TAX COURT OPINION

Case: Peter Hoskey
Docket Number: 17570-19L
Judge: Buch
Opinion Type: bench
Filed: 10/29/2020
Pages: 11

CLC UNITED STATES TAX COURT WASHINGTON, DC 20217 PETERHOSKEY, Petitioner, v. ) ) ) ) Docket No. 17570-19 L. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to petitioner and respondent a copy of the pages of the transcript of the trial in this case before Judge Ronald L. Buch, at the Tampa, Florida remote session, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. October 29, 2020 SERVED Oct 30 2020 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge Ronald L. Buch October 7, 2020 Peter Hoskey v. Commissioner Docket No. 17570-19L THE COURT: The following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion may not be relied on as precedent in any other case. This opinion is in conformity with Internal Revenue Code section 7459(b) and Rule 152(a) of the Tax 10 Court Rules of Practice and Procedure. Any section 11 references refer to the Internal Revenue Code or the 12 Treasury regulations in effect during the year at issue, 13 14 15 and Rule references are to the Tax Court Rules of Practice and Procedure. This case comes before the Court as a review of 16 the Commissioner's notice of determination pursuant to 17 section 6330. The case concerns a notice of intent to 18 levy issued by the Commissioner for tax year 2015. 19 Although Mr. Hoskey administratively appealed the 20 collection action taken by the Commissioner, Mr. Hoskey 21 did not respond or provide information to the Appeals 22 Officer, and as a result, we sustain the Commissioner's 23 determination. 24 25 BACKGROUND At the time the Commissioner issued his notice .( nners 4 intent to levy, Mr. Hoskey had an outstanding liability of of $8,566.67 for 2015, including tax, interest and penalties. The liability arose from deductions that Mr. Hoskey improperly took, claiming his grandchildren as dependents. Mr. Hoskey had an opportunity to dispute his liability for 2015. The Commissioner issued a notice of deficiency, informing Mr. Hoskey that he had determined a deficiency for 2015. Mr. Hoskey did not challenge the 1 2 3 4 5 6 7 8 9 10 notice of deficiency, and the Commissioner assessed the 11 additional taxes, as well as penalties and accrued 12 13 14 interest. Mr. Hoskey entered into an installment agreement to pay his outstanding liability. Mr. Hoskey made 15 payments under that agreement for approximately six 16 months, at which point he defaulted. Shortly after 17 default, the Commissioner terminated the installment 18 agreement and issued a notice of intent to levy. 19 Mr. Hoskey timely filed Form 12153, Request for 20 a Collection Due Process or Equivalent Hearing. On that 21 form, Mr. Hoskey checked the box labeled "I Cannot Pay 22 Balance." This request for a collection hearing gave rise 23 to the determination that we review in this proceeding. 24 Mr. Hoskey failed to respond to Appeals while 25 his collection case was pending. The Appeals Officer scheduled a conference call 5 to discuss possible collection alternatives and requested additional financial information on Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. Mr. Hoskey did not attend the scheduled conference, and he did not provide the financial information needed for the Appeals Officer to consider collection alternatives. The APPeals Officer sent a follow up letter to Mr. Hoskey explaining that he could mail or fax the requested 1 2 3 4 5 6 7 8 9 10 information within 14 days; otherwise, the Appeals Officer 11 would issue a determination based on the information 12 available in the administrative record. 13 After the 14-day period elapsed, the Appeals 14 Officer issued a notice of determination sustaining the 15 levy. In making her determination, the Appeals Officer 16 verified that all required procedures were followed by the 17 Commissioner. The Appeals Officer reviewed Mr. Hoskey's 18 account transcripts and the corresponding administrative 19 record. She determined that the Commissioner had followed 20 the proper steps when assessing the taxes owed by Mr. 21 Hoskey. The Appeals Officer also confirmed her 22 independence by confirming that she had no prior 23 involvement in the Commissioner's assessment or collection 24 activities against Mr. Hoskey. 25 The Appeals Officer then considered the issues 6 raised by Mr. Hoskey and weighed the equities of collection. The Appeals Officer considered Mr. Hoskey's ability to pay. She noted the lack of financial information provided by Mr. Hoskey, particularly that he had not submitted the Form 433-A as requested. Because of the lack of financial information from Mr. Hoskey, she concluded that the collection action was no more intrusive than necessary. On September 9, 2019, the Commissioner issued a 1 2 3 4 5 6 7 8 9 10 notice of determination sustaining the notice of intent to 11 12 13 14 15 levy. Mr. Hoskey timely filed a petition challenging the determination. In his petition, Mr. Hoskey again indicated his inability to pay the liability. At trial, Mr. Hoskey testified about his efforts 16 to provide information to the Commissioner and his current 17 collectability status. Mr. Hoskey was, at some time, 18 responsive to the Commissioner. It is likely that he was 19 responsive during an earlier time, for example, when 20 getting his installment agreement. But there is no 21 evidence that he responded to the Appeals Officer during 22 this collection proceeding. As for collectability, Mr. 23 Hoskey had stopped making payments on his liability 24 because he could no longer afford to do so. 25 In the time since the Commissioner issued his 7 notice of determination, matters have only gotten worse. Mr. Hoskey had been earning income selling produce along the roadside. We glean from Mr. Hoskey's testimony that his truck was impounded, and as a result, he lost that source of income. The result is that Mr. Hoskey remains unable to pay his liability or make the payments on the installment agreement. DISCUSSION As a general matter, the Commissioner's 1 2 3 4 5 6 7 8 9 10 determinations are presumed to be correct, and the 11 taxpayer bears the burden of proving an error. Rule 12 13 14 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In a collection case, a taxpayer may challenge the existence or amount of the underlying tax liability 15 only if the taxpayer did not have a prior opportunity to 16 dispute the liability. Sec. 6330(c)(2) (B). If a taxpayer 17 18 received a previous collection notice with respect to the same tax and tax period, then the taxpayer had a prior 19 opportunity to dispute the existence or amount of the 20 liability. Sec. 301.6330-1(e)(1), (e)(3)A-E7, Proced. & 21 Admin. Regs. Mr. Hoskey had a prior opportunity to 22 challenge his underlying liability for 2015. Moreover, he 23 did not contest the liability at any time in this 24 proceeding. Accordingly, the underlying liability is not 25 at issue here. Cnners Where the underlying liability is not at issue, 8 we review the Commissioner's 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 reviewing for abuse of discretion, we do not conduct an independent review of the collection alternatives. We do not substitute our judgment for that of the Commissioner. We only ensure that the Commissioner's decision was not arbitrary, capr1clous, or 1 2 3 4 5 6 7 8 9 10 without sound basis in fact or law. Klein v. 11 Commissioner, 149 T.C. 341, 348 (2017); Murphy v. 12 Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 13 14 (1st Cir. 2006). We now turn to the question of whether the 15 Commissioner abused his discretion in sustaining the levy, 16 and we conclude that he did not. Generally, the 17 Commissioner's determination must take three things into 18 consideration: (1) verification that the applicable laws 19 and administrative procedures have been met; (2) issues 20 21 raised by the taxpayer; and (3) whether any proposed collection action reasonably balances the need for 22 efficient tax collection with the legitimate concern of 23 the taxpayer that any collection action be no more 24 intrusive than necessary. Sec. 6330(c)(3); Lunsford v. 25 Commissioner, 117 T.C. 183, 184 (2001). The Appeals Officer reviewed Mr. Hoskey's 9 account transcripts and the administrative record, determining that the Commissioner had complied with all legal and procedural requirements in his assessment and collection activities. In confirming that all legal and procedural requirements have been met, an Appeals Officer may rely on an account transcript. Schroeder v. Commissioner, T.C. Memo. 2002-190; Mann v. Commissioner, T.C. Memo. 2002-48. Collection hearings must be conducted by an impartial officer or employee who has had no prior involvement with the unpaid tax. Sec. 6330(b)(3). The 1 2 3 4 5 6 7 8 9 10 11 12 13 Appeals Officer confirmed that she had not previously 14 participated in the Commissioner's assessment or 15 16 collection activities with respect to Mr. Hoskey. The Appeals Officer considered the issues raised 17 by Mr. Hoskey in his hearing request and his purported 18 inability to pay the amount owed. In her evaluation, the 19 Appeals Officer noted that Mr. Hoskey failed to provide 20 the financial information she requested on Form 433-A. 21 The Appeals Officer cannot be faulted for failing to 22 consider information that was never provided to her. If a 23 taxpayer fails to provide information necessary to 24 consider an issue after being given a reasonable 25 OPportunity to do so, the issue cannot be raised on review. Sec. 301.6330-1(f)(2)(A-F3), Proced. & Admin. Regs.; see also Giamelli v. Commissioner, 129 T.C. 107, 10 115 (2007). In limited situations, we can remand a case to appeals for further consideration even if the Commissioner did not abuse his discretion. One such instance occurs where a taxpayer has undergone a material change in circumstances after the Commissioner issued a determination. Churchill v. Commissioner, T.C. Memo 2011- 182; see also Leago v. Commissioner, T.C. Memo. 2012-39; INS v. Ventura, 537 U.S. 12, 14-18 (2002). A material change in circumstances occurs when the taxpayer's ability 1 2 3 4 5 6 7 8 9 10 11 12 13 to pay has decreased such that Appeal's determination 14 would have differed had the circumstance been present at 15 the time of the hearing. Churchill v. Commissioner, T.C. 16 Memo 2011-187, *13-*15 (remanding to Appeals for further 17 consideration based on decreased income resulting from a 18 divorce); Gurule v. Commissioner, T.C. Memo. 2015-61, *35- 19 *39 (remanding to Appeals for further consideration based 20 on expenses incurred because of a death in the family). 21 22 In this particular case, Mr. Hoskey's change in circumstances is not material under this standard. At the 23 time Mr. Hoskey requested a collection hearing, he did not 24 have the ability to pay the taxes owed. The Appeals 25 Officer sustained the levy because Mr. Hoskey failed to 733406-2250|operationseescribersnet!wwwesaibersnet Provide the requested documentation substantiating his 11 financial situation. If he could have afforded to pay and the subsequent loss of income made him uncollectible, this likely would have constituted a material change. However, Mr. Hoskey claimed to be unable to pay at the time he requested Appeals consideration, and his loss of income does not alter his claimed inability to pay. If he was uncollectible beforehand, his reduction in income does not change that material fact - that he was and remains 1 2 3 4 5 6 7 8 9 10 uncollectible. 11 12 Mr. Hoskey may have been entitled to have his account placed in currently not collectible status. 13 However, he did not provide sufficient information for 14 Appeals to consider placing a hold on collection. To 15 qualify for currently not collectible status, a taxpayer 16 must demonstrate the inability to pay. Using information 17 provided by the taxpayer, the Commissioner can calculate 18 the taxpayer's reasonable collection potential. But for 19 the Commissioner to do so, the taxpayer must provide the 20 required financial information, which Mr. Hoskey did not 21 do during his collection hearing or while docketed before 22 our Court. Nothing in this opinion prevents Mr. Hoskey 23 from continuing to work with the Commissioner to obtain 24 currently not collectible status, but on this record, we 25 cannot find an abuse of discretion and therefore cannot remand this case to Appeals. CONCLUSION 12 The Commissioner did not abuse his discretion in his determination to uphold the notice of intent to levy. The change in Mr. Hoskey's financial situation is not a 1 2 3 4 5 6 material change suitable for remand. Accordingly, we sustain the determination. Decision will be entered for the Commissioner. (Whereupon, at 10:21 a.m., the above-entitled matter was concluded.) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25