TAX COURT OPINION

Case: Russell T. Burkhalter
Docket Number: 14345-16L
Judge: Gustafson
Opinion Type: bench
Filed: 02/06/2018
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 DRC RUSSELL T. BURKHALTER, Petitioner, v. ) ) ) ) Docket No. 14345-16 L. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant Rule 152(b) of the 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 proceedings in the above case before the undersigned judge at Atlanta, Georgia, 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 entered for respondent. Dated: Washington, D.C. February 6, 2018 (Signed) David Gustafson Judge SERVED Feb 06 2018 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge David Gustafson January 23, 2018 Russell T. Burkhalter v. Commissioner of Internal Revenue Docket No. 14345-16L THE COURT: The Court has decided to render in this case the following as its oral Findings of Fact and Opinion. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code, and Rule 152 of the Tax Court Rules of 10 Practice and Procedure, and it shall not be relied on as 11 12 precedent in any other case. This "collection due process" ("CDP") case is 13 brought by petitioner Russell T. Burkhalter pursuant to 26 14 U.S.C. section 6330(d), asking this Court to review the 15 determination by the Office of Appeals of the Internal 16 Revenue Service ("IRS") to sustain a notice of proposed 17 levy to collect Mr. Burkhalter's unpaid income tax, 18 additions to tax, penalty, and interest for the three 19 20 21 years 2010, 2011, and 2013. The Commissioner previously filed a motion for summary judgment as to Mr. Burkhalter's challenge to his 22 underlying liability, and we granted that motion and 23 precluded his liability challenge by our order of July 12, 24 25 2017. We therefore proceeded to trial on the collection issues -- particularly, IRS Appeals' supposed failure to 1973)406-2250Íoperations@escFibersmet|www.escribers.net enter into an installment agreement or to put Mr. Burkhalter into currently non-collectible status. Mr. Burkhalter represented himself at trial, and 4 Jason P. Oppenheim represented the Commissioner. FINDINGS OF FACT Mr. Burkhalter resided in Georgia at the time he filed his petition. (Stip. 1.) Liabilities and notice of levy As of October 2015, the IRS's records reflected that Mr. Burkhalter had unpaid income tax liabilities (Stip. 7) totaling more than $300,000 (Ex. 4-J). On 1 2 3 4 5 6 7 8 9 10 11 12 October 8, 2015, the IRS issued to Mr. Burkhalter a 13 "Notice of Intent to Levy and Notice of Your Right to a 14 Hearing". (Stip. 8; Ex. 4-J.) 15 CDP hearing 16 17 On November 8, 2015, Mr. Burkhalter timely sent to the IRS a Form 12153, "Request for a Collection Due 18 Process ... Hearing" (Ex. 5-J; Stip. 5). On the form he 19 checked a box indicating "I cannot pay balance." He did 20 not check a box indicating that he wanted an Installment 21 Agreement ("IA") or an Offer in Compromise ("OIC"). 22 Mr. Burkhalter's case was assigned in IRS 23 Appeals to Settlement Officer ("SO") Brewton in Atlanta. 24 25 on April 20, 2016, SO Brewton sent Mr. Burkhalter a letter (Ex. 14-R) introducing herself and the CDP process, and $73) 406-2250|operationspescribers net|www.escribers.n et 5 1 2 3 4 5 6 7 8 9 10 11 12 scheduling a telephone conference for May 12, 2016. The letter bore her address at the Atlanta Appeals Office. The letter explained that, in order to be considered for a collection alternative such as an IA or an OIC, Mr. Burkhalter must submit a financial information statement on Form 433-A ("Collection Information Statement") and his income tax returns for 2014 (due in April 2015) and 2015 (then recently due in April 2016). SO Brewton's letter said, "Please send me the items listed above". The May 12, 2016, hearing took place as scheduled, as a telephone conference between SO Brewton and Mr. Burkhalter. We find that Mr. Burkhalter did not 13 provide a Form 433-A or his 2014 and 2015 tax returns at 14 or before that hearing. In the phone conference, SO 15 Brewton explained that because Mr. Burkhalter had not 16 provided that financial information, she could not enter 17 into an IA with him nor put him in "currently not 18 collectible" ("CNC") status. He did not request 19 additional time to submit the information. 20 Notice of Determination and petition 21 On May 31, 2016, IRS Appeals issued to Mr. 22 Burkhalter a "Notice of Determination" (Ex. 6-J) that 23 sustained the proposed levy. The "Summary and 24 Recommendation" attached to the notice stated: "A 25 determination was made to sustain the Notice of Intent to (973)406-2250|operations@escrbetsmetivmvr.escribersnet 6 Levy due to all legal and procedural requirements having been met. Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, needed to determine eligibility for collection alternatives, was not submitted. Therefore, the case is being returned to the Collection Field Function for the appropriate action." On June 21, 2016, Mr. Burkhalter timely filed his petition with this Court. This case was called from the Court's trial calendar and tried on January 22, 2018. . OPINION I. Collection Due Process principles If a taxpayer fails to pay any Federal income tax liability after demand, segtion 6331(a) authorizes the IRS to collect the tax by levy on the taxpayer's property. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 However, the IRS must first issue a final notice of intent 17 to levy, and notify the taxpayer of the right to an 18 administrative hearing before the Office of Appeals. Sec. 19 20 6330(a) and (b)(1). After receiving such a notice, the taxpayer may request an administrative hearing before IRS 21 Appeals. Sec. 6330(a)(3) (B), (b) (1). 22 At the CDP hearing, the appeals officer must 23 make a determination whether the proposed collection 24 action may proceed. The appeals officer is required to 25 take into consideration several things: cnbers (973}406-2250|operationsgescribers.netlwww.escribers.net 7 1 2 3 4 5 First, the appeals officer must obtain verification that the requirements of any applicable law and administrative procedure have been met by IRS personnel (see sec. 6330(c)(3) (A)). Mr. Burkhalter raised no verification issue, either in his petition or at trial; .6 and at trial the Commissioner made a showing that all 7 8 9 applicable law and administrative procedure had indeed been met. Second, the appeals officer must consider any collection alternatives proposed by the taxpayer (see sec. 10 - 6330(c) (3) (B), citing sec. 6330(c) (2)). Mr. Burkhalter 11 12 13 14 15 16 17 contends that the IRS erred in this regard. And third, the appeals officer must determine "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary" .(see sec. 6330(c)(3)). Mr. Burkhalter raised no issue as to this balancing, either in his 18 petition or at trial; and at trial, through SO Brewton's 19 testimony, the Commissioner made a showing that she had 20 made the appropriate balancing. 21 22 II. Standard of review In considering Appeals' denial of a collection 23 alternative (such as an IA), the Court reviews the 24 administrative determination for an abuse of discretion. 25 See Sego v. Commissioner, 114 T.C. 604, 610 (2000). } BillEllllli 1913)406-2250|operations@escribersnetIwwkescribers.net . 8 1 2 3 4 5 6 7 8 9 III. Collection alternatives Mr. Burkhalter contends that IRS Appeals abused its discretion by failing to grant him a collection alternative, i.e., either an IA or CNC status. Appeals' reason for the denial was Mr. Burkhalter's failure to provide financial information. To grant CNC status, the IRS needs to know whether the taxpayer's financial situation is such that he truly cannot afford to make payment toward the tax; and to grant an IA, the IRS needs 10 to know both that the taxpayer cannot afford to currently 11 make full payment of the liability and that he can afford 12 13 14 to make the payments that he proposes. If the taxpayer fails or refuses to provide financial information on Form 433-A, then Appeals does not abuse its discretion in 15 declining to grant the collection alternative. See 16 Huntress v. Commissioner, T.C. Memo. 2009-161, slip op. at 12. 17 18 We do not find credible Mr. Burkhalter's 19 testimony at trial that, in response to a request from 20 another IRS employee, he sent Form 433-A to an address in 21 Washington, D.C., that was given on the form. He 22 initially testified that this occurred three years ago, 23 which would have been in early 2015 -- i.e., before his 24 CDP hearing. He could not say the name of the IRS 25 employee (nor say certainly that he was from Appeals), nor ) cribers (973)406-2250|operations@escribersinet|mvw.escribers.net produce a copy of the Form 433-A that he supposedly submitted. He did not testify that, at the May 12, 2016, CDP hearing, he told SO Brewton of this supposed mailing 9 to Washington, D.C. With the intention of verifying, if possible, at least some of Mr. Burkhalter's testimony on this point, we solicited respondent's non-objection to our taking judicial notice after trial of the Form 433-A in effect in 2015, as it appears on the IRS website. We learned that 1 2 3 4 5 6 7 8 9 10 the form includes no Washington, D.C., address and no 11 12 13 instruction as to mailing. Thus, the only instructions given to Mr. Burkhalter about the Form 433-A were in the letter from Appeals, directing that he send it to SO 14 Brewton in Atlanta. He did not do so and does not allege 15 16 17 that he did. CONCLUSION IRS Appeals did not abuse its discretion when it 18 declined to grant a collection alternative to Mr. 19 Burkhalter. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 9:09 a.m., the above-entitled matter was concluded.) 20 21 22 23 24 25 511Ellii (973)406:2250[operations@escribers.net|www.esaibers.net