TAX COURT OPINION

Case: Roger D. & Mary M. Catlow
Docket Number: 1849-11L
Judge: Kroupa
Opinion Type: bench
Filed: 03/19/2012
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 ROGER D. & MARY M. CATLOW, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. ) ) ) ) 1849-11 L ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the trial of the above case before Judge Diane L. Kroupa at Seattle, Washington on March 1, 2012, containing her oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. March 19, 2012 8ERVED MAR 2 2 2012 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 3 Bench Opinion by Judge Kroupa March 1, 2012 Catlow v. Commissioner Docket No. 1849-11L THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. These oral findings of fact and opinion shall not be relied upon as precedent in any other case. This bench opinion is made pursuant to the authority granted in § 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the years at issue as later defined, and all rule references are to the Tax Court . Rules of Practice and Procedure. This is a collection review case involving the proposed levy action and a federal tax lien filing to collect Petitioners' unpaid federal income tax liabilities for the taxable years 1992 through 1996 (the years at issue). This collection review case is before the Court on Respondent's motion for summary .judgment filed December 27, 2011. The Court scheduled Respondent's motion for a hearing in Seattle, Washington. Terri Merriam appeared on behalf of Petitioners, and Kristin Joe appeared on behalf of Heritage Reporting Corporation (202) 628-4888 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 4 Respondent. Findings of Fact. The record establishes or the parties do not dispute the following facts. Petitioners resided in Washington at the time they filed the petition in this case. Beginning in the 1980s, Petitioners claimed losses and credits from their investment in a partnership organized and operated by Walter J. Hoyt III (Hoyt) on their federal income tax returns. Hoyt was convicted on criminal charges relating to the promotion of this and other partnerships. Petitioners' claim to the losses and credits resulted in the underreporting of their taxable income for many years. We reviewed Petitioners' case with Îrespect to collection of their tax liabilities for 1981 through 1991 (the prior years) and sustained the Commissioner's collection actions for those years in Catlow v. Commissioner, T.C. Memo 2007-47. Petitioners appealed our determination, and the Court of Appeals for the Ninth Circuit affirmed our decision to the extent it permitted the Commissioner to proceed with the collection action for the prior years. Keller v. Commissioner, 568 F.3d 710 (Ninth Cir. 2009). Heritage Reporting Corporation (202) 628-4888 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 5 We now review Petitioners' case with respect to collection of their tax liabilities for the years at issue. Respondent issued to Petitioners a Notice of Intent to Levy and Notice of Your Right to a Hearing regarding the years at issue. Shortly after, Respondent issued to Petitioners Notices of Federal Tax Lien Filing and Your Right to a Hearing regarding the same years. Petitioners timely requested a CDP hearing. The settlement officer scheduled a telephone CDP hearing and requested that Petitioners provide certain financial information. Petitioners provided the information, and their counsel had a telephone CDP hearing with the settlement officer. The parties discussed the possibility of a partial pay installment agreement and scheduled a follow-up call. Petitioners' counsel later contacted the settlement officer regarding the Commissioner's levy on Petitioners' bank account for the tax liabilities for the prior years. In a follow-up conference call, the settlement officer informed Petitioners' counsel that the Commissioner could levy for the prior years as only the years at issue were subject to the CDP procedures. The settlement officer notified Petitioners' Heritage Reporting Corporation (202) 628-4888 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 counsel later on the telephone that Petitioners would not be eligible for a partial pay installment agreement because of equity in their rental property. The settlement officer used the information Petitioners provided as to their financial situation. The settlement officer issued a determination notice for the years at issue sustaining Respondent's proposed collection actions for the years at issue. Petitioners timely filed a collection review petition. As previously stated, Respondent filed a summary judgment motion. Petitione filed an objection as the Court ordered. The Court scheduled Respondent's motion for, a hearing in Seattle, Washington. The Court heard oral arguments from both parties at the motion hearing. Opinion. We are asked to decide whether to grant summary judgment. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See e.g. FPL Group, Inc. v. Commissioner, 116 T.C. 73, 74 (2001). A motion for summary judgment will be granted if the pleadings and other acceptable materials show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. See Rule 121(b); Elect. Arts, Inc. v. Commissioner, 118 T.C. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 226, 238 (2002). The moving party has the burden of proving that no genuine issue of material fact exists and it is entitled to judgment as a matter of law. See e.g. Rauenhorst v. Commissioner, 119 T.C. 157, 162 (2002). Respondent has met his burden. In the petition, Petitioners asserted that Respondent erred in requiring them to deal with the revenue officer addressing the prior years because he did not return any of their calls. They since modified this argument with respect to the summary judgment motion. In response to Respondent's summary judgment motion, Petitioners asked that we dismiss this case as moot because the parties have agreed to the collection alternative of a partial pay installment agreement. Petitioners want a partial pay installment agreement to cover the prior years and the years at issue. Respondent counters that an installment agreement applies only with respect to the prior years, not the years at issue. At the motion hearing, Petitioners asked that we remand the years at issue back to the revenue officer addressing the prior years so that all of Petitioners' liabilities can be addressed together. Heritage Reporting Corporation (202) 628-4888 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 8 In essence, Petitioners want to address collection of their liabilities collectively rather than addressing the prior years and the years at issue separately. Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review Respondent's determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). We must decide whether Respondent exercised his discretion arbitrarily, capriciously or without sound basis in fact or law. See Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Fargo v. Commissioner, T.C. Memo 2004-13. In making this determination, we do not conduct an independent review of what would be an acceptable collection alternative, nor do we substitute our judgment for that of the settlement officer. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005). Based upon our examination of the entire record before us, we find that Respondent did not abuse his discretion in determining that the collection action should proceed with respect to Petitioners' unpaid income tax liabilities for the years at issue. Respondent is therefore entitled to Heritage Reporting Corporation (202) 628-4888 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 summary judgment in his favor. We briefly describe collection procedures. A lien in favor of the United States is imposed on all property and property rights of a taxpayer liable for taxes after a demand for the payment of the taxes has been made and the taxpayer fails to pay those taxes. Sec. 6321. The lien arises when the assessment is made. Sec. 6322. The Secretary generally must file a notice of federal tax lien with the appropriate state office for the lien to be valid against certain third parties. Sec. 6323. The Secretary is also required to send written notice to the taxpayer of the filing of a notice of lien and of the taxpayer's right to an administrative hearing on the matter. Sec. 6320(a). In addition, no levy may be made on any person's property unless the Secretary has notified such person in writing of their right to a hearing before the levy is made. Sec. 6330 (a). At the hearing, a taxpayer may raise any relevant issue, including appropriate spousal defenses, challenges to the appropriateness of the collection action and possible collection alternatives. Sec. 6330(c) (2) (A). Following a hearing, the appeals officer must issue a notice of Heritage Reporting Corporation (202) 628-4888 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 10 determination regarding the validity of the filed federal tax lien. In making the determination, the Appeals Office is required to take into consideration: 1) Verification presented by the Secretary that the requirements of applicable law and administrative procedure have been met; 2) Relevant issues raised by the taxpayer; and 3) Whether the proposed collection action appropriately balances the need for efficient collection of taxes with the taxpayer's concerns regarding the intrusiveness of the proposed collection action. Sec. 6330(c) (3). If the taxpayer disagrees with the Appeal Office's determination, the taxpayer may seek judicial review by appeal to this Court. Sec. 6330(d). The record reflects that the settlement officer properly verified that all the legal and procedural requirements have been met. She also addressed the collection alternative that Petitioners presented to resolve their outstanding tax liabilities for the years at issue. A settlement officer may enter into an installment agreement with a taxpayer if such agreement would facilitate full or partial collection of tax liability. Sec. 6159(a). The settlement officer discussed and Heritage Reporting Corporation (202) 628-4888 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 11 considered Petitioners' proposed partial payment installment agreement, but ultimately concluded that she could not agree to it because of Petitioners' equity in their property. Petitioners have failed to establish that there was an abuse of discretion by the settlement officer. Petitioners may not rely merely on allegations or denials. Moreover, we remind the parties that the Court does not substitute its judgment for that of the settlement officer in deciding whether there was any abuse of discretion. We cannot remand this case as Petitioners request because there has been no abuse of discretion. A taxpayer is entitled to a single CDP hearing with respect to the year to which the unpaid liability relates. Sec. 6320(b) (2); Freiie v. Commissioner, 131 T.C. 1, 5 (2008), aff'd 325 Fed. Appx. 448 (Seventh Cir. 2009). See also Kelby v. Commissioner, 130 T.C. 79, 86 (2008) (similar holding for § 6330 cases). Petitioners have already had hearings, both with respect to the prior years and with respect to the years at issue. We place no weight in Petitioners' argument that their agreement with the Commissioner regarding collection of the prior year liabilities should now bind Respondent for the years at issue. Each year Heritage Reporting Corporation (202) 628-4888 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 e L 12 stands alone. See Rose v. Commissioner, 55 T.C. 28, 31-32 (1970); Elder v. Commissioner, T.C. Memo 2007-281. We cannot Respondent to do more when there has been no abuse of discretion as here. To reflect the foregoing, decision will be entered for Respondent and an appropriate order will be issued sustaining Respondent's collection actions set forth in the determination notice dated December 20, 2010, upon which this case is based, regarding Petitioners' unpaid income tax liabilities for the years 1992 through 1996, inclusive. An order will also be issued granting Respondent's motion for summary judgment. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 8:32 a.m. the bench opinion in the above-entitled matter was concluded. ) // // // // // // // // Heritage Reporting Corporation (202) 628-4888