T.C. Memo. 2010-246

UNITED STATES TAX COURT

RONALD M. COSTI, Petitioner v.

 COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 26482-09L. Filed November 10, 2010.

Ronald M. Costi, pro se.

Anna A. Long, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: This case was commenced under section 6330 in

response to a notice of determination concerning collection

action sustaining a lien to secure petitioner’s unpaid tax

liabilities for 2004 and 2006. The issue for decision is whether

sustaining the lien was an abuse of discretion. All section

references are to the Internal Revenue Code.
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FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference. 

Petitioner resided in California at the time his petition was

filed. At all material times he was an insurance agent.

Petitioner filed 2004 and 2006 Federal income tax returns on

which he reported tax due of $47,579 and $43,492, respectively. 

He did not make required estimated tax payments for either year

but did make payments reducing the tax liabilities. As of

November 26, 2008, balances remained outstanding on the

liabilities for 2004 and 2006, and petitioner does not dispute

the liabilities. In February 2006, he entered into an

installment payment agreement for the balance of his 2004

liability. He defaulted on that agreement by not making timely

estimated tax payments for subsequent years.

On November 26, 2008, the Internal Revenue Service (IRS)

filed a notice of Federal tax lien for 2004 and 2006. Petitioner

requested a hearing under sections 6320 and 6330. Petitioner

submitted information to a representative of the IRS Appeals

Office and entered into negotiations for installment payments on

the unpaid balances of his liabilities. A hearing was

subsequently conducted by another IRS employee who had recently

become a settlement officer in the Appeals Office and had limited

experience handling hearings under section 6330. Petitioner
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requested that the lien be removed, and the settlement officer

indicated that she would recommend removal of the lien but that

her recommendation was subject to managerial review. The removal

of the lien was not approved, however, and the settlement

officer’s request that it be removed was ultimately withdrawn.

The settlement officer verified that the requirements of

applicable law and administrative procedure had been met and

determined that the filing of the lien was appropriate to protect

the Government’s interest. On October 5, 2009, a notice of

determination sustaining the lien was sent to petitioner.

OPINION

Section 6321 imposes a lien in favor of the United States on

all property and property rights of a taxpayer liable for taxes

after a demand for the payment of the taxes has been made and the

taxpayer fails to pay. The lien arises when the assessment is

made. See sec. 6322. The IRS files a notice of Federal tax lien

to preserve priority and put other creditors on notice. See sec.

6323. Section 6320(a) requires the Secretary to send written

notice to the taxpayer of the filing of a notice of lien and of

the taxpayer’s right to an administrative hearing on the matter.

The hearing generally shall be conducted consistent with

procedures set forth in section 6330(c), (d), (e), and (g). See

sec. 6320(c). At the hearing a taxpayer may raise any relevant

issue, including challenges to the appropriateness of the
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collection action and possible collection alternatives. See sec.

6330(c)(2)(A). Taxpayers are to provide all relevant information

requested by Appeals. Sec. 301.6330-1(e)(1), Proced. & Admin.

Regs. 

Under section 6330(c)(2)(B) a taxpayer may contest the

validity of the underlying tax liability, but petitioner has not

done so. Therefore, to prevail petitioner must establish that

the issuance of the notice of determination sustaining the lien

filing was an abuse of discretion. See Sego v. Commissioner, 114

T.C. 604, 609-610 (2000). An abuse of discretion is shown only

if the action of the Appeals officer was arbitrary, capricious,

or without sound basis in fact or law. See Giamelli v.

Commissioner, 129 T.C. 107, 111 (2007).

Petitioner represents that he timely contacted the Appeals

Office and made arrangements to make payments on the unpaid

balances of his liabilities. He contends that sustaining the

lien was an abuse of discretion because he was initially told

that the lien would be withdrawn and was given inconsistent

information by different representatives in the Appeals Office. 

He implies that the change of position may have resulted from

contact made with the IRS by his former wife. His complaint is

basically one of unfulfilled expectations.

The notice of determination reflects that the denial of the

request for withdrawal of the lien occurred in part because
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petitioner declined to provide information about how the lien

would adversely affect him. There is no evidence in the

administrative record or at trial suggesting that the lien is

more intrusive than necessary to protect the Government’s

interest.

Although petitioner feels that he was misled into believing

that the lien would be removed and that the Appeals Office

communications and change of position were unfair, he has not

shown that the lien was inappropriate. We cannot conclude that

sustaining the lien was an abuse of discretion. 

Decision will be entered

for respondent.