Opinion
25213-21L
02-03-2023
STEVEN J. SCHWARTZ, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Courtney D. Jones, Judge
In this collection due process (CDP) case, petitioner, Steven J. Schwartz (Mr. Schwartz), asks us to review a Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 (notice of determination), issued by the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) on September 13, 2021. The notice of determination sustained a proposed levy action to collect unpaid federal income taxes assessed against Mr. Schwartz for taxable years 2013, 2014, and 2015 (Tax Periods).
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.
This case is before the Court on respondent's Motion for Summary Judgment, filed October 12, 2022. The issue for decision is whether Appeals abused its discretion by rejecting the proposed installment agreement and sustaining the proposed levy action. Mr. Schwartz filed an Opposition to Motion for Summary Judgment on November 2, 2022.
On November 16, 2022, the parties held a conference call with the Court to clarify the relationship between the instant case and the case lodged at Docket No. 480-21L. In another related case, Docket No. 18538-17, Mrs. Schwartz was granted innocent spouse relief under section 6015(b) for the tax liabilities at issue in the instant case. The liabilities at issue in the case lodged at Docket No. 480-21L are the liabilities for which Mr. Schwartz and Mrs. Schwartz remain jointly liable.
For the reasons elaborated upon below, we cannot conclude that respondent did not abuse his discretion in the instant case. Therefore, we will deny respondent's Motion.
Background
The following background is drawn from the parties' pleadings, motion papers, and associated exhibits and declarations. They are stated solely for the purpose of resolving the present Motion and not as findings of fact in this case. See Rule 1(b). Mr. Schwartz resided in Maryland when he timely filed his Petition.
While it does not affect our analysis as the notice of determination and associated exhibits do not contain enough information for the Court to determine whether Appeals abused its discretion, we have reason to question the sufficiency of Exhibit 1, Affidavit of Steven J. Schwartz, attached to Petitioner's Opposition to Motion for Summary Judgment. Such affidavit states, "Each factual allegation made in the Response is true and accurate, I have personal knowledge of each factual allegation asserted in the Response, and I incorporate them into this affidavit as if detailed at length herein." (Doc. 12) (emphasis added). Rule 121 provides that a party opposing a motion for summary judgment may submit an opposition and, if they so desire, a supporting affidavit or declaration. See Rule 121(a), (b). An affidavit "shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant or declarant is competent to testify to the matters stated therein." See Rule 121(d). We have reason to doubt the petitioner's ability to incorporate by reference the statements in the petitioner's Opposition to Motion for Summary Judgment. It is the Court's responsibility to answer questions of fact and law. It is not, however, the Court's responsibility to sift through an opposition memo, separate out each individual statement and argument therein, and decide which statements to impart to an affiant as if he had detailed them in an affidavit himself.
I. Deficiency, Notices CP90, and Request for Collection Due Process Hearing
This matter arises from Mr. Schwartz' agreed assessment for tax liabilities for taxable years 2013, 2014, and 2015 (Taxable Years). On July 8, 2019, the IRS issued Mr. Schwartz three Notices CP90, Intent to Seize Your Assets and Notice of Your Right to a Hearing, one concerning each of the Taxable Years at issue. Mr. Schwartz, through his authorized representatives, Stephen P. Kauffman (Mr. Kauffman) and Terry L. Goddard Jr. (Mr. Goddard), filed Form 12153, Request for a Collection Due Process or Equivalent Hearing, that was received on July 19, 2019. On his Form 12153, Mr. Schwartz checked the boxes for "Installment Agreement," "Offer in Compromise," and "I cannot pay balance."
The IRS issued a notice of deficiency to Mr. Schwartz and his wife, Lisa A. Schwartz (Mrs. Schwartz), concerning taxable years 2013, 2014, and 2015. On August 31, 2017, Mr. and Mrs. Schwartz filed a petition with this Court seeking redetermination of that notice of deficiency. See Docket No. 18538-17. The Court entered a stipulated decision on September 17, 2018, wherein Mrs. Schwartz was granted relief under section 6015(b) for the tax liabilities at issue in the instant case, and Mr. Schwartz remains liable for the tax liabilities at issue in the instant case. The case lodged at Docket No. 480-21L is a separate CDP case pertaining to the liabilities for which Mr. and Mrs. Schwartz remain jointly liable.
II. Initial Settlement Officers
Mr. Schwartz' appeal was assigned to Settlement Officer Clara Schuster on December 11, 2019, but was subsequently reassigned to Settlement Officer Nicole Mullin (SO Mullin) on January 16, 2020. On the same day she received Mr. Schwartz' appeal, SO Mullin verified that she had no prior involvement with Mr. Schwartz for the type of taxes and tax years associated with his Appeal, reviewed the case transcript, and verified that the requirements of any applicable law or administrative procedure were met. On January 23, 2020, SO Mullin sent Mr. Schwartz Letter 4837, which scheduled a telephonic hearing for February 25, 2020, and also requested that, within 14 days, Mr. Schwartz submit: (1) a completed Form 433-A, Collection Information Statement for Individuals; (2) a completed Form 656, Offer in Compromise and supporting documentation; (3) proof of current estimated tax payments for the current year to date, and (4) within 21 days, a signed tax return for the taxable year 2018 since one had not yet been filed.
On February 13, 2020, Mr. Goddard sent SO Mullin a reply letter, asking to reschedule the February 25, 2020, telephone hearing due to a conflicting obligation. The letter also informed SO Mullin that Mr. Schwartz had another pending CDP case with Settlement Officer Janice Bankston (SO Bankston), that most of the requested financial information had already been sent to SO Bankston, and attached a copy of the Form 433-A previously provided to SO Bankston, dated October 1, 2019. On February 18, 2020, SO Mullin sent a fax to Mr. Goddard cancelling the hearing scheduled for February 25, 2020, and informed him that she would likely transfer the case to SO Bankston. SO Mullin transferred the case to SO Bankston on or around March 15, 2020.
III. Settlement Officer Bankston
On February 19, 2021, SO Bankston verified that she had no prior involvement with Mr. Schwartz for the type of taxes and tax years associated with his Appeal. On the same day she received Mr. Schwartz' appeal, SO Bankston left a voicemail for Mr. Goddard. On February 22, 2021, in response to SO Bankston's voicemail, Mr. Goddard faxed SO Bankston unsigned copies of Mr. Schwartz' tax returns for taxable years 2018 and 2019. On March 1, 2021, SO Bankston spoke with Mr. Goddard, and also followed up with a letter later that day, requesting that by March 15, 2021, Mr. Schwartz supply signed copies of his returns for taxable years 2018 and 2019, a complete Form 433-A with supporting financial information, and proof of compliance with estimated tax payments for taxable year 2020. Mr. Goddard provided much of the requested information via fax on March 15, 2021, including Form 433-A and associated explanations for certain items contained therein, bank statements, pay stubs, Mr. Schwartz' W-2 for taxable year 2020, a signed copy of Mr. Schwartz' return for taxable year 2018, and a request stating that "Mr. Schwartz asks for an installment agreement with a monthly payment of no more than $1,500 per month."
IV. Settlement Officer Hopkins
On May 12, 2021, the case was transferred to Settlement Officer Genene Hopkins (SO Hopkins). On the same day she received Mr. Schwartz' appeal, SO Hopkins verified that she had no prior involvement with Mr. Schwartz for the type of taxes and tax years associated with his Appeal. On June 28, 2021, SO Hopkins verified that the requirements of any applicable law and administrative procedure were met, and called Mr. Goddard to discuss the case and payment options.
Specifically, SO Hopkins and Mr. Goddard discussed the proposed installment agreement of $1,500 per month. SO Hopkins agreed that Mr. Schwartz qualified for a partial pay installment agreement (PPIA), but that the monthly payment would have to be an unspecified amount that was "substantially more" than what was proposed, and there would be additional liability for taxable years 2019 and 2020 once those returns were processed. SO Hopkins proposed the following four options, and gave Mr. Goddard until July 2, 2021, to discuss them with Mr. Schwartz and notify her of a decision: (1) enter a PPIA after paying the 2019 and 2020 assessments; (2) enter a PPIA that includes the 2019 liability after filing and paying the amounts due on the return for taxable year 2020; (3) receive a 180 day extension of time to pay the amounts due; or (4) be issued a notice of determination sustaining the levy.
On June 30, 2021, Mr. Goddard left a voicemail for SO Hopkins requesting the calculations made by the IRS Collection Office (Collections) that were used to reject Mr. Schwartz' proposed installment agreement. SO Hopkins replied later the same day, explaining that Mr. Schwartz' financial information was not forwarded to Collections, but rather she used an installment agreement calculator to determine the payment plan, the liabilities due, and stated that any PPIA would be "way more" than the $1,500 proposed by Mr. Schwartz.
On July 2, 2021, Mr. Goddard requested that SO Hopkins forward the results from the installment agreement calculator. On July 8, 2021, in lieu of faxing the results from the installment agreement calculator, SO Hopkins called Mr. Goddard and explained the appeals process, the installment agreement calculation, and "[e]xplained that the payment amount proposed [was] not feasible as it would not fully pay the liabilities through the [collection statute expiration date]." SO Hopkins also noted that the return for taxable year 2019, filed in December 2020, still showed a significant balance due, and once Mr. Schwartz filed his return for taxable year 2020 in October 2021, that return would also show a significant balance due. SO Hopkins then asked for Mr. Schwartz' decision on how to resolve the matter by the close of business on July 12, 2021. On that date, Mr. Goddard left a voicemail for SO Hopkins, requested that a notice of determination be issued, and acknowledged that the levy would be sustained.
On September 13, 2021, SO Hopkins' Appeals Team Manager, Darla Weatherby, issued a notice of Determination Concerning Collection Actions under IRC sections 6320 or 6330, sustaining the proposed levy action. In relevant part, the notice of determination states, "[y]our installment agreement request in the amount of $1,500 was considered but not approved." The notice of determination, however, does not contain any additional explanation or analysis regarding Mr. Schwartz' ability to pay. On October 4, 2021, Mr. Schwartz filed a petition with this Court seeking review of the notice of determination.
Discussion
I. General Principles
A. Summary Judgment Standard
Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We may grant summary judgment when there is no genuine dispute of material fact, and a decision may be rendered as a matter of law. See 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 inferences drawn from them in the light most favorable to the nonmoving party. Id. The nonmoving party may not rest upon mere allegations nor denials in their pleadings and must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). We find that this case is not appropriate for summary adjudication on the record before the Court.
B. Standard of Review
Mr. Schwartz did not challenge the validity of his underlying federal income tax liability for the Tax Periods. Therefore, we will review Appeals' determination for abuse of discretion. See Goza v. Commissioner, 114 T.C. 176, 182 (2000); Sego v. Commissioner, 114 T.C. 604, 610 (2000). An 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); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
In considering a taxpayer's qualification for a collection alternative, such as an installment agreement, a settlement officer does not abuse her discretion by relying on guidelines set forth in the Internal Revenue Manual (IRM). See Siebert v. Commissioner, T.C. Memo. 2021-34, at *18. We do not substitute our own judgment for that of the settlement officer, and we do not conduct an independent determination of what would be an acceptable collection alternative. See, e.g., Johnson v. Commissioner, 136 T.C. 475, 488 (2011), aff'd, 502 Fed.Appx. 1 (D.C. Cir. 2013). If Appeals follows all statutory and administrative guidelines and provides a reasoned and balanced decision, the Court will not reweigh the equities. Bero v. Commissioner, T.C. Memo. 2017-235, at *10-11 (citing Thompson v. Commissioner, 140 T.C. 173, 179 (2013)). However, in a CDP case, if we decide that a further hearing would be helpful, necessary, or productive, then we may remand the case to the IRS Independent Office of Appeals. Kelby v. Commissioner, 130 T.C. 79, 86 n.4 (2008); Lunsford v. Commissioner, 117 T.C. 183, 189 (2001).
The IRM "does not have the force of law and does not confer rights on taxpayers." Fargo v. Commissioner, 447 F.3d 706, 713 (9th Cir. 2006), aff'g T.C. Memo. 2004-13, 2004 WL 68398.
We review SO Hopkins' determinations for an abuse of discretion, and we consider whether she: (1) properly verified that the requirements of any applicable law or administrative procedure were met; (2) considered any relevant issues raised by the petitioner; and (3) considered whether the proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of Mr. Schwartz that any collection action be no more intrusive than necessary. See § 6330(c)(3); Sego, 114 T.C. at 609.
C. Legal Framework
Section 6159(a) authorizes the Commissioner to enter into a written agreement allowing a taxpayer to pay a liability in installments if the "agreement will facilitate full or partial collection of such liability." The decision to accept or reject an installment agreement lies within the discretion of the Commissioner. See Thompson, 140 T.C. at 179 (citing Kuretski v. Commissioner, T.C. Memo. 2012-262, at *9; Treas. Reg. § 301.6159-1(a), (c)(1)(i)). The Commissioner has 10 years from the date of assessment to collect unpaid taxes, although the Commissioner and taxpayer may agree to extend the period in connection with an installment agreement. See § 6502(a).
Generally, installment agreements "should reflect taxpayers' ability to pay on a monthly basis throughout agreements." IRM 5.14.1.4(4) (Sept. 19, 2014). Namely, the settlement officer should analyze a taxpayer's income and allowable expenses to determine the amount of disposable income the taxpayer has available for payment under an installment agreement; this is the minimum amount that a settlement officer may accept under an installment agreement. See Boulware v. Commissioner, T.C. Memo. 2014-80, at *29; IRM 5.14.1.4(4). The IRM also provides that settlement officers are advised to analyze all relevant facts in considering acceptance of an installment agreement, including the taxpayer's compliance history, ability to pay, and equity in assets. IRM 8.22.7.5(5) (Aug. 26, 2020). All taxpayers are expected to immediately pay their delinquent tax liabilities in full. IRM 5.14.2.1.1(1) (April 26, 2019). However, if full payment cannot be achieved by the collection statute expiration date (CSED), and the taxpayers have some ability to pay, the IRS can enter a PPIA. IRM 5.14.2.1.1(2). The IRS may reject an installment agreement when a taxpayer's monthly net income exceeds the amount he has offered to pay. See Bero, T.C. Memo. 2017-235, at *12-13.
"[W]e judge the propriety of the [Office of Appeals'] determination . . . on the grounds invoked by the Office of Appeals." Serna v. Commissioner, T.C. Memo. 2022-66, at *8; Elkins v. Commissioner, T.C. Memo. 2020-110, at *24; see also SEC v. Chenery Corp., 332 U.S. 194, 196 (1947); Antioco v. Commissioner, T.C. Memo. 2013-35, at *25 ("Applying Chenery in the CDP context means that we [cannot] uphold a notice of determination on grounds other than those actually relied upon by the Appeals officer.").
In doing so, we look to the reasons offered in the notice of determination as further unspooled in the settlement officer's contemporaneous rejection memorandum and case activity notes. Serna, T.C. Memo. 2022-66, at *8; accord Melasky v. Commissioner, 151 T.C. 93, 106 (2018) ("[W]e will uphold a determination of less than ideal clarity if the basis for the determination may reasonably be discerned."), aff'd, 803 Fed.Appx. 732 (5th Cir. 2020); Kasper v. Commissioner, 150 T.C. 8, 24-25 (2018) ("Although we may not accept any post hoc rationalizations for agency action provided by the Commissioner's counsel, we may consider any 'contemporaneous explanations of the agency decision' contained in the record."); Tourus Records, Inc. v. DEA, 259 F.3d 731, 738-40 (D.C. Cir. 2001) (quoting Camp v. Pitts, 411 U.S. 138, 143 (1973) (same); see also N.C. Wildlife Fed'n v. N.C. Dept. of Transp., 677 F.3d 596, 604 (4th Cir. 2012) (citing O'Reilly v. U.S. Army Corps of Eng'rs, 477 F.3d 225, 238-39 (5th Cir. 2007); Hall v. U.S. Envt'l Prot. Agency, 273 F.3d 1146, 1161 (9th Cir. 2001)) (the agency action must be upheld on the basis articulated by the agency, which is the administrative record).
In the CDP context, we have found the administrative record deficient in a variety of situations. For example, in Antioco v. Commissioner, T.C. Memo 2013-35, respondent advanced positions that were legally and factually incorrect, and that were unsupported by the record. Id. at *17-19, 21. In Jones v. Commissioner, T.C. Memo. 2012-274, respondent failed to explain the reasoning for certain adjustments and to properly explain the conclusions in the face of contrary information provided by petitioners. Id. at *22-24. In Salahuddin v. Commissioner, T.C. Memo. 2012-141, 2012 WL 1758628, the reasoning regarding respondent's denial of an installment agreement was equivocal. Id. at *7.
II. Analysis
In his Petition, Mr. Schwartz argues that the Commissioner committed the following errors in issuing his notice of determination: (1) the Commissioner did not conduct a complete and thorough review of the financial information provided by the petitioner and the installment agreement monthly payment amount offered by the petitioner in light of the petitioner's current financial circumstances; (2) the Commissioner incorrectly determined that no collection alternative could be reached; and (3) the Commissioner failed to properly determine whether the proposed collection activity balances the need for the efficient collection of taxes with the petitioner's legitimate concern that any collection activity be no more intrusive than necessary, as required by section 6330(c)(3)(C). We need to consider only the arguments regarding the Commissioner's review of petitioner's financial information to resolve the present motion.
On his Form 12153, Mr. Schwartz checked the collection alternative boxes for "Installment Agreement," "Offer in Compromise," and "I Cannot Pay Balance." For the reasons discussed immediately below, we find that the record is inadequate to support Appeals' rejection of Mr. Schwartz' proposed installment agreement, and thus we need not address the offer in compromise or cannot-pay-balance collection alternatives.
A. Notice of Determination
We begin with the grounds invoked by the agency in the notice of determination. Chenery, 332 U.S. at 196. Mr. Schwartz proposed an installment agreement of no more than $1,500 per month. The notice of deficiency told Mr. Schwartz only, "[y]our installment agreement request in the amount of $1,500 was considered but not approved." It does not contain any additional explanation or analysis regarding Mr. Schwartz' ability to pay.
B. Administrative Record
Given the dearth of explanation in the notice of determination, we now turn to the administrative record. N.C. Wildlife Fed'n, 677 F.3d at 604. As we explain below, the record before the Court gives some - but not enough - insight into the statement contained in the notice of determination. On July 12, 2021, Mr. Schwartz' representative contacted SO Hopkins, requested that a notice of determination be issued, and acknowledged that the levy would be sustained. The case activity record print contains an entry, dated July 13, 2021, which states:
POA left VMS on 7/12/2021 requesting that the determination letter be issued. He acknowledges that the levy would be sustained.
Note: the determination letter will notate that the $1,500.00 IA proposed was considered but not feasible since it would not pay the liabilities before the [Collection Statute Expiration Date] expires. A partial pay installment agreement is not feasible since it would be more that [sic] what the taxpayer advised that he could pay ($1,500.00).
The record suggests that SO Hopkins principally rejected Mr. Schwartz' proposed installment agreement because the proposal would not fully pay the liabilities within the time prescribed by law, see IRM 5.14.2.1.1(1), and the proposed PPIA was less than his ability to pay. See Bero, T.C. Memo. 2017-235, at *12-13; IRM 5.14.2.1.1(2). This notion is further supported by the fact that on July 8, 2021, just days before Mr. Schwartz' representative requested that a notice of determination be issued, SO Hopkins held a phone conversation with Mr. Schwartz' representative and expressed that the proposed installment agreement of $1,500 was not feasible because it would not fully pay the liabilities in the required statutory period.
The record does not support the conclusion that SO Hopkins rejected the proposed installment agreement for any other reason, such as Mr. Schwartz' additional unpaid liabilities for taxable years 2019 and 2020. See IRM 5.14.1.3(7) (Note).
As previously stated, the Court will not substitute its own judgment for that of the settlement officer, and we will not recalculate Mr. Schwartz' ability to pay or conduct an independent determination of what would be an acceptable collection alternative. See, e.g., Johnson, 136 T.C. at 488; Speltz v. Commissioner, 124 T.C. 165, 179-80, aff'd, 454 F.3d 782 (8th Cir. 2006). The Court will, however, consider whether Appeals' rejection of the proposed installment agreement was arbitrary, capricious, or without sound basis in fact or law, and whether Appeals considered all of the financial information contained in the record. See Murphy, 125 T.C. at 320; Woodral, 112 T.C. at 23; see also Gurule v. Commissioner, T.C. Memo. 2015-61, at *35. Under that analysis, we find the record wanting. See Melasky, 151 T.C. at 106; Antioco, T.C. Memo. 2013-35, at *25; see also N.C. Wildlife Fed'n, 677 F.3d at 604.
1. Gross Income Calculation, Generally
SO Hopkins determined that Mr. Schwartz had the ability to pay $30,845 per month, as reflected in the case activity record print. However, the record is void as to how SO Hopkins calculated Mr. Schwartz' ability to pay as she did not provide any accompanying explanation or discussion for any of the income or expense categories. In the Court's review of the administrative record, the Court observed that some of the allowable expenses are seemingly based on the national and local standards, but the record is silent as to how the other amounts were calculated, and some appear to lack a sound basis in either fact or law. See Jones, T.C. Memo. 2012-274, at *22 (declining to sustain respondent's notice of determination, in part, because the settlement officer made adjustments to income and expenses but "failed to explain any of her reasoning" regarding the adjustments); Antioco, T.C. Memo. T.C. Memo. 2013-35, at *19 (finding that the appeals officer made a mistake of law that rendered his determination an abuse of discretion).
SO Hopkins determined that Mr. and Mrs. Schwartz had a combined gross income of $55,192. This number neither matches the amounts listed on Form 433-A, nor the amounts of gross income found in Mr. and Mrs. Schwartz' pay stubs, as increased by the corresponding multiplier per the instructions on Form 433-A. See Boettcher v. Commissioner, T.C. Memo. 2021-4, at *11-13. The record contains no information about how SO Hopkins determined the combined amount of gross income, which appears to lack an adequate basis in fact. Cf. Serna, T.C. Memo. 2022-66, at *9 (finding no abuse of discretion where the record showed that petitioner's monthly income sufficed to cover the allowable expenses for himself and the sole dependent he claimed); see Jones, T.C. Memo. 2012-274, at *22.
2. Gross Income Calculation, Mrs. Schwartz' Income
Second, setting aside the question about the accuracy of respondent's calculation of petitioner's gross income, the record does not explain why Mrs. Schwartz' income was included in the ability to pay calculation at all. Mrs. Schwartz was granted innocent spouse relief under section 6015(b) for the tax liabilities at issue, see Docket No. 18538-17, and thus she is presumably a non-liable person for the liabilities at issue in the instant case. See IRM 5.15.1.5(2) (Nov. 17, 2014). While Mrs. Schwartz' income should be reviewed to determine Mr. Schwartz' portion of the shared household income and expenses, the assets and income of the non-liable person are generally not included when calculating the taxpayer's ability to pay. Id. The record fails to explain why Mrs. Schwartz' income was included in the ability-to-pay calculation, and in the absence of any explanation, this appears to be a deviation from the IRM, significantly alters the ability-to-pay calculation, and might rise to an abuse of discretion. See Orum v. Commissioner, 123 T.C. 1, 13 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005) (holding that a settlement officer does not abuse their discretion by relying on the guidelines set forth in the IRM); Jones, T.C. Memo. 2012-274, at *22.
3. Other Claimed Expenses
Third, Mr. Schwartz claimed monthly unreimbursed business expenses of $4,390 for travel, food, transportation, and living expenses related to his job in Florida, monthly Maryland state tax payments of $1,200, which he says were necessary to maintain his medical license, and monthly tuition expenses for his minor child with special learning needs. SO Hopkins disallowed these expenses without explanation. In the absence of an appropriate explanation we cannot say whether or not SO Hopkins abused her discretion in denying these expenses. See Jones, T.C. Memo. 2012-274, at *22; Lowery v. Commissioner, T.C. Memo. 2019-151, at *11-13; see also IRM 5.15.1.8(1) (July 24, 2019).
III. Conclusion
For purposes of respondent's motion, and on the administrative record before the Court, we cannot conclude that SO Hopkins did not abuse her discretion. As we have explained above, the record is devoid of any analysis regarding Mr. Schwartz' financial information, which frustrates the Court's ability to discern Appeals' reasoning and properly review its determination. See Melasky, 151 T.C. at 106.
We may remand a case when the settlement officer did not develop a record sufficient for judicial review. See Hoyle v Commissioner, 131 T.C. 197, 204-05 (2008), supplemented by 136 T.C. 463 (2011). Because a remand would be "helpful," "necessary," or "productive," we will remand this case to respondent's Independent Office of Appeals for further consideration and clarification. Gurule, T.C. Memo. 2015-61, at *39; see also Kelby, 130 T.C. at 86 n. 4 (2008); Lunsford, 117 T.C. at 189; Churchill v. Commissioner, T.C. Memo. 2011-182. The remand will give Appeals an occasion to properly explain the reasoning underlying the notice of determination, with specific regard to the aforementioned items.
In reaching our decision, we have considered all arguments and, to the extent not mentioned, we conclude they are moot, irrelevant, or without merit.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment, filed October 12, 2022, is denied. It is further
ORDERED that, on the Court's own motion, this case is remanded to respondent's Independent Office of Appeals for a supplemental administrative hearing in accordance with the Court's order. It is further
ORDERED that the above-referenced hearing shall take place at a mutually agreed upon date and time, but no later than May 31, 2023. It is further
ORDERED that each party, on or before June 30, 2023, shall file with the Court and serve on the other party, a report regarding the then-present status of this case.