TAX COURT OPINION

Case: Reid M. Rankin
Docket Number: 12237-17L
Judge: Goeke
Opinion Type: bench
Filed: 03/29/2018
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 REID M. RANKIN, Petitioner(s), y. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 12237-17 L. ) ) ) ) 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 San Francisco, California 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 oçfact and opinion, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. March 29, 2018 SEMED MAR 3 0 2018 3 1 2 3 4 5 6 7 8 9 . Bench Opinion by Judge Joseph Robert Goeke March 8, 2018 Reid M. Rankin v. Commissioner of Internal Revenue Docket No. 12237-17L 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 10 opinion is rendered pursuant to the authority provided by 11 12 13 14 15 16 Internal Revenue Code section 7459(b) and Rule 152 of the Tax Court Rules of Practice and Procedure. Section references throughout this bench opinion will be to the Internal Revenue Code unless otherwise noted. The Court has jurisdiction to review this matter based upon a timely petition following a notice of 17 determination sustaining Respondent's proposed collection 18 activity for income tax liabilities for the years 2010 and 19 20 2011. The parties have stipulated certain facts and, as a result of that stipulation of facts, certain documents 21 were admitted into the record as evidence. 22 23 24 25 There was no further trial other than the submission of the stipulation of facts; however, counsel for the parties both appeared and made arguments based upon the record of trial. cribers (973)406-2250|operationseescrbersnet|www.escribersnet The Petitioner was a resident of California at 4 the time the petition was filed in this case. Respondent's settlement officer made a complete review of the administrative record and summarized that quite well in the notice of determination which was issued to the Petitioner and which was stipulated as part of the administrative record of the review made by the settlement officer. The collection activity that was proposed and is addressed by the settlement officer is a Federal income 1 2 3 4 5 6 7 8 9 10 tax lien, which lien was filed by the Internal Revenue 11 Service with the County Recorder of San Francisco County 12 on May the 3rd, 2016. 13 14 On June the 6th, 2016, the Petitioner submitted a Request for a Collection Due Process or Equivalent 15 Hearing for the income taxes for the years 2010 and 2011 16 regarding the notice of Federal income tax lien which the 17 Petitioner had received. In the Form 12153, which the 18 Petitioner submitted requesting a hearing, the Petitioner 19 20 21 22 23 indicated that he could not pay the balance of the income tax liability and requested withdrawal of the Federal income tax lien. The actual liability is not in dispute in this case but merits some discussion. The liability's not in 24 dispute because the Petitioner had a prior opportunity to 25 dispute the liability because the Respondent previously (973)406-2250|operationscescrasersnet|www.escribers.net 1 2 3 4 5 6 7 8 9 10 11 issued a notice of deficiency, and the Petitioner did not timely petition that notice to the tax court. The tax liabilities for 2010 and 2011 were the result of substitute for returns prepared by the Internal Revenue Service because the Petitioner did not timely file Federal income returns for 2010 and 2011. In fact, the Petitioner had not filed Federal income tax returns for the years 2010 through 2016 at the time the settlement officer began review of this case. However, the years in question are only 2010 and 2011. What happened subsequent to the settlement 12 officer's review regarding the taxable year 2010 has been 13 14 15 stipulated by the parties, and that circumstance is that the Petitioner faxed to the settlement officer a copy of the 2010 Form 1040 on or about April 18th, 2017, which was 16 prior to the actual hearing that the Petitioner held with 17 18 the settlement officer. The original liabilities reflected in the notice 19 of lien exceed $900,000, and the notice of deficiency 20 liability for the year 2010, which the Petitioner did not 21 contest, was $558,704. 22 23 24 25 Subsequent to the submission of the faxed Form 1040 for 2010, the Internal Revenue Service abated the vast majority of the tax liability for 2010 which left, for that year, an assessment of roughly $65,000. cribers (973)406-2250|operations@estrbersmet|www.escribersmet 6 1 2 3 4 5 6 7 8 9 10 11 Petitioner's counsel, in their pre-trial memorandum, estimated that the liability for both the years, after this abatement, would be approximately $94,000. However, it appears that that amount would not include interest. But in any event, the original liability, as shown in the notice of lien of in excess of $900,000 has been substantially reduced in Respondent's assessment records. This reduction generates Petitioner's arguments in the present case, which we will describe in more detail. Petitioner makes two arguments. One is that the settlement officer should have delayed the issuance of the 12 notice of determination because of the reduction in the 13 14 assessment for 2010 and because of the fact that the file d notice of lien has the much larger liability, which 15 Petitioner alleged impedes their credit rating. 16 17 18 19 20 Petitioner also argues that there's a streamline procedure which became available in January of 2017 which the settlement officer might have considered because of the reduced liability, which streamline procedure applies to circumstances below $100,000 in tax liability. 21 Petitioner concedes, however, with respect to the 22 23 24 25 streamline procedure that they did not raise the potential for this resolution with the settlement officer. And the settlement officer's notice of determination points out that the Petitioner did not submit the requested financial (973)406.2250|operationseescribersmet|www.escribers.net 1 2 3 4 5 6 7 8 9 information, which would have been necessary for the settlement officer to consider any compromise or reduced payment agreement, as well as an installment payment agreement. The Petitioner's failure to supply this information to the settlement officer and raise the necessary argument with the settlement officer is fatal to the Petitioner's argument that the settlement officer should have considered the streamline agreement. Giamelli 10 v. Commissioner, 129 T.C. 107, 115 (2007). 11 12 13 14 15 Regarding the Petitioner's argument that the settlement officer should have withdrawn the Federal income tax lien because of the reduced liability and allowed the Petitioner to negotiate some other resolution, we believe the settlement officer's notice of 16 determination has a very detailed analysis of the 17 underlying legal requirements for the withdrawal of the 18 19 20 21 22 lien and correctly determined that such a withdrawal was inappropriate at the time the settlement officer reviewed the present case. The settlement officer noted that section 6323(j) allows the withdrawal of a filed notice of lien 23 without full payment under certain conditions. We will 24 25 not review those conditions here, as they are set forth in the notice of determination. But we agree with the (973)406-2250|operationsgescrbersmetj www.escribersnet 8 1 2 3 4 settlement officer's analysis that those conditions are not applicable here, and we also agree that the withdrawal of the lien was not an abuse of discretion, in other words, that the settlement officer's determination to 5 maintain the lien and not withdraw the lien was not an 6 7 8 9 10 11 12 13 14 15 16 17 18 abuse of discretion. We also note that the settlement officer correctly balanced the IRS' need to collect this tax liability with the potential harm to the taxpayer and that the taxpayer's alternatives relative to the reduced liability were to bring to the attention of creditors the Internal Revenue Service records which reflected the reduced liability or, if the property was sold, to arrange payment of the underlying tax liabilities to obtain release of the lien, which payment would have been substantially less than the amounts originally assessed by the Respondent exceeding $900,000. Given these circumstances, we see no abuse of 19 discretion on the part of the settlement officer, and 20 abuse of the discretion the settlement officer is 21 clearly the appropriate standard for our review because, 22 as we stated previously, the underlying liability is not 23 before us. Goza v. Commissioner, 114 T.C. 176 (2000). 24 We note that the burden of showing that there's 25 an abuse of discretion or that the appeals action was cribers (973)4062250|operationseescrbersnet\www.escribersmet , 9 1 2 3 4 5 arbitrary or capricious clearly rests on the Petitioner. Pacific First Federal Savings v. Commissioner, 101 T.C. 117, 121; Rule 142(a)(1) of the Tax Court Rules of Practice and Procedure. We note that the present case is not subject to the application of section 7491 which 6 might, under certain circumstances where the underlying 7 8 9 liability was in dispute, allow for the shifting of the burden to the Commissioner. In any event, we sustain the notice of 10 determination by the settlement officer based upon the 11 analysis we've described, and we find no evidence in the 12 administrative record or the stipulation of facts that 13 would support a determination that there was an abuse of 14 discretion by the settlement officer. We note the parties 15 have stipulated that the settlement officer completed the 16 appropriate review of the assessment process, and we rely 17 upon that stipulation as well to sustain the notice of 18 determination, which sustaid the proposed lien, which is 19 on file with the County of San Francisco. 20 21 22 23 24 25 Given our determination, a decision will be entered-staddspf the proposed collection action. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 1:00p.m., the above-entitled matter was concluded.) (973)406-2250 ] operations@escrbersnet ] wwwascribers.net