T.C. Memo. 2011-57

UNITED STATES TAX COURT

JOHN CARLYLE BERKERY, SR., Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19070-09L. Filed March 9, 2011.

John Carlyle Berkery, Sr., pro se.

Jack T. Anagnostis, for respondent.

MEMORANDUM OPINION

WELLS, Judge: This case is before the Court on respondent’s

motion for summary judgment pursuant to Rule 121.1 We must

1Unless otherwise indicated, section references are to the

Internal Revenue Code of 1986, as amended, and Rule references

are to the Tax Court Rules of Practice and Procedure.
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decide whether respondent’s settlement officer abused her

discretion in sustaining a notice of Federal tax lien filing. 

Background

Some of the facts and certain exhibits have been stipulated. 

The stipulations of facts and accompanying exhibits are

incorporated in this opinion by reference and are found

accordingly. 

At the time the petition was filed, petitioner resided in

Pennsylvania. 

On April 11, 2007, petitioner filed a Federal income tax

return for his 2004 tax year, reporting a tax liability of

$3,258. The following day, on April 12, 2007, he filed a tax

return for his 2005 tax year, reporting a tax liability of

$3,712. Petitioner did not pay his tax liability for either

year. Respondent assessed petitioner’s tax liabilities for his

2004 and 2005 tax years on May 14, 2007. On June 18, 2007,

respondent sent notices and demands for payment of balances due

for petitioner’s tax years 2004 and 2005. 

On October 29, 2007, petitioner received a call from an

employee in respondent’s Automated Collection System (ACS) unit. 

As explained below, the parties disagree about what transpired

during the October 29, 2007, telephone call. During the ensuing

months, petitioner did not make any payments on his liabilities

for his 2004 and 2005 tax years. 
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On March 20, 2009, respondent filed a Notice of Federal Tax

Lien (NFTL) with respect to petitioner’s 2004 and 2005 tax years. 

During a telephone call on March 23, 2009, petitioner

entered into an installment agreement with respondent’s ACS unit

to pay $75 per month beginning April 12, 2009, and increasing to

$145 per month beginning April 12, 2010. At that time,

petitioner apparently was not aware that the NFTL had been filed,

and he contends that respondent’s employee told him that no lien

would be filed if he fulfilled the installment agreement. 

The next day, March 24, 2009, respondent mailed petitioner a

Notice of Federal Tax Lien Filing and Your Right to a Hearing,

regarding the lien that had been filed on March 20. Petitioner

received the notice 2 days later, on March 26, 2009. On or about

April 2, 2009, petitioner requested a withdrawal of the NFTL by

submitting to respondent Form 12277, Application for Withdrawal

of Filed Form 668(Y), Notice of Federal Tax Lien. The filing of

the NFTL was upheld by Technical Services Advisor Bruce Clark

(Mr. Clark) in a letter dated April 13, 2009, stating that after

a review of petitioner’s file, Mr. Clark had determined that the

lien was not filed prematurely. The letter informed petitioner

that the lien had been filed before the March 23, 2009,

installment agreement and that, at that time, he was already in

default on a previously established installment agreement. 
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The parties appear to disagree about whether petitioner had

ever entered into a previous installment agreement. Respondent

contends that petitioner had entered into an installment

agreement during his October 29, 2007, telephone conversation

with an employee in respondent’s ACS office. Petitioner admits

that he spoke with respondent’s employee on or about that date,

but he contends that he did not enter a formal installment

agreement and merely told her that he would do his best to pay as 

soon as possible. The record does not contain any documentation

of the alleged October 29, 2007, installment agreement. However,

because the instant case is before us on respondent’s motion for

summary judgment, we are obliged to view all facts in the light

most favorable to the nonmoving party. See Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994). For purposes of the instant motion, we will assume

that petitioner never entered into an installment agreement

before the March 23, 2009, installment agreement.

On April 15, 2009, petitioner timely submitted Form 12153,

Request for a Collection Due Process or Equivalent Hearing. On

Form 12153 petitioner requested that the NFTL be withdrawn so

that he could refinance his home, and he requested that

respondent allow him to continue with the installment agreement

entered into on March 23 as a collection alternative instead of

imposing the lien. 
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Petitioner made one payment on the installment agreement in

May 2009. 

On June 17, 2009, respondent’s settlement officer Denise

Williams (Ms. Williams) sent petitioner a letter acknowledging

his request for a collection due process (CDP) hearing and

scheduling a telephone conference. In the letter, Ms. Williams

informed petitioner that the lien would be released after 

petitioner paid the balances due for 2004 and 2005. Ms. Williams

also enclosed copies of Publications 783, Instructions on how to

apply for a Certificate of Discharge of Property From Federal Tax

Lien, and 784, How to Prepare an Application for a Certificate of

Subordination of Federal Tax Lien, which she thought would help

petitioner obtain financing for his home. 

Ms. Williams conducted the CDP hearing by telephone on July

17, 2009. On his Form 12153 and during the hearing petitioner

contended that, because he had not entered into an installment

agreement on October 29, 2007, he could not be in default on that

agreement and he therefore should be given the opportunity to

meet the terms of the March 23, 2009, installment agreement

before respondent filed an NFTL. Petitioner also informed Ms.

Williams that the lien reduced his credit score by 100 points,

affecting his eligibility for a loan, and he told her that the

lien was “counter-productive to both * * * [respondent] and

myself [because] [i]t stops me from getting additional financing
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on my house.” After the hearing, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 dated July 30, 2009, sustaining the lien. 

Discussion

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials and may be granted where

there is no genuine issue of material fact and a decision may be

rendered as a matter of law. Rule 121(a) and (b); Fla. Peach

Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The moving party

bears the burden of proving that there is no genuine issue of

material fact, and factual inferences are viewed in the light

most favorable to the nonmoving party. Sundstrand Corp. v.

Commissioner, supra at 520. However, the party opposing summary

judgment must set forth specific facts that show a genuine issue

of material fact exists and may not rely merely on allegations or

denials in the pleadings. Rule 121(d).

Where the underlying tax liability is not in issue, we

review the determination of the Appeals Office for abuse of

discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). 

In reviewing for abuse of discretion, we will reject the

determination of the Appeals Office only if the determination was

arbitrary, capricious, or without sound basis in fact or law. 

See Murphy v. Commissioner, 125 T.C. 301, 308 (2005), affd. 469 
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F.3d 27 (1st Cir. 2006). Petitioner does not dispute the

underlying liabilities. Consequently, we review the

determination of the Appeals Office for abuse of discretion. 

Where, as in the instant case, we review a settlement

officer’s determination to sustain the filing of an NFTL for

abuse of discretion, we review the reasoning underlying that

determination to decide whether it was arbitrary, capricious, or

without sound basis in fact or law. We do not substitute our

judgment for that of the settlement officer, and we do not decide

independently whether we believe the lien should be withdrawn. 

See id. at 320.

Pursuant to section 6321, the Federal Government obtains a

lien against “all property and rights to property, whether real

or personal” of any person liable for Federal taxes upon demand

for payment and failure to pay. See Iannone v. Commissioner, 122

T.C. 287, 293 (2004). The lien arises automatically on the date

of assessment and persists until the tax liability is satisfied

or becomes unenforceable by reason of lapse of time. Sec. 6322;

Iannone v. Commissioner, supra at 293. The purpose of filing,

pursuant to section 6323, notice of the lien that arises under

section 6321 is to protect the Government’s interest in a

taxpayer’s property against the claims of other creditors. 

Filing an NFTL validates the Government’s lien against a

subsequent purchaser, holder of a security interest, mechanic’s
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lienor, or judgment lien creditor. See sec. 6323(a); Stein v.

Commissioner, T.C. Memo. 2004-124; Lindsay v. Commissioner, T.C.

Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th Cir. 2003). 

If the Commissioner chooses to file an NFTL, he must provide

the taxpayer with written notice not more than 5 business days

after the filing, and he must advise taxpayer of the right to a

hearing before the Appeals Office. Sec. 6320(a). If the

taxpayer requests such a hearing, the Appeals Office must verify

that the requirements of any applicable law or administrative

procedure have been met. Secs. 6320(c), 6330(c)(1). The Appeals

officer must also determine 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)(3). Finally, the Appeals officer must consider any

issues raised by the taxpayer at the hearing, including

appropriate spousal defenses, challenges to the appropriateness

of collection actions, and offers of collection alternatives such

as an installment agreement. Secs. 6320(c), 6330(c)(2) and (3).

Under certain circumstances, the Commissioner has the

discretion to withdraw an NFTL that has been filed. Section

6323(j)(1) provides:
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SEC. 6323(j). Withdrawal of Notice in Certain

Circumstances.--

(1) In general.--The Secretary may withdraw a

notice of a lien filed under this section and this

chapter shall be applied as if the withdrawn notice had

not been filed, 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,

(C) the withdrawal of such notice will

facilitate the collection of the tax liability, or

(D) with the consent of the taxpayer or the

National Taxpayer Advocate, the withdrawal of such

notice would be in the best interests of the

taxpayer (as determined by the National Taxpayer

Advocate) and the United States.

Section 6323(j)(1) is permissive. Although section 6323(j)(1)

allows the Commissioner to withdraw the NFTL for any of the

listed reasons, it does not require him to do so. The

regulations make the Commissioner’s discretion explicit: “If the 

Commissioner determines conditions for withdrawal are present, 

the Commissioner may (but is not required to) authorize the 

withdrawal.” Sec. 301.6323(j)-1(c), Proced. & Admin. Regs.

(emphasis added).

At the Appeals hearing, petitioner advanced two contentions. 

His first contention is that respondent should withdraw the NFTL

and allow him to proceed with the March 23, 2009, installment
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plan, to which petitioner had agreed before learning about the

NFTL. Secondly, he contends that the NFTL should be withdrawn so

that he can refinance his home, enabling him to pay his tax

liabilities. 

In support of his first contention, petitioner argues that

Mr. Clark was mistaken when he found that petitioner had entered

into a previous installment agreement. Petitioner contends that,

because he had never entered into such an agreement, he could not

be in default, and he therefore should be permitted to fulfill

his obligations under the March 23, 2009, installment agreement

before the filing of an NFTL.

We conclude that the issue of whether there was a previous

installment agreement is irrelevant to the issue of the proper

filing of an NFTL. 

In Crisan v. Commissioner, T.C. Memo. 2007-67, the

Commissioner filed an NFTL against the taxpayers after the

parties had begun negotiating an installment agreement. As in

the instant case, the taxpayers learned about the NFTL only after

they had entered the installment agreement, and, as is alleged in

the instant case, the Commissioner had made representations to

the taxpayers that no further collection actions would be taken

while they were negotiating the installment agreement. Like

petitioner, the taxpayers in Crisan argued that the NFTL would

damage their credit, making it difficult for them to obtain
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additional financing, and that the NFTL had been filed

prematurely because they had just entered into an installment

agreement. We held that the implementation of an installment

agreement did not preclude the Commissioner from filing an NFTL,

nor was the Commissioner required to withdraw the NFTL after the

installment agreement became effective. 

In Ramirez v. Commissioner, T.C. Memo. 2005-179, the

taxpayer had entered into an installment agreement after the

filing of the NFTL and contended that he should be released from

the NFTL. In that case we likewise held that the installment

agreement did not preclude the Commissioner from maintaining a

lien until the balance of the taxpayer’s taxes was paid. See

also Dorra v. Commissioner, T.C. Memo. 2004-16. The taxpayer in

Stein v. Commissioner, supra, argued that the Appeals Office

abused its discretion by rejecting an installment agreement. We

stated that even if the Appeals officer had accepted the

installment agreement as a collection alternative, the

Commissioner would not have been required to withdraw the NFTL

until the full liability had been paid.

Section 6323(j)(1) is permissive, and nothing in it requires

respondent to withdraw the NFTL because of the installment

agreement. Accordingly, we hold that the decision of

respondent’s Appeals Office to sustain the NFTL despite the

installment agreement was not an abuse of discretion.
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In support of petitioner’s second contention, that the NFTL

has made it impossible for him to refinance his home and thus

obtain money to pay his tax liabilities, he states that his

credit score has been reduced by 100 points. In her letter

acknowledging his request for a CDP hearing, Ms. Williams

supplied petitioner with information describing how to apply for

a certificate of subordination to the NFTL and how to obtain a

certificate of discharge from the NFTL. Although he contends

that the NFTL has made it impossible for him to refinance his

home, petitioner has offered no evidence that he has been

rejected for a loan because of the NFTL, or even that he has

applied for a loan since respondent filed the NFTL. Nor has

petitioner presented any evidence that suggests the alternatives

offered by Ms. Williams, i.e., applying for a certificate of

subordination of the NFTL or obtaining a certificate of discharge

from the NFTL, would be insufficient to satisfy his supposed need

to obtain financing. It is no doubt true that the NFTL lowered

petitioner’s credit score, but this fact does not establish that

refinancing petitioner’s home would be impossible or that the

NFTL otherwise interferes with petitioner’s ability to pay his

tax obligations. 

Accordingly, there is no evidence in the record to suggest

that the NFTL is impairing petitioner’s ability to pay his

outstanding tax liabilities. Where a motion for summary judgment
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has been properly made and supported, the opposing party may not

rest upon mere allegations or denials in that party’s pleadings

but must, by affidavits or otherwise, set forth specific facts

showing that there is a genuine issue for trial. Rule 121(d). 

Respondent’s motion was properly made and supported. Petitioner

has not offered specific facts to support his contention that the

NFTL impairs petitioner’s ability to pay his tax liability. 

Consequently, we conclude that there is no genuine issue for

trial regarding that fact. 

The record shows that Ms. Williams had sufficient evidence

on which she could reasonably base her conclusion that

withdrawing the NFTL would not facilitate collection. Petitioner

had almost 2 years before the filing of the NFTL during which he

made no effort to refinance his home, and petitioner made no

payments on his tax liabilities during that entire period. 

Petitioner’s payment history casts doubt on the good faith of his

efforts to pay. Accordingly, we conclude that respondent’s

settlement officer did not abuse her discretion when she

determined that withdrawing the NFTL would not facilitate

collection of the tax liabilities. 

Respondent’s settlement officer considered all of

petitioner’s contentions, verified compliance by the Internal

Revenue Service with all applicable laws and regulations, and

considered whether the proposed collection actions balanced the
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need for efficient tax collection with petitioner’s concern that

they be no more intrusive than necessary. 

On the basis of the record before us, we conclude that there

is no genuine issue of material fact for trial. We hold that

respondent’s settlement officer did not abuse her discretion in

sustaining the filing of the NFTL. 

In reaching these holdings, we have considered all the

parties’ arguments, and, to the extent not addressed herein, we

conclude that they are moot, irrelevant, or without merit.

To reflect the foregoing,

 An order and decision will

 be entered for respondent.