Opinion
14154-22L
03-27-2023
ROBERT LAWRENCE THOMPSON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Courtney D. Jones, Judge
In this collection due process (CDP) case, petitioner, Robert Lawrence Thompson, asks this Court to review a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (notice of determination), issued by the Internal Revenue Service (IRS) Independent Office of Appeals (Appeals) on May 3, 2022. The notice of determination sustains the filing of a Notice of Federal Tax Lien (NFTL) to collect unpaid federal income taxes for taxable years 2017 and 2018 (tax years).
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulatory 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 February 2, 2023 (docket entry no. 11). On February 3, 2023, the Court ordered Mr. Thompson to file and serve a response or objection to respondent's Motion for Summary Judgment, and despite being given an opportunity, Mr. Thompson has failed to do so. The issue for decision is whether Appeals properly sustained the filing of the NFTL.
Because Mr. Thompson failed to respond to respondent's Motion, this 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
The following background is drawn from the parties' pleadings, motion papers, and associated declarations and exhibits. This background is stated solely for the purpose of resolving the present Motion and is not stated as findings of fact in this case. See Rule 1(b). Mr. Thompson resided in California when he filed his Petition.
Mr. Thompson and his spouse, Michelle M. Thompson-who is not a party to this case-are liable for unpaid federal income taxes for taxable years 2017 and 2018. Mr. Thompson previously entered into an installment agreement, but that agreement was terminated on August 31, 2019, because he accrued new liabilities for taxable year 2018.
Some of the events leading up to and including the issuance of the notice of determination occurred jointly; that is, both Mr. Thompson and Ms. Thompson were involved. However, because Mr. Thompson is the only party before this Court, and to minimize confusion, we will refer to all such instances with reference to Mr. Thompson only.
On March 24, 2020, respondent sent Mr. Thompson a Letter 3172, Notice of Federal Tax Lien Filing and Notice of Your Right to a Hearing under IRC 6320. In response, Mr. Thompson timely submitted Form 12153, Request for Collection Due Process or Equivalent Hearing, dated April 27, 2020, and received by the IRS on May 8, 2020. The Form 12153 indicates that Mr. Thompson sought an installment agreement as a collection alternative, and stated in the explanation section that "I thought payments were being made, but apparently only the state taxes are." Mr. Thompson did not raise the issue of his underlying liability on the Form 12153.
The record contains two Forms 12153. The forms are identical in many respects, including the types of taxes and tax years at issue, the request for a hearing in response to a NFTL, and the request for an installment agreement and accompanying explanation. However, the forms also differ in multiple respects. First, one form bears the same address shown on the notice of determination, while the other bears a different address. Second, one form is signed only by Mr. Thompson, while the other form is signed by both Mr. Thompson and his spouse, Ms. Thompson. The record indicates that Mr. Thompson originally submitted the form bearing only his signature. The IRS issued Form 3884C, inquiring whether Mr. Thompson intended to file an individual or joint request, and thereafter, on June 8, 2021, Mr. Thompson submitted the form signed by both himself and Ms. Thompson.
Mr. Thompson's CDP hearing was assigned to settlement officer Rosa Garcia (SO Garcia). On September 16, 2021, SO Garcia verified that she had no prior involvement with this taxpayer for the types of taxes and tax years at issue. On November 8, 2021, SO Garcia issued Letter 4837, a substantive contact letter, scheduling a telephonic CDP hearing for December 8, 2021. The letter also advised Mr. Thompson of his rights, and requested, within 14 days, a complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, as well as other financial information, such as bank statements, proof of income, and proof of estimated tax payments or withholdings for taxable year 2021. SO Garcia did not receive any of the requested information.
On December 8, 2021, SO Garcia held a telephonic CDP hearing with Mr. Thompson. SO Garcia advised Mr. Thompson of the appeals process, and discussed the lien notice and installment agreement request for the tax periods at issue. SO Garcia advised Mr. Thompson that the lien filing was not premature, that all administrative procedures were followed, and that there is no evidence that collection would be facilitated by withdrawing the lien.
Regarding Mr. Thompson's request for an installment agreement, SO Garcia explained that even though he was in compliance with the return filing requirement, she was unable to consider his eligibility for an installment agreement. SO Garcia's stated reason was that she had not received a collection information statement, and he was not in compliance with his estimated tax payments or withholdings for taxable year 2021. SO Garcia advised Mr. Thompson to make his required estimated tax payments, and allowed him until December 23, 2021 to provide proof of his compliance.
As of April 12, 2022, SO Garcia had not received the documents necessary to consider Mr. Thompson's eligibility for an installment agreement. Additionally, SO Garcia checked the computer records and determined that Mr. Thompson had not made the required estimated tax payments or withholdings, and therefore was not eligible for an installment agreement because he was not in compliance for taxable year 2021. On May 3, 2022, Appeals Team Manager Vincent Davis issued Mr. Thompson a notice of determination sustaining the NFTL for the tax periods at issue. On June 9, 2022, Mr. Thompson 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 or 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 appropriate for summary adjudication.
B. Standard of Review
This court has jurisdiction to review the administrative determination made by Appeals. §§ 6320(c), 6330(d)(1). Where the underlying liability was not properly at issue, we will review Appeals's determination for an abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). An abuse of discretion occurs if the Appeals officer or employee conducting the hearing exercises their discretion "arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999); see also Giamelli v. Commissioner, 129 T.C. 107, 111 (2007). Where the underlying tax liability was properly at issue in the CDP hearing, we will review the determination de novo. Lunsford v. Commissioner, 117 T.C. 183, 185 (2001) (citing Goza, 114 T.C. at 181- 82).
Based on the record before the Court, Mr. Thompson did not contest his underlying liability, and therefore we will review Appeals's determination for an abuse of discretion.
II. Analysis
A. Statutory Framework
In determining whether SO Garcia abused her discretion in sustaining the collection action, we consider whether she: (1) properly verified that the requirements of applicable law or administrative procedure were met, (2) considered any relevant issues raised by Mr. Thompson, and (3) considered whether any proposed collection action balances the need for the efficient collection of taxes with Mr. Thompson's legitimate concern that any collection action be no more intrusive than necessary. See §§ 6320(c), 6330(c)(1), (3). Our review of respondent's Motion for Summary Judgment and the record before the Court establishes that SO Garcia properly verified that the requirements of applicable law and administrative procedure were followed.
B. Verification Requirement
First, in both the notice of determination and the case activity record, SO Garcia documented that she verified: (1) that she had no prior involvement with the type of tax and taxpayer for the tax years at issue; (2) that the assessment was properly made for the tax years at issue; (3) that notice and demand for payment was mailed to Mr. Thompson's last known address within 60 days of the assessment; and (4) that a balance was due and owing when the NFTL was issued. We find that the verification requirement was properly satisfied.
C. Issues Raised by the Taxpayer
Second, in his Form 12153, Mr. Thompson sought an installment agreement as a collection alternative; he did not raise the issue of his underlying liability. In her November 8, 2021 letter, SO Garcia asked Mr. Thompson to submit, within 14 days, a collection information statement and proof of his compliance with estimated tax payments or withholding. Mr. Thompson failed to provide the requested information before the CDP hearing. SO Garcia provided Mr. Thompson an extension of time to provide the necessary documents for her to consider his eligibility for an installment agreement, yet he still failed to do so. Additionally, on April 12, 2022, SO Garcia verified that no estimated tax or withholding payments had been made for taxable year 2021, and therefore Mr. Thompson was not in compliance with the federal income tax laws.
It is well settled that a settlement officer is justified in rejecting a proposed collection alternative, such as an installment agreement, if the taxpayer fails to submit the requested financial information or is not in compliance with federal income tax laws. See, e.g., Pough v. Commissioner, 135 T.C. 344, 351 (2010). Therefore, we find that SO Garcia properly considered the relevant issues raised by Mr. Thompson.
D. Balancing
Finally, the notice of determination demonstrates that SO Garcia conducted a balancing analysis, concluding that Mr. Thompson was not entitled to an installment agreement and sustaining the NFTL. Accordingly, we find that SO Garcia balanced the need for efficient collection of taxes with the legitimate concern of Mr. Thompson that the collection action be no more intrusive than necessary.
III. Conclusion
Based on the administrative record before the Court, we find that SO Garcia properly discharged all of her duties and did not abuse her discretion in sustaining the NFTL for the tax years at issue. In reaching our decision, we have considered all arguments made and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit.
Upon due consideration and for cause, it is
ORDERED that respondent's Motion for Summary Judgment (docket entry no. 11), filed February 2, 2023, is granted. It is further
ORDERED AND DECIDED that respondent's Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code, dated May 3, 2022, upon which this case is based, is sustained.