T.C. Su m m ary Op i n i o n 2 0 1 9 -7

UNITED STATES TAX COURT
VICA TECHNOLOGIES, LLC, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 5 2 47 -1 7 S L. Fi l edAp ri l 4 , 2 0 1 9
. Hy aci nt h An y i am

(an o ffi cer), fo r p et i t i o ner. Art h u r W
. Pet ers en III an dAu dra M . Di n een , fo r res p o n d en t .

SUM M ARY OPINION URDA, J ud g e: Th is cas e was h eardp u rs u an t t o the p ro v i si on s o f s ect i o n 7 4 6 3 o f t h e In t ern al Rev en u e Co d e i n effect wh en th e p et i t i o n was fi l ed
. 1

1 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e (Co de) i n effect at al l rel ev an tt i m es , an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an d Pro cedu re. W e ro u ndal l m o n et ary am ou n t s t o t h e n eares td o l lar.- 2
-

Pu rs u an t t o s ect i o n 7 4 6 3(b ), th e d eci s i o n t o b e en t eredi s n o trev i ewab le b y an y
o th er co u rt , an dth i s o p i ni o n s h al l n o t b e t reat ed as p reced en tfo r an y o th er cas e. In th i s co l l ect i o n du e p ro ces s (CDP) cas e, Vi ca Tech no l og i es , LLC, s eek s
rev i ew p urs u an tt o s ect i o n s 6 3 2 0 (c) an d6 33 0 (d )(1 ) o f th e d et erm i n at i o n b y th e In t ern al Rev enu e Serv i ce (IRS) Offi ce o f Ap p eal s t o up ho l dth e fi l i n g o f a n o t i ce
o f Fed eral t ax l i en t o co ll ecta t ax l i ab i l i ty fo r 2 0 1 5
. Pet i t io n er al s o ch al len g edi n th e p et i t i o n a p u rp o rt ed d et erm i n at i o n n o tt o ab at e i n t eres tfo r 2 0 1 1 , 2 0 1 2 , 2 0 1 4 , an d 2 0 1 5 , as wel l as cert ai n co l l ect i o n act i o n s rel at i n g t o 2 01 1 , 2 0 1 2 , an d 2 0 1 4
. W e p rev i o u s l y

d i sm i s s edtho se cl ai m s fo r l ack o f ju ri s d i ct i o n . Res p o n d en th as m o v edfo r s u m m ary ju d g m en t u n d er Ru l e 1 2 1 , co n t en d i n g th atn o d i s p u t ed i s s u es o f m at eri al factrem ai n an dth at th e d et erm i n at i on t o s u s t ai n th e co l l ect i o n act i o n fo r 2 0 1 5 was p ro p er as a m at t er o f l aw. W e ag ree an d
acco rd i n g l y

wi l l g ran tth e m o t i o n . Back gro u n d Pet i t i o ner i s a Pen n s y l v an i a l i m i t edl i ab i l i ty co m p an y o p erat edb y

Hy aci n t h An y i am , wh o act edo n i t s b eh al f atal l t i m es rel ev an tt o th i s cas e. Pet i t i o n er fi l ed i t s 2 0 1 5 Fo rm

1 06 5 , U.S. Retu rn o f Part n ers hi p In co m e, o n Oct o b er 1 7 , 2 01 6 , a
m o nt h aft er i twas du e. Th e IRS t h ereaft er i m p o s eda l at e-fi l i n g p en al ty p u rs u an t t o s ect io n 6 6 9 8 (a) o f $ 78 0 , wh i ch i tas s es s edo n No vem b er 7 , 2 0 16
.- 3
-

To co l lectth e l i ab i l i ty , th e IRS b eg an b y i s su i n g p et i t i o n er a No t i ce o f Fed eral Tax Li en Fi l i n g an dYo u r Ri g h tt o a Heari n g u n d er I.R.C. 6 3 2 0 o n Decem b er 1 5 , 2 0 16 . Th i s n o t i ce i n fo rm edp et i t i o n er t h at i th adu n t il J an uary2 3 , 2 0 1 7 , t o req ues ta h eari n g t o ap p eal th e co l l ect io n act i o n . Pet i t i o ner d i dn o ts eeka CDP h eari n g atfi rs t . In st ead , o v er t h e co u rs e o f a week , i t s en ta fl u rry

o f req u es t s fo r o th er t y

pes o f rel i ef. Sp eci fi cal l y , p et i t i o n er
s ub m i t t edt o an IRS rev enu e o ffi cer a l et t er req u es t i n g ab at em en to f t h e s ect i o n 6 6 9 8 (a) p en al ty

fo r 2 0 15 , as wel l as th e ab at em en t o f s i m il ar l at e-fi l i n g p en al t i es th atth e IRS h adp rev i o us l y as s es s edfo r 2 0 1 1 , 2 0 1 2 , an d2 0 1 4
. 2 Pet it i on er fo l l o w edth i s p en al ty

ab at em en treq ues twi th a l et t er as s ert i ng th ati th ad
reas on ab l e cau s e fo r t h e l at e fi l i n g o f i ts retu rn s . Pet it i o n er al s o fi leda Fo rm 1 2 2 7 7 , Ap pl i cat io n fo r W i th drawal o f Fi l ed Fo rm 6 6 8 (Y), No t i ce o f Fed eral Tax Li en , i n wh i ch i ts o u gh twi th drawal o f t h e l i en n o ti ces fo r 2 0 1 1 , 2 0 1 2 , 2 0 1 4 , an d 2 0 1 5
. OnDecem

b er 2 0, 2 01 6 , th e rev en u e o ffi cer s en t p et it i on er an IRS Let t er 2 4 1 3 (P), wh ich d en i edth e p en al ty ab at em en treq u es to n th e g ro u ndth atth e i n fo rm at i o n p et it i on er p ro v i d edd i d n o t es t ab l i sh “ reas o n ab l e cau s e fo r ad ju s t i n g

2 Th e IRS h adi s s u edco l l ect i o n n o t i ces t o p et it i o n er t o co l l ectth e l i ab i l i t ies fo r 2 0 1 1 , 2 0 12 , an d 2 0 1 4 i n Oct o b er an dNo vem b er o f 2 0 1 6
.- 4
-

th e p en al ty ”. Th e l et t er i n cl u d eda s ect i o n en ti t led“ Ap p eal s Pro cedu res ”, wh i ch
s etfo rt h s t ep s t o “ recei v e fu rt h er co n s i d erat io n b y an Ap p eal s Offi cer.” In p art i cu l ar, p et i t i o n er was req ui redt o s ub m i tt o th e rev en u e o ffi cer a wri t t en
s t at em en to f t h e d i s p u tedi ss ues wi th i n 1 5 d ay s o f t h e d at e o f t h e l et t er. Acco rd in g t o the l et t er, “ [e] v en th o u gh y o um ay b e req u es t i n g Ap p eal s co n s i d erat i o n , we wi l l fi rs trev i ew y o ur ad d i t io n al i nfo rm at i o n t o d et erm i n e wh eth er t h e p en al ty s h o u l d b e rem ov edo r redu ced .” Th e l et t er co n t i n ued : “ If y o u r ap p eal can n o tb e i m m ed i at el y res o lv edwi th t h e ad d i t i o n al i n fo rm at io n , we wi l l fo rwardy o ur wri t ten s t at em en tt o Ap p eal s . ” Pet i t i o ner d idn o t fi l e a s t at em en twi th t h e rev en u e
o ffi cer, o r t ak e an y

o th er act i o n i n res p o n s e t o th e l et t er, b efo re t h e ex p i rat io n o f th e 1 5 -d ay

p eri o d o n J an u ary

4 , 2 0 1 7
. Th i s d i dn o tm ean p et i t i o n er was g i v i ng up th e fi g h t . To th e co n trary , p et i t i o n er’ s cam

p s en ta t ri o o f d o cu m en t s l at er i n J an u ary : (i ) a Fo rm 1 2 1 5 3 , Req ues t fo r a Co l l ect i o n Du e Pro ces s o r Equ i v al en tHeari n g , i n wh i ch p et i t i o n er req u es t eda CDP h eari n g ; (i i ) a l et ter fro m M r. An y i am

i n s upp o rt o f p et it i o n er’ s CDP req u es t ; an d (i i i ) a d ocu m en t s ty l ed“ Ap p eal fo r Ab at em en to f Lat e Fi l i n g Pen al t i es ”, wh ich M r. An y iam s en tt o th e rev en u e o ffi cer o n p et it i o n er’ s b eh al f. 3

3 Th e reco rdd o es n o t o ffer a p reci s e d at e o f m ai l i n g fo r t h es e d o cu m en t s . Each was d at edJ an uary1 2 , 2 0 1 7 , an dwas recei v ed b y th e IRS o n J anu ary

2 0 , (co n ti n u ed ...)- 5
-

Onth e Fo rm

1 2 15 3 , p et i t i o n er i nd i cat edth ati twi s h ed t o ch al l en g e th e l at efi li n g p en al t i es fo r 2 0 1 1 , 2 01 2 , 2 0 1 4 , an d2 0 1 5 . Pet it i on er ch eck edth e b o x
m ark ed“ I can n o tp ay

b al an ce”, as wel l as th e b o x t o req ues twi th drawal o f a l i en . In h i s acco m

p an y i n g l et t er o f s up po rt , M r. An y i am req u es t edp en al ty ab at em en tb ecau s e o f a d o wn tu rn i n p et i t i o n er’ s b u s i n es s . He al s o n o t ed thath e
was “ cu rren t l y

t ak i n g cl as s es i n t ax p rep arat i on .” He fu rt h er ex p l ai n edth ath e h ad

“ s ack ed* * * [p et i t i o n er’ s ] cu rren tacco u n t an t b ecau se o f h i s n eg l ig en ce an dp o o r at t en ti o n b ecau s e I was n o t p ay i n g h i m h i s fu l l s erv ice ch arg es . ” M r. An y i am

s an g a s im i l ar tu n e i n th e p en al ty ab at em en tap peal l et t er t o th e
rev en u e o ffi cer, m i xi n g al l eg at i o n s o f fi n an ci al p ro b l em s, recri m in at i o n s ag ai n s t p et i t i o n er’ s acco u n t an t , an das s u ran ces th at M r. An y i am h i m sel f was l earn i n g t o p rep are t ax es . Th e ap peal l et t er, wh i ch ad dres sedp et i t i o ner’ s 2 0 1 1 th ro u g h 2 0 1 5 t ax y ears , fu rt h er at t em

p t edt o ju s t i fy

ab at em en t o f t h e p en al t i es o n th e g ro u n dth at

3 (...co n t in u ed ) 2 0 1 7 . As we h av e n ot edi n a s i m i lar co n t ex t , al th ou g h l i t i g an t s can n o t s ti p u l at e juri s d i ct i o n , th ey

m ay ag ree o n th e fact s th atd et erm i n e juri s di ct i o n . Wh i s t l eb l o wer 2 3 7 1 1 -1 5 W v . Co m m is s io n er, T.C. M em o . 2 0 1 8 -3 4 , at* 9 . Th e p art i es ’ ag reem en tth atth e IRS recei v edp et i t i o n er’ s CDP req u es to n J an u ary 2 0 s u ffi ces to es t ab li s h th atth e req u es twas t i m el y fo r p res en t p u rp o ses . See s ec. 6 3 20 (a)(3 )(B), (b )(1 ); s ec. 3 0 1 .6 3 20 -1 (a)(2 ), Q&A-A1 1 , Pro ced . & Ad m i n . Reg s.- 6
-

M r. An y iam

h adb een o u to f t h e co u n try ex t en s i vel y

fo r fam i l y an dwo rkreas o n s fro m 2 0 11 th ro u g h 2 0 13
. 4 OnAp ri l 1 7 , 2 0 1 7, a s et t l em en to ffi cer i n th e Offi ce o f Ap p eal s s en t p et i t i o n er a l et t er i n res p o n s e t o i t s CDP h eari n g req u es t . Th is l et t er ex p l ai n edth at p et i t i o n er’ s h eari n g req u es twas l at e fo r s ev eral o f th e t ax p eri o d s an dth at fo r th o s e p eri o d s p et i t i o n er wo ul drecei v e an equ i v al en th eari n g rat her t h an a CDP h eari n g . No t i n g th atp et i t i o n er h adreq u es tedp en al ty ab at em en t , th e s et t l em en t
o ffi cer as k edfo r an y

d o cu m en t at i o n th atm i g hts up p o rta fi n d i n g o f reas o n ab l e
cau s e. Sh e s ch edul eda t el ep h o n e h eari n g fo r M ay 2 3 , 2 0 17 , b u tex p lai n edth at p et i t i o n er co u l dres ch edu l e o r req u es t“ an o th er t y p e o f co n feren ce (t el ep h o n e,
co rres p o n d en ce o r i n -p ers o n ).” In res p o n s e M r. An y iam , act i n g ag ai n o n p et i t i o n er’ s b eh al f, co n t act edth e
s et t l em en to ffi cer o n ce b y l et t er an dtwi ce b y

p h o n e t o d i s cu s s t he m eri t s o f t h e
cas e. Atth e s t arto f t h e s eco n dt el ep h o ne cal l th e s et t l em en t o ffi cer i nfo rm edM r.

4 To cl o s e t h e l oo p o n th e ch al len g es p et it i on er fi l edi n Decem b er, t h e IRS d en iedth e req u es tfo r l i en wi thd rawal b y m ean s o f a l et t er d at edFeb ru ary 9 , 2 0 1 7
. OnM arch 2 0 , 2 0 1 7 , p et it i o n er fi l edan ap p eal o f th atd eci s i o n i n th e IRS Co l lect i on Ap p eal s Pro g ram , an ad m i n i s trat i v e p ro gram th atp ro v i d es an o p p o rtu ni ty

fo r a t ax pay er t o co n t es t th e d et erm in at i o n o f cert ai n co l l ect i on act i o n s i n the Offi ce o f Ap p eal s , wi th o u tri g h tt o a l at er ju di ci al rev iew. See g en eral l y In t ern al Rev enu e M an u al p t . 8 .2 4 .1
. 2 (Dec. 2 , 2 0 1 4 ). Th at ap peal l i es o ut s i d e t h e s co p e o f o u r rev i ew, an dth us we s ay n o m o re ab o u t i t .- 7
-

An y i am th atth atd i s cu s s i on wo u l ds erv e as p et i t i o n er’ s h eari n g , g i v en thath e was ad dres s i n g th e s ub s t an ce o f p et i t i o n er’ s CDP ch al l en ge (as h e h adi n th e p rev i o u s l et t er an dcal l ). Acco rd i ng t o th e s et t lem en t o ffi cer’ s cas e n o tes , s h e t h en g av e M r. An y i am

“ an o p p ortu n i ty t o fu l l y

ex p l ai n * * * [p et i t i o n er’ s ] p os i t i o n.” He ack n o wl ed g ed th atp et i t i o n er h adfai l edt o t i m el y fi l e t h e rel ev an t Fo rm s 1 0 65 b u tn o n et h el es s
as k edfo r ab at em en to f the p en al t i es o n th e g ro u n dth at“ h e fo rg o tt o rem in d* * * [p et i ti o n er’ s acco un t an t ] t o fi l e anex t en s i o n an d the act u al retu rn s . ” Aft er h eari n g th i s ex p l an at i o n , th e s et t l em en to ffi cer i nfo rm edh i m th atp et it i o n er co u l dn o t req u es tp en al ty

ab at em en tb ecau s e i th adfai l edt o t i m el y ap p eal th e ab at em en t d en ial . Th e s et t l em en to ffi cer’ s n o t es rep res en tth atM r. An y i am i ni t i al l y
s u g g es t edth at p et i ti o n er h ad n o tt i m el y recei v edth e l et t er d en y i n g p en al ty ab at em en tb u tl at er ad m it ted“ th ath e was s tret ch i n g th e t ru th” o n th i s p o i n t . M r. An y i am

n ex t u rg edwi th drawal o f t h e l i en ag ai ns tp et i t i o n er. Th e
s et t l em en to ffi cer reject edth atreq u es t , h o wev er, o n t h e g ro u ndth at p et i t io n er d i d
n o tfi twi th i n an y

o f t h e cat eg o ri es s etfo rth i n th e Co d e u n d er wh i ch s u ch rel i ef
co u ldb e g ran ted
. Th ro u g h o u tth e h eari n g M r. An y i am al so as s ert edth atp et i t i o ner’ s fi n an ci al p ro b lem s ju s t i fi edp en al ty ab at em en to r m ad e p aym en ti m p o ss i b l e. Acco rd i n g t o- 8
-

h er cas e n o t es , th e s et t l em en t o ffi cer o fferedh i m a s tream l i n edi n s t al l m en t ag reem en to f $ 1 2 5 p er m o n th t o res o l v e p et i t i o n er’ s l i ab i l i ty . 5 Th e s et t l em en t
o ffi cer al s o ex p l ai n edth atp et i t i o n er co u lds en d a co py o f Fo rm 4 3 3 -B, Co l l ect i o n In fo rm at i o n St at em en tfo r Bu s i n es s es , t o h el p h er d et erm i ne wh et h er p et i t i o n er
m etcert ai n h ard s hi p cri t eri a. Th e cas e n o t es refl ectth atM r. An y iam d ecl i n edt o
co n si d er t h es e co l l ect i on p ro p os al s u n t i l h e h adth e o pp o rtu n i ty t o d i s cu ss th e
m at t er wi th th e rev en u e o ffi cer. Th e s et tl em en to ffi cer g av e M r. An y iam u n t i l M ay 1 7 , 2 0 1 7 , t o res t artt al k s , b u th e d idn o t d o s o . Th e s et t l em en to ffi cer t h ereaft er cl os edth e cas e an d o n J u n e 1 4, 2 0 1 7 , i s su eda n o t i ce o f d et erm i n at i o n s u s tai n i ng th e fi l i n g o f th e Fed eral t ax l i en as t o 2 0 1 5 . As p art i cu larl y

rel ev an th ere, t h e n ot i ce s tat edth atp et i t io n er was p recl u d ed fro m rai si n g th e i s s ue o f p en al ty ab at em en tdu ri n g t h e CDP h eari n g b ecau s e i th ad

“ h ada p ri o r o p p ortun i ty

t o ap p eal [t h e] d en i al ” o f i ts ab at em en treq u es t . Des p i t e th i s p o s i t i o n th e n o ti ce n o n et h el es s ex p l i ci t l y ad dres s ed , an dreject ed , p et i ti o n er’ s arg u m en t s th ati t s rel i an ce o n i t s acco un t an t an dM r. An y iam ’ s ab s en ces fro m th e
co u nt ry co n s ti tu t edreas o nab l e cau s e.

5 Al th o ug h i ti s n o ten t i rel y cl ear fro m

th e reco rd , i t ap pears thatth e p ro p os edi n s t al l m en t ag reem en twas i n t en d edt o res o lv e b o th th e 2 0 1 5 p en al ty an d p et i t i o n er’ s l i ab i l i t i es fo r 2 01 1 , 2 0 1 2 , an d2 0 14
.- 9
-

Pet i t i o ner t i m el y

p et it i o n edth i s Co u rtfo r rev i ew o f t h e n o ti ce o f d et erm i n at i o n . Al tho u g h th e n o t i ce rel at eds o l el y t o 2 0 1 5 , th e p et i t i o n ch al l en g ed th e p ro p ri et y o f t h e IRS’ co l l ect i o n act i o ns reg ard i n g 2 0 1 1 , 2 0 12 , an d 2 0 1 4 , as wel l as a p u rp o rt edd et erm i nat i o n n o tt o ab at e i nt eres tfo r 2 0 1 1 , 2 01 2 , 2 0 1 4 , an d 2 0 1 5 . W e d i s m i s sed th o s e cl ai m s fo r l ack o f ju ri s d i ct i o n. See s ecs . 6 3 20 (c), 6 3 3 0 (d ); s ee al s o s ec. 3 0 1 .6 3 20 -1 (i )(2 ), Q&A-I6 , Pro ced . & Ad m in . Reg s . Th e
s o l e i s su e rem ai n i n g b efo re u s i s the d et erm i n at i on b y th e Offi ce o f Ap peal s t o
up h o l dth e n o t i ce o f l i en fi li n g fo r 2 0 1 5
. Di s cu ss i o n A. Su m

m ary J u dg m en t Th e p u rp os e o f s u m

m ary ju d g m en t i s t o ex p ed it e l i t i g at i o n an d av o i dco st l y , t i m e-co n s u m i n g , an du n n eces s ary tri al s . Fl a. Peach Co rp . v . Co m m i s si on er, 9 0 T.C. 6 7 8 , 6 8 1 (1 9 8 8 ). Un d er Ru l e 1 2 1 (b ) t he Co u rtm ay g ran ts u m

m ary ju d g m en t wh en th ere i s n o g en u i n e d i s p u t e as t o an y m at eri al fact an da d eci s i o n m ay b e
ren d eredas a m at t er o f l aw. Su n d s tran d Co rp . v . Co m m i s s io n er, 9 8 T.C. 5 1 8 , 5 2 0 (1 9 9 2), aff’ d , 1 7 F.3 d 9 6 5 (7 th Ci r. 1 9 9 4 ). Ind eci d i n g wh et h er t o g ran t s u m m ary ju d g m en t , we co n s tru e fact ual m at eri al s an di n feren ces drawn fro m th em i n th e l i gh t m o s tfav orab l e t o th e n o n m o v i n g p art y . Id . Ho wev er, t h e n o n m o vi n g p art y
m ay n o t res t up o n th e m ere al leg at i o n s o r d en i al s o f i t s p l ead i n g s b u ti n s t eadm u s t- 1 0 -

s etfo rt h s p eci fi c fact s s h o wi n g th atth ere i s a g en u i n e d i s p u t e fo r t ri al
. Ru l e 1 2 1 (d ); s ee Cel ot ex Co rp . v . Cat ret t , 4 7 7 U.S. 3 1 7 , 3 2 4 (1 9 86 ). B. St an dardo f Rev i ew Pu rs uan tt o s ect i o n s 6 3 2 0 (c) an d6 3 3 0 (d )(1 ), we h av e ju ri s d i ct i on t o rev iew
an Offi ce o f Ap p eal s d et erm i n at i on . See M u rp h y v . Co m m i s s i o n er, 1 25 T.C. 3 0 1 , 3 0 8 (2 00 5 ), aff’ d, 4 6 9 F.3 d2 7 (1 s tCi r. 2 0 06 ). Wh ere t h e v al i d i ty o f th e
u n d erl y i n g t ax l iab i l i ty

i s p ro p erl y

ati s s u e, we rev i ew t h e d et erm i nat i on reg ard i n g th e u n derl y i n g t ax l i ab i l i ty d e n o v o . Seg o v . Co m

m i s s i o ner, 1 1 4 T.C. 6 0 4 , 6 1 0 (2 0 0 0); Go za v . Co m

m i s s i o n er, 1 14 T.C. 1 7 6 , 1 8 1 -1 8 2 (2 00 0 ). W e rev i ew al l
o th er d et erm i n at i o n s fo r ab u se o f d i s cret i o n . Seg o v . Co m m i s s i o ner, 1 1 4 T.C. at 6 1 0 ; Go za v . Co m

m i s s i o n er, 1 1 4 T.C. at1 8 2
. Inrev i ewi n g fo r ab u s e o f d i s cret i o n , we m

u s t up h ol dthe Offi ce o f Ap p eal s ’ d et erm in at i o n u n les s i t i s arb i trary , cap ri ci o us , o r wi th ou ts o u n d b as i s i n fact o r l aw. See, e.g ., M u rp h y v . Co m m i s s i o n er, 1 2 5 T.C. at3 2 0; Tay l o r v . Co m m i s s i o n er, T.C. M em o. 2 0 0 9 -2 7 , 9 7 T.C.M . (CCH) 1 1 0 9 , 1 1 16 (2 0 0 9 ). C. Un d erl y in g Li ab i l i ty A t ax p ay er m ay

rai se a CDP ch al l en g e t o th e ex i s t en ce o r am o u n to f h i s
u n d erl y i n g t ax l iab i l i ty

o nl y i f h e “ d idn o trecei v e an y s t atu t o ry n o t i ce o f d efi ci en cy

fo r s u ch t ax l i ab il it y

o r d i dn o to th erwi s e h av e an o p po rtu ni ty t o d i s p u t e- 1 1 -

s u ch tax l i ab i l i ty .” Sec. 6 3 3 0(c)(2 )(B). Th e p h ras e “ u nd erl y i n g t ax l i ab il i ty ” i n cl u d es th e t ax d efi ci en cy , an y p en al t i es an d ad d i t i o n s t o t ax , an ds t atut o ry i n t eres t . Kat z v . Co m

m i s s i o n er, 1 1 5 T.C. 3 2 9 , 3 3 9 (2 0 0 0 ). In d et erm in i n g wh et h er t h e t ax p ay er h ad an o p p o rtu n i ty t o d i s p u te h i s l i ab i l i ty , we n o t e t h atth e reg u lat i o n s d i s ti n g u i sh b et ween l i ab i li t ies th at are
s ub jectt o d efi ci en cy p ro cedu res an dth o s e t hatare n o t. Pen al t i es i m p o s ed u n d er
s ect i on 6 6 9 8 (a) are n o ts ubjectt o d efi ci en cy p ro cedures . See s ec. 6 6 9 8 (d ). W i t h
res p ectt o s u ch l i ab i l it i es th e reg u l at i on s p ro v id e t h at“ [a] n o p po rtu ni ty t o d i s p u t e th e u n derl y i n g l iab i l i ty

i n cl ud es a p ri o r o p p o rtu n it y fo r a co n feren ce wi th Ap p eal s th atwas o ffered ei ther b efo re o r aft er t h e as s es s m en t o f t h e l iab i l i ty .” Sec. 3 0 1.6 3 3 0 -1 (e)(3 ), Q&A-E2 , Pro ced
. & Ad m i n . Reg s . Res p o n d en targ u es th atp et i ti o n er can n otch al l en g e i t s u nd erl y in g l i ab i l i ty fo r 2 0 1 5 b ecau s e i t h adan o p p o rtu n i ty t o d o s o b u t fai l edt o t ak e ad van t ag e o f i t . In p art i cu l ar, res p o n d en tco n t en d s th atth e Let t er 2 4 1 3 (P), d at edDecem b er 2 0 , 2 0 1 6 , g av e p et i t i o n er u n t il J an u ary 4 , 2 0 1 7 , t o ap p eal the d en i al o f t h e ab at em en t req u es tan dthatp et i t i o n er’ s fai l u re t o t im el y ap p eal p recl u d es a ch al l en g e n o w. Th e IRS’ arg u m en tthatp et i t i o n er can n o tch al l en g e i t s u nd erl y i n g l i ab i l i t y i n thi s CDP p ro ceed i n g h i n g es o n th e p rem i s e t hatth e Let t er 2 4 1 3 (P) p ro vi d ed p et i t i o n er wi th an ad equ at e o pp o rtu n i ty t o d o s o . Th i s fo rm

l et ter i n d i cat es th at i t- 1 2 -

was l as trev i s ed i n 19 9 1 , an d th u s th e p ro cedures i t co n t em p l at es were d ev el o p ed b efo re t h e CDP reg im e was ev ena t wi n kl e i n Co n g res s ’ ey e. Th i s Co u rth as n o t p rev i o u s l y ad dres s edwh et h er t h e p re-CDP p ro cedu res d es cri b ed i n th e l et ter
s at i s fy th e req u i rem en t s o f th e CDP reg i m e. W e n eedn o td eci d e t hatqu es ti o n i n th is cas e, h o wev er, b ecau s e th e n o t i ce
s up p li es a s ep arat e b as i s fo r res o l v i n g the i s s u e o f p et i ti o n er’ s l i ab i l i ty fo r t h e p en al ty . Th e s et t lem en to ffi cer g av e M r. An y i am th e o p p o rtu n i ty

atth e CDP h eari n g t o rai s e arg u m en t s ab o u tp et i t i on er’ s u n d erl y i ng l i ab il i ty , an dh e d i ds o . Acco rd in g t o th e cas e n ot es , M r. An y i am rep ri s edp et i t io n er’ s co n ten t i o n th ati t s
acco u n t an t ’ s fai l u re t o t i m el y fi l e i t s 2 0 1 5 retu rn co n s t i tu t edreas o n ab l e cau s e t h at
wo u l dju st i fy

ab at em en to f t h e l at e-fi li n g p en al ty . M r. An y i am al s o s u g g es t edthat p et i t i o n er’ s fi n an ci al trav ai l s co n s t i tu tedreas o nab l e cau s e. An dM r. An y i am arg u ed th ro u g ho u tth e p ro ceed i n g th ath i s ex ten d edab s en ces fro m th e co u nt ry
s up p li edreas o n ab l e cau s e fo r p et i t i o n er’ s l at e fi l i n g. Th e n o t i ce o f d et erm i n at i o n fl at l y reject edth es e co nt en t i on s . Tak i n g th e fact s i n t he l i g h tm o s t fav o rab l e t o t h e n o nm o v i n g p art y , we ag ree wi th th atco n cl u s i o n . 6 Pet i ti o n er’ s arg u m en tth at rel i an ce o n an acco u n t an t

6 It s h o u ld b e n o t ed th atp et i t i o n er d i dn o tch al l en g e t h e ap p li cab i li ty o r am ou n to f t h e u nd erl y i n g p en al ty atth e CDP h eari n g. Rat h er, i tch al l en gedo n l y (co n ti n u ed ...)- 1 3 -

co n st i tu t es reas o n ab le cau s e fl ies i n the face o f wel l-es t ab li s hedp reced en tth atth e fai l u re t o fi l e a t i m el y

retu rn i s n o tex cu s ed b y

rel i an ce o n an ag en tan d thats u ch rel i an ce d o es n o ts up pl y

reas o n ab l e cau se fo r l at e fi l i n g. See Un it edSt at es v . Bo y l e, 4 6 9 U.S. 2 4 1 , 2 5 2 (1 9 8 5 ). No r d o fi n an ci al p ro b l em s , s t an di n g al on e,
es t ab l i s h reas o nab l e cau s e fo r l at e fi l i n g . See Bo wd en v . Co m m i s s i on er, T.C. M em o. 1 9 9 6 -3 1 8 , 7 2 T.C.M . (CCH) 9 6 , 1 0 9 (1 9 9 6 ) (t ax p ay er’ s al l eg edi n ab i l i ty t o p ay t ax was n ot reas o n ab l e cau s e fo r l at e fi l i n g ). An dM r. An y i am ’ s ab s en ces fro m th e co u n try

i n 2 0 1 3 d o n otp ro v i d e reas on ab l e cau s e fo r p et i t i o n er’ s fai l u re t o t i m el y fi l e i t s 2 0 1 5 Fo rm 1 0 6 5 . Acco rd in g l y , we wi l l g ran ts u m m ary ju d g m en tt o
res p o n d en t, up h o l d in g th e IRS’ d et erm in at i o n o f t h e u n d erl y i n g l i ab i l i ty . D. Ab u se o f Di s cret i on W e n ex tm

u s trev iew t h e reco rdt o d et erm i n e wh eth er t h e s et t l em en to ffi cer: (1 ) p ro p erl y

v eri fi edth atth e req u i rem en t s o f ap p l i cab l e l aw o r ad m i n is trat i v e p ro cedure h av e b een m et ; (2 ) co n s i d eredan y rel ev an t i ss u es p et it i o n er rai s ed ; an d

6 (...co n t in u ed ) wh et h er reas o n ab l e cau se ex i s tedth atwo u l d ju s t i fy ab at em en t o f t h e p en al ty p u rs u an t t o s ec. 6 6 98 (a). Gi ven th atth e ex i s ten ce o f reas o n ab l e cau s e was th e o n l y i ss u e p et i t i o n er rai sed atthe CDP h eari n g, i t i s th e o n l y i ss u e we rev i ew. See Gi am el l i v . Co m

m i ss i o n er, 1 2 9 T.C. 1 0 7 , 1 13 (2 0 0 7 ); s ee al so s ec. 3 0 1.6 3 2 0
- 1 (f)(2 ), Q&A-F3 , Pro ced
. & Ad m i n . Reg s . (“ In s eek i n g Tax Co u rt rev i ew o f a No t ice o f Det erm i n at i o n , th e t ax p ay er can o n l y as kth e co u rtt o co n s i d er an i s s u e, i n cl u d i n g a ch al l en ge t o th e u n d erl y i n g t ax l i ab il i ty , th atwas p ro perl y rai s edi n th e t ax p ay er’ s CDP h eari n g .”).- 1 4 -

(3 ) co n s i d ered wh et h er “ an y p ro p o s edco l l ect i on act i o n b al an ces th e n eedfo r t h e effi ci en tco l lect i o n o f t ax es wi th th e l eg i t i m at e co n cern o f * * * [p et i ti o n er] th at
an y co l l ect i o n act io n b e n o m o re i n tru s i v e t h an n eces s ary . ” See s ec. 6 3 3 0(c)(3 ). Ou r rev i ew o f t h e reco rdes t ab l i s h es th at th e s et tl em en t o ffi cer s at is fi ed al l o f t h es e req u i rem en t s . As an i n i t i al m at t er, t h i s Co u rth as au th o ri ty t o rev i ew s at i sfact i o n o f t h e
v eri fi cat i o n req u i rem en treg ard l es s o f wh et h er t h e t ax p ay er rai s edthati s s u e atth e CDP h eari n g . See Ho y l e v . Co m m i s s i o n er, 1 3 1 T.C. 1 97 , 2 0 0 -2 0 3 (2 0 0 8),
s up p lem en t ed b y

1 3 6 T.C. 4 63 (2 0 1 1 ). Pet i t i o n er d i dn o tal l eg e i n th e p et i t i o n th at th e s et tl em en to ffi cer fai l edt o s at i s fy th i s req ui rem en t , an dwe co n cl u d e, fro m o u r
rev i ew o f th e reco rd , thatth e s et t l em en t o ffi cer co n duct eda t h o ro ug h rev i ew o f th e t ran s cri p t s o f p et it i o n er’ s acco u n t an d v eri fi edth atal l req u i rem en t s were m et . 7

7 In h i s m o t i o n fo r s u m

m ary ju d g m en t , res p o n den tas s ert s t h atth e p en al t y i m p o s edu n d er s ec. 6 69 8 co n s t i tu t es a p en al ty “ au t o m at i cal l y

cal cu l at edth ro u g h el ect ro ni c m ean s ” wi th i n t h e m ean i n g o f s ec. 6 7 5 1 (b )(2 )(B) an di s th erefo re n o t s ub jectt o t h e s up erv i s o ry

ap pro v al req u i rem en to f s ec. 6 7 5 1(b )(1 ). Pet i t i o n er d o es no targ u e t o th e co n trary , an d t h u s we n eedg o n o fu rt h er. W e n o n et h el es s n o t e o ur recen th o l d i n g th ata s ec. 6 6 9 9 p en al ty --t h e s am e t y pe o f p en al ty

as i s i m p o s edu n d er s ec. 6 69 8 h ere, ju s tfo r S co rp o rat i o n s --was au t o m at i cal l y cal cu l at edth ro u g h el ect ro n i c m ean s wh ere t h e p en al ty was a s i m p l e an dau t o m at i c co m p u t at i o n an d h adb een g en erat edb y th e IRS co m pu t er s y s t em . See ATL & So n s Ho ld i n g s , In c. v . Co m m i ss i o n er, 1 5 2 T.C. , (s l ip o p . at2 1 -2 5 ) (M ar. 1 3 , 2 0 1 9 ); cf. W al qui s t v . Co m m i s s i o n er, 1 5 2 T.C. , (s l i p o p. at2 0 ) (Feb . 2 5 , 2 0 1 9 ) (co n cl u di n g th ata s ub s t an t i al u n d ers tat em en tp en al ty u n der s ec. 6 6 6 2 th at

(co n ti n u ed ...)- 1 5 -

Th e reco rdal s o s h o ws th atth e s et t l em en to ffi cer d i d n o tab u s e h er d i s cret i o n wh en co n s i d eri n g th e i s s u es p et i ti o n er rai s edat th e CDP h eari n g . Th ere, M r. An y iam

arg u edth atp et i ti o n er was en ti t ledt o wi th drawal o f th e l i en
n o t i ce fo r 2 0 15 an dth atth e rev en u e o ffi cer h ads u g g es tedatan earl i er p oi n ti n t h e p ro ces s th at s u ch rel ief m i g h tb e fo rt h co m i n g . Sect i o n 6 3 2 3 (j)(1 ) l i st s fo u r ci rcu m s t an ces u n d er wh ich the Secret ary h as th e d i s cret i on t o g ran ts u ch rel i ef: (A) t h e fi l i ng o f t he n o t i ce was p rem atu re o r n o ti n acco rd an ce wi th ad m i n i s trat i v e p ro cedure; (B) t h e t ax pay er h as en t eredi n t o an i n s t al l m en tag reem en t; (C) t h e wi th drawal o f t h e n o t i ce wo u l d faci l i t at e t h e co l lect i o n o f th e t ax l i ab il i ty ; o r (D) wi th th e co n s en to f t h e t ax p ay er o r t h e Nat i o n al Tax p ay er Ad v o cat e, t h e wi th drawal o f t h e n o t i ce wo u l d b e i n th e b es t i n teres t s o f th e t ax pay er an dth e Un i ted St at es . Pet i t i o n er h as o ffered n o reas o n t o th i n kth ati tfi t s wi th i n an y o f th es e cat eg o ri es . W e acco rd i n g l y h ol dthatth e s et t l em en to ffi cer d id n o t ab u s e h er d i s cret i o n i n s o co n cl u d i n g . Th e reco rdfu rt h er refl ect s th at , i n s us t ai n i n g th e p ro p o s edco l l ect i o n act i o n , th e s et tl em en to ffi cer p ro p erl y b al an ced“ th e n eedfo r t h e effi ci en t co l l ect i on o f t ax es wi th th e l eg it i m at e co n cern o f * * * [p et i t i o ner] th atan y co l lect i o n act i o n b e

7 (...co n t in u ed ) was “ d et erm i n edb y

an IRS co m

p u t er p ro g ram wi th o uth u m ani np u t o r rev i ew” was a p en al ty

au t o m at i cal l y

cal cu lat edth ro u g h el ect ro n ic m ean s ).- 1 6 -

n o m o re i n tru s i v e t h an n eces s ary .” Sec. 6 3 3 0 (c)(3 ). A t ax p ay er i n a CDP h eari n g h as th e ri g htt o req ues t a co l l ect i o n al t ern at i v e, s u ch as an i n s t al l m en tag reem en t . See s ec. 6 3 3 0 (c)(2 )(A)(i i i ). Pet i t i o ner d idn o t d o s o . To th e co nt rary , th e reco rd i n d i cat es th atth e s et t l em en t o ffi cer at t em p t edt o craft an accep t ab l e i n s tal l m en t ag reem en t , wh i ch M r. An y i am (o n p et i t i o n er’ s b eh al f) refu sedt o accep t . Th e
reco rdfu rt h er s h o ws thatthe s et t l em en t o ffi cer g av e p et i t i o n er ad d i t i o n al t i m e t o
reco n s i d er an dres t artd i scu ss i o n s o n t h i s fro nto r t o i n tro duce d o cu m en t at i o n
s up p ort i n g a fi n di n g o f fi nan ci al h ard s h ip . Pet i t i o ner d i dn o tav ai l i t sel f o f an y o f th es e ch an ces . Al th o u g h p et i t io n er as s ert s i n th i s Co u rt th ati td idn o t d ecl i n e an y i n s t al l m en tag reem en t , i tfai ls t o s up p o rti t s co n ten t i o n wi th an y fact s . No r h as i t
s u g g es t edth at i tp u tfo rward an y o ffer i t s el f. W e t h u s fi n do u rs el v es i n th e b ro ad h eart l an d o f o u r p reced en tth atan Ap p eal s o ffi cer d o es n o tab u s e h er d i s cret i o n i n
s u s t ai n i n g a p ro po s edco l lect i o n act io n wh ere t h e t ax p ay er h as fai ledt o p u ta
s p eci fi c o ffer o n th e t ab l e. See, e.g
. , Di n in o v . Co m m i s s io n er, T.C. M em o . 2 0 0 9
- 2 8 4 , 9 8 T.C.M . (CCH) 5 5 9 , 5 6 4 (2 0 0 9 ). Pet i t i o ner fi n al l y

co n t en d s th atth e s et t l em en to ffi cer ab us edh er d i s cret i o n b y n o t affo rd i n g i ta h eari ng . Al th o u g h i ti s n o ten t i rel y cl ear, p et i t i o n er ap p aren tl y

fau l t s th e s et tl em en to ffi cer fo r n o tco n duct i ng a face-t o -face h eari n g . Th e reg u lat i on s , h o wev er, p ro v i d e t h ata “ CDP h eari n g m ay , b u ti s n o treq ui redt o ,- 1 7 -

co n si s to f a face-t o -face m eet i n g ”. Sec. 3 01 .6 3 2 0-1 (d )(2 ), Q&A-D6 , Pro ced . & Ad m i n . Reg s.; s ee, e.g ., Kat z v . Co m m i s si o n er, 1 1 5 T.C. at 3 3 7 . If a face-t o -face h eari n g i s n o t h el d, a h eari n g co n du ct edb y t el ep h o n e, b y

co rres p o nd en ce, o r b y
rev i ew o f d o cu m en t s s uffi ces fo r p u rp o s es o f s ect io n 6 3 2 0(b ). See s ec. 3 0 1 .6 3 2 0- 1 (d )(2 ), Q&A-D7 , Pro ced . & Ad m i n . Reg s .; s ee, e.g ., Tal b o tv . Co m m is s i o n er, T.C. M em o . 2 01 6 -1 9 1 , at* 1 7 , aff’ d , 7 0 8 F. Ap p’ x 4 2 1 (9 th Ci r. 2 01 7 ). Th e
s et t l em en to ffi cer h ere o ffered a face-t o -face h eari n g, wh i ch p et i t i o n er d i dn o t accep t , b efo re h ol d i n g a t el ep h o n e CDP h eari n g . Pet it i o n er p res en t s n o co l o rab l e cl ai m th atth e s et t l em en to ffi cer ab u s edh er d i s cret i on . Fi n d i n g n o ab u s e o f d i s cret i o n i n an y res p ect , we wi l l g ran ts u m m ary ju d g m en tfo r res p on d en t an d affi rm th e IRS’ d et erm i nat i o n t o s u s tai n the n o t i ce o f Fed eral t ax l i en fi l in g fo r 2 0 1 5
. To refl ectthe fo reg o i n g , Anap p ro p ri at e d eci s i o n wi l l b e
en t ered
.