T.C. Mem o. 2 01 5- 2

UNITED STAT ES TAX COURT DAVID C. SCHOLZ, Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 40 4- 13 L. Fi le d J anuary 5, 2 01 5.

Ja m es G. McGee, J r., forpe ti ti on er. Hor ace C ru m

p, fo r res po nd en t.

MEMORANDUM OPINION LAUBER, Ju dg e: In thi s co ll ect io n due pro ces s (C DP) cas e, pe ti ti on er se ek s re vi ew pu rs ua ntto sec ti on 63 30 (d )(1 ) of t he de te rm in at io n b y th e In te rn al 1

All st atut ory

refe ren ces are t o the Int ern al Rev enue Co de ineffe ctat t he 1 rel ev an t t im es , andall Ru le refe ren ces are t o the Tax C ou rt Rul es of P ract ic e an d Pro cedur e. All do ll ar am ou nt s ar e ro un de d t o the ne ares t d ol lar.- 2 -

[* 2] Rev enue Serv ic e (IR S o r res po nd en t) t o uph ol d ano ti ce o f in te ntto lev y for th e ta xabl e y ears 20 07 , 20 08 , 20 09 , and20 10 . Res po nd en t h as m ov edfor su m m ary jud gm en t u nd er Ru le 12 1, co nt en di ng th atth ere a re n o d is pu te d i ss ue s o f m at eri al factan d tha t h is act io n i n s us ta in in g the pro po se d l ev y was p ro pe r as a m at te r of law. We agre e an d a cco rd in gl y wil l g ran t the m ot io n. Bac kg ro un d The fol lo win g fa ct s ar e d eri ve d fr om th e p art ie s’ pl ead in gs an d m ot io n pape rs , in cl ud in g a tt ach edex hi bi ts an d a ffi da vi ts . See Ru le 12 1( b) . Peti ti on er i s a se lf- em pl oyed i ns ur an ce s al es m an . He resi de d i n M is si ss ip pi when he pe ti ti on ed th is Co urt. Pet it io ne r fi le d l at e h is Fed eral in co m e ta x re turn s fo r 20 07 -2 01 0 anddi d no t p ay th e fu ll am ount s o f ta x s ho wn as du e o n tho se returns . The IR S subs equ en tl y ass es se d the tax sh own as due . In an effo rt t o c ol le ctth es e as se ss ed am ount s, the IRS s en t p et it io ne r, on Ju ne 4, 2 01 4, a F in al Not ic e o f In te ntto Levy an d No ti ce o f You r Ri gh t t o aHeari ng . Peti ti on er t im el y subm it te d F orm

12 15 3, Reque stfor

a Co ll ect io n Du e Pro ces s o r Equ iv al en t Hea rin g. Inhi s re qu es t, p et iti on er as ke d tha t h is acco un t b e p la cedincurren tl y no t co ll ect ib le st atus or, al te rn at iv el y , th atth e IRS co ns id er a co ll ect io n a lt ern at iv e in th e fo rm of a n in st al lm en t ag reem en t.- 3 -

[* 3] On Oct ob er 1 1, 2 01 2, a s et tl em en t o ffi cer ( SO) fro m th e IRS App eal s Off

ic e wro te pe ti ti on er t o s ch edul e a CDP h eari ng forOcto be r 22 , 20 12 . The SO i nfo rm edpe ti ti on er tha t i n o rd er fo r hi m to co ns id er a co ll ect io n a lt ern at iv e, pe ti ti on er n eed edto subm ita co m pl et edFo rm

43 3- A, Col le ct io n In fo rm at io n S ta te m en t fo r W ag e Earn ers an d S el f-Em pl oyed In di vi du al s, t og ethe r with s up po rti ng fin an ci al in fo rm at io n. At the CDP h eari ng pe ti ti on er’s rep res en ta ti ve to ldth e SO th atpe ti ti on er’s rece ntlo ss of am ajor

cli en t ad ve rs el y

ha d a ffec te d h is fin an ci al si tu at io n. As a res ul t, p et it io ne r was no t ab le to pro vi de up da te d fi na nc ia l i nf orm at io n wi th inth e ti m efra m e th e SO h adset . The p art ie s ag reedth atpe ti ti on er wo ul d p ro vi de th e reque st edin fo rm at io n b y Nov em be r 14 , 20 12 . The SO i nf orm edpe ti ti on er’s rep res en ta ti ve th atif the in fo rm at io n was no t re cei ve d b y th atda te , th e p ro po se d le vy woul d b e su st ai ne d. The SO di d n otrece iv e th e reque st edin fo rm at io n b y Nov em be r 14 , 20 12 , an d p et it io ne r di d n otti m el y reque stad di ti on al ti m e to subm itit . The SO ne ve rth el es s wai te d an a dd it io na l two wee ks be fo re cl os in g the fil e. Havi ng he ard no th in g fr om

pe ti ti on er o r hi s re pr es en ta ti ve , th e SO o n No ve m be r 29 , 20 12 , su st ai ne d the pro po se d l ev y by iss ui ng a Not ic e o f Det erm in at io n C on cern in g Co ll ect io n Act io n( s) un de r Sec ti on 63 20 an d/ or63 30 . Peti ti on er t im el y pe ti ti on ed- 4 -

[* 4] th is Co urt fo r rev ie w onJan ua ry 3, 2 01 3. OnFeb ru ary 19 , 20 14 , res po nd en t fil eda m ot io n fo r su m

m ary jud gm en t, an d p et it io ne r res po nd edon Apri l 9 , 20 14 . 2

Dis cu ss io n A. Su m

m ary Ju dg m en t an d S tand ardof R ev ie w The pu rp os e o f su m

m ary jud gm en t i s t o e xp ed it e li ti ga ti on an d a vo idun ne ces sa ry an d t im e-co ns um in g tria ls . Fla. Pe ach Co rp . v. Co m m is si on er, 9 0 T.C. 67 8, 6 81 (19 88 ). The C ou rt m ay gra ntsu m

m ary jud gm en t wh enth ere i s n o g enuin e d is pu te as t o any m at eri al factan d ade ci si on m ay be ren de redas am at te r of law. Sun ds tra ndCo rp . v. Co m m is si on er, 9 8 T.C. 5 18 , 52 0 (1 99 2) , aff’d, 1 7 F .3d 96 5 (7 thCir . 19 94 ). Whe re the m ov in g p arty pro pe rly m ak es an d s up po rts a m ot io n fo r su m

m ary jud gm en t, “ anadve rs e p arty m ay no t re stup on th e m ere al le ga ti on s o r de ni al s o f su chparty’ s p le ad in g,” bu t m us t s etforth sp eci fic fact s, On Oct ob er 3 1, 2 01 3, p et it io ne r fi le d ape ti ti on for bankrupt cy

inth e U.S. 2 Ban kr up tc y Co urt fo r th e So ut he rnDis tri ctof M is si ss ip pi . This fil in g trig ge red th e au to m at ic st ay

un de r 11 U.S.C. sec . 36 2( a)(8 ) (2 01 2) . On Nov em be r 22 , 20 13 , th e b an krup tc y

co urt i nd ic at edth atth e au to m at ic st ay wou ldbe li fte d i f pe ti ti on er fai le d t o c om

pl y with acert ai n c ou rt o rd er. Pet it io ne r di d fa il to co m pl y with tha t or de r, an d the bankrupt cy st ay was a cco rd in gl y

li fte d o n J anuary

10 , 20 14 . On Sep te m be r 24 , 20 14 , th e b an krup tc y co urt cl os edpe ti ti on er’s cas e b y di sc ha rg in g cert ai n d eb ts un de r 11 U.S.C. sec . 72 7 (2 01 2) , bu t i t d oe s n otap pe ar tha t the 20 07 - 20 10 tax li ab il it ie s atis su e h ere wer e d is ch arg ed . Cf. Neil so n v . Comm is si on er, 94 T.C. 1, 9 (19 90 ) (Tax Co urt l ack s juris di ct io n t o d eci de whethe r a t ax pay er’s de fic ie nc ie s wer e d is ch arg edina ba nkrupt cy pro ceed in g) . In an y

ev en t, n ei th er pa rty con te nd s tha t the bankrupt cy st ay or p et it io ne r’s di sc ha rg e in bankrupt cy ha s an y effe cton ou r juri sd ic ti on to co ns id er an d re so lv e th is cas e o n the m eri ts .- 5 -

[* 5] by affid av itor o th erwi se , sh owi ng th atth ere i s a g enui ne di sp ut e fo r tr ia l. Ru le 12 1( d) . Pet it io ne r’s res po ns e to th e m ot io n fo r su m m ary jud gm en t al le ge s n o d is pu te as t o any m at eri al fact . In l ig htof r es po nd en t’s m ot io n, h is supp orti ng affi da vi ts , andpe ti ti on er’s res po ns e th eret o, we co nc lu de th atth is cas e m ay be ad jud icat edsu m

m ari ly. Whe re (a s h ere) th ere i s n o c ha ll en ge to th e am ou nt s o f a t ax pa y er’s und erlying tax li ab il it ie s fo r th e y ears at i ss ue , th e Co urt re vi ews th e IRS de te rm in at io n fo r ab us e o f di sc ret io n. Go za v . Comm is si on er, 1 14 T.C. 17 6, 1 82 (20 00 ). An ab us e o f di sc ret io n e xi st s wh ena de te rm in at io n i s arbi trary , cap ric io us , or wi th ou t so un d b as is infactor l aw. See M ur ph y v. Co m m is si on er, 1 25 T.C. 30 1, 3 20 (2 00 5) , aff’d, 4 69 F.3d27 (1s t Ci r. 20 06 ). B. Ana lysis Inde ci di ng whethe r th e SO ab us edhi s d is cret io n i n s us ta in in g the pro po se d le vy, w e co ns id er wh ethe r he : (1 ) pr op erl y ve rif ie d tha t the requi rem en ts of a ny ap pl ic ab le law o r adm in is tra ti ve pro cedur e h av e b eenm et ; (2 ) co ns id eredany rel ev an t i ss ue s p et it io ne r rai se d; an d (3 ) de te rm in edwhet he r th e p ro po se d co ll ect io n a ct io n “ ba lanc es th e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi th th e le gi ti m at e co nc ernof t he pe rs on th atan y co ll ect io n a ct io n b e n o m or e in tru si ve- 6 -

[* 6] th anne ces sa ry .” Sec. 6 33 0( c)(3 ). It i s cl ear f ro m ou r rev ie w of the reco rd th atth e SO co nduc te d ath or ou gh rev ie w of p et it io ne r’s fil in gs an d a cco un t tra ns cri pt s an d v eri fie d tha t the requi rem en ts of app li cab le law an d a dm in is tra ti ve pr oc edur e were f

ol lo wed . The tax pa y er m ay

rai se at h is CDP h eari ng an y rel ev an t i ss ue rel at in g t o the co ll ect io n a ct io n, i nc lu di ng “ of fers of c ol le ct io n a lt ern at iv es .” See s ec. 63 30 (c)( 2) (A)(i ii ). Pet it io ne r’s he ari ng reque stin cl ud eda st at em en t tha t h e in te nd edto pro po se anin st al lm en t ag reem en t. Sec ti on 61 59 au th or iz es th e IRS to en te r in to a writ te n a gr eem en t al lo win g atax pay er t o p ay a ta x l iabi li ty in in st al lm en ts if i t co nc lu de s tha t the “ ag reem en t wi ll faci li tate ful l o r pa rti al co ll ect io n o f su chli ab il ity .” Tho ug h s ta ti ng hi s i nt en ti on to do so , pet it io ne r ne ve r actua ll y pro po se d an in st al lm en t ag reem en t. The SO ga ve hi m a reas on ab le ex te ns io n o f ti m e, whi ch affo rd edhi m

m or e th ansi x wee ks to m ak e su cha pr op os al be fo re the cas e was cl os ed . It i s n otanab us e o f di sc ret io n fo r a s et tl em en t o ffi cer t o d ecl in e to co nsi de r anin st al lm en t ag reem en t wh ere the tax pa y er d oe s n otpl ace asp eci fic pro po sa l o n the tab le . See Mc Lain e v . Comm is si on er, 1 38 T.C. 22 8, 2 43 (20 12 ). Mo reo ve r, pe ti ti on er n eg le ct edto furni sh Fo rm 43 3- A andth e und erl y in g fin an ci al in fo rm at io n tha t the SO ha d twice reque st ed . As a p rere qu is it e fo r co n-- 7 -

[* 7] si de rat io n o f a co ll ect io n a lt ern at iv e, itis in cu m be nton th e ta xp ay er t o pr ov id e th e fi na nc ia l i nf

orm at io n tha t wi ll en ab le th e IRS to m ak e anin fo rm ed ev al ua ti onof h is ab il ity

to pay . See, e.g ., sec s. 6 15 9, 7 12 2; Kin dr edv. Co m m is si on er, 4 54 F.3d68 8, 6 97 (7t h C ir. 2 00 6) ; Ol se n v . Uni te d S ta te s, 4 14 F.3 d 1 44 , 15 1 (1 stCir . 20 05 ). A settl em en t o ffi cer d oe s n otab us e h is di sc ret io n whe n the tax pa y er’s fai lu re t o p ro vi de fin an ci al in fo rm at io n p rev en ts th e SO fro m co ns id eri ng co ll ect io n a lt ern at iv es . See, e.g ., Lance v. Co m m is si on er, T.C. Mem o. 20 09 -1 29 ; Sc hwe rs en sky v. Co m m is si on er, T.C. Mem o. 2 00 6- 17 8. Pet it io ne r co nt en ds th athe “ di d n otha ve a su ffi ci en t o pp ortu ni ty to ex pl or e le ss in tru si ve co ll ect io n m ean s” be cau se of h is “ ch an ge infin an ci al st atus ” an d supp os ed“ in ab il ity

to sh ow s uc h ach an ge to th e App eal s Off ic er.” Qu it e th e co nt rary: Whe n p et it io ne r’s rep res en ta ti ve in fo rm edth e SO o f pe ti ti on er’s ch an ge infin an ci al st atus , th e SO affo rd edhi m a th ree- weekex te ns io n o f ti m e in whi chto subm ita pr op os al with s up po rti ng fin an ci al in fo rm at io n. Aft er tha t d ead li ne ha d pa ss ed , th e SO wai te d ano th er two wee ks be fo re cl os in g the cas e. Und er the se ci rcu m st an ces , pet it io ne r was pe rfec tl y cap ab le of d em on strat in g h is “ ch an ge in fin an ci al st atus ” to th e SO.

“ The re i s n o re qu ire m en t tha t the Co m m is si on er wai t a c ert ai n a m ou ntof ti m e b efo re m ak in g ade te rm in at io n a s t o apro po se d l ev y .” Gazi v. Co m m is -- 8 -

[* 8] si on er, T.C. Mem o. 2 00 7- 34 2, 9 4 T.C.M . (CCH) 4 74 , 47 9; see , e.g., Sh an le y v. Co m m is si on er, T.C. Mem o. 2 00 9- 17 , 97 T.C.M. (CCH) 1 06 2 (f in di ng no ab us e of di sc ret io n wh enanSO su st ai ne d ano ti ce o f de te rm in at io n a fte r a t axpa y er fai le d t o p ro vi de reque st eddo cu m en ta ti onwithi n 1 4 d ay s) . Whe n an S O gi ve s a ta xp ay er an ad equa te pe rio d o f ti m e in whi chto res po nd , itis no t an ab us e o f di sc ret io n fo r th e SO to m ov e ah eadaft er en co un te rin g ra di o s il en ce fr om th e ta xp ay er. See Mas el li v. Co m m is si on er, T.C. Mem o. 2 01 0- 19 (ci ti ng Ro m anv. Co m m is si on er, T.C. Mem o. 2 00 4- 20 ). Fin di ng no ab us e o f di sc ret io n i n any res pe ct , we wil l g ran t s umm ary jud gm en t fo r res po nd en t an d s us ta inth e p ro po se d co ll ect io n a ct io n. To refl ectth e fo reg oi ng , An ap pr op ria te ord er an d d eci si on wil l b e en te red .