TAX COURT OPINION

Case: Eberto Cue
Docket Number: 21404-18SL
Judge: Goeke
Opinion Type: bench
Filed: 12/02/2019
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 EBERTOCUE, Petitioner(s), v. ) ) ) ) ) Docket No. 21404-1 8SL. 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 herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at Miami, Florida containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for petitioner. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. December 2, 2019 SERVED Dec 03 2019 Bench Opinion by Judge Joseph Robert Goeke 3 November 15, 2019 Eberto Cue v. Commissioner Docket No. 21404-18SL 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. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This case was conducted under section 7463(a) of the Internal Revenue Code, which the petitioner elected. 1 2 3 4 5 6 7 8 9 10 11 12 Pursuant to section 7463(b) that decision we enter in this 13 14 15 case shall not be reviewed in any other court. This opinion is rendered pursuant to section 7459(b) and Rule 152 of the Tax Court Rules of Practice and procedure. 16 Hereinafter, references to sections are to the Internal 17 Revenue Code in affect for the years at issue in this 18 19 20 21 case. In this case the petitioner challenges the filing of a federal tax lien for the years 2013 and 2014, income tax liabilities. The underlying liabilities, 22 penalties, and interest are not in dispute. This Court 23 24 has jurisdiction under section 6320(b)(4) and section 6330(d)(1). The petitioner filed forms 1040 for taxable 25 years 2013 and 2014, but the petitioner failed to fully cribers (9/3)406-2250loperations@escribiers.netj www solbetsået 4 pay each respective liability for those years. Respondent assessed the tax liabilities, penalties, and interest. For two years before respondent filed the Notice of Federal Tax Lien in this case, the petitioner's tax liability was deemed uncollectable by respondent. The letter 3172 Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC Section 6320 was issued by the respondent on May 3, 2018. This notice advised the petitioner that respondent had filed a federal tax lien due to unpaid income taxes for the years 2013 and 2014. During the period while petitioner's taxes were deemed uncollectable, the petitioner did take steps to pay an outstanding obligation to the authority that ran his condo association, and sold a parking space for $17,000. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 This event and petitioner's employment, which was obtained 16 17 18 19 over this two-year period may have triggered respondent's scrutiny of petitioner's situation two years after his tax liability was deemed uncollectable, but in any event, respondent determined to file a Notice of Federal Tax 20 Lien. After the filing of the Notice of Federal Tax Lien 21 22 on June 1, 2018, the petitioner mailed Form 12153, Request for a Collection Due Process Hearing to the respondent. 23 Petitioner requested that the notice of Federal Tax Lien 24 be withdrawn, because of his currently non-collectable 25 status, but he did not contest the underlying tax cribers liabilities or propose collection alternatives. 5 Respondent acknowledged the receipt of the Form 12153, and advised the petitioner that he would have an opportunity to discuss his disagreements relative to the filing of the Notice of Federal Tax Lien, and seek collection alternatives in a letter dated July 31, 2018. On August 13, 2018 the settlement officer held a telephone conference with the petitioner. The settlement officer had prepared three options, which she proposed to the 1 2 3 4 5 6 7 8 9 10 petitioner during that conference. These options would 11 12 lead to the withdrawal of the Notice of Federal Tax Lien, based upon the settlement officer's representations to the 13 Petitioner on the telephone call. This is verified by the 14 15 16 17 18 settlement officer's notes. These three options were that the petitioner enter into a direct debt installment agreement for $475 a month to pay off the account within 60 months; second, that the petitioner fully pay his tax liabilities; and third, that the petitioner provide 19 documentation showing that he would lose his job if, in 20 21 fact, the Notice of Federal Tax Lien was not withdrawn. Petitioner had made the representation that the 22 Notice of Federal Tax Lien would have major repercussions 23 on his employment with the bank, if in fact, it was not 24 withdrawn. Following the phone call, petitioner sent a 25 letter dated August 14, 2018 together with the cribers 13)4002250|pperat ns@exribersnetlwww.esalbetsmet 6 documentation in support of his position that the lien would adversely affect his employment. He noted that he was licensed in his position with the bank, and he sent information which demonstrated that his license could be in jeopardy if he had outstanding tax liens. Among the documents the petitioner submitted was a document which showed that he had to authorize the licensing officials to do a credit check on him, and that if this credit check demonstrated outstanding federal tax liens that would be noted by the licensing officials aversely to his request to renew his license, which he had to renew every year based upon his position with the bank. The settlement officer considered this information, but made a determination that the petitioner 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 was already in breach of the licensing requirements, apart 16 from the Notice of Federal Tax Lien filing. The 17 18 settlement officer did not seriously consider petitioner's documentation, which would demonstrate that he would lose 19 his job if, in fact, the Notice of Federal Tax Lien was 20 not withdrawn. The Notice of Determination subsequently 21 was issued based upon the settlement officer's 22 determination that the Notice of Federal Tax Lien should 23 not be withdrawn. On September 26, 2018, in that Notice 24 of Determination the settlement officer explained as 25 follows. *0n August 27, 2018 the officer called you and cribers (9M)406-280 p taÑonse scribersnet wwwescribersmé 7 explained that the lien would not be withdrawn. The officer explained in the documentation that you sent it clearly stated that a person has shown that he is not financially responsible when he has shown a disregard in the management of his or her own financial condition. The officer explained that you already met that criteria when you owed the federal government, and when your home was foreclosed. The officer advised that she will be sustaining the lien, and the account will remain in currently non-collectable status. You had no further questions Subsequently, the petitioner filed a timely 1 2 3 4 5 6 7 8 9 10 11 12 13 petition in this Court to seek review of this 14 15 16 17 determination. The Notice of Determination also contains the following information. "The filing of the federal tax lien makes the IRS a secured creditor, which protects the government in the event that you sell assets or file 18 bankruptcy. You failed to demonstrate that the Notice of 19 Federal Tax Lien was overly intrusive, or that better 20 alternatives are available, and it is my judgment that the 21 Notice of Federal Tax Lien balanced the efficient 22 collection of taxes with your legitimate concern that the 23 collection action be no more intrusive than necessary." 24 Following the Notice of Federal Tax Lien, 25 Petitioner, based upon his responsibilities pursuant to 73j406-2250foperations@escribers.net{vrawiscribershet 8 the license he had received, discussed his status with his employer and his supervisor. After some discussion with other authorities within the bank, the petitioner was advised on August 19, 2018 as follows. ½ You are ineligible to remain in your current position due to your outstanding tax lien. Subsequently, petitioner lost his position with the bank, as he was not able to obtain a position in the bank for which his license was not required. Petitioner testified that he remains unemployed to this day and has supported himself through unemployment benefits and the assistance of his wife up to this point. It's noteworthy 1 2 3 4 5 6 7 8 9 10 11 12 13 that petitioner's loss of his position eliminates his 14 ability to make reasonable payments on his tax liability, 15 16 and that the conditions set by the settlement officer included an amount which the petitioner could not possibly 17 pay given his financial status. It is noteworthy that 18 neither the petitioner nor the settlement officer proposed 19 a lesser amount of monthly payments as a way that the 20 petitioner could avoid a Notice of Federal Tax Lien 21 22 23 24 filing. When the underlying tax liability is properly at issue, the Court decides the issue of liability de novo, Sego v. Commissioner, 114 T.C. 604, 610 (2000). Since the 25 underlying tax liability is not at issue in this case, the cribers Court will review the appeals officer's determination based upon an abuse of discretion standard. Giamelli v. 9 Commissioner, 129 T.C. 107, 114 (2007). It is well established that when considering the collection alternative and balancing that alternative with the intrusion on the taxpayer, the appeals office must consider the relevant evidence that has been provided by the taxpayer. Olsen v. United States, 414 F.3d 144 (1st 1 2 3 4 5 6 7 8 9 Circuit 2005). In appl Šthe abuse of discretion standard 10 11 this Court must determine whether the appeals officer dó exercised discretion in an arbitrary,a capricious,3 or or 12 without sound basis in law. ßeshiens Battle v. 13 Commissioner, T.C. Memo 2009-171, and Woodral v. 14 Commissioner, 112 T.C. 19 (1999). 15 16 This case boils down to the conditions provided by the settlement officer to the taxpayer and whether the 17 analysis made by the settlement officer of the condition 18 relative to the loss of employment was reasonable, or was 19 arbitrary. There's no dispute that the settlement officer 20 provided the three conditions I've outlined previously. 21 Her analysis that the petitioner was already exposed to 22 losing his license, because of his failure to pay the 23 24 taxes overlooked the fact that the petitioner had been employed for some time, and was in a position to generate 25 income, which ultimately may have been used to pay the tax cribers liability. 10 The petitioner placed his tax obligations behind debt associated with his residence, and he had a history of not paying his tax liabilities after having experienced financial setbacks in the end of the first decade of this century. However, it was unreasonable for the settlement officer to overlook the impact of the lien and its public filing on the petitioner's employment. Her failure to seriously consider the petitioner's assertions that he 1 2 3 4 5 6 7 8 9 10 would lose his position demonstrates that the settlement 11 officer did not seriously intend to act on the third 12 13 14 condition that she provided the petitioner in the telephonic hearing. While we believe that petitioner could have been more aggressive over the course of his 15 Pending liability in trying to reach a payment agreement, 16 17 and we note that the petitioner failed to follow through on two prior agreements, the fact that the settlement 18 officer did not seek a reasonable payment from the 19 Petition demonstrates that the settlement officer was not 20 actually interested in generating collection from the 21 petitioner, but merely wished to sustain the Notice of 22 Federal Tax Lien. 23 24 25 Given these circumstances, we believe the settlement officer's actions were arbitrary and capricious, and we sustain the petitioner's argument that Cdbers 97Ú406-2250 operatonsgescribersaet{www4sulkiershet 11 1 2 3 4 5 the Notice of Federal Tax Lien should be withdrawn. We note that having lost his job the petitioner is sa less likely w pcNs-i-t-imi to actually make payments on his federal tax liability, which is unfortunate. And we do not look at his current situation and the government's need to 6 maintain the ability to collect from the equity petitioner 7 might have in his condo in analyzing this situation. 8 9 Rather, we look at the actual analysis of the settlement officer contemporaneous with the determination, which was 10 made in this case, that analysis we find to be arbitrary 11 12 and capricious. Therefore, a decision will be entered for the 13 petitioner. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 9:46 a.m., the above-entitled matter was concluded.) 14 15 16 17 18 19 20 21 22 23 24 25 cribers 733406-2250{operations@escribertnettwwwascribersnet .