T.C. Mem o. 2 01 4- 24 8

UNITED STAT ES TAX COURT

ANTHONYE. CLIFFORD, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 24 11 1- 11 L. Fi le d Dec em be r 11 , 20 14
.
Ant ho ny E. Cli ffo rd , pro se. W il li am Jo hn Greg g, 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 s 6 32 0( c) an d 6 33 0( d) (1 ) of ade te rm in at io n b y 1

All st atut ory

refe ren ces are t o the Int ern al Rev enue Co de ineffe ctat a ll 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] th e In te rn al Rev enue Serv ic e (IR S o r res po nd en t) t o s us ta in th e fi li ng of a
no ti ce o f Fed eral tax li en(NFTL). The IR S h as m ov edforsu m m ary jud gm en t un de r 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 th atit s d et erm in at io n t o s us ta in th is co ll ect io n a ct io n was pro pe r as a m at te r of law. W e ag ree a ndacco 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 em pl oyed as ch ie f ex ecu ti ve off ic er o f St an da rdSo lar, In c. (St an da rdSo lar). He
res id edinW as hi ng to n, D.C., whe n h e fi le d h is pe ti ti on . Pet it io ne r fi le d F ed eral in co m e ta x re tu rn s fo r 20 07 , 20 08 , and20 09 bu t d id
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 as se ss ed th e unp ai d p orti on s o f th es e se lf- rep orte d t ax li ab il it ie s, i n the am ou nt s o f $5 3,4 63 , $5 6,6 34 , and$7 ,85 6, re sp ect iv el y . On Apr il 14 , 20 11 , inaneffo rt t o c ol le ctth e as se ss edtax , th e IRS fil edanNFTL andsen t p et it io ne r Lett er 3 17 2, No ti ce o f Fed eral Tax Li enFil in g a ndYou r Ri gh t t o aHeari ng . In re sp on se , pet it io ne r ti m el y subm it te d F orm

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- 3 -

[* 3] Heari ng , reque st in g a n o ffer -in -co m pr om is e (OIC) as apro po se d c ol le ct io n al te rn at iv e. 2 Inhi s C DP he ari ng reque stpe ti ti on er p ro po se d t o c om pr om is e h is tax li ab il it ie s fo r al l o pe n years ( th enex ceed in g $ 36 0,0 00 ) by paym en t o f $2 06 ,00 0,
co ns is ti ng of 1 2 m on th ly paym en ts of $ 50 0 fo ll owe d b y a lu m p- su m pa ym en t o f $2 00 ,00 0 i n J un e 2 01 2. Pe ti ti on er s tate d tha t h is on ly sizabl e as se t co ns is te d o f op ti on s t o p ur ch as e 1 50 sh ares of S tand ardSo lar co m m on st oc k wi thanest im at ed
va lu e o f ab ou t $ 5,0 00 pe r sh are. He wi sh edto de fer the du e d at e fo r th e lu m p- su m pa ym en t t o a ffo rdhi m

ti m e to li qu id at e o r bo rro w aga in stth is ass et . Pet it io ne r pa rti ci pa te d i n aCDP h eari ng with aset tl em en t o ffi cer f ro m th e IRS Ap pe al s Off

ic e (SO1 ). SO1 t ol d p et it io ne r th athi s o fferco ul d n otbe pro ces se d u nl es s i t was setforth on IRS Fo rm 65 6, Offe r in Co m

pr om is e, an d was Bes id es hi s l iabi li ti es forth e y ears at i ss ue , pet it io ne r ha d, as of Au gu st22 , 2 20 11 , ou ts tand in g t ax li ab il it ie s fo r 19 98 -2 00 0 a nd20 02 -2 00 6 i n the ag gr eg at e am ount(in cl ud in g i nt eres t) o f $2 50 ,17 1. Th e IRS fil edanNFTL for tho se y ears an d s en t p et it io ne r a Let te r 31 72 , bu t h is reque stfora CDP h eari ng was unt im el y . See s ec. 3 01 .63 20 -1 (c)( 2) , Q&A-C3 , Pro ced . & Adm in . Reg s. Th e IRS th erea fte r affo rd edhi m

an“ equi va le nthe ari ng .” See s ec. 3 01 .63 20 -1 (i) (1 ), Pro ced . & Adm in . Reg s. Pet it io ne r pa rti ci pa te d i n a n e qu iv al en t h eari ng , andth e IRS App eal s Off

ic e uph el d the NFTL. In hi s p et it io n, p et it io ne r so ug htrev ie w of the IRS d eci si on to su st ai n the NFTL for tho se othe r y ears , bu t thi s C ourt l ack s juri sd ic ti on to rev ie w th e res ul ts of a n e qu iv al en t h eari ng . See, e.g ., Kenn edy v. Co m m is si on er, 1 16 T.C. 25 5, 2 63 (20 01 ). W e th eref or e g ran te d re sp on de nt ’s m ot io n t o d is m is s fo r la ck of ju ris di ct io n a s t o t ax y ears 19 98 -2 00 0 a nd20 02
- 20 06
.- 4 -

[* 4] acco m

pa ni edby a paym en t equa l t o 2 0% o f th e co m pr om is e am ou nt . SO1 in di cat edth athe wou ldbe am en ab le to anin st al lm en t ag reem en t wh ereb y pe ti ti on er wo ul d fu ll y

pa y hi s o ut st an di ng tax li ab il it ie s b y m on th ly paym en ts of $3 ,00 0, ap pa ren tl y

in te nd in g thi s t o c on st itut e a fi na l o ffer . Whe n p et it io ne r di d
no t re sp on d t o thi s o ffer , SO1 cl os edth e cas e an d o n S ep te m be r 20 , 20 11 , sen t 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 Sect io n 6 32 0 and/o r 63 30 su st ai ni ng th e NFTL. Pet it io ne r ti m el y

pe ti ti on edth is Co urt co nt en di ng (am on g o th er thi ng s) th at he ha d n otun de rs to odSO1’s o fferto co ns ti tu te a fo rm al an d fi na l co ll ect io n al te rn at iv e. On Oct ob er 5 , 20 12 , res po nd en t m ov edto rem an d the cas e to th e IRS App eal s Off

ic e, rep res en ti ng th atpe ti ti on er h adno t b eenaffo rd edanad equa te op po rtu ni ty to s ub m itanOIC. W e g ran te d re sp on de nt ’s m ot io n a ndrem an de d the
cas e fo r a s up pl em en ta l CDP he ari ng . Pet it io ne r was ass ig ne d ane w set tl em en t o ffi cer ( SO2 ) who co nduc te d a face -to -fac e h eari ng on Marc h 7 , 20 13 . Peti ti on er s ub m it te d aform al OIC b as ed up on do ub t as to co ll ect ib il ity inwhi chhe pro po se d t o c om pr om is e h is
ou ts tand in g t ax li ab il it ie s fo r $1 75 ,00 0, p ay ab le inm on th ly ins ta ll m en ts of $ 1,2 50 with apo ss ib le ba ll oo n p aym en t atanun sp eci fie d d at e. Pet it io ne r subm it te d upto -d at e fi na nc ia l i nf

orm at io n, i nc lu di ng anap pr ai sa l o f th e St an da rdSo lar st oc k h e- 5 -

[* 5] he ldun de r op ti on , whi chth e ap pr ai se r ha d d is co un te d fo r res tri ct io ns on m ark et ab il ity . As reque st edby SO2, pe ti ti on er al so subm it te d aco py of h is de li nque nt20 11 Fed eral in co m e ta x re tu rn , whi chsh owe d a n unp ai d b al an ce due . SO2 de te rm in edth atpe ti ti on er’s m on th ly inc om e was $1 2,5 19 , th athi s m on th ly dis po sabl e in co m e was $4 ,99 9, an d tha t h is reas on ab le co ll ect io n p ot en ti al (RCP ) was $3 59 ,02 6. SO2 in fo rm edpe ti ti on er tha t, ab se ntsp eci al cir cu m st an ces , he c ou ldno t ac cep t anOIC o f le ss th anpe ti ti on er’s RCP . At subs eque nt
m eet in gs inJu ly andAug us t 2 01 3, SO2 ag reedto reduc e p et it io ne r’s RCP t o $2 78 ,32 0 a fte r fu rth er d is co un ti ng th e v al ue of t he Sta nd ardSo lar st oc k. On Sep te m be r 10 , 20 13 , SO2 fo rm al ly offer edpe ti ti on er an OIC o f $2 78 ,32 0, co nsi st in g o f a $ 17 4,7 05 in it ia l p aym en t an d 2 3 m on th ly paym en ts of $ 4,5 05 [$ 17 4,7 05 % ($4 ,50 5 23 ) ' $2 78 ,32 0]. Pet it io ne r reject edSO2’s o ffer . On Oct ob er 7 , 20 13 , pet it io ne r subm it te d a
rev is edOIC, ba se d upo n d oubtas t o c ol le ct ib il ity , of $ 16 9,0 00 , con si st in g o f a $1 00 ,00 0 i ni ti al pa ym en t an d 2 3 m on th ly paym en ts of $ 3,0 00 . Ign or in g the ti m e va lu e o f m on ey , th is off

er was sm al le r th anth e $ 17 5,0 00 off er p et it io ne r ha d m ad e in Marc h 2 01 3. Pe ti ti on er al so subm it te d aco py of h is 20 12 Fed eral in co m e ta x return, wh ic h s ho wedanunpa idba lanc e due .- 6 -

[* 6] SO2 de te rm in edth atpe ti ti on er’s rev is edOIC was subs tant ia ll y sm al le r th an hi s re vi se d R CP o f $2 78 ,32 0 a ndth athi s fa il ur e to pa y hi s 2 01 1 and20 12 tax li ab il it ie s ev id en cedon go in g n on co m pl ianc e wit h h is Fed eral tax ob li ga ti on s. SO2 acco rd in gl y

clo se d the cas e an d, o n Ap ril 1, 2 01 4, s us ta in edth e NFTL for 20 07 -2 00 9 i n asupp le m en ta l n ot ic e o f de te rm in at io n tha t i s n ow b efo re the Co urt. On J ul y 10 , 20 14 , res po nd en t m ov edfor su m m ary jud gm en t an d p et it io ne r, on Aug us t 1 6, 2 01 4, re sp on de d t o tha t m ot io n. 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 mis 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 a ny 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 ). Pet it io ne r’s res po ns e to th e su m m ary jud gm en t m ot io n a lle ge s n o d is pu te as t o a ny m at eri al fact . In l ig htof r es po nd en t’s m ot io n, h is suppo rti 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 is ap pr op ria te forsu m

m ary ad jud ic at io n.- 7 -

[* 7] Whe re (a s h ere) th ere i s n o d is pu te as t o the tax pa y er’s und erl y in g l iabi li
ti es , we rev ie w 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 ati onis arb itrary, capri ci ou s, o r witho utso 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 (20 05 ), aff’d, 4 69 F.3d27 (1s t Ci r. 20 06 ). B. Ana lysis Inde ci di ng whethe r SO2 ab us edhi s d is cret io n i n s us ta in in g the fil in g o f th e NFTL, we con si de r whe th er h e: (1) pro pe rly veri fie 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 ra is edby pet it io ne r; a nd(3) de te rm in edwhethe r “ an y pro po se d
co ll ect io n a ct io n b al an ces th e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi thth 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 .” See s ecs . 63 20 (c), 6 33 0( c)(3 ). Our re vi ew of th e rec or d re ve al s th atSO2 c on du ct eda th or ou gh rev ie w of p et it io ne r’s acco un t, d et erm in edth atth e ta x h adbe enpro pe rly ass es se d, v eri fie d tha t al l o th er re qu ire m en ts of app li cab le law andadm in is tra ti ve pro cedur e were f ol lo wed , andde te rm in edth atth e p ro po se d
co ll ect io n a ct io n b al an cedth e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi th pe ti ti on er’s l eg it im at e co nc ernth atth e co ll ect io n a ct io n b e n o m or e in tru si ve th an- 8 -

[* 8] ne ces sa ry . Peti ti on er’s s ol e co nt en ti on is th atSO2 abu se d h is di sc ret io n i n de cl in in g t o a ccep t p et it io ne r’s rev is edOIC. A tax pa y er m ay

rai se at aCDP 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 off ers of aco ll ect io n a lt ern at iv e. Sec. 63 30 (c)( 2) (A)(i ii ). Thi s C ou rt d oe s n otin de pe nd en tl y rev ie w th e rea so nabl en es s of th e ta xp ay er’s p ro po se d c ol le ct io n a lt ern at iv e b utrev ie ws o nl y whet he r th e SO’s de ci si on to rejectth atoff er was arb itrary, capri ci ou s, o r witho utso un d b as is in law o r fac t. Mu rp hy v. Co m m is si on er, 1 25 T.C. at 3 20 . W e d o n otsubs ti tu te ou r jud gm en t fo r th atof t he SO as t o the acce pt ab il ity of apa rti cu lar of

fer. See, e.g ., Jo hn so n v . Comm is si on er, 1 36 T.C. 47 5, 4 88 (20 11 ), aff’d, 5 02 Fed
. App x. 1 (D.C. Cir . 20 13 ). Sect io n 7 12 2( a) au th or iz es th e IRS to co m pr om is e anou ts tand in g t ax li ab ili ty, an d the reg ul at io ns setforth th ree g ro un ds forco m pr om is e: (1) do ub t as to li ab il ity ; (2 ) do ub t as to co ll ect ib il ity ; o r (3 ) pr om ot io n o f effe ct iv e ta x a dm in is
tra ti on . Sec. 3 01 .71 22 -1 (b ), Pro ced . & Adm in . Reg s. Th e Sec ret ary m ay co m pr om is e a t ax li ab il ity

ba se d o n d oubtas t o c ol le ct ib il ity wher e th e ta xp ay er’s as se ts
an d i nc om e ren de r fu ll co ll ect io n u nl ik el y . Sec. 3 01 .71 22 -1 (b )(2 ), Pro ced . & Adm in . Reg s. Co nv ers el y , th e IRS m ay rejectanOIC whe re the tax pa y er’s RCP is gr eat er tha n the am ounthe pro po se s t o p ay . See J oh ns on , 13 6 T.C. at48 6. Ab se nt- 9 -

[* 9] a sh owi ng of s pe ci al cir cu m st an ces , App eal s o ffi cers are d ire ct edto reject of fers subs tant ia ll y

be lo w th e ta xp ay er’s RCP wher e th e OIC i s p rem is edon do ub t as to co ll ect ib il ity . See Re v. Pr oc . 20 03 -7 1, s ec. 4 .02 (2 ), 20 03 -2 C.B. 5 17 , 51 7. Pet it io ne r subm it te d two OIC s af te r th is cas e was rem an de d fo r a s up pl em en ta l h eari ng . The s eco ndwas l owe r th anth e fi rs t, an d e ach was $ 10 0,0 00 be lo w hi s R CP. Cf. Lin dl ey v. Co m m is si on er, T.C. Mem o. 2 00 6- 22 9 (f in di ng th at th e App eal s o ffi cer d idno t ab us e h is di sc ret io n b y reject in g a n OIC $2 5,5 35 be lo w tax pa y er’s RCP ), aff’d o n thi s i ss ue sub n om . Kell er v . Comm is si on er, 5 68 F.3 d 7 10 (9t h C ir. 2 00 9) . An App eal s o ffi cer i s n otrequi redto ne go ti at e wit h a ta xp ay er i nd efi ni te ly. Krei t M ech . Ass oc s. In c. v. Co m m is si on er, 1 37 T.C. 12 3, 13 4 (2 01 1) . SO2 n eg ot ia te d wi th pe ti ti on er fo r m an y m on th s, an d h is wil li ng ne ss to reduc e p et it io ne r’s RCP f ro m $3 59 ,02 6 t o $ 27 8,3 20 ex em pl ifi es hi s fl ex ib il ity . SO2 m ad e a fi na l o ffer

co rres po nd in g t o the lo wer RCP he ha d d et erm in edfor pe ti ti on er, an d p et it io ne r reject edth atoff er. Und er the se cir cum st an ces , SO2 d id
no t ab us e h is di sc ret io n b y clo si ng th e cas e wit ho utso li ci ti ng an ot he r of fer fr om pe ti ti on er, es pe ci al ly becau se pe ti ti on er’s m os t re cen t o fferwas s ub st an ti al ly be lo w hi s R CP an d b ecau se he was n otinco m pl ianc e wit h h is curren t t ax- 10 -

[* 10 ] ob li ga ti on s. See Reedv. Co m m is si on er, 1 41 T.C. 24 8, 2 56 -2 57 (20 13 ); Bro m ba chv. Co m

m is si on er, T.C. Mem o. 2 01 2- 26 5, at*2 1. 3 Fi nd in g n o abu se of d is cret io n i n a ny resp ect , we con cl ud e th atres po nd en t is en ti tl edto jud gm en t as a m at te r of law s us ta in in g the supp le m en ta l n ot ic e o f de te rm in at io n i ss ue d Ap ril 1, 2 01 4. An ap pr op ria te ord er an d d eci si on wil l b e en te red
.

The Co urt fi nd s n o s pe ci al cir cu m st an ces th atwou ldhave jus ti fie d S O2’s 3 acce pt an ce o f anoff

er m or e th an$1 00 ,00 0 b el ow p et it io ne r’s RCP. Cf . sec . 30 1.7 12 2- 1( c)(3 )(i ii ), Adm in . & Pro ced . Reg s. (p ro vi di ng th ateco no m ic ha rd sh ip m ay ex is t wh ere t ax pa y er i s unabl e to earn a li vi ng be cau se of alo ng -te rm il ln es s ordi sabi li ty or whe re l iqui da ti on of h is ass et s wo ul d re nd er h im un ab le to m eet ba si c li vi ng ex pe ns es ). Pet it io ne r co nt en ds th atth e Gov ern m en t s hu td own du rin g Octo be r 20 13 pre ve nt edhi m fro m co nt in ui ng ne go ti at io ns with S O2. As n ot edin th e te xt , an Ap pe al s o ffi cer i s n otob li ga te d t o n eg ot iate in de fin it el y ; i n a ny even t, SO2 di d n otis su e th e supp le m en ta l d et erm in at io n l et te r un ti l Ap ril 20 14
.