TAX COURT OPINION

Case: Jihad N. & Joy A. Ahmad
Docket Number: 8805-07L
Judge: Paris
Opinion Type: memo
Filed: 11/15/2011
Pages: 9

T.C. Memo. 2011-269 UNITED STATES TAX COURT JIHAD N. AND JOY A. AHMAD, Petitioners v. COMMISSIONER OF INTE)RNAL REVENUE, Respondent Docket No 8805-07L. Filed November 15 2011. Jihad N. and Joy A. Ahmad, pro sese. G. Chad Barton, for· respondent. MEMORANDUM OPINION - PARIS, Judge: . This case is before the Court on a petition for review of a Notice of Determination Concerning Collection Action (s) Under Section 6320 and/or 6330 (notice of determination). See sec. 6330(d).1 Petitioners seek judicial 1Unless otherwise indicated, all section references are 'to '. (cont:inued . . ) D NOV 1 5 2011 - 2" - review of respondent's determination to proceed with a filed lien and proposed levy. These collection actions concern petitioners' outstanding Federal income tax liabil.ity for taxable year 2003. The issues for decision are: (1) Whether petitioners are precluded from contesting their underlying liability for taxable year 2003; and (2) whether respondent's determination to sustain the filing of the lien and proposed collection by levy constitutes an abuse of discretion. Background The parties submitted this case for decision, fully stipulated. See Rule 122(a). The stipulation of facts filed and supplemented on September 14, 2009, and the. attached exhibits are incorporated herein by this reference. Petitioners resided in Oklahoma at the time their petition. was filed. Petitioners filed a joint Federal income tax return for taxable year 2003. On December 5, 2005, respondent issued to petitioners a notice of deficiency in which he determined a deficiency in petitioners' 2003 income tax and an accuracy- 1(...continued) the *Internal Revenue Code of .1986, as amended, references. are to the Tax Court Rules of Practice and Procedure. .and all Rule - 3 - related penalty under section 6662 (a) . Petitioners failed to file a timely petition to contest this notice of deficien$(cid:0)570. On April 17, 2006, res ondent Êssessed petitioners' 2003 tax liability on the basis of tl noti e óf deficiency issued on December 5,' 2005. On April 27, 20 6, respondent issued to petitioneÈs a Final Notice f Intent to Z.evy and Notice of Your Right' to a Hearing advising them that he intended to levy to collect the unpaid liability for taxable ýear 2003. On May 4,~ 2006, respondent issued to petitioners a Notice of Federal Tax Lien Filing and Your Right to a Hearing, reflectiilg that a notice of Federal tax lien for' the 2003 liability had been filed on April 27, 2Ö06. On May 23, 2006, petitioners filed Form 12153, Request for a Collection Due 'Process or E uivalent Hearing. On September 11, 2006, petitioners delivered a letter to the Oklahoma City 'Appeals Of f ice detailing their dispute regarding the underlying income tax'li"abi'lity for taxablÂ year 2003. On November 22, 2 06, respondent'è Appeals Office sent pètitiohers à lett!er acknowledging the receipt of petitioners' request for a 2Petitioners attempted to dispute the notice of deficiency for taxable year 2003 in thë petition filed at docket No. 8804-07S. However, the notice of deficiency was dat·ed Dec. 5, 2005, and the petition. was not filed untll Apr. 19, 2007. Accordingly, that case was dismissed for lack of that the petition was not timely filed under sec. 6213 (a) . jurisdiction on the ground collection due process (CDP) hearing and scheduling a telephone conference for December 20, 2006 - The November 22, 2006, letter advised petitioners that they could not dispute respondent's det rmination of their underlying liability for taxable year 2003 because, they had had a prior opportunity to do so. The letter further stated that for the Appeals .Office t;o consider collection alternátives, petit-ioners would be required to provide: (1) A cogpleted .Form 433-A Collection Information Statement for Wage Earners and Self- Employed Individuals; (2) signed t x returns for. taxable years 1996, 1997, and 2005; and (3) proo of. estimate.d tax payments made for taxable year 2006. Petitioners failed to meet these requirement s . . On December 20, 2006, a telephone CDP hearing was held . . between Settlement. Officer Silverhorn (SO Silverhorn) and , petitioner Jihad Ahmad. No col ection alternatives. were discussed .during this phone conference and SO Silverhorn. informed petitioners that the requirements for consideration of such alternatives had not been Inet. OnaMarch 29, 2007, SO Silverhorn issued to petitioners a notice of determination. On April 19, 3Contemporaneous with the CDP hearing process, petitioners were actively pursuincj an audit reconsideration whicli substantially reduced !büt did not negate the outstanding assessed balance. Consequently, SO Silverhörn was justified in proceedinëJ with the CDP hearing since there remained an ur(cid:0)540paidassessed balance due . indeed 2007, petitioners filed a pétition with this Court for review of - 5 - SO Silverhorn' s determination. Discussion A. Standard of Review 1 . Under section 6321, . if a person liable t pay anyi tax e neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, additiion to: tax,. or assessable penalty, together with any costs that may accrue in addition, thereto) shall be a lien in. favor of the United States upon all property, whether ieal or personal, belonging to such person. In order for_ a 1;i.e under section 6321 to be valid against any. purchaser, holder of a security interest, mechanic's leinor, or judgment lien creditor, such a lien must be filed in accordance with the requiretpents of section 63 3 (f) . Sec. 6323 (a) . A taxpayer may appeal a lien filed under section 6323 by requesting an administrative hearing with the IRS under section 6320(b). Similarly, undèr section 6331, if a person liable to pay any tax neglects or refùses to þay the' same within 10 days after notice and demand, it shall be lawful for the secretary to collect s'uch tax by' levy up n all property' and rights to property belonging to such person, taxpayer ma(cid:0)570appeal the proposed ' levy to the IRS under secti n 633Ê by requesting an adminiÊtrative hearing. When practicable,n an administrative hearing for a lien will be held in conjunction with an administrative hearing for a proposed levy for the same. taxable year. See sec. 6320 (b) (4) . If an adverse determination is reached on either issuer the taxpayer is af forded the opportunity for judicial review of the determination int the Tax Court pursuanti to section -6330 (d) . Petitioners se.ek review of respondent' s determination. Wherè the y lidity of tihe ùnderlying tax liability is properly ah issue? the Coùrt will re iew the matter de no o. Davis vi CommissioÃer fl15 T. C. 35, 39 (2000) . Where the underlying tax liability is not operly at issue, the Court will review the CommissioneÈ'È administrative deiermination for abuse of discretion. 4Sego v. C mmissiorier, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T. C. 176, 181-182 (2000) . An abuse of discretion is any action that is arbitrary capricious, or without sound basis in law or f act . Woodral v. Commissioner, 112 T . C. 19, 23 _(1999) . The underlying tax liability may be properly at issue at a collection due proces s hearing only . when . the taxpayer has not received a notice of deficiency or has not otherwise had an opportunity to challenge the liability. Sec. 6330 (c) (2) (B) . Where the taxpayer has received a notice of deficiency, the taxpayer must file a petition for redetermination of the notice of deficiency within. 90 days of the date such notice was mailed. Sec.. 6213 (a) .1 Petitioners were issued as notice of deficiency on December 5, 2005. Petitioners do not assert that they did not receive the notice of deficiency. Petitioners .failed to file. a. petition within 90 days of this date.. B'ecause petitioners had forgone a prior opportunitys to challenge the notice òf. deficiency for, taxable year 2003, the underlying liability is not properly at issue in this case . Accòrdingly, the. applicable scope of review is for abuse of discretion.. B. Abuse of Discretion ,, . . Sections 6320 and 6330 require the Commissioner to ive tÉhe taxpayer notice of a filed ien or proposed le y and notice of the right to a fair hearing before an impartial officer of the IRS Appeals Office. Secs. 6320(a) and (b), 6330(a) and (b). At the hearing, the taxpayer m y rÀise appropriat!Å spousal defenses, challenge the appropriatene s of colléction hctions, and offer dÒllection alternatives. S c . 6330 (c) (2) (A) . AÒditionally, the taxpayer .may challenge the èxistence or amount 6f 'the underlýing tax liability only if the taxpayer did not receive a notice of deficiency or did not otherwise have an opportunity to challenge the underlying liability. Sec . 6330 (c) (:2) (B) . At the hearing, generally, the. Appeals officer musti consider the above-stated issues rai ed by the taxpayer verify that ,the requirements of, applicableulaw and administrative procedure have been'-met, and consider, whether any proposed collection± action balances the need for; efficient collection of taxes with the legitimate concern of the: * * * [taxpayer] that any collection actiontbe. no more intrusive than necessary " Sec. 6330 (c).(3) Underlying2 liability, and othei-. section 6330 (c) (2) issuest »must be raised at the Appeals hearing to be properly raised before this' Court .· Giamelli v. Commissioner 129 T . C. 107, 115 (2007) . It is not an abuse of discretibri for an Appeals officer to sustain a collection action where the taxpayer fails to provide requested information necessary tå consider collection alternatives., See Dinino v. Commissioner, T.C. Memo. 2009-284; Prater.v. Comissioner, T.C. Memo. 2007-241; Chandler. v. Commissioner, . T. C. Memo. 2005-99. The on Ly issue petitioners raised at. their_CDP hearing was the amount of. their underlying liability for tax year 2003.. . However, petitioners were precluded ! from c allenging their 2003 liability as t hey had f rgone a prior opportunity to do so. See sec. 6330 (c) (2) (B) .4 4The Court recognizes that petitioners have achieved substantial reduction of their outstanding liability through audit reconsideration. . The Court further recognizes that at the time of trial petit'ioners continued to seek further abatements of accrued interest . However, scope of de termination proces s . the Cöurt's jurisdiction in review of these considerat-ions. are outside the the CDP Petitioners did not present any spousal defenses or challenge the appropriateness of the proposed collection actions. Petitioners also failed to provide SO Silverhorn with the requested financial information necessary for him to consider any applicable collection alternatives. Accordingly, SO Silverhorn did not abuse his discretion in sustaining the lien and proposed levy actions. The Court has considered all of the arguments made by the parties and, to the extent they are not addressed herein, they are considered unnecessary, moot, irreleVant, or without merit . To reflect the foregoing and respondent's :concesslons, An appropriate decision will be entered.