T.C. M em o . 2 0 1 9 -9 7

UNITED STATES TAX COURT

BIANCA LAVINIA GILM ORE, Pet i t io n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 4 4 79 -1 7 L. Fi l edAu gu s t 6 , 2 0 1 9
.

Bi an ca Lav i n i a Gi l m o re, p ro s e. Lau ra J . M u l l i n , fo r res p o n d en t .

M EM ORANDUM FINDINGS OF FACT AND OPINION GALE, Ju d g e: Pu rs u an tt o s ect i o n 6 3 3 0 (d )(1 ), 1 p et it i on er s eek s rev i ew o f th e d et erm i n at i o n o f res p on d en t ’ s Offi ce o f Ap p eal s (Ap p eal s ) t o s u s t ai n a

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de o f 1 98 6 , as am en d edan di n effect atal l rel ev an tt i m es .- 2
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[* 2 ] p ro p o s ed l ev y

t o co l l ect p et i t i o n er’ s u np ai d Fed eral i n co m e t ax l iab i l i t i es fo r t ax ab l e y ears 2 0 1 2 an d2 0 1 5
. Th e i s s u es fo r d eci s i o n are: (1 ) wh et h er t he
u n d erl y i n g t ax l iab i l i t i es are s ub jectt o ch al len g e i n th is p ro ceed i n g o r are
o th erwi s e i n co rrect an d (2 ) wh et h er t h e s et t l em en t o ffi cer (SO) wh o co ndu ct ed p et i t i o n er’ s co ll ect i o n du e p ro ces s (CDP) h eari n g ab us edh i s d i s cret io n i n
s u s t ai n i n g t h e p ro p o s edl ev y . FINDINGS OF FACT Pet i t i o ner res i dedi n Ari zo n a wh en s he fi l edh er p et i t i o n. Th e ad m i ni s trat iv e reco rd , as s upp l em en tedb y Fo rm 4 3 4 0 , Cert i fi cat e o f As s es s m en t s , Paym en t s , an dOth er Sp eci fi edM at t ers , fo r each y ear at i ss u e,
es t ab l i s h es th e fo l l owi ng m at t ers , wh i ch th e p art i es d o n o td i s p u t e. Pet i t i o ner fi l edan u n ti m el y jo i n tFed eral i n co m e t ax retu rn fo r 2 0 1 2 o n Feb ru ary 1 , 2 0 1 6 . Up on i t s recei p tres p on d en tas s es s edthe rep ort edl i ab i l i ty , as wel l as ad d i t i o n s t o t ax fo r fai l u re t o fi l e t im el y u n d er s ect io n 6 65 1 (a)(1 ), fai l u re t o p ay t i m el y u n d er s ect i o n 6 6 5 1 (a)(2 ), an d fai l u re t o m ak e es t i m at edt ax p aym en t s
u n d er s ect i o n 6 6 5 4
. Pet i t i o ner t i m el y

fi l eda Fed eral i nco m e t ax retu rn fo r 2 0 1 5 . Up o n i t s recei p t res p o n d en t as s es s edth e rep o rt edl i ab i l i ty as wel l as an ad d i t i o n t o t ax fo r fai l u re t o p ay

t i m el y u nd er s ect i o n 6 6 5 1 (a)(2 ).- 3
-

[* 3 ] OnDecem

b er 2 , 2 0 16 , res p o n d en ti s s u edp et it i on er a Fi n al No t i ce o f In t en t t o Lev y an d No t i ce o f Yo u r Ri g h tt o a Heari n g (NIL) co n cern i n g t h e co l l ect i o n o f h er u npai dFed eral i n co m e t ax l i ab i l i t i es fo r 2 0 1 2 an d 2 0 1 5
. Inres po n s e, t h e rep res en t at i v e h o ld i n g p et i t i o n er’ s p o wer o f at t o rn ey 2 t i m el y s ub m i t t ed a Fo rm 1 2 1 5 3 , Requ es tfo r a Co ll ect i o n Du e Pro ces s o r Equi v al en tHeari n g (CDP h eari n g req u es t ), o n p et i t i o n er’ s b eh al f. Th ereo n , th e rep res en t at i v e ch eck edth e fo l l o w i n g co l l ect i o n al t ern at iv e b o x es : “ In s t al l m en tAg reem en t ”, “ Offer i n Co m p ro m i s e” (OIC), an d“ I Can n o tPay Bal an ce”. A d o cu m en t at t ach edt o th e Fo rm 1 2 1 5 3 s t at edth atp et it i on er b el i ev edth e NIL t o b e “ p rem atu re an d i n ap p ro p ri at e” an dth ath er “ cu rren t fi n an ci al co n d i t i o n wi l l n o tal l o w * * * [h er] t o fu l l p ay

th e t ax l i ab il i ty .” Th e SO rev i ewed p et i t io n er’ s In t eg rat edDat a Ret ri ev al Sy s t em (IDRS) tran s cri p t s an d th e ad m i n is trat i v e fi l e. He d et erm i n edth at(1 ) p et i t i o n er’ s CDP h eari n g req u es twas t i m el y , (2 ) t h e u n d erl y i n g as s es s m en t s were p ro perl y m ad e, (3 ) n o t i ce an dd em an dwere p ro p erl y i s s u ed , an d(4 ) t here were b al an ces du e wh en
res p o n d en t i s s uedh er t h e NIL. Th e IDRS t ran s cri p t s i n th e reco rdco n fi rm th e SO’ s fi n d i n g , wh i ch h e n o t edi n th e cas e act i v i ty reco rd , thatp et i t i o ner fi l ed

2 OnDecem

b er 7 , 2 0 1 6 , p et i t i o n er au th o ri zedth i s p ers o n t o rep res en th er b efo re t h e In t ern al Rev en u e Serv i ce fo r an y m at ter i n v o l v i ng h er Fed eral i n co m e t ax fo r t he t ax ab l e y ears 2 00 3 -1 7
.- 4
-

[* 4 ] retu rn s fro m 2 0 1 2 th ro u g h 2 0 1 5 , h ada b al an ce due fo r each o f t h o s e p eri o d s , an d h adn o tm ad e an y es t i m at edt ax p aym en t s fo r 2 0 16
. OnFeb ru ary 1 4 , 2 0 1 7, the SO s en tp et i t i o n er an d t h e rep res en t at i v e each l et t ers ackn o wl ed gi n g recei p to f t h e CDP h eari ng req u es t an ds ch edu l i n g a t el ep ho n e co n feren ce wi th th e rep res en t at i v e fo r M arch 1 5 , 2 0 1 7 . Th e SO req u es t edth at ei th er p et i t i o n er o r t h e rep res en t at iv e p ro v i de h i m wi th , i n ad d i t i on t o a n u m b er o f o ther d o cu m en t s , “ [p ] ro o f t h aty o uare cu rren twi th y o u r es t i m at ed t ax p aym en treq ui rem en t s fo r t h e Fo rm 1 0 4 0 p eri o d en d i n g Decem ber 3 1 , 2 0 1 7 ”
n o l at er t h an M arch 1 0 , 2 0 1 7 , ad d in g that“ Ap p eal s can n otap p ro ve an i n s t al l m en t ag reem en to r accep tan o ffer-i n -co m p ro m is e u n l es s al l req u i redes t i m at edt ax p aym en t s fo r t h e cu rren ty ear’ s i n co m e t ax l i ab i l it y h av e b een m ad e.” In th e Feb ru ary

1 4 , 2 0 1 7 , l et t er t h e SO referred t o a p rev io u sl y s ub m i t t ed Fo rm 4 3 3 -A, Co l lect i o n In fo rm at io n St at em en tfo r W ag e Earn ers an dSel fEm p l o y edIn d i v i du al s , wh ich p et i t i o n er s i g n edan dd at edo n Decem b er 1 4, 2 0 1 6
. Th erei n , p et i t i o n er cal cu l at edth ats h e co u l d p ay $ 3 7 3 p er m o n th t o ward s h er
o u t s t an d i n g t ax l i ab i l i t i es , res u l t i n g fro m h er rep o rt edm o n th l y

i n co m e o f $ 1 0 ,0 0 0 l es s m o n th l y

ex p en s es o f $ 9,6 2 7 . Th e $ 1 0 ,0 00 m o n th ly i n co m e fi g u re was- 5
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[* 5 ] ch aract eri zedas th e n etb u s i n es s i n co m e fro m an “ El d erl y

Care Serv ices ” b u s i n es s p et i t i o n er o perat ed as a s o l e p ro pri et o rs h i p . 3 OnM arch 1 4 , 2 0 1 7 , th e rep res en t at iv e fax edth e SO a co p y o f t h e p rev i o u s l y s ub m i t t edFo rm 4 3 3 -A, d at edDecem b er 1 4 , 2 0 1 6 , as wel l as s o m e o f th e o th er req u es tedd ocu m en tat i o n b u t fai ledt o p ro vi d e t h e SO wi th an y d o cu m en t at i o n rel at edt o p et i t io n er’ s cu rren tco m p l ian ce wi th h er es t im at edt ax p aym en t o b l i g at io n s . OnM arch 1 5 , 2 0 1 7 , th e SO h el da t el ep h o n e co n feren ce wi th th e rep res en t at i v e. Pet i t i o n er d i dn o tp art i ci p at e i n t h e cal l . Th e SO fi rs t ex p l ai n ed th ath e h adv eri fi edth atal l ap p l i cab l e l aws an dad m i n i s trat iv e p ro cedu res h ad b een sat i s fi edi n as s es s i n g th e 2 0 1 2 an d2 0 15 l i ab il i t i es . Th e SO an dth e rep res en t at i v e th en d i s cu s s edth e i s s u es rai s ed i n th e CDP h eari n g req ues t . Th e SO’ s n o t es t o th e fi l e reco rdth atth e rep res en t at i v e ad vi s ed h i m , am o n g o th er th i n g s , th atp et i t i o n er: (1 ) s o u gh tei th er an i n s tal l m en tag reem en t o f $ 3 0 0 p er
m o nt h o r an OIC, (2 ) d i dn ot d i s p u t e t h e u n derl y i n g t ax l i ab i l i t i es fo r 2 0 1 2 an d 2 0 1 5 , an d(3 ) h adcl o s edh er b us i n es s an d was n o w u n em p l o y ed . Th e SO i n fo rm edth e rep res en t at i v e t hati n o rd er fo r p et i t i o ner t o qu al i fy fo r an i n s t al l m en t

3 Pet i t i on er cl ari fi edattri al th ath er b u s i n es s was th e o p erat i o n o f an as s i s t ed l i vi n g faci l i ty .- 6
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[* 6 ] ag reem en to r OIC, h e n eed edt o recei v e a n u m ber o f i t em s n o l at er t h an M arch 2 9 , 2 0 1 7 , i n cl u d i ng : (1 ) d o cu m en t at io n p ro vi n g h er co m p l i an ce wi th , i n t er al i a, h er es t i m at edt ax p aym en t o b li g at io n s , (2 ) i n fo rm at i o n reg ard i n g wh en h er b u s i n es s cl o s ed , an d(3 ) up dat edfi n an ci al i n fo rm at i o n refl ect in g h er fi n an ci al
co n di t i o n aft er t h e cl o s u re o f h er b u s i n es s . OnM arch 3 0 , 2 0 1 7 , th e SO recei v eda fax fro m the rep res en t at i ve
co n tai n i n g s o m e, b u tn o tal l, o f th e req u es t eds upp o rt i n g d o cu m en t at i o n . Th e rep res en t at i v e s t at ed th atp et i t io n er’ s b u s in es s cl o s edo n J un e 1 5 , 2 0 1 6, b u t p ro v id edn o d o cu m en t at i o n co rro b o rat i n g t h e d at e, es t ab l i s h i n g p et it i on er’ s
co m p l ian ce wi th h er es t i m at edt ax p aym en to b l ig at i o n s , o r up d at in g fi n an ci al i n fo rm at i o n refl ect i n g h er fi n an ci al co n di t i o n aft er t h e cl o s u re o f h er b u s in es s . Th e SO n o tedi n h i s cas e act i v i ty reco rd fo r Ap ri l 1 4 , 2 0 1 7, thatp et i t i o n er h ad n o tm ad e an y es t i m at edt ax p aym en t s fo r 2 0 1 6 o r 2 0 1 7 as o f t h atd at e. Th ere
are n o fu rt h er en tri es i n t he cas e act i v i ty reco rdco n cern i n g es t i m at edt ax p aym en t s
u n t i l th e fo l l o wi n g en try

o n M ay 2 2 , 2 0 1 7 : “ Pro po s ed l ev y act i o n h as b een
s u s t ai n edas th e * * * [t ax pay er] fai l edt o p ro vi d e al l req u i redd o cu m en t at i o n an d i s n o ti n cu rren tco m

pl i an ce.” OnJ u ne 1 , 2 0 17 , Ap peal s i s s uedp et i t i o n er a n o t ice o f d et erm i n at i o n
s u s t ai n i n g t h e p ro p o s edl ev y . Th e n o t i ce s t at es th atth e SO h adv eri fi edth atth e- 7
-

[* 7 ] req u i rem en ts o f ap p l icab l e l aw an dad m i n i st rat i v e p ro cedu re h adb een
s at i s fi edan dp ro v i d edd et ai l s wi th res p ectt o th e v eri fi cat io n . Th e n o t ice al s o
s t at es th atp et i t i o n er “ d i dn o td i s p u t e * * * [h er] l i ab i l i ty .” It fu rt h er s t at es two
reas on s p et i ti o n er d i dn ot qu al ify fo r co l l ect io n al t ern at i ves an d t h erefo re t h e p ro p os edl ev y

was s u s tai n ed : (1 ) “ Th e t ax pay er d i dn o t p ro v i d e t h e req ues t ed
s up p ort i n g d o cu m en t at i on t o s up p o rth i s [s ic] req u es tfo r an In s tal l m en t Ag reem en to r Offer i n Co m p ro m i s e” an d(2 ) “ A d d i t i o n al l y , th e t ax p ay er i s n o ti n
co m p l ian ce wi th h i s [s i c] fi li n g req u i rem en t s o r es t i m at edt ax p aym en t req u i rem en t s fo r 2 0 1 7 .” Fi n al l y , th e n o t i ce s t at es th atth e SO b al an cedth e n eedfo r t h e effi ci en t
co l l ect i o n o f t ax es wi th p et i t i o n er’ s l eg it im at e co n cern thatth e co l l ect i o n act i o n b e
n o m o re i n tru s i v e t h an n eces s ary . Inth i s reg ard , th e n o t i ce s tat es th atth e SO
co n cl u d ed th at a l ev y

s tru ckth e ap p ro p ri at e b al an ce, g i v en th atp et i t i o n er was i n el i g i b l e fo r an y co l l ect i o n al t ern at i ves i n v i ew o f h er fai l u re t o p ro v i d e requ es t ed d o cu m en t at i o n o r t o b e i n cu rren tco m p l i an ce wi th h er es t i m at edt ax req u i rem en t s . OnJ u ly 3 , 2 0 1 7, p et i t i o ner t i m el y p et i t i o n edfo r rev i ew o f th e n ot ice o f d et erm i n at i o n . Th e p et i t i o n s t at es th atp et i t i o ner’ s “ ri g h t s as a t ax p ay er were n o t rep res en t edb y

* * * [h er rep res en t at i v e] t o th e In tern al Rev en u e Serv i ce” an dth at
s h e h adrev o k edthe rep res en t at i v e’ s p o wer o f at t o rn ey as o f J u n e 1 5 , 2 0 1 7 . Th e- 8
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[* 8 ] p et i t i o n fu rt h er s t at es th atp et i t i o n er h as “ n o tb een g iv en l eg al ri gh t s as a t ax p ay er t o p res en t* * * [h er] d o ub tas t o l i ab i l i ty ” an dth ats h e i s “ as k i n g fo r t h e
o p p o rtu ni ty

t o d is p ut e * * * [h er] d o ub tas t o l i ab i l it y .” OPINION I. Ad m i ni st rat i v e Heari n g fo r Pro p o s edLev y an dJ u d i ci al Rev i ew Sect io n 6 3 0 1 em

p o wers th e Secret ary

t o co ll ectth e t ax es i m

p o s ed b y th e i n t ern al rev en u e l aws . To fu rt her t h ato b ject i v e, Co n gres s h as p ro vi d ed th atth e Secret ary m ay effect th e co l l ect i o n o f t ax es b y , am o n g o th er m et h o ds , l ev i es . See g en eral l y Li v i n g Care Al t s. o f Ut i ca, In c. v . Un i tedSt at es , 4 1 1 F.3 d6 2 1, 6 2 4 -6 2 5 (6 th Ci r. 2 0 0 5 ). Sect i o n 6 3 3 1 (a) au th o ri zes th e Secret ary t o l ev y up o n p ro p ert y

o r p ro p erty ri g h t s o f a t ax p ay er l i ab l e fo r t ax es wh o fai l s t o p ay th o s e t ax es wi th i n 1 0 d ay s aft er n o t i ce an d d em an dfo r p aym en tare m ad e. Wh en th e Secret ary

p u rs u es co l l ect i o n b y

l ev y , h e m

us tn o t i fy th e affect ed t ax p ay er i n wri t i n g o f h i s ri g h tt o a CDP h eari n g wi th an i m p art i al o ffi cer o r
em pl o y ee o f Ap p eal s . Sec. 6 3 30 (a) an d(b ). Du ri ng th e h eari n g t h e Ap p eal s
o ffi cer m u stv eri fy th atth e req u i rem en t s o f an y ap p l icab l e l aw o r ad m in is trat i v e p ro cedure h av e b een m et . Sec. 6 3 3 0 (c)(1 ). Du ri n g th e h eari n g the t ax p ay er m ay : (1 ) rai s e an y

rel ev an ti s s u e rel at i n g t o the u npai dt ax o r th e p ro p o s edl ev y , i n cl u d i n g ap p ro p ri at en es s o f t h e co l l ect i o n act i o n an do ffers o f co l l ect i on- 9
-

[* 9 ] al t ern at iv es s u ch as an i n s t al l m en tag reem en to r an OIC, s ec. 6 3 3 0 (c)(2 )(A);
s ec. 3 0 1.6 3 3 0 -1 (e)(1 ), Pro ced . & Ad m i n . Reg s ., an d (2 ) ch al len g e t h e ex i s ten ce o r
am ou n to f t h e u nd erl y i n g t ax l i ab il i ty , b u t o nl y i f h e d i dn o t recei v e a n o t i ce o f d efi ci en cy

wi th res p ectt o , o r o th erwi s e h av e an o pp o rtun i ty t o d is p u t e, i t , s ee
s ec. 6 3 30 (c)(2 )(B). Fo l l owi n g th e h eari n g , th e Ap p eal s o ffi cer m u s ti s s u e a n o t i ce o f d et erm i n at i o n co n cern in g th e p ro p o sedco l l ect io n act i o n . See s ec. 3 0 1 .6 3 30
- 1 (e)(3 ), Q&A-E8 (i ), Pro ced . & Ad m i n . Reg s . Inm ak i n g the d et erm in at i o n th e Ap p eal s o ffi cer i s req u i redt o t ak e i n t o co ns i d erat i o n : (1 ) wh ether t h e req u i rem en t s o f ap p l icab l e l aw an dad m i n i st rat i v e p ro cedu re h av e b een m et ; (2 ) an y rel ev an ti s s ues rai s edb y th e t ax p ay er; an d(3 ) wh et h er t h e p ro p o s ed
co l l ect i o n act i on ap p ro p ri at el y b al an ces th e n eedfo r effi ci en tco l l ect i o n o f t ax es wi th th e t ax p ay er’ s l eg i t i m at e co n cern s thatth e co l l ect i o n act i o n b e n o m ore i n tru si v e t h an n eces s ary . Sec. 6 3 3 0 (c)(3 ); Lu n s fo rd v . Co m m i s s i o n er, 1 1 7 T.C. 1 8 3 , 1 8 4 (2 0 0 1). If t h e t ax p ay er p et i ti o n s fo r rev i ew wi th i n 3 0 d ay s o f t he Ap p eal s o ffi cer’ s d et erm i n at i o n , th e Tax Co u rth as juri s d i ct i o n t o rev i ew i t . Sec. 6 3 3 0 (d )(1 ). Wh ere t he v al id i ty

o f t h e u n d erl y i ng t ax l i ab i l i ty i s p ro p erl y

ati ss ue, t h e Co u rt wi l l rev i ew th e d et erm i nat i o n reg ard i n g i to n a d e n ov o b as i s . Go za v .- 1 0 -

[* 1 0 ] Co m

m i s si o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 8 2 (2 0 00 ). Wh ere t h e v al i d i ty o f t h e
u n d erl y i n g t ax l iab i l i ty

i s n o t p ro p erl y

at i s su e, t h e Co urtwi l l rev i ew t h e d et erm i n at i o n i n th e n ot ice fo r ab u s e o f d i s cret i o n . Id . at1 82
. II. Un d erl y in g Tax Li ab i l i ty A t ax p ay er m ay

ch al l en g e t h e ex i s t en ce o r am o u n to f t h e u n d erl y i n g t ax l i ab i l i ty du ri n g h i s CDP h eari ng i f h e d i dn otrecei v e a n o ti ce o f d efi ci en cy o r
o th erwi s e h av e a p rev io us o p p o rtu n it y t o d i s p u t e i t. Sec. 6 3 3 0(c)(2 )(B). He m ay al s o d i s p u t e t h e l i ab i l i ty wh ere h e rep o rt edi tas du e o n h i s retu rn (an d
co n seq u en t l y

d i dn o trecei v e a n o t i ce o f d efi ci en cy ). M o n t g o m ery v . Co m m i s s i o n er, 1 2 2 T.C. 1 , 8 -9 (2 0 0 4 ). Pet i t io n er s o rep o rt edth e u n d erl y i n g t ax l i ab i l i t i es ati s s u e an d s eek s t o d i s p u t e t h em i n thi s p ro ceed in g . Ho wev er, th i s Co u rtm ay

co n s i d er a ch al l en g e t o the u n d erl y i n g t ax l i ab i l i ty o n l y i f t h e t ax p ay er rai s edi tb efo re t h e Ap p eal s o ffi cer. Gi am el li v . Co m m i s s io n er, 1 2 9 T.C. 1 0 7 , 1 1 5 (2 0 0 7); s ec. 3 0 1 .6 3 20 -1 (f)(2 ), Q&A-F3 , Pro ced
. & Ad m i n . Reg s . Res p o n d en tco n t en d s th atp et i t i o n er fai l edt o rai s e t h e u n d erl y i n g t ax l i ab i l i t i es du ri ng h er CDP h eari n g an d th erefo re m ay n o trai s e th em i n th i s p ro ceed in g . Th e SO’ s co nt em p o ran eo us n o t es s t at e t h atp et i t io n er’ s rep res en t at i v e ad v is edh i m

du ri n g a t el ep h o n e co n feren ce (i n wh i ch p et it i on er d i d n o t p art i ci p at e) t h atth e u n d erl y i n g t ax l i ab i l i t i es fo r 2 0 1 2 an d2 0 1 5 were n o tb ei n g- 1 1 -

[* 1 1 ] d i s p u t ed . Th e n o t ice o f d et erm i n at i o n s o fi nd s . Qu es ti o nedab o u t h er cl ai m t o the co n traryattri al , p et i ti o n er res po n d edi n a co n fu s i n g an dev as i v e way . 4 W e fi ndth atth e u nd erl y i n g t ax l i ab i l i t ies were n o tch al l en g edi n th e CDP h eari n g an d th erefo re u n der Gi am el l i m ay n o tn o w b e rev iewed
. Ev en i f th e u nd erl y i n g t ax l i ab i l i t i es were p ro p erl y at i s s u e an d s ub

jectt o
o u r d e n o v o rev i ew, th e res ul ti n th i s cas e wo u l db e u n ch an g ed . Th e ch al l en g e t o th e u n derl y i n g t ax l i ab i l i t i es th atp et i t i on er ad v an cedattri al i s fri v o l o u s ; n am el y , th atth e b u s i n es s i n co m e fro m h er o p erat i on o f an as s i s tedl i vi n g faci l i ty was n o t
s ub jectt o Fed eral i n co m e t ax b ecau s e i t was d o m es t i cal l y s o u rced . Inp et i t i o n er’ s
v i ew, o nl y

fo rei g n -s o u rce i nco m e i s s ub jectt o Fed eral i n co m e t ax . 5 Su ffi ce i tt o

4 Un d er d i rect qu es t io n i n g fro m th e Co u rt , p et i t i o n er was u nab l e o r u n wi l l i n g t o s t at e cl earl y th ats h e d i rect edh er rep res en t at i v e t o ch al len g e t h e u n d erl y i n g t ax l iab i l i t i es fo r 2 0 1 2 an d2 0 15 wi th th e SO. In s tead , p et it io n er ap p earedt o co n fu s e h er l i ab i li t i es fo r t ho s e y ears wi th th e arran gem en t s s h e cl ai m eds h e m ad e t o p ay

th em . Inth es e ci rcu m s t an ces , we d ecl i n e t o treat th e cl ai m i n h er p et it i o n th ath er “ ri g h t s as a t ax p ay er were n o trep res en t ed b y * * * [h er rep res en t at iv e] t o t h e In t ern al Rev en u e Serv ice” as a cl ai m o f i n effect iv e as s i s tan ce o f co u n s el . M o reo v er, as d i s cu s sedi n fra, t h e ch al len g es p et i t i o n er s o u g htt o m ak e t o th e u n d erl y i n g l i ab i l i t i es were fri v o l o u s .

5 Pet i t i on er al s o o ffered v ari ou s t ax -p ro t es ter arg u m en ts --s u ch as the cl ai m th ath er l ab o r i s h er p ro p ert y an dth erefo re an y

i n co m e g en erat edb y h er l ab o r i s n o ts ub jectt o t ax --i n h er res p o ns e t o a m o t i o n fo r s u m m ary ju d g m en tres p o n d en t m ad e t h atwas d en i ed . As k edattri al wh ether t h o s e arg u m en ts were al s o b ei n g ad v an cedas ch al l en ges t o th e u n d erl y i n g t ax l i ab i li t i es , p et i t i o ner was ev as i v e. Su ch t ax -p ro t es t er arg u m en t s wo u l dn o ti n an y ev en t cas tan y

d oub t o n th e (co n ti n u ed ...)- 1 2 -

[* 1 2 ] s ay th at“ [i ] n g en eral , al l ci t i zen s o f t h e Un i t edSt at es * * * are l i ab l e t o th e i n co m e t ax es i m

p o sedb y th e Co d e wh et h er the i n co m e i s recei vedfro m s o u rces wi th i n o r wi th o u tth e Un i t ed St at es .” Sec. 1 .1 -1 (b ), In co m e Tax Reg s . 6 III. Co l l ect io n Al t ern at i v es In s t al l m en t ag reem en t s, OICs , an ds u s p en s i o n s o f co l l ect i o n act i v i ty are
co l l ect i o n al t ern at i v es th atth e t ax p ay er m ay p ro p o s e, s ee s ec. 6 3 3 0 (c)(2 )(A)(i i i ),
an d th atAp p eal s m

us t “ t ak e i n t o co n s i d erat i o n”, s ec. 6 3 3 0 (c)(3 )(B), i n d et erm i n i n g wh eth er t o p ro ceed wi th a p ro p o s edl ev y . A s u s p en s i o n o f co l l ect i o n act i vi ty o ccu rs wh en , p u rs u an t t o the In t ern al Rev en ue M an u al (IRM ), a t ax p ay er’ s acco u nt i s d ecl ared“ cu rren t ly n o tco l l ect i b l e” (CNC) i n cas es o f h ard s h i p . See IRM p t s . 1
. 2 .1 .6 .1 4 (No v . 1 9 , 1 9 8 0 ) (Po l i cy St at em en t 5 -7 1 ), 5 .1 6.1 .2 .9 (Au g . 2 5 , 2 0 1 4 ). By ch eck i n g th e “ I Can n o t Pay Bal an ce” b o x o n th e

5 (...co n t in u ed ) ex i s t en ce o r am o u n to f t h e u n d erl y i n g t ax l i ab i l it i es i f rev iewedd e n ov o .

6 Un d ert ak i n g d e n o v o rev i ew o f t h e s ec. 6 6 51 (a) an d6 65 4 ad d i t i o n s t o t ax th atm ak e up a p o rt i o n o f t h e u n d erl y i n g t ax l iab i l i ty fo r each y ear wo u l dl i k ewi s e h av e n o i m

p acto n th e o u t co m e. Th e o n l y ch al l en g e p et it i o n er rai s edwi th res p ect t o the ad d i t i o n s t o t ax was h er cl ai m th at res p on d en th adfai l edt o co m p l y wi th th e s up erv i s o ry

ap p ro v al req u i rem en to f s ec. 6 7 5 1 (b )(1 ) wi th res p ectt o them
. Ho wev er, th e s ec. 6 6 5 1 (a) an d 6 6 54 ad d i t i o ns t o t ax are ex em p tfro m the req u i rem en t s o f s ec. 6 7 5 1 (b )(1 ). Sec. 6 7 51 (b )(2 )(A).- 1 3 -

[* 1 3 ] Fo rm

1 2 15 3 , th e rep res en t at i v e i n effect req u es tedth atp et i t i o n er’ s acco u n t s fo r t h e y ears ati s su e b e p l aced i n CNC s tatu s . Th e n o t i ce o f d et erm i n at i o n s t at edth ato ne o f t he reas o ns fo r reject i n g an y
co l l ect i o n al t ern at i v e fo r p et i t i o n er was h er fai lu re t o b e i n co m p l ian ce wi th h er
cu rren tes t i m at edt ax p aym en t o b l i g at i o ns . Iti s n o tan ab u s e o f d is cret i o n fo r an Ap p eal s o ffi cer t o d en y

co l l ect i o n al t ern at iv es b ecau s e t h e t ax pay er i s n o ti n
co m p l ian ce wi th cu rren t t ax o b l i g at i o n s . See, e.g ., Fi rs tRo ckBap t is t Ch u rch Ch i ldDev . Ct r. v . Co m

m is s i o n er, 1 4 8 T.C. 3 8 0 , 3 9 1 (2 0 1 7 ); Gi am el l i v . Co m m i s s i o n er, 1 2 9 T.C. at1 1 1-1 1 2 ; Hart m an n v . Co m m i s s io n er, T.C. M em o. 2 0 1 8 -1 5 4 , at * 9 -* 1 0 ; Hen n es s ey M an o r Nu rs i n g Ho m e, In c. v . Co m m i s s i o n er, T.C. M em o . 2 0 1 7 -9 7 , at* 1 2 ; Bo ul ware v . Co m m i s si on er, T.C. M em o. 2 0 1 4 -8 0 , at* 2 1 , aff’ d , 8 1 6 F.3 d 1 3 3 (D.C. Ci r. 2 01 6 ); St ark m an v . Co m m i s s i o n er, T.C. M em o . 2 0 1 2 -2 3 6
. Pet i t i o ner s ub m i t t edt o the SO a Fo rm 4 3 3 -A d at edDecem

b er 1 4 , 2 0 1 6 , i n d i cat i n g t h at s he h adn etb u s i n es s i n co m e o f $ 1 0 ,0 0 0 p er m o n th . Th e SO’ s
rev i ew o f p et i ti o n er’ s acco u n ttran scri p t s i n d icat edth at s he h ad m ad e n o es t i m at ed t ax p aym en t s fo r 2 0 1 6
. Aft er p et i t i o n er was affo rd ed an o p po rtu n i ty t o p ro v i d e d o cu m en t s s h o wi n g h er co m pl i an ce wi th es t i m at edt ax req u i rem en t s an dfai l edt o d o s o , th e SO reas o n ab l y co n cl u d edi n M arch 2 0 1 7 th atp et i t i o n er was d el i n qu en t- 1 4 -

[* 1 4 ] wi th res pect t o h er cu rren tt ax o b l i g at i o ns --t hati s , h er o bl i g at i o ns wi th
res p ectt o 2 0 16 --an d d en i edh er an y co l l ect i o n al t ern at i v es o n th at b as i s (am o n g
o th ers ). 7 Itwas n o tan ab u s e o f d i s cret i o n fo r h i m t o d o s o . In reach i n g thi s co n cl u s io n , we are m i n d fu l --g i v en p et i t io n er’ s req u es tfo r CNC s t atu s , wh ich i s ty

p i cal ly p rem i sedo n a s h o wi n g o f h ard s hi p --th ati t wo u ld b e an erro r o f l aw an d an ab u s e o f d i s cret i o n fo r an Ap p eal s o ffi cer t o s u s t ai n a p ro p os edl ev y

i f ex ecu t i o n o f t h atl ev y

wo u l dcreat e eco n o m i c h ard s hi p,
n o twi th s t an d i n g th e t ax p ay er’ s d el i nqu en cy wi th res p ectt o cu rren tt ax o b li g at i o n s . See Vi n at i eri v . Co m

m i s s i o n er, 1 3 3 T.C. 3 92 (2 0 0 9 ); s ee al s o s ec. 6 3 4 3 (a)(1 )(D);
s ec. 3 0 1.6 3 4 3 -1 (b )(4 ), Pro ced . & Ad m in . Reg s . Ho wev er, t h i s cas e i s read i l y d i s t i n gu i sh ab l e fro m

Vi n at i eri . Inth atcas e, t he t ax p ay er h add o cu m en tedh er i n co m e an d as s et s i n d et ai l (an dth e s et tl em en t o ffi cer h adb een ab l e t o v eri fy
s am e), d em o n s trat i n g th ata l ev y o n h er wag es o r car wo u l dren d er h er u nab l e t o p ay h er reas on ab l e b as ic l i v i n g ex p en s es . Pet i t i o n er, b y co n tras t , s ubm i t t eda

7 Wh il e t he s p eci fi c t erm s o f t h e n o t i ce o f d et erm i n at i o n s t at e t h at p et i t i o n er’ s fai l u re t o qu al i fy fo r a co l l ect i o n al t ern at iv e was du e t o h er fai l u re t o b e “ i n co m

p l ian ce wi th * * * [h er] fi l i n g req u i rem en t s o r es t i m at edt ax p aym en t req u i rem en t s fo r 2 0 1 7 ” (em p h as i s ad d ed ), we are s at i s fi edo n th e b as i s o f t h e SO’ s cas e act i vi ty

n ot es th ath i s an al y s i s an dco ncl u s i o n reg ard i n g n o n co m p l i an ce were b as edup o n h i s d et erm in at i o n th atp et i ti o ner was o p erat i n g a s o le p ro p ri et ors h i p du ri n g a s i g n ifi can tp o rt i o n o f 2 0 1 6 th atwas g en erat i n g n eti nco m e o f ap p ro x i m at el y $ 1 0 , 0 0 0 p er m o n t h an dy eth adp ai dn o es t i m at edt ax fo r t h aty ear. M o reo v er p et i ti o n er co n ced edattri al th at s he h ad p ai d n o es t im at edt ax fo r 2 0 1 6
.- 1 5 -

[* 1 5 ] Fo rm

4 3 3-A i n d i cat in g thatas o f t h ree m o n th s b efo re the co n feren ce b et ween h er rep res en t at i v e an dth e SO, s h e h adm on th l y i n co m e fro m h er b u s i n es s
o f $ 1 0,0 0 0 an dm o n thl y

ex p en s es o f $ 9 ,6 2 7 , l eav i n g at l eas ta m o d es tco l l ect i o n p o t en t i al
. To b e s u re, t h e rep res en t at iv e al s o ad v i s edthe SO t h atp et i t i o n er’ s b u s i n es s h adceas edo p erat io n s an dth ats h e was u n em p l o y ed . Inres p o ns e, t h e SO
s o u g htad d i t i o n al i n fo rm at i o n co n cern i n g the d at e o f ces sat i o n an d p et i t i o n er’ s fi nan ci al co n d i t i o n i n h er p o st cl o s u re u n em pl o y eds t atu s . Th e rep res en t at i v e p ro v id edth e b u si n es s ’ ces s at i on d at e b u tn ot hi n g co n cern in g p et i t i o n er’ s fi n an ci al
co n di t i o n th ereaft er. In th es e ci rcu m s t an ces , we co n cl ud e t h atp et i t i o n er fai l edt o d em o n s trat e h ard s h i p s u ffi ci en tfo r t h e SO t o d i s reg ardth e req u i rem en tth ata t ax p ay er h av e s at is fi edcu rren tt ax o b l i g at i o n s i n o rd er t o b e el i g ib l e fo r a
co l l ect i o n al t ern at i v e. IV. Co n cl u si o n Pet i t i o ner o ffered o n l y

fri v o l o u s ch al l en g es t o t h e u n d erl y i n g t ax l i ab i l i t i es . Th e SO’ s d en i al o f an y

co l l ect io n al tern at i v es t o p et i t i o ner b ecau s e s h e was n o t
cu rren twi th h er es ti m at edt ax o b l i g at i o n s was n o t an ab u s e o f d i s cret i o n . Th e SO
v eri fi ed th atth e req u irem en t s o f ap p l i cab l e l aw an d ad m i n i st rat i v e p ro cedu re were
s at i s fi edi n as s es s i n g the u n d erl y i n g l i ab i l i t ies ati s s ue, an dh e b al an cedthe n eed fo r t h e effi ci en tco l l ect i on o f t ax es wi th p et i t i o n er’ s l eg i t i m at e co n cern th atth e- 1 6 -

[* 1 6 ] p ro p o sedco l lect i o n act i on b e n o m o re i n tru s i v e t h an n eces s ary . Fo r t h es e
reas on s , th e d et erm in at i o n t o p ro ceedwi th th e p ro po s ed l ev y i s s us t ai n ed
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredfo r
res p o nd en t .