Hochman to sign the Form 4549 on his behalf. See Conn. Gen. Stat. Ann. sec. 1-351o (West 2016). It is clear that the POA granted Mrs. Reiners the authority to act as Mr. Hochman's agent with respect to Federal tax matters, which she did by signing the Form 4549. One consequence of the valid Form 4549 is that petitioners cannot in this proceeding now challenge the tax liabilities for 2013 and 2014 to which they have consented. See sec. 6330(c)(2)(B); Aguirre v. Commissioner, 117 T.C. 324, 327 (2001).
Petitioners' challenge to the validity of the 2013 and 2014 assessments suggests that the SO failed to verify that the requirements of any applicable law or administrative procedures have been met. See sec. 6330(c)(1). Their challenge in that regard is rejected.
Petitioners' 2016 Tax Liability
According to petitioners, respondent abused his discretion by not allowing petitioners an opportunity to challenge the underlying tax liability for 2016. As noted, respondent's SO gave petitioners an opportunity to submit documents for an audit reconsideration for 2016. Petitioners did not comply with that request, nor did they provide the requested Form 433-A and supporting documents by the hearing date or thereafter, despite being given a reasonable amount of time to do so.
A taxpayer is precluded from disputing the underlying liability if it was not properly raised in the administrative hearing. See Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). An issue is not properly raised in the administrative hearing if "the taxpayer fails to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity to present such evidence." Sec. 301.6330-1(f)(2), A-F3, Proced. & Admin. Regs.; see also Lee v. Commissioner, T.C. Memo. 2011-112.
The record shows that petitioners raised a dispute with respect to the underlying liability for 2016 during the course of the administrative proceeding, but failed to provide the SO with any documentation of the disputed liability. As a result, petitioners did not properly raise the underlying liability for 2016 in the administrative hearing. Consequently, petitioners' underlying tax liability for 2016 is not properly before the Court.
Abuse of Discretion
If the taxpayer's underlying tax liabilities are not in dispute, as is the case here, we review the Appeals Office administrative decision for abuse of discretion. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). An abuse of discretion occurs if the Appeals Office exercises its discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Although the petition does not address lien withdrawal, on their Form 12153 petitioners expressed interest in lien withdrawal and an installment agreement. According to the notice, petitioners' request for a lien withdrawal was rejected because respondent's SO concluded, after taking into account petitioners' situation, that none of the circumstances described in section 6323(j) applied.
As we have noted in previous cases, the decision to withdraw a Federal tax lien lies within the Commissioner's discretion and is not mandatory. See sec. 6323(j)(1); Kyereme v. Commissioner, T.C. Memo. 2012-174; see also Klika v. Commissioner, T.C. Memo. 2012-225 (noting, among other things, that this Court generally has no authority to grant relief based on a taxpayer's claim that a lien adversely affected his or her credit rating or employment prospects). We find no compelling reason here to depart from this line of authority. Under the circumstances as presented in respondent's motion, the Court finds that the rejection of petitioners' request for lien withdrawal is not an abuse of discretion.
It is further well settled that the Commissioner is justified in rejecting a proposed collection alternative, such as an installment agreement or an offer in compromise, if as in this case the taxpayer fails to submit requested financial information. See, e.g., Pough v. Commissioner, 135 T.C. 344, 351 (2010); Prater v. Commissioner, T.C. Memo. 2007-241. Respondent's rejection of petitioners' proposed installment agreement is not an abuse of discretion.
Otherwise, and in all other respects, respondent has shown that he has satisfied the procedural requirements imposed upon him by section 6330. See secs. 6320(c), 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). That being so, respondent's determination to proceed with collection of the underlying liabilities in accordance with the notice is sustained.
It follows, and is
ORDERED that respondent's motion is granted. It is further
ORDERED that petitioners' motion is denied. It is further ORDERED AND DECIDED that respondent may proceed with collection as determined in the notice.