T.C. Mem o. 2 01 4- 14 0

UNITED STAT ES TAX COURT
SYNERGY ENVIRONMENTAL, INC., Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 93 76 -1 2L. Fi le d J ul y 15 , 20 14
.
Pau l E. Ken t, fo r pe ti ti on er. Lis a R. Wood s an d B ry an t Sm ith, fo r res po nd en t.

MEMORANDUM OPINION HAINES, Ju dg e: Thi s m at te r is curren tl y be fo re the Co urt p ur su an t t o the pa rti es ’ joi ntm ot io n t o s ub m itth is cas e o n ast ip ul at edreco rdun de r Ru le 12 2. 1

Unl es s o th erwi se in di cat ed , all Ru le refe ren ces are t o the Tax C ou rt R ul es 1 of Prac ti ce an d P ro cedur e, an d a ll sec ti onrefe ren ces are t o the Int ern al Rev enue Co de , as a m en de d andineffe ctat a ll rel ev an t t im es . Am ou nt s ar e ro un de d t o the ne ares t d ol lar.-2
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[* 2] Pet it io ne r fi le d ape ti ti on with thi s C ou rt i n re sp on se to a Not ic e o f Dete rm in at io n C on cern in g C ol le ct io n Act io n Un de r Sec ti on 63 20 . The i ss ue for de ci si on is whet he r res po nd en t ab us edhi s d is cret io n b y reject in g p et it io ne r’s pr op os edoff

er-i n- co m pr om is e (OIC)
.

Bac kg ro un d So m e o f th e fac ts ha ve be enst ip ul at edan d are s o fo un d. Th os e ex hi bi ts at ta ch edto th e st ip ul at io n wh ic h wer e fo un d a dm is si bl e are in co rp or at edby thi s refe ren ce. Pet it io ne r, a d efu nc t co rp or at io n, m ai nt ai ne d i ts pri nc ip al pl ace o f bu si ne ss inCal ifo rn iawhenth e p et it io n was fil ed
. On Au gu st31 , 20 10 , res po nd en t re cei ve d an OIC (Aug us t 3 1 OIC ) fro m pe ti ti on er, o ffer in g $ 60 0 t o c om pr om is e unp ai d F ed eral in co m e ta x l iabi li ti es for ta x years e nd in g S ep te m

be r 30 , 19 97 , 19 98 , 19 99 , and20 00 (y ears at i ss ue ). Res po nd en t re

jecte d the Aug us t 3 1 OIC
. InJu ne 20 11 res po nd en t i ss ue d p et it io ne r a n ot ic e (l ie n n ot ic e) i nd ic at in g th ata no ti ce o f Fed eral tax li enha d b eenfil edwith re sp ectto it s o ut st an di ng tax li ab il it ie s fo r th e y ears at i ss ue an d i nf orm in g i t tha t i t was en ti tl edto a he ari ng un de r se ct io n 6 32 0. Inlat e Ju ly 201 1 p et it io ne r ap pe al edth e reject io n o f th e Aug us t 3 1 OIC to th e IRS App eal s Off

ic e (Ap pe al s) . A few days la te r pe ti ti on er t im el y reque st eda-3
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[* 3] se ct io n 6 32 0 h eari ng reg ard in g the li enno ti ce wi thApp eal s. Inth e h eari ng reque st , pet it io ne r pr op os edanOIC as a co ll ect io n a lt ern at iv e. App eal s as si gn edth e se ct io n 6 32 0 h eari ng an d the ap pe al of the Aug us t 3 1 OIC rejec ti on to App eal s Off ic er Owy an g (AO Owy an g) , who was n otpre vi ou sl y in vo lv edwith the Aug us t 3 1 OIC . AO O wy an g h el d the he ari ng . Peti ti on er d id
no t ch al le ng e th e und erl y in g l iabi li ti es du rin g the he ari ng bu t d idpro po se th e Aug us t 3 1 OIC as aco ll ect io n a lt ern at iv e. Inmid -March 20 12 AO Owy an g s en t pe ti ti on er a d et erm in at io n n ot ic e su st ai ni ng th e n ot ic e o f li enfil in g. With res pe ct to th e Aug us t 3 1 OIC as aco ll ect io n a lt ern at iv e, th e d et erm in at io n n ot ic e st at ed th at“ [b ]ecaus e th e Offer

inCo m pr om is e was fil edon07 /2 9/ 20 10 , a y ear e arl ie r th anth e Reque stfora Co ll ect io n Du e Pro ces s Hearin g fo r th e fi le d fe de ral tax li en , any deci si on onth e OfferinCo m pr om is e is co ve redun de r anearl ie r, se pa rat e work uni t.” Aro un d two wee ks aft er AO Owy an g s en t the de te rm in at io n n ot ic e, he sen t a s ep arat e le tt er t o p et it io ne r su st ai ni ng res po nd en t’s re jecti on of the Aug us t 3 1 OIC . Atta ch edto th e le tt er was an“ App eal s C as e Me m or an du m ”
ex pl ai ni ng th e d eci si on . Pet it io ne r fi le d ape ti ti on with thi s C ou rt c ha ll en gi ng th e d et erm in at io n.-4
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[* 4] Dis cu ss io n A li eninfav orof the Uni te d S ta te s o n a ll pro pe rty andrig ht s t o p ro pe rty of a p ers on li ab le fortax es (ta xp ay er) i s i m po se d wh ena de m an d fo r th e ta xe s h as be enm ad e an d the tax pa y er fa il s t o p ay . Sec. 6 32 1. Th e li enari se s wh enan as se ss m en t i s m ad e. Sec. 6 32 2. Gen eral ly, inord er fo r th e li ento be va li d a ga in st th irdparti es , th e Sec ret ary m us t fi le a li enno ti ce wi thcert ai n S ta te or l oc al
au th or it ie s wh ere the tax pa y er’s p ro pe rty is s ituate d. Se c. 63 23 (a), (f ); Li nd say

v. Co m m is si on er, T.C. Mem o. 2 00 1- 28 5, af f’d, 56 Fed . App x. 8 00 (9t h C ir. 2 00 3)
. The Secr et ary m

us t fu rn is h the tax pa y er wi th writ te n n ot ic e o f th e fi li ng of a li enno ti ce an d o f th e ta xp ay er’s ri gh t t o ahe ari ng co nc ern in g the li en . Sec. 63 20 (a)( 1) , (3) . If th e ta xp ay er t im el y reque st s a h eari ng , th e h eari ng is to be
co nduc te d b y

anoff ic er o r em

pl oyee of App eal s wh o h as ha d n o p rio r in vo lv em en t with re sp ectto th e unp ai d t ax es . Sec. 6 32 0( b) (1 ), (3 ), (c). W e h av e juri sd ic ti on to rev ie w App eal s’ det erm in at io ns . Secs . 63 20 (c), 63 30 (d ). Dete rm in at io ns with re sp ectto th e und erl y in g t ax li ab il ity are re vi ewed de no vo , wher eas de te rm in at io ns co nc ern in g c ol le ct io n m at te rs are re vi ewedfor ab us e o f di sc ret io n. Se go v. Co m m is si on er, 1 14 T.C. 60 4, 6 10 (20 00 ); Go za v . Co m m is si on er, 1 14 T.C. 17 6, 1 81 -1 82 (20 00 ). Pet it io ne r do es no t d is pu te th e-5
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[* 5] un de rlyin g l iabi li ti es . Con se qu en tl y , we rev ie w th e App eal s o ffi cer’s de te rm in at io n fo r ab us e o f di sc ret io n. The ab us e o f di sc ret io n s tand ardrequi res th e Co urt t o d eci de whet he r th e Co m m is si on er’s d et erm in at io n was arb itrary, capri ci ou s, o r witho utso un d b as is in factor l aw. W oo dr al v. Co m m is si on er, 1 12 T.C. 19 , 23 (19 99 ); Ke ll er v . Co m m is si on er, T.C. Mem o. 2 00 6- 16 6, af f’d inpart, 5 68 F.3d71 0 (9 thCir . 20 09 ); Fo wlerv. Co m

m is si on er, T.C. Mem o. 2 00 4- 16 3. The tax pa y er m ay

rai se at the he ari ng “ an y rel ev an t i ss ue ” rel at in g t o the
unpa idtax or the li en , in cl ud in g o ffer s o f co ll ect io n a lt ern at iv es su chas an OIC
. Secs . 63 20 (c), 6 33 0( c)(2 )(A). The de te rm in at io n b y App eal s m

us t t ak e in to co ns id erat io n any relev an t i ss ue s ra is edby the tax pa y er. Sec s. 6 32 0( c), 63 30 (c)( 3) (B). Th e d et erm in at io n n ot ic e m us t s etforth App eal s’ fin di ng s an d de ci si on s as to su chis su es . See s ec. 3 01 .63 20 -1 (e)( 3) , Q&A-E8, Pr oc ed . & Adm in . Reg s. W ith re sp ectto th e Aug us t 3 1 OIC pe ti ti on er p ro po se d a s a c ol le ct io n al te rn at iv e in th e se ct io n 6 32 0 h eari ng , th e d et erm in at io n n ot ic e st at es on ly tha t

“ [b ]ecaus e th e OfferinCo m pr om is e was fil edon07 /2 9/ 20 10 , a y ear e arl ie r th an th e Reque stfora Co ll ect io n Du e Pro ces s Hearin g fo r th e fi le d fe de ral tax li enan y de ci si on onth e OfferinCo m pr om is e is co ve redun de r anearl ie r, se parat e work-6
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[* 6] un it .” Thi s s ta te m en t d oe s n otfin d o r de ci de an yth in g wi th res pe ctto th e ap pr op ria te ne ss of the Aug us t 3 1 OIC . Hence , th e d et erm in at io n d oe s n otco nt ai n al l the st at em en ts requi redby sect io n 3 01 .63 30 -1 (e)( 3) , Q&A-E8, Pr oc ed . & Adm in . Reg s. Add it io na ll y , th e st at em en t i nd ic at es th atAO Owy an g d idno t co ns id er pe ti ti on er’s Au gu st31 OIC as a co ll ect io n a lt ern at iv e in m ak in g h is de te rm in at io n pu rs ua ntto sec ti on 63 20 . Thatth e Aug us t 3 1 OIC was c on curren tl y be in g co ns id eredina se pa rat e ap pe al di d n otob vi at e th e n eedto co ns id er the Aug us t 3 1 OIC i n the sec ti on 63 20 he ari ng . See s ecs . 63 20 (c), 6 33 0( c)(2 ), (3 ), an d (4 ). W e 2 th in k i t i s n eces sary

to rem an d thi s ca se to App eal s fo r a s up pl em en ta l h eari ng . 3 W e n ot e th atth is cas e is di st in gu is habl e fro m W es t v . Comm is si on er, T.C. 2 Mem o. 2 01 0- 25 0. InW es t, the App eal s o ffi cer r efu se d t o re co ns id er a co ll ect io n al te rn at iv e th atth e ta xp ay er h adpre vi ou sl y rai se d i n ano th er ad m in is tra ti ve pr oc eed in g. We hel d that the App eal s o ffi cer d idno t ab us e h is or h er d is cret io n be cau se th e co ll ect io n a lt ern at iv e h adbe enrai se d andde ci de d i n the adm in is tra ti ve he ari ng . Unl ik e th e co ll ect io n a lt ern at iv e in W es t, the co ll ect io n al te rn at iv e rai se d i n p et it io ne r’s se c. 63 20 he ari ng , i.e., th e Aug us t 3 1 OIC , had no t b eenco ns id eredina pr ev io us he ari ng as i t was st il l u nd er ap pe al when th e de te rm in at io n n ot ic e was is su ed
. W e rem an d acas e to App eal s wh enth e ta xp ay er d idno t h av e a p ro pe r 3 he ari ng an d the furth er h eari ng is ne ces sary or wi ll be pro du ct iv e. Lun sf or d v
. Co m m is si on er, 1 17 T.C. 18 3, 1 89 (20 01 ); Dra ke v. Co m m is si on er, T.C. Mem o. 20 06 -1 51 , aff’d, 5 11 F.3d65 (1s t Ci r. 20 07 ); Li te s v . Comm is si on er, T.C. Mem o. 20 05 -2 06 . Whe n we r em an d acas e to App eal s, “ th e furth er h eari ng is a supp le m en t t o the tax pa y er’s o rig in al sec ti on 63 30 he ari ng , [an d] no t a n ew (co nt in ue d...)-7
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[* 7] Accor di ng ly, we wil l re m an d thi s m at te r to App eal s t o c on si de r pe ti ti on er’s Aug us t 3 1 OIC as aco ll ect io n a lt ern at iv e an d t o s ta te App eal s’ fin di ng s an d de ci si on . In ev al ua ti ng th e Aug us t 3 1 OIC , App eal s s ho ul d c on si de r pe ti ti on er’s
curren t fi na nc ia l ci rcu m st an ces , pet it io ne r’s curren t p ay in g andfil in g c om pl ianc e, an d any oth er re le va ntfact or s. Pet it io ne r m ay no t ra is e an y

ne w or a dd it io na l is su es be y on d the Aug us t 3 1 OIC
. Inreac hi ng ou r ho ld in gs he rei n, 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 edab ov e, we co nc lu de th ey are m oo t, i rrel ev an t, o r witho utm eri t. To re fle ctth e fo reg oi ng , An ap pr op ria te ord er wi ll be is su ed
.

(...co nt inue d) 3 he ari ng .” See Kel by v. Co m m is si on er, 1 30 T.C. 79 , 86 (20 08 ). The Co m m is si on er the n i ss ue s s up pl em en ta l d et erm in at io ns aft er the furth er h eari ng , whi chwe canrev ie w. Id. On ce the Co m m is si on er i ss ue s s up pl em en ta l de te rm in at io ns , ho wev er, we can no t re vi ew an y of the pri or

no ti ces of de te rm in at io n. Se e id . (“ [T]he p os it io n o f th e Co m m is si on er tha t we re vi ew is th e po si ti ontak eninth e la stsupp le m en ta l d et erm in at io n.” ).