# PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b),THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.T.C. Sum m ary Opi ni on 20 14 -1 9

UNITED STAT ES TAX COURT

MERWIN K. SIGALE , Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 18 66 9- 11 S L. Fi le d M arch 4, 2 01 4.

MerwinK. Sig al e, pr o s e. DerekP. Ric hm an , forres po nd en t.

SUMM ARY OPINION GUY, Spec ia l Tri al Ju dg e: Thi s ca se was h eardpu rs uantto th e p ro vi si on s of sec ti on 74 63 ineffe ctwhen th e p et it io n was fil ed
. Pur su an t t o s ect io n 7 46 3( b) , 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 Rev enue Co de , as a m en de d a ndineffec t atall rel ev an t t im es . All m on et ary (co nt in ue d...)- 2 -

th e d eci si on to be en te redis no t re vi ewab le by any othe r co urt, an d thi s o pi ni on sh al l n otbe tre at edas p rece de ntforan y othe r cas e. Thi s ca se is anap pe al fro m a no ti ce o f de te rm in at io n i n wh ic h the Int ern al Rev enue Serv ic e Offi ce o f App eal s (Ap pe al s Off ic e) uph el d apro po se d l ev y act io n t o c ol le ctpe ti ti on er’s unp ai d F ed eral in co m e ta x l iabi li ti es for 20 06 an d 20 08 . The s ol e is su e fo r de ci si on is whet he r res po nd en t’s d et erm in at io n t o pr oc eedwith the pro po se d l ev y was an abu se of d is cret io n. We ho ldth atitwas no t. Bac kg ro un d So m e o f th e fac ts ha ve be enst ip ul at edan d a re s o fo un d. Th e st ip ul at io n o f fact s an d the acco m

pa nyin g e xh ib it s ar e in co rp or at edhe rei n b y th is refe ren ce. Pet it io ne r res id edinFlo rid a atth e ti m e th e p et it io n was fil ed
. I. Pet it io ne r’s His to ry

of Tax Deli nque nc y Pet it io ne r is a pr of

es so r atMi am i Dad e Co ll eg e. Sin ce 1 99 8 h e h as ro ut in el y fai le d t o p ay

th e fu ll am ou nt s o f ta x re po rte d a s due on hi s Fe de ral in co m e ta x re tu rn s. InDecem be r 20 06 pe ti ti on er en te redin to anin st al lm en t ag reem en t wi th th e In te rn al Rev enue Serv ic e (IR S) i n re sp ectof h is unpa idtax (...co nt inue d) 1 am ount s ar e ro un de d t o the ne ares t d ol lar.- 3 -

li ab il it ie s fo r 19 99 to 20 01 , 20 03 , and20 04 . The i ns ta ll m en t ag reem en t was no t m ad e p artof t he reco rd , andth ere i s n o i nd ic at io n wh ethe r pe ti ti on er ac tu al ly
m ad e an y pa ym en ts pu rs ua ntto th e ag reem en t. InApri l 2 00 9 p et it io ne r le arn ed th atth e IRS ha d p rev io us ly term in at edth e in st al lm en t ag reem en t af te r co nc lu di ng th athe was i n d efau lt . Peti ti on er m ai nt ai ns th atth e IRS fai le d t o p ro pe rly no ti fy hi m th atth e in st al lm en t ag reem en t h adbe enterm in at edan d o f hi s ri gh t t o app eal th e m at te r. BetweenAug us t 7 , 20 09 , andSep te m be r 13 , 20 13 , pet it io ne r m ad e bi week ly paym en ts of $ 37 5 wh ic h the IRS cr ed it edto hi s ac co un t fo r 20 02 , 20 03 , an d 2 00 4. Pe ti ti on er t es ti fie d tha t h e d idno t d ire ctth e IRS to ap pl y th e p aym en ts fo r a p art ic ul ar t ax ab le y ear. As of S ep te m be r 13 , 20 13 , pet it io ne r ha d fu ll y pa id hi s t ax li ab il it ie s fo r 20 02 an d 2 00 4, wh il e h e st il l o wed$6 ,97 6 fo r 20 03 . 2 II. Pet it io ne r’s Tax R eturn fo r 20 06 On Oct ob er 1 7, 2 00 7, p et it io ne r fi le d atax return fo r 20 06 rep orti ng tax du e of $2 4,9 08 . He was cr ed it edwith wi th ho ld in g t ax of $ 18 ,38 8 anda refu nd ab le cred itof $ 94 6, an d h e rem it te d $ 2,7 48 with the return, l eav in g aba lanc e due of $2 ,82 6. OnNov em

be r 19 , 20 07 , res po nd en t as se ss edth e ta x re po rte d o n the
As o f Sep te m

be r 13 , 20 13 , pet it io ne r al so owed$4 ,25 6 a nd$8 ,75 6 fo r th e 2 ta xabl e y ears 20 05 an d 2 01 0, re sp ect iv el y .- 4 -

return, anad di ti on to tax forfai lu re t o t im el y pa y th e ta x, an d s tatu to ry

in te res t. On the same dat e res po nd en t s en t t o p et it io ne r a n ot ic e o f th e b al an ce due . On Ja nu ary 21 , 20 08 , pet it io ne r m ad e a p aym en t o f $3 ,16 0 fo r 20 06 . III. Pet it io ne r’s Tax R eturn fo r 20 08 On Oct ob er 2 1, 2 00 8, p et it io ne r fi le d atax return fo r 20 08 rep orti ng tax du e of $3 2,0 07 . He was cr ed it edwith wi th ho ld in g t ax of $ 21 ,38 3, a r efu nd ab le cred it of $1 ,41 8, an d a n e arl ie r paym en t o f $2 ,00 0, l eav in g aba lanc e due of $ 7,2 06 . On Nov em be r 30 , 20 09 , res po nd en t as se ss edth e ta x re po rte d o n the return, ad di ti on s to tax forfai lure t o t im el y pa y th e ta x a ndfai lu re t o p ay est im at edtax , and st atut ory in te res t. Onth e sa m e d at e, res po nd en t s en t t o p et it io ne r a n ot ic e o f th e ba lanc e due . On Ju ly 18, 2 01 2, re sp on de ntap pl ie d a n o ve rp aym en t cr ed itof $ 97 fo r th e ta xabl e y ear 2 00 2 a ga in stpe ti ti on er’s unp ai d t ax li ab il ity for20 08 . IV. Col le ct io n Act iv ity

for 20 06 an d 2 00 8 On Se pt em

be r 3, 2 01 0, re sp on de ntsen t t o p et it io ne r a Fi na l No ti ce o f In te nt to Levy andNot ic e o f You r Ri gh t t o aHeari ng for20 06 an d 2 00 8 p ur su an t t o se ct io n 6 33 0. Th e n ot ic e in fo rm edpe ti ti on er tha t h e o wed$7 6 fo r 20 06 (co m pr is in g a ccru edin te res t o f $4 8 a nda la te pa y m en t ad di ti on to tax of $ 28 ) an d 3 The am ou ntdu e fo r 20 06 rep res en ts th e su m of a dd it io na l i nt eres t an d a 3 la te paym en t ad di ti on to tax th ataccrue d i n re sp ectof t he unpa idtax li ab il ity of (co nt in ue d...)- 5 -

$8 ,52 4 fo r 20 08 (co m

pr is in g t ax du e o f $7 ,89 2, ac cru edin te res t o f $2 72 , anda la te paym en t ad di ti on to tax of $ 36 0) . Peti ti on er’s at to rn ey , Ste ve n Kl it zn er, res po nd edto th e n ot ic e b y m ak in g ati m el y

reque stforanadmin is tra ti ve he ari ng with the App eal s Off

ic e, in di cat in g tha t p et it io ne r in te nd edto pro po se a co ll ect io n al te rn at iv e in th e fo rm

of an i ns ta ll m en t ag reem en t an d/ oranoff er-i n- co m pr om is e. Pet it io ne r’s cas e was ass ig ne d t o S et tl em en t Offi cer S an dr a Ro se (SO Ro se ) in Mem ph is , Tenn es se e. On Jun e 1 5, 2 01 1, M r. Kli tz ne r subm it te d t o S O Ros e a Fo 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 fEm pl oyed In di vi du al s, al on g wi th supp orti ng do cu m en tati on an d aco ve r le tt er reque st in g tha t the cas e b e tr an sf erre d t o alo cal App eal s Off ic e fo r a fac e-t o- face he ari ng . Peti ti on er re po rte d i n the Fo rm 43 3- A th athe di d n otha ve cas h o r ot he r as se ts th atco ul d b e li qu id at edto pa y hi s o ut st an di ng tax li ab il it ie s. Onth e o th er ha nd , he r ep orte d tha t h is gro ss m on th ly inc om e was $9 ,32 9 (c om pr is in g wag es of $6 ,23 1 a ndSo ci al Secu rit y /p en si on be ne fit s o f $3 ,09 8) an d tha t h is m on th ly liv in g ex pe ns es to ta le d $ 5,8 27 . The Fo rm 43 3- A in cl ud ed(1) anit em iz edsch edul e o f pe ti ti on er’s m on th ly liv in g e xp en se s wh ic h i nc lu de d e nt rie s o f $1 ,49 4 fo r “ Tax es (...co nt inue d) 3 $2 ,82 6 dur in g the pe rio d No ve m be r 19 , 20 07 (th e d at e res po nd en t fi rs t en te red as se ss m en ts forth os e it em s) , to Jan ua ry 21 , 20 08 (th e d at e p et it io ne r pa id$3 ,16 0 in sat is fact io n o f th e am ount s as se ss edon Nov em be r 19 , 20 07 ).- 6 -

(In co m e an d F ICA)” an d $ 87 0 fo r “ Oth er Se cu redDebt s” an d (2 ) a s up pl em en ta l st at em en t wh ic h i nd ic at edth atth e en try for “ Oth er Se cu redDebt s” in cl ud es “ Irs Obl ig at io n Lev ie s” of $ 75 0. Pet it io ne r subm it te d a n a dd en du m to Fo rm 43 3- A exp la in in g tha t h e h ad rece nt ly pai d app ro xi m at el y $2 0,0 00 to pri va te nu rs es who were p ro vi di ng care for Caro l M il le r, th e 8 6- y ear- ol d m ot he r of Flo ren ce Pa is ey , hi s “ fia nc ee/ do m es ti c pa rtn er”. Th e ad de ndum wentonto ex pl ai n tha t M s. M il le r ha d tran sf erre d s om e of he r fu nd s t o M s. Pa is ey , who intu rnha d tran sf erre d the fun ds to pe ti ti on er. 4 Fi na ll y , th e ad de ndum

in di cat edth atpe ti ti on er was pa y in g $ 1,7 00 pe r m on th to ren t an ap art m en t fo r Ms . Pai se y inTall ah as se e, Fl or id a, whi le sh e p ur su eda do ct or at e atFlo rid a St at e Uni ve rs ity . Peti ti on er ac kn owl ed ge d at tria l tha t h e is no t m arri edto Ms . Pai se y . SO Ro se rev ie wedpe ti ti on er’s fi na nc ia l s ta te m en t an d s up po rti ng do cu m en ts an d d et erm in edth athi s g ro ss m on th ly w ag es were $ 8,2 58 (as op po se d to th e $ 6,2 31 rep orte d i n F orm 43 3- A), in crea si ng hi s g ro ss m on th ly inc om e to $1 1,3 56 . Afterm ak in g s om e small a dju st m en ts th atreduc edhi s m on th ly

5 Pet it io ne r te st ifi edat t ria l tha t h e fre qu en tl y ha s d iff ic ul tl y m ak in g “ en ds 4 m eet ” an d h as bo rro wedlar ge su m s o f m on ey fro m Ms . Mil le r. The reco rddo es no t cl earl y refl ectho w SO Ros e co m pu te d p et it io ne r’s 5 (co nt in ue d...)- 7 -

ex pe ns es to $5 ,58 5, SO Ro se de te rm in edth atpe ti ti on er h adm on th ly dis po sabl e in co m e o f $5 ,77 1. She furth er d et erm in edth athe co ul d m ak e m on th ly 6 in st al lm en t p aym en ts of $ 1,5 00 --an am ou ntth atwou ldall ow h im to pa y off hi s t ax li ab il it ie s fo r 20 06 an d 2 00 8 wi th in th ree years a ndst il l re m ai n i n c om pl ianc e wit h hi s cu rren t t ax ob li ga ti on s. Pet it io ne r res po nd edto SO Ro se by ins is ti ng th athe co ul d p ay no m or e th an $8 00 pe r m on th . At Mr. Kl it zn er’s reque st , SO Ros e co ns ul te d wi th he r m an ag er who co nf irmed th atpe ti ti on er was ab le to pay $1 ,50 0 p er m on th . SO Ros e’s cas e act iv ity no te s s ta te th ataft er s he in fo rm edMr. Kli tz ne r of he r m an ag er’s d eci si on , he to ldhe r th atth e App eal s Off ic e sh ou ldis su e a fi na l n ot ic e o f de te rm in at io n. Pet it io ne r as se rte d at tria l tha t M r. Kli tz ne r’s st at em en t re gard in g the is su an ce o f a no ti ce o f de te rm in at io n was m erel y a “ rh et or ic al ” co m

m en t an d tha t h e in fact
(...co nt inue d) 5 gr os s m on th ly inc om e o f $1 1,3 56 . W e d o n ot e th atpe ti ti on er’s b iwee kl y gro ss wag es of $ 3,2 35 fro m

Mi am i Dad e Co ll eg e wou ldbe th e equi va le ntof $ 7,0 09 a m on th . In ad di ti on to m on th ly reti rem en t b en efi ts of $ 3,0 98 th atpe ti ti on er rep orte d o n F orm

43 3- A, itap pe ars th atSO Ro se ad de d m on th ly paym en ts of $5 96 an d $ 39 9 tha t h e rec ei ve d fr om Co x En te rp ris es an d Kn ig htRid de r Newsp ap ers , res pe ct iv el y . SO Ro se in crea se d the m on th ly exp en se for“ Tax es (on in co m e)” f ro m 6 $1 ,49 4 t o $ 1,9 68 an d e li m in at edth e $ 75 0 m on th ly exp en se pe ti ti on er re po rte d fo r “ Irs Obl ig at io n Lev ie s” .- 8 -

reque st edan d e xp ect edto be grant eda face -to -fac e h eari ng be fo re the co nc lu si on of th e adm in is tra ti ve pro ceed in g. On J ul y 8, 2 01 1, the App eal s Off ic e is su edto pe ti ti on er a No ti ce o f Dete rm in at io n C on cern in g C ol le ct io n Act io n( s) Und er Se ct io ns 63 20 an d/ or63 30 su st ai ni ng th e p ro po se d l ev y act io n. Pe ti ti on er fi le d ati m el y pe ti ti on forrev ie w with the Co urt. The pe ti ti on in cl ud es all eg at io ns th atth e p ro po se d l ev y wou ld cau se pe ti ti on er fi na nc ia l h ard sh ip , th atth e App eal s Off ic e h adim

pr op erl y de ni ed hi m a face -to -fac e h eari ng , andth at , altho ug h the IRS u ni late ral ly term in at eda

“pr ev io us pa ym en t ag reem en t” , he c on ti nu edto vo lu nt ari ly pay $7 50 pe r m on th
. Dis cu ss io n Sect io n 6 33 1( a) au th or iz es th e Co m mis si on er t o l ev y

up on pro pe rty and rig ht s t o p ro pe rty of a t ax pa y er wh o i s l iabl e fo r ta xe s an d wh o fa il s t o p ay th os e ta xe s wi th in 10 da y s af

te r no ti ce an d d em an d fo r pa ym en t i s m ad e. Sect io n 63 30 (a) p ro vi de s tha t the lev y au th or iz edinsec ti on 63 31 (a) m ay be m ad e o nl y

if th e Sec ret ary ha s n ot ifi edsu chpe rs on inwrit in g o f th e ri gh t t o a n a dm in is tra ti ve he ari ng be fo re the lev y

is en fo rced . Upo n t im el y reque st , th e p ers on is en ti tl edto anadmin is tra ti ve he ari ng be fo re the App eal s Off ic e. Sec. 6 33 0( b) (1 ). Inren de rin g an a dm in is tra ti ve de te rm in at io n i n aco ll ect io n re vi ew pr oc eed in g u nd er s ect io n 6 33 0, the App eal s Off ic e m us t v eri fy th atth e- 9 -

requi rem en ts of a ny app li cab le law an d a dm in is tra ti ve pro cedur e h av e b eenm etin pr oc es si ng th e ta xp ay er’s cas e. Sec. 6 33 0( c)(1 ), (3 )(A). The App eal s Off ic e al so m us t co ns id er an y

is su es rai se d b y

th e ta xp ay er re la ti ng to th e co ll ect io n a ct io n, in cl ud in g o ffer s o f co ll ect io n a lt ern at iv es (su chas a n i ns ta ll m en t ag reem en t), ap pr op ria te sp ou sa l d efen se s, an d c ha ll en ge s t o the ap pr op ria te ne ss of t he co ll ect io n a ct io n. Se c. 63 30 (c)( 2) (A), (3 )(B) . A tax pa y er m ay ch al le ng e th e ex is te nc e o r am ou ntof h is or h er u nd erl y in g t ax li ab il ity if the tax pa y er d idno t rece iv e a n ot ic e o f de fic ie nc y or d idno t o th erwi se have anearl ie r op po rtu ni ty to di sp ut e su chtax li ab il ity . Sec. 6 33 0( c)(2 )(B) . Fin al ly, th e App eal s Off ic e m us t co ns id er wh ethe r th e co ll ect io n a ct io n b al an ces th e n eedforeffi ci en t co ll ect io n ag ai ns t the tax pa y er’s co nc ernth atco ll ect io n b e n o m or e in tru si ve th anne ces sa ry . Sec. 6 33 0( c)(3 )(C)
. Sect io n 6 33 0( d) (1 ) gr an ts th is Co urt juris di ct io n t o re vi ew th e adm in is tra ti ve de te rm in at io n m ad e b y th e App eal s Off

ic e. If th e ta xp ay er’s un de rlyin g t ax li ab il ity

is pro pe rly in d is pu te , th e Co urt wi ll rev ie w th e 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 -1 82 (20 00 ). Whe re the un de rlyin g t ax li ab il ity is no t atis su e, as is th e cas e h ere, we re vi ew th e de te rm in at io n fo r ab us e o f di sc ret io n. Id . at 1 82 ; s ee al so Seg o v . Comm is si on er,- 10 -

11 4 T.C. 6 04 , 61 0 (2 00 0) . An ab us e o f di sc ret io n o ccu rs if the App eal s Off ic e ex erci se s i ts di sc ret io n “ 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 ). I. Vali di ty of th e Fi na l No ti ce o f In te ntTo Lev y Pet it io ne r co nt en ds th atres po nd en t fa il edto pro pe rly no ti fy hi m th atth e in st al lm en t ag reem en t h e en te redin to in20 06 ha d b eenterm in at ed . Cit in g In te rn al Rev enue Man ua l (I RM) pt . 5.1 4.1 .5 (S ep t. 2 6, 2 00 8) , pet it io ne r arg ue s th atso lo ng as h e was de ni edno ti ce an d the op po rtu ni ty to ap pe al th e te rm in at io n of th e in st al lm en t ag reem en t, the IRS was ba rredfro m pro ceed in g wi th an y

lev y act io n fo r th e y ears inis su e an d the no ti ce o f in te ntto lev y date d S ep te m

be r 3, 20 10 , is in va li d. We di sa gr ee. The reco rdsh ows th atpe ti ti on er en te redin to anin st al lm en t ag reem en t wi th th e IRS du rin g 2 00 6 i n re sp ectof h is unpa idtax li ab il it ie s fo r 19 99 to 20 01 , 20 03 , an d 2 00 4 a ndth atth e IRS term in at edth e ag reem en t s om et im e b efo re J un e 2 00 9. Ass um in g fo r th e sa ke of a rg um en t tha t p et it io ne r was no t p ro pe rly no ti fie d tha t th e in st al lm en t ag reem en t h adbe enterm in at ed , th e p ro vi si on s o f IRM pt . 7 5.1 4.1 .5(1 )(e) ge ne ral ly w ou ldha ve ba rredth e IRS fro m pro ceed in g wi th a le vy
W e m ak e n o fi nd in g wh ethe r pe ti ti on er was pro pe rly no ti fie d tha t the 7 in st al lm en t ag reem en t h adbe enterm in at ed
.- 11 -

act io n i n re sp ectof p et it io ne r’s acco un t fo r th e y ears 19 99 to 20 01 , 20 03 , and 20 04 whi le anap pe al of t he term in at io n o f th e in st al lm en t ag reem en t was pe nd in g orun res ol ve d. Be th atas i t m ay , th e p ro vi si on s o f IRM pt . 5.1 4.1 .5(2 )(c) (an d the ex am pl e th atfol lo ws i t) m ak e itve ry cle ar tha t the IRS was free to serve no ti ce o f a p ro po se d l ev y

forpe ti ti on er’s b al an ce due y ears no t i nc lu de d i n the di sp ut ed in st al lm en t ag reem en t (e .g., 2 00 6 a nd20 08 ). Acco rd in gl y , we rejectpe ti ti on er’s arg um en t tha t the no ti ce o f in te ntto lev y date d S ep te m

be r 3, 2 01 0, i s i nv al id
. II. Whe th er the IRS Pr op erl y App li edPet it io ne r’s Paym en ts As p et it io ne r se es it , aft er the IRS d em an de d tha t h e p ay th e b al an ces du e fo r 20 06 an d 2 00 8, al l o f th e p aym en ts th athe subm it te d s ho ul d h av e b eenap pl ie d ag ai ns t h is unpa idtax li ab il it ie s fo r th os e y ears an d n o o th ers . Con si st en t wi th th is th eo ry , pet it io ne r co nt en ds th athe ha s fu ll y pa idhi s t ax li ab il it ie s fo r 20 06 an d 20 08 th ro ug h the bi week ly paym en ts th athe m ad e b etween20 09 an d 2 01 3. The reco rdrefl ect s tha t fr om Aug us t 7 , 20 09 , to Sep te m be r 13 , 20 13 , pe ti ti on er m ad e b iwee kl y pa ym en ts of $ 37 5 wh ic h the IRS cr ed it edto hi s ac co un t fo r 20 02 , 20 03 , and20 04 . Peti ti on er t es ti fie d a t tria l tha t h e d idno t d ire ctth e IRS to ap pl y th e p aym en ts to hi s ac co un t fo r 20 06 an d 2 00 8. Itis well est ab li sh edth at in th e ab se nc e o f di rect io n b y th e ta xp ay er, the IRS ca n app ly a paym en t ag ai ns t an y ou ts tand in g t ax li ab il ity

of t he tax pa y er. See , e.g., Woodv. Un it edSta te s, 8 08- 12 -

F.2 d 4 11 , 41 6 (5 th Cir . 19 87 ). On thi s re co rd , we con cl ud e th atres po nd en t pr op erl y cred it edth e p aym en ts to pe ti ti on er’s acc ou ntfor20 02 , 20 03 , and20 04 . Pet it io ne r al so co nt en ds th atres po nd en t’s re co rd s re fle ctth athe ha s p ai d a ll am ount s due for20 06 . W e d is ag ree. Al th ou gh th e rec or d i nc lu de s a F orm 43 40 , Cert ifi cat e o f Ass es sm en ts , Paym en ts , andOth er Sp eci fie d M at te rs , whi chsh ows th atpe ti ti on er’s b al an ce fo r 20 06 is zero , a clo se r rev ie w of tha t tran sc rip t o f acco un t, al on gs id e o th er tran sc rip ts inth e rec or d, s ho ws tha t p et it io ne r owe s ad di ti on al in te res t an d afai lu re t o p ay ad di ti on to tax att rib ut ab le to accr ua ls fro m Nov em be r 19 , 20 07 , th e d at e res po nd en t fi rs t en te redass es sm en ts forth os e it em s, to Jan ua ry

21 , 20 08 , th e d at e p et it io ne r pa id$3 ,16 0 i n s at is fact io n o f th e am ou nt s as se ss edon Nov em

be r 19 , 20 07 . III. Whethe r th e App eal s Off ic e Abu se d It s Di sc ret io n Pet it io ne r m ai nt ai ns th atth e App eal s Off ic e ab us edit s d is cret io n i n reject in g h is pro po sa l t o m ak e m on th ly ins ta ll m en t p aym en ts of $ 80 0. Sp eci fic al ly, pe ti ti on er co m pl ai ns th atth e App eal s Off ic e fai le d t o (1 ) affo rdhi m a face -to -fac e h eari ng an d (2 ) pr op erl y co ns id er wh ethe r th e p ro po se d l ev y wou ld cau se aneco no m ic ha rd sh ip
. Sect io n 6 15 9 aut ho riz es th e Co m m is si on er t o e nt er i nt o awrit te n a gr eem en t al lo win g atax pa y er t o p ay a li ab il ity

inin st al lm en ts if the “ ag reem en t wi ll- 13 -

faci li ta te ful l o r pa rti al co ll ect io n o f su chli ab il ity .” The d eci si on to acce ptor rejectin st al lm en t ag reem en ts li es withi n the di sc ret io n o f th e Co m mis si on er. See Tho m ps on v. Co m

m is si on er, 1 40 T.C. 17 3, 1 79 (20 13 ) (ci ti ng Kure ts ki v. Co m m is si on er, T.C. Mem o. 2 01 2- 26 2, at*9 an d s ect io n 3 01 .61 59 -1 (a), (c )(1 )(i ), Pro ced . & Adm in . Reg s.). A. Face-t o- Face Heari ng W e n ot e atth e o ut se t tha t SO Ro se ’s cas e act iv ity no te s s tate th at Mr. Kl it zn er co ns en te d t o the is su an ce o f th e n ot ic e o f de te rm in at io n wi th ou t a face -to -fac e h eari ng . Mr. Kli tz ne r di d n otap pe ar as a witne ss at t ria l t o t es ti fy as to hi s co nv ers at io ns with S O Ros e, an d we a re n otin cl in edto acce ptpe ti ti on er’s se co nd ha ndacco un t o f wha t tran sp ire d. Bu t ev enif M r. Kli tz ne r de m an de d a face -to -fac e m eet in g, as pe ti ti on er as se rts , we con cl ud e th atth e App eal s Off ic e d id no t ab us e it s d is cret io n i n p ro ceed in g wi th ou t o ne . In s ho rt, p et it io ne r’s gr os s m on th ly inc om e was at l eas t $ 10 ,10 7 (c om pr is in g wag es of $ 7,0 09 an d S oc ia l Secu rit y /p en si on be ne fit s o f $3 ,09 8) . Giv in g p et it io ne r th e b en efi t o f th e d oubt an d a ss um in g tha t h is m on th ly liv in g e xp en se s t ot al ed$5 ,82 7 (a s h e rep orte d o n Fo rm 43 3- A), he was l eftwith $ 4,2 80 of d is po sabl e in co m e eac h m on th . That be in g the cas e, SO Ro se ’s det erm in at io n tha t p et it io ne r co ul d m ak e m on th ly in st al lm en t p aym en ts of $ 1,5 00 witho utsu ffer in g e co no mic hard sh ip was- 14 -

co m pl et el y reas on ab le , andwe se e n o re as on to qu es ti onhe r de ci si on to is su e a fin al de te rm in at io n wi th ou t h ol di ng a face -to -fac e h eari ng . 8 B. Add it io na l Ex pe nd itur es Pet it io ne r co nt en ds th atSO Ro se ab us edhe r di sc ret io n b y fai li ng to tak e in to acco un t m on th ly exp en di tu res th athe m ad e fo r th e b en efi t o f Ms . Pai se y , hi s do m es ti c p artne r, an d M s. M il le r, he r m ot he r. The Co m m is si on er h as is su edfin an ci al an al y si s g ui de li ne s fo r se tt le m en t of fic ers to fol lo w inde te rm in in g the term s o f anin st al lm en t ag reem en t. See IRM, Fi na nc ia l An al y si s Han db oo k, 2 Adm in is tra ti on , pt . 5.1 5 (Oc t. 2 , 20 09 ). In ev al ua ti ng a ta xp ay er’s ab il ity to pa y tax , th e Co m

m is si on er cl as si fie s a t ax pa y er’s ex pe ns es in to ne ces sa ry

ex pe ns es an d c on di ti on al ex pe ns es . Pix le y v. Co m m is si on er, 1 23 T.C. 26 9, 2 72 (20 04 ). “ The to ta l n eces sa ry ex pe ns es est ab li sh th e m in im

um a ta xp ay er an d fa m il y

ne ed s t o l iv e.” IRM pt . 5.1 5.1 .7(1 ) (Oct . 2, 20 09 ). “ Co nd it io na l” ex pe ns es are tho se ex pe ns es th atdo no t m eetth e n eces sa ry ex pe ns e te stbu t wh ic h m ay be all owabl e if

th e ta x l iabi li ty, in cl ud in g p ro jecte d accrua ls , canbe ful ly pai d wi th in fiv e y ears . Schul m anv. Co m m is si on er, T.C. Mem o. 2 00 2- 12 9; IRM p t. 5 .15 .1.7 (7 ). The g ui de li ne s s ta te th atge ne ral ly, whe n Thi s C ou rt a ndothe r co urts ha ve he ldth ata face -to -fac e h eari ng is no t 8 requi redun de r se c. 63 30 inall cir cu m st an ces . See, e.g ., Jac ks on v. Co m m is si on er, T.C. Mem o. 2 01 0- 18 0.- 15 -

th e Co m m is si on er i s d et erm in in g the ab il ity to pa y , a tax pa y er i s al lo wedon ly ex pe ns es whi chhe or s he is requi redto pa y , anddi sc ret io na ry ex pe ns es at tri bu tabl e to a no nl iabl e p ers on are n ottak enin to acco un t. IRM pt . 5.1 5.1 .4(1 ), (3 )(G) (Oct . 2, 2 00 9)
. W e se e n o n eedto de lv e in to th e p ot en ti al ly m urky qu es ti on whet he r th e ex pe nd itur es th atpe ti ti on er m ad e o n b eh al f of Ms . Pai sl ey

an d M s. M il le r co ns ti tu te ne ces sa ry

or c on di ti on al ex pe ns es as t ho se term s ar e u se d i n the IRM pr ov is io ns cit edab ov e. Ass um in g fo r th e sa ke of a rg um en t tha t the y qu al ify as on e o r th e o th er, we n ev erthe le ss co nc lu de th atth e App eal s Off ic e d idno t ab us e it s d is cret io n i n thi s ca se . As pr ev io us ly dis cu ss ed , pet it io ne r ha d asubs tant ia l am ountof d is po sabl e in co m e. W e are co nv in cedon th is reco rdth athe ha d a m pl e fin an ci al res ources to m ak e m on th ly ins ta ll m en t p aym en ts of $ 1,5 00 , pay his own reas on ab le li vi ng ex pe ns es , andha ve en ou gh fun ds lef t o ve r to pro vi de si gn ifi can t as si st an ce t o M s. Pa is le y

an d h er m ot he r. IV. Con cl us io n Co ns is te ntwith the pre ced in g d is cu ss io n, we h ol d tha t the App eal s Off ic e de te rm in at io n t o p ro ceedwith the pro po se d l ev y act io n was no t an ab us e o f di sc ret io n, an d the pro po se d l ev y is su st ai ne d.- 16 -

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.