Opinion
16434-21SL
03-17-2023
BRANDON E. SHANNAHAN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Diana L. Leyden, Special Trial Judge.
This case is calendared for trial at the March 27, 2023, Pocatello, Idaho, remote Trial Session of the Court.
On May 10, 2021, petitioner timely filed a Petition in this case. Petitioner seeks review of a Notice of Determination Concerning Collection Action(s) Under Section 6320 or 6330 of the Internal Revenue Code (notice of determination), dated April 12, 2021. The notice of determination sustained a notice of federal tax lien filing with respect to petitioner's unpaid tax liability for 2012.
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.
On January 25, 2023, respondent filed a motion for summary judgment (motion) under Rule 121. Respondent filed in support of the motion a declaration by Heidi A. Guillot, Supervisory Appeals Officer of Internal Revenue Service (IRS)Office of Appeals (Appeals Office). The Court by order served February 6, 2023, directed petitioner to file a response to the motion on or before February 27, 2023. Petitioner has not filed a response to respondent's motion.
The Court uses the term "Internal Revenue Service" or "IRS" to refer to administrative actions taken outside of these proceedings. The Court uses the term "respondent" to refer to the Commissioner of Internal Revenue, who is the head of the IRS and is respondent in this case, and to refer to actions taken in connection with this case.
On July 1, 2019, the IRS Office of Appeals was renamed the IRS Independent Office of Appeals. See Taxpayer First Act, Pub. L. No. 116-25, § 1001, 133 Stat. 981, 983 (2019). We will use the name in effect at the times relevant to this case, i.e., the Office of Appeals or Appeals Office.
Upon review of the record on respondent's motion, the Court concludes that there are not any genuine issues of material facts and that respondent is entitled to judgment as a matter of law.
Background
The record on respondent's motion establishes and/or the parties do not dispute the following. Petitioner resided in Idaho at the time the Petition was filed with the Court.
Petitioner's tax liability for 2012 was determined when petitioner did not timely file a federal income tax return. The IRS made a substitute for return for that year. Subsequently, petitioner filed an original 2012 joint federal income tax return showing a filing status of married filing jointly and claiming dependents. The underlying liability reflected on this return is not disputed by petitioner. Petitioner's original tax liability for 2012 was determined when petitioner did not timely file a federal income tax return. The IRS made a substitute for return for that year. Subsequently, petitioner filed an original 2012 joint federal income tax return showing a filing status of married filing jointly and claiming dependents. That return was accepted, and the revised 2012 liability reflected on that return is not disputed by petitioner.
On October 8, 2019, the IRS issued a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (notice of federal tax lien), with respect to petitioner's 2012 tax liability. Petitioner timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, to challenge the filed notice of federal tax lien Petitioner checked the boxes for an installment agreement, offer-in-compromise, and "I Cannot Pay Balance" as collection alternatives. Petitioner also wrote in the box titled "Other" "incorrect amount filed as married w/ 1 dependent. You are calculating as single w/ 0 dependents."
Petitioner checked the box to request an equivalent hearing, but the record on respondent's motion does not show that he failed to timely request the CDP hearing.
Petitioner's CDP hearing request was assigned to Heidi A. Guillot, Appeals Officer (AO). The AO verified that she did not have prior involvement with petitioner for the tax year at issue in this case. The AO sent petitioner a letter dated April 10, 2020, informing him that she had scheduled a telephone collection due process (CDP) hearing for May 5, 2020, at 2 p.m. EST. The AO also informed petitioner that he had not filed his tax returns for 2013, 2014, 2015, 2017, and 2018, and that petitioner needed to file those tax returns or explain why he was not required to file any or all such tax returns. The AO also informed petitioner that the IRS had made a substitute for return for 2012, but that petitioner could file an original return to claim married filing jointly and claim dependents.
Although this letter did not mention that petitioner had not filed his tax return for tax year 2016, the record establishes that petitioner also did not file a federal income tax return with respect to that year.
As for the collection alternatives that petitioner noted on the Form 12153, the AO in that letter informed petitioner that he needed to file a Form 433-A, Form 433-B and/or Form 656 with supporting documentation. The AO gave petitioner 14 days from the date of the letter to submit all requested documentation and gave petitioner 21 days from the date of the letter to file the outstanding tax returns.
On May 5, 2020, the AO and petitioner had the telephone CDP hearing. The AO agreed to provide petitioner with computer transcripts that showed the amount of income that had been reported under his social security number for the years for which tax returns were not filed. Petitioner agreed to send the AO an original 2012 return by May 27, 2020. On May 20, 2020, petitioner called the AO to tell the AO petitioner had not received the computer transcripts. The AO sent another copy of the computer transcripts and petitioner confirmed he received them. On December 18, 2020, petitioner called the AO and said that his wife had prepared the outstanding tax returns. The AO provided petitioner with the address to send the returns to the IRS and suggested that they be sent by certified mail with a tracking number by December 23, 2020.
On March 18, 2020, the AO confirmed that petitioner's original returns for 2012 and 2019 had been filed. For 2018 petitioner's wife filed a tax return with the filing status of married filing separately. At that time petitioner had not filed his tax returns for 2013 through 2018.
As of March 19, 2021, petitioner had not filed the outstanding tax returns and had not submitted the Forms 433-A, 433-B, or 656 that the AO requested to consider the collection alternatives petitioner requested. The AO issued the notice of determination dated April 12, 2021, proposing to sustain the filed notice of federal tax lien.
Discussion
A. Summary Judgment
Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Either party may move for summary judgment upon all or any part of the legal issues in controversy. Rule 121(a). The Court may grant summary judgment only "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits or declarations, if any, 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(a) and (b); see Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Respondent, as the moving party, bears the burden of proving that no genuine dispute exists as to any material fact and that respondent is entitled to judgment as a matter of law. See FPL Grp., Inc. v. Commissioner, 115 T.C. 554, 559 (2000); Bond v. Commissioner, 100 T.C. 32, 36 (1993); Naftel v. Commissioner, 85 T.C. at 529. In deciding whether to grant summary judgment, the factual materials and inferences drawn from them must be considered in the light most favorable to the nonmoving party. FPL Grp., Inc. v. Commissioner, 115 T.C. at 559; Bond v. Commissioner, 100 T.C. at 36; Naftel v. Commissioner, 85 T.C. at 529. The party opposing summary judgment must set forth specific facts which show that a question of genuine material fact exists and may not rely merely on allegations or denials in the pleadings. Rule 121(d); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988); King v. Commissioner, 87 T.C. 1213, 1217 (1986).
B. Hearings Under Section 6320
Section 6321 imposes a lien in favor of the United States on all property and rights to property of a taxpayer where there exists a failure to pay any tax liability after demand for payment. The lien generally arises automatically at the time assessment is made. I.R.C. § 6322. Section 6323(a), however, provides that the lien shall not be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until the Commissioner files a notice of federal tax lien with the appropriate public officials. Section 6320 sets forth procedures to afford protections for taxpayers upon the filing of a notice of federal tax lien.
Section 6320(a)(1) establishes the requirement that the Commissioner notify in writing the taxpayer described in section 6321 of the filing of a notice of federal tax lien under section 6323. This notice required by section 6320 must be sent not more than five business days after the notice of federal tax lien is filed and must inform the taxpayer of the opportunity for administrative review of the matter in the form of a CDP hearing before the Appeals Office. I.R.C. § 6320(a)(2)(C), (3).
If a CDP 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 CDP hearing the Appeals officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. I.R.C. § 6330(c)(1); see I.R.C. § 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. I.R.C. § 6330(c)(2)(A); see I.R.C. § 6320(c). Within 30 days after the Appeals Office issues a notice of determination, the taxpayer may appeal the determination to the Court. I.R.C. § 6330(d)(1); see I.R.C. § 6320(c).
In reviewing an IRS administrative determination in a CDP case, if the underlying tax liability is properly in dispute the Court reviews the issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182. Petitioner timely petitioned the Court for review of the notice of determination.
Petitioner has not challenged the underlying liability for 2012.
The Court's review of CDP cases is limited to issues that taxpayers raised during their CDP hearings. Giamelli v. Commissioner, 129 T.C. 107, 112-13 (2007); Magana v. Commissioner, 118 T.C. 488, 493 (2002); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3.
C. Scope of Review
Respondent asserts that in nonliability CDP cases such as this the scope of the Court's review is limited to the administrative record. That is true for such cases appealable to the U.S. Courts of Appeals for the First, Eighth, and Ninth Circuits. See Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009), aff'g in part as to this issue T.C. Memo. 2006-166; Murphy v. Commissioner, 469 F.3d 27, 31 (1st Cir. 2006), aff'g 125 T.C. 301 (2005); Robinette v. Commissioner, 439 F.3d 455, 459- 60 (8th Cir. 2006), rev'g 123 T.C. 85 (2004).
This order is appealable to the U.S. Court of Appeals for the Ninth Circuit pursuant to section 7482(b)(1)(G)(i), and thus, the Court will limit its review to the administrative record.
D. Abuse of Discretion
In deciding whether the AO abused her discretion in sustaining the collection action the Court considers whether the AO: (1) properly verified that the requirements of applicable law and administrative procedure had been met; (2) considered any relevant issues petitioner raised; and (3) considered "whether any 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." See I.R.C. § 6330(c)(3).
In reviewing for abuse of discretion, the Court generally considers only the arguments, issues, and other matters that were raised at the CDP hearing or otherwise brought to the attention of the Appeals Office. Giamelli v. Commissioner, 129 T.C. at 115.
1. Collection Alternatives
In determining whether there was an abuse of discretion the Court does not conduct an independent review and substitute its judgment for that of the settlement officer. Murphy v. Commissioner, 125 T.C. at 320. If the AO follows all statutory and administrative guidelines and provides a reasoned, balanced decision, the Court will not reweigh the equities. Thompson v. Commissioner, 140 T.C. 173, 179 (2013).
This Court has held on numerous occasions that it is not an abuse of discretion for Appeals to reject collection alternatives (e.g., an installment agreement, an offer-in-compromise, or placing an account in currently not collectible status) and sustain the proposed collection action due to the taxpayer's failure to submit requested financial information. See, e.g., McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Pough v. Commissioner, 135 T.C. 344, 351 (2010); Kendricks v. Commissioner, 124 T.C. 69, 79 (2005); Orum v. Commissioner, 123 T.C. 1, 13 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005); Wright v. Commissioner, T.C. Memo. 2012-24, at *8; Ranuio v. Commissioner, T.C. Memo. 2010-178, at *27; Dinino v. Commissioner, T.C. Memo. 2009-284, at *21-22; Huntress v. Commissioner, T.C. Memo. 2009-161, at *12; Prater v. Commissioner, T.C. Memo. 2007-241, at *7; Chandler v. Commissioner, T.C. Memo. 2005-99, at *9-10; Roman v. Commissioner, T.C. Memo. 2004-20, at *13-14.
2. Verification
The record shows that the AO properly verified that the requirements of all applicable laws and administrative procedures were met in the processing of petitioner's case and that the proposed sustaining of the filed federal tax lien balances the Government's need for the efficient collection of taxes with petitioner's concerns that the collection action be no more intrusive than necessary.
E. Conclusion
In sum the Court concludes that there is no genuine dispute as to a material fact and that respondent is entitled to judgment as a matter of law sustaining the notice of determination, as supplemented, on which this case is based.
Premises considered, it is
ORDERED that respondent's motion for summary judgment, filed January 25, 2023, is granted. It is further
ORDERED AND DECIDED that respondent may proceed with the proposed collection action (sustaining the federal tax lien filing) in respect of petitioner's remaining tax liability for 2012 as determined in the notice of determination dated April 12, 2021, upon which this case is based.