T.C. Mem o. 2 01 5- 17 8

UNITED STAT ES TAX COURT

GARY WAYNE RODRIGUES, Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 27 27 7- 11 L. Fi le d S ep te m be r 10 , 20 15 . Gary W ayne Ro dr ig ue s, p ro se. Jo na th anJ. On o andPet er R. Ho ch m an , forres po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION VASQUEZ, Ju dg e: Thi s ca se ari se s fr om a pe ti ti on for

rev ie w fil edin res po ns e to a Not ic e 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 Sect io n 6 32 0 and/o r 63 30 (no ti ce o f de te rm in at io n) with re sp ectto pe ti ti on er’s 1
Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o the Int ern al 1 (co nt in ue d...)-2
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[* 2] Fed eral in co m e ta x l iabi li ty for 2 00 9. Th e is su es forde ci si on are: (1 ) whe th er d is tri bu ti on s fr om pe ti ti on er’s i nd iv idua l re ti rem en t ac co un t (I RA) were i nc lu dabl e in hi s g ro ss in co m e; an d (2 ) whe th er re sp on de ntab us edhi s di sc ret io n i n s us ta in in g the fil in g o f a n ot ic e o f Fed eral tax li en(NFTL). FINDINGS OF FACT I. Pet it io ne r’s Cri m in al Co nv ic ti on Fro m 19 84 -2 00 2 p et it io ne r se rv edas p lan a dm in is tra to r of th e Uni te d Publ ic W orke rs Mu tu al AidTrus t Fu nd(UPW pl an ). In 2 00 3 h e was co nv ic te d i n 2 th e U.S. Dis tri ctCo urt fo r th e Dis tri ctof Hawaii of m ai l fr au d, h eal th care frau d,
m on ey lau nd eri ng , con sp ira cy

to co m m itm on ey

lau nd eri ng , em

be zzl em en t, an d acce pt in g k ic kb ack s t o i nf lu en ce o pe rat io n o f th e UPW pl an . Con se qu en tl y , he was sen te nc edto 64 m on th s i n p ris on an d o rd eredto pay a $5 0,0 00 fin e to th e Dis tri ctCo urt an d $ 37 8,1 03 .63 inres ti tu ti on to Uni te d P ub li c Work ers (UPW). Pet it io ne r atth atti m e h adno li qu idass et s fr om whi chth e jud gm en t co ul d be sat is fie d. Ho wev er, p et it io ne r whi le em pl oyed atUPW

parti ci pa te d i n a
(...co nt inue d) 1 Rev enue Co de ineffe ctat a ll rel ev an t t im es . The UPW pl anwas an ERI SA-g ov ern edem pl oyee welf

are b en efi t p lan 2 th atpro vi de d h os pi ta li zat io n b en efi ts to it s p art ic ip an ts .-3
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[* 3] de fin edco nt rib ut io n p lan u nd er wh ic h h e h adaccr ue d p en si on be ne fit s. The 3 Gov ern m en t s ou gh t t o c ol le ctpe ti ti on er’s fi ne an d re st itut io n b y garn is hi ng hi s pe ns io n b en efi ts . Duri ng a co urt h eari ng pe ti ti on er’s co un se l, the Gov ern m en t’s co un se l, an d the pre si di ng jud ge vo ic edco nc ernov er, am on g o th er thi ng s, the tax co ns eque nc es of t he po te nt ia l g arn is hm en t o rd er. As a r es ul t-- to av oi d i m m ed ia te ta xa ti on an d t o b uy tim e in th e h op e o f fi nd in g an a lt ern at e so ur ce o f pa ym en t-- pe ti ti on er, thr ou gh un de rs ig ne d c ou ns el , est ab li sh edanIRA atFHB whe reb y hi s pe ns io n b en efi ts were tran sf erre d androl le d o ve r in to th e IRA. 4 Pet it io ne r ev en tu al ly app eal edhi s co nv ic ti on an d, i n 2 00 7, the Co urt o f App eal s fo r th e Nin th Cir cu itaffi rm ed . There aft er, p et it io ne r fi le d ape ti ti on fora writof c ert io rari , whi chth e U.S. Supr em e Co urt d en ie d. In20 08 th e Dis tri ct Co urt o rd eredFHB to di sb ur se th e fu nd s i t h el d i n p et it io ne r’s IRA t o s at is fy pe ti ti on er’s fi ne an d re st itut io n o bl ig at io ns (20 08 garn is hm en t o rd er). In20 08 UPW

pu rs ue d aciv il act io n a ga in stpe ti ti on er i n the Dis tri ctCo urt an d o bt ai ne d ajud gm en t ag ai ns t h im for $8 50 ,00 0. UPW, in o rd er t o c ol le ctth e The d efi ne d c on tri bu ti on pl anwas e st ab li sh edan d m ai nt ai ne d a t Fi rs t 3 Hawai ian B an k (F HB). Pet it io ne r es tabl is he d the IRA b y ex ecu ti ng a st ip ul at io n wi th th e 4 Gov ern m en t an d fi li ng itwith the Dis tri ctCo urt. Inth e st ip ul at io n p et it io ne r ag reedth at , if n eces sa ry , th e IRA p ro ceed s wo ul d b e d is pe rs edto sat is fy hi s fi ne an d re st itut io n o bl ig at io ns .-4
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[* 4] jud gm en t, fi le d am ot io n t o g arn is h the ga in s an d i nt eres t tha t h adaccrue d i n pe ti ti on er’s IRA. Pet it io ne r ob jecte d t o the m ot io n, ar gu in g tha t the ga in s an d in te res t wer e ex em

ptfro m garn is hm en t u nd er Haw. Rev . Sta t. An n. s ec. 6 51 -1 24 (Lex is Nex is 20 12 ). The m ag is tra te jud ge di sa gr eedwith p et it io ne r an d h el d tha t th e g ai ns an d i nt eres t wer e n otex em ptbe cau se th e p en si on be ne fit s “ lo stth ei r ch arac te r as ‘ ret ire m en t p lan a ss et s’” whe n the y were tran sf

erre d i nt o the IRA. Subs eque nt ly, in20 09 th e Dis tri ctCo urt fi le d an o rd er ad op ti ng th e m ag is tra te jud ge ’s fin di ng s an d re co m m en da ti on . On Dec em

be r 7, 2 00 9, FHB is su eda ch eckfor$4 28 ,10 3.6 3 fr om pe ti ti on er’s IRA t o the cle rkof t he Dis tri ctCo urt. Ad di ti on al ly, on Decem be r 8, 20 09 , FHB is su eda ch eckfor$8 9,3 43 .98 fro m pe ti ti on er’s IRA t o UPW. The reaf te r, FHB i ss ue d aFo rm

10 99 -R, Dis tri bu ti on s Fr om Pen si on s, An nu it ie s, Ret ire m en t o r Pro fit -Sh ari ng Pla ns , IRAs, In su ran ce Co nt ract s, et c., to pe ti ti on er fo r 20 09 rep orti ng th athe ha d re cei ve d t ax ab le di st rib ut io ns fro m hi s IRA of $5 17 ,44 7.6 1 ($ 42 8,1 03 .63 + $8 9,3 43 .98 ). II. Pet it io ne r’s Tax R eturn F il in g andCo ll ect io n Du e Pro ces s (C DP) Hear in g Pet it io ne r fi le d h is 20 09 Fed eral in co m e ta x re tu rn , onwhi chhe rep orte d ta xabl e IRA d is tri bu ti on s o f $5 17 ,44 8 anda ta x l iabi li ty of $1 33 ,11 6. On-5 -

[* 5] Nov em

be r 22 , 20 10 , th e In te rn al Rev enue Serv ic e (IR S) as se ss edpe ti ti on er’s ta x a s re po rte d o n h is return. Pet it io ne r di d n otful ly pay th e as se ss edtax li ab il ity . The IR S fi le d an NFTL reg ard in g the li ab il ity , andon Feb ru ary 24 , 20 11 , th e IRS m ai le d p et it io ne r a Let te r 31 72 , Not ic e o f Fed eral Tax Li enFil in g andYou r Ri gh t t o aHeari ng Und er IR C 6 32 0. Inres po ns e to th e Let te r 31 72 pe ti ti on er t im el y subm it te d a Fo rm 12 15 3, Re qu es t fo r a Co ll ect io n Du e Pro ces s o r Equ iv al en t Hea rin g. Onhi s Fo rm 12 15 3 p et it io ne r (1 ) in di cat edth athe was n otli ab le forth e ta x o wed ; (2 ) qu es ti on edth e le ga li ty andva li di ty of th e 2 00 8 g arn is hm en t o rd er; (3) reque st eda te le ph on e CDP h eari ng fro m pri so n; an d (4 ) as ke d the IRS t o re st or e h is IRA with in te res t. Pet it io ne r al so att ach edvario us do cum en ts to hi s Fo rm 12 15 3. On M ay 17 , 20 11 , th e IRS Offic e o f App eal s (Ap pe al s) m ai le d p et it io ne r a le tt er s ta ti ng th atth ey

ha d re cei ve d h is CDP h eari ng reque st . Howev er, the let te r was returne d a s u nd el iv erab le be cau se of p et it io ne r’s fai lu re t o p ro vi de anin m at e reg is te r nu m

be r in hi s C DP he ari ng reque st . On Ju ly 20, 2 01 1, Ap pe al s m ai le d pe ti ti on er a l et te r no ti fy in g h im th athi s C DP he ari ng ha d b eentra ns ferr edto th e SanFran ci sc o, Ca li fo rn ia , App eal s Off ic e. The IRS as si gn edpe ti ti on er’s CDP h eari ng to Set tl em en t Offi cer Al an Owy an g. OnSep te m

be r 12 , 20 11 , Set tl em en t Offi cer Owy an g m ai le d p et it io ne r a-6
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[* 6] let te r sc he du li ng a te le ph on e CDP h eari ng forOcto be r 5, 2 01 1. Inres po ns e, pe ti ti on er s en t a l ette r to Set tl em en t Offi cer Owy an g, d at edSep te m be r 26 , 20 11 , reque st in g aco rres po nd en ce CDP h eari ng an d an e xt en si on of t im e. Pet it io ne r al so in fo rm edSet tl em en t Offi cer Owy an g tha t h is wife wou ldso on co nt act Set tl em en t Offi cer Owy an g o n h is be ha lf. On Se pt em

be r 28 , 20 11 , pet it io ne r’s wife sen t a l et te r to Set tl em en t Offi cer Owy an g i nf

orm in g h im

th atpe ti ti on er h adrece iv edhi s Se pt em be r 12 , 20 11 , let te r, an d wo ul d s oo n re qu es t an ex te ns io n o f ti m e. The l ette r al so st at edth atpe ti ti on er ha d n o a cces s t o aco m

pu te r an d l im it edacce ss to a typewri te r. Set tl em en t Offi cer Owy an g d en ie d p et it io ne r’s ex te ns io n re qu es t. On Octo be r 6, 2 01 1, h e m ai le d p et it io ne r a “ la stch an ce l et te r” i nd ic at in g tha t h e wou ldm ak e a d et erm in at io n b y rev ie win g the adm in is tra ti ve fil e an d any in fo rm at io n p et it io ne r ha d p rev io us ly sub mitte d. Se tt le m en t Offi cer Owy an g advi se d p et it io ne r th atif h e wan te d t o p ro vi de ad di ti on al in fo rm at io n h e sh ou lddo so withi n 1 4 d ay s fr om

th e d at e o f th e le tt er. Pet it io ne r di d n otsubm itany ad di ti on al in fo rm at io n. On Oct ob er 1 3, 2 01 1, p et it io ne r’s wife sen t a f in al let te r to Set tl em en t Offi cer Owy an g i nf

orm in g h im

th atpe ti ti on er h adrece iv edhi s Oct ob er 6 , 20 11 , le tt er, an d tha t p et it io ne r ha d re qu es te d an e xt en si on of t im e o n S ep te m be r 26 ,-7 -

[* 7] 20 11 . The l et te r al so rei te rat edth atpe ti ti on er h adno acce ss to a co m pu te r an d l im it edacce ss to a typewri te r. Duri ng th e co ur se of t he CDP h eari ng pe ti ti on er d idno t p ro po se an y co ll ect io n a lt ern at iv e. On Oct ob er 3 1, 2 01 1, the IRS i ss ue d p et it io ne r th e n ot ic e of de te rm in at io n s us ta in in g the li enact io n a t i ss ue . Pet it io ne r, whi le res id in g i n 5 Cal ifo rn ia , ti m el y

pe ti ti on edth is Co urt fo r rev ie w of the no ti ce o f de te rm in at io n.

OPINION I. St atut ory

Fram ewo rk Sect io n 6 32 1 i m

po se s a l ie n i n fa vo r of

th e Uni te d S ta te s o n a ll pro pe rty and rig ht s t o p ro pe rty of a t ax pa y er l iabl e fo r ta x wh ena de m an d fo r pa y m en t o f th e ta x h as be enm ad e an d the tax pay er fa il s t o p ay th e ta x. Se ct io n 6 32 0( a) p ro vi de s th atth e Sec ret ary sh al l furn is h the tax pa y er wi th a no ti ce o f th e fi li ng (i.e ., Lett er 31 72 ) withi n fi ve bu si ne ss day s af te r th e NFTL is fil ed . If a t ax pa y er re qu es ts a he ari ng inres po ns e to a Lett er 3 17 2 p ur su an t t o se ct io n 6 32 0, a h eari ng sh al l b e h el d b efo re an im pa rti al off

ic er o r em

pl oyee of App eal s. Sec . 63 20 (b )(1 ), (3 ). At th e h eari ng th e ta xp ay er m ay rai se an y rel ev an t is su e, in cl ud in g app ro pr ia te sp ou sa l d efen se s, ch al le ng es to th e ap pr op ria te ne ss of
Befo re the no ti ce o f de te rm in at io n was is su ed , Set tl em en t Offi cer Owy an g 5 ve rif ie d tha t al l l eg al an d a dm in is tra ti ve requi rem en ts for co ll ect io n h adbe enm et .-8
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[* 8] th e co ll ect io n a ct io n, an d c ol le ct io n a lt ern at iv es . Sec. 6 33 0( c)(2 )(A). A ta xp ay er i s p recl ud edfro m co nt es ti ng th e ex is te nc e o r am ou ntof t he un de rlyin g ta x l iabi li ty unl es s the tax pa y er d idno t re cei ve a no ti ce o f de fic ie nc y forth e li ab il ity inqu es ti on or d idno t o th erwi se ha ve anearl ie r op po rtu ni ty to d is pu te th e li ab il ity . Sec. 6 33 0( c)(2 )(B) ; s ee al so Seg o v . Commis si on er, 1 14 T.C. 60 4, 6 09 (2 00 0) . Fo ll owi ng a he ari ng App eal s m us t d et erm in e whe th er p ro ceed in g wi th th e li enact io n i s ap pr op ria te . In m ak in g tha t d et erm in at io n Ap pe al s i s re qu ire d t o ta ke in to co ns id erat io n: (1) ve rif ic at io n p res en te d b y

th e Sec ret ary du rin g the he ari ng pro ces s 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 h av e b eenm et ; (2 ) rel ev an t i ss ue s ra is edby the tax pa y er; an d (3 ) whe th er the li enact io n app ro pr ia te ly bal an ces th e n eedfor effi ci en t co ll ect io n of tax es with the tax pa y er’s co nc ern s re gard in g the in tru si ve ne ss of t he co ll ect io n act io n. Se c. 63 30 (c)( 3) . II. St an dardof R ev ie w If the tax pa y er d is ag rees with Ap pe al s’ det erm in at io n, the tax pa y er m ay se ekrev ie w of the de te rm in at io n b y fil in g ati m el y

pe ti ti on inth is Co urt. Sec s. 63 20 (c), 6 33 0( d) . If a ta xp ay er’s und erl y in g l iabi li ty is p ro pe rly at is su e, we rev ie w any det erm in at io n wi th res pe ctto th e und erl y in g l iabi li ty de n ov o. Se go v.-9
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[* 9] Co m m is si on er, 1 14 T.C. at 6 10 ; Go za v . Comm is si on er, 1 14 T.C. 17 6, 1 81
- 18 2 (2 00 0) . W e rev ie w any oth er ad m in is tra ti ve de te rm in at io n fo r ab us e o f di sc ret io n. Cr ai g v . Comm is si on er, 1 19 T.C. 25 2, 2 60 (20 02 ) (ci ti ng Seg o v . Co m m is si on er, 1 14 T.C. at 6 10 ). Res po nd en t co nc ed es th atpe ti ti on er d idno t re cei ve a no ti ce o f de fic ie nc y an d d idno t o th erwi se ha ve anop po rtu ni ty to ch al le ng e th e und erl y in g t ax li ab il ity . Acco rd in gl y , pet it io ne r m ay ch al le ng e th e und erl y in g l iabi li ty in thi s p ro ceed in g an d, t o the ex te ntth e und erl y in g l iabi li ty is atis su e, we wil l re vi ew res po nd en t’s de te rm in at io n d e n ov o. III. Bu rd enof P ro of Pet it io ne r do es no t d is pu te th atth e IRA d is tri bu ti on s wer e m ad e o r res po nd en t’s ca lc ul at io n o f ta x. Ra th er, p et it io ne r di sa gr ees on ly w ith res po nd en t’s l eg al co nc lu si on s (i .e., th atpe ti ti on er’s IRA d is tri bu ti on s wer e ta xabl e). Bec au se th e rel ev an t fa ct s ar e und is pu te d andon ly a leg al is su e rem ai ns , we ne edno t d eci de who be ars th e b ur de n o f pr oo f on th is is su e. See Es ta te of Mo rg en s v . Commis si on er, 1 33 T.C. 40 2, 4 09 (20 09 ), aff’d, 6 78 F.3d76 9 (9 th Cir . 20 12 ); s ee al so W aam iq -Ali v. Co m m is si on er, T.C. Mem o. 2 01 0- 86 ; Ro zzan o v . Co m m is si on er, T.C. Mem o. 2 00 7- 17 7.-1 0-

[* 10 ] IV. Dis tri bu ti on s Fr om Qual ifi edRet ire m en t Pl an s Dis tri bu ti on s fr om

qu al ifi edret ire m en t p lans are g en eral ly inc lu dabl e in th e di st rib ut ee’s i nc om e inth e y ear o f di st rib ut io n a s p ro vi de d i n s ect io n 7 2. Se cs . 40 2( a), 4 08 (d )(1 ). An ex cep ti on ex is ts if the di st rib ut io n p ro ceed s ar e ro ll edov er in to anIRA wit hi n 6 0 d ay s o f th e d is tri bu ti on . Sec. 4 08 (d )(3 ). Thi s ca se rev ol ve s ar ou ndth ree s ep arat e d is tri bu ti on s- -o ne in20 04 an d two in20 09 --tha t o ccu rredaft er p et it io ne r’s cri m in al co nv ic ti on . As pa rt o f hi s cri m in al sen te nc e, th e Dis tri ctCo urt o rd eredpe ti ti on er t o p ay a fi ne to th e Dis tri ct Co urt an d re st itut io n t o UPW. Howev er, atth atti m e p et it io ne r ha d n o l iqui d as se ts fro m

whi chth e jud gm en t co ul d b e sa ti sf ie d. As a res ul t, i n 2 00 4, t o s at is fy pe ti ti on er’s fi ne an d re st itut io n o bl ig at io ns , th e Gov ern m en t m ov edto garn is h pe ti ti on er’s p en si onbe ne fit s. Pet it io ne r--t o a vo idimm ed ia te tax at io n andto bu y ti m e in th e h op e o f fi nd in g an a lt ern at e so ur ce o f pa ym en t-- es tabl is he d an IRA at FHB wh ereb y

hi s p en si on be ne fit s wer e tr an sf erre d androl le d o ve r in to th e IRA. The parti es do no t d is pu te th atth is rol lo ve r di st rib ut io n was no nt ax ab le in20 04 an d thu s al lo wedpe ti ti on er t o c on ti nu e to de fer t ax at io n o f hi s p en si on be ne fit s un ti l a s ub se qu en t d is tri bu ti on . Pet it io ne r un fo rtu na te ly w as un ab le to fin d an a lt ern at e so ur ce o f pa ym en t. As a re su lt , in20 08 --af

te r th e Dis tri ctCo urt’s co nv ic ti onwas a ffi rm edby the-1 1-

[* 11 ] Co urt o f App eal s fo r th e Nin th Cir cu it --the Dis tri ctCo urt o rd eredFHB to di sb ur se th e fu nd s i t h el d i n p et it io ne r’s IRA t o s at is fy pe ti ti on er’s fi ne an d res ti tu ti on ob li ga ti on s. Th erea fte r, in20 09 FHB is su edtwo ch eck s fr om pe ti ti on er’s IRA- -o ne to th e cl erkof t he Dis tri ctCo urt fo r $4 28 ,10 3.6 3 andth e ot he r to UPW

for$8 9,3 43 .98 . Peti ti on er ar gu es , am on g o th er thi ng s, tha t the se di st rib ut io ns sh ou ldno t b e subjec t t o t ax be cau se he pe rs on al ly didno t re cei ve th e fund s o r rec ei ve a be ne fitth eref ro m an d the withd rawal s wer e in vo lu nt ary. Res po nd en t ar gu es th atth e st atut e requi res th e im po si ti onof t he tax irr es pe ct iv e o f actua l re cei ptby or be ne fitto pe ti ti on er o r th e v ol un tary na tu re o f th e d is tri bu ti on . W e ag ree wi th res po nd en t. Pet it io ne r co ns tru ct iv el y rece iv edth e IRA di st rib ut io ns when th e d is tri bu ti on s wer e m ad e to th e Dis tri ctCo urt an d UPW in sa ti sf act io n o f pe ti ti on er’s o bl ig at io ns , andpe ti ti on er ca nn otesc ap e ta xa ti on on th e b as is th atth e fu nd s wer e d is bu rs edto th irdparti es . See Laro to nd a v . Co m m is si on er, 8 9 T.C. 2 87 , 29 1 (1 98 7) . “ The di sc harg e b y a th irdpe rs onof * * * [a t ax pay er’s o bl ig at io n] is equi va le ntto rece ip t b y th e p ers on tax ed .” OldCo lo ny Trus t Co . v. Co m

m is si on er, 2 79 U.S. 71 6, 7 29 (19 29 ); s ee al so You ng v. Co m m is si on er, 1 13 T.C. 15 2, 1 57 (19 99 ), aff’d, 2 40 F.3d36 9 (4 th Cir . 20 01 ). The factth atth e tr an sf

er i s i nv ol un tary , su chas b y garn is hm en t, h as no si gn ifi can ce. See , e.g., Tu ck er v . Comm is si on er, 6 9 T.C. 6 75 , 67 8 (1 97 8) ;-1 2-

[* 12 ] Ch am

be rs v. Co m

m is si on er, T.C. Mem o. 2 00 0- 21 8 (h ol di ng am ou nt s ga rn is he d fr om

em pl oyee’s wage s fo r al im on y an d c hi ldsupp ort wer e in cl ud ab le inem pl oyee’s in co m e), aff

’d, 17 Fed . App x. 6 88 (9t h C ir. 2 00 1) ; Vo rwal d v . Co m m is si on er, T.C. Mem o. 1 99 7- 15 (ho ld in g tha t am ou nt s tran sf erre d fr om ta xp ay er’s ret ire m en t ac co un t t o h is form er s po us e in garn is hm en t p ro ceed in g co ns ti tu te d d eem eddi st rib ut io ns to tax pa y er fro m hi s re ti rem en t ac co un t an d wer e, th eref or e, in cl ud ab le inhi s i nc om e). Pet it io ne r’s IRA was garn is he d t o s at is fy hi s fi ne an d re st itut io n o bl ig at io ns im po se d b y th e Dis tri ctCo urt. The garn is he d fu nd s, i n o th er wo rd s, were pa idto sa ti sf y leg al ob li ga ti on s tha t p et it io ne r owe d andth us co ns ti tu te gro ss in co m e to hi m . Pet it io ne r al so att em pt s t o fi ndfau ltwith the Dis tri ctCo urt, the Gov ern m en t, an d F HB. Pet it io ne r as se rts on bri ef tha t h e trus te d andrel ie d o n th es e en ti ti es to “ co m

pl y with the law” an d tha t the y vi ol at edth e la w when th ey es tabl is he d andadm in is te redhi s IRA, andul ti m at el y di st rib ut edth e p ro ceed s fr om hi s IRA. W e d is ag ree. Fi rs t, i t was pe ti ti on er wh o, thr ou gh un de rs ig ne d c ou ns el , de ci de d t o e st ab li sh th e IRA atFHB. Seco nd , pet it io ne r ge ne ral ly cite d v ari ou s se ct io ns of t he Int ern al Rev enue Co de --i nc lu di ng sec ti on s 4 08 an d 3 40 5- -b ut fai le d t o s pe ci fy

ho w any of the en ti ti es in vo lv eddi d n otco m pl y with the se-1 3-

[* 13 ] pro vi si on s. Th ird , pet it io ne r is mis ta ke n i n h is be li ef tha t the IRA was es tabl is he d t o e sc ap e ta xe s i nd efi ni te ly. Pet it io ne r was advi se d t o e st ab li sh th e IRA t o avo ida ta xabl e ev en t b efo re h e h adex haus te d h is ap pe al of h is co nv ic ti on an d t o g iv e h im se lf a dd it io na l t im e to fin d an a lt ern at e so ur ce o f paym en t. When pe ti ti on er was un ab le to fin d an a lt ern at e so ur ce o f pa ym en t, the Dis tri ctCo urt or de redFHB to di sb ur se th e p ro ceed s fr om pe ti ti on er’s IRA t o s at is fy hi s fi ne an d res ti tu ti on ob li ga ti on s. Th e eco no m ic be ne fitpe ti ti on er en joy edin20 09 when he co ns tru ct iv el y

rece iv edth e d is tri bu ti on s ca nn otbe ig no red . Pet it io ne r al so refe rs to th e m ag is tra te jud ge ’s fin di ng s an d re co m m en da ti on inDeco st a ex rel . Bd. o f Trs. o f Uni te d P ub li c Work ers v. Ro dr ig ue s, No . 03
- 00 59 8 DAE-LEK, 20 09 W L 33 99 09 1 (D. Haw. Oct . 22 , 20 09 ), to sh ow tha t the IRA d is tri bu ti on s wer e n ottax ab le to hi m . Thes e fi nd in gs st em fro m UPW ’s
m ot io n fi le d i n the Dis tri ctCo urt t o g arn is h the ga in s an d i nt eres t tha t ac cru edin pe ti ti on er’s IRA. Pet it io ne r ob jecte d t o the m ot io n, ar gu in g tha t the ga in s an d in te res t wer e ex em

ptfro m garn is hm en t u nd er Haw. Rev . Sta t. An n. s ec. 6 51 -1 24 . 6 The m ag is tra te jud ge di sa gr eedwith p et it io ne r an d h el d tha t the ga in s an d i nt eres t
Haw. Rev . Sta t. An n. s ec. 6 51 -1 24 (Lex is Nex is 20 12 ) ex em pt s fr om 6 at ta ch m en t, ex ecu ti on or s ei zu re, the rig ht s o f a d eb to r to a pe ns io n, an nu ity , ret ire m en t o r di sabi li ty allo wan ce u nd er ce rta inret ire m en t p lans de sc rib edun de r th e In te rn al Rev enue Co de .-1 4-

[* 14 ] were n otex em

ptbe cau se pe ti ti on er’s p en si on be ne fit s “ lo stth ei r ch arac te r as ‘ ret ire m en t p lan a ss et s’” whe n the y were tran sf

erre d i nt o the IRA. Pet it io ne r ur ge s u s t o a do ptth e m ag is tra te jud ge ’s li ne of r eas on in g h ere. We dec li ne to do so . Firs t, i t i s i m

po rta ntto no te th atth e m ag is tra te jud ge ’s fin di ng s wer e m ad e in a d iff eren t co nt ex t. Ad di ti on al ly, we do no t ag ree wi th th e m ag is tra te jud ge ’s co nc lu si on th atth e IRA was crea te d fo r th e Gov ern m en t an d UPW. The rec or d sh ows th atth e IRA was create d fo r th e so le pu rp os e o f as si st in g p et it io ne r to av oi d a ta xabl e ev en t b efo re h e h adex haus te d h is ap pe al of h is co nv ic ti on an d t o g iv e hi m ad di ti on al ti m e to fin d an a lt ern at e so ur ce o f paym en t. Furth erm or e, ou r in qu iry here is whethe r th e d is tri bu ti on s atis su e were t ax ab le to pe ti ti on er fo r 20 09 . The fac t i s, p et it io ne r en joy edaneco no mic be ne fitin20 09 when , for pu rp os es of s at is fy in g h is fin e an d re st itut io n o bl ig at io ns , FHB di sb ur se d the fund s i t h el d i n h is IRA--an a cco un t es tabl is he d s ol el y forhi s b en efi t an d fu nd ed by his pe ns io n fu nd . Accor di ng ly, be cau se pe ti ti on er co ns tru ct iv el y rece iv edth e IRA d is tri bu ti on s i n 2 00 9, the y are i nc lu dabl e inhi s g ro ss in co m e fo r th aty ear. Pet it io ne r la st ly argu es th atth e 2 00 8 g arn is hm en t o rd er v io la te d the Co ns um er Cr ed itPro te ct io n Actas we ll as t he Man da to ry Vict im s R es ti tu ti on Act. Pet it io ne r reque st s tha t, as a co ns eque nc e, we rev ers e th e 2 00 8 g arn is hm en t o rd er an d re st or e h is IRA wit h i nt eres t. Pet it io ne r m us t re so rt t o the ap pr op ria te Fed eral-1 5-

[* 15 ] co urt fo r a res ol ut io n o f su chdi sp ut es . Com pl ai nt s o f th is na tu re ar e b ey on d th e juri sd ic ti on of t hi s C ou rt. Al th ou gh pe ti ti on er d is ag rees with the 20 08 ga rn is hm en t o rd er, h e h as no t s ho wn a l eg it im at e b as is forex cl ud in g the 20 09 di st rib ut io ns fro m

hi s g ro ss in co m e. V. Abu se of Di sc ret io n W e n ow turn t o re sp on de nt ’s det erm in at io n t o p ro ceedwith c ol le ct io n, whi chwe rev ie w un de r anab us e o f di sc ret io n s tand ard . App eal s ab us es it s di sc ret io n i f itact s “ arb itrari ly, cap ric io us ly, orwitho utso un d b as is infactor law.” W oo dr al v. Co m

mis si on er, 1 12 T.C. 19 , 23 (19 99 ). Pet it io ne r ha s n otadvanc edan y arg um en t tha t Se tt le m en t Offi cer Owy an g’s act io ns were an ab us e o f di sc ret io n. Ad di ti on al ly, pe ti ti on er d idno t o fferany co ll ect io n a lt ern at iv e dur in g the co ur se of t he CDP h eari ng . Furt he rm or e, Set tl em en t Offi cer Owy an g d et erm in edth atth e requi rem en ts of app li cab le law an d a dm in is tra ti ve pro cedur e were m etan d c on cl ud edth atsu st ai ni ng th e NFTL ap pr op ria te ly 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 co nc ern s re ga rd in g the in tru si ve ne ss of t he li enact io n. Acco rd in gl y , we ho ldth at res po nd en t d idno t ab us e h is di sc ret io n i n s us ta in in g the NFTL.-1 6-

[* 16 ] Inreac hi ng ou r ho ld in g, we h av e co ns id eredall arg um en ts m ad e, an d t o the ex te ntno t m en ti on ed , we con si de r th em irr el ev an t, m oo t, o r witho utm eri t. To re fle ctth e fo reg oi ng , Deci si on wil l b e en te red fo r res po nd en t.