T.C. Sum m ary Opi ni on 20 14 -9 0

UNITED STAT ES TAX COURT

BRIAN CRAIG JOHNSON, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 11 54 3- 13 S L. Fi le d S ep te m be r 11 , 20 14 .
Bri anCrai g J oh ns on , pro se. Jo hn F. Dris co ll an d EdwinB. Cle ve rd on , forres po nd en t.

SUMM ARY OPINION LAUBER, Ju dg e: Thi s ca se was h eardpu rs ua ntto th e p ro vi si on s o f se ct io n 74 63 of t he Int ern al Rev enue Co de ineffec t wh enth e p et it io n was fil ed . 1

Unl es s o th erwi se in di cat ed , all st atut ory refe ren ces are t o t he Int ern al 1 Rev enue Co de ineffe ctat a ll rel ev an t t im es , andall Ru le refe ren ces are t o t he Tax Co urt Ru le s o f Prac ti ce an d P ro cedur e.- 2 -

Purs ua ntto sec ti on 74 63 (b ), th e d eci si on to be en te redis no t re vi ewab le by any ot he r co urt, an d thi s o pi ni on sh al l n otbe tre at edas p rece de ntforan y ot he r cas e. Inth is co ll ect io n due pro ces s (C DP) cas e, pe ti ti on er s eek s re vi ew pu rs ua nt to sec ti on 63 20 (c) o f th e d et erm in at io n b y th e In te rn al Rev enue Serv ic e (IR S o r res po nd en t) t o uph ol d the fil in g o f a n ot ic e o f Fed eral tax li en . Res po nd en t h as m ov edforsu 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 di sp ut edis su es of m at eri al factan d t ha t h is de te rm in at io n t o uph ol d t he no ti ce o f ta x l ie n fi li ng 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 th e m ot io n. Bac kg ro un d Pet it io ne r ti m el y

fil eda Fed eral in co m e ta x re tu rnfor20 05 . The IR S ex am in edth e return, d et erm in eda ta x d efi ci en cy an d a dd it io ns to tax , andm ai le d a no ti ce o f de fic ie nc y

to pe ti ti on er’s l as t kno wn ad dr es s b y cert ifi edm ai l. The no ti ce o f de fic ie nc y

was re tu rn edto th e IRS un cl ai m edaft er thr ee fa il edde li ve ry at te m pt s. Pet it io ne r di d n otpe ti ti on th is Co urt i n re sp on se to th e n ot ic e o f de fic ie nc y . In M arch 20 08 th e IRS ass es se d t he in co m e ta x d efi ci en cy an d ad di ti on s t o t ax for

20 05 an d the reaf

te r be ga n i ts co ll ect io n e ffo rts . InAug us t 2 00 9 aset tl em en t o ffi cer ( SO) fro m th e IRS App eal s Off

ic e se nt pe ti ti on er, wit h re sp ectto hi s 2 00 5 t ax li ab il ity , a Fin al Not ic e o f In te ntto Levy- 3 -

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, i n wh ic h h e so ug ht to di sp ut e h is un de rlyin g t ax li ab il ity for20 05 . Accor di ng to pe ti ti on er h is ori
gi na l re tu rnforth aty ear r ep orte d a n i nc orrectam ou ntdu e to anerro ne ou s Sc he dul e K-1 , Sha reh ol de r’s Sh are o f In co m e, Deduc ti on s, Cr ed it s, et c. At the CDP h eari ng , hel d i n J un e 2 01 0, the SO to ldpe ti ti on er tha t h e co ul d no t ch al le ng e h is 20 05 tax li ab il ity be cau se he ha d n eg le ct edto pe ti ti on th e Tax Co urt i n re sp on se to th e 2 00 5 n ot ic e o f de fic ie nc y . As st at edinhe r cas e act iv ity rep ort, p et it io ne r was “pr oh ib it ed[fro m ch al le ng in g h is un de rlyin g l iabi li ty] be cau se th e St atut ory

Not ic e o f Defi ci en cy

was m ai le d t o t he las t kno wn ad dr es s. [T]he n ot ic e was returne d t o IR S unc la im ed .” Fo ll owi ng th e h eari ng th e SO is su edto pe ti ti on er a No ti ce o f Det erm in at io n C on cern in g C ol le ct io n Act io n( s) Und er Se ct io n 6 32 0 a nd/o r 63 30 su st ai ni ng th e p ro po se d l ev y , whi chpe ti ti on er do es no t d is pu te rece iv in g. Pe ti ti on er d idno t p et it io n t hi s C ou rt i n re sp on se to th atno ti ce o f de te rm in at io n. Ina furth er ef

fo rt t o c ol le ctpe ti ti on er’s as se ss ed20 05 tax li ab il ity , th e IRS fil ed , inDecem

be r 20 12 , a no ti ce o f Fed eral tax li en(NFTL), whi chis th e subjec t of th e p res en t co nt ro ve rs y . The IR S se ntpe ti ti on er a No ti ce o f Fed eral Tax Li en Fi li ng an d Yo urRig htto a Heari ng Und er IR C 6 32 0, an d h e ti m el y reque st ed- 4 -

an ot he r CDP h eari ng . In h is reque stpe ti ti on er adva nc edth e sa m e ch al le ng e to hi s un de rlyin g 2 00 5 t ax li ab il ity th athe ha d a tt em

pt edto rai se at t he pri orCDP he ari ng . He als o s ou gh t a c ol le ct io n a lt ern at iv e in th e fo rm of a n o ffer -in
co m pr om is e an d/ or

withd rawal of t he NFTL. A di ffer en t s et tl em en t o ffi cer ( SO2 ) ackno wled ge d re cei ptof p et it io ne r’s he ari ng reque stan d s ch edul eda te le ph on e CDP h eari ng . She in fo rm edpe ti ti on er th at , inord er fo r he r to co ns id er a co ll ect io n a lt ern at iv e, he ha d t o b e in co m pl ianc e wit h h is Fed eral tax return fi li ng ob li ga ti on s. Sh e n ot edth at , acco rd in g t o IR S rec or ds , he h adfil edno return fo r 20 07 , 20 09 , 20 10 , or 2 01 1. Dur in g the Apri l 3 , 20 13 , hea rin g, SO2 advi se d p et it io ne r he co ul d n otco nte sthi s as se ss ed20 05 tax li ab il ity be cau se he ha d n eg le ct edto pe ti ti on th is Co urt in res po ns e to eit he r th e 2 00 5 n ot ic e o f de fic ie nc y or t he 20 10 no ti ce o f de te rm in ati on . Mor eo ve r, be cau se pe ti ti on er h adfil edno tax return fo r 20 07 , 20 09 , 20 10 , or 20 11 , sh e was un ab le to co ns id er h is reque stforanoff er-i n- co m pr om is e. Howev er, s he to ldhi m

th atsh e m ig htco ns id er a re qu es t fo r withd rawal of t he NFTL. Sh e fax edhi m

th e rel ev an t fo rm

an d g av e h im

14 da y s t o re sp on d. Pet it io ne r di d n otreturn the withd rawal form , no r di d h e p ro vi de an y ot he r do cu m en ta ti on to SO2 dur in g the he ari ng pro ces s. Sh e subs eque nt ly clo se d t he cas e an d, o n Ap ril 23 , 20 13 , th e IRS is su edpe ti ti on er a n ot ic e o f de te rm in at io n- 5 -

up ho ld in g the NFTL. Peti ti on er, wh il e res id in g i n Lo ui si an a, ti m el y pe ti ti on ed th is Co urt fo r rev ie w of tha t d et erm in at io n. Dis cu ss io n I. Su m

m ary Ju dg m en t St an da rd Su m m ary jud gm en t i s i nt en de d t o e xp ed it e li ti ga ti on an d a vo idun ne ces sa ry an d c os tl y

tri al s. FPL Grp ., Inc . v. Co m mis si on er, 1 15 T.C. 55 4, 5 59 (20 00 ). W e m ay gra ntsu m

m ary jud gm en t wh enno ge nu in e d is pu te ex is ts reg ard in g a ny m at eri al factan d ade ci si on m ay be ren de redas am at te r of law. See Ru le 12 1( b) ; Sund st ran d C or

p. v . Comm is si on er, 9 8 T.C. 5 18 , 52 0 (1 99 2) , aff’d, 1 7 F .3d96 5 (7 th Cir . 19 94 ). In r es po ns e to a m ot io n fo r su m m ary jud gm en t, the no nm ov in g pa rty m us t s etforth sp eci fic fact s s ho win g t ha t a g enui ne di sp ut e o f m at eri al fact ex is ts fortri al . Rul e 1 21 (d ); S un ds tra ndCo rp ., 98 T.C. at 5 20 . Pet it io ne r res po nd edto th e m ot io n fo r su m m ary jud gm en t b y

fil in g alet te r no ti ng th atcert ai n p ro pe rty subjec t t o t he tax li enha d b eenso ldan d e xp res si ng th e ho pe th atth e p ro ceed s wo ul d d is ch arg e h is 20 05 tax li ab il ity . This let te r di d n ot al le ge an y

m at eri al fact s i n d is pu te . W e co nc lu de th atsu m m ary ad jud ic at io n i s ap pr op ria te .- 6 -

II. St an dardof R ev ie w Neit he r se ct io n 6 32 0( c) n or63 30 (d ) pr es cri be s the st an da rdof r ev ie w th at th is Co urt s ho ul d app ly in re vi ewin g a n IR S adm in is tra ti ve de te rm in at io n i n a CDP cas e. The g en eral param et ers forsu chrev ie w are m ark edou t b y ou r pr ecede nt s. Where th e v al id ity of the un de rlyin g t ax li ab il ity is at i ss ue , th e Co urt re vi ews th e IRS ’ de te rm in at io n d e n ov o. Go za v . Comm is si on er, 1 14 T.C. 17 6, 1 81 - 18 2 (2 00 0) . Whe re the un de rlyin g t ax li ab il ity is no t p ro pe rly at is su e, we rev ie w th e IRS ’ de ci si on forab us e o f di sc ret io n. Id . at 1 82 . An ab us e o f di sc ret io n e xi st s whe n ade te rm in at io n i s arbi tra ry , cap ric io us , or wi th ou t s ou ndba si s i n fa ctor l aw. See M ur ph y v. Co m m is si on er, 1 25 T.C. 30 1, 3 20 (20 05 ), aff’d, 4 69 F.3d27 (1s t Ci r. 20 06 ). A tax pa y er’s und erl y in g l iabi li ty is n otpro pe rly at is su e dur in g aCDP he ari ng , andth eref

or e can no t b e rai se d i n t hi s C ourt o n re vi ew th ereo f, if t he ta xp ay er re cei ve d ano ti ce o f de fic ie nc y forsu chli ab il ity

or o th erwi se ha d apri or op po rtu ni ty to d is pu te it . See s ec. 6 33 0( c)(2 )(B) ; s ec. 3 01 .63 20 -1 (e)( 3) , Q&A-E2, Pro ced . & Adm in . Reg s. A ta xp ay er h as ha d apri orop po rtu ni ty to d is pu te a li ab il ity whenhe pa rti ci pa te d i n a n e arl ie r CDP h eari ng , recei ve d ano ti ce o f de te rm in at io n re ga rd in g the same liabi li ty, an d was en ti tl edto pe ti ti on th is Co urt- 7 -

fo r rev ie w of the de te rm in at io n und er s ect io n 6 32 0( c) o r 63 30 (d ). See Be ll v. Co m m is si on er, 1 26 T.C. 35 6 (2 00 6) . Here, p et it io ne r pa rti ci pa te d i n apri orCDP h eari ng reg ard in g h is 20 05 tax li ab il ity --the Ju ne 20 10 he ari ng reg ard in g t he no ti ce o f le vy. He at te m pt edto rai se hi s 2 00 5 t ax li ab il ity

at tha t h eari ng , bu t the SO refu se d t o l ethi m do so . Co nc ei vabl y , th atrefu sa l m ay ha ve be enerro ne ou s. If itwas, p et it io ne r co ul d 2 ha ve ch al le ng edth atde te rm in at io n, as well as h is un de rlyin g 2 00 5 t ax li ab il ity , by se ek in g re vi ew in th is Co urt. See Bel l, 1 26 T.C. at 3 58 -3 59 . Becau se pe ti ti on er ha d apri orop po rtu ni ty to co nt es t h is 20 05 tax li ab il ity bu t n eg le ct edto do so , th at li ab il ity was n otpro pe rly rais edat t he Apri l 2 01 3 C DP he ari ng . W e acc or di ng ly rev ie w SO2’s d et erm in at io n fo r ab us e o f di sc ret io n o nl y . The SO, du rin g the Ju ne 20 10 he ari ng , refu se d t o l etpe ti ti on er ch al le ng e 2 hi s u nd erl y in g t ax li ab il ity be cau se he ha d n otpe ti ti on edth is Co urt i n re sp on se to th e 2 00 5 n ot ic e o f de fic ie nc y . Gener al ly, a ta xp ay er m us t ac tu al ly recei ve th e no ti ce o f de fic ie nc y

forth e p recl us io n u nd er s ect io n 6 33 0( c)(2 )(B) to ap pl y . See Tatu m v. Co m mis si on er, T.C. Mem o. 2 00 3- 11 5. Bu t s ee On y an go v. Co m m is si on er, 1 42 T.C. __(Ju ne 24 , 20 14 ) (p recl us io n app li es de sp it e la ckof rece ip t wh ere t ax pa y er d ecl in es to retrie ve m ai l d es pi te m ul ti pl e rea so nabl e op po rtu ni ti es to do so ); S eg o v . Comm is si on er, 1 14 T.C. 60 4, 6 10 (20 00 ) (p recl us io n app li es de sp it e la ckof r ecei ptwher e ta xp ay er d el ib erat el y refu se s de li ve ry of m ai l). Th e rec or d c on ta in s n o e vi de nc e as to why th e 2 00 5 n ot ic e o f de fic ie nc y , th ou gh m ai le d t o p et it io ne r’s la stkn own ad dr es s, was returne d t o the IRS u nc la im edaft er thr ee fa il edde li ve ry att em pt s. Be cau se pe ti ti on er d idno t pe ti ti on inres po ns e to th e 2 01 0 n ot ic e o f de te rm in at io n, we n eedno t d eci de whe th er the SO was c orrectinde te rm in in g t ha t p recl us io n app li edbe cau se he di d no t p et it io n i n re sp on se to th e 2 00 5 n ot ic e o f de fic ie nc y .- 8 -

III. Ana lysis W e co ns id er wh ethe r, inth e co ur se of m ak in g h er d et erm in at io n, SO2 : (1 ) pr op erl y ve rif ie d tha t the requi rem en ts of a ny app li cab le law o r admin is tra ti ve pr oc edur e h av e b eenm et ; (2 ) co ns id eredan y 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 “ an y pro po se d c ol le ct io n a ct io n b al an ces th e n eedforth e effi ci en t co 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 th anne ces sa ry .” Sec. 6 33 0( c)(3 ). W e h av e rev ie wedth e rec or d a ndco nc lu de th atSO2 p ro pe rly veri fie d t ha t al l re qu ire m en ts of app li cab le law an d a dm in is tra ti ve pro cedur e were m et . SO2 al so pro pe rly bal an cedth e n eedforeffi ci en t co ll ect io n o f ta xe s wi th pe ti ti on er’s le gi ti m at e co nc ernth atco ll ect io n a ct io n b e n o m or e in tru si ve th anne ces sa ry . SO2 de cl in edto co ns id er p et it io ne r’s reque stforanoff er-i n- co m pr om is e b ecau se he ha d n otfil eda ta x re turnfor20 07 , 20 09 , 20 10 , or 2 01 1. Itis no t an ab us e o f di scret io n fo r th e IRS to de cl in e d is cu ss io n o f a co ll ect io n a lt ern at iv e whe re the tax pa y er i s n otinco m

pl ianc e wit h h is tax return fi li ng ob li ga ti on s. See , e.g., Ro dr ig ue z v . Comm is si on er, T.C. Mem o. 2 00 3- 15 3. Ra th er g en ero us ly, SO2 di d of fer p et it io ne r th e o pp ortu ni ty to re qu es t wi th dr awal of t he NFTL. Pet it io ne r di d 3 W ithd rawal of a n NFTL i s a c ol le ct io n a lt ern at iv e. See s ec. 3 01 .63 20 - 3 1( e)(3 ), Q&A-E6 , Pro ced . & Adm in . Reg s. Be cau se pe ti ti on er was no t i n (co nt in ue d...)- 9 -

no t re tu rnth e wit hd rawal form withi n t he 14 da y s al lo wedan d h e th us de cl in edto pu rs ue th is op po rtu ni ty. Pet it io ne r ha s n otall eg eda m at eri al di sp ut e o f fac t co nc ern in g a ny of th es e p oi nt s, an d we t he refo re re so lv e th em inres po nd en t’s fav or . Fi nd in g n o abu se of d is cret io n i n a ny resp ect , we wil l g ran t s umm ary jud gm en t fo r res po nd en t an d a ffi rm th e IRS ’ de te rm in at io n t o s us ta in th e n ot ic e o f Fed eral tax li enfil in g. 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 .

(...co nt inue d) 3 co m pl ianc e wit h h is tax return fi li ng ob li ga ti on s, SO2 was n otob li ga te d t o o ffer th atrel ie f.