TAX COURT OPINION

Case: Nacoleon James Hillsman, Jr.
Docket Number: 11617-07L
Judge: Chiechi
Opinion Type: memo
Filed: 10/28/2008
Pages: 15

UNITED STATES TAX COURT NACOLEON AMES HILLSMAN, JR .,,Petitioner v . COMMISSION R OF INTERNAL REVENUE, Respondent Docket No . 1161 1 -07L . Filed October 28, 2008 . Nacoleon .James I illsman, Jr . , pro se . CHIECHI, Judge : This case is before the Court on respon- dent's motion for summary judgment as supplemented .- We shal l -Respondent fil d a declaration of Appeals Team .Manager° Debra Dufek in suppo t of respondent's motion for summary judgment (respondent's d claration) . We shall refer collectively t respondent's motion or summary judgment as supplemented and respondent's declara ion .as respondent's motion . SERVED OCT 2 8 2008 grant respondent's motion . - 2 - Background The record establishes and/or the parties do not dispute the following . Petitioner' s address shown in the petition in this case was in Chicago, Illinois . On December 30, 2002, respondent prepared a substitute for return for petitioner's taxable year 1999 . On September 19, 2005, petitioner filed a Federal income tax (tax) return for his taxable year 1999 (1999 return) . In that return, petitioner showed total tax of $37,819 and tax due of $29,052 . When petitioner filed his 1999 return, he did not pay the tax due shown in that return . On February 6, 2006, respondent assessed the total tax shown in petitioner's 1999 return, additions to tax under sections 6651(a)(1)2 and 6654(a)-of $6,943 and $1,280, respectively, and interest as provided by law of $14,051 .07 for petitioner's taxable year 1999 .3 (We shall refer to any unpaid assessed(cid:127) amounts with respect to petitioner's taxable year 1999, as'wel l ZAll section references are to the Internal Revenue code in effect at all relevant times . All Rule references are to the Tax Court Rules of Practice and Procedure . .3 On Apr . 15 , 2006, respondent credited a refund of $1,40 2 due to petitioner for his taxable year 2005 against the liability for-petitioner's taxable year 1999 . as interest as provided bylaw accrued after February 6, 2006, a s petitioner'°s unpaid 999 .1'iability . ) On February,6, 006, respondent-issued-to'petitioner a notice of balance du with respect to petitioner's unpaid 1999 liability . RF, a On April '15 1 20 6., -respondent issued to petitioner a final notice of intent to levyand . notice of your right to a hearing : (notices ofi intent to levy) with . respect= to petitioner's unpaid'- 1999 liability4. On June 7, 2006, petitioner- submitted-to respondent Form . 656, Offer-in .Compro ise', in,which-petitioner offered to compro mise petitioner's un aid .1999 liability (petitioner's . June 7, 2006 offer-in-compromise) . In that form,=petitioner offered to compromise . that liability by paying $11,716-over a 24-month period . On July 19, 2006, respondent rejected petitioner's Jun 7, 2006'offer-in-corn romise . On July 20', .2006, , respondent filed a notice of' Federal- ., tax lien with respect to petitioner's unpaid 1999 .liability . On Ju y 21, 2006, respondent issued to petitioner. a notice' of Federal tax lien :filing and your right to a . hearing underSRC 6320 (notice of tax lien) -with respe t to petitioner's unpaid .1999 liability . 4The record doe not establish that petitioner requested a . hearing with respond nt's Appeals Office(cid:127)(Appeals Office) with respect to the notic of intent to levy .. i 4 - 'On August 18, 2006, petitioner submitted to respondent Form 13711, Request for Appeal of Offer in Compromise , in which .he appealed respondent's rejection of petitioner's June1'-7, 20 .0 6 offer-in-compromise . On August 28, 2006, petitioner timely submitted to respon- dent Form 12153 ; Request for a Collection Due Process Hearing (petitioner's Form 12153), with respect to the notice of tax lien. In that form, .petitioner indicated his disagreement with the notice of tax lien and requested a hearing with the Appeals Office . In petitioner's Form 12153, petitioner statedin perti- nente part : "My initial Offer in Compromise,* * * has, been' ill forwarded to the Office of Appeals . A final determination :- regarding the outcome has not been .issued, therefore,-the Federal Tax Lien should be removed until ** *~final resolution has been issued . " By letter dated October 19, 2006, a settlement officer with- the Appeals Office who was assigned petitioner's Form 1215.3 (settlement officer) acknowledged receipt of that form . That letter stated in pertinent part : ;;; .I have scheduled a telephone conference call for you on November 21, 2006 at 9 :00AM [sic] . This call will be your primary opportunity to discuss with me . the .reasonsyou disagree with the collection action and/or to discuss alternatives to the collection action . On or about November 30, 2006, the settlement officer sen t petitioner a letter that stated in pertinent part : - 5 I sent you .a le tion Due Proces uled for 11/21 / ter offering you a telephonic Collec- conference . The conference was sched- 006 . I confirmed yo u someone in the schedule your d for January 2 [sic] . I hope the-,offer befor this time, the release of th e rejected offer has been assigned'to ew York Appeals Office . I will ree process hearing on the filed tax lien * * .; [ill-egible], , 2006 [sic] @ 10 : 00AM hat a decision would have been made o n ' * a* * .At the= scheduled hearing - date . ppeals Office will not recommend a ax lien . -Once I' complete will make a det hearing you req administrative already provid e your hearing on the tax-lien issue ., we rmination in the Collection Due Process ested by reviewing the Collectio n ile and whatever information you hav e On a date not d sclosed by the record, petitioner made a so- called short-term d e erred payment offers of-$15,000 .02 to b e paid over°a-period 24 months to compromise petitioner's unpaid '1999 liability . On anuary 24, 2007, respondent accepted that offer (petitioner' s ccepted offer-in-compromise) . . . On April 23, 20 7, the Appeals Office issued to petitioner a notice of determina t on concerning collection action(s .) under section 6320'and/6 ; 330 (notice of determination) with respect to petitioner's taxa le year-1999 . That notice stated in pert i nent part : 'The term "shor amount that a taxpa y liability and that i 24 months , after wri of Internal Revenue Internal Revenue Man -term deferred payment offer" refers to a n r offers to compromise the . taxpayer's tax to be paid in more than 90 days, but"within ten notice of acceptance by the Commissioner Commissioner) of the offered amount . Se e al (IRM) pt . 5 .8 .1 .9 .4(3) (Sept . 1, 2005) . - 6 Summary of Determinatio n Based on all the documents that were presented we determined the filing of the tax lien was appropriate . The Service followed all applicable procedures and guidelines in the filing of the Notice of Federal Tax Lien . Since the filing of the tax lien your offer-in-compromise was submitted for acceptance . The Offer Unit determined the amount offered was adequate . The, tax lien will ;;.be released once you,have met the terms of the offer-in-compromise . The notice of determination included an attachment tha t stated in pertinent part : I SUMMARY AND RECOMMENDATION .You requested a hearing from Appeals under the provi- sions of Internal Revenue Code (IRC) [section] 6320 on the above income tax periods . The Form 12153,'Request for a Due Process Hearing was : timely filed . You were provided the opportunity to a telephone, correspondence, or face-to-face hearing . A telephone hearing was conducted . The Internal Revenue Service followed all legal .,,,and administrative requirements in filing the tax lie n .'against you . It was determined that this action was' the most efficient collection method when the Notice of .Federal Tax Lien was requested . The Offer Unit filed the offer [sic] after rejecting your submitted offer-in-compromise . You filed a timely appeal with the Offer Unit-protesting the rejection . The Offer Unit reinvestigated your offer and has recommended acceptance of your offer . The'tax lien will be released as soon as the terms of the offer are met . BRIEF BACKGROUND A tax lien was filed against you because of your out-, standing tax liability amount . Your income tax was prepared by the Service because you neglected to file the tax return . ill return You'-filed an off liability . Your timely appeal pr Officer contacte offer . The,Settll was . recommended r-in=compromise to resolve the tax offer was rejected and you filed a testing the rejection . The Settlement the Offer Unit on the status of your ' ement Officer was notified your offer nd submitted for approval . )ISCUSSION AND ANALYSI S Verification of (legal procedural requirements : Appeals has obt ined'verification from the IRS office collecting .the tax that the requirements of-any applicable law, regulation or administrative procedure with respect,to the proposed levy or NFTL filingt63 have been met . Computerecords indicate that the notice and demand, notice of intent to levy . and/or notice of federal tax lie filing, and notice of a right to a Collection Due Process hearing were issued . Assessment was tax and perio d roperly made per IRC § 6201 for each isted on-the CDP notice . The notice and the taxpayer' s IRC [section] 6 3 when a taxpayer bility after no valid against . t notice of the l i for filing per of your account to pay after no 21 states that a statutory lien arises neglects or refuses to pay a tax lia ice demand [sic] and demand . To be ird parties except government . entities, en must be filed in the proper plac e RC [section] 6323(a) and (f) . A review indicates that you neglected or refused ice and demand . IRC [section] 6 Service to with (NFTL) . A NFTL notice was prem with the Servic taxpayer enter e 23(j) allows the Internal Revenue raw a Notice of Federal Tax Lien may be .withdrawn if the filing of the tureor otherwise not in accordanc e 's administrative procedures, if the into an .[installment] payment agree- 6See supra note refers to "the propo action that the Appe filing of the notice tioner's taxable yea Although the notice of-determinatio n ed levy or NFTL filing", the only collection is Office sustained in that notice was the of Federal tax lien with respect to peti- 1999 . ment under Section 6159 to satisfy the tax .,liability for which the lien was imposed by means of the agreement unless such agreement provides otherwise, i f withdrawal of such notice will facilitate the collection of the tax liability, or if with the consent of the taxpayer or National Taxpayer Advocate, the, .withdrawal of the notice would not [sic] be in the best interest of the taxpayer (as determined by the National Taxpayer Advocate) and the United States (as determined by the IRS) . The filing of the NFTL was not premature and followed administrative guidelines . There was no [installment] payment agreement [under section 6159] or the agreement,;provided for the filing of the NFTL . Neither the taxpayer nor Appeals contends that withdrawal would facilitate collection . Withdrawal is considered not to be in the best interest of the Government . There was a balance due when the CDP levy notice was issued or when the NFTL filing was requested . 'Prior involvement : l! I had no prior involvement with respect to the specific . tax periods either in Appeals or Compliance Coll'ectioft . Collection statute verification : The collection statute has been suspended ; the collection period allowed by statute to collect these taxes, has been suspended by the appropriate computer codes for the tax periods at issue . { Collection followed all legal procedural requirements''. and the actions taken or proposed were appropriate under the circumstances . Issues raised by the taxpaye r Collection Alternatives Offered by Taxpaye r Your due process request form indicated your initial offer was reject d and you appealed the decision . You believe the fill g of the tax lien was premature and the tax lien sho ld be removed until a final resolution' was made on your offer . A review of your account revealed you had an outstanding tax liability totaling over $50,000 .00 . Because'of your outstanding tax liability amount and the rejection of your offer, the filing of .the tax lien was . no t premature . A telephone hearing was'conducted with you and you notified the Set dement Officer that your offer ,has been approved . he Settlement Officer contacted the Offer Unit, Ms . S eck ..and verified the acceptance of your offer . You were notified the tax lien would be released once the terms of your offer .were met ., Because . you chose not . to-sign the W iver form this determination lette r was issued to you . Challenges to th e Existence of Amount of Liability You did not chal l nge the liability at your hearing . You raised no ot h r relevant issues . Balancing of need payer concern tha intrusive than necessary . for efficient collection with tax- the collection action be no mor e not be withdrawn by'Appeals and is,' e] most appropriate action . IR C d 6330 require. that the Appeals ether a proposed collection action for efficient collection-''of taxe s The tax lien'will believed to be [t [sections] 6320 a Office consider w balances the need with the legitimate concern that any collection be no more intrusive ha necessary . The filing of the tax lien was determine to be the most effective method of collection when it was filed . It - 10 - The tax lien will be released as soon as the terms of your offer are met . As of April 23, 2007, the date on which the Appeals Office issued to petitioner the notice of determination, petitioner had not begun making the 24 monthly payments required under the term s of petitioner's accepted offer-in-compromise . Since May 18, 2007, petitioner has made, and as of August 4, 2008,has contin- ued to make, those required monthly payments . Discussio n The Court may grant summary judgment where there is no genuine issue of'material fact and a decision may be, ;,rendered a s a matter of law . Rule 121(b) ; Sundstrand Corp . v . Commissioner , 98 T .C . 518, 520 (1992), affd . 17 F .3d 965 (7th Cir . 1994) . We conclude that there are no genuine issues of material fact regarding the questions raised in respondent's motion . In petitioner' s response to respondent's motion, petitioner does not dispute the existence or the amount of petitioner's unpaid 1999 liability . . Where, as is the case here, the validit y of the underlying tax liability 'is not properly placed at issue, the Court will review the determination of the Commissioner for abuse of discretion . See Sego v . Commissioner , 114 T .C . 604, 610 (2000 ) ; Goza v . Commissioner , 114 T .C .'176, 181-182 (2000 ) It is petitioner's position that the Appeals Office abused its discretion in determining in the notice of determination t o sustain the Federal tax lien with respect to petitioner's unpaid - 11 - 1999 liability and t e filing of the notice of that lien . ' According to petitio er, the Federal tax lien with respect t o that liability " was re-maturely placed on my account " and should be "removed" becauseIhe has been making the payments require d under"the terms of pe'titioner's accepted offer-in-compromise . . If any pers refuses to pay t cluding any inte tax, or assessab that may accrue favor of the Uni to property, whe such person . n liable to pay any tax neglects or e same after demand, the amount (inest, additional amount, addition to e penalty, together with any cost s n addition thereto) shall be a lien in ed States upon all property and rights her real'or personal, belonging t o Section 6322 provides shall arise at the ti until the liability f or becomes unenforceab e_by reason of lapse of time ." As perti- nent here, section 63 2 (a)(1) provides that the Secretary of th e certificate of release of a Federal tax ays after the day on which the "Secretary y for the amount assessed , together wit h 'In the notice of mined that "The tax li has] met the terms of Office also determined . respondent followed=all filing the notice of Fe tioner's unpaid 1999 li is not appropriate at t etermination, the Appeals Office detern will be released once * * * [petitioner he offerz-in-compromise ." The Appeal s in the notice of determination tha t applicable procedures and guidelines in eral tax lien with respect to petibility and that withdrawal of that notice is time . - 12 - all interest in respect thereof, has been fully satisfied or has become legally unenforceable" . Consistent with section 6325(a)(1), part 5 .17 .2 .7 .3(2) of the IRM (Oct . 31, 2000) provides that "A Certificate of Release of the federal tax lien is authorized" where, inter alia,rthe "amount assessed (plus interest) is paid ." Part 5 .17 .2 .7 .3.2(1 ) of the IRM (Oct . 31, 2000) provides in pertinent part : (1) When the Service accepts an offer in compromise ; * * * the lien against the taxpayer is released, provided that all of the following conditions are met : a . It is a cash offer, or all installments under the terms of the offer, including an"j accrued interest, have been paid . If a taxpayer makes a cash offer to compromise a tax liability , the offer amount must be paid within 90 days after the date o n which the Commissioner accepts the offer . IRM pt . 5,1 .8 .1 .9 .4(3 ) (Sept . 1, 2005) . On February 6, 2006, respondent assessed petitioner ' s unpaid 1999 liability and issued to petitioner a notice of ;balance due with respect to that liability . On that date , a Federal tax lien arose by operation of law in favor . of the United States on al l property and rights to property belonging to petitioner with respect to petitioner's unpaid 1999 liability . See sec . 6322 . . On a date not disclosed by the record, petitioner made a short- term deferred payment offer of $15,000 .02 to compromise that f - 13 - liability .' Pursuan t to that offer, petitioner agreed to pa y $15,000 .02 in 24 mon hly payments to commence after writte n notice of respondent' s acceptance of that offered amount . On January 24, 2007, re s ondent accepted petitioner's offer o f $15,000 .02 to compro ise petitioner ' s unpaid 1999 liability . As of April 23, 2007 , e date on which the°Appeals Office issued t o petitioner the notic e of determination, petitioner had not made all of the 24 months payments required under the terms of petitioner's accept e offer-in-compromise . We conclude tha t respondent was not re respect to petitioner's unpaid 1999 liability . 9 See sec . 6325 ( a)(1) ; IRM pt . 5 Nor was responde t required to withdraw the notice o f Federal tax lien file with respect to petitioner's unpaid 199 9 liability . Section 6 23(a)'provides that the "lien imposed by section 6321 shall n o be valid as against any purchaser, holder, of a security interes mechanic's lienor','or judgment lie n creditor until notice subsection (f) has b e n filed by the Secretary . When respondent 'Thus, petitione 9Form 656 , . Offer Commissioner has acce the taxpayer remains has satisfied all of IRM pt . 5 .9 .4 .9-1(1) for petitioner's unpa the terms of petition in Compromise , indicates that, where th e ted an offer to compromise a tax liability, iable for that liability until the taxpayer he terms of the offer-in-compromise . See Jan . 1, 2006) . Petitioner remains liable d 1999 liability until he satisfies all of is accepted offer-in-compromise . m 14 - assessed petitioner's unpaid-1999 liability on February 6,, ;.20 .06, a Federal tax lien arose by operation of law in favor of the United States on all property and rights to property ; belonging to petitioner with respect to petitioner's unpaid 1999 liability . Pursuant to section 6323(a), on July 20, 2006„ respondent filed a notice of Federal tax lien with respect to that liability in order to protect respondent's interest in petitioner's property against other creditors of petitioner .' ° Section 6323(j)(1) provides in pertinent part : (1) In general .--The Secretary may withdraw a notice of a lien filed under this section * * * if the Secretary determines that-- (A) the filing of such notice was premature or otherwise not in accordance with administrative procedures of the Secretary * * * We conclude that the filing of the notice of Federal tax lien with respect to petitioner's unpaid 1999 liability was not premature . We also conclude that the .,filing of the notice,of Federa l tax lien with respect to petitioner's unpaid 1999 liability was otherwise "in accordance with administrative procedures of the Secretary" . Cf . sec . 6323(j) (1) (A) . Part 5 .12 .2 .3(!.1) of the IRM 10See also pt . 5 .12 .2 .4 .1(1) of the IRM (May 20, 2005) (generally a notice of Federal tax lien should be filed if "the aggregate * * * [ unpaid balance of assessment] is $5,000 or more") . As of the date on which respondent filed the. notice of Federal tax lien with respect to petitioner's unpaid 1,99,9 liabil ity, petitioner's unpaid 1999 liability was substantially in excess of $ 5,000 . - 15 - (May 20, 2005) provides that the Commissioner must make reason- able efforts to contact a taxpayer before filing a notice of Federal tax lien in order to advise the taxpayer that such a notice may be filed if the taxpayer does not make full payment o f a tax liability when requested . . Part 5 .12 .2 .3(1) of the IRM further provides that the issuance of a notice of balance due under section 6303(a) constitutes reasonable efforts to contact the taxpayer . Before filing the notice of Federal tax lien, respondent issued to petitioner a notice of balance due with respect to petitioner's unpaid 1999 liability and thereby made reasonable efforts to contact him, as required by the Internal Revenue Manual . Based upon our e amination of the entire record before us, we find that the Appeals Office did not abuse its discretion in making the determinatons in the notice of determination with . respect to petitioner s taxable year 1999 . We have consider d all of the contentions and arguments of the parties that are, of discussed herein, and we find them to b e without merit, irreleant, and/or moot . On the record be ore us, .we shall grant respondent's motion To reflect the foregoing, An order granting respondent's motion and decision for respondent will be entered .