Opinion
20724-18L
12-23-2021
Anne Keith Walton, Petitioner v. Commissioner of Internal Revenue, Respondent
ORDER AND DECISION
DAVID GUSTAFSON JUDGE
This is a collection due process ("CDP") case brought by petitioner Anne Keith Walton pursuant to section 6320(a)(3)(B). Ms. Walton filed a timely petition (Doc. 1) in this Court on October 23, 2018, asking us to review a notice of determination ("NOD") issued by the IRS Office of Appeals ("IRS Appeals") sustaining a notice of federal tax lien ("NFTL") covering Ms. Walton's unpaid Federal income tax liabilities for the 2012, 2013, and 2014 years. The issue before us is whether Appeals abused its discretion in sustaining the NFTL. Respondent, Commissioner of the Internal Revenue Service ("the Commissioner"), filed a motion for summary judgment (Doc. 24) pursuant to Rule 121 on October 2, 2020. For the reasons explained herein, we will grant respondent's motion.
Unless otherwise indicated, all section references are to the Internal Revenue Code (26 U.S.C.) in effect at the relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. Dollar amounts are rounded. A citation in this order to a "Doc." refers to a document so numbered in the Tax Court docket record of this case, and a pinpoint citation therein refers to the pagination as generated in the portable document format ("PDF") file.
On July 1, 2019, the IRS Appeals Office was renamed the "Internal Revenue Service Independent Office of Appeals". See Taxpayer First Act, Pub. L. No. 116-25, sec. 1001(a), 133 Stat. at 983 (2019). Some of the events in this case predate that renaming. We use the term "IRS Appeals" without distinction to refer to the office both before and after the name change.
Background
Ms. Walton's Federal income tax liabilities for 2012, 2013, and 2014
Ms. Walton is a "contract attorney who works on various legal projects through a staffing agency." (Doc. 24 at 183.) For 2012, 2013, and 2014, Ms. Walton filed Federal income tax returns self-reporting her adjusted gross income and total tax liabilities as follows:
(Doc. 24, Exs. X, Y, & Z) Ms. Walton did not include any payments when she filed her Federal income tax returns for 2012 and 2013, and included only a $100 payment with her return for 2014. (Doc. 24 at 216-236.) The IRS assessed the liabilities Ms. Walton reported, as well as additions to tax for failure to make estimated payments pursuant to section 6654, penalties for late payment pursuant to section 6651(a)(2), and interest. Id.
Year
Gross income
Total tax
2012
$80,880
$24,951
2013
58, 510
17, 362
2014
52, 657
15, 705
Filing of the NFTL and CDP hearing request
The IRS mailed Ms. Walton a Letter 3172, "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320" ("CDP lien notice"), dated March 27, 2018, notifying Ms. Walton that a Notice of Federal Tax Lien covering the liabilities for 2012, 2013, and 2014 was filed that same day at the Office of Recorder of Deeds for Washington D.C. (where Ms. Walton resides), and informing her of her right to request a CDP hearing with IRS Appeals by May 3, 2018. (Doc. 24 at 35-36.)
Ms. Walton submitted a Form 12153, "Request for a Collection Due Process or Equivalent Hearing", on May 2, 2018, listing the NFTL as the basis for the hearing and requesting consideration of an installment agreement, an offer in compromise, and lien withdrawal. Id. at 37-38. Appeals sent Ms. Walton a Letter 4837, "Appeals Received Your Request for a Collection Due Process Hearing", on June 27, 2018, scheduling the CDP hearing for August 9, 2018, and requesting that she provide a completed Form 433A, "Collection Information Statement for Wage Earners and Self-Employed Individuals", supporting documentation for monthly income and expenses, and proof of payment for her 2018 estimated taxes. Id. 77-78.
Initial CDP hearing before IRS Appeals
Administration of Ms. Walton's CDP hearing was assigned to Settlement Officer Wilhamina Hayes ("SO Hayes"). (Doc. 1 at 3.) The CDP hearing was held on August 9, 2018. (Doc. 24 at 157.) During the CDP hearing, Ms. Walton raised the issues of (1) collection alternatives of an installment agreement or offer in compromise, and (2) withdrawal of the NFTL. (Doc. 1 at 5.) However, Ms. Walton had not provided the requested financial information to SO Hayes prior to the CDP hearing, so SO Hayes gave Ms. Walton one more week to do so. (Doc 24 at 157.) On August 16, 2018, Ms. Walton sent to SO Hayes a Form 433A as well as a Form 12277, "Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien". Id. at 81-87. Ms. Walton's Form 12277 listed the reasons for withdrawal as "withdrawal will facilitate collection of the tax" and "the taxpayer believes withdrawal is in the best interest of the taxpayer and the government," and listed the factual basis for withdrawal as Ms. Walton's illness and financial hardship. Id. at 87. However, Ms. Walton's 433A was incomplete and without supporting documentation. Id. at 158. SO Hayes reminded Ms. Walton to submit supporting documentation of income and expenses, advised Ms. Walton to file her 2017 return and make any associated estimated payments so Ms. Walton could qualify for collection alternatives, and granted Ms. Walton one more week to provide the requested information. Id.
In a fax to SO Hayes dated August 27, 2018, Ms. Walton provided a completed Form 433A with supporting documentation, a copy of her filed 2017 Federal income tax return showing a refund due, copies of letters from creditors showing the respective amounts of private debt and student loan payments, and a cover letter discussing Ms. Walton's health history. Id. at 89-153. Based on her review of Ms. Walton's Form 433A, SO Hayes proposed an installment agreement of $1,138 per month. Id. at 158. Ms. Walton, in a conversation with SO Hayes on August 30, 2018, indicated willingness to accept the installment agreement. Id. SO Hayes sent Ms. Walton a letter on September 4, 2018, referencing the tentative installment agreement terms and providing Ms. Walton with Form 433D, "Installment Agreement", and Form 12257, "Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Levy Prohibition". Id. at 155. SO Hayes's letter did not set a deadline for Ms. Walton to respond or return the enclosed forms. Ms. Walton completed Form 433-D and Form 12257, dated September 18, 2018, and sent them to IRS Appeals via mail. Id. at 160-164. IRS Appeals received Ms. Walton's envelope containing the signed forms 433D and 12257 on September 26, 2018. Id. at 164.
However, because SO Hayes had not yet received Ms. Walton's forms 433D and 12257 and had not heard from Ms. Walton by phone as of September 25, 2018, SO Hayes issued a NOD on September 26, 2018, sustaining the NFTL because (as explained in the NOD) Ms. Walton's forms 433-D and 12257 had not yet been received by IRS Appeals, Ms. Walton was not eligible for an offer in compromise based on her ability to full-pay the liability, and Ms. Walton was not current with estimated tax payments. Id. at 29, 159.
Tax Court proceedings
Ms. Walton filed a timely petition in this Court on October 23, 2018, appealing the NOD based on allegations that (1) the NOD was issued before IRS Appeals processed Ms. Walton's signed Form 433-D, and (2) Appeals did not properly consider Ms. Walton's special circumstances when considering the issue of lien withdrawal. (Doc. 1 at 1.) At the time she filed her petition, Ms. Walton resided in Washington, D.C. Id. at 2.
The Commissioner filed a motion for summary judgment (Doc. 7) on May 16, 2019. However, we denied the Commissioner's motion in our order dated June 27, 2019 (Doc. 11) because, in drawing inferences in Ms. Walton's favor as the non-moving party as required by Rule 121, we could not "rule out the possibility that the settlement officer jumped the gun by issuing the NOD on the same day that (unbeknownst to her) the IA signed by Ms. Walton arrived at the IRS." (Doc. 11 at 4.) Because the parties thereafter agreed that the initial CDP hearing "may have been concluded prematurely because at that time Ms. Walton's signed offer of an installment agreement was in the mail," they filed a joint motion for remand (Doc. 16) to IRS Appeals to "consider a new installment agreement proposal from Ms. Walton or such other collection alternatives as Ms. Walton may now wish to offer." (Doc. 24 at 165.) We granted the parties' joint motion for remand by order dated September 13, 2019 (Doc. 17).
Supplemental CDP hearing
On remand to IRS Appeals, administration of the supplemental CDP hearing was assigned to Settlement Officer Valencia Turner ("SO Turner"). Id. at 213. Ms. Walton was given time to prepare and submit an updated Form 433A with supporting documentation, which she provided via fax on November 7, 2019. Id. at 177. In the cover letter of Ms. Walton's fax to SO Turner, Ms. Walton discussed her (redacted) mental health diagnosis and associated out-of-pocket medical costs, food allergies, clothing costs for professional attire, private debts, and student loan payments to justify deviations from the national standards for expenses. Id. at 183-184. On Ms. Walton's updated Form 433A, she listed out-of-pocket medical expenses of $200 per month and a student loan expense of $1300 per month with a statement written in the margin that the student loan payments would resume January 5, 2020. Id. at 180. Ms. Walton included a letter from her doctor, her patient health summary, and a letter from Navient (Ms. Walton's Federal student loan servicer) reflecting the $1,309 student loan payment due January 5, 2020. Id. at 184-187. Although Ms. Walton's income statement claimed $0 disposable income, Ms. Walton proposed an installment agreement of $300 per month. Id. at 184.
The supplemental CDP hearing was held on November 13, 2019. Id. at 210. Based on her review of Ms. Walton's updated Form 433A, SO Turner proposed an installment agreement in the amount of $1,046 per month. (Doc. 22 at 5.) Ms. Walton responded that, although this new monthly payment was lower than the previous installment agreement amount, she would not be able to maintain monthly payments of $1,046 because of current and upcoming expenses, specifically student loan payments, out-of-pocket medical expenses, and private debts. (Doc. 24 at 210.) After Ms. Walton and SO Turner were not able to reach a mutually agreeable collection alternative, SO Turner issued a supplemental NOD on February 13, 2020, sustaining the NFTL and sending Ms. Walton's case back into IRS collections. (Doc. 22 at 5-6.)
Respondent's instant motion for summary judgment
The Commissioner filed the instant motion for summary judgment (Doc. 24) on October 2, 2020, arguing that there are no genuine disputes of material fact regarding whether IRS Appeals abused its discretion in sustaining the NFTL because "reasons stated for withdrawal of a [NFTL] by Ms. Walton during the hearing process * * * were not conditions under which a withdrawal of the notice would be authorized," "acceptance [of] an offer [in compromise] is not appropriate under respondent's guidelines," and both settlement officers relied on the standardized national and regional allowable expenses in calculating the amounts of the proposed installment agreements. (Doc. 24 at 17-19.)
In her response to the Commissioner's motion, Ms. Walton alleges that there are genuine disputes of material fact with respect to (1) the denial of the lien withdrawal, (2) the calculation of the monthly installment agreement payment, and (3) failure to consider an offer in compromise for special circumstances. (Doc. 25 at 8-9.) Ms. Walton's response does not contain any affidavits, declarations, or other documentary support.
Discussion
I. Applicable legal principles
A. Summary judgment standard
The purpose of summary judgment is to expedite litigation and avoid unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant summary judgment when there is no genuine dispute as to any material fact and 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 moving party (here, the Commissioner) bears the burden of showing that no genuine issue of material fact exists, and the Court will view any factual material and inferences in the light most favorable to the nonmoving party (here, Ms. Walton). Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). However, Rule 121(d) imposes a duty on a party resisting summary judgment:
When a motion for summary judgment is made and supported as provided in this Rule, an adverse party may not rest upon the mere allegations or denials of such party's pleading, but such party's response, by affidavits or as otherwise provided in this Rule, must set forth specific facts showing that there is a genuine dispute for trial. If the adverse party does not so respond, then a decision, if appropriate, may be entered against such party.
Here, the Commissioner offers its administrative file on Ms. Walton's CDP hearing in support of its motion for summary judgment, and Ms. Walton's response contains no affidavits, declarations, or other documentary support. The issue of whether Appeals abused its discretion in sustaining the NFTL can be resolved on the basis of the record before us. In order for the Commissioner to prevail on his motion, he must show there is no genuine dispute of material fact that, as a matter of law, IRS Appeals did not abuse its discretion in sustaining the NFTL. We hold that the Commissioner has met this burden.
B. CDP procedures
When a taxpayer fails to pay any Federal income tax liability within 10 days after notice and demand, section 6321 imposes a lien in favor of the United States on all the property of the delinquent taxpayer, and section 6323(f) authorizes the IRS to file notice of that lien. However, within five business days after filing a notice of federal tax lien, the IRS must provide written notice of that filing to the taxpayer. Sec. 6320(a). After receiving such a notice, the taxpayer may request an administrative CDP hearing before IRS Appeals. Sec. 6320(b)(1).
At the CDP hearing, IRS Appeals must determine whether the proposed collection action may proceed. In making that determination, the appeals officer must consider the following: (1) whether the requirements of any applicable law or administrative procedure have been met; (2) any issues raised by the taxpayer, including (relevant here) challenges to the appropriateness of the collection action and proposed collection alternatives; 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. Secs. 6320(c), 6330(c).
Once Appeals issues its determination, the taxpayer "may, within 30 days of a determination * * * petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter)." Sec. 6330(d)(1).
C. Tax Court Review
Where a challenge to the underlying liability is properly at issue in the appeal of a collection determination, the Tax Court reviews de novo the determination of the underlying liability. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). However, here the liabilities are those that Ms. Walton self-reported on her tax returns, and no dispute has been raised as to those liabilities.
As to collection-related issues other than the underlying liability, we review IRS Appeals' determination for abuse of discretion. Downing v. Commissioner, 118 T.C. 22, 30-31 (2002). Applying that abuse-of-discretion standard, we decide whether IRS Appeals's determination to decline an installment agreement and to sustain the NFTL was 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).
D. Withdrawal of a NFTL Withdrawal of a NFTL is governed by section 6323(j), which reads in relevant part:
(1) In general. The Secretary may withdraw a notice of a lien * * * if the Secretary determines that-
(A) the filing of such notice was premature or otherwise not in accordance with administrative procedures of the Secretary,
(B) the taxpayer has entered into an agreement under section 6159 to satisfy the tax liability for which the lien was imposed by means of installment payments, unless such agreement provides otherwise,
© the withdrawal of such notice will facilitate the collection of the tax liability, or
(D) with the consent of the taxpayer* * * the withdrawal of such notice would be in the best interests of the taxpayer * * * and the United States.
Accordingly, there are four circumstances in which the Secretary has the discretion to withdraw a NFTL (i.e., he "may", not "shall, withdraw it).
To guide IRS personnel in administering this statutory structure, the Secretary has promulgated part 5.12.9 of the Internal Revenue Manual ("IRM"). For example, IRM pt. 5.12.9.3.2.1 covers withdrawal of a NFTL under section 6323(j)(1)(B) and directs that a NFTL may be withdrawn if the taxpayer enters into a direct debit installment agreement ("DDIA") where "the aggregate unpaid balance of assessments on the DDIA is $25,000 or less at the time of the request" (emphasis in original). IRM pt. 5.12.9.3.2.1(4). Regarding withdrawal of a lien pursuant to section 6323(j)(1)(C) to facilitate the collection of the tax liability, IRM pt. 5.12.9.3.3 provides a non-exhaustive list of factors for IRS personnel to consider in deciding whether "withdrawing the NFTL will result, either immediately or in the future, in a greater amount being collected by the IRS than had the NFTL been maintained." The examples in IRM pt. 5.12.9.3.3 indicate that withdrawal of an NFTL will facilitate collection where "the taxpayer agrees to pay the balance of tax due through payroll deductions at a rate higher than the IRS can obtain through a wage levy" or where the NFTL interferes with the taxpayer's ability to perform job duties or generate income, but not where the property is "not necessary for her to perform her job duties or generate income." To determine whether withdrawal would be in the best interest of the taxpayer and the government pursuant to section 6323(j)(1)(D), IRM pt. 5.12.9.3.4 provides a list of potential issues for IRS personnel to consider, and the examples indicate that it is not in the best interest of the government to withdraw an NFTL where "withdrawal of the NFTL would result in partial payment," "the government [would] relinquish its secured creditor status in exchange for a promise to pay," or the taxpayer is requesting that the NFTL be withdrawn "because it is harming her credit worthiness."
"We note that it 'is a well-settled principle that the Internal Revenue Manual does not have the force of law, is not binding on the IRS, and confers no rights on taxpayers.'" Thompson v. Commissioner, 140 T.C. 173, 190 n.16 (2013) (quoting McGaughy v. Commissioner, T.C. Memo. 2010-183, slip op. at 20). We cite its provisions to inform our analysis of whether IRS Appeals abused its discretion in following the relevant provisions of the IRM in making its determination.
II. Analysis
A. Respondent has made and supported a prima facie case showing IRS Appeals did not abuse its discretion
The Commissioner's motion for summary judgment is supported by certified copies of Ms. Walton's tax account transcripts and a certified copy of the IRS's administrative file for Ms. Walton's CDP hearing. These records shows that, in making her supplemental determination, SO Turner considered the issues required in sections 6320(c) and 6330(c). SO Turner verified that the IRS had met the requirements of the legal and administrative procedure for collection of delinquent tax by levy by making valid assessments for each tax and period listed on the CDP notice and sending notice and demand for payment to Ms. Walton's last known address within 60 days of assessment pursuant to section 6303. SO Turner also verified that there was a balance due for each tax period when the NFTL was issued, and that she had no prior involvement in the case regarding the tax and periods at issue. (Doc. 22 at 5-6.)
The record also shows that SO Turner considered Ms. Walton's collection alternative of an installment agreement, but that no installment agreement was entered because SO Turner could not agree with Ms. Walton on an acceptable amount of the monthly payment. Id. at 6. SO Turner also considered Ms. Walton's request for withdrawal of the NFTL, but concluded that sustaining the NFTL was "necessary to protect the government's interest" and that "retaining the NFTL balances the need for efficient collection with your concern that any collection action be no more intrusive than necessary." Id.
The Commissioner has made and supported a prima facie case that IRS Appeals did not abuse its discretion in sustaining the NFTL because SO Turner considered all three issues under section 6330(c) and her determination is rationally based on IRS administrative procedures and the information provided by Ms. Walton during the CDP process. We should therefore grant the Commissioner's motion unless Ms. Walton shows a genuine dispute of material fact.
B. Ms. Walton has not shown any genuine dispute of material fact
Ms. Walton alleges that there are genuine disputes of material fact with respect to (1) the denial of the lien withdrawal, (2) the calculation of the monthly installment agreement payment, and (3) failure to consider an offer in compromise for special circumstances. (Doc. 25 at 8-9.) We will address each of these contentions. In doing so, we bear in mind that we review Appeals' determinations not de novo but for abuse of discretion. We do not substitute our own judgment for that of the settlement officer but rather assure that the settlement officer's decisions were in the realm of reason.
1. Denial of NFTL withdrawal
On Ms. Walton's Form 12257, she requested withdrawal of the lien and stated the reasons for withdrawal as "withdrawal will facilitate collection of the tax" and "the taxpayer believes withdrawal is in the best interest of the taxpayer and the government"; and she stated the factual basis for withdrawal as her illness and financial hardship. (Doc. 24 at 38.) Ms. Walton claimed on her Form 12153 that the NFTL "causes hardship as it prevents employment in my profession." Id. In the light most favorable to Ms. Walton, we construe this statement as made in support of her request for withdrawal of the NFTL to facilitate collection and as in the best interest of the taxpayer and the government.
Ms. Walton stated during the initial CDP hearing that withdrawal would facilitate collection by enabling her continued employment and her ability to repay the tax liability. However, in her fax to IRS Appeals, dated November 7, 2019 (i.e., while the lien was in existence), she stated that she was currently employed. Id. at 183. Although Ms. Walton also stated that her employment "could end at any time without warning, and there have been periods of time in the last year when [Ms. Walton] found [herself] without employment," this appears to be the result of the contract nature of Ms. Walton's employment and not of the existence of the NFTL. Id. Accordingly, Ms. Walton has not shown that the NFTL actually interferes with her ability to maintain employment or perform her job duties or that "withdrawing the NFTL will result, either immediately or in the future, in a greater amount being collected by the IRS than had the NFTL been maintained", such that withdrawal would facilitate collection.
Ms. Walton has likewise not shown how withdrawal of the NFTL would be in the best interests of the government, and reference to the examples contained in IRM pt. 5.12.9.3.4 indicates that withdrawal of the NFTL would not be in the government's best interests in this case. Therefore, we find no abuse of discretion in IRS Appeal's determination to deny withdrawal of the NFTL.
2. Calculation of installment agreement payments
To guide financial analysis of taxpayers' ability to pay their liability, the Secretary is required to "develop and publish schedules of national and local allowances designed to provide that taxpayers * * * have an adequate means to provide for basic living expenses." Sec. 7122(d)(2)(A). The IRS's "Collection Financial Standards" is the schedule of national and local expense allowances used by IRS personnel to determine a taxpayer's ability to repay their liability. IRM pt. 5.15.1.8. We have consistently held that "the use of local and national standards is expressly authorized by Congress and does not constitute an abuse of discretion even if it forces a taxpayer * * * to change his lifestyle." Perrin v. Commissioner, 103 T.C.M. 1150, 1151 (2012); see also Friedman v. Commissioner, 105 T.C.M. 1288, 1290 (2013). In order to allow expense amounts greater than the national and local standards, a taxpayer must provide documentation that supports a determination that using national and local expense standards leaves them an inadequate means of providing for basic living expenses. IRM pt. 5.15.1.8. Here, Ms. Walton described her medical condition and related out-of-pocket medical costs in general terms but did not provide documentation proving specific amounts of ongoing out-of-pocket medical costs. Based on the administrative procedures of the IRS and the precedent of this Court, it was not an abuse of discretion for IRS Appeals to adhere to the national and local standards in determining Ms. Walton's ability to pay.
Available at https://www.irs.gov/businesses/small-businesses-selfemployed/collection-financial-standards.
Ms. Walton also argues that "the second settlement officer acknowledged during the hearing that she did not include required monthly payments towards student loan debt in her calculations and reduced Ms. Walton's claimed monthly expenses even though they were supported by evidence." (Doc. 25 at 6.) The evidence Ms. Walton refers to is the statement from Navient showing that her student loan payments would resume on January 5, 2020, in the amount of $1,309. (Doc. 24 at 187.) Appeals did not take Ms. Walton's student loan expense into account because, at the time the installment agreement was being considered, "the payments had not yet begun, and therefore were not substantiated as being paid." (Doc. 26 at 10.) IRM pt 5.15.1.11 states that a student loan expense may be allowed if the taxpayer "substantiate[s] that the payments are being made," and further provides that "if [taxpayers] later make arrangements to pay the student loan, they can request the installment agreement be revised." Under the facts and circumstances as they existed at the time Ms. Walton's request for an installment agreement was being considered by SO Turner, it was not an abuse of discretion to disallow Ms. Walton's student loan expense on the basis that the payments were not substantiated as being paid.
3. Failure to consider an offer in compromise
Section 7122(a) grants the Secretary the authority to "compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense" at his discretion. Section 7122(d) states that "the Secretary shall prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute." To that end, the Secretary has issued regulation 26 C.F.R. sec. 301.7122-1(d), Proc. & Admin. Regs., which reads:
(1) In general. An offer to compromise a tax liability pursuant to section 7122 must be submitted according to the procedures, and in the form and manner, prescribed by the Secretary. An offer to compromise a tax liability must be made in writing, must be signed by the taxpayer under penalty of perjury, and must contain all of the information prescribed or requested by the Secretary.
The Secretary has prescribed the form and manner and procedures for submitting an offer in compromise in IRM pt. 5.8.1.15(1), which provides that "a request for an offer is submitted on Form 656, Offer in Compromise, [and] all offer applications must be received on the current Form 656." IRM pt. 5.8.1.15(2) further provides that "when submitting Form 656, taxpayers must include an application fee and the required TIPRA payment."
The IRS administrative file does not show that Ms. Walton ever submitted a Form 656, and Ms. Walton does not allege that she did so or paid the associated application fee or deposit. Furthermore, SO Hayes determined, based on her review of Ms. Walton's Form 433A, that Ms. Walton had the ability to full-pay her tax liabilities within the remaining period for collection such that Ms. Walton was not eligible for an offer in compromise. See 26 C.F.R. sec. 301.7122-1(c)(2)(i) ("To guide this determination [of the amount of basic living expenses and ability to pay], guidelines published by the Secretary on national and local living expense standards will be taken into account."). We find no abuse of discretion where IRS Appeals failed to consider an offer in compromise when the taxpayer did not submit a Form 656 in accordance with IRS administrative procedures and IRS Appeals determined that the taxpayer was able to full-pay the liability.
III. Conclusion
In conclusion, we find that there is no genuine dispute of material fact regarding whether IRS Appeals abused its discretion by sustaining the NFTL covering Ms. Walton's 2012, 2013, and 2014 tax liabilities. Respondent's motion shows that Appeals verified that the requirements of applicable law and administrative procedure were met, considered issues raised by the taxpayer concerning the appropriateness of the collection action and proposed collection alternatives, and determined that 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 as required by sections 6320(c) and 6330(c). Furthermore, Ms. Walton's response failed to raise a genuine dispute of material fact supported by affidavit or as otherwise provided in Rule 121. Accordingly, we will grant the Commissioner's motion for summary judgment and sustain the supplemental NOD. Once Ms. Walton's case is transferred back to IRS collections, she will have, outside of the CDP process, the option to either submit an offer in compromise based on special circumstances, or request an installment agreement, or request currently not collectible status based on her present financial condition.
In view of the foregoing, it is ORDERED that respondent's motion for summary judgment is granted. It is further
ORDERED AND DECIDED that respondent may proceed with collection of petitioner's unpaid income tax liabilities for the 2012, 2013, and 2014 tax years, as described in the "Supplemental Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330" dated February 13, 2020.