T.C. M em o . 2 0 1 7 -6 0

UNITED STATES TAX COURT

D ENISE LLOYD, Pet i ti o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 7 5 59 -1 5 L. Fi l edAp ri l 1 0 , 2 0 1 7
.
Ch arl es A. Ray , J r., fo r p et i t i o n er. Rach el L. Ro l l i n s , fo r res p o nd en t .

M EM ORANDUM OPINION LAUBER, J u d g e: Inth is co l l ect i o ndu e p ro ces s (CDP) cas e, p et it i o n er
s eek s rev i ew p u rs u an tt o s ect i o n 6 3 3 0 (d )(1 ) 1 o f t h e d et erm i n at i o n b y th e In t ern al

1 Al l s t atut o ry

referen ces are t o th e In t ern al Rev en u e Co de (Co d e) i neffect at al l rel ev an tt i m es , an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an d Pro cedu re. W e ro u ndal l m o n et ary am ou n t s t o t h e n eares td o l lar.- 2
-

[* 2 ] Rev enu e Serv i ce (IRS o r res p o n d en t ) t o up h o l da n o t i ce o f i n t en tt o l ev y . Th e IRS s erv edth e l ev y

n o t i ce t o as s i s ti nco ll ect i n g u npai dtru s tfu n dreco v ery p en al t i es (TFRPs ) fro m

p et i t i o n er fo r 1 0 cal en dar q u art ers du ri ng 2 0 1 0-2 0 1 2 . Th e
s o l e i s su e fo r d eci s i o n i s wh et h er t h e IRS s et tl em en t o ffi cer ab u s edh i s d i s cret i o n i n d ecl i ni n g t o accep t a $ 3,0 0 0 o ffer-i n-co m p ro m i s e (OIC). Res p o nd en t h as
m o vedfo r s umm ary

ju d g m en to n th i s qu es t i o n , an dwe wi ll g ran t h is m o t i o n .

Back gro u n d Th e fo l l o w i n g fact s are b as edo nth e p art i es ’ p l ead i n g s , res p o n d en t ’ s m o t i on , an dp et i t i o n er’ s o pp o s i t i o n , i n cl u d i ng th e at t ach ed affi d av i t s an d ex h i b i t s . Pet i t io n er res i dedi n M ary l an dwh ens h e fi l edh er p et i t i o n . Pet i t i o ner was th e s o le s h areh o ld er o f D.H. Ll o y d& As s oci at es , In c. (D.H. Ll o y d ), a Di s tri cto f Co l u m b i a co rp o rat i o nen g ag edi n th e co m m erci al i n s u ran ce b ro k erag e b u s i n es s . D.H. Ll o y db ecam e d el in qu en to n i ts em p l o ym en tt ax l i ab i l

i t ies fo r t h e 1 0 qu art ers i n qu es t i o n . Th e IRS s ubs equ en tl y as s es s edTFRPs ag ai n s tp et i t i o n er u nd er s ect i o n 6 6 7 2, h av i n g d et erm i nedth ats h e was a “ res p o n s i bl e p ers o n ” req u i red t o co l l ect , acco u n tfo r, an dp ay o v er t he wi th h el dem p l o y m en tt ax es . Th e ag g reg at e am o u n t o f t h e as s es s edp en al t i es i s ap pro x i m at el y $ 1 0 0 ,0 0 0
.- 3
-

[* 3 ] OnM ay

1 2 , 2 0 1 4 , i n an effo rtt o co l l ectth es e u np ai d l i ab i li t i es , th e IRS s en t p et i t i o n er a Let t er 1 0 5 8 , Fi n al No t i ce o f In ten t t o Lev y an dNo t i ce o f Yo u r Ri g h t t o a Heari n g . Pet i t i o n er t i m el y req u es t eda CDP h eari n g , i n d i cat in g th ats h e
s o u g hta co l l ect io n al t ern at i v e i nth e fo rm o f an i n s t al l m en tag reem en t . Sh e d i d
n o ti n d i cat e an i n ten t i o n t o ch al l en g e h er u n d erl y i n g l i ab i l i ty fo r an y quart er i n qu es ti o n . Aft er recei v i ng p et i t i o n er’ s cas e o nJ u l y 1 8 , 2 0 14 , a s et t l em en to ffi cer (SO) fro m th e IRS Ap p eal s Offi ce rev i ewedh er ad m i ni s trat i ve fi l e an dco n fi rm edth at th e p en al t i es i n qu es t i o n h adb een p ro p erl y as s es sedan dth atal l o th er req u i rem en t s o f ap p l i cab l e l aw an d ad m i n i s trat i v e p ro cedu re h adb een m et . Th e SO
s ch edu l eda t el ep h o n e CDP h eari n g fo r Au g u s t2 2 , 2 0 1 4 . He i n fo rm edp et i t i o n er th at , i n o rd er fo r h i m

t o co n s id er a co l l ect i o nal tern at i v e, s h e n eed edt o s up p l y a
co m p l et edFo rm

4 3 3 -A, Co l l ect i o nIn fo rm at i o n St at em en tfo r W ag e Earn ers an d Sel f-Em p l o y edIn d i v i du al s , an da Fo rm 6 5 6 , Offer i nCo m

p ro m i se, wi th s up p o rt i n g fi n an ci al i n fo rm at i o n . Pet i t i o ner s ub m i t t eda Fo rm 6 5 6 o nwh i ch s h e s ou g h tan OIC b as edo n d o ub tas t o co ll ect i b il i ty , o fferi n g t o p ay $ 3 ,0 0 0 t o co m

p ro m i s e h er o u ts tan d i n g l i ab i l i t i es fo r t h e 1 0 qu art ers i n ques t i o n . Sh e i n cl u d eda Fo rm 4 3 3-A s h o w i n g
m o nt h l y i n co m e o f $ 1 6 ,6 2 1 , m o n th l y ex p en s es o f $ 1 6 ,8 4 7 , as s et s o f $ 9 8 0 , 0 0 0 , an d- 4
-

[* 4 ] l i ab i l i t i es o f $ 9 2 2 ,8 5 4 . Her ex p en s es i ncl u d edh o u s i n g ex p en s es o f $ 6 ,9 6 4 p er m o n th an dv eh i cl e o wn ers hi p ex p en s es o f $ 1 , 6 1 7 p er m o nt h
. Th e l at t er i n cl u d ed a $ 1,2 0 0 m o n th l y

l eas e p aym en tfo r a 2 0 1 2 m o del Lex u s . A t el ep h o n e CDP h eari n g was h el d wi th p et i t io n er’ s rep res en t at i v e o n Au g u s t2 2 , 2 0 1 4 . Duri n g th at cal l th e SO ad v i s edth at p et i t io n er’ s o ffer wo u l db e fo rward edt o th e IRS OIC p ro ces s i n g u n i t(u n i t ) fo r ev al u at i o n . OnM arch 3 0 , 2 0 1 5 , th e u n i tretu rn edth e OIC wi th a reco m m en d at i on th ati tb e reject edb ecau s e i t w as l es s th an pet i t i o ner’ s “ reas o n ab l e co l l ect io np o t en t i al ” (RCP), wh i ch th e
u n i tcal cu l at ed t o b e $ 17 5 ,0 3 5 . Itd et erm i n edth i s RCP s o l el y o n the b as i s o f p et i

t i on er’ s n eti n co m e, ex cl u d i n g fro m i t s cal cu l at i on s h er as s et s an d l i ab i l i t i es . Th e
u n i td et erm i n edthath er rep o rt edm o n th l y ex p en s es , p art i cu l arl y

fo r h o us i n g an d
v eh icl e ex p en s es , ex ceed edthe ap p l i cab l e l o cal s t an d ard s b y m o re th an$ 1 ,0 0 0 p er
m o nt h . Em

p l o y i n g th e l ocal s t an d ardam o un t s , th e u ni tco n cl ud ed thatp et i t i o n er
co u ldp ay a t o t al o f $ 1 75 ,0 35 du ri n g t h e rem ai nd er o f t he co l l ect i o nl i m i t at i o n s p eri o d
. Aft er recei v i ng th e u n it ’ s res p o ns e t h e SO wro t e p et i t i o ner’ s rep res en t at i v e t o s ch edu l e an o th er t el ep h o n e cal l. Duri n g th atcal l th e SO ex pl ai n ed th atp et i

t i on er’ s actu al h o u s i n g an d v eh i cl e ex p en s es s i g n i fi can t l y ex ceed edth e IRS l o cal
s t an d ard s . Her rep res en t at iv e th en req u es t eda d ev iat i o nfro m th es e s t an d ard s .- 5
-

[* 5 ] W i th res p ect t o h o u s in g ex p en ses , p et i t i o n er co n t en d edth ath er p ri m ary
res i den ce was an es s en t i al b u s i n es s as s etb ecau s e s h e s om et i m es wo rk edfro m h o m e an dth at th e IRS s h ou l dal l o w a h o u s eh o l d s i ze o f fo ur fo r p u rp o s es o f
co m p u t i n g h o u s i n g co s t s . W i th res p ect t o th e v eh i cl e ex p en s es , s h e co n t en d ed th ath er wo rkas an i n s u ran ce b ro k er n eces s i tat eda h i g h -qu al i ty v eh i cl e. Th e SO reject edth es e co n t en t i o n s . He co n cl u d edthatp et i t i on er’ s h o u s e
was n otan es s en t ial b u s i n es s as s etb ecau s e s h e co u l d wo rkfro m o th er l o cat i o n s
an d th ath er h o u s eh o l ds i ze was p ro p erl y s et attwo o nth e b as is o f h er l as t -fi l ed Fed eral i nco m e t ax return . 2 An dh e co n cl ud edth atp et i t io n er’ s wo rk d i dn o trequ i re u s e o f an y

s p eci al i zedv eh i cl e. Th e SO acco rd i n g ly reject edp et i t i o n er’ s req u es tfo r a d ev i at i o n fro m IRS l o cal s t an d ard s . Th e SO i n fo rm edp et i t i on er t h at h e co u l d co n s id er a s i x -y ear i ns t al l m en t ag reem en to f $ 1 ,5 4 5 p er m on th . Pet i t i o n er reject edthi s o ffer. Th e SO acco rd

i n g l y cl o sed th e cas e an d , o n J u n e 1 0 , 2 0 15 , i s s u edp et i t i o n er a n ot i ce o f d et erm i

n at i o n s u s t ai n in g t he p ro p o s edl ev y fo r t h e 1 0 qu art ers i nqu es ti o n .

2 Pet i t i on er al s o co n t en d edth atthe m o rt gag e o n h er h o u s e was “ u n d erwat er.” Ho wev er, h er Fo rm 4 3 3 -A i n d i cat edth at th e h o u se h ada fai r m ark etv al u e (FM V) o f $ 9 6 0,0 0 0 an d en cu m b ran ces o f o n l y $ 81 0 ,8 5 4; th e m o rt g ag e co ul db e reg ard edas “ u nd erwat er” o n ly i f t h e FM V were red u cedb y 2 0% t o p ro du ce an es t i m at e o f a “ qu i ck

s al e” p ri ce. In an y

ev en t , th e SO co n cl u dedth atth e v al u e o f th e h o us e was i m

m at eri al b ecau s e i twas n o tb ei n g co n s i d eredan as s eti nth e RCP cal cu l at io n .- 6
-

[* 6 ] Pet i t i o ner t i m el y

p et it i o n edth i s Co u rtfo r rev i ew o f t h e n o ti ce o f d et erm i n at i on . On Oct o ber 1 3 , 2 0 1 6, res p o n d en tfi leda m o t i on fo r s u m m ary ju d gm en t , t o wh i ch p et i t i on er t i m el y

rep l i ed
. Di s cu ss i o n Th e p u rp os e o f s u m

m ary ju d g m en t i s t o ex p ed it e l i t i g at i o nan d av o i dco st l y , t i m e-co n s u m i n g , an du n n eces s ary tri al s . Fl a. Peach Co rp . v . Co m m i s si on er, 9 0 T.C. 6 7 8 , 6 8 1 (1 9 8 8 ). Un d er Ru l e 1 2 1 (b ), th e Co u rtm ay g ran ts u m

m ary ju d g m en t wh en th ere i s n o g en u i n e d i s p u t e as t o an y m at eri al fact an da d eci s i o nm ay b e
ren d eredas a m at t er o f l aw. Su n d s tran d Co rp . v . Co m m i s s io n er, 9 8 T.C. 5 1 8 , 5 2 0 (1 9 9 2), aff’ d , 1 7 F.3 d 9 6 5 (7 th Ci r. 1 9 9 4 ). Ind eci d i n g wh et h er t o g ran t s u m m ary ju d g m en t , we co n s tru e fact ual m at eri al s an di n feren ces drawn fro m th em i nth e l i gh t m o s tfav orab l e t o th e n o n m o v i n g p art y . Ib i d . Ho w ev er, t h e n on m ov i n g p arty m ay n o tres tup o n th e m ere al l eg at i o ns o r d en i al s o f h er p l ead i n g s b u ti n s t ead
m u sts etfo rt h s p eci fi c fact s s h o wi n g th atth ere i s a g en u i n e d i s p ut e fo r t ri al . Ru l e 1 2 1 (d ); s ee Su n d s tran dCo rp ., 9 8 T.C. at 5 2 0 . W e fi n d t h atn o m at eri al fact s are i n d i s p u t e an dth at th i s cas e i s ap p ro p ri at e fo r s u m m ary ad ju d i cat i o n .- 7
-

[* 7 ] Wh ere (as h ere) t here i s n o ch al l en g e t o th e am o u n t s o f t he t ax p ay er’ s u n d erl y i n g l i ab i l i t i es fo r t h e qu art ers i nques t i o n , 3 we rev i ew t h e IRS d et erm i n at i o n fo r ab u s e o f d i s cret i o n . Go za v . Co m m i s s i o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 82 (2 0 0 0 ). Ab u s e o f d i s cret i o n ex i s ts wh en a d et erm i n at i o n i s arb i trary , cap ri ci o us , o r wi th o u t
s o u n d b as i s i n facto r l aw. See M u rp h y v . Co m m i ss i o ner, 1 25 T.C. 3 0 1, 3 2 0 (2 0 0 5), aff’ d , 4 6 9 F.3 d2 7 (1 s t Ci r. 2 0 0 6 ). In d eci d i n g wh et h er t he SO ab u s edh i s d i s cret i o n i n s u s t ai ni ng th e l ev y , we rev i ew t h e reco rdt o d et erm i n e wh et h er h e: (1 ) p ro p erl y

v eri fi edth atth e req u i rem en t s o f ap p l i cab l e l aw o r ad m i n is trat i v e p ro cedu re h av e b een m et ; (2 ) co n s i d ered an y rel ev an ti s s u es p et i t i o n er rai sed ; an d(3 )
co n si d ered“ wh eth er an y

p ro p os edco l l ect i o nact i o nb al an ces th e n eedfo r t h e effi

3 Pet i t i on er d i dn o tch al l en g e h er l i ab i l i ty fo r t h e TFRPs duri n g th e CDP h eari n g o r i n h er p et i t i o n t o thi s Co u rt . Sh e i s th us p recl u d edfro m ch al l en g i n g th o s e l i ab i l i t i es h ere. See Ru l e 3 3 1 (b )(4 ) (“ A n y i s s u e n o trai sedi nth e as s i g n m en t s o f erro r s h al l b e d eem edt o b e co n ced ed
. ”); Th o m ps o n v . Co m

m i s si o n er, 1 4 0 T.C. 1 7 3 , 1 7 8 (2 0 1 3 ) (“ At ax p ay er i s p recl u d edfro m d i s p ut in g th e u n d erl y i n g l i ab i l i ty if i twas n o tp ro p erl y rai s edi nth e CDP h eari n g .”); s ec. 3 0 1 .6 3 3 0 -1 (f)(2 ), Q&A-F3 , Pro ced . & Adm i n . Reg s . Pet i t io n er l i k ewi s e d idn o t al l eg e du ri ng th e CDP h eari n g , i n h er p et i t io n, o r i nh er res p o ns e t o th e m o t io n fo r s u m m ary ju d gm en tth atth e TFRPs , wh i ch are as s es sab l e p en al ti es , were n o t“pers o n al l y ap p ro v ed(i n wri t i n g ) b y

the i m m ed i at e s up erv i s o r o f t he i n d i vi du al m ak i n g * * * [t he p en al ty

d et erm i n at i o n ]
. ” Sec. 6 7 5 1 (b )(1 ). Th ati s s u e i s t herefo re d eem ed co n ced ed . See Ru l e 3 31 (b )(4 ) (“ An y i s s u e n otrai s ed i n t h e as s i g nm en t s o f erro r s h al l b e d eem edt o b e co n ced ed .”); Tri o l a v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4
- 1 6 6 , 1 0 8 T.C.M . (CCH) 1 8 5 , 1 8 7 ; Di n i n o v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9
- 2 8 4
.- 8
-

[* 8 ] ci en tco l l ect i o n o f t ax es wi th th e l eg i t i m at e co n cern o f * * * [p et i ti o n er] th at
an y co l l ect i o n act io n b e n o m o re i n tru s i v e t h an n eces s ary . ” See s ec. 6 3 3 0(c)(3 ). Sect io n 7 1 2 2 (a) au th o ri zes th e IRS t o co m p ro m i s e an o u t st an d in g t ax l i ab i l

i ty . Th e reg ul at i o ns s etfo rt h th ree g ro u n d s fo r s u ch co m p ro m i se: (1 ) d o ub tas t o l i ab i l i ty ; (2 ) d o ub tas t o co l l ect i b i l i ty ; o r (3 ) p ro m o t i o n o f effect iv e t ax ad m i n i s trat i on . Sec. 3 0 1 .7 1 2 2 -1 , Pro ced . & Adm i n . Reg s . Pet i t i o n er b as edh er OIC o n d o ub tas t o co ll ect i b il i ty . Th e Secret ary m ay

co m p ro m i s e a t ax l i ab i l i ty

o nth e b as i s o f d o ub tas t o
co l l ect i b i l i ty

wh ere t h e t ax p ay er’ s as s et s an d i n co m e ren der fu ll co l l ect i o nu n l i k el y . Id . p ara. (b )(2 ). Co n v ers el y , th e IRS m ay rejectan OIC wh en th e t ax p ay er’ s RCP ex ceed s th e am o u n ts h e p ro p os es t o p ay . See J o h n s o nv . Co m m i s si on er, 1 3 6 T.C. 4 7 5 , 4 8 6 (2 0 1 1 ), aff’ d , 5 0 2 F. Ap p’ x 1 (D.C. Ci r. 2 0 1 3 ). Gen eral l y , Ap p eal s
o ffi cers are d i rect edt o rejecto ffers s ub s tan t ial l y b el o w the t ax p ay er’ s RCP u n l es s

“ s p eci al ci rcu m s t an ces ” ju s t i fy accep t an ce o f s u ch an o ffer. See Fai rl am b v . Co m m i s s i o n er, T.C. M em o . 2 0 1 0 -2 2 ; Rev
. Pro c. 2 0 03 -7 1 , s ec. 4
. 0 2(2 ), 2 0 0 3 -2 C.B. 5 1 7 , 5 1 7
. W e d o n o ti n d ep en d en t l y as s es s t h e reas on ab l en es s o f t h e t ax p ay er’ s p ro p o s edo ffer. Rat h er, o u r rev i ew i s l i m i t edt o as cert ai n i n g wh eth er t he d eci s i o n t o rejecth er o ffer was arb i trary , cap ri ci o u s , o r wi th o u ts o u n d b as i s i nfacto r l aw.- 9
-

[* 9 ] M u rp h y , 1 2 5 T.C. at3 2 0. W e d o n o ts ubs t i tu t e o ur ju d g m en tfo r t h e
s et t l em en to ffi cer’ s as t o th e accep t ab i li ty o f an y p art i cu l ar o ffer. See, e.g ., J o h n so n , 1 3 6 T.C. at4 8 8. Th e SO d et erm i nedp et i t i o n er’ s RCP o nth e b as i s o f h er m o n th l y i n co m e o f $ 1 6 ,6 2 1 l es s al l o wab le ex pen s es . Incal cu l at i n g al l o wab l e h o us i n g an dv eh i cl e
ex p en s es , h e u s edthe IRS l o cal s t an d ardam o u n ts , wh i ch were s i g n i fi can t l y l o wer th an p et i t i o n er’ s actu al ex p en s es . Pet i ti o n er co n ced es as m u ch ; h er s o l e co n t en t i on i s th ats h e was en t i t l ed t o a d ev iat i on fro m th o s e s tan d ard s . Th e Co d e p ro v i d es th atth e IRS s h al l creat e an dp ub l i s h s ch edu l es o f

“ n at i o n al an dl o cal al l owan ces ” t o en s u re t h at t ax p ay ers en t eri n g i n t o OICs h av e ad equat e m ean s t o p ro v i d e fo r b as i c l iv i n g ex p en s es . Sec. 7 1 2 2 (d )(1 ) an d(2 )(A). Th i s Co u rth as up h el d t h e IRS’ u s e o f p ub l i s h edl ocal s t an d ard s t o d et erm i n e b as i c l i vi n g ex p en s es i n th e co n t ex to f ev al u at i n g co l l ect i o nal tern at i v es . See, e.g ., Sp el t z v . Co m

m i s s i o n er, 1 2 4 T.C. 1 65 , 1 7 9 (2 0 0 5), aff’ d, 4 5 4 F.3 d 7 8 2 (8 th Ci r. 2 0 0 6 ). Al l o w ab l e h o u s i n g an dv eh i cl e ex p en s es are t h o s e t h atare “ n eces s ary t o p ro v id e fo r a t ax p ay er’ s an dh i s o r h er fam i l y ’ s h eal th an d wel fare an d/o r p ro du ct i on o f i nco m e.” In t ern al Rev enu e M an u al (IRM ) p t . 5 .1 5
. 1
. 7 (1 ) (Oct . 2 , 2 0 1 2 ). Ord i n ari l y , s et t l em en to ffi cers are d i rect edt o al l o w th e t ax pay er t h e l es s er
o f t h e l o cal s t an d ard s o r t h e am o u n t s actu al l y p ai dm o nt hl y fo r h o u s i ng an dv eh i

-- 1 0 -

[* 1 0 ] cl e ex p en s es . See IRM p t . 5 .1 5 .1 .9 (No v. 1 7 , 2 01 4 ); IRM p t . 5 .1 5.1 .7 (4 ) (Oct . 2 , 2 0 1 2 ). On l y i f t h e l o cal s t an d ard s are “ i n ad equ at e t o p ro v i d e fo r a s p eci fi c t ax p ay er’ s b as i c l i v i n g ex pen s es ” s h o u l dth e SO al lo w a d ev i at i o n . IRM p t . 5 .1 5.1 .7 (5 ). Th e t ax p ay er b ears th e b u rd en o f p ro v i d i n g s uffi ci en ti n fo rm at i o n t o th e SO t o ju s t i fy

d ev i at i on fro m

l o cal s t an d ard s. See Th om as v . Co m m i ss i o n er, T.C. M em o . 2 01 5 -1 8 2
. W i th res p ect t o h er m o n th l y h o u s i n g ex p en ses o f $ 6 ,9 6 4 , p et i t i o n er co n t en d s th ath er p ri m ary

res i d en ce was i n t eg ral t o h er b u s i nes s an dth ath er h o u s i n g
ex p en s es s h ou l dh av e b een cal cu l at edfo r a fo u r-p ers o nrat h er th an a t wo -p ers o n h o u s eh o l d . On th e fi rs t p o i n t th e SO n o tedth atp et i t i o n er’ s b us i n es s rep o rt edren t al ex p en ses fo r t wo d i s t i n cto ffi ce l o cat i on s . He reas o n ab l y co n cl u d edthat , wh i l e
s h e s o m et i m es wo rk edfro m h om e, h er ab i l i ty

t o wo rk fro m th os e l o cat i o n s m ean t th ath er res i d en ce was n otan es s en t i al b u si n es s as s et . Th e SO reject edp et i t i on er’ s cl ai m fo r a l arg er h o u s eh o l ds i ze b ecau s e s h e h ad rep o rt edo n l y two p eo p l e i n h er h o u s eh o l do nh er l as t -fi l ed retu rn , wh i ch was fo r t ax y ear 2 0 1 3 . See IRM p t . 5 .1 5 .1 .9 (1 ). Pet i t i o n er co n t en d s t hatth e SO
s h o u ldh av e b as edh i s h o us eh o l ds i ze d et erm i n at i o n o nh er 2 0 1 4 retu rn , wh i ch
s h o wedfo u r h o u seh o l d m em b ers . Bu ts h e req u es t edan ex t en s i o no f t i m e, u n t i l Oct o b er 1 5 , 2 0 1 5 , t o fi l e h er 2 0 1 4 retu rn , an d t h e SO i s s u edth e n o t i ce o f d et er-- 1 1 -

[* 1 1 ] m in at i o n o n J u n e 1 0 , 2 0 1 5 , fo u r m o n th s b efo re t h atretu rn was due. Itwas
n o tan ab u se o f d i s cret io n fo r t h e SO t o b as e h i s d et erm i n at i o no n p et i t i o n er’ s 2 0 1 3 retu rn , wh i ch was h er m o s trecen t ly fi l edreturn atth e t i m e t h e SO m ad e h i s d et erm i n at i o n . 4 W i th res p ect t o v eh i cl e ex p en s es , p et i t i o n er co n t en d s th ats h e n eed edh er Lex us fo r wo rkp u rp o ses an dth at$ 1 ,6 1 7 o f th e rep o rt edm o n th ly ex p en s es , i n cl u d i n g a l eas e p aym en to f $ 1,2 0 0 , s h o u l db e al l o wed . Th e SO reas o n ab l y reject

edth i s co n t en t i o n an d l i m i t edp et i ti o n er t o th e s t an dardv eh i cl e al l o wan ce. He fo u n d t h ats h e h adn o t s ho wna “ s p eci al v eh icl e req u i rem en t ” fo r h er wo rkan d th ata l es s ex p en s i v e v eh i cl e wo u l dh av e b een p erfect l y s ui t ab l e. IRM p t . 5 .8
. 5.2 2 .3 (Sep t . 3 0 , 2 0 1 3 ). Th e SO d i d n o tactarb it rari l y o r cap ri ci o u s l y

i nd et erm i n i n g thatp et i t i o n er’ s RCP g reat l y

ex ceed edh er $ 3 ,0 0 0 o ffer. He reas o n ab l y reject edh er req u es t fo r a d ev i at i o n fro m

th e l o cal s t an d ard s b ecau s e s h e fai l ed t o d em on s trat e t h atth ey were i n ad equ at e t o p ro v i de fo r h er b as i c l i v i n g ex p en s es . He reas o n ab l y d et erm i n ed th atp et it i o n er h adn o “ s p eci al ci rcu m s tan ces ” t hatwo u ld warran taccep t 4 Ev en i f an i n creas e t o p et i t i o n er’ s h o us eh ol ds i ze were warran t ed , th e SO n o t edth ath e wo u l dth en h av e t o fact o r i n t o h is cal cu l at io ns th e i n co m e o f h er n o n l i ab l e s p o u s e, wh ich m ig hth av e i n creas edh er RCP s ub s tan t ial l y .- 1 2 -

[* 1 2 ] an ce o f an o ffer s ub s t an t i al l y b el o w h er RCP. 5 In s t eadh e o ffered p et i t i o n er
a s i x -y ear i n s t al l m en t ag reem en to f $ 1 ,5 4 5 p er m o n th, wh i ch s h e reject ed . Fi n d i n g
n o ab u s e o f d i s cret i o n i n an y res p ect , we wi l l s u st ai nth e p ro po s edco l l ect io n act i on . To refl ectthe fo reg o i n g , Anap p ro p ri at e o rd er an dd eci s i o n wi l l b e en t ered
.

5 Sp eci al ci rcu m st an ces th at m ay warran taccep t an ce o f an OIC wh ere t h e RCP i s m o re t han th e o ffer am o u n t i n cl u de: (1 ) fact s d em o n s trat i ng th atth e t ax p ay er wo u lds uffer “ eco n o m ic h ard s h i p ” i f t h e IRS were t o co l lectfro m h er an am ou n tequ al t o th e RCP an d(2 ) co m p el l i n g p ub l i c p o l i cy

o r eq u i ty co n s i d erat i on s thatp ro v i d e s u ffi ci en tb as i s fo r co m p ro m is e. See M u rp h y , 1 2 5 T.C. at3 0 9 ; M cCl an ah an v . Co m

m i s si o ner, T.C. M em o . 2 00 8 -1 6 1; IRM p t . 5 .8 .4 .2 (4 ) (M ay 1 0 , 2 0 1 3 ).