TAX COURT OPINION

Case: Marc L. Parella
Docket Number: 823-17L
Judge: Nega
Opinion Type: bench
Filed: 03/20/2018
Pages: 13

UNITED STATES TAX COURT WASHINGTON, DC 20217 MARC L. PARELLA, Petitioner, v. SR ) ) ) ) Docket No. 823-17 L. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b) of the Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceedings in the above case before Judge Joseph W. Nega at San Francisco, California, on February 16, 2018, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be for respondent. (Signed) Joseph W. Nega Judge Dated: Washington, D.C. March 20, 2018 SERVED Mar 20 2018 3 1 2 3 4 5 6 7 8 9 10 11 Bench Opinion by Judge Joseph W. Nega February 16, 2018 Marc L. Parella v. Commissioner of Internal Revenue Docket No. 823-17L THE COURT: The Court has decided to render the following as its oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. In this Bench Opinion, unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax Court Rules · 12 of Practice and Procedure. This Bench Opinion is rendered 13 pursuant to section 7459(b) and Rule 152, and this opinion 14 15 16 17 18 shall not be treated as precedent for any other case. Petitioner Marc L. Parella appeared pro se. Joseph E. Conley appeared on behalf of respondent. This case arises from a petition filed in response to respondent's Notice of Determination 19 Concerning Collection Action(s) Under Section 6320 and/or . 20 6330, dated December 5, 2016 (notice of determination), 21 which sustained the Notice of Federal Tax Lien (NFTL). 22 23 24 25 We must decide whether to sustain the determinations in the notice of determination. FINDINGS OF FACT This case was tried on February 14, 2018, in San cnbers (973)406-2250|operationsgescribersmetlwww.escribers.net Francisco, California. Petitioner resided in California at the time he filed the petition. Petitioner timely filed his Form 1040, U.S. Individual Tax Return (return), for tax years 2011, 2012, 4 and 2014. In those respective returns, petitioner reported a balance due of $0, $0, and $15,125.80. After petitioner filed his 2011 and 2012 returns, they were selected for examination by the Internal Revenue Service (IRS) Examination Department. On 1 2 3 4 5 6 7 8 9 10 February 15, 2016, petitioner agreed to an additional 11 12 assessment of $34,317.50 for tax year 2011 and $11,505.76 for tax year 2012. That day, payments totaling $1,830 13 were applied toward petitioner's assessments for tax year 2011. 14 15 Thereafter, petitioner requested an installment 16 agreement for his liabilities for tax years 2011, 2012, 17 18 and 2014. On.May 31, 2016, petitioner entered into an installment agreement with the IRS, in which he agreed to 19 pay $650 per month until July 6, 2018, when his payment 20 would then increase to $750 per month. 21 22 23 24 On June 16, 2016, respondent issued petitioner an NFTL for tax years 2011, 2012, and 2014. On July 25, 2016, petitioner timely submitted to respondent Form 12153, Request for a Collection Due Process or Equivalent 25 Hearing (Form 12153). In that form, petitioner requested (973)406-2250|operationsgescribers net|www.escribersnet that respondent withdraw the NFTL, and stated in pertinent 5 part: Taxpayer is a government contractor working at Livermore Lab in California (contiact enclosed). Taxpayer's job requires a security clearance which will be revoked if the lien is not withdrawn. Also, Taxpayer will not be eligible for further government contracts if he has a NFTL in the public record. The NFTL in San Francisco County must be withdrawn or Taxpayer will lose employment and be unemployable. Also, 2014 return was amended reducing tax to -0-. Taxpayer will do an Installment Agmt. On September 23, 2016, respondent's Office of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Appeals' (Appeals Office) Settlement Officer Carol B. Pugh 16 (SO Pugh) sent petitioner a letter scheduling a telephonic' 17 Collection Due Process (CDP) hearing for October 20, 2016. 18 On October 20, 2016, SO Pugh held the CDP 19 hearing with petitioner's representative. During that 20 hearing, SO Pugh informed petitioner's representative that 21 22 respondent had filed the NFTL because the nstallment agreement required such a filing, and that an Automated 23 Collection System (ACS) employee had advised petitioner 24 that such a lien would be filed. In response, 25 petitioner's representative asserted that the Appeals cribers (973)406-2250|operations@escribersaet|www.escribersmet 6 1 Office should withdraw the NFTL, under section 2 3 4 5 6 7 8 9 6323(j) (1) (A), because petitioner: (1) had entered into an installment agreement and release of the NFTL would facilitate collection of petitioner's outstanding liabilities; and (2) could lose his job as a government contractor as the NFTL could keep him from getting a security clearance. Upon hearing this information, SO Pugh asked petitioner's representative if petitioner would be willing to change his installment agreement into a 10 direct debt installment agreement for purposes of 11 withdrawing the NFTL. Petitioner disputes such an offer 12 was made. It does not matter whether such an offer was 13 made because acceptance of such an offer by the taxpayer 14 15 could still not have led to a withdrawal of the lien under the Internal Revenue Manual. See Internal Revenue Manual 16 pt. 5.12.2.6; 5.14.5.1. 17 18 At the conclusion of the CDP hearing, SO Pugh informed petitioner's representative that she would 19 recommend sustaining the.NFTL because the lien was 20 required by the installment agreement and petitioner had 21 22 not presented any information showing that the lien should be released or withdrawn. In response, petitioner's 23 representative requested to speak to another settlement 24 officer. SO Pugh stated that she would advise Appeals 25 Team Manager (ATM) Darla M. Weatherby (ATM Weatherby) to $73)406-2250|operations@escribeenet|www.escribers.net 1 2 3 4 5 6 7 8 9 call him before she closed petitioner's file. On October 26, 2016, petitioner's representative faxed SO Pugh a letter (October 26, 2016 letter). In that letter, petitioner's representative stated that: (1) in February 2016 petitioner had secured employment as an independent contractor programmer/systems analyst working at Lawrence Livermore National Laboratory (LLNL); (2) petitioner's employment contract was set to expire at the end of 2016; (3) LLNL had offered petitioner full-time 10 employment contingent upon a series of security reviews; 11 (4) at his next security review, petitioner needed to 12 disclose the filing of the NFTL; and (5) the NFTL could 13 keep petitioner from receiving his security clearance, 14 which would deny him future employment. The letter also 15 16 17 18 19 20 21 stated that petitioner, not petitioner's representative, had set up the installment agreement, and that at that time, respondent had not explained to petitioner that he could avoid the NFTL by electing to do a direct debit installment agreement instead. I On October 27, 2016, ATM Weatherty and SO Pugh called petitioner's representative and petitioner. During 22 that call, ATM Weatherby and SO Pugh requested that 23 petitioner provide documentation, including terms and/or 24 stipulations of employment, to substantiate petitioner's 25 position in the October 26, 2016 letter that he would not (973)406-2250|-operations@escribers.net|www.esaibersJiet 8 1 be hired unless respondent withdrew the NFTL. ATM 2 Weatherby and SO Pugh stated that petitioner's 3 4 5 6 7 8 9 representative had until November 3, 2016, to submit the requested documentation. On November 7, 2016, ATM Weatherby reviewed petitioner's computerized tax records, which showed: (1) in April 2016 petitioner contacted an ACS employee to set up an installment agreement and (2) that an!ACS employee informed petitioner that respondent would file an NFTL 10 because the assessed balance on petitioner's account was 11 greater than $50,000. Later that day, petitioner's 12 representative called ATM Weatherby. During that call, 13 petitioner's representative informed ATM Weatherby that he 14 needed an extension, until November 8, 2016, in order to 15 gather the requested documentation. In response, ATM 16 Weatherby granted petitioner's representative's request, 17 but also informed petitioner's representative that 18 petitioner had been warned about the NFTL at the time he 19 entered into the installment agreement because the 20 21 22 23 assessed balance on his account was between $50,000 and $100,000. On November 8, 2016, petitioner's representative faxed SO Pugh a series of documents (November 8, 2016 24 fax). Amongst those documents were: (1) a statement from 25 petitioner's representative which included the job cnbers (973)406-2250|operationspescribersmet|www.escribers.net 9 1 2 3 description for the position petitioner had applied and interviewed for at LLNL; (2) a document containing U.S. Government Adjudicative Guidelines for Determining 4 Eligibility for Access to Classified Information; (3) a 5 6 7 8 9 10 11 12 13 14 15 one-page letter from petitioner; and (4) a one-page letter from the CEO of Spire Systems, Inc. discussing petitioner's job situation. In petitioner's letter, he quoted Adjudicative Guideline F: Financial.Consideration, which states in pertinent part: "Conditions that could raise a security concern and may be disqualifying include * * * (g) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same". The faxed letter did not include any direct statement from petitioner's place of employment concerning the adverse effects the lien in question would have on 16 petitioner's continued employment as the SO had requested. 17 On November 9, 2016, SO Pugh reviewed the 18 November 8, 2016 fax and concluded that the provision 19 cited in petitioner's letter did not apply |to his case 20 21 22 because he had filed his returns. Accordingly, SO Pugh continued to recommend that the NFTL be sustained. On December 5, 2016, respondent issued 23 petitioner the notice of determination. In that notice, 24 SO Pugh stated that she balanced the competing interest 25 when finding that the filing of the NFTL was appropriate, (973)406-2250|operations@escribersmet|www.escribersaet 10 1 2 3 4 5 6 7 8 9 and that the filing of the NFTL and the retaining of it balanced the need for efficient collection with petitioner's legitimate concerns that any collection action be no more intrusive than necessary. Based on our review of the record, we conclude SO Pugh verified that the requirements of any applicable law and administrative procedures have been met. I. Review of Appeals Office's Determination OPINION 10 Sections 6321 and 6323 impose a valid lien, 11 which arises when assessment is made, in favor of the 12 United States on all property and property rights of a 13 person who is liable for unpaid Federal taxes after demand 14 15 16 17 for payment has been made. See sec. 6322. Section 6320(a) requires the Secretary to send written notice to the taxpayer upon the filing of a notice of lien and informs the taxpayer of his or her right to an 18 administrative hearing on the matter. After receiving 19 such a notice, the taxpayer may request an administrative 20 21 22 hearing before the Appeals Office. Sec. 6320(a)(3)(B), (b)(1). The section 6320 hearing generally shall be 23 conducted consistent with procedures set forth in section 24 6330(c), (d), (e), and (g). Sec. 6320(c). At the 25 hearing, a taxpayer may raise any relevant issue, } BM (973)406-2250|operationseescribers;net|www.escribers.net 11 including challenges to the appropriateness of the collection action and possible collection alternatives. Sec. 6330(c)(2) (A). A taxpayer is expected to provide all relevant information requested by the Appeals Office for its consideration of the facts and issues involved in the hearing. See sec. 301.6320-1(e)(1), Proced. & Admin. 1 Regs. Where there is no dispute as to the underlying liabilities, we review the actions of the Appeals Office 1 2 3 4 5 6 7 8 9 10 for abuse of discretion. See Swanson v. Commission, 121 11 12 13 14 15 T.C. 111, 119 (2003). Abuse of discretion may be found if an action is arbitrary, capricious, or without sound basis in fact or law. Giamelli v. Commissioner, 129 T.C. 107, 111 (2007); Woodral v. Commissioner, 112 T.C. 19, 23 (1999). We do not consider issues that were not properly 16 addressed in the section 6320 hearing. See Giämelli v. 17 Commissioner, 129 T.C. at 113. 18 19 II. Petitioner's Underlying Tax Liabilities The administrative record indicates that during 20 the CDP hearing, petitioner failed to make dany meaningful 21 challenge to his underlying liabilities. Consequently, 22 petitioner is precluded from raising these challenges to 23 his underlying liabilities in this proceedi:ng. See 24 Giamelli v. Commissioner, 129 T.C. 25 III. (cid:0)540ection6323(j): Lien Withdrawal 1 (973)406-2250|operations@escribersmetlwww.escribers.net Petitioner contends that the Appeals Office should have withdrawn the NFTL under section 6323(j) (1) (A) 12 because petitioner had entered into an installment agreement and release of the NFTL would facilitate collection of petitioner's outstanding liabilities. To this extent, petitioner argues that such a filing could keep petitioner from receiving his security clearance, which may jeopardize his future employment. When ATM Weatherby and SO Pugh asked petitioner to substantiate his claim, petitioner's representative I sent a letter which quoted Adjudicative Guideline F: 1 2 3 4 5 6 7 8 9 10 11 12 Financial Consideration. That letter stated in pertinent 13 part: "Conditions that could raise a security concern and 14 may be disqualifying include * * * (g) failure to file 15 16 17 annual Federal, state, or local income tax returns as required or the fraudulent filing of the same". Upon reviewing this information, SO Pugh determined that the 18 provision cited by petitioner in his letter did not apply 19 to his case because he had filed his returns, but only 20 21 22 23 failed to pay the taxes he owed. Therefore, petitioner failed to provide adequate documentation to support his contention. When a Federal tax lien is in place, the IRS is 24 permitted to withdraw the NFTL under four situations, 25 including where "the withdrawal of such notice will HER I I 13 1 2 3 facilitate the collection of the tax liability" or "the withdrawal of such notice would be in the best interest of the taxpayer * * * and the United States". Sec. 6323(j). 4 With that in mind, we acknowledge that the loss of a top 5 6 7 8 9 security clearance would have jeopardized petitioner's continued employment at LLNL, and that the loss of his job would have potentially ended his ability to satisfy his installment agreement payments and ultimately pay his then outstanding Federal income tax liabilities. Nevertheless, 10 we note that section 6323(j) uses discretionary, not 11 mandatory, language and respondent is not required to 12 withdraw the lien even for one of the reasons stated in 13 section 6323(j). gart v. Commissione 14 Memo. 2013-113, 2013 WL 1688029, *6; see also sec. CIkhd 15 301.6323(j)-1(c), Proced. & Admin Regs. Accordingly, on 16 17 18 19 20 21 22 23 24 the record/ before us, we find that SO Pugh did not abuse her discretion in not withdrawing the NFTL, especially in light of petitioner's failure to provide her with the requested statement from petitioner's employer regarding the effects the lien would have on petitioner's continued employment as the SO had requested. On that record, we sustain the determinations in the notice of determination. IV. Conclusion Accordingly, a decision will be entered for 25 respondent. This concludes the Court's oral findings of (973)406-2250loperationseescribersmetlwww.escribersnet fact and opinion in this case. In reaching our holdings herein, we have considered all arguments made by the parties, and to the extent not mentioned above, find those arguments moot, irrelevant, or without merit. 14 (Whereupon, at 10:00 a.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 (973)406-2250|operations@escribersnet|www.escribersaet