TAX COURT OPINION

Case: Michael Wayne Smith
Docket Number: 3295-08
Judge: Colvin
Opinion Type: bench
Filed: 04/06/2009
Pages: 5

U NITED STATES TAX COU RT WASHINGTON , DC 2021 7 JOHN DRONAN, Petitione r V . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R i Docket No . 4699-08L . Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 James S . Halpern at San Francisco, California, on March 18, 2009, containing his oral findings of fact and opinion rendered at the conclusion of the trial . In accordance with the oral findings of fact and opinion, an appropriate order will be issued . (Signed) James S . Halpern Judge Dated : Washington, D .C . April 6, 2009 SERVED APR - 9 2009 kil ORIGINAL 3 1 Bench Opinion by Judge James S . Halpern March 18, 2009 2 John Drohan v . Commissioner 4699-08L 3 THE COURT : The Court has decided to render ora l 4 findings of fact and opinion in this case, and the following 5 represents the Court's oral findings of fact and opinion . 6 This bench opinion is made pursuant to th e 7 authority granted by section 7459(b) of the Internal Revenu e Code of 1986, as amended, and Rule 152 of the Tax Cour t 9 Rules of Practice & Procedure . 10 Unless otherwise indicated, all section reference s 11 are to the Internal Revenue Code in effect for the yearsin 3S A: ' 12 issue, and all rule references are to the Tax Court Rules o f 13 Practice & Procedure . 14 This case is before the Court pursuant to a 15 petition -"filed under section 6330(d) for review of a 16 determination made by Respondent's office of appeals . By 17 notice of determination concerning collection actior(s)unde r 18 section 6320 and/or 6330, dated January 25th, 2008, appeals = n ~rq 1+ 19 determined that a. notice of filing of federal tax lien i s 20 sustained with respect to Petitioner's 1999 through 200 2 21 federal income tax liabilities . 22 Petitioner alleges that Respondent erred i n 23 sustaining the notice by denying Petitioner's request t o 24 establish a lien subordination and in sustaining collectio n 25 against Petitioner . At trial, Petitioner relied only o n r Heritage Reporting Corporation (202) 628-4888 4"-1-4~1 -~. "aArczz~ 4 1 appeals' failure to subordinate the lien . 2 The parties have stipulated certain facts . Th e 3 stipulation of facts with attached exhibits is incorporated 4 herein,by this reference . Petitioner bears the burden o f 5 proof . Rule 142(a) . 6 On May 22nd , 2007, the Commissioner sent P 7 a notice of federal tax lien for the years in 8 question showing an unpaid balance of assessment o f 9 $79,18.7 .05 . Petitioner requested a collection due process 10 hearing and a hearing followed . 11 In the appeals officer's explanation accompanying 12 the determination, the appeals officer states tha t 13 Petitioner requested that the IRS provide a subordination o f 14 the tax lien to(cid:127)allow him to refinance his property to pa y 15 the liability . The appeals officer states that Petitione r Dr mo re 16 owns three properties and he should sell onenof them i n 17 order to pay his liability . He further states that he wil l 18 not direct IRS compliance to agree to allow subordination of Tt 19 the tax lien . 20 Petitioner's uncontradicted testimony, supported 21 by a property overview included with Exhibit 9-J, is that he 22 had sufficient equity in his real estate-to pay th e 23 $79,187 .05(cid:127) unpaid balance of assessment shown on the notice 24 of federal tax lien . His uncontradicted testimony also . 25 that, had the tax liens been subordinated, he would have Heritage Reporting Corporatio n (202) 628-4888 4 5 1 paid irf full the unpaid balance of assessment with 2 additional borrowings against his property . 3 Section 6330(c)(3)(C) provides that the appeal s 4 officer's determination take into consideration whether any 5 proposed collection action balances the need for th e 6 efficient collection of taxes with the legitimate concern of 7 the person that any collection action be no more intrusive 8 than necessary . Since it appears that the IRS could, with 9 little risk and short delay, have obtained the whole unpai d 10 balance of assessment had it agreed to Petitioner's lien 11 subordination request, we conclude that appeals ' 12 determination did not give adequate weight to Petitioner's 13 legitimate concern for the least intrusive collection action 14 possible . 15 The appeals officer abused his discretion . 16 We therefore do not sustain the determination . We 17 shall enter an order and decision remanding this case t o 18 appeals with instructions to subordinate the 3overnment'st+ 19 federal tax liens for the purpose of allowing,Petitioner to j c7 4 20 borrow against the properties,so long as ; etitioner arranges 21 for any proceeds of the borrowings to go to the governmen t 22 to the extent necessary to pay the $79,187 .05 unpaid balance 23 of assessment here in issue, plus any additional/,accrue d J 24 interest . 25 This concludes the Court's oral findings of fac t Heritage Reporting Corporation (202) 628-4888 1 and opinion in this case . 2 (Whereupon, at 10 :10 a .m ., the bench opinion in 3 the above-entitled matter was concluded . ) 6 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Heritage'Reporting Corporation (202) 628-4888