TAX COURT OPINION

Case: Ross Harvey King
Docket Number: 18723-07S
Judge: Colvin
Opinion Type: bench
Filed: 11/18/2009
Pages: 10

UNITED STATES TAX COUR T , WASHINGTON D.C. 2021 7 ROSS .HARVEY KING , Petitioner ., COMMISSIONER OF INTERNAL REVENU E Respondent . Docket No . 18723-07 S O R D E R Pursuant to Rule 152(b), flax Court Rules of Practice an d Procedure, it i s ORDERED that the Clerk of the Court shall transmit to petitioner and-to respondent a copy of the pages of the transcript of the proceedings of the above-case before Judge Diane L . Kroupa at San Diego, California, on October 27, 2009, containing her oral findings of fact and opinion . In accordance with the oral findings of fact°and opinion, decision will be entered for respondent . (Signed) Diane L . Kroupa Judge Date : Washington, D .C . kovember 18, 200 .9 Bench Opinion by Judge Diane L . Kroupa October 27, 200 9 Ross Harvey King Docket No .-18723-07 S 3 THE COURT : The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion . 6 These oral findings of fact and opinion shall not be relie d upon as precedent in any other case . This collection review proceeding was heard as a small tax case pursuant to the provis'ions of Section 746 3 10 and Rules 170 through 175 . All section references are to 11 the Internal Revenue Code, as amended and in . effect for 2004 12 and 2005, which years shall be referred to as the years at 13 issue, and all Rule references are to the Tax Court Rules of 14 Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted in Section 7459(b) and Rule 152 .,, 17 Ross King appeared pro se, and Chad Southall 18 appeared on behalf of Respondent . 19 FINDINGS OF FAC T 20 The record reflect or the parties do not dispute 21 the following facts . 22 This is a collection review case involving the 23 filing of a notice of federal tax lien, and this collection 24 review, matter is before the Court on Respondent .'s motion to 25 dismiss as moot filed on October 1st, 2009 . Petitione r Heritage Reporting Corporation (202) 628-4888 1 filed an objection, and the Court heard oral arguments on 2 October 26, 2009, in San Diego, California . 3 Petitioner resided in California at the time he 4 filed the petition in this case . 5 6 Petitioner . filed returns for 2004 and 2005, but wa s . unable to pay the amount owing . Respondent made . assessment s based upon the amount reflected on the returns . Notice and demand of balances due were sent to Petitioner, as required under Section 6303, but Petitioner was unable to pay the 10 amounts due . 11 12 On February 15th, 2007, Respondent sent Petitione r .a "Notice of . Federal Tax Lien Filing and Your Right to a 13 Hearing Under Section 6320," .advising Petitioner that . he had 14 unpaid tax liabilities owing to Respondent for 2004 an d 15 2005 . On the same day as-Petitioner was notified of the 16 lien, the lien was ..filed or recorded with the San Diego 17 County Recorder's office . 18 Petitioner timely filed a request for a collection 19 hearing with Appeals . At the hearing, Petitioner requested 20 that the lien be released or withdrawn, as it was adversely 21 affecting his credit score . Petitioner did not challenge 22 . the existence or amount of the liabilities .- Instead, he . 23 took the position there,' as he does in these proceedings, 24 that the filing of the lien violated an-understanding, if 25 not an agreement, that he had with Respondent regarding ho w Heritage Reporting Corporation (202) 628-4888 1 those liabilities would be paid . 2 During the collection hearing, Petitioner stated 3 that he believed the lien was premature , as he was i n 4 negotiations with the revenue officer for full payment . Indeed, the revenue officer's history indicated tha t Petitioner merely mentioned that he wanted to wait until he turned 59, and then liquidate his 401(k) to pay his outstanding tax liabilities . On July 26, 2007, after the hearing, Respondent sent Petitioner a notice .o f 10 determination concerning collection actions under Sectio n 11 6320 and/or 6330 (notice determination) informing Petitioner 12 that the appeals officer sustained the filing .of the federal 13 tax lien regarding 2004 and 2005 . 14 'Petitioner did manage to pay the entire amount 1.5 outstanding for 2004 and 2005 by liquidating his 401(k) . . 16 Because Petitioner fully paid all the outstanding tax 17 liabilities for the'years at issue, Respondent released the 18 tax lien and moved to dismiss this collection revie w 19 proceeding . 20 A hearing on Respondent's motion was held before 21 . Special Trial Judge Carluzzo in October 2008, exactly on e 22 year ago . Judge Carluzzo denied Respondent's motion at that 23 time because the record was , incomplete,and documents were 24 missing, including the determination notice . 25 Respondent subsequently rectified the issues Judg e Heritage Reporting Corporation (202) 628-4888 5 Carluzzo raised with last year's motion and made the record more complete . Respondent filed a new motion to dismiss a s 3 moot on October 1st, 2009 that attached a copy of th e 4 determination notice . Petitioner filed an objection, again 5 asserting that Respondent should withdraw the lien because 6 it adversely affects his credit rating, especially i n 7 today's poor economic times . Petitioner provided a copy o f an installment agreement Petitioner had in 2005 regardin g 9 his unpaid liability for 2004 only . Petitioner was unable 10 to . provide any documentation regarding an installmen t 11 agreement for both of the years at issue . 12 OPINION 13 We are asked to decide whether Respondent abused 14 his discretion in deciding to sustain the lien filing . 15 Where, as is the case here, the validity of the underlying 16 tax liability is not properly placed at issue, the Court 17 will review Respondent's determination for abuse o f 18 discretion . Sego v . Commissioner , 114 T .C . 604, 610 (2000) ; 19 Goza v . Commissioner -, 114T .C . 176, 181-182 (20 .00) . We mus t 20 decide whether Respondent exercised his discretio n 21 arbitrarily, capriciously or without sound basis in fact or 22 law . See Woodral v . Commissioner , 112 T .C . 19, 23 (199 9 ) . 23 We briefly give an overview of lien proceedings . 24 Section 6321 imposes a lien in favor of the United States on 25 all property and rights to property-of a taxpayer when Heritage Reporting Corporatio n (202) 628-4888 6 1 demand for payment of that person's liability for taxes has 2 been made, and the person fails to pay those taxes . Th e 3 lien arises when the assessment is made, and continues until 4 the tax liability is satisfied or the statute of limitations 5 bars enforcement of .the lien . Sec . 6322 ; Iannone v . 6 Commissioner , 122 T .C . 287, 293 (2004) . If the taxpayer fails to pay, the Commissioner files the lien with the appropriate state office to validate the lien against others . See . Sec . 6323(a) ; Lindsay v . 10 Commissioner , T .C . Memo . 2001-285 . Section 6323(a) requires 11 that the Commissioner record the federal lien to make the . 12 lien valid'against any purchaser, holder of a securit y 13 interest, mechanic's lienor,,or judgment lien creditor . 14 Behling v . Commissioner , 118 T .C . 572, 575 (2002) . 15 Section 6320 provides that the Secretary shal l 16 furnish the taxpayer described in Section 6321 with written 17 notice that a lien was .filed . The person may then request 18 administrative review of the matter in the form of an 19 Appeals Office .hearing . The Appeals office hearing 20 generally shall be conducted in a manner consistent with the 21 procedures for levies . Sec . 6320(c ) .22 If the . taxpayer requests a hearing, he or she may 23 raise at the hearing any relevant issues relating to th e 24 unpaid tax or the proposed lien . Sec . 6330(c)(2 .) . Relevant 25 issues include .any appropriate spousal defenses, challenges Heritage Reporting Corporatio n (202) 628-4888 1 to the appropriateness of collection, and possibl e 2 alternative means of collection, such as an installmen t 3 agreement or an offer-in-compromise . Sec . 6330(c)(2)(A) . 4 After the hearing, the appeals officer is required 5 to make a determination that addresses issues the taxpaye r 6 raised, verifies that all requirements of applicable law an d 7 administrative procedures have been met, and balances th e 8 need for the efficient collection of taxes with th e legitimate concern of the person . that any collection actio n 10 be no more intrusive than necessary . Sec . 6330 (c)(3)(C) . 11 We~are satisfied that Respondent has rectified any 12 issues'with the record and missing documents . The appeals 13 officer properly verified that legal and procedural require- 14 ments have been met . He confirmed, using a transcript o f 15 Petitioner's accounts, that assessments were properly mad e 16 for the years at issue, that appropriate and timely notices 17 were sent regarding the assessments, and that Petitioner wa s 18, ,properly informed of his rights with respect to the lien . 19 We now focus on whether Respondent should have 20 withdrawn the lien. Petitioner argues that Responden t 21 should have withdrawn the lien because he had an installment 22 agreement to satisfy the liability . We agree wit h 23 Petitioner that the Commissioner may-withdraw the lien if 24 the taxpayer has entered into an installment agreement to 25 satisfy the liability for which the lien was imposed . Heritage Reporting Corporation (202) 628-4888 8 Sec . 6323(j) (1) . We do not find those facts here, however . Instead, .we find that Petitioner did not have an agreement for the years at issue . The determination notice stated that Petitioner, believed the lien was premature , as he was i n negotiations with the revenue officer for full payment . The 7 revenue officer's history also indicated that Petitione r 8 merely mentioned that he wanted to wait until he turned 59, 9 and then liquidate his 401(k) to pay his outstanding tax 10 liabilities . .11 At the hearing this week, Petitioner admitted that 12 he_wanted to wait .until .he turned 59 to liquidate his 401(k) 13 and pay his tax liabilities in full . We found Petitioner 14 credible on this issue, as waiting until that age woul d 15 absolve Petitioner from the ten percent-early withdrawal 16 penalty under Section 72(t) . In, addition, Petitioner was 17 only able to provide a copy of an earlier installmen t 18 agreement for 2004 . only . Petitioner failed to show that an 19 agreement existed for the two years at issue . 20 Even if-Petitioner had entered into an installment 21 agreement to satisfy the liability for which the lien wa s 22 imposed, Respondent would not have been required to withdraw 23 the lien . See Sec . 6323(j) (1)_; .Seca 301 .6323(j)-1(c) , 24 Proced . & Admin . Regs . IRS Publication 592, "What Yo u 25 Should Know About the IRS Collection Process," specifically Heritage Reporting Corporatio n (202) 628-4888 1 2 3 4 states that the Commissioner may file a tax lien even if a n installment agreement is in effect . IRS Publication 59 4 at 6 ; see , e .g ., Beery v . Commissioner ,_122 T .C . 184 , 189-190 (2004) (Commissioner not precluded from filing a federal tax lien) . We similarly must deny Petitioner's request to remove the tax lien entirely from his record because . it negatively reflects against his . credit rating . As Judg e 9 ; Carluzzo pointed out last year in his bench opinion, . w e 10 generally haveno authority to grant relief to a taxpayer's 11 claim that filing the lien adversely affected tha t 12 taxpayer's credit rating . Gerakios v . Commissioner , T .C . 13 Memo . 2004-203 . We are satisfied that the record is now 14 complete . 15 Petitioner has not-presented any evidence-o r 16 . persuasive arguments to convince us that Respondent abuse d 17 his discretion . As stated previously, Respondent verified, 18 as required by Section 6330(c)(1), that t,he requirements of 19 'applicable laws and administrative procedures had been met . 20 Respondent also determined that the filing of the tax lien 21 balanced the need for the efficient collection of taxes with- 22 Petitioner's legitimate concerns that any collection action 23 be .no more intrusive than necessary . 24 Thus, .. having reviewed the entire record, w e 25 conclude that Respondent did not abuse his discretion in Heritage Reporting Corporatio n (202) 628-:4888 10 1 determining that the filing of the lien here was appropriate 2 regarding Petitioner's unpaid tax liabilities for 2004 an d 3. 2005 . We therefore shall grant Respondent's motion to 4 dismiss as moot filed on October 1st, 2009 . 5 This concludes the Court's oral findings of fac t and opinion in this case . (Whereupon, at 1 :15 .-p .m ., the bench opinion in the above-entitled case was concluded .)- 10 12 13 14 // . 15 16 // 17 // 18 . // 19 2 0 21 22 23 / / 24 // 25 Heritage Reporting Corporation (202) 628-4888