TAX COURT OPINION

Case: Valance M. Steele
Docket Number: 17289-07L
Judge: Colvin
Opinion Type: bench
Filed: 10/22/2008
Pages: 13

MR UNITED STATES TAX COURT WASHINGTON , D .C . 2021 7 ,Antr . S-9 RV I CF. CAL . STAT . STS VALANCE M . STEELE , Petitioner , V . COMMISSIONER OF INTERNAL REVENUE, Respondent . Docket No . 17289-07 L O R D E R 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 of the above case before Judge Diane L . Kroupa at San Francisco, California on September 25, 2008, containing her oral findings of fact and opinion rendered after the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed ) Diane L. Kroupa Judg e Dated : Washington, D .C . October 22, 2008 SERVED OCT 2 3 mu 2 1 P R O C E E D I N G S 2 (2 :01 p .m .) 3 Bench Opinion by Judge Diane L . Kroupa September 25, 2008 4 Valance M . Steele v . Commissioner Docket No . 17289-07L 5 THE CLERK : Docket No . 17289-07L, Valance M . 6 Steele . 7 THE COURT : The Court has decided to render ora l 8 findings of fact and opinion in this case, and the following 9 represents the Court's oral findings of fact and opinion . 10 These oral findings of fact and opinion shall not be relied 11 upon as precedent in any other case . 12 This bench opinion is made pursuant to th e 13 authority granted in section 7459(b) and Rule 152 . All 14 section references are to the Internal Revenue Code, a s 15 amended and in effect for the years at issue, later defined 16 in this bench opinion, and all rule references are to the 17 Tax Court's Rules of Practice & Procedure . 18 This is a collection review case involving the 19 proposed levy action to collect Petitioner's unpaid ta x 20 liabilities for each of the years at issue . This collection 21 review matter is before the Court on Respondent's motion for 22 summary judgment, filed on May 1st, 2008 . 23 Petitioner Valance-Steele appeared pro se . Emily 24 Giometti appeared on behalf of Respondent . 25 Heritage Reporting Corporation (202) 628-4888 3 1 FINDINGS OF FACT 2 Certain facts have been stipulated . The 3 stipulation of facts, the stipulation, the supplemental 4 stipulation of facts, and the second supplementa l 5 stipulation of facts filed by the parties with accompanying 6 exhibits, is incorporated by this reference . The facts are 7 so found . 8 Petitioner resided in California at the time she 9 filed the petition . Petitioner is a real estate agent who 10 failed to timely file a federal income tax return for 1995, 11 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, and 2005, or 12 some 10 years which shall be referred to as the years a t 13 issue in this bench opinion . 14 Petitioner did not have taxes withheld from her 15 income for any of the years at issue . The Internal Revenue 16 Service, the IRS, filed a substitute for return fo r 17 Petitioner for each of the years at issue . Petitione r 18 subsequently submitted returns for the taxable years 1998, 19 1999, 2000, and 2001, in February of 2004, but failed to pay 20 any tax reported due on the returns . 21 Petitioner also filed a return for 2003 and 2005 22 but made no payments . For 2004, Petitioner filed a return 23 and made some payments but did not pay the full amount of 24 tax due . Respondent assessed the amounts shown due . 25 Petitioner attempted to resolve all of her Heritage Reporting Corporatio n (202) 628-4888 1 outstanding tax liabilities of approximately $600,000 i n 4 2 March 2006 by submitting an offer-in - compromise . taiycx. ,oo 3 Petitioner , through her attorney , offered to pay atheft 4 dollars a month for 24 months until August 2008 and $480 0 5 per month thereafter . Petitioner explained she could 6 initially pay only dollars a month because she 11060 7 needed funds to pay her daughter ' s college tuition, room , 8 and board . 9 Respondent reviewed the form 433-A, collection 10 information statement, Petitioner submitted that included 11 Petitioner ' s income and expenses . Respondent also reviewed 12 Petitioner's tax return for 2006 and other informatio n 13 showing she earned substantial income over the past several 14 years from which no income taxes were withheld . 15 Respondent determined , based on Petitioner' s 16 income and expenses, that Petitioner could afford to pay 17 more than the theusand dollars offered each month . l I 000 &9k'- 18 Respondent issued to Petitioner a letter entitled Fina l 19 Notice, Notice of Intent to Levy . and Notice of Your Right to 20 a Hearing , as required under section 6330(a), on Octobe r 21 9th , 2006, advising Petitioner that Respondent intended to 22 levy to collect the unpaid liabilities for each of the years 23 at issue , and that Petitioner could receive a CDP hearin g 24 with appeals . 25 The total amount of liabilities outstanding at the Heritage Reporting Corporatio n (202) 628-4888 5 1 time of the final notice was $614,157 .85 . Respondent issued 2 the final notice after sending at least four other notices 3 to Petitioner for each year involved . Petitioner timel y 4 submitted form 12153 , request for a collection due process 5 hearing , for each of the years at issue . In Petitioner' s 6 request for a hearing , Petitioner did not dispute the amount 7 of the underlying liability for any of the years at issue . 8 Instead , Petitioner asserted that she had previousl y 9 requested a payment plan and provided all the necessary 10 documentation to enable Respondent to consider her payment 11 request , but that Respondent had not yet responded . 12 Settlement officer Catherine B . Smith sent a 13 letter to Petitioner scheduling a telephone CDP conference . 14 Officer Smith offered Petitioner in the letter the chance to 15 request a face-to-face hearing and explained the issue s 16 which officer Smith could consider during the hearing . The 17 letter also explained that Petitioner would need to mak e 18 estimated tax payments for Respondent to approve any 19 collection alternative , including an installment payment 20 agreement . 21 The letter was sent to the same address Petitioner 22 used in her CDP request and on her petition . But Petitioner 23 asserts she did not receive the letter . Officer Smith sent 24 Petitioner a second letter, also to the same address , 25 reminding her of the telephone conference and of her ability Heritage Reporting Corporatio n (202) 628-4888 6 1 to instead schedule a face-to-face conference . Petitione r 2 replied in a letter and requested an extension of time . 3 Petitioner sent a second letter stating she had not received 4 the letter and pleading again for additional time . 5 Officer Smith held a telephone conference wit h 6 Petitioner on April 23rd, 2007, during which she explaine d 7 the CDP procedures and the requirement that Petitioner remit 8 the estimated tax payments for her to receive a paymen t 9 plan . Petitioner failed to justify why her allowabl e 10 expense for collection alternative purposes should excee d 11 those that compliance permitted . Officer Smith held another 12 telephone conference with Petitioner on May 10th, 2007 . 13 Officer Smith asked Petitioner whether she preferred an in- 14 person conference and Petitioner replied that she needed 15 additional time to review all the letters she had received 16 from Respondent . 17 Petitioner agreed to call officer Smith on May 18 23rd, 2007, with her decision, but officer Smith did not 19 receive any call or voice-mail message from Petitioner . 20 Officer Smith consequently reached her determination by 21 reviewing Petitioner's transcripts and the administrative 22 file, which contained information regarding the prio r 23 installment agreement request Petitioner submitted to 24 compliance . Officer Smith agreed with compliance tha t 25 Petitioner could pay more than the amount proposed and that Heritage Reporting Corporatio n (202) 628-4888 7 1 Petitioner was not in compliance with her filing and payment 2 obligations . 3 Officer Smith noted that Respondent had made 4 numerous unsuccessful attempts to resolve Petitioner' s 5 accounts on a mutually agreeable basis before proposing the 6 levy action . Officer Smith ultimately concluded that, given 7 Petitioner's terminal noncompliance and failure t o 8 demonstrate a willingness to timely remit estimated ta x 9 payment, an installment agreement would not prove to be a 10 viable alternative to collection by levy of Petitioner' s 11 substantial unpaid tax liabilities . Petitioner proposed no 12 collection alternatives during the telephonic hearings with 13 officer Smith, nor did Petitioner raise any spousa l 14 defenses . 15 On July 6th, 2007, officer Smith sent Petitioner a 16 notice of determination concerning collection actions under 17 section 6320 and/or 6330, which shall be referred to as the 18 notice determination in which officer Smith sustained th e 19 proposed levy action for each of the years at issue . 20 Petitioner timely filed a petition with this Court 21 requesting that we review whether officer Smith abused her 22 discretion in deciding to sustain the proposed levy action 23 to collect Petitioner's outstanding tax liabilities for each 24 of the 10 years at issue . 25 Heritage Reporting Corporation (202) 628-4888 8 1 For the first time in the petition) Petitioner 2 asserted that she was denied a face-to-face hearing . 3 Respondent filed a motion for summary judgment on may 1st, 4 2008, asking the Court to find that there are no genuine 5 issues of material fact regarding whether Respondent abused 6 his discretion in deciding to sustain the proposed levy 7 action . Petitioner submitted a document that the Court 8 filed as an objection to Respondent's motion . 9 OPINION 10 We are asked to decide whether to grant 11 Respondent's motion for summary judgment . Summary judgment 12 is intended to expedite litigation and avoid unnecessary and 13 expensive trials . See, e .g ., FPL Group, Inc . v . 14 Commissioner , 116 T .C . 73, 74 (2001) . 15 A motion for summary judgment will be granted if 16 the pleadings, answers to interrogatories, depositions , 17 admissions, and other acceptable materials, together with 18 the affidavits, if any, show that there is no genuine issue 19 as to any material fact, and that a decision may be rendered 20 as a matter of law . See Rule 121(b) ; Electric Arts, Inc . v . 21 Commissioner , 118 T .C . 226, 238 (2002) . 22 We are satisfied that there is no genuine issue as 23 to any material fact and that a decision may be rendered as 24 a matter of law . We therefore shall grant Respondent' s 25 motion for summary judgment . Heritage Reporting Corporation (202) 628-4888 9 1 We begin with the standard of review . Where the 2 underlying tax liability is properly at issue, the Cour t 3 will review the matter on a de novo basis . Sego v . 4 Commissioner , 114 T .C . 604, 610 (2000) . 5 Where, as the case here, the validity of th e 6 underlying tax liability is not properly placed at issue, 7 the Court will review Respondent's determination for abuse 8 of discretion . Sego v . Commissioner , supra ; Goza v . 9 Commissioner , 114 T .C . 176, 181-182 (2000) . 10 We must decide whether Respondent exercised hi s 11 discretion arbitrarily, capriciously, or without sound basis 12 in fact or law . See Woodral v . Commissioner , 112 T .C . 19, 13 23 (1999) ; Fargo v . Commissioner , T .C . Memo 2004-13 . 14 Based upon our examination of the entire record 15 before us, we find that Respondent did not abuse hi s 16 discretion in determining that the collection action should 17 proceed with respect to Petitioner's unpaid liability for 18 each of the years at issue . 19 We now explain an overview of the lev y 20 proceedings . If any person liable for federal tax liability 21 neglects or refuses to make payment within 10 days of notice 22 and demand, the Commissioner is authorized to collect th e 23 tax by levy on that person's property . See Sec . 6331(a) . 24 At least 30 days before enforcing collection by 25 levy on the person's property, the Secretary is obliged to Heritage Reporting Corporatio n (202) 628-4888 1 provide the person with a final notice of intent to levy , 2 including notice of the administrative appeals available t o 1 0 3 the person . See Sec . 6331(d) . 4 The person is entitled upon request to an 5 administrative review hearing before appeals . Sec . 6 6330(b)(1) . 7 If the taxpayer requests a hearing , he or she may 8 raise at that hearing any relevant issues relating to th e 9 unpaid tax or the proposed levy . Sec . 6330(c)(2) . 10 Relevant issues include any appropriate spousal 11 defenses, challenges to the appropriateness of collection, 12 and possible alternative means of collection , such as an 13 installment agreement, or an offer-in-compromise . Sec . 14 6330(c) (2) (A) . 15 After the hearing the appeals officer is required 16 to make a determination that addresses issues the taxpayer 17 raised, verifies that all requirements of applicable law and 18 administrative procedures have been met, and balances th e 19 need for the efficient collection of taxes with th e 20 legitimate concern of the person that any collection action 21 be no more intrusive than necessary . Cc) Sec . 6330(c)(3) **. 22 The record demonstrates that the appeals office 23 properly verified that all applicable laws and 24 administrative procedures were followed in this collection 25 review matter . The appeals officer confirmed, using Heritage Reporting Corporation (202) 628-4888 11 1 transcripts of Petitioner's accounts, that assessments wer e 2 properly made for each of the years at issue, tha t 3 appropriate and timely notices were sent regarding th e 4 assessments , and that Petitioner was properly informed of 5 her rights with respect to the proposed levy action . 6 Officer Smith also addressed the sole issue that 7 Petitioner raised in her hearing request, which was whether 8 Respondent should grant Petitioner an installment agreement . 9 Officer Smith found the analysis that compliance did o f 10 Petitioner ' s finances to be reasonable and consistent with 11 the Internal Revenue Manual guidelines . Officer Smit h 12 agreed that Petitioner could pay more than the amount 13 proposed, and that Petitioner had not provided adequate 14 justification as to why she should be allowed expenses 15 beyond those generally allowed for the national standard, 16 housing, utilities, transportation, and other essential 17 expenses . 18 Finally, the record reflects that officer Smith 19 properly balanced the need for the efficient collection of 20 taxes with Petitioner's legitimate concern that any 21 collection be no more intrusive than necessary . Petitioner 22 has not raised any challenges to the appropriateness o f 23 collection , nor raised any spousal defenses . See Sec . 24 6330(c)(2) . 25 Accordingly, these issues are now deemed conceded . Heritage Reporting Corporatio n (202) 628-4888 12 1 Rule 331(b) (4) . 2 We take this time to note that, for the first time 3 in the petition, Petitioner asserted that she wanted a face- 4 to-face hearing with officer Smith . In this regard, it i s 5 well established that a taxpayer can only ask this Court to 6 review those issues the taxpayer originally raised in th e 7 CDP hearing . Magana v . Commissioner , 118 T .C . 488, 493 8 (2002) . 9 This issue is therefore not before us because 10 Petitioner did not present this issue and the settlement 11 officer did not consider this issue in the CDP hearing . 12 Even if we were to consider Petitioner's claim that she is 13 entitled to a face-to-face hearing, we would find no merit 14 to her argument . A CDP hearing may consist of one or more 15 16 17 18 19 20 21 22 23 24 25 written or oral communications between an appeals office r and the taxpayer . Sec . 301 .6330-1, Procedure & Administration Regs . This and other courts have held that face-to-face CDP hearings are not required under section 6330 . Katz v . Commissioner , 115 T .C . 329 (2000) . Taxpayer not entitled t o face-to-face hearing, telephone conference procedurall y proper . Leineweber v . Commissioner , T .C . Memo 2004-17 . Face-to-face hearing not required, prior telephon e conversations constitute CDP hearing . Tilley v . Unite d States , 270 F .Supp . 2d 731 (MDNC 2003) . Face-to-fac e Heritage Reporting Corporation (202) 628-4888 13 1 hearing not required , telephone conversations suffice . Guv 2 v . United States , 2002 Westlaw 1732850 (EDNY 2002) . IRS 3 does not owe taxpayer a duty to hold a face - to-face CD P 4 hearing . 5 Petitioner has not presented any evidence o r 6 persuasive arguments to convince us that Respondent abused 7 his discretion in sustaining the proposed levy action . We 8 therefore conclude that Respondent did not abuse hi s 9 discretion in upholding Respondent ' s proposed levy action to 10 collect Petitioner' s outstanding income tax liability for 11 each of the years at issue . 12 Accordingly, an appropriate order and decision 13 will be issued to provide that Respondent ' s motion for 14 summary judgment, filed May 1st, 2008 , is granted as to the 15 years 1995, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 16 and 2005 . 17 In addition, we will issue a decision that the 18 determinations set forth in the notice of determination 19 concerning collection actions under section 6320 and/or 20 6330, dated July 6th, 2007, upon which this case is based, 21 are sustained as to all of the years at issue . 22 This concludes the Court' s oral findings of fact 23 and opinion in this case . 24 (Whereupon , at 2 :21 p . m ., the bench opinion in the 25 above -entitled matter was concluded . ) Heritage Reporting Corporation (202) 628-4888