TAX COURT OPINION

Case: David West
Docket Number: 2674-06L
Judge: Gale
Opinion Type: memo
Filed: 11/16/2010
Pages: 30

T.C. Memo. 2010-250 UNITED STATES TAX COURT DAVID WEST, Petitioner v COMM]iSSIONER -OF INTERNAL REVENUE Respoñdent Docket No . 2674 -06L . Filed No einber 16 2010 . David West, pro se. Andrea D . Haddad, f or respondent . MEMORANDUM OPINION GALE, Judge: Pursuant to section 6330 (d) (1) , petitioner seeks review of respondent's determiliation tò niaintiain a lien with respect to petitioner' s unpaid incom tax or 1½99 . Pending IUnless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as in effect periods, and all Rule references are- to the Ta Practice and Procedure. for the rélevant Cou t Rules of $$8VED NOV 8 2010 - 2 - before us are respondent's me tion for summary judgment (motion) and petitioner's motion for summary judgment2 (cross-motion) - under Rule 121. For the reasons set forth below, we shall grant respondent ' s motion and deny /petitioner' s cross -motion . At the time of filing tl e petition, petitioner resided in B ckground3 New Hampshire . Petitioner did not timely file an income tax return for taxable year 1999. On April 6, 2003, respondent mailed petitioner a statutory notic( of deficiency for 1999, which petitioner received. In res onáe to the. notice, onaTune 16, 2003, petitioner submitted a Form 1040, U.S. Individual Income Tax Return, for 1999 in which he reported tax liability of $9 0 , 519 . 56 and a balance due of $81, 625 . 32 . Pet it ioner did not pay the balance reported as cue. On August 25,,2003, 7respondent assessed the $90,519.56 tax liability petitioner reported as due, as well as additions to tax for failure to pay estimated tax of 2Petitioner's cross-motion does not specifically seek the lien. removal of Instead, petitioner réquetsts that his previously rejected offer-in compromise be accepted. Since acceptance of petitioner's-offer-in-compromise would eliminate the liability giving rise to the lien, we treat his motion as issue in this casë. seeking elim~ination of the lien that is at 3The following findings are established in the administrative record .or, through party admissions and/or are undisputed. - 3 - $4,347,42, .for failure to timely file of $18,365.70, and for failure to timely pay of $16,733.19. On February 10, 2004, 'respondent issued to petitioner'a Final liotice, Notice of Intent to Levy and Notice of Your Right to a Hearing under IRC 6330, with respect to the assessed tax liability for 1999. Petitioner untimely submitted a Form 12153, Request-for a Collection Due Probeas Hearing, 'aver a year'later (dated February'22, 2005)- and was given an eqüivalent hearing.' In early April 20045 petitioner submitted a Form 656, Offer in Compromise, whereby he sought to compromise his 1999 liability for $8,974s02 on' the basis of effective tax adininïstration and doubt as to liability (OIC) . Attached -to the Form 656 was a seven-page explanation of petitioner' s position - (Form 656 attachinent) . On -the first: page of the Form 656 attachment petitioner explaïned that he was claiming bòth an effective tax administration basis and a doubt as to liability basis for his OIC. He further- explained- that the doubt as to 1.iability basis related solely to the estimated. tax addition for 1999, which 7 petitioner believed had beén miscalculated because the addition, 4Petitioner sought review of Those portions of in -this case. the levy were dismissed for lack of the 2004 levy in the petition the petition seeking review of jurisdiction. sPetitioner dated the document Apr. 2, 2004, and respondent stamped it received on Apr. 7, 2004. -44 - he contended, was due entirely to sales of stock that occurred during the last week of 199Ó Petitioner explained hid effective tax administration rground in the remaining six pages - o the Forms 656t attachment . Therein, petitioner, contended that of ective tax administration dictated- acceptance of his OIC becausè his 1999 tax liability was principally due to large capital gains arising from the sale of stock during ther last week of 1999 that were largely of f set by large capital -losses -incurre from stock, sales during 2000. The Form 656 attachment stated that petitioner .calculated his $8, 974.02 x0ICy by computing the, 1999 tax he would owe if his capital losses (and certain interest, expenseb after 1999 were allowed to offset his capital- gains for -1999 and he were given a + creditsfor $3,962.35 of.-alteenative minimum tax as a result -of the exercise in an earlier .ydar of incentive stock options to acquire the stock sold at a gain in 1999 . The Form 656 attachment also cited as-an irgument, for acceptance of petitioner's OIC an incident in 1987 where petitioner's inability to understand section 422, had caused him -to forfeit an opportunity to exercise certain very valuable incentive stock options . Finally, the Form 656 attachment cited petitioner' s difficulty in finding employment and the fact that the unresolved 1999 tax liability would likely preclude his borrowing against - 5 - the equity in his house to pay off certain unsecured debt, necessitating a sale of the house. On'Junes 2, 2004p one of respondent's offer -examiners rejected petitioner s OIC. 'On June -30, 2004, petitioner appealed - the re j e c t ion to respondent'-s Of f ice "of Appeals . An Appeals officer (2004 Appeals officer) reviewed petitioner's OIC and sustained the offer examiner's rejection (2004 administrative proceeding) , advising petitioner in a November 12, 2004, letter that.his OIC had been rejected because an amdunt largér than his offer appearedecollectible and that "We have not found that an exceptional circumstance exists that'allowssour acceptance of your offer." On January 20; 2005, respondent issued to pe'titioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 with respect to his 1999 tax liability.' Petitioner timely submitted a Form 12153 dated February 22, 2005.7 In the correspondence between petitioner and the Appeals employee assigned to his hearing requ'est (CDP hearing*offi-cer) ' petitioner requested that his OIC previously ejected by ithe e- Appeals Office be.reconsidered, and the CDP hearing officer - SA notice of lien had been filed with rèspect to petitioner's residence,in Hampton Falls, N.H. 7The Form 12153 requested a hearing with respect Jan. 20, 2005 notice of Federal 2004, notice of intent to levy. to both the tax lien filing and the Feb. 10, See text supra at note 4. - 6 - refused. The,Appeals Office subsequently issued a Notice of Determination Concerning Collection Action (s) _Unders Section 6320 and/or 6330 * (notice of deterniination) -on December 30 x 2005,3 determining that the lien sh uld be sustained a Petitioner timely petitioned -the Court in respönse to the notice of determination and the parties subsequently filed motions for summary judgment Discussion "Summary judgment;is in ended to:expedite litigation.and, avoid unnecessary and expensive trials." Fla.. Peach Corp. v. Commissioner, 90 T.C. .678,- 681 3(1988) Summary judgment mayabe granted r if the "pleadings, aÈswers to interrogatories, depositions, admissions, and any other acceptable materials, toge ther with the af f idavits i f any; show - that there -is' no genuine issue as to any mate ial fact and .that a decision may be rendered as ma matter of slaw.' Rule 121(a) and (b) . Factual inferences are viewed in -a light most favorable, to the -nonmoving party, and the moving party bears the burden of - proving that . there is no sgenuine issue of material fact., Craiq v. Commissioner, 119 -T.C. 252, 60 (2.002) ; Dahlstrom v. Commissioner, 85 .T.C. 812, 821 (1985) ; Jacklin v. Commisssioner, 79 T.C. 340, 344 (1982) . Section 6321 imposes a lien in favor of the United States on all property and rights to property' of a person liable for tiaxels (taxpayér) when a demand for9the taxes has been inade and the taxpayer fails to pay The lien arises when an assessment is made. -Sec. 6322.e Generally, in order for the lien to be valid against- third parties, the' Secretary must file a notice of lien with certain State or lócal authorities where the taxpayer's property is situated. Sec. 6323(a),' (f); Lindsay v. Commissioner, T.C.. Memo. 20012285,-affd. 56 Fed.. Appx". 800 (9th Cir. 2003) . Section 6320 provides"that the Secretary shall furnish the taxpayer with written notide of..the filing of a notice of lien^ and of the 'taxpayer's -right- to a hearing concerning the lien. Sec. 6320 (a) (1) , (3) If tlie taxpayer timely requests a hearing, the hearing is to' be conducted by an officer or employee òf the Commissioner's Office of Appeals who has had no prior involvement with respect to the unpaid taxes.: Sec. 6320(b) (1), (3), (c). The taxpayer may taise at the heiring Many relevant issue" relating to the unpaid tax or the proposed lien, including offers of collection alternatives such as an offer-in-compròmise. Secs. 6320(c), 6330(c) (2)-(A).s The taxpayer-may also raise challenges to the exištence or amòunt of the underlying*tax liability if he did not receive any-statutory nòtice of deficiency with respect to such liability ior otherwise- have an opportunity to dispute it. Sec. 6330(c) (2) (B). Howevery pufsuant to section 6330(c) (4), an issue may not be raised at the hearing if the issue was raised and considered in a previous administrative or judicial ~ 8 - proceeding in which the, taxp yer, meaningfully÷ participated. "Sections 6330,(c) (4) expressl provides that taxpayers, at collection hearings before r spondent'-s Appeals Office, may not raise issues that were ,previously raised by taxpayers and considered in any other administrative or judicial -proceeding in which the taxpayers meaningfülly participated." Maqana v. Commissioner, 118 T.C. 488, 492 (2002); sec. 301.6320-I(e) (1) Proced. & Admin. Regs.; s,ee älso McIntosh v. Commissioner, T.C. Memo. 2003-279; Wootenav.t Coinmissioner, ,T.C. Memo. 12003-113 e At the conclusion. of thå hearing, the Appeals- employee must determine whether and how to proceed with collection, taking into account, inter -alia, the" iss es properly raised by: the taxpayer. Sec 6330 (c) (3) . We have jurisdiction to review the Appeals Office's determinations .- -Sec . 6330 (d) . Determinations with respect to the underlying tax liability are reviewed de novo, whereas determinations concerning co lection matters are reviewed for abuse,of discretion. Sego v -Commissioner,- 114 T.C. 604,2610 (2000) ; Goza v. Commissioner 114 T.C. 176, 181-182 (2000) . In hist motioni responde t asserts that the sole issue petitiorier raised during the hearing requested pursuant to, section 6320 (a) (3) (B) .and (b) (CDP hearing) was whether the prior re jection of petitioner' s OIC' by, respondent s .Appeals Of f icesin the 2004 admirïistrative proceeding was proper. Petitioner does ..reamleimm. snot dispute that.assertion in his response to respondent's motion. He asserts instead merely that "appropriate consideration"i was not given to his OIC in the 2004' administrative proceeding. We -therefore conclude that the only issue petitioner raised at his CDP hearing that remains'beforetus is the irejection of his OIC as a collection alteknative to the lien." In his submissions, petitioner argues that the CDP hearing officer erred in refusing to consider his OIC,1 claims that the OIC had not received appropriate considèration in the 2004 administrative proceeding, and advances arguments in support of the merits of his OIC. Respondent contends that petitioner's OIC "As noted, petitioner's OIC as originally submitted to the the OIC at, his CDP hearing could be construed a,s the underlying tax liability for there was'doubt as to liability with resyent to the to collection action has had "an opportunity to dispute offer examiner and reviewed by the Appeals Office included a claim that estimated tax addition for 1999. Given this doubt as to liability claim in the OIC, petit'ioner's attempt to renew consideration of a challenge to a portion of 1999. However, petitioner was precluded from challenging the underlying tax liability at his CDP hearing pursuant 6330(c) (2) (]B), which precludes such a challenge where the person subject such tax liability." pursuant with the notice of constituted "an opportunity to dispute" his underlying tax liability for 1999 within the meaning of sec. 6330(c) (2) (B). Bell v. Commissioner, 126 T.C. 35-6, 358 (2006) ; McCollin v. Commissioner, T.C. Memo. 2010-93; Nelson v. Commissioner, T.C:·3 Memo. 2009-108; Miller v.- Commissioner, T.C. Memo. 2007-35. was thereforeeprecluded pursuant from disputing the underlying tax liability for 1999 at his CDP hearing held with respect filing. to sec. 6330, which petitioner received in connection intent to levy mailed to him on Feb. 10, 2004, to sec. 6330(c) (2) (B) to the notice of Federal tax-lien Sec. 6330(c) (2) (]B). The offer of a hearing to sec. See He l - 10 - had been previously -considere and rejected by the 'Appeals, office in the 2004 administrative pr ceeding änd, consequently, pursuant to section 6330 (c) (4) could nþt-be raised at the CDP -héaring. Section 6330 (c) (4) , as applicable to petitioner's hearing request, " provf ded as sfollow : SEC. 6330 (c) . .Matt rs Considered at Hearingl.:-In the case of any hearing conducted under this section-- * * * * * * * (4) Certain is ues precluded.--An issue may not be raised a the hearing if - (A) sthe i sue wasoraised and considered at a previous hearing under section 6320 or in any other previous administrative sor , judicial proceeding; -and L . -1 (B) the p rson seeking to raise the issue participated meaningfully in such hearing or proceeding. Consáquentlf, the propriety of the -CDP hearing of ficer' s refusal to consider the OIC depends upon-whether the OIC was "raised and conåideNd at a * * * previou administrative * * * proceeding" and whether petitioner "parti ipated meaningfully" in the revious' proceeding "Sec . 6330 (<c) (4) applies !!to hearings econcerning liensdelde pursuant to sec . 6320 . Sec . 6320 (c ) . TSec. 6330 (c) (4) was amérided in the Tax Relief and Heilth Care Act of 2006, Pub. L. 109 432, div. A, sec. 407(b)t(2), 120 * Stat . 2961, so that subpars . (A) . (i) and (ii) of subpar. A) and (B) were redesignated cls . 11 - There can- be no dispute that petitioner's OIC was "raised" in the 2004 administrative proceeding. It was the sole subject of the 2004 administrative proceeding; thes2004 Appeals officer reviewed -the offer 'examiner''s rejection of the OIC and sustained it. Nor can it be disputed that the OIC for which petitioner contended, in his CDP hearing was the same collection alternative considered in the 2004 administratives proceeding. Petitioner ~^2 attached to his' CDP hearing .request the same six pages of the , Form 656- attachment, containing theeexplanation: of his offer. based on effectivertax administration, that-he had attached to the Form 656 he submitted in the 2004 administrative proceeding.9 Finally the 2004 administrative roceeding was indisputably an "administrative * * *' proceeding" within the meaning section 6330 (c) (4) ; the 2004 Appeals -officer's review of "Respondent contends that the Form .656 and the Form 656 they were, the administrative i-ecord in this case We Even assuming the Form 656 and the Form 656 ättachment attachment are not part of because the CDP hearing officer did not review the documents. disagree . were not reviewed by the CDP hearing officer, nonetheless a part of petit'ioner's administrative file and were therefore available for her review. Moreover, petitioner submitted six of (labeled as such, covering petitioner's explanation of effective tax administration grounds fo'r his OIC) as an attachment undisputably reviewed the Form 12153 and its attachment . Consequently, of Labor, 885 F.2d 551, concerning the 2004 Appeals officer's Nov. 12, 2004, cited in our findings. the Form 656 and the Form 656 attachment are part the Form 656 attachment the - to his Form 12153. The CDP hearing officer the seven pages of the administrative record. See Thompson v. U.S. Dept. of -553 556 (9th Cir. 1989) . The same is true letter, 4 - ,12 - the reje'ction -of s petitioner'à OIC was performed- ïn accordance with section 7122 (d) . 1 - Whether petitioner's OIC was "considered" in the 2004 admini-strative proceedingsrecluires a closer look fortpurposes of summary: judgment . . Pe t itione contends in -hi s obj e'c t ion to ^ 4 respondents s motion that his OIC, did not receive "appropriate" consideration, that the offe examinerarejected it solely onathe basis of ability to pay, and that the -2004 Appeals officers who reviewed the rejection andosustained it "shortshrifted me and refused, to make an appropriat e effort to learn about my ! situation." In connection-with petit ioner's CDP hearing,s the CDP hearing officer took the position th4t further consideration of a petitioner's OIC was foreclosed by virtue of the 2004 . e administrative proceeding. Implicit in this position was the CDP hearing officer's conclusion that petitioner's OIC had been "considered" in the 2004 administrative proceeding for purposes of section 6330 (c) (4) .' The basis for tl e CDP hearing officer' s conclusion is reflected iri h r notes, recorded in the Appeals case activity records for thè CDP hearing, which state that she reviewed the entries in the ppeals case activity records and the Appeals case memo (2004 App 1s case memo) prepared by the 2004 "Sec. 7122,(d) was redesignated sec;.7122(e) in the Tax i Increase - Prevention and Reconciliation Act - of 2005, Pub. L . 109-222, sec. 509(a), 120 Stat. 362 (2006). - 13 - Appeals officer. The CDP hearing officer's notes ,contain a level of detail with respect of the content ofisthe 2004 Appeals case ' memo--the nature- of petitioner's OIC, the name of the 2004 Appeals officer, and the Internal Revenue Manual (IRM) provision upon which the rejectiorr was based, IRM pt. 5.8.-11.2.2(3) (May 15, 2004) --which persuades us that there is "no genuine issue 'of material fact concerning whether the' CDP hearing officer reviewed the record of the 2004 administrative proceeding in reaching 'the conclusion that petitioner's OIC had been "considered" in' that" proceeding. Moreover, the CDP hearing officer had befo're her petitionet' s written description of the OIC that he had' submitted in the 2004 administrative proceeding.' Thus," the CDP hearing officer could compare petitioner's-submitted grounds for the OIC with the 2004 Appeals case memo in reaching her determination" that the OIC had been "considered" in the 2004 administr'ative proceeding. Our* own examination of' ther Form 656 attachment and of the 2004 Appeals case memo analyzing it persuades us that the CDP hearing of f icer' s determination that petitioner' s' OIC had been "considered" in the 2004 administratiire proaeeding was proper. Petitioner contende that the 2004 Appeals "officer's consideration of' his OIC in the 2004 ~ administratïve - proceeding was inadeouate--that the 2004 Appeals officer did not make the* "appropriate ef fort" to understand his - situation and, in essence, - 14 - di.d not grasp his arguments based on effective tax administration. However, as discussed -below, a comparison of two documents in- the administrative record--the Form 656 attachment and, the 2004 Appeals case sme o--is sufficient to convince us that there-is no genuine, issue of material fact and that respondent is entitled to. a decision in hi favor as a matter of law on the issue of whether petitioner' OIC was "considered" in a prev,ious administrative proceeding wi hin the meaning ofesection 6330 (c) (4) . In the Form. 656 attachmènt, petitioner explained that his grounds for. seeking an offer in-compromise,based on effective tax administration were the lack of ''proportionality" in ahis tax liability arising from the f c,t that he had realized large capital gains in 1999 as a result of sales of stock of a high technology company that .occu$red during the last week of that year,- while -in 2000 he had i curred large capital losses as, a result of - stock sales of companies in the same sector. But for the fact that his capital ga ns and losses straddled taxable s years, petitioner contended, he would have been able to offset the gains with the losses, with the result that his 1999 capital gains would not have resulted in any signi-ficant income tax liability, - Petitioner further suggested that the unfairness of his,circumstances was exacerbated by ±the fact thats thessettlement ! dates for many of the late-1999 stock sales occurred in 2000. As - 15 - an additional circumstance?of unfairness, petitioner cited the fact that the stock he "sold at' a gain in 1999 had been acquired through the exercise of incentive stock options 'in an earlier unspecified year and that lus had incurred and paid alternative minimum tax (AMT) of $3,962.35 as a result of the'exercise of the incentive stock options In petitioner's view the fact that he also incurredsa capital gains tax liability under the regular tax upon the sale of the stodk in 1-999 constituted double taxation. The Form 656 attachment further- stated that-petitioner had calculated his $8,974.02 offer'by computing the 1-999 income t'ax he would owe if his 2000 capital losses (and certain interest expense incurred after 1999) were allowed to offset his capital gains for 1999 and he were given a credit against the 1999 liability -for the $3,962.35 in AMT paid when he acquired the stock pursuant to incentive stock options . Irf 'addition, the Form 656 attachment.cited as an argument for acceptance -of - petitioner's OIC his contention that he had been "burned" in 1987 by the operation of section 422 when he sought i to exercise incentive~ stock options upon his departure from a company at that time. In petitioner's view, the complexities of section 422, which he could not understand, had resultedain the dompany's refusal- to allow him to exercise the most valuablë of the options he held, and in his aircumstances he was unable to effectively contend otherwise. - '16 - The Forma 656 attachment also discussed spetitioner' s compliance history, maintain ng that -there r were .mitigating circumstances, for his failure to timely file -for 1999, and that his failure to timely file .for 2000 through 2002 was excusable because the had overpaid this axes -for those years. i Finally, the Form 656. attachment .cited -pet itioner' s precariouse financial condition arising from his d fficulty in finding employment and the fact that, the unresolvedd1999 tax liability would probably preclude his borrowing against the equity ïn his house to pay off certain ynspecified unsecureci, debt, necessitating a sale of the hous e . In ther Internal Revenue Service Restructuringr and Reform Act of 19985, Pub.. L. 105-206, see. 3462(a),n112eStat. 764, Congress added section 7122 (c) , ,direct ing the Secretary to "prescribe guidelines for officers and mployees of the Internal Revenue Service to determine whether an of fer-in-compromise is adequate and should, be accepted to resolve a dispute." The legislative history indicates that Congr ss -intended that the guidelines provide forecompromises of ir come tax liabilitiesa on, the basis of factors other than doubts as to liability or collectibility, such as compromises to "promote effective taxe administration." H Conf./Rept. 105-599, at 289 s(1998), 1998-3 Cl.B. 74'/', 1043 a Regylations adopted pursuant to section 7122 set forth guidelines for evaluating offers-in-compromise to promote - 17- - effective tax administration (ETA offers) Under-section 301.7122-1(b) (3) (i) , Proced. & Admin.. Regs. ETA offers may be accepted where collection in full could be achieved but would cause economic hardship, or, under section 301.7122-1(b) (3) (ii), Proced. & Admin. Regs.,-even where collection in full could be achieved without economic hardship: the IRS may compromise to promote effective tai administration where compelling public olicy or eguity considerations identified by the taxpayer provide a sufficient basis for compromising the liability.- Compromise will be justified only where, due to exáeptional circumstances, collection of undermine public confidence that administered in a fair and equitable manner. proposing compromise under this paragraph -(b) (3) (ii) will be expected to demonstrate circumstances that justify compromise even though a similarly situated taxpayer may have paid his liability in full. the full liability would the tax laws are being A taxpayer The regulations cite as examples of appropriate circumstances for accepting a "non-hardship" ETA offer a taxpayer whose medical condition rendered him unable to manage iny of his financial affairs for many years who seeks t& compromise his liability when the medical disability ends, or a taxpayer who incurs a tax liability as a result of erroneous 'advice received froin the IRS. Sec. 301.7122-1(c) (3) (iv), Proced. & Admin. Regs. Even in the foregoing circumstances, the regulations provide that acceptance of a compromise is within the Secretary's discretion. Id. Additional detailed insŠructions concerning acceptance of - 18 - nonhardship ETA offers .are c ritained,in the IRM. 5.8.11 2 2 Public Policy or Equity Grounds (05-15-2004) the Service may 1. Where there is no Doubt as to Liability (DATL) , no = Doubt as -to Collectibility (DATC) , and the liability could be collected in full without causing economic hardsh p, compromise to promote Effective Tax Administration (ETA) where compelling dublic policy or equity considerations identifijd by the taxpayer provide a sufficient basis for accepting less than full payment. - Compromi'se is authorized on this basis only where, due to exceptional circumstances, collection in full woul undermine public confidence that the tax laws are being administered in a fair änd equitable manner. « Because the Service assúmes that Congress iniposes tax liabilities only where it determines it is fair. to do so, compromi e on these grounds will be rare. , 2. The,Service recognizes that compromise on these grounds will often raise the issue of disparate treatment of in full and whose liabilities arose under subs tant ially -s imilar c ircumstances . seeking compromise on this basis bear the burden of demonstrating circumstar ces sthat are compelling enough to justify compromise notwithstanding this inherent taxpayers who can pay Taxpayers inequity. r - 3. Compromise on publi policy or equity grounds is not authorized based ásolely on a taxpayer' s belief that a provision of law is itself unfair. Where a taxpayer is clearly liable for, taxes, penalties, or interest due to op~erati n of that the law is unf air ould undermine ethe law, a f inding the t·ax MThe IRM provisions set out above are from the version applicable as of May 15, 200 , covering the period when the Appeals officer determined that rejection of petitioner's OIC should be sustained. - 19 - will of Congress in imposing liability under those circumstances. Examples provided in the IRM of instances where - compromises sought on grounds of inequity would not promote ef fective tax administration and should be- rejected include a taxpayer's claim that a tax liability resulting from dischargé of indebtedness rather than from wages is inequitable, or the claim of a taxpayer-partner that his tax liability arising from a TEFRA partnership-level proceeding is-unfair because it is due to the actions of the tax matters partner.' Id. The 2004 Appeals case memo states as follows with respect to petitioner' s compliance history: The taxpayer did not file income tax returns for 1999 through 2002 until after he received an SF'R [substitute for return] statutory notice of deficiency on the 1999 period on 4-16-03; he subsequently filed returns for all 4 periods on 6-16-03. overpayments, were processed prior "to the posting of 1999 balance due assessment The 2Ø00 through 2002 returns, which reflected the . * ** * We conclude that there is no genuine issue of material fact concerning whether petit-ioner' s compliance history as - raised in the Form 656 attachment was considered in the 2004 administrative proceeding . " "Moreover, the 2004 Appeals case memo did not cite petitioner's noncompliance as a factor in sustaining the . rejection of his OIC. Admin. Regs. See sec. 301.7122-1(c) (3) (ii) , Proced. & The 2004 Appeals case m mo states as follows with respect to - 20 - economic hardship: The taxpayer is 45 years old and single, with no dependents . He is a computer .softwa e engineer; he indicated thatshe was unemployed at Information Statement, stated that he was doin free-lance consulting work which was generating income. the time 1 e completed the Collection ut during the appeals conference he * * * * * * * a a The COIC [Centralized O fer in Compromise] Examiner did not verify the taxpayer's financial "Full Pay Worksheet" baded, on the taxpayer's own figuress from his CIS [Collection Information Statement]. indicated that of $208,486. property; $45, 778 in -bråkerage and sinvestment accounts ; and $13,188 in vehicle equity (2 vehicles). the taxp(yer had NRE [net realizable equity] This consisted of $149,520 NRE in real information, but completed a This * * * * * * * imminent eizure .of his house was not ,he will be forced 4to sell his house in As form the economic hardship factors, the -taxpayer really raises nothing more than his assertion that if the tax is not compromiséd, order to pays his mother tback the $$6, 000 that he borrowed from her. Both the -COIC Examiner and I explained .to the taxpayer that contemplated, and the COIC Examiner suggested that while the taxpayer was unemployed, currently not collectib e, after the filing of a notice -of federal unsecured loan f rom the taxpayer' s mother should be considered as having a purposes of an OIC anal sis. relatively young, has no children, and has no health problems--all economic hardship crite:dia have been met . factors generally considered in determining if riority over the tax liability for, the liability could be reported, as The taxpayer is also * But there- is no reason that the - tax lien. * * We conclude there is no genuine issue of material fact concerning whether petitioner' s economic hardship as raised in the Form 656 attachment was considered in the 2004 dministrative proceeding. - 21 - The 2004 Appeals case memo states as follows with respect to the Form 656 attachment's explanation of peti-tioner's- reasons that his OIC based on effective tax administration should be accepted: the taxpayer claims only As for ,the equity considerations, that it is not fair that he can't use his stock losses in later years to immediately and fully offset the gains-he experienced in 1999, and he complains that difficult to understand. IRM 5..8.11.2.2(3), compromise on public policy or equity grounds is not authorized based solely on a taxpayer's belief that a provision of the tax law is itself unfair. Where a taxpayer is clearly liable for taxes, penaltiest or interest due to operation of finding that Congress in imposing liability under those circumstances. the law is unfair would undermine the will of Per IRC § 422 is law, a The 2004 Appeals case memo demonstrates that the 2004 Appeals. officer was,aware of petitioner/s argumentrin the Form 656 attachment that his inability to offset 1999 capital gains with 2000 capital losses should constitute effective tax administration grounds for compromising his liability.. The Appeals officer did not accept the argument, -but her failure to do so in these circumstances does not show.thatsshe failed to adequatelyaconsider it. :Instead, her decision to reject. such a ground reflects a straightforward app ication -of IRM pt.: a 5.8.11.2.2(3), to the effect that a,nonhardship effective tax administration compromise.is not authorized where it is based - solely on the taxpayer's claim that the tax law itself is unfair, as compromise of the tax in such circumstances would thwart the will of Congress. Congress first enacted a capital loss carryforward for individuals†in 1938, see Revenúe Act of 1938, ch. 289, sec. A117(e), 52 Stat. 502,15 but -Congress has not provided for a,capital loss öarrvback, -the principal unfairness identified by petitioner as grounds for an effective tax adininist'ration compromise . See secs . - 1212 (b) , 172 (d) (2) (A) ; see also Merlo v. Commissioner, 126 T.C.> 205 (2006) ,« affd. 492 F.3d 618 (5th Cir. 2007) . We con lude that there is no genuine issue of måterial fact and that respondent is entitled to-summary judgment on the issue of whet hei- pet'itioner' s capital eloss carryback argument was "considered" in a prev2.ous administrative proceeding within the ,meaning of se~ction 6330 (c) (4) . The same~ considerations apply with respect to petitioner s contentions that section 422 is too complex. In the Form 656 attachment, petitioner cited in support of his OIC a 1987 incident where. he contends that his inability to understand section 422 rendered him unable to negotiate ef fectively with a former employers who would not allow him. to exercise the most valuable of certain incentive stock options he had been granted pursuant - to that - employment . The Appeals case memo' s re f erence to petitioner's complaint that section 422 is difficùlt-to understand demonstrates that the32004-Appeals officer- was aware of7petitioner's section 422ea gument.- Her refusal to treati the 1sThe càpital loss carr rwÉrd provis n for dividuals is current ly codi f ie d as se c . 1212 (b) . - 23 - argument as grounds for an effective tax administration compromise<does not support any inference that, she failed to consider it'; - rather, her treatments reflectsra straightforward application of IRM pt. 5.8.11-.2.2(3) . Moreover,. the ];987 incentive stock options incident did not" result in the- 1999 income tax liability for which petitioner was seeking compromise. We conclude that there is no genuine issue of material fact and that respondent is entitled to summary judgment on the issue of whether petitioner's section1422 complexity argument was "considered" in a previous administrative proceeding- within the meaning of section 6330(c) (4). The Appeals case memo does not mention the argument in the Form 656 attachment concerning the settlement dates of petitioner's 1999 stock sales; i e., petitioner's contention that the unfairness of his inability to offset his 1999 capital gains with his 2000 capital losses is exacerbatedaby the fact that the settlement dates for his 1999 stock sales occurred in 2000. Viewing the silence of the Appeals case memo in the light most favorable to petitioner, we draw the inference that the Appeals officer, failed to-consider the settlement date argument. But any failure of'the Appeals officer or, subsequently, the CDP hearing officer," to consider the settlement date argument was harmless "We assume arguendo for purposes of deciding respondent' ss motion that if the settlement date argument was not considered at (continued...) 4 - 24 - error. The Internal Revenue Service's use of the trade date, rather than the, settlemente date, as the date of a stock- sale for Federal -income tax ,purposess fol'lows expressed congressional intent. See Rev. - Rul.a 93-84 1993-2 C.B'. 225 (citing Sr.. Repta 99-313, at 131 (1986) , 1986-3 C.B. (Vol. 3) 1, 131 and H., «Conf . Rept. 99-841 (Vol. II), at I 297 (1986), 1986-3 C.B. (Vola 4) 1, 297:) . Thus,a any claim by. petitioner that the use of his 1999 trade dates rather than his 000 settlement dates created unfairness justifying an effective tax administration'compromise would- also clearly run afoul of IRM pt. 5.8.11.2.2 (3) : Since the- settlement date argument would not have provided any basis sfor an effective tax administration compromise,-any failure to consider the argument in. the 2004 administrative proceeding' or in the CDP el hearing would not have affect ed the outcome of either and is not a bar to summary judgment . Finally, the Appeals ca(e memo did not reference petitioner's AMT argument to the effect that a portion of his effective tax administration compromise sh'ould be, based on his y having earlier paid- AMT when he exercised incentive stock -options to acquire the stock- whose sale in 1999 generated the tax liability .petiitioner sought do compromise. ' Petitioner considered " (. . . continued) the 2004 administrative proceeding, forsconsideration, at petitiorer's CDP hearing with respect liena it would have been preserved to the - 25 - the earlier AMT liability and the subsequent capital gains tax liability arising from the same stock-to constitute unfair double taxation that should support seffective tax administration relief under section. 7122. As with petitioner's settleinent date - argumênt, we draw the inference most favorable to petitioner that the Appeals case memo' s silence regarding petitioner' s AMT argument indicates that the Appeals officer failed to consider it. However, we have previously considered and rejected the claim that the tax liability arising from the treatment of incentive stock options under the: AMT regime should be eliminated on fairness grounds thröugh an effective tax administration compromise of the liabi]:ity pursuant to section 17122. See: Speltz v. Commissioner, 124'T.C. 165 (2005),--affd. 4542 F.3d 782- (8th Cir. 2006)3.. In Speltz, the taxpayers, like petitioner, argued that an Appeals of f icer had " ' f ailed - to properly consider' " , and had abused his discretion in re.jecting; their ETA offer premised on the "'unintended and unfair'" tax liability caused by the treatment of incentive stock options under thesAMT27 Id. at "The t'axpayers in Speltz v. Commissioner, 1Ž4' T.C. 165 (20 05) , af f d. 454 F . 3d - 782 (8th Cir . 20 06) , had incurred . a . substantial AMT liability upon the exercise of options, only to have the acquired stock decline precipitously in value before it was sold. modest AMT liability when he exercised incentive stock options, and he then sold the acquired stock in 1999 at a substantial gain. In contirast, petitioner 'incubred a incentive stock 175. -Concluding that, a compiomise of the liabi'lity pursuant to section 7122 was not appropriate, we observed: 26 - the statutory scheme [for the We cannot conclude that section 7122 gives incentive st ock- options] by administrative or Accepting petitioners'- ýosition would result in nullification of a port on of taxation- of judicial action. the Court a license to .make adjustments to complex tax laws on a case-by-case basis * * * Moreover, we cannot conclude that it is an abuse of cliscretion for the-Appeals officer to decline to do so. Appeals officer correctly applied the provisions of regulations and of those portions cautioning against granting relief based one inequity where to do so would undermine congressional intent. In this case, we conclude that the the - the internal Revenue Manual, specifically [Id. at 178-179t] Because petitioner' s AMT argi ment would not have constituted proper grounds ifor acceptance" of an. ETA- offer, any failure by the 2004 Appeals officer or, sub equently the CDP hearing office to consider it was. harmless error. Since petitioner's AMT argument would not have provided.any basis for an effective tax administration comproma.se, a y failure to consider the argument in the 2004 administrative proceeding or in- the - CDP hearing would not have affected the outcothe of either and is not a bar to summary dudgment . The Appeals case memo dëmonstrates that the 2004 Appeals officer considered petitione 's compliance history and economic hardship issues, raised in the Form 656 attachment and concluded that petitioner had not showñ economic hardship (änd-did not treat his compliance history as an adverse factor) . The Appeals case memo fürtner demonstrat s that the 2004 Appeals officer --27 - considered the capital loss carryback and.section 422 arguments raised in the Form 656 attachment as grounds for petitioner's OIC, and rejected them as inadequate grounds for a.nonhardship effective tax administration compromise, pursuant t.o IRM pt. 5.8.11.2.2(3) . As for petitioner'ssremaining arguments in the Form 656 attachment, even if it is assumed that.the 2004 Appeals officer didsnot consider petitioner's settlementadate or AMT arguments, these -arguments-are so clearly precluded byiIRM pt. 5.8.11.2.2(3) as grounds for an ETAnoffer that any failure to consider them was harmless error. After a careful review of petitioner's explanation.oft his OIC in the: Form 656 attachment, we find.that he advanced no other arguments. Petitioner's principal grievance concerns his inability to carry back a capital loss from 2000 to offset a capital gain for 1999. Allowing him to do so would'nullify the statutory scheme for capitalelosses that has been in place för over 70 years. Given the-,nów widely recognized performance of high technology a stocks over 1999 and 2000, there is every reason -to believe that petitioner's experience was not an isolatedoone. Granting petitioner an effective tax administration compromise of his' liabilities on this ground would give him disparate treatment as compared to similarly situated taxpayers without sa compelling justification, in contravention of the-guidance in the regulations and-the IRMe "See sec. 301-.7122-1(b) (3).(ii); Procedf -' 28 - & Admin. Recjs . ; IRM pt . 5.8 .11. .2 (2) . - The same can be said- for petitioner' s grievances with respect ! to the treatment of incentive stock options unde the AMT regime, ¯ the complexity of section 422 generally,. and tl e use of trade rather than settlement dates for establishing the timing of a capital, gain. ör loss. e Eacht represents'a claim that a provision of the tax law is unfair. - The 2004.-Appeals officer's rejection of petitioner's grounds for an effective'tax administration compromise does not demonstrate a lack of ' "consideration" of the issue; her decision reflects adherence to the reculations and- IRM. See Speltz v. Commissioner, supra at :178--i 9. Wer accordingly conclude that respondent is entitled to sunŸmary judgment on the issue "of - whether- the OIC petitioner s ught to raise in his CDP hearing was "considered" -in a previous administrative proceeding withinathe meaning of section 6330 (c) (4) (A) . The remaining issue is whether petitioner "participated meaningfully" in the previous administrative proceeding within the meaning of section 6330 (c) (4) (B) 7 Petitioner contends in rhis objection to respondent's motion that thes2004 Appeals -officera "hung .up the phone on me as I pleaded-for a hearing". The officer's entries,in the Appeals case activity:records confirm that she hung up on petitioner, though her entries -reflect rthat she did so after petitioner insisted on going over ,his Form 656 attachment line by line and "she had advised him that all, relevant -029 - issues had been discussed, in her view Weldo not resolve the participants' versions of these eventà for-purposes of summary j udgment . Ins t ead, pe tit ioner ' s submis s ion of the de t ailed Form 656 attachment which is undisputed, and the 2004 Appeals case memo, which establishes that the 2004 Appeals ófficer reviewed the Form 656 attachment, are sufficient standing alone to demonstrate that petitioner "participated meaningfully" in the 2004 administrative proceeding within the meaning of section 6330 (c) (4) (B) . Respondent is entitled to summary judgment in his favor on that issue. Since, we conclude that respondent is entitled to summary judgment in his favor on the issues of whether the OIC that petitioner sought to raise at his CDP hearing had been "raised" and "considered" at a previous administrative proceeding in which petitióner "participated meaningfully" within the, meaning of section~6330 (c) (4) , it follows that respondent is entitled to summary judgment in his favor on the issue of whether the CDP hearing officer's refusal, pursuant to section 6330(c) (4), to consider petitionér's OIC at his CDP hearing was proper. As the rejection of his OIC was the sole issue petitioner raised at his CDP hearing, it further follows that respondent is entitled to judgment as a matter of law that the lien at issue in this case may be maintained. n P 1 - 30 - 4 To reflect the foregoinc .,e • % , ria , An appropriate order and i decision wil] be entered. 1 .H 4 1 q 4.