T.C. Mem o. 2 01 5- 24 2

UNITED STAT ES TAX COURT JODY LEE RAIDA, Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 19 48 -1 5L. Fi le d Dec em be r 15 , 20 15 . Jo dy Lee Raid a, pr o s e. Dian a P. Hin to n, fo r res po nd en t.

MEMORANDUM OPINION THORNTON, Ch ie f Ju dg e: Pet it io ne r se ek s re vi ew pu rs ua ntto sec ti on s 63 20 (c) and63 30 (d )(1 ) of t he de te rm in at io n b y th e In te rn al Rev enue Serv ic e 1

All sec ti on 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. W e ro un d a ll do ll ar am ou nt s t o the ne ares t d ol lar.- 2 -

[* 2] (IRS or r es po nd en t) s us ta in in g apro po se d l ev y to co ll ectsec ti on 66 72 tru st fundreco ve ry

pe na lt ie s (TFR Ps ) as se ss edag ai ns t h er fo r fai li ng to co ll ectan d p ay ov er em pl oym en t t ax es of LuuLuu C om , Inc . (Luu Luu ). Res po nd en t h as m ov ed fo r su m m ary jud gm en t. Fo r th e rea so ns ex pl ai ne d b el ow, we wi ll gra nthi s m ot io n. Bac kg ro un d The fol lo win g u nc on tro ve rte d fa ct s ar e d eri ve d fr om th e p et it io n, the ex hi bi ts att ach edto th e su m

m ary jud gm en t m ot io n, an d re sp on de nt ’s othe r fi li ng s i n th is cas e. Pet it io ne r res id edinNew Yorkwhensh e p et it io ne d thi s C ou rt. In20 02 res po nd en t d et erm in edth atpe ti ti on er was res po ns ib le forLuu Luu ’s fai lu re t o p ay

ov er t o the Uni te d S ta te s p ay ro ll tax es withh el d fr om

it s emplo y ees fo r th e ta xabl e qua rte rs en di ng Decem be r 31 , 20 00 , andMarc h 3 1, 2 00 1. Re sp on de ntm ai le d t o h er a Let te r 11 53 , Trus t Fu nd s R eco ve ry Pen al ty L et te r, pr op os in g to ass es s TFRPs ag ai ns t h er fo r th os e p eri od s. Th e p en al ti es --$ 77 ,83 8 and $5 9,0 68 , res pe ct iv el y --were ass es se d o n Jun e 3 0, 2 00 3. Inres po ns e to pe ti ti on er’s reque st , th e IRS App eal s Off ic e h el d ahe ari ng to co ns id er h er ch al le ng e to th e pe na lt ie s. Th e as se ss m en ts were s us ta in ed . Pet it io ne r subs eque nt ly pro po se d an o ffer -in -co m pr om is e, whi chth e IRS reject edinJan uary

20 06 . From Sep te m

be r 20 07 to Aug us t 2 01 2, p et it io ne r’s de bt- 3 -

[* 3] was cla ss ifi edas c urren tl y no t co ll ect ib le . On Feb ru ary 14 , 20 13 , inaneffo rt to co ll ectth e as se ss edTFRPs , th e IRS sen t p et it io ne r two Lett ers 10 58 , Fin al Not ic e o f In te ntto Levy andNot ic e o f You r Ri gh t t o aHeari ng . In re sp on se , pe ti ti on er t im 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 Hea rin g, ch eck in g n on e o f th e co ll ect io n a lt ern at iv e b ox es an d s ta ti ng on ly tha t “ I am

no t l iabl e fo r th e ta xe s” . On J un e 9 , 20 14 , a se tt le m en t o ffi cer ( SO) fro m th e IRS App eal s Off

ic e m ai le d p et it io ne r a l et te r ackno wled gi ng rece ip t o f he r Fo rm 12 15 3. Th e SO m ai le d h er a s eco ndlet te r on Ju ly 1, 20 14 , sch edul in g atel ep ho ne co ll ect io n due pr oc es s (C DP) h eari ng forJu ly 17, 2 01 4. He i nf orm edpe ti ti on er tha t b ecau se th e App eal s Off

ic e h adpre vi ou sl y

rev ie wedan d s us ta in edhe r li ab il ity forth e pe na lt ie s, tha t i ss ue wou ldno t b e rec on si de red . He in fo rm edpe ti ti on er tha t, t o ha ve a co ll ect io n a lt ern at iv e co ns id ered , sh e h adto pro vi de , withi n 1 4 d ay s, a co m pl et edFo rm

43 3- A, Col le ct io n In fo rm at io n S tate m en t fo r W ag e Earn ers an d Sel f-Em pl oyed In di vi du al s, an d, wi th in21 day s, a s ig ne d F orm 10 40 , U.S. In di vi du al Inc om e Tax Return, fo r ta xabl e y ear 2 01 3. On the da te of t he CDP h eari ng pe ti ti on er fa xe d t o the SO a Fo rm 43 3- A li st in g $ 14 ,16 7 m on th ly inc om e, $9 4 o f di sp os ab le in co m e aft er ex pe ns es , and zero pe rs on al ass et s. Co nt rary to the in st ru ct io ns of F orm 43 3- A, pet it io ne r- 4 -

[* 4] at ta ch edno do cu m en ta ti on to supp ort h er cl ai m edex pe ns es . The SO rev ie wedth e Fo rm

43 3- A and , aft er ap pl y in g s tand ardall owa nc es for cert ai n ty

pe s of ex pe ns es , det erm in edth atpe ti ti on er h adm on th ly dis po sabl e in co m e o f $4 ,49 4. He in di cat ed , ho wev er, tha t h e wou ldbe wil li ng to co ns id er ad di ti on al ex pe ns es if by Jul y 31 , 20 14 , sh e co ul d p ro vi de supp orti ng do cu m en tati on . He ren ewedhi s reque stforhe r 20 13 Fo rm 10 40 . On Au gu st5, 2 01 4, re sp on de ntrece iv edpe ti ti on er’s 2 01 3 F orm 10 40 . On Sep te m be r 4, 2 01 4, p et it io ne r se ntanem ai l t o the SO, st at in g tha t s he was “ st il l i n th e p ro ces s o f do cu m en ti ng * * * [h er] exp en se s an d h eal th care co st s” an d tha t i t wou ldbe fin al iz edwithi n the ne xttwo week s. Sh e al so reque st edco ns id erat io n o f a p art ia l p aym en t i ns ta ll m en t ag reem en t. Pet it io ne r ne ve r subm it te d the reque st edsupp orti ng ex pe ns e d oc um en ta ti on orm ad e a s pe ci fic pro po sa l fo r anin st al lm en t ag reem en t. The SO rev ie wedth e adm in is tra ti ve fil e, ve rif

ie d tha t the TFRPs ha d b eenpro pe rly ass es se d, an d de te rm in edth atall othe r requi rem en ts of app li cab le law an d a dm in is tra ti ve pr oc edur e h adbe enm et . On Dece m be r 16 , 20 14 , res po nd en t i ss ue d the 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( s) un de r Sec ti on 63 20 an d/ or63 30 , su st ai ni ng th e p ro po se d l ev y with re sp ectto pe ti ti on er’s unp ai d TFR Ps .- 5 -

[* 5] Pet it io ne r ti m el y

so ug htrev ie w inth is Co urt, as se rti ng inhe r pe ti ti on th at

“ [t]he set tl em en t o ffi cer d idno t re vi ew do cum en ta ti on of n eces sa ry li vi ng ex pe ns es , sp eci fic al ly out -o f-p oc ke t m ed ic al ex pe ns es .” On Se pt em be r 16 , 20 15 , res po nd en t m ov edforsu m m ary jud gm en t. The Co urt o rd eredpe ti ti on er t o fi le a res po ns e to th is m ot io n b y Octo be r 21 , 20 15 . Peti ti on er fa il edto res po nd . Altho ug h the Co urt co ul d e nt er a d eci si on ag ai ns t h er fo r th atreas onalo ne , see Ru le 12 1( d) , we wil l n ev erthe le ss co ns id er re sp on de nt ’s m ot io n o n i ts m eri ts . Dis cu ss io n A. Su m

m ary Ju dg m en t 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 id un ne ces sary

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 ge nu in e d is pu te as t o any m at eri al factan d ade ci si on m ay be ren de redas am at te r of law. Ru le 12 1( b) ; Su nd stran d C or p. v . Commis si on er, 9 8 T.C. 5 18 , 52 0 (1 99 2) , aff’d, 1 7 F .3d96 5 (7 th Cir . 19 94 ). If a m ov in g p arty pro pe rly m ak es an d s up po rts a m ot io n fo r su m

m ary jud gm en t, “ anadve rs e p arty m ay no t re stup on th e m ere al le ga ti on s o r de ni al s o f su chparty’ s p le ad in g” bu t m us t s etforth sp eci fic fact s, b y affi da vi t o r ot he rwis e, sh owi ng th atth ere i s a g enui ne di sp ut e fo r tr ia l. Ru le 12 1( d) .- 6 -

[* 6] B. St an dardof R ev ie w Inanact io n s uc h a s thi s t o re vi ew anIRS ad m in is tra ti ve de te rm in at io n un de r se ct io n 6 33 0( d) (1 ), if t he un de rlyin g t ax li ab il ity is pro pe rly at is su e, th e Co urt re vi ews th e IRS de te rm in at io n d e n ov o. Go za v . Commis si on er, 1 14 T.C. 17 6, 1 81 -1 82 (20 00 ). Oth erwi se , th e Co urt re vi ews th e IRS de te rm in at io n fo r ab us e o f di sc ret io n. Id . at 1 82 . Abu se of d is cret io n e xi st s wh ena de te rm in at io n i s 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 ). Sect io n 6 33 0( c)(2 )(B) pe rm it s a t ax pa y er t o c ha ll en ge th e ex is te nc e o r am ountof h er u nd erl y in g l iabi li ty in a C DP pr oc eed in g o nl y if s he di d n otrece iv e a n ot ic e o f de fic ie nc y

or o th erwi se ha ve anop po rtu ni ty to co nt es t tha t l iabi li ty. In a cas e in vo lv in g adi sp ut edTFRP, a t ax pa y er wh o re cei ve s a Let te r 11 53 an d ch al le ng es th e und erl y in g t ax li ab il ity at a n Ap pe al s co nf

eren ce i s p recl ud edun de r se ct io n 6 33 0( c)(2 )(B) fro m ch al le ng in g the un de rlyin g t ax li ab il ity ina subs eque nt CDP h eari ng . See Ma so n v . Comm is si on er, 1 32 T.C. 30 1, 3 17 -3 18 (20 09 ); s ee al so sec . 30 1.6 33 0- 1( e)(3 ), Q&A-E2 , Pro ced . & Adm in . Reg s. As we p rev io us ly dis cu ss ed , pet it io ne r rec ei ve d aLett er 1 15 3 andun su cces sf ul ly chal le ng edhe r un de rlyin g l iabi li ty at he r 20 03 App eal s co nf eren ce. Pet it io ne r’s rece ip t o f Lett er 1 15 3 andhe r subs eque ntApp eal s co nf eren ce co ns ti -- 7 -

[* 7] tu te d, fo r pu rp os es of s ect io n 6 33 0( c)(2 )(B) , a pr io r “ op po rtu ni ty to d is pu te ” he r li ab il ity

forth e TFRPs . See Bi sh ay v. Co m m is si on er, T.C. Mem o. 2 01 5- 10 5, at*6 . Con se qu en tl y , sh e is no t en ti tl edinth is pro ceed in g t o c ha ll en ge he r un de rlyin g l iabi li ty onc e ag ai n. Acco rd in gl y , we rev ie w res po nd en t’s de te rm in at io n fo r ab us e o f di sc ret io n. C. Ana lysis Inde ci di ng whethe r th e SO ab us edhi s d is cret io n i n s us ta in in g the pro po se d le vy acti on , 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 an y ap pl ic ab le law o r adm in is tra ti ve pro cedur e h adbe enm et ; (2 ) co ns id eredan y rel ev an t i ss ue s p et it io ne r rai se d; an d (3 ) de te rm in edwhet he r “ an y pro po se d c ol le ct io n a ct io n b al an ces th e n eedforth e effi ci en t co ll ect io n o f ta xe s wi th th e le gi ti m at e co nc ernof * * * [pe ti ti on er] 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 .” Sec. 6 33 0( c)(3 ). Pet it io ne r’s pr im ary co nt en ti on is th atth e SO ab us edhi s d is cret io n b y “ no t rev ie w[in g h er] do cu m en tati on of n eces sa ry li vi ng ex pe ns es , sp eci fic al ly out -o fpo ck etm ed ic al ex pe ns es .” The re co rdsh ows , ho wev er, tha t p et it io ne r fai le d t o subm itth e reque st edfin an ci al in fo rm at io n t o s up po rt t he m on th ly exp en se s cl ai m edon he r Fo rm

43 3- A. Peti ti on er al so m ad e n o s pe ci fic pro po sa l fo r a co lle ct io n a lt ern at iv e. It i s n otanab us e o f di sc ret io n fo r anSO to de cl in e to co ns id er- 8 -

[* 8] a co ll ect io n a lt ern at iv e whe re the tax pa y er m ak es no sp eci fic pro po sa l. See McLai ne v. Co m

m is si on er, 1 38 T.C. 22 8, 2 43 (20 12 ); Ke nd ric ks v. Co m m is si on er, 1 24 T.C. 69 , 79 (20 05 ). A set tl em en t o ffi cer i s n otrequi redto ne go ti at e wit h atax pa y er i nd efi ni te ly. See Kre itMec h. As so cs ., Inc . v. Co m m is si on er, 1 37 T.C. 12 3, 1 34 (20 11 ). After gi vi ng pe ti ti on er 2 -1 /2 m on th s m or e th ansh e h adreque st edto subm itth e pr om is eddo cu m en ts , th e SO cl os edth e cas e. Und er the se cir cu m st an ces , th e SO di d n otab us e h is di sc ret io n b y clo si ng th e cas e wit ho utpro vi di ng st il l m or e ti m e orso li ci ti ng a fo rm al off

er fro m pe ti ti on er. Pet it io ne r rai se d n o o th er i ss ue s athe r CDP h eari ng ; s he is th eref or e n ot en ti tl edto rai se th em

no w. See s ec. 3 01 .63 30 -1 (f)(2 ), Q&A-F3 , Pro ced . & Adm in . Reg s. Inany

ev en t, s he rai se d n o o th er i ss ue s i n h er p et it io n. Our rev ie w of th e rec or d re ve al s tha t the SO co nduc te d ath or ou gh rev ie w of p et it io ne r’s acco un t, d et erm in edth atth e TFRPs were p ro pe rly ass es se d, an d v eri fie d tha t o th er requi rem en ts of app li cab le law an d a dm in is tra ti ve pro cedur e were f ol lo wed . W e co nc lu de th at , insu st ai ni ng th e p ro po se d c ol le ct io n a ct io n, the SO pro pe rly ba lanc ed“ th e n eedforth e eff ic ie ntco ll ect io n o f ta xe s wi th th e le gi ti m at e co nc ern of * * * [p et it io ne r] tha t an y co ll ect io n a ct io n b e n o m or e in tru si ve th an ne ces sa ry .” Sec. 6 33 0( c)(3 ).- 9 -

[* 9] Fi nd in g n o abu se of d is cret io n i n any 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, an d we s us ta inhi s d et erm in at io n. To re fle ctth e fo reg oi ng , An ap pr op ria te ord er an d d eci si on wil l b e en te red .