1 All Rule references are to the Tax Court Rules of Practice

and Procedure, and all section references are to the Internal

Revenue Code.

T.C. Memo. 2008-226

UNITED STATES TAX COURT

ALLAN BARRY MARKS AND ROSALIND J. MARKS, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14073-07L. Filed October 7, 2008.

Allan Barry Marks and Rosalind J. Marks, pro se.

Justin L. Campolieta, for respondent.

MEMORANDUM OPINION

THORNTON, Judge: This case is before us on respondent’s

motion for summary judgment, filed under Rule 121.1
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2 Petitioners have not disputed this determination of their

gross monthly income in this proceeding or, insofar as the record

reveals, in the sec. 6330 hearing.

Background

This is an appeal from respondent’s determination upholding

the proposed use of a levy to collect petitioners’ unpaid Federal

income tax liabilities for 1994 through 1999. When they

petitioned the Court, petitioners resided in Florida. 

 On February 23, 2006, respondent sent petitioners a Notice

of Intent to Levy and Notice of Your Right to a Hearing (the

notice of intent to levy) regarding unpaid taxes for 1994 through

1999. Petitioners timely requested a hearing. With petitioners’

acquiescence, respondent’s Appeals settlement officer conducted

the hearing by telephone in March and April 2007.

Petitioners requested that a collection alternative be

considered. They submitted a Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals, listing

monthly income of $7,814 and monthly expenses of $7,498. 

After reviewing petitioners’ information, the settlement

officer proposed an installment agreement with monthly payments

of $1,826. In arriving at this amount, the settlement officer

used updated information provided by petitioners to determine

their gross monthly income to be $8,642.2 The settlement officer

allowed living expenses that generally approximated or exceeded

the amounts that petitioners had listed on their Form 433-A, with
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3 Although the settlement officer also used the standard

allowance guidelines for food, clothing, and miscellaneous

expenses, the result in this instance was a higher allowance

($1,306) than petitioners had claimed ($1,041).

4 The record does not reveal the starting amount or phase-in

schedule for the proposed monthly payment.

one notable exception. In making allowance for housing and

utilities expenses, the settlement officer allowed $1,291 on the

basis of the maximum standard allowance for a family of two

living in Miami-Dade County, Florida, rather than the $2,145 that

petitioners had listed.3 

According to the settlement officer’s case activity report,

in a telephone conversation on April 2, 2007, petitioner husband

stated that he was in agreement with a monthly installment

payment of $1,826 as proposed by the settlement officer. By

letter dated April 3, 2007, the settlement officer sent

petitioners a proposed installment agreement reflecting monthly

payments of this amount. On April 9, 2007, the settlement

officer received a telephone message from petitioner wife stating

petitioners could not afford the proposed monthly installment

payments and requesting that they be lowered to between $450 and

$500. The settlement officer rejected this proposal and

countered that the monthly installment payment should be phased

in so as to increase to $1,826 after 1 year.4 Petitioners did

not accept this offer. 
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5 The amended petition also assigns as error: (1) That

respondent had misapplied certain payments relating to an earlier

installment agreement; and (2) that assessments for tax years

1994, 1995, and 1996 are barred by the statute of limitations.

The parties agree that these issues have been resolved.

By Notice of Determination Concerning Collection Action(s)

Under Section 6320 and/or 6330, dated May 22, 2007, respondent’s

Appeals Office sustained the issuance of the notice of intent to

levy.

Pursuant to section 6330, petitioners seek review of

respondent’s determination. Petitioners’ amended petition

assigns as error: (1) That the settlement officer “proposed an

installment payment agreement for significantly less than the

amount proposed”; and (2) that “some” of the living expenses

allowed by the settlement officer in calculating the net monthly

income available for installment payments do not “correctly or

reasonably reflect or represent the actual amounts associated

with those expenses.”5

On July 11, 2008, respondent filed a motion for summary

judgment. On August 22, 2008, petitioners filed their response. 

Discussion

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be

granted where there is no genuine issue of any material fact and

a decision may be rendered as a matter of law. Rule 121(a) and
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(b); see Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v.

Commissioner, 90 T.C. 753, 754 (1988). The moving party bears

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

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment. Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,

79 T.C. 340, 344 (1982). When a motion for summary judgment is

made and properly supported, the adverse party may not rest upon

mere allegations or denials of the pleadings but must set forth

specific facts showing that there is a genuine issue for trial. 

Rule 121(d).

If a taxpayer fails to pay any Federal income tax liability

within 10 days of notice and demand, the Secretary is authorized

to collect the tax by levy on the person’s property. Sec. 

6331(a). First, however, the taxpayer must be notified of the

right to an administrative hearing before the Appeals Office of

the Internal Revenue Service. Sec. 6330(a) and (b)(1). At the

hearing, the taxpayer may generally raise relevant issues

relating to the unpaid tax or the proposed levy, including offers

of collection alternatives, which may include, among other

things, an installment agreement or offer in compromise. Sec.

6330(c)(2)(A). Within 30 days after the Appeals Office issues a
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6 Pursuant to an exception not relevant here, the

Commissioner is required to enter into an installment agreement

in certain circumstances, generally involving tax liabilities of

less than $10,000. Sec. 6159(c).

notice of determination, the taxpayer may appeal the

determination to the Tax Court. Sec. 6330(d)(1). 

Petitioners have not challenged their underlying liability.

Accordingly, we review respondent’s determination for abuse of

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

Under this standard of review, the determination will not be

disturbed unless it is arbitrary, capricious, or without sound

basis in fact or law. See, e.g., Murphy v. Commissioner, 125

T.C. 301, 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006). For the

reasons discussed below, we conclude that there is no genuine

issue in dispute regarding the exercise of respondent’s

discretion. 

Section 6159(a) authorizes the Secretary to enter into

installment agreements “under which such taxpayer is allowed to

make payment on any tax in installment payments if the Secretary

determines that such agreement will facilitate full or partial

collection of such liability.”6 Eligibility for an installment

agreement is based on the taxpayer’s current financial condition. 

See generally 2 Administration, Internal Revenue Manual (IRM)

(CCH), pt. 5.14.1.5, at 17,508 (July 12, 2005). In requesting an

installment agreement, a taxpayer must provide specific
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information, including a proposed monthly payment or other

periodic payment amount. 2 Administration, IRM (CCH), pt.

5.14.1.3(4), at 17,505 (July 12, 2005). The amount of the

taxpayer’s installment payment depends on his or her ability to

pay. 2 Administration, IRM (CCH), pt. 5.14.1.5(5), at 17,509

(July 12, 2005). “The taxpayer must agree to the maximum monthly

payment based upon the taxpayer’s ability to pay.” 2

Administration, IRM (CCH), pt. 5.14.2.2.1(7), at 17,530 (July 12,

2005). Allowable expenses are determined by reference to the

Financial Analysis Handbook (a separate section of the IRM) and

the national and local financial standards referenced therein. 

See 2 Administration, IRM (CCH), pt. 5.14.1.5(1), at 17,508 (July

12, 2005). 

Petitioners allege that in past years they had one or more

installment agreements (apparently covering at least some of the

same liabilities at issue here) with significantly lower monthly

payments than the settlement officer proposed in the section 6330

hearing. Petitioners also allege that in October 2004 one of

respondent’s agents proposed (apparently with respect to the same

liabilities that are at issue here) an installment agreement

providing for monthly payments of $1,000. Petitioners appear to

contend that the settlement officer erred by insisting upon

monthly installment payments that were significantly larger than
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those called for in their prior installment agreements or in

respondent’s alleged October 2004 proposal.

Petitioners’ contention is without merit. Respondent was

not bound by the terms of any prior installment agreement or of

an offer alleged to have been made but not accepted more than 2

years earlier. Petitioners acknowledge that they assented to the

termination of their previous installment agreement because “the

payment was not covering the accruing interest and penalties.” 

The administrative record shows that during the section 6330

hearing the settlement officer considered this history and

appropriately proposed an installment agreement on the basis of

current information. 

Petitioners contend that the settlement officer abused her

discretion by determining their basic living expenses partly by

reference to standard expense allowances. We disagree. 

After considering all the information submitted by

petitioners, the settlement officer applied standard allowances

with respect to two categories of expenses: (1) Food, clothing,

and miscellaneous; and (2) housing and utilities. The settlement

officer allowed petitioners a standard allowance of $1,306 for

food, clothing, and miscellaneous expenses, even though

petitioners had claimed only $1,041 for this amount. 

Accordingly, with respect to this item, petitioners have no
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7 Petitioners contend that they should be permitted to

conduct discovery with respect to respondent’s derivation of the

standard allowance guidelines. They contend further that they

should be permitted to supplement their response to respondent’s

motion for summary judgment to take into account the fruits of

this discovery. Discovery must generally be completed and any

motion to compel discovery must be filed no later than 45 days

before the date set for call of a case from the trial calendar

(in this case, the discovery deadline would be Sept. 19, 2008). 

Rule 70(a)(2). Petitioners have filed no motion to compel

discovery. In any event, we are unpersuaded of the relevancy of

the derivation of respondent’s county-wide standard housing and

utilities allowance in the absence of any proof or assertion of

specific facts showing that application of the standard allowance

(continued...)

reason to complain about the settlement officer’s use of the

standard allowance. 

In essence, petitioners’ disagreement is with the settlement

officer’s use of respondent’s local standards for housing and

utilities expenses for Miami-Dade County, Florida. Petitioners

do not contend that the settlement officer misapplied these

standard allowances or that their use would have deprived

petitioners of the means to provide for basic living expenses. 

Instead, they seek to challenge the legitimacy of respondent’s

standard allowances, contending that they “are not believed to be

representative of actual expenses for the applicable categories

and grouping of items of expense, not just with respect to the

Petitioners, but also with respect to all taxpayers in the

Petitioners’ geographic region”. Contrary to Rule 121(d),

however, petitioners have set forth no specific facts showing

that there is a genuine issue for trial in this regard.7
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7(...continued)

would leave petitioners without the resources to meet basic

living expenses--a matter which is within petitioners’ own

knowledge and as to which no discovery from respondent is needed.

This Court has sustained the Commissioner’s use of the IRS’s

published national and local allowances as guidelines for basic

living expenses in evaluating the adequacy of proposed

installment agreements and offers-in-compromise. See, e.g.,

Speltz v. Commissioner, 124 T.C. 165, 179 (2005), affd. 454 F.3d

782 (8th Cir. 2006); Fernandez v. Commissioner, T.C. Memo. 2008-

210; Klein v. Commissioner, T.C. Memo. 2007-325; Lemann v.

Commissioner, T.C. Memo. 2006-37; Etkin v. Commissioner, T.C.

Memo. 2005-245; Hawkins v. Commissioner, T.C. Memo. 2005-88. 

More particularly, this Court has generally found no abuse of

discretion where Appeals officers used the housing and utilities

standard allowances rather than the taxpayer’s actual expenses. 

See Diffee v. Commissioner, T.C. Memo. 2007-304; McDonough v.

Commissioner, T.C. Memo. 2006-234; Schulman v. Commissioner, T.C.

Memo. 2002-129; cf. Fowler v. Commissioner, T.C. Memo. 2004-163

(holding that an Appeals officer abused his discretion in

determining, on the basis of the standard allowance guidelines, 

that the taxpayers could not live as cheaply as they had claimed

and so could not afford their proposed installment payments).

Ultimately, the only issue in this proceeding is whether

there was an abuse of discretion in refusing petitioners’
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requested collection alternative and determining that the

proposed levy should proceed. Clearly there was not. The

settlement officer followed applicable procedures in considering

petitioners’ request for a collection alternative and in

proposing monthly installment payments. Petitioners countered

with an informal proposal for monthly installment payments of

$450 to $500. This proposal, however, was for less than half the

$1,144 of available net monthly income that would be indicated

taking into account their undisputed $8,642 of gross monthly

income and making allowance for the $7,498 of total living

expenses that petitioners listed on their Form 433-A (rather than

the standard allowances used by the settlement officer). 

Rejection of this offer was not arbitrary, capricious, or without

sound basis.

In conclusion, we are satisfied that there is no genuine

issue as to any material fact and that a decision may be rendered

as a matter of law. 

To reflect the foregoing, 

An appropriate order and

decision will be entered.