TAX COURT OPINION

Case: Duane S. Ashley
Docket Number: 5151-00L
Judge: Chiechi
Opinion Type: memo
Filed: 11/25/2002
Pages: 12

. T.C. Memo. 2002-286 3 UNITED STATES TAX COURT DUANE S. ASHLEY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 5151-00L. Filed November 25, 2002. Duane S. Ashley, pro se. Steven M. Webster, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION CHIECHI, Judge: The petition in this case was filed in response to a "NOTICE OF DETERMINATION CONCERNING COLLECTION ACTION (S) UNDER SECTION 6320 and/or 6330" (notice of determina- . tion) . We must consider whether respondent may proceed with collec- tion with respect to petitioner's taxable year 1989. We hold SERVED NOV 2 5 2002 that respondent may. - 2 - FINDINGS OF FACT Virtually all of the facts have been deemed established pursuant to the Court's Order under Rule 91(f)¹ dated September 5, 2002. Petitioner resided in Beaufort, South Carolina, on the date he filed the petition in this case. Petitioner worked for the U.S. Government (Government) from 1973 until January or February 1987, when the Government dis- charged him. At the time of his discharge, petitioner was working for the Parris Island Marine Corps Recruit Depot. After his discharge in early 1987, petitioner made various claims against the Government, whiéh were not resolved to his satisfac- tion. In an effort to have such claims resolved by a Federal court, petitioner decided not to, and did not, file a Federal income tax return (return) for taxable year 1989 or any taxable year thereafter. On August 12, October 7, November 18, and December 30, 1991, respondent sent petitioner delinquency notices with respect to his taxable year 1989. On April 28, 1992, respondent sent by certified mail to petitioner's last known address, i.e., Star Route 6, Box 295½A, ¹All Rule references are to the Tax Court Rules of Practice and Procedure. All section references are to the Internal Revenue Code in effect at all relevant times. Beaufort, South Carolina 29902 (Route 6 mailing address), a notice of deficiency (notice) with respect to petitioner's taxable year 1989.2 The USPS notified petitioner on April 29, 1992, and again on May 5, 1992, about the certified mail from réspondent that it was attempting to deliver to him. On May 13, 1992, the USPS returned that certified mail to respondent as "unclaimed" . In the notice that respondent issued to petitioner with respect to taxable year 1989, respondent determined, inter ali.a, that for that year petitioner had nonemployee compensation totaling $31,302 and interest income totaling $63. In the notice, respondent further determined for taxable year 1989 a deficiency of $9,022 in Federal income tax (tax) and additions to tax under sections 6651(a)(1) and 6654 of $2,256 and $608, respectively. Petitioner did not petition the Court with respect to the notice issued by respondent relating to his taxable year 1989. On September 28, 1992, respondent assessed tax of $9,022 and additions to tax under sections 6651(a)(1) and 6654 of $2,256 and $608, respectively, with respect to petitioner's taxable year 1989, as determined in the notice. On September 28, 1992, 2Petitioner resided in the property at the Route 6 mailing address throughout 1992 and thereafter. United States Postal Service (USPS) changed the mailing address of Avenue, Beaufort, South Carolina. that property from the Route 6 mailing address to 14 Woodbine Sometime after 1992, the respondent also assessed interest of $2,994.50 that had accrued as of that date on such deficiency and such additions to tax. (We shall refer to such assessed tax, assessed additions to tax, and assessed interest, as well as any interest thereon as pro- vided by law which respondent has not assessed but which accrued after September 28, 1992, as petitioner's unpaid liability for 1989.) On September 28 and December 7, 1992, and January 11, 1993, respondent sent petitioner notices of balance due with respect to petitioner's unpaid liability for 1989. On September 28, 1993, respondent filed a notice of Federal tax lien with respect to petitioner's taxable year 1989.3 On January 10, 1997, a payment of $192.55 was made by levy with respect to petitioner's taxable year 1989.4 On March 31, 1999, respondent issued a Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing (notice of intent to levy) with respect to petitioner's taxable year 1989. On or before April 29, 1999, in response to the notice of intent to levy, petitioner filed Form 12153, Request for a 3The Federal tax lien filed on Sept. 28, 1993, was not a collection action subject 1(a)(1), v. Commissioner, 117 T.C. 117, 118 n.3 (2001). to sec. 6320. (b)(2) Q&A-B2, Proced. & Admin. Regs.; see also Nicklaus See sec. 301.6320- 4The levy made on Jan. 10, 1997, was nót subject 6330. Proced. & Admin. Regs.; see also Nicklaus v. Commissioner, supra. See sec. 301.6330-1(a)(1), (3) Q&A-A4, to sec. (4) Example 1, - 5 - Collection Due Process Hearing (Form 12153). In Form 12153, petitioner alleged: Have been requesting hearing for almost 10 years now from local and Atlanta agents and no response except liens and seizure of bank account amount into consideration or complying with your own instructions by field agents has led to this. I want my day in Federal Court and am again requesting such in account, by local agent * * *. Not in excess.of actual taking On January 19, 2000, petitioner submitted to respondent's Appeals Office (Appeals Office) Form 433-A, Collection Informa- tion Statement for Individuals (Form 433-A). In that form, petitioner indicated that he had two dependents--the mother of his son and their son. Petitioner indicated in Form 433-A that he owned: His home located in Beaufort, South Carolina, which he valued at $77,000; .four automobiles, two of which he did not value, one of which he valued at $6,500, and one of which he valued at $1,500; three boats which he did not value; and certain tools of trade on which he placed a "current pawn value" of $5,000 to $7,500 and a "replacement value" of $20,000 to $25,000. In Form 433-A, petitioner indicated that his monthly compensation varied but that it was around $2,000 and that his monthly total expenses were $1,300. In response to a question in Form 433-A asking for "Additional information or comments", petitioner stated: "Dept of Navy owes me disability from Oct '86 thru current". According to the Appeals Office Case Memorandum relating to - 6 - the notice of intent to levy with respect to petitioner's taxable year 1989, . Mr. Ashley [petitioner] makes claims that he cannot pay He included another letter with his the amount due. protest alluding to a large government debt owed him from another agency for disability payments which he claims were improperly denied. He believes that the Internal Revenue Service should help him in his cause to recover what he believes are his benefits and then share in those benefits to pay the taxes at hand. * * * * * * * that he doesn't owe the tax, but In the instant case, Mr. Ashley in his protest claims not should be offset by the debt owed him by another federal government agency. assessment at hand was made under "substitute for return" procedures and is not tax return. Therefore, Mr. Ashley may file an original tax return to correct based upon relevant records he may have. It should be noted that the from a voluntarily filed the amount of tax at any time that the liability * * * * * * * Mr. Ashley responded to a letter sent by the settlement officer sayihg in a phone message that he would be amenable to completing a financial statement to declare his inability to pay. sent to Mr. Ashley with instructions to complete as fully as possible and return to the settlement officer for evaluation. His overture at not being able to pay should be treated as a collection alternative within the meaning of 1998 as it applies here. the new Restructuring and Reform Act of Such a financial statement was * * * * * * * A telephone conference was agreed upon and held with Mr. Ashley. * * * Mr. Ashley went over his claim that the Internal Revenue Service should straighten out his problem with the Department of ability claim. the Navy, which he said denied his dis- * * * - 7 - Mr. Ashley was again advised that he could file an original tax return for 1989. * * * * * * * * * * information submitted by Mr. Ashley The financial indicates that he has equity in property from which some funds may be generated. Mr. Ashley houses not only himself but his common law wife and their natural son. pendents for purposes of determining disposable income. Mr. Ashley indicated that his wife does not work and that his income is the sole income of the household. An analysis of his monthly income over allowable expenses reveals the following: there are three who are claimable as de- Thus, Income $2,000 Expense Type National Std. Housing & Util. Transportation Total 781* 350** Expense Amount $ $ & 235*** $1,366**** . *3 people in household, source: BLS 10/99. **as claimed but unsubstantiated, no housing purchase or rental expense is involved or included. ***as allowed for one car, no purchase expense is involved or included. ****Mr. Ashley's claim reflects monthly.expenses of $1,300. The home and autos are paid for. Mr. Footnote: Ashley claims that he lost his health and life insurance because of above. the circumstances described Applying a present value to the excess income over expenses yields a total of $25,994 [$634 per month x 41 months left on statute = $25,994]. the home because he had satisfied the According to the county valuation of Mr. Ashley's realty and the information on encumbrances, he has the full equity of mortgage. no available valuations for the vehicles or boats in Mr. Ashley's possession. However, it is unnecessary to obtain that information because the addition of present value to the equity in the realty substantially exceeds what Even reducing the value of The county valuation is $75,353. is owed by Mr. Ashley. There are - 8 - the realty by 20% leaves equity of $60,282. Also, eliminating present value in its entirety because of the dischargeability of the taxes still leaves net realizable equity substantially in excess of owed. the amount [See IRM in his filing obligations. Mr. Ashley might have been entitled to enter into an installment agreement but for the fact that he is not current 5.14.1.4(4).] Mr. Ashley was given ample opportunity to file the delinquent, and as he indicated to the settlement officer, but unfortunately, has not done so. assistance from the Internal Revenue Service in preparing the unfiled returns which, according to information secured by the settlement officer, could not be offered. Therefore, an installment agreement option for Mr. Ashley. taxable returns (all since 1989) He requested isn't an As indicated above, Mr. Ashley's equity in assets reasons why an offer is inappropri- The settlement officer considered an offer in compromise as an [sic] collection.alternative. However, there are several ate. far exceeds the amount owed which precludes acceptance based on "doubt as to collectibility". Nor has he claimed or demonstrated that there are any special circumstances which would warrant consideration of an "Effective Tax Administration" offer. the Service policy with respect submit offers is that they be current returns before their offers can be processed. 5.8.3.3(2).] compliance with his filing responsibilities at of his appeal nor has he become compliant s1nce. As noted above Mr. Ashley was not in filing all due [See IRM in to individuals who In any event, in filing. the time the opportunity to file an original Mr. Ashley has not offered a viable collection alternative in his case. Nor has he availed himself of return for the subject year which he claims verbally would reduce the amount of tax due. Further, Mr. Ashley will not be available for a viable collection alternative until such time that he becomes compliant with his filing obligations. Therefore, the following conclusions and determinations are made in this matter. income tax to date The sending of under the circumstances. Since no viable collection Intent to Levy was proper the Notice of . . - 9 - alternative has been offered, the intrusiveness of the proposed levy is commensurate with the need to collect the revenue efficiently and in such a manner. Mr. Ashley was advised that the liability can be adjusted at any time if an accurate return is filed and substantiated. should thus be sustained. The sending of the Notice of to Levy Intent On March 29, 2000, pursuant to section 6330, the Appeals Office issued to petitioner a notice of determination with respect to petitioner's taxable year 1989. That notice stated in pertinent part: Summary of Determination: The Service followed its procedural, administrative and legal guidelines in sending the Notice of Levy. Intent to There were no viable collection alternatives advanced by the taxpayer. The intrusiveness. of with the need to collect the revenue efficiently. the proposed levy is commensurate Attached to the notice of determination was a document entitled "Attachment - 3193". That document stated in pertinent part: Matters Considered Whether the Service followed its procedural, administrative and legal guidelines in issuing the Notice of Intent to Levy. tax was made and notice and followed. Failure to pay the As [sic] assessment of demand for payment amount occurred thereafter. Before levy can be made a Notice of issued. procedures in issuing the Notice of levy. * * The Service followed the required Intent to Levy must first be * Intent to Whether any collection alternatives are advanced by the taxpayer and the viability of such offers. - 10 - The taxpayer proposed the Service act on his behalf in seeking to recover damages the taxpayer says are owed to him by another federal agency. There is no established debt at this time, and therefore, no power of recover the taxes owed. that he could file an original for the subject year but has yet to do so. taxpayer was asked to file delinquent but has not done so. tives offered. income tax return The taxpayer was advised levy against the debt to There were no other alterna- The tax returns Whether the proposed action would be unnecessarily intrusive as against efficiently. the need to collect the revenue The intrusiveness of the proposed levy is commensurate with the need to collect the revenue efficiently and in such a manner. The failure to file delinquent returns precludes the collection alternatives most often employed. OPINION Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review the administrative determination of the Appeals Office for abuse of discretion.5 sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). SPetitioner did not petition the Court with respect to the notice that respondent issued to him relating to his taxable year 1989. Moreover, although invited to do so by the Appeals Office, petitioner did not prepare and file with the Appeals Office a return for 1989. At trial, petitioner testified that he did not know what he owed for his taxable year 1989. Assuming arguendo that petitioner had properly placed at underlying tax liability at issue, on the record before us, we find that petitioner has failed to establish that petitioner's unpaid liability for 1989 is not valid. issue the validity of the - 11 - Petitioner asks the Court to grant him various remedies, including full compensation for claimed disability benefits, appropriate redress for his alleged wrongful discharge by the Government, an investigation of various complaints against the Internal Revenue Service, and relief from petitioner's unpaid liability for 1989 and for any unpaid liabilities for taxable ye'ars thereafter. We do not have the authority to resolve any of the matters raised by petitioner except the issue as to whether respondent may proceed with collection with respect to petitioner's taxable year 1989. ·The record is devoid of any evidence establishing that respondent abused respondent's discretion in determining in the notice of determination to proceed with collection with respect to that year. On the record before us, we find that respondent did not abuse respondent's discretion in making that determination. We have considered all of petitioner's arguments and conten- tions which are not discussed herein relating to whether respon- dent may proceed with collection with respect to petitioner's taxable year 1989, and we find them to be without merit and/or irrelevant. To reflect the foregoing, Decision will be entered for respondent. t &