T.C. Summary Opinion 2004-48

UNITED STATES TAX COURT

CAROLYN D. RAMIREZ, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14154-02S. Filed April 12, 2004.

Carolyn D. Ramirez, pro se.

Trent D. Usitalo, for respondent.

WOLFE, Special Trial Judge: This case was heard pursuant to

the provisions of sections 6330(d) and 7463 of the Internal

Revenue Code in effect when the petition was filed. Unless

otherwise indicated, all subsequent section references are to the

Internal Revenue Code in effect at relevant times. The decision

to be entered is not reviewable by any other court, and this

opinion should not be cited as authority. The sole issue for

decision is whether respondent abused his discretion in failing
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to consider petitioner’s offer in compromise at a hearing as

required by section 6330(b) and (c)(2)(A)(iii).

Some of the facts have been stipulated, and they are so

found. The stipulation of facts and the attached exhibits are

incorporated herein by this reference. When she filed her

petition, petitioner resided in Fresno, California.

On February 8, 2002, respondent issued to petitioner a

Notice of Intent to Levy under IRC 6330 (notice) with regard to

petitioner’s unpaid Federal income tax liability for 1999. In

response to the notice, petitioner filed a Form 12153, Request

for a Collection Due Process Hearing (CDP hearing), on February

16, 2002. Petitioner stated on the Form 12153 that she wanted to

explore an offer in compromise. Petitioner’s case was assigned

to an Appeals officer (the Appeals officer) from respondent’s

Appeals office in Fresno, California (the Appeals office). On

June 13, 2002, the Appeals officer wrote petitioner the following

letter:

This is to advise you that I have been assigned your

request for a Collection Due Process Hearing. I have

scheduled your hearing for Wednesday July 10, 2002 at

10:00 AM. The Collection Due Process hearing may be

conducted via telephone, correspondence or in a personal

conference. To facilitate our discussions, I am

enclosing an explanation of the Appeals process for

Collection Due Process cases.

I suggest we conduct the hearing by telephone. Please

call me at the scheduled date and time. * * * If you

would like to conduct the hearing in a different way,

such as in person or by correspondence please let me

know before the hearing date. If the date and time is
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not convenient please notify me prior to the hearing

date as to the day of the week (Monday - Thursday) and

time (between 9:00 AM and 3:00 PM) in which a hearing

may be held.

I have included a Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed

Individuals. If you wish to propose collection

alternatives, please complete this financial statement

and return it to me at least 10 days prior to the

Hearing * * * If I do not receive the Form 433A at least

10 days prior to the Hearing I can only assume that you

do not wish to propose a collection alternative. * * *

On July 10, 2002, petitioner did not call in for her

scheduled CDP hearing, and, as of that date, she had not

contacted the Appeals officer to reschedule the CDP hearing and

had not returned a completed Form 433-A. Following petitioner’s

failure to appear for her CDP hearing, the Appeals officer sent

to petitioner the following letter, dated July 10, 2002:

Your Collection Due Process Hearing was scheduled for

Wednesday July 10, 2002 at 10:00. Since I didn’t

receive a call from you I can only assume you no longer

desire a Hearing. I have enclosed Form 12257 which is

a waiver of review of a collection due process

determination. If you sign and return that form you

will save us some work and speed up the closing of your

case. In the event you still desire a hearing please

notify me of this on or before the close of business

Monday July 22, 2002. In the event there is no

response a determination will be made based on

available information and a Determination Letter will

be issued. I am usually in the office Monday -

Thursday from 8:30 - 6:00.

Petitioner telephoned the Appeals officer on or about July

11, 2002. Petitioner told the Appeals officer that she had been

out of the country and still wanted a hearing. Petitioner and

the Appeals officer discussed her case, and petitioner concluded
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that she still wanted to propose an offer in compromise. The

Appeals officer asked petitioner to submit a completed 

Form 433-A.

On August 5, 2002, the Appeals officer still had not

received a Form 433-A from petitioner and had not heard from her

since July 11, 2002. On August 5, 2002, the Appeals officer

administratively closed petitioner’s case for a determination

based upon the information in her file. On August 8, 2002, the

Appeals officer received a package from petitioner containing a

completed Form 433-A and related financial documents (the offer

in compromise materials). The Appeals officer considered the

offer in compromise materials to be late, and he did not review

the information. On August 12, 2002, the Appeals officer issued

a Notice of Determination. The Notice of Determination stated

that petitioner did not have an offer in compromise pending at

this time and set forth the following rationale for preceding

with the levy:

Although a levy is intrusive, since the information

related to the taxpayer’s financial specifics were not

provided so that we might evaluate the collection

alternative, the proposed collection action balances 

the need for the efficient collection of the taxes with

the legitimate concern of the taxpayer that any

collection action be no more intrusive than necessary.
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By letter dated August 13, 2002, the Appeals officer sent

petitioner the following explanation of his decision in issuing

the Notice of Determination:

On August 5, 2002 I closed your case for issuance of

our Determination Letter. On August 12, 2002 that

letter was mailed. I will place the information you

recently sent us in the administrative file and ask

that someone in our Automated Collection System (ACS)

Department take a look at it for purposes of

considering the next collection step.

You have a choice concerning our Determination Letter. 

You can file a petition with the United States Tax

Court and ask either the government’s attorney or the

Judge to have someone look at your information or you

can do nothing and let someone with our ACS Department

look at it once your case is returned to them.

Upon receiving the Notice of Determination, petitioner wrote

the following letter to the Appeals officer on August 22, 2002:

I received your notice dated August 12, 2002. I have

two concerns: (1) when we spoke on July 11, 2002, I

distinctly remember the due date being July 31, 2002. 

I remember we went back & forth on the due date but

this was the date we decided on * * * (2) I submitted

all the information on July 31, 2002. I dropped it in

the box at the main post office. The mail handler had

to [purchase] 11 -37¢ stamps on the envelope. That

envelope was returned - see attached.

Attached to petitioner’s letter was a copy of a notice from the

Postal Service, which bore a postmark dated in August 2002. The

copy submitted to the Court is difficult to read, and the date in

August is illegible. The Postal Service notice states:

We regret that your mail is being returned to you because

of heightened security measures. All domestic mail,

weighing 16 ounces or over, that bears stamps * * * 
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MUST be presented to a retail clerk at a post office. 

Postage that is affixed to the return mail may be used

for re-mailing the item.

 

On the notice from the Postal Service was the following

handwritten message from a Postal Service employee: “You dropped

a large priority envelope in the drop box - it was returned, but

I cancelled the stamps for you and sent it on - to avoid further

delay.” The notation “8-2” is handwritten on the envelope in

which petitioner mailed her materials to the Appeals officer. 

Petitioner timely filed a petition with this Court under

section 6330(d). After petitioner’s case was set for trial, in

the words of the stipulation of the parties, “As a courtesy to

Petitioner, Respondent’s counsel forwarded * * * [her file] to an

Offer Specialist to review in an effort to determine if the case

could possibly be settled by way of an offer in compromise.” The

settlement negotiations were unsuccessful.

The underlying tax liability is not in dispute in this case. 

Following a Stipulation of Settled Issues filed with the Court on

June 9, 2003, the sole issue to be decided is whether the Appeals

officer properly considered an offer in compromise raised by

petitioner.

Discussion

Under section 6330, a taxpayer is entitled to notice and an

opportunity for a hearing before certain lien and levy actions

are taken by the Commissioner in the process of collecting unpaid
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Federal taxes. Upon request, a taxpayer is entitled to a “fair

hearing” conducted by an impartial officer from the Office of

Appeals. Sec. 6330(b)(1), (3). Such a hearing need not be

conducted face-to-face; a taxpayer may receive a fair hearing by

telephone or through written correspondence. Sec. 301.6330-

1(d)(2) Q&A-D7, Proced. & Admin. Regs. At the hearing, the

Appeals officer is required to: (1) Obtain verification from

the Secretary that the requirements of applicable law and

administrative procedure have been met, (2) consider certain

issues raised by the taxpayer such as collection alternatives

including an installment agreement or an offer in compromise, and

(3) consider whether any proposed collection action balances the

need for the efficient collection of taxes with the legitimate

concern of the taxpayer that any collection action be no more

intrusive than necessary. Sec. 6330(c).

This Court has jurisdiction to review the Commissioner’s

administrative determination under section 6330(d). Where, as

here, the validity of the underlying tax liability is not at

issue, we review the determination for abuse of discretion. Sego

v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,

114 T.C. 176, 181-182 (2000). In doing so, under the

circumstances of this case, we do not conduct an independent

review of what would be an acceptable offer in compromise. 

Rather, we review only whether the Appeals officer’s decision to
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issue a Notice of Determination without reviewing petitioner’s

proposed offer in compromise was arbitrary, capricious, or

without sound basis in fact or law. See Woodral v. Commissioner,

112 T.C. 19, 23 (1999). 

In the present case the Appeals officer actually was in

possession of petitioner’s offer in compromise before the Notice

of Determination was mailed. Petitioner testified that she

believed that she was to contact the Appeals officer by July 31,

2002, and that she mailed her offer in compromise materials to

him on that date. She expected prompt delivery of the materials,

but they were delayed because of security procedures in effect

with respect to mail at the time in question. Nevertheless,

petitioner’s offer in compromise was received by the Appeals

office on August 8, 2002, and the Notice of Determination was not

mailed until August 12, 2002. The Appeals officer closed

petitioner’s case for a determination based upon petitioner’s

file on August 5, 2002, and he did not review petitioner’s offer

in compromise because it was received after he administratively

closed her case. The unusual circumstance here is that the

Appeals officer had petitioner’s offer in compromise material on

his desk before the Determination Letter was mailed. The record

indicates that he could have examined her material and conducted

the Appeals office hearing. Instead, he refused to examine

petitioner’s materials and referred her to the “Automated
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Collection System”. Under these circumstances, we believe the

Appeals officer’s decision not to review petitioner’s offer in

compromise was an abuse of his discretion and denied petitioner

her right to a fair hearing under section 6330.

 Where a taxpayer is not afforded a proper opportunity for a

hearing under section 6330, the Court can remand the case to the

Appeals office to hold a hearing if we “believe that it is either

necessary or productive”. Lunsford v. Commissioner, 117 T.C.

183, 189 (2001); Day v. Commissioner, T.C. Memo. 2004-30. In the

present case, petitioner claims that she has evidence that her

assets are of lower value than the Commissioner previously

believed and that she should not be required to pay her tax

obligations in full immediately. We believe there is a

possibility that a productive result may occur from remanding

petitioner’s case to the Appeals office for a proper hearing and

review of petitioner’s offer in compromise. 

To reflect the foregoing,

An appropriate order

will be issued.