T.C. Mem o. 2 01 5- 22
UNITED STAT ES TAX COURT

DANA KARL BATE MAN AND TRACIE LYNN BATEMAN, Pet it io ne rs v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 18 35 -1 4L. Fi le d F eb ru ary 11 , 20 15 .
Dan a Karl Bat em anan d Tra ci e Lynn Bat em an , pro ses e. Lou is H. Hill , forres po nd en t.
MEMORANDUM FINDINGS OF FACT AND OPINION FOLEY, Jud ge : Th e is su e fo r de ci si on is whethe r res po nd en t ab us edhi s di sc ret io n i n s us ta in in g ano ti ce o f Fed eral tax li en(NFTL) rel at in g t o p et it io ne rs ’ 20 05 an d 2 00 6 (years inis su e) t ax li ab il it ie s.-2 -

[* 2] FINDINGS OF FACT Pet it io ne rs fil edFed eral in co m e ta x re tu rn s re la ti ng to th e y ears inis su e. On Fe brua ry

23 , 20 09 , res po nd en t s en t p et it io ne rs a no ti ce o f de fic ie nc y rel at in g to th os e y ears . Peti ti on ers rece iv edth e n ot ic e o f de fic ie nc y an d, o n Oct ob er 1 2, 20 10 , fil eda pe ti ti on with thi s C ou rt. OnMay 16, 2 01 1, the Co urt d is m is se d the pe ti ti on be cau se itwas fi le d a fte r th e 9 0- da y pe rio d p res cri be d b y

sec ti on 62 13 (a). 1 On Fe brua ry

5, 2 01 3, re sp on de ntsen t p et it io ne rs a Lett er 3 17 2, No ti ce o f Fed eral Tax Li enFil in g a ndYou r Ri gh t t o aHeari ng Und er IR C 6 32 0, re la ti ng to th e y ears inis su e. Pet it io ne rs ti m el y sen t re sp on de nta Fo rm

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. Inth ei r Fo rm 12 15 3, p et it io ne rs reque st eda co ll ect io n due pro ces s (C DP) h eari ng an d s ta te d tha t “ th is lei n i s a li tt le pre m atur e an d thr eat en s m y em pl oym en t” . On Ju ly 18, 2 01 3, p et it io ne rs fax edres po nd en t a F orm

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 S el f-Em

pl oyed In di vi du al s, an d aMarc h 8 , 20 12 , lette r fro m th e Dep artm en t o f th e Arm

y (i.e ., Mr. Bat em an ’s em

pl oyer) st at in g tha t M r. Bat em an ’s sec ur ity

cle aran ce wo ul d b e su sp en de d.

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 ineffe ctat a ll rel ev an t t im es .-3 -

[* 3] Dur in g aface -to -fac e CDP h eari ng , onNov em be r 26 , 20 13 , Mr. Bat em an in fo rm edth e App eal s o ffi cer tha t p et it io ne rs di sa gr eedwith re sp on de nt ’s de te rm in at io n o f th e und erl y in g t ax li ab il it ie s re lati ng to th e y ears inis su e. Mr. Bat em anfurth er s ta te d tha t the NFTL was p rem atur e an d thr eat en edhi s em pl oym en t. The App eal s o ffi cer d is cu ss edwith M r. Bat em anth e te rm s o f a po ss ib le in st al lm en t ag reem en t, p ur su an t t o wh ic h the NFTL even tu al ly cou ldbe withd rawn(i.e ., afte r pe ti ti on ers pa ida su ffi ci en t am ou ntof t he ir t ax li ab il it ie s) . Mr. Ba te m anst at edth atpe ti ti on ers co ul d n otaffo rdth e p ro po se d m on th ly pa ym en ts an d re

jecte d the in st al lm en t ag reem en t. OnJan uary 15 , 20 14 , res po nd en t s en t p et it io ne rs a no ti ce o f de te rm in at io n i n wh ic h re sp on de nt su st ai ne d the NFTL andde te rm in edth atpe ti ti on ers “ fai le d t o e st ab li sh gro un ds fo r withd rawal of t he li en ”. Pet it io ne rs , whi le res id in g i n Oh io , ti m el y fil eda pe ti ti on with the Co urt. OPINION Pet it io ne rs rece iv eda no ti ce o f de fic ie nc y rel at in g t o the y ears inis su e an d th us are p recl ud edfro m

co nt es ti ng th ei r un de rlyin g t ax li ab il it ie s. See sec . 63 30 (c)( 2) (B); Bal ti c v . Comm is si on er, 1 29 T.C. 17 8, 1 83 (20 07 ). Acco rd in gl y , we rev ie w res po nd en t’s ad m in is tra ti ve de te rm in at io n fo r ab us e o f di sc ret io n. Se e Goz a v . Comm is si on er, 1 14 T.C. 17 6, 1 82 (20 00 ).-4 -

[* 4] Pet it io ne rs co nt en d tha t the NFTL was fi le d p rem atur el y an d tha t res po nd en t ab us edhi s d is cret io n b y no t wi th dr awin g i t. To e st ab li sh th at res po nd en t ab us edhi s d is cret io n, p et it io ne rs m us t es tabl is h tha t h is act io ns were arb itrary, capri ci ou s, o r witho utso un d b as is inlaw o r fac t. See Giam el li v. Co m m is si on er, 1 29 T.C. 10 7, 1 11 (20 07 ); Woo dr al v. Co m mis si on er, 1 12 T.C. 19 , 23 (19 99 ). The Ap pe al s o ffi cer r ev ie wedth e in fo rm at io n p et it io ne rs subm it te d, 2 ev al ua te d the ir c on te nt io ns , andve rif ie d tha t the requi rem en ts of app li cab le law an d a dm in is tra ti ve pro cedur e h adbe enm et . See s ec. 6 33 0( c). Inad di ti on , th e App eal s o ffi cer b al an cedth e n eedforeffi ci en t co ll ect io n o f ta xe s wi th pe ti ti on ers ’ co nc ern s tha t the 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 . See s ec. 63 30 (c)( 3) (C). In de ed , th e App eal s o ffi cer r ai se d wi thpe ti ti on ers th e p os si bi li ty of anin st al lm en t ag reem en t p ur su an t t o wh ic h the NFTL cou ldha ve be en withd rawn . Peti ti on ers , ho wev er, rejec te d the ag reem en t. Res po nd en t re as on ab ly de te rm in edth atth e NFTL was the m os t ef fic ie ntm ean s o f pr ot ect in g the publ ic in te res t re la ti ng to pe ti ti on ers ’ unpa idtax li ab il it ie s. See id . Furthe rm or e, res po nd en t d et erm in edth atth e NFTL was n otpre m atur e an d tha t wi th dr awal of th e NFTL wou ldno t fa ci li ta te th e co ll ect io n o f pe ti ti on ers ’ ta x l iabi li ti es . See s ec. The let te r fro m

th e Dep artm en t o f th e Arm y pre da te d the NFTL by 2 ap pr ox im at el y

11 m on th s an d d idno t es tabl is h wh y Mr. Bat em an ’s sec ur ity cl eara nc e was de ni ed .-5 -

[* 5] 63 23 (j)(1 )(A), (C) . In s ho rt, re sp on de nt ’s det erm in at io n n otto withd raw the NFTL was n otarb itrary or cap ric io us . See Woodral v. Co m m is si on er, 1 12 T.C. at 23 . Co nt en ti on s we h av e n otad dr es se d a re i rrel ev an t, m oo t, o r m eri tl es s. 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.