T.C. Summary Opinion 2011-34

UNITED STATES TAX COURT

JOSEPH N. PERLMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 25769-09S. Filed March 17, 2011.

Joseph N. Perlman, pro se.

James R. Bamberg, for respondent.

PANUTHOS, Chief Special Trial Judge: This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed. Pursuant to

section 7463(b), the decision to be entered is not reviewable by

any other court, and this opinion shall not be treated as

precedent for any other case. Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

This case is before the Court on petitioner’s request for

judicial review of an Internal Revenue Service (IRS)

determination to sustain a notice of intent to levy to collect

petitioner’s 2007 Federal income tax liability. The sole issue

for decision is whether the IRS abused its discretion in

determining that collection by levy may proceed.1

Background

At the time the petition was filed, petitioner resided in

Florida. 

Petitioner is a self-employed attorney. Petitioner filed a

joint Federal income tax return with his wife for 2007 reporting

a tax of $30,583. Petitioner and his wife did not make estimated

tax payments for 2007 but had a withholding credit of $2,373 and

a refundable credit of $1,200. Neither petitioner nor his wife

made any payment with the return, but they did make two payments

in 2009 totaling $2,000.

1Respondent filed a motion for summary judgment pursuant to

Rule 121. Petitioner filed a response to respondent’s motion,

and the Court set the motion for hearing at trial. At the trial

session the Court took the motion under advisement and proceeded

with trial. During trial the Court heard testimony and received

evidence. Therefore the Court will deny respondent’s motion for

summary judgment.
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The IRS assessed the unpaid balance as well as additions to

tax for failure to timely pay tax under section 6651(a)(2) and

failure to make estimated tax payments under section 6654. On

May 19, 2009, the IRS issued a Final Notice of Intent to Levy and

Notice of Your Right to a Hearing for the 2007 tax liability. 

On June 5, 2009, the IRS received a Form 12153, Request for

a Collection Due Process or Equivalent Hearing, from petitioner. 

On the Form 12153 petitioner requested an installment agreement

or offer-in-compromise (OIC) as collection alternatives. Along

with the form, petitioner provided certain financial information

and documentation as well as a general explanation of his

finances at the time of the request.

On August 3, 2009, the IRS issued a letter to petitioner

acknowledging receipt of the request and scheduling a collection

due process (CDP) hearing for September 3, 2009. In the letter,

the IRS requested an updated Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals, and

proof of petitioner’s estimated tax payments for 2009. 

Petitioner submitted an incomplete Form 433-A which reflected

investment accounts with fair market values totaling $350,000 as

well as bank accounts, lines of credit, three real properties (a

house, an office, and a condominium), and leased vehicles as

assets. Petitioner also provided a detailed summary of his

business income and expenses as well as his Social Security
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benefits. Petitioner did not submit evidence regarding any 2009

estimated tax payments or his living expenses.

On September 3, 2009, during the CDP hearing the settlement

officer (SO) informed petitioner that on the basis of the

information provided, petitioner had the ability to fully pay the

liability. Petitioner agreed that he owed the underlying

liability but stated that he had very little equity in his assets

and could not fully pay the liability. The SO informed

petitioner that expenses relating to the condominium would not be

allowed during the evaluation of a proposed installment

agreement. The SO gave petitioner until September 18, 2009, to

provide evidence showing he made estimated tax payments for 2009

and to provide information as to the current equity in his

assets. 

In his September 15, 2009, response, petitioner enclosed a

check for $2,100 which represented his only estimated tax payment

for 2009, 3 months of bank statements, various deed and property

searches for his properties that listed initial mortgage amounts

but omitted other mortgages, and additional documentation as to

the condominium mortgage. Petitioner did not provide the

mortgage information or documents showing the current equity for

the house or office, nor did he provide a list of his living

expenses. Petitioner did not submit a Form 656, Offer in
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Compromise, or propose a payment schedule or amount for an

installment agreement.

While the SO had not received a completed Form 433-A, the SO

determined that petitioner still had the ability to fully pay the

liability, on the basis of the updated information petitioner

provided. On October 5, 2009, the IRS issued a notice of

determination sustaining the proposed levy. On October 30, 2009,

petitioner timely filed a petition with the Court disputing the

notice of determination.

Discussion

We have jurisdiction under section 6330(d)(1) to review

respondent’s determination that the notice of intent to levy was

proper and that respondent may proceed to collect by levy.2

In reviewing the Commissioner’s decision to sustain collection

actions, where the validity of the underlying tax liability is

properly at issue, the Court reviews the Commissioner’s

determination of the underlying tax liability de novo. Sego v.

Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114

T.C. 176, 181-182 (2000). The Court reviews any other

administrative determination regarding proposed collection

actions for abuse of discretion. Sego v. Commissioner, supra at

2The Pension Protection Act of 2006, Pub. L. 109-280, sec.

855, 120 Stat. 1019, amended sec. 6330(d) and granted this Court

jurisdiction over all sec. 6330 determinations made after Oct.

16, 2006. Perkins v. Commissioner, 129 T.C. 58, 63 n.7 (2007).
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610; Goza v. Commissioner, supra at 182. An abuse of discretion

occurs when the exercise of discretion is without sound basis in

fact or law. Murphy v. Commissioner, 125 T.C. 301, 308 (2005),

affd. 469 F.3d 27 (1st Cir. 2006). The taxpayer has the burden

of proving that the Commissioner’s determination to sustain a

proposed collection action is an abuse of discretion. Rule

142(a).

At the collection hearing, a taxpayer may raise any relevant

issues relating to the unpaid tax or proposed levy, including

spousal defenses, challenges to the appropriateness of the

collection actions, and offers of collection alternatives. Sec.

6330(c)(2)(A). In addition, he may challenge the existence or

amount of the underlying tax liability, but only if he did not

receive a notice of deficiency or otherwise have an opportunity

to dispute such liability. Sec. 6330(c)(2)(B).

Petitioner does not dispute the underlying liability, but

instead he asserts he was denied an opportunity to have an OIC or

an installment agreement considered.

Offer-in-Compromise

The Secretary may compromise any civil or criminal case

arising under the Internal Revenue laws. Sec. 7122(a); Murphy v.

Commissioner, supra at 308. Section 7122(d) provides that the

Secretary “shall prescribe guidelines for officers and employees

of the Internal Revenue Service to determine whether an offer-in-
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compromise is adequate and should be accepted to resolve a

dispute.” Taxpayers who wish to propose an OIC must submit a

Form 656. See Godwin v. Commissioner, T.C. Memo. 2003-289, affd.

132 Fed. Appx. 785 (11th Cir. 2005). We have consistently held

that the Commissioner has not abused his discretion for failing

to consider an OIC where a taxpayer failed to submit an offer to

the Appeals officer. Kendricks v. Commissioner, 124 T.C. 69, 79

(2005). Petitioner did not submit a Form 656, complete financial

information, or any proposed settlement terms. Therefore the

Commissioner has not abused his discretion in failing to consider

an OIC or any less formal “collection alternative”.

Installment Agreement

Section 6159(a) gives the Secretary discretionary authority

“to enter into written agreements with any taxpayer 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.” The Commissioner has the discretion to accept or

reject an installment agreement proposed by a taxpayer. See sec.

301.6159-1(b)(1)(i), Proced. & Admin. Regs. We review the

Commissioner’s rejection of an installment agreement for abuse of

discretion. See Orum v. Commissioner, 123 T.C. 1, 12-13 (2004),

affd. 412 F.3d 819 (7th Cir. 2005).

Although petitioner indicated his interest in an installment

agreement, he did not propose any specific payment amounts or
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installment schedule. Additionally, petitioner’s updated but

incomplete information still reflected his ability to fully pay

the liability. When a hearing officer is unable or refuses to

consider collection alternatives because of a taxpayer’s failure

to provide financial information, courts have held that there was

no abuse of discretion. Schwersensky v. Commissioner, T.C. Memo.

2006-178; see also Lance v. Commissioner, T.C. Memo. 2009-129. 

We conclude that respondent did not abuse his discretion in

failing to consider an installment agreement.

We have considered the parties’ arguments and, to the extent

not discussed herein, we conclude the arguments are irrelevant,

moot, or without merit.

To reflect the foregoing,

An appropriate order and

decision will be entered for

respondent.