TAX COURT OPINION

Case: Howard Scott Stein
Docket Number: 16636-19L
Judge: Morrison
Opinion Type: bench
Filed: 04/15/2021
Pages: 10

Docket No.: 16636-19L Page 1 of 1 United States Tax Court Washington, DC 20217 Howard Scott Stein Petitioner v. Commissioner of Internal Revenue Respondent Docket No. 16636-19L ORDER OF SERVICE OF TRANSCRIPT 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 respondent a copy of the pages of the transcript in the above case before Judge Richard T. Morrison, at San Francisco, California, on February 26, 2021, containing his oral ﬁndings of fact and opinion rendered at the conclusion of trial. In accordance with the oral ﬁndings of fact and opinion, an appropriate order will be issued. (Signed) Richard T. Morrison Judge Served 04/15/21 RECEIVED 3/15/21 IN THE UNITED STATES TAX COURT In the Matter of: HOWARD SCOTT STEIN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 16636-19L ) ) ) ) ) ) ) ) ) ) ) ) Pages: 1 through 8 Place: San Francisco, California (Remote Proceeding) Date: February 26, 2021 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 IN THE UNITED STATES TAX COURT In the Matter of: HOWARD SCOTT STEIN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 16636-19L ) ) ) ) ) ) ) ) ) ) ) ) Burton Federal Bldg. & U.S. Cthse. 450 Golden Gate Avenue Room 2-1408, 2nd Floor San Francisco, California 94102 (Remote Proceeding) February 26, 2021 The above-entitled matter came on for bench opinion, 15 pursuant to notice at 5:01 p.m. HONORABLE RICHARD T. MORRISON Judge BEFORE: APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 16 17 18 19 20 21 22 23 24 25 2 P R O C E E D I N G S (5:01 p.m.) THE CLERK: Calling from the calendar docket number 16636-19L, Howard Scott Stein. (Whereupon, a bench opinion was rendered.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Bench Opinion by Judge Richard T. Morrison 3 February 26, 2021 Howard Scott Stein v. Commissioner of Internal Revenue Docket No. 16636-19L 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 on as precedent in any other case. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986 as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all references to sections are to the Internal Revenue Code of 1986, as amended and in effect at all relevant times. All Rule references are to the Tax Court Rules of Practice and Procedure. Respondent, the Commissioner of Internal Revenue, is referred to as the IRS. Petitioner Howard S. Stein commenced this collection due process, or CDP, case pursuant to section 6330(d)(1) in response to a determination by the IRS Office of Appeals to uphold a proposed levy relating to his unpaid federal income tax liabilities for the 2014, 2015, and 2016 taxable years. Stein was a resident of 1 2 3 4 5 6 7 8 9 10 11 California when he filed his petition. 4 The notice of determination stated that Stein had made an offer-in-compromise of $516; that Stein could fully pay his tax liability (which was approximately $150,000) from his disposable monthly income; and that therefore (1) the offer was rejected and (2) Stein would not be placed in currently-not-collectible status. See Internal Revenue Manual, or I.R.M., pt. 5.8.4.3(2) (May 10, 2013). Offers-in-compromise and currently-not- collectible status are part of a set of issues referred to as collection alternatives. Sec. 6330(c)(2)(A)(iii); 12 (c)(3)(B). 13 14 15 16 17 18 19 20 21 22 23 24 25 We held a trial on February 24, 2021, to consider whether Appeals abused its discretion in issuing the notice of determination. As explained in Sego v. Commissioner, 114 T.C. 604, 610 (2000), the Court reviews administrative determinations made by Appeals regarding nonliability issues for abuse of discretion. The materials we review in a case like this one, a CDP case appealable to the Ninth Circuit, primarily consist of the administrative record. See sec. 7482(b)(1)(G)(i); Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009); sec. 301.6330-1(f)(2), Q&A-F4, Proced. & Admin. Regs.; Meyer v. Commissioner, T.C. Memo. 2013-268, at *13 n.9. It is also relevant whether Stein's financial circumstances have 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 changed so much since the notice of determination to 5 justify a remand for Appeals to consider Stein's changed financial circumstances. See Churchill v. Commissioner, T.C. Memo. 2011-182, at *13; Leago v. Commissioner, T.C. Memo. 2012-39, at *23-*24; Gurule v. Commissioner, T.C. Memo. 2015-61, at *36-*37. There are several ambiguities in the administrative record. The IRS concedes that Appeals was wrong to conclude that Stein could fully pay his tax liability from disposable monthly income, but argues that this does not matter because the amount of Stein's offer was less than his tax liability. See I.R.M., pt. 5.8.4.3(2) (May 10, 2013). The record is unclear as to how this comparison informed the reasoning of Appeals. A portion of the administrative record, pages 14 through 15 of Exhibit 10-J, states that Stein could pay only $10,438, not the entire tax liability. Those pages ask Stein to increase his offer. But it is unclear if these pages were sent to Stein. Furthermore, the IRS contends that these pages were prepared by the settlement officer assigned to handle the CDP hearing. But Stein contends that they were prepared by the IRS centralized offer-in-compromise center. The record is unclear on this authorship matter. The IRS contends that certain of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 determinations in the notice of determination were made by 6 the settlement officer, whereas Stein contends they were made by the settlement officer's manager. The record is unclear on this matter. The IRS urges that any errors made by Appeals can be excused by the harmless error doctrine. However, the Court's decision about the scope of the error and whether the error was harmless would necessarily hinge on too many suppositions about the administrative record. Ordinarily, we might remand for Appeals to clarify the administrative record, i.e., to further explain what happened during the initial consideration by Appeals and how it made its determination. See Wadleigh v. Commissioner, 134 T.C. 280, 299 (2010). In this case, though, it would be unproductive to require Appeals to clarify the administrative record as to its initial consideration. The administrative record strongly suggests that the determination of Appeals hinged on an analysis of two months of Stein's bank statements that showed large deposits that were the proceeds from the sale of Stein's collection of musical instruments. Thus the determination was based on unusual financial circumstances that no longer exist. Therefore, we will remand for Appeals to consider collection alternatives on a supplementary administrative record. We will direct Appeals to consider any additional evidence and 7 information Stein wishes to submit. We will retain jurisdiction over this case to preserve Stein's right of judicial review of the administrative determination. An appropriate order will be issued. This concludes the Court's Oral Findings of Fact and Opinion. (Whereupon, at 5:10 p.m., the above-entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 8 CASE NAME: Howard Scott Stein v. Commissioner DOCKET NO.: 16636-19L We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 8 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Jaqueline Denlinger on February 26, 2021 before the United States Tax Court at its remote session in San Francisco, CA, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Meribeth Ashley, CET-507 Transcriber 3/9/21 Date _______________________________________________ Lori Rahtes, CDLT-108 Proofreader 3/9/21 Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25