T.C. Memo. 2004-8

UNITED STATES TAX COURT

JOHNNIE L. TILLMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 11709-02L. Filed January 6, 2004.

Johnnie L. Tillman, pro se.

James A. Kutten, for respondent.

MEMORANDUM OPINION

COHEN, Judge: This proceeding was commenced in response to

a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330. The issue for decision is whether

there was an abuse of discretion in rejecting petitioner’s offer

to compromise for $100 petitioner’s unpaid Federal income tax

liabilities for 1993, 1994, and 1995 exceeding $13,000 and
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instead determining that the account should be treated as

“currently not collectible (CNC)”; the account should be

revisited when petitioner’s income exceeds $35,000; and “levies

will not be pursued.” Unless otherwise indicated, all section

references are to the Internal Revenue Code in effect for the

years in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

Background

Petitioner resided in Missouri at the time the petition was

filed. On December 19, 1996, petitioner executed a Form 870,

Waiver of Restrictions on Assessment and Collection of Deficiency

in Tax, consenting to additional income tax assessments for 1993,

1994, and 1995. The additional taxes were assessed on

February 17, 1997. On July 15, 2000, the Internal Revenue

Service (IRS) mailed to petitioner a Final Notice - Notice of

Intent to Levy and Notice of Your Right to a Hearing. Attached

to the notice was a schedule showing then unpaid balances of

$1,566.69 for 1993, $5,901.55 for 1994, and $5,693.97 for 1995. 

Petitioner requested a hearing under section 6330,

designating Frank L. Zerjav (Zerjav), C.P.A., as his

representative. In August 2000, petitioner submitted to the IRS

a Form 656, Offer in Compromise, in which he offered to pay the

total of $100 in satisfaction of his liabilities for 1993, 1994,

and 1995. On February 26, 2001, Appeals Officer James B. Wallace
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(Wallace) wrote to Zerjav suggesting that Zerjav contact Wallace

to arrange a mutual date and time for the hearing to be conducted

with respect to petitioner’s liability. On October 16, 2001,

Wallace sent to Zerjav a letter requesting completion of an offer

in compromise package, including financial information. On

December 5, 2001, Wallace wrote to Zerjav scheduling a hearing

for January 15, 2002. 

On January 14, 2002, Wallace received from Zerjav various

information concerning petitioner’s finances. In a telephone

conversation on January 14, 2002, Zerjav advised Wallace that

petitioner wanted to pursue an offer in compromise. No

person-to-person hearing took place on January 15, 2002. 

Appeals Officer Wallace reviewed the financial information

submitted by petitioner. He considered petitioner’s income and

the income of petitioner’s mother, because petitioner’s mother

lived with petitioner and was supported in part by petitioner. 

Wallace concluded that, after allowable expenses, petitioner

could pay $82 per month toward his tax liability. In a letter

dated February 28, 2002, Wallace proposed three alternatives: 

(1) A cash offer of $3,936 (computed as 48 months multiplied by

$82 per month); (2) a short-term deferred payment offer of

$4,920, payable over 2 years (60 months multiplied by $82 per

month); and (3) a deferred payment offer of $6,888 (84 months

multiplied by $82 per month). Wallace’s proposals were based on
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allowing all of the expenses claimed by petitioner in his

financial forms and were calculated in accordance with the IRS

Manual. Petitioner did not accept any of Wallace’s proposals.

On March 8, 2002, Wallace wrote to Zerjav suggesting a

resolution of the section 6330 proceeding, wherein collection of

petitioner’s 1993, 1994, and 1995 income tax liabilities would be

held in suspense until petitioner’s income exceeded $35,000 per

year. Petitioner did not accept that proposal. On May 29, 2002,

Wallace met with Zerjav and discussed collection alternatives. 

Zerjav insisted on an offer in compromise in the amount of $100

and offered no other collection alternatives. 

On June 11, 2002, a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 was sent to

Zerjav as petitioner’s representative. The determination was

summarized as follows:

The decision by Appeals is that this account is to be

placed in currently not collectible (CNC) status based

on the taxpayer’s current financial situation. The

taxpayer’s account should be revisited when his income

exceeds $35,000. As a result of this action, levies

will not be pursued.

The petition in this case disputed consideration of

petitioner’s mother’s income by the Appeals officer and other

details of the Appeals officer’s analysis and complained of the

lack of “independent review” of the rejection of the offer in

compromise. The petition also alleged:
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h) The entire offer consideration process was

conducted by the Appeals Division which further

violates the intent of Congress under the IRS

Restructuring and Reform Act of 1998 (the Act) to the

extent petitioner has been denied independent review of

the rejected offer as required under the Act.

5. Petitioner has at all times acted in good faith

in connection with his tax affairs. Therefore denial

of an offer that would give him a “fresh start” is

misplaced. Moreover, no alternatives such as income

collateral agreements were made available to either the

Petitioner or his representative prior to issuance of

the rejection.

After the case was set for trial, respondent filed a Motion for

Summary Judgment. Although petitioner was ordered to serve on

respondent and file with the Court a written response to the

Motion for Summary Judgment, he failed to do so. However, when

the case was called for hearing on the Motion for Summary

Judgment, petitioner was permitted to present the testimony of

Zerjav as a means of explaining his position. See Rule 121(b),

(d).

Zerjav testified:

Our firm represents not only Mr. Tillman but

literally hundreds of other folks who have sought

relief--tax relief through an offer in compromise

program. In this particular instance, a collection

action, a collecting hearing, due process was

requested. And the process of evaluating suitability

for an offer in compromise was handled not by an offer

specialist but, rather, by the appeals officer assigned

to the case.

Allegations of error in the petition in this case, apparently

prepared by Zerjav, are identical to those in at least one other
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petition in this Court. See Chandler v. Commissioner, T.C. Memo.

2004-7 (filed this date).

Discussion

The primary dispute in this case arises from an apparent

misunderstanding by petitioner and his representative of the

effect of sections 6320 and 6330. Sections 6320 (pertaining to

liens) and 6330 (pertaining to levies) were enacted as part of

the Internal Revenue Service Restructuring and Reform Act of

1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746, to provide new

procedural protections for taxpayers in collection matters. 

Section 6330 generally provides that the Commissioner may not

proceed with a collection of taxes by way of a levy on a

taxpayer’s property until the taxpayer has been given notice of,

and the opportunity for, an administrative review of the matter. 

The statute specifically provides that “such hearing shall be

held by the Internal Revenue Service Office of Appeals.” Sec.

6330(b)(1). A taxpayer is entitled to only one hearing with

respect to the taxable period involved in the proposed lien or

levy. Sec. 6330(b)(2). If the taxpayer is dissatisfied with the

determination made after the hearing, judicial review of the

determination, such as that sought in this case, is available. 

See generally Goza v. Commissioner, 114 T.C. 176, 179-181 (2000).

Section 6330(c) specifies the matters considered at the

hearing. In this case, there is no dispute that the requirements
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of applicable laws and procedures regarding the assessment have

been met, sec. 6330(c)(1), and there is no dispute with respect

to the underlying tax liability, sec. 6330(c)(2)(B). We review

respondent’s determination for abuse of discretion. Goza v.

Commissioner, supra at 182. Section 6330(c)(2)(A) provides:

(A) In general.--The person may raise at the

hearing any relevant issue relating to the unpaid tax

or the proposed levy, including–-

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of

collection actions; and

(iii) offers of collection alternatives,

which may include the posting of a bond, the

substitution of other assets, an installment

agreement, or an offer-in-compromise.

The only collection alternative offered by petitioner during the

process before Appeals was an offer in compromise for $100. 

Petitioner complains that there was no review within the

Appeals Office and that there was an abuse of discretion by the

Appeals officer in not referring the offer in compromise

evaluation to IRS collection personnel. In some cases,

assistance from revenue officers may be sought. See, e.g.,

Van Vlaenderen v. Commissioner, T.C. Memo. 2003-346. Petitioner

does not, however, have a right under section 6330 to more than

one hearing or to a hearing before anyone other than the Office

of Appeals. Sec. 6330(b).
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We infer that the failure to eliminate petitioner’s total

liability for the 3 years in issue by a single payment of $100, a

result that petitioner’s representative had achieved in other

cases, led to the pursuit of this proceeding in response to what

otherwise would be regarded as a favorable determination. 

Petitioner has not offered, nor have we found in the record, any

reason why the determination to suspend collection and not to

pursue levies is an abuse of discretion. That his representative

achieved a $100 compromise of liabilities in other cases is

irrelevant. We conclude that the material facts are not in

dispute and that respondent is entitled to judgment as a matter

of law. 

To reflect the foregoing,

An appropriate order and

decision will be entered.