T .C. Su m m ary Op i n io n 2 01 8 -3 4

UNITED STATES TAX COURT

ERIC AM AEFUNA, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 3 2 35 -1 6 S L. Fi l edJ u l y 9 , 2 0 1 8.

Eri c Am aefu n a, p ro s e. Ki rs ten E. Bri m er an dJ en n a Can t arel l a (s tu d en t), fo r res p o n den t
.

SUM M ARY OPINION PANUTHOS, Sp eci al Tri al J u d g e: Th i s cas e was h eardp urs u an t t o th e p ro v is i o n 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 Pu rs u an t t o s ect i o n 7 4 6 3(b ), th e d eci si on t o b e en t eredi s n o t

1 Un l es s o th erwi s e i nd i cat ed , s ub s equ en ts ect i on referen ces are t o t h e (co n ti n u ed ...)- 2
-

rev i ewab l e b y

an y o ther co u rt , an d t h i s o p i n i o n s h al l n o tb e t reat ed as p reced en t fo 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 p et i t io n er s eek s rev i ew, p u rs u an t t o s ect io n 6 3 3 0 (d )(1 ), o f t h e d et erm i n at io n b y th e In t ern al Rev en u e Serv i ce (IRS
o r res po n d en t ) 2 t o up h o l d a n ot i ce o f i n t en tt o l ev y t o co ll ectp et i t i o n er’ s 2 0 1 2 an d 2 0 1 4 Fed eral i n co m e t ax l i ab i li t i es . Th e i s s ues fo r d eci si o n are (1 ) wh et h er p et i t i o n er’ s u n derl y i n g l i ab i l it i es were p ro p erl y as s es s edan d (2 ) wh et h er
res p o n d en t ab us edh i s d is cret i o n i n d et erm i ni n g thatth e co l l ect i on b y l ev y m ay p ro ceed
. Back gro u n d So m e o f t h e fact s h av e b een s ti p u lat ed , an dwe i n co rp o rat e t h e s t i p u l at i o n
an d th e acco m

pan y in g ex hi b i t s b y

th i s referen ce. Pet it i on er res id edi n Pen ns y lv an i a wh en the p et i t i o n was t i m el y fi l ed
.

1 (...co n t in u ed ) In t ern al Rev enu e Co d e i n effect fo r al l rel ev an tt i m es , an dal l Ru l e referen ces are t o the Tax Co u rtRu l es o f Pract i ce an dPro cedu re. W e ro u n dm on et ary am o u n t s t o th e n eares td o l l ar.

2 Th e Co urt u s es th e t erm

“ IRS” t o refer t o ad m i ni s trat i ve act i on s t ak en o u t s i d e o f t h es e p ro ceed in g s . Th e Co u rtu s es th e t erm “ res p o n d en t ” t o refer t o th e Co m m i s s i o n er o f In t ern al Rev en u e, wh o i s t h e h eado f t h e IRS an di s res p on d en t i n thi s cas e, an d t o refer t o act io n s t ak en i n co n n ect io n wi th th i s cas e.- 3
-

Pet i t i o ner m arri edAzu k a Am aefu n a i n 1 9 9 5 an drem ai nedm arri edt o h er th ro u g h ou tal l rel ev an tp eri o ds . So m et i m e aro u n d 1 9 9 7 M rs . Am aefu n a m o v edt o th e Un i t edSt at es t o l i v e wi th p et i t i o n er. So m et i m e i n 2 00 2 p et i t i o n er an dM rs . Am aefu n a m o v ed t o th ei r cu rren tres i d en ce i n Pen n s y l van i a. Pet i ti o n er an dM rs . Am aefu n a h av e fi v e b i o l o g i cal ch i l dren . Pet it i o n er p rep aredth e i n co m e t ax retu rn s fo r h i m s el f an dM rs . Am aefu n a fo r t h e y ears i n i ss u e. Pet i t i o ner o p erat edan i n s u ran ce s al es b u s i n es s b efo re M ay 2 0 05 . OnM ay 2 3 , 2 0 0 5 , p et i t i o n er i n co rp orat edth e b u s i n es s as Am eri can Fi n an ci al St eward s h i p Co rp . (AFSC), an S co rp o rat i o n i n Pen n s y l v an i a. 3 Pet i ti o n er an d M rs . Am aefu n a were t h e s o l e o ffi cers an dem p l o y ees o f AFSC. Pet i t i on er s erv ed as p res i d en to f AFSC an dM rs . Am aefu n a s erv edas v i ce p res i d en t an d t reas urer. M rs . Am aefu n a p erfo rm edcl eri cal wo rk

fo r AFSC.

3 If a b u s i n es s m eet s th e req u i rem en t s o f s ec. 1 3 6 1, i t m ay el ectt o b e t reat ed as an “ S co rp o rat i o n ” an dg en eral ly av o i dco rp o rat e t ax . Secs . 1 3 6 2 (a), 1 3 6 3 (a). AnS co rp o rat i o n , l i k e a p art n ers h ip , i s a fl owt h ro u g h en t i ty ; i t s i n co m e an dl o s s es fl ow t h ro u g h t o i t s s h areh o l d ers , wh o th en p ay i n co m e t ax . See s ec. 1 3 63 (b ). Sec. 1 3 6 6 (a)(1 ) p ro v i d es th atan S co rp o rat i o n s h areh o l der d et erm i n es h i s o r h er t ax l i ab i l i ty by

t ak i n g i n t o acco u nth i s o r h er p ro rat a s h are o f t h e S co rp o rat i o n ’ s i n co m e, l o s s es , d edu ct i o n s , an dcred i t s fo r t h e S co rp o rat io n ’ s t ax ab l e y ear en d i n g wi th o r i n th e s h areh o l der’ s t ax ab l e y ear.- 4
-

Du ri n g th e y ears i n i ss u e p et i t i o n er o r AFSC 4 h ad co n tract s wi th an
u n s p eci fi edn u m

b er o f i n su ran ce v en d o rs , i n cl u d i n g Fo rem o s t In s u ran ce Co ., Gran dRap i d s (FIC). Pet i ti o n er’ s m ai n ro le atAFSC was t o s eeko u t p o t en t i al cl i en ts an ds el l i n su ran ce p o li ci es , earn i n g co m m i s s io n s o n th e b as i s o f s al es
m ad e. I. 2 0 1 2 In co m e Tax Retu rn s FIC i s s u eda Fo rm

1 0 99 -M ISC, M i s cel l an eo u s In co m e, t o p et i ti o n er fo r 2 0 1 2 refl ect in g n o n em

p l o y ee co m

pen s at io n o f $ 1 5,1 21 . Pet i t i on er ack n owl ed g ed recei p t o f t hi s am o u n t
. Pet i t i o ner t i m el y

fi l eda 2 0 1 2 Fo rm 1 0 4 0 , U.S. In di vi dual In co m e Tax Retu rn , el ect i n g h eado f h o us eh o l d fi l i n g s tatu s an drep o rt i n g ad ju s t edg ro ss i n co m e o f $ 57 ,5 25 an dt ax du e o f $ 1 0 ,5 9 7
. 5 Pet i t io n er d i d n o trem itp aym en twi th h i s return , al th ou g h i n Au g us t 2 0 1 3 h e en t eredi n t o an i n s t al l m en tag reem en t
. Pet i t io n er m ad e i n s t al l m en t p aym en t s u n t i l th e en do f 2 0 1 3
.

4 It i s u ncl ear fro m

th e reco rdwh et her p et i t io n er o r AFSC was a p arty t o th e co n tract s wi th FIC an dth e o th er i n s u ran ce v en d ors .

5 Pet i t i on er’ s 2 0 1 2 Fo rm

1 0 4 0 was n o tm ad e a p arto f t he reco rd
.- 5
-

A 2 0 1 2 Fo rm

1 1 2 0 S, U.S. In co m e Tax Retu rn fo r an S Co rp orat i o n , was t i m el y fi l edo n b eh al f o f AFSC. 6 Oni t s Fo rm 1 1 2 0 S AFSC rep o rt eda l o s s o f $ 1 ,8 4 0
. 7 Th e $ 1 5 ,1 2 1 o f i n co m e fro m FIC was n o t rep o rt ed o n AFSC’ s 2 0 1 2 Fo rm 1 1 2 0 S. OnM arch 3 , 2 01 4 , p et i t io n er fi l eda 2 0 12 Fo rm 1 04 0 X, Am en d edU.S. In d i v i du al In co m e Tax Retu rn . Pet i t i o n er m ad e t h e fo l l o wi n g ad ju s t m en t s t o h i s 2 0 1 2 Fo rm

1 0 40 : (1 ) a d ecreas e o f $ 2 4 ,2 4 3 t o ad ju s t edg ro ss i n co m e; (2 ) a ch an g e fro m th e s t an d ardd edu ct i on o f $ 8 ,7 0 0 t o i t em i zed d edu ct i on s t o t al i ng $ 2 2 ,9 9 9 ; (3 ) a cl ai m

fo r an earn edi n co m e t ax cred i t(EIC) o f $ 1 , 8 27 ; an d(4 ) a cl ai m fo r an ad d it i o n al ch i l d t ax cred i to f $ 2 ,0 0 0 . Th e at t ach edSch edu l e A, It em i zed Deduct io n s, cl ai m ed d edu ct i o n s fo r $ 4 8 8 o f g en eral s al es t ax es ex p en s e, $ 3 ,3 0 8 fo r real es t at e t ax es ex p en s es , an d $ 1 9 ,2 0 3 fo r h o m e m o rt g ag e i n t eres t ex p en s e. Pet i t io n er at t ach edtwo Fo rm s 1 0 9 8 , M o rt g ag e In t eres tSt at em en t , fo r t ax ab l e y ear 2 0 1 1 refl ect in g h o m e m o rt g ag e i n t eres tex p en s es t o t al i n g $ 1 9,2 0 3 . Pet i ti o n er
wro te o n th e 2 0 12 Fo rm 1 0 4 0X: “ Ex p l an at io n : Li n e 1 - Ori g i nal retu rn d i dn o t i n cl u d e Fo rm s 1 0 98 M o rt gag e In t eres th erei n at t ach ed , p ro p ert y & s ch o o l t ax , al s o

6 Al th o ug h n o ten t irel y

cl ear, i tap p ears th atp et i ti o n er p rep aredthe i n co m e t ax return s fo r AFSC fo r the y ears i n i s su e.

7 Th e reco rdd o es n o t refl ectth e d et ai ls o f t h e 2 0 1 2 Fo rm 1 1 0 2 S, an d t h u s i t i s u n cl ear h o wth i s l o s s was cal cu l at ed
.- 6
-

at t ach edh erei n , Sch edu le ‘ A ’ was n o to n the o ri g i n al b u th erei n at t ach ed .” Pet i t io n er d i dn o tex p l ai n th e redu ct i o n t o ad j u s t edg ro s s i n co m e. Onth e b as is o f th e 2 01 2 Fo rm 1 0 4 0 X th e IRS p art i al l y ab at edp et i t io n er’ s t ax l i ab i l i ty

b y $ 3 ,9 7 2 o n J un e 9 , 2 0 14
. 8 Aft er t hes e ad ju s t m en t s , th e ap p l i cat i o n
o f p et i ti o n er’ s p aym en t s , an dth e ap p l i cat io n o f o v erp aym en tcred i t s fro m 2 0 1 3
an d 2 0 1 6 , a b al an ce du e rem ai nedfo r t h e 2 0 1 2 t ax y ear. 9 II. 2 0 1 4 In co m e Tax Retu rn s FIC i s s u edt o p et i ti o n er a Fo rm 1 0 9 9 -M ISC fo r 2 0 1 4 , refl ect i n g
n o n em p l o y ee co m

p en s at i o n o f $ 1 8 ,5 3 5 . Pet i t io n er ack n o w l ed g edrecei p t o f t h i s
am ou n t
. Pet i t i o ner t i m el y

fi l eda 2 0 1 4 Fo rm 1 0 4 0 refl ect i n g h eado f h o u s eh ol dfi l i ng
s t atu s an drep o rt i n g $ 5 7 ,6 7 5 o f s el f-em p l o ym en t i n co m e u n d er t h e b u si n es s d es cri p t io n “ Sal es ”. Th e at t ach edSch edu l e C, Pro fi t o r Lo s s Fro m Bu s i n es s , refl ect ed$ 6 0 ,0 0 0 o f g ro s s recei p t s an dd edu ct i o n s t o t al i n g $ 2 ,3 2 5
. Pet i t i o n er d i d
n o trep o rtan y

o th er i n co m e. Pet i t i o n er’ s 2 0 14 Fo rm 1 0 4 0 retu rnrefl ect eda t ax

8 OnOct ob er 2 4 , 2 0 14 , p et i t i o n er fi l eda s eco n d 2 0 1 2 Fo rm 1 04 0 Xrefl ect i n g ad ju s t m en t s th atare i d en t ical t o th e ad ju s t m en ts o n th e 2 01 2 Fo rm 1 0 4 0 X th atwas fi led on M arch 3 , 2 01 4 . Th e IRS d i d n o tfu rt h er ad ju s t p et i t io n er’ s t ax l i ab i l i ty . 9 Th e IRS ap p l i edp et i t i o n er’ s 2 0 13 o v erp aym en tcred ito f $ 2 ,4 9 7 o n Ap ri l 1 5 , 2 0 1 4 , an d pet i t i o ner’ s 2 0 1 6 o v erp aym en tcred i t o f $ 3 ,0 5 7 o n M arch 2 7, 2 0 1 7
.- 7
-

du e o f $ 1 1 , 6 7 8 ; h e d i dn o trem i tp aym en t wi th h i s return an datth e t i m e o f t ri al h e h ad n o tm ad e p aym en t s t o wardth e 2 0 1 4 l i ab il i ty
. M rs . Am aefu n a al s o s ep arat el y fi l eda 2 0 1 4 Fo rm 1 04 0 el ect i n g h eado f h o u s eh o l dfi l i ng s t atu s an d rep o rt i n g $ 15 ,9 5 7 o f s el f-em p lo ym en ti n co m e u n d er th e b u si n es s d es cri p t i o n “ Co m p l i an ce”. Th e at t ach edSch edu l e C rep o rt ed $ 1 6 ,1 0 7 i n t o t al g ro s s recei pt s , i n cl u d i ng $ 1 5 ,0 01 fro m AFSC, an d a d edu ct i o n o f $ 1 5 0 fo r l eg al an dp ro fes si o n al s erv i ces ex p en s e. M rs . Am aefu n a’ s rep ort edt o t al t ax o f $ 2 ,2 5 5 an dcred i t s o f $ 7 , 9 1 7 ($ 6 ,1 4 3 EIC % $ 1 ,7 74 ad d i t i on al ch i ldt ax cred i t ), res ul t i n g i n an o v erp aym en to f $ 5 , 6 6 2
. A 2 0 1 4 Fo rm

1 1 2 0 S was fi l edo n b eh al f o f AFSC rep o rt i n g g ro s s recei p t s o f $ 7 7 ,2 5 5 ; th i s am o u n td i dn oti n cl u d e t h e $ 18 ,5 3 5 o f i n co m e fro m FIC. AFSC’ s 2 0 1 4 recei p t s were o ffs et b y ex p en s es t o tal i ng $ 8 2 ,3 19 , i n cl u di n g $ 7 4 ,9 9 9 fo r
o ffi cers co m

p en sat io n ex p en s e, 1 0 res u l ti n g i n a l o s s o f $ 5 , 0 6 4
. III. Co l l ect io n Du e Pro ces s Heari n g To co l lectp et i t i o n er’ s u np ai d2 0 1 2 an d2 0 1 4 l i ab i l i t i es th e IRS s en t a No t ice LT1 1 , No t i ce o f In t en tt o Lev y (n o ti ce o f i n t en tt o l ev y ), o n M ay 2 4 , 2 0 1 6
. In res po n s e p et i t i o n er t i m el y fi l eda Fo rm 1 21 5 3, Req u es tfo r a Co l l ect io n Du e

1 0 Th i s was rep ort edas $ 60 ,0 0 0 (ro u n d ed up fro m $ 5 9,9 9 8 ) i n g ro s s recei p t s o n p et it i o n er’ s 2 0 1 4 Fo rm 1 0 4 0 an d $ 1 5 ,0 0 1 i n g ro s s recei p t s o n M rs . Am aefu n a’ s 2 0 1 4 Fo rm

1 0 40
.- 8
-

Pro ces s o r Equ i v al en tHeari n g , wh i ch the IRS recei v edo n J u n e 6 , 2 0 1 6 . Onh i s Fo rm 1 2 1 5 3 p et i t i o n er as sert ed : “ I am n o tl i ab l e fo r (I d o n o to we) al l o r p arto f th e t ax es as s t at edb y

IRS”. He d i dn o tp ro v i d e fu rt h er d et ai l o r s up p o rt i n g d o cu m en t at i o n . Pet i t i on er d i dn o tas sertan i nab i l i ty t o p ay th e l i ab i l i t i es , n o r d i d h e req u es ta co l lect i o n al t ern at i v e. Set t l em en tOffi cer (SO) Di ed re Serra 1 1 fro m th e IRS Offi ce o f Ap p eal s was
as s i g n edt o p et i t i o n er’ s cas e. Sh e rev i ewedth e ad m i ni s trat i v e fi l e fo r t ax ab l e y ears 2 0 1 2 an d2 0 1 4 an dco n fi rm edth atthe l i ab i l i ti es h adb een p ro p erl y as s es s ed
an d th atal l o th er req u irem en t s o f ap p l i cab l e l aw h adb een m et . On Au g u s t1 2 , 2 0 1 6 , SO Serra s en tp et i t io ner a l et t er s ch edul i n g a t el ep h o n e CDP h eari n g fo r Sep tem b er 2 0 , 2 0 1 6, an dreq u es t i n g th atp et it i on er p ro v i de a Fo rm 4 3 3 -A, Co l lect i on In fo rm at i o n St at em en tfo r W ag e Earn ers an d Sel f-Em p l o y ed In d i v i du al s . Pet i t i o ner’ s t el ep h o n e CDP h eari n g was res ch edul edan d h el do n Sep t em b er 2 3 , 2 0 1 6 . Duri n g the h eari ng p et i t i o ner as s ert edth ath i s l i ab il i ti es were i n co rrect b ecau s e th ey

i ncl u d edam o u n t s rep o rt edt o h i m b y FIC o n Fo rm s 1 0 9 9 -M ISC, as p ai dt o p et i t i o n er. Pet i t i o n er as s ert edth atth es e am ou n t s s h o u ld h av e b een

1 1 Ats o m e p o i n t aft er t ri al Di edre Serra ch an g ed h er n am e t o Di ed re Bart h o lo m ew. W e wi l l co n t i n ue t o refer t o h er as SO Serra.- 9
-

rep o rt edt o AFSC. SO Serra req u es t edth atp et it i o n er p ro v i de co rrect edFo rm s 1 0 9 9 -M ISC, Fo rm s 1 0 4 0 X , o r a Fo rm 4 3 3 -A wi th i n 1 4 d ay s , an d s h e i n fo rm ed p et i t i o n er t h ati f s h e d i dn o trecei v e t h es e d o cu m en ts s he wo u l d s u s t ai n t h e l ev y . SO Serra wro t e th e fo l l o wi n g n o t es i n h er Cas e Act i v i ty Reco rdPri n t ab o u tth i s
ex ch an g e: To l dTP [p et i t i o n er] * * * h e i s b ei n g i s s u ed1 0 9 9 s as a s el f-em p lo y ed co n tract o r, an di f t h i s i s i n co rrect h e n eed edt o co rrect * * * o u r reco rd s s h o w s el f-em

p l o ym en t , an dh e recei ved al l b i l l s t o d at e s o t h i s s h o u l d h av e b een co rrect edwh en 1 s tb i l l s were i s su ed . Al s o ad v i s ed u n t i l co rrect ed 1 0 9 9s are i s s u edb y th e p ay ers s o n ew 1 0 4 0Xs can b e s ub m i t t ed , h e i s l iab l e fo r t h e i n co m e as SE [s el f-em pl o y ed ] . TP s t at es h e i s n o t s el f-em

p lo y edb u twi l l co n tactp ay ers . To l dh im h as 1 4 d ay s t o g etth i s co rrect edo r s ub m itFo rm 4 3 3 -A, i f n o t recei v ed m u s ts u s t ai n l ev y an di s su e NOD [No t i ce o f Det erm i n at i on ] . TP as k edi f h e co u l dth en g o t o Tax Co u rt , t o l dh i m y es i f h e fi l es th e p et i t i o n wi th i n 3 0 d ay s aft er o u r cl o s in g l et t er. TP s t at edwi l l wo rk o n g et t i ng th is co rrect edas ap . By Oct o b er 1 7 , 2 0 16 , p et i t i o ner h adn o t p ro v i d edSO Serra wi th an y req u es t edfo rm s , i n cl u di n g co rrect edFo rm s 1 0 9 9-M ISC o r Fo rm s 1 0 4 0 X, an ds h e t en t at i v el y d et erm i nedt o s u s tai n the l ev y an ds en tth i s d et erm i n at io n t o h er
s up erv i s o r. OnOct o ber 1 9 , 2 0 1 6 , th e IRS i s s u eda Let t er 3 1 9 3 , No t i ce o f Det erm i n at i on Co n cern i n g Co ll ect i o n Act i o n (s ) Un d er Sect i o n 6 3 2 0 an d/ o r 6 3 3 0 , s u s t ai n i n g t h e p ro p o s edl ev y . Inres p o n s e p et i t i o n er t i m el y fi l edh i s p et i t i o n o n No v em b er 1 , 2 0 1 6 , ren ewi ng h i s as s ert i on th at h is i n co m e t ax l i ab i l i t i es are- 1 0 -

i n co rrect b ecau s e o f an “ erro r” i n th e Fo rm s 1 0 9 9 -M ISC i s s u edb y FIC an dal s o
as s ert i n g th atFIC “ is co rrect i n g th e erro r. Th e co rrect i o n wi l l res u lti n co rrect i o n
o f d o ub l e t ax at i on * * * th e 1 4 d ay s g i ven t o m e b y th e ap p eal s o ffi ce was n o t
s u ffi ci en tfo r m e t o g etth e erro r * * * co rrect ed .” Di s cu ss i o n I. Sect io n 6 3 3 0 W e h av e ju ri s d i ct i o n u n d er s ect i o n 6 3 3 0 (d )(1 ) t o rev iew res p o nd en t ’ s d et erm i n at i o n th atth e n ot i ce o f i n t en tt o l ev y was p ro p er an dth atres p o n d en tm ay p ro ceed to co l l ectb y

l ev y . Inrev i ewi n g th e Co m m i s si o n er’ s d eci s i o n t o s u s t ai n
co l l ect i o n act i on s , wh ere t h e v al i d i ty o f t h e u n derl y i ng t ax l i ab i l it y i s p ro p erl y

at i s su e, t h e Co u rtrev i ews th e Co m m i ss i o ner’ s d et erm i n at io n o f th e u nd erl y i n g t ax l i ab i l i ty de n o v o . Seg o v . Co m m i s s io n er, 1 1 4 T.C. 6 04 , 6 1 0 (2 0 0 0 ); Go za v . Co m m i s s i o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 8 2 (2 0 0 0). Th e Co u rtrev i ews an y o th er ad m i n is trat i v e d et erm i nat i o n reg ard i n g p ro p os edco l lect i o n act io n s fo r ab u s e o f d i s cret i o n . Seg o v . Co m

m i s si o n er, 1 1 4 T.C. at6 1 0 ; Go za v . Co m m i s si o n er, 1 1 4 T.C. at1 8 2 . Anab u s e o f d is cret i o n o ccu rs wh en th e ex erci s e o f d i s cret i o n i s wi th o u ts o u n d b as i s i n facto r l aw. M u rp h y v . Co m m i s s i o ner, 1 2 5 T.C. 3 01 , 3 0 8 (2 0 0 5), aff’ d , 4 6 9 F.3 d2 7 (1 s t Ci r. 2 0 0 6 ).- 1 1 -

A t ax p ay er m ay

ch al l en g e t h e u n derl y i ng t ax l i ab il i ty du ri n g a CDP h eari n g i f t h e t ax p ay er d idn o trecei v e a s t atut o ry n o t ice o f d efi ci en cy

fo r t h e l iab i l i ty

o r d i dn o t o th erwi s e h av e t h e o p p o rtu n i ty t o d i s p u t e t h e l i ab i l i ty . Sec. 6 3 3 0 (c)(2 )(B);
s ee al so M on t g o m ery

v . Co m m i s s i o n er, 1 2 2 T.C. 1 , 8 -9 (2 0 0 4) (h ol d in g th at t ax p ay ers are al l o wedt o ch al l en g e t h e u n d erl y i n g l i ab i l i ty wh ere t ax pay ers s el fas s es s edth ei r u nd erl y i n g l i ab i li ty an dd i d n o trecei v e a n o t i ce o f d efi ci en cy ). Th i s Co u rtm ay

co n s i d er s u ch a ch al l en ge, h o w ev er, o n l y i f t h e t ax p ay er p ro p erl y

rai s ed i t befo re th e s et t l em en t o ffi cer. Gi am el l i v . Co m m is s i o n er, 1 2 9 T.C. 1 0 7, 1 1 5 (2 0 0 7). Ani s su e i s n o tp ro perl y rai s edatth e CDP h eari n g i f t h e t ax p ay er fai l s t o req u es tAp p eal s co ns i derat i o n o f t h e rel ev an ti s s ue o r i f h e o r s h e req u es t s Ap p eal s co n si d erat i o n b u t fai l s t o p res en t an y ev i d en ce aft er b ei n g g i v en a
reas on ab l e o p p o rtun i ty

t o d o s o . LG Ken dri ck , LLC v . Co m m is s i o n er, 1 46 T.C. 1 7 , 3 4 (2 0 1 6 ), aff’ d , 6 84 F. Ap p ’ x 7 4 4 (1 0 th Ci r. 2 01 7 ); s ec. 3 0 1.6 3 3 0 -1 (f)(2 ), Q&A-F3 , Pro ced . & Ad m i n . Reg s . Res p o n d en tco n ced es th atp et i t i o ner d i dn o t h av e a p ri or o p p o rtu n i ty t o
co n tes th i s u n d erl y i n g l i ab i li ti es ; th u s p et i t i o n er was al l o wedt o ch al l en g e t h e
u n d erl y i n g l iab il i ti es ath i s CDP h eari n g . Sec. 6 3 3 0(c)(2 )(B); s ee al s o M o n tg o m ery

v . Co m m i s s io n er, 1 2 2 T.C. at8 -9 . Res p o n d en t as s ert s th atp et i t i o n er d i dn o t p ro p erl y

rai s e t h e i s s u e o f h i s u n d erl y i n g l i ab i l i t i es atth e CDP h eari n g , an d- 1 2 -

th u s th e u n d erl y i ng l i ab il i t i es are n o tp ro p erl y ati ss u e b efo re t h e Co u rt . W e n eed
n o td eci d e wh ether p et i t io n er p ro p erl y rai s edth e i s su e o f h i s u nd erl y in g l i ab i l i ti es b ecau s e p et i ti o n er h as n o tp res en t edev id en ce es t ab l i s h i n g th at(1 ) t h e i n it i al t ax rep o rt i n g was i n co rrect an d(2 ) t h e u n d erl y i n g as ses s edt ax l i ab i li t ies are i n co rrect
. See Kri s h n an v . Co m

m is s io n er, T.C. M em o . 2 0 1 6 -8 3 , at* 9 -* 1 0 (h o l di n g th atev en i f t h e u n d erl y i n g l i ab i l i ty was i n i s su e t h e t ax p ay er d i dn o td em o n s trat e t hatth e
as s es s m en t s were i n co rrect ). A. Pet i t i o ner’ s 2 0 1 2 an d 2 0 1 4 Sel f-As s es sedTax es Res p o n d en ts eek s t o co l l ect p et i t io n er’ s s el f-as ses s edl i ab i l i t i es fo r t ax ab l e y ears 2 0 1 2 an d2 0 1 4
. 1 2 Ing en eral , th e Co m m i s s i o ner’ s as ses s m en t i s p res u m ed
co rrect , an dth e t ax p ay er b ears th e b u rd en o f p ro v i n g o th erwi s e. Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 1 1 , 1 1 5 (1 9 3 3); Po i n d ex t er v . Co m m i s si on er, 1 2 2 T.C. 2 8 0 , 2 8 6 (2 0 0 4 ), aff’ d , 1 3 2 F. Ap p’ x 9 1 9 (2 d Ci r. 2 0 0 5 ). In th e ab s en ce o f
co rro b o rat in g ev i den ce, t h e Co u rti s n o treq ui redt o accep ta t ax p ay er’ s s el fs erv i ng t es t i m o n y . To k ars k i v . Co m m i s s io n er, 8 7 T.C. 7 4 , 7 7 (1 9 86 ).

1 2 Res p o nd en td i dn ots eekad ju s t m en t s t o p et i t i o n er’ s i n co m e t ax retu rn s o r as s erti n creas edd efi ci en ci es fo r t h e y ears i n i ss u e. Acco rd i n gl y , we res o l v e o n l y th e i s s ue o f t h e s el f-as s es sed l i ab i l it i es ch al l en g ed b y p et i ti o n er.- 1 3 -

Ath i s CDP h eari n g an d attri al p et i t io n er as s ert edthath e was n ot l iab l e fo r th e fu l l am o u n t s s h o wno n h is i n co m e t ax retu rn s fo r t h e y ears i n i s s u e b ecau s e t h e retu rn s rep o rt edth e i nco m e fro m FIC as earn edb y

p et i ti o ner. Pet i t i o n er as s ert s th atFIC s h o u ld h av e i n s t ead i s s u edth e Fo rm s 1 0 99 -M ISC t o AFSC. Atth e t i m e
o f t ri al p et it i o n er h adn o t p ro v i d edco rrect edFo rm s 1 0 9 9 -M ISC o r o th er ev i d en ce (o th er t h an h is o wnt es t i m o n y ) t o s up po rtth i s as s ert i o n , d es p it e as s ert i n g i n h i s p et i t i o n th atFIC was “ co rrect i n g th e erro r”. Pet i t i o ner al s o h as n o ts h o wn th ath e rep ort edth e i n co m e fro m FIC o n h i s Fo rm s 1 0 4 0 fo r th e y ears i n i s s u e. Pet i t i o n er t es t i fi edthath e rep o rt edth is i n co m e fo r t ax ab l e y ears 2 0 1 2 an d2 0 1 4 , b u ti ti s u n cl ear fro m th e reco rdwh et h er h e rep o rt edth e $ 1 5 ,1 2 1 fro m FIC o n h i s 2 0 12 Fo rm 1 0 4 0 . Ad d i t i o n al l y , p et i t i o n er d i dn o t rep o rtth e $ 1 8 ,5 3 5 fro m FIC o n h i s 2 0 14 Fo rm 1 0 4 0 . Th i s i n co m e was n o t rep o rt edo n AFSC’ s 2 01 4 Fo rm 1 1 2 0 S an dth e o nl y i nco m e t h atp et i t i o ner rep o rt edo n h i s 2 0 1 4 Fo rm 1 0 4 0 was th e $ 60 ,0 0 0 d i s tri b u t i o n fro m AFSC. Ev en i f p et i t i o n er h adrep o rt edthe i n co m e fro m FIC o n h i s 2 0 1 4 Fo rm 1 0 4 0 , i ti s u n cl ear t h atth e t ax co n s equ en ces wo u l dh av e b een d i fferen t i f t he i n co m e h adb een rep o rt ed t o AFSC; b ecau se p et i t io n er an dM rs . Am aefu n a
co l l ect i v el y

o wn1 0 0 % o f AFSC, al l i nco m e an dl o s s es o f t h e S co rp o rat io n wo u l d h av e fl o wed th ro u g h t o th em . See s ec. 1 3 6 3 (b ).- 1 4 -

Ad d it i on al l y , th ere are a n u m b er o f erro rs an di n co n s i s t en ci es o n th e i n d i v i du al retu rn s p et i t i on er p rep ared fo r h i m s el f an dM rs . Am aefu na fo r t h e y ears i n i ss u e, i n cl u d i n g t h e fo l lo wi n g : (1 ) p et i ti o n er cl ai m edan u n ex p l ai n edan d
u n s upp o rt edredu ct i o n t o ad ju st edg ro s s i n co m e o f $ 2 4 ,2 4 3 o n h i s 2 0 1 2 Fo rm 1 0 4 0 X; (2 ) p et i t io n er cl ai m eda d educt i o n o f $ 1 9 ,2 0 3 fo r m o rt g ag e i n t eres t
ex p en s e o n h i s 2 0 12 Fo rm 1 04 0 X, b u tth e at t ach edFo rm s 1 0 9 8 are fo r t ax ab l e y ear 2 0 1 1 ; (3 ) p et i t io n er an d M rs . Am aefu n a each i n co rrect l y el ect edh eado f h o u s eh o l dfi l i ng s t atu s o n th ei r i n co m e t ax retu rn s fo r 2 0 1 4 ; 1 3 (4 ) p et i ti o n er an d M rs . Am aefu n a wo u ldn o t h av e qu al i fi edfo r t he EIC fo r 2 0 14 o n th e b as is o f t h ei r
m arri ag e s tatus an dco m

b i n edad j u s t edg ro s s i n co m e; 1 4 an d (5 ) p et i t i o n er t es t i fi ed th ath e h as p ro fes si o nal l y p rep aredi n co m e t ax retu rn s fo r cl i en ts s in ce 2 0 0 8 ,

1 3 Sec. 1 (b ) i m

p o s es an ad v an t ag eo u s t ax rat e s ch edu l e fo r an i nd i v i du al wh o i s a “ h eado f h ou s eh o l d ” as d efi n edi n s ec. 2 (b ). Th e fi rs t el i gi b i l i ty req u i rem en t fo r h eado f h ou s eh o l ds t atu s i s th atth e t ax p ay er n o tb e m arri edo r a s urv i v i n g s p o u se. Sec. 2 (b )(1 ). Ex cep t i on s t o th i s req ui rem en ti ncl u d e s i tu at io n s wh ere t h e s p o u ses are s ep arat edu n d er a d ecree o f d i v o rce o r s ep arat i o n , wh ere o ne o f t h e s p o u ses i s a n o n res i d en t al i en , o r wh ere t h e s p o u ses l i ve ap art fo r atl eas t th e l as t s i x m o n ths o f t h e y ear. See s ecs . 2 (b )(2 ), (c), 7 70 3 (b ). Pet i t i o ner an d M rs . Am aefu n a were m arri edi n 1 9 95 an dh av e l i v edt o g et h er s i n ce 1 9 9 7 . Pet i ti o n er d i dn o t as s ert , n o r d o es i tap p ear, t h atan y o f t h e ab o v e-m en t i o nedex cep ti o n s are ap p li cab l e.

1 4 Fo r t ax ab l e y ear 2 0 14 m arri edfi l i ng jo i n t l y t ax p ay ers wi th th ree o r m o re ch i l dren d o n o tqu al i fy

fo r th e EIC i f t hey

h av e earn edi n co m e ex ceed i n g $ 5 2 ,4 2 7
. See Rev . Pro c. 2 0 1 3 -3 5 , s ec. 3 .0 6 , 2 0 1 3 -4 7 I.R.B. 5 3 7 , 5 40
.- 1 5 -

p rep ari n g as m an y

as 3 0 0 i nco m e t ax retu rn s a y ear b y 2 0 1 0 , b u ti td o es n otap p ear th ath e rep ort edi n co m e fro m thi s act i v i ty

fo r t h e y ears i n i s s u e. Fo r t h es e reas on s , we h o l dth atp et it i on er h as n o tm et h is b u rd eno f p ro v i ng th ath e o v errep o rt edh i s i n co m e fo r 2 0 1 2 an d2 01 4 . Thu s , p et i t i on er i s l i ab l e fo r h i s s el f-as s es s edl i ab i l i t i es . See Ru l e 1 42 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. at1 1 5 ; To k ars ki v . Co m

m i s s i o n er, 8 7 T.C. at7 7
. B. Ab u se o f Di s cret i on W i th res p ect t o th e i ss ue o f th e ad m i ni s trat i v e d et erm i nat i o n reg ard in g th e p ro p os edco l l ect i o n act i o n, we co n cl u d e th ati twas n otan ab u s e o f d i scret i o n fo r th e Ap p eal s Offi ce t o s u s t ai n the l ev y . Pet i t i o ner d i dn o tp ro v i d e SO Serra wi th am en dedretu rn s o r co rrect ed Fo rm s 1 0 9 9 -M ISC wi th in 1 4 d ay s as req ues t edo r p ro vi d e h er wi th o th er d o cu m en t at i o n t o s up p o rth is as s ert i o n s th atth e Fo rm s 1 0 99 -M ISC s h o u l dh av e b een is s u edt o AFSC. Nei th er d i dh e s ubm i ta Fo rm 4 3 3 -A o r an y

o f t h e o th er req u es t edi n fo rm at i o n an dd o cu m en t at i o n . Iti s wel l s et t l edth ati t i s n otan ab u s e
o f d i s cret i o n fo r t h e Ap p eal s Offi ce t o s u st ai n a p ro p os edco l lect i o n act io n ag ai n s t a t ax p ay er fo r fai l i n g t o s ub m itreq u es t edd o cu m en t at i o n an d/ o r fi n an ci al i n fo rm at i o n . Po ug h v . Co m m i s s i o n er, 1 3 5 T.C. 3 4 4, 3 5 1 (2 0 1 0).- 1 6 -

Pet i t i o ner d i dn o treq u es tad d i t i o n al t i m e t o p ro v i d e ev i d en ce t o s up p o rt h i s
as s ert i o n b efo re, duri n g , o r aft er t h e CDP h eari n g. Pet i t i o n er al s o as s ert s th at1 4 d ay s was n o ten o u g h t i m e fo r h i m t o o bt ai n co rrect ed Fo rm s 1 0 99 -M ISC o r o th er
ev i d en ce. W e h av e h el d t h ata 1 4 -d ay d ead li n e fo r a t ax p ay er t o p ro v i d e req u es t ed i n fo rm at i o n m ay

b e reas o n ab l e an dth atth e Ap p eal s Offi ce d o es n o th av e t o p ro v id e a t ax p ay er wi th an ex t en s i o n o f t i m e t o p ro vi d e t h i s i n fo rm at i o n. Sh an l ey
v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -1 7 , 2 0 0 9 W L 1 95 9 2 9 , at* 5 -* 7
. Pet i t i o ner d i dn o treq u es ta co l l ect i o n al t ern at i ve s u ch as an o ffer-i n co m p ro m i s e o r an i n s t al l m en tag reem en tan dd i dn ots ub m i t t o SO Serra a s p eci fi c
o ffer o r p ro p o se an y

s p eci fi c t erm s . Th e Ap peal s Offi ce d o es n o tab us e i t s d i s cret i o n i n fai li n g t o co ns i d er an o ffer t h atp et i t i o ner d i dn o tm ak e. Hu n tres s v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -1 6 1 , 2 0 09 W L 1 8 8 3 9 84 , at* 5
. In m ak i n g the d et erm i n at i o n wh et h er t o s u s t ai n the p ro p o s edl ev y , s ect i o n 6 3 3 0 (c)(3 ) req u i res th e SO t o co n s i d er: (1 ) wh et h er th e req u i rem en t s o f an y ap p li cab l e l aw o r ad m i n i s trat i v e p ro cedu re h av e b een m et ; (2 ) an y i s s ues ap p ro p ri at el y

rai s edb y th e t ax p ay er; an d (3 ) wh ether t h e co ll ect i o n act i o n s b al an ce t h e n eedfo r t h e effi ci en t co l l ect i o n o f t ax es an dth e l eg i t i m at e co n cern o f th e t ax p ay er t h atan y

co ll ect i o n act i o n b e n o m o re i n tru s i v e t h an n eces s ary . See al s o Lu n s fo rdv . Co m

m i s s i on er, 1 1 7 T.C. 1 8 3 , 1 8 4 (2 0 0 1 ). Th e reco rdrefl ect s- 1 7 -

th atSO Serra co n s i d eredeach o f t h es e req u i rem en t s . Th erefo re, we co n cl ud e t h at i t w as n o tan ab u s e o f d is cret i o n t o s u s tai n the p ro p o s ed co ll ect i o n act i o n . II. Co n cl u si o n Fo r t h e reas o n s s t at edab o v e, we s u s t ai n th e d et erm i n at i o n o f t h e Ap p eal s Offi ce t o p ro ceed wi th the l ev y . W e h av e co n s i d eredal l o f t h e p art i es ’ arg u m en t s , an d , t o th e ex t en tn o t ad dres s edh erei n , we co n cl u d e th atth ey are m oo t , i rrel ev an t , o r wi th o utm eri t
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t ered fo r res p o n den t
.