TAX COURT OPINION

Case: Robert Fitzgerald Pough
Docket Number: 21954-07L
Judge: Goeke
Opinion Type: reported
Filed: 09/13/2010
Pages: 16

135 T .C . No . 1 6 UNITED STATES TAX COUR T ROBERT FITZGERALD POUGH, Petitioner v . jOMMISSIONER OF INTERNAL REVENUE, Responden t DocketlNo . 21954-07L . Filed September 13, 2010 . seeks to collect income taxes and sec . 6672, penalties by means of levy and lien . At the m q f this case P raised his inability to obtain a uity loan unless the tax lien was released . P to timely raise this issue with the assigne d officer although he was given a reasonable time ond, to obtain a loan, and to have his counsel the Appeals officer . I .R .C . trial home e failed Appeal to res contac Regarding the income tax liabilities, P failed to submit amended income tax returns after being provided adequa e time to .do so . liabil ty under sec . 6672 ,_ I .R .C ., after being offered an adm nistrative hearing . P had previously agreed to his Held : P did not properly raise the income tax liabilities with the Appeals officer and may not raise See Giamelli v . Commissioner , that issue in this case . 129 T .C . 107, 111 ( 2007) . SERVED SEP 13 201? Held , further , P having declined an administrative hearing, may not raise in this proceeding the sec . 6672, I .R .C ., liability . . . Held , further , because the Appeals officer gave P adequate time to submit the requested items, it was not an abuse of discretion to move ahead when P failed to submit them . Held , further , R's proposed collection actions are sustained . Robert Fitzgerald Pou.gh, pro se . Anne M . Craig , for respondent . OPINION ' .GOEKE, Jude : This case was commenced in response to a notice of determination concerning collection action sustaining a notice of Federal tax lien and a proposed levy with respect-t o section 66721,civil penalties for three calendar quarters durin g 2006 and income taxes for> .years,2002 through 2005 . The . issue for { decision'is whether the Internal Revenue . Service (IRS)Appeal s officer abused her discretion in determiningtorsustain the tax lien and the proposed levy . For the reasons stated herein, w e conclude that the .Appeals officer did,not .,abuse her discretion .' 'Unless otherwise indicated, all section references are t o the Internal Revenue Code in effect for the relevant period . , -.- 3 Backgroun d f ,the facts .have,been stipulated and are so found . !Thestipulaltion of facts and the accompanying exhibits ar e incorporated herein by this reference . . At the time the petition Petitioner is president of 911tDirect, Inc . (911 Direct), #which sells, installs,, and services equipment for police and fire !dispatchers . °911 Direct was . delinquent"in paying=trust-fund ,taxes for q arters ending March' 31, 'June 30, and September 30 , !2006 .. On December 6, 2006, petitioner and his representative me t with an,IRSlrevenue officer . The IRS thereafter issued t o petitioner a Letter 1i53( DO) proposing to assess section 667 2 ',penalties, a0ainst petitioner for :the unpaid trust fund taxes o f 1,911 Direct .! Petitioner did not : appeal-or contest the assessment s proposed in the Letter 1153(DO)' . Petitioner signed Form 2751, ,Proposed As essment of Trust Fund Recovery Penalty, agreeing t o assessmentslagainst him of section 6672 pehalti e's(cid:127)for the unpai d { !trust fun d On February 2, 2007, petitioner filed delinquent 2002, 2003 , !2004, and 2 t 05 income tax returns . Each return showed a balanc e On Mar h 26, 2007 ; petitioner was'issued a Final Notice o f !Intent to L vy and Notice of,Your Right to a Hearing for his 2004 and 2005 income tax liabilities ., , On April 16 , 2007, petitioner, was issued a Final Notice (cid:127) of Intent to Levy and Notice of You r Right to a , Hearing for his 2002 and 2Q03 ; income . tax=l (cid:127)iabilities . On .April 18 ,; 2007 petitioner was issued ,a Notice of Federal 'Tax - Lien Filing and Your Right to :;a Hearing Under ° IRC 6320 for his . 2004 and , 2005 income tax aiabilities . ' .On .April '27,, 200 7 petitioner was issued a Notice of Federal Tax Lien Filing and ° Your Right to a Hearing Under IRC 6320(cid:127)- for his 2002 and'2003 income tax liabilities . On May 22 ; 2007 , ° petitioner ' was(cid:127) issued' - a Final Notice of Intent to Levy and Notice of Your Right to a Hearing for . the trust fund recovery penalties ( TFRPs ) . On June 5, 2007, petitioner was .issued a Notice 'of Federal Tax Lien- Filing and, Your Right to a Hearing Under IRC 6320 for the TFRPs(cid:127) . Petitioner timely , submitted . requests for hearings in response4t o each Notice of Federal Tax Lien .Filing ., and Your.. Right to-.a , Hearing Under IRC 6320 and Final Notice . of 'Intent to Levy an d Notice , of Your Right to a Hearing . An IRS Appeals officer was assigned to hear petitioner's- requests . The Appeals officer determined that '911'Directwas n current on its 2007 : Federal tax deposits ( FTDs)'and that petitioner was not in compliance with estimated payments :' of his income taxes for 2006 and 2007 . The Appeals officer and petition' er , held a telephone , hearing . on,April~ . 26, 2007 . - During ,the' hearing , petitioner,. said - he would .cbe _ able to pay, they'_,TFRP s - 'r 5 within 6 0 ays, but he did not . .Petitioner also said that hi s }accountant incorrectly prepared petitioner's tax returns for 2002 through 200 5 . Petitioner said he intended to file=Forms 1040X, .- Amended U . S Individual Income=Tax Return, but he never did so . Additionall y, petitioner orally requested an installmen t agreement o f $200 a month,,but he never, submitted a Form 656, . .,Offer in Co promise . The Appeals officer requested .that petitioner file Form 433- {A, Collecti on Information Statement for Wage Earners and Self Employed In viduals, and Form 433-B, Collection Information (Statement f r, Businesses , .and submit a 2006 Profit and Loss (P&L') ,statement f or 911 Direct . The Form 433-A petitioner submitte d !showed equi y of approximately $61,000 in real estate he owned . ,The P&L st a ement petitioner submitted showed 911 Direct had net income of $ 44,870 in 2006 . .,On May 30, 2007, the-Appeals officer determined that ,petitioner' unpaid individual tax liabilities from Forms 1040 , U .S . Indiv i ual Income Tax Return," for years 2002 through 2005 $56,111 by October 28, 2007 . On May 31, 2007, the Appeals off cer called petitioner and .asked_whether he would be able to pay this liability within 120 days by borrowing agains t his assets . Petitioner responded'that .he would be meeting with.a :loan office -at .his bank in the next week to discuss refinancing ,his propert in order to .°.pay the individual liabilities . The Appeals officer told petitioner to notify herby June 14, 2007, " if he was unable to secure sufficient financing to pay'the ' individual liabilities within 120 days . Petitioner .called° wit h questions on ; June 7, 2007, and reaffirmed his commitment to ge t back to the Appeals officer with further information on,financing by the June 14,'2007, deadline . Petitioner .did not get back't o the Appeals officer . Petitioner represents that he~inquired-' about a home'equity,loan but was told he could not get one because°of .the-liens-which the IRS had filed on his home . Petitioner (introduced no evidence that he had actually made such an inquiry with abank . Petitioner further represents that' ; he requested that the Appeals officer lift the liens so that h could, apply ,, for a . loan . ° There is no evidence that such R a request was made until July610, 2 .007 . At that time the Appeals office r did not release the liens . On June 19, 2007, petitioner informed the Appeals officer that he was preparing . a .reque"st for 'abatement of penalties fo r all taxable yearsat issue, .but he did not specify which penalties he was referring to . Petitioner said he would'send the abatement request to the Appeals officer by July 9, 2007 . Petitioner never sent such a"request . On July 10, 2007 the Appeals officer called petitioner and' informed .,him hat records-indicated that he,had not made any FTDs for,911 Direct for the"quarters ending March 31, and June 30 , 2007 :__ Dur'ng-the July 10, 2007 ;'telephone call, petitioner claimed he would provide-verification of compliance with th e [obligation to make .FTDs for those quarters . Petitioner also requested an additional -week to see whether'he could get funds t o [fully pay is liabilities for income taxes and for°TFRPs within ,,60 days . Petitioner did not-provide' verification of compliance- by 911 Dir ct with its obligation to make the FTDs or provid e 'information regarding full payment of his liabilities . 1 On July 16, 2007, petitioner left a message for the Appeals [officer, th t he had retained someone with'a power of"attorney to represent im . Petitioner stated the representative woul d contact thAppeals 'o.f.ficer the . next day .todiscuss the case . No one did . On July 25, 2007 , ,the, Appeal's officer again,-spoke wit h petitioner . Petitioner asked whether the Appeals officer had !been contacted by his representative, and she responded that she had not . The Appeals officer informed petitioner that she planned to close the-file . Petitionersaid he would get in'touch [with the representative and . have the person contact the Appeals- lofficer-the next day if the Appeals officer would delay closur e of the file . The Appeals''officer agreed to delay ; however, again no one contacted her . On August 2, 2007, the Appeals officer ,closed the file . - 8 - On,August 23, 2007, respondent sent petitioner . .a Notice'of, Determination Concerning-,Collection Action(s) Under Section 6320 and 6330 (notice of determination) . The notice of determination sustained the proposed levy .and .the notices of Federal tax lien (NFTLs) for .all tax periods at ;issue The_notice of ° determination set forth a conclusion that the requirements of law and administrative procedure,had been met and that the need for. efficient collection justified the intrusiveness . of the' collection action . The notice of determination also',stated that petitioner, had not submitted a, written,request for an abatements% of penalt,ies, . nor,a Form 656 ; that neither, an offer-in-compromise nor an installment payment would be an acceptable collection alternative given petitioner's equity in assets and his earning- capacity.;; and that petitioner was ° . not'. in compliance with his income .tax obligations for 2006 . and 200 .7, nor was 911 Direct in compliance with its obligation to make FTDs for 2007 . . Petitioner timely filed a petition .for lien or levy action-' under sections 6320(c) and 6330(d) requesting a review of respondent's collection action . The petition : alleged that" petitioner and 911 Direct were inz,compliance with all Federal tax, filings . and that no .-loans could be obtained to satisfy the liabilitie s A trial was held on March 8 and 9, 2010, in Jacksonville, . . Florida . At trial petitioner testified extensively . Much of his testimony pertained to,a separate hearing involving 911 Direct ' 4 which was rot :.-appealed to this Court and which is not 'at issue . Petitioner .lalso testified .. that he .was confused about all th e } actions taken against him and how ''to resolve them . Finally° , petitioner testified that the-income of 911 Direct as stated i n the P&L statement was incorrect . Discussion- Section 6321 :imposes a lien in favor of theUnited'States o n Fall property of a taxpayer-liable for taxes after .a demand fo r payment of the taxes has been made and the' taxpayer fails 'to . pay . The lien arises when the assessment is'made .0=Sec : 6322 .° The Secretary must send a written notice to the taxpayer of th e filing ofa notice of lien and of the taxpayer's"right'to a 4hearing on he matter . Sec-6320(a) . 'Similarly, before . proceeding with a levy,-the IRS must0.issue a final notice of intent to levy and notify the taxpayer'of the-right to a hearing . Sec . 6330(a) and (b)(1) . During the hearing, a taxpayer may raise any relevant issue, including challenges to th e appropriateiess of the collection action and possible collectio n alternative . Sec . 6330(c) (2)'(A) . Following the hearing, th e Appeals Offce~must make'a determination whether the lien°'filin g was appropr .ate and is required to consider : (1) Whether the } .Secretary hLs met'the requirements of applicable law'and - 10 - administrative procedure ; (2) the 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 that the collection action be no more-intrusive than necessary . Sec . 6330(c)(3) . . II . Underlying Liabilitie s In a hearing a taxpayer may challenge the existence o r amount of the underlying tax liability for any. tax period if he did not *receive a notice of deficiency for such liability -or otherwise have an opportunity to dispute such tax liability . Sec . 6330(c)(2)(B) . We address the underlying.TFRP. and income . .' tax liabilities separately . Petitioner previously had an opportunity to challenge .-the TRFP liabilities when he received the Letter 1153 .(DO), but .he .did not do so . . Instead, petitioner signedForm 2751, agreeing to assessment against him of the TFRPs .a Therefore he was unable to contest the underlying TFRP liabilities in the hearing, and .we may not consider them . Sec . 6330(c)'(2)(B), (d) . while petitioner told the Appeals . officer that he intended . tofile amended income tax returns, petitioner did not do so over the period of nearly 7, months between the filing of his original Forms 1040 and the issuance of the notice of determination . The underlying income tax liabilities were therefore not challenged in the hearing, and we may not consider . them . See sec . - . 11 - 6330(c)(2)(IB), (d) ;. Giamelli v . Commissioner , 129 T .C . 107, 11 1 (2007) ; Newstat v . Commissioner, T .C . Memo . 2005-262 . III . Standard of Revie w Where a taxpayer's underlying tax liability is not in dispute, t e Court reviews the Commissioner's determination for abuse of,_discretion .. See Sego v . Commissioner ; 114 T .C . 604, 610 (2000) ; Goza v ._ Commissioner, 114 T .C . 176, 182 .(2000) . To establish an use of discretion, the taxpayer must prove that the decision of the Commissioner was arbitrary, capricious, or without sound basis in fact or in'law . Giamelli v . Commissioner , . supra at 111 (citing Woodral v . Commissioner , 112 T .C . 19, 2 3 (1999)) ; Ti nerman v . Commissioner, T .C . Memo . 2010-150 . In reviewing for abuse of discretion, .we generally consider only the arguments, issues, and other matters that were raised at the 'hearing or otherwise brought to the attention of the Appeals 'Office . Giamelli v . Commissioner, supra at 115 ; Tinnerman v . Commissioner, supra . Considering the facts of this case, we find that there as no abuse of discretion in the Appeals officer's determination to uphold the tax lien and the proposed levy against petitioner . DIV . Whethe the Decision To Sustain the Liens and Notices of Levy W s an Abuse of Discretion A . Whether the. Secretary Has Met the Requirements of Apblicable Law and Administrative Procedur e Before issuance of a notice of determination, an Appeals officeri.must .verify that all requirements of applicable law an d administrative procedure have been met . Sec . 6330(c)(1),=(3)(A) The Appeals officer determined that respondent followed the requirements of applicable law and administrative procedure i n filing the~liens :and proposing to levy . The notice of , determination noted-that-the liabilities were-duly assessed'and the requisite notices were mailed timely . . to .petitione,r . ... .'There'i s no evidence that the requirements of-applicable law an d administrative procedure were not satisfied . B . Relevant Issues Raised by Petitione r An Appeals officer is required to consider any relevan t issue raised by a taxpayer during the course of a hearing , including challenges to the appropriateness of collection actio n and collection .alternatives offered by the taxpayer . Sec . 6330 (c) (2) (A) , (3 .) (B) We find that,the Appeals office r adequately took into consideration the relevant-issues petitione r raised and did not abuse her discretion . Petitioner expressed interest in-an installment agreement o f $200 per month . Petitioner also informed the'Appeals office r that-he wished to submit a request for abatement of penalties and . . that .he-,,-was going to have his representative contact the .Appeal s officer . Finally, petitioner attempted to have the Appeal s officer release the-liens on his home so that he could apply fo r an equity loan . We address each of . these matters .in turn . - 13 - We find the Appeals officer did not abuse her discretion in regard to petitioner's expression ofinterest in an installment agreement . Petitioner did'not submit a written proposal for such ,,an agreemen nor a Form 656 as is requisite for an offer-in- !compromise . He was not current on his tax obligations, an d neither was his corporation . See Giamelli v . Commissioner , supra at 111-112 ("Reliance on a failure to pay current taxes in rejecting~a collection alternative does not constitute an abuse' of discretion .") ; Nelson v . Commissioner , T .C . Memo . 2009-108 . Although petitioner stated he would provide verification of his and 911 Dir ct's .compliance with tax obligations, he did not do so . In addition, the Appeals officer told petitioner that an installment agreement would not be . acceptable given petitioner's equity in asset s and petitioner's income from 911 Direct, as reported on Form 433-A and the P&L statement . It was proper for the Appeals officer to consider these items when determining whether to accept such an offer-in-compromise . See Orum v . Commissioner, 123 T .C . 1, 14 (2004 ), affd . 412 F . 3d 819 (7th Cir . 2005) ; Schrop-D v . Commissioner, T .C . Memo . 2010-71 . We-also find the Appeals officer did not abuse he r ,discretion' by not waiting for petitioner's representative to get in touch with her or by not waiting for petitioner tosubmit a written req est for abatement of penalties . Petitioner failed to meet reason ble deadlines set by the Appeals officer relating to - 14 - the representative and to the abatement of penalties request . This Court has found that when an Appeals . officer 'gives -a - taxpayer an adequate timeframe to submit requested items ; it is, not an abuse of discretion to move ahead if the taxpayer fails to submit the : requested items . . Shanley v . Commissioner , TC .- Memo ., 2009 -17 . Petitioner represents that he attempted to get a loan,bu t was denied outright because a tax lien had . been placed on his, home . ,It appears that on July 1 .0, 2007, petitioner requested that the Appeals officer lift the- lien so °he could apply . for- a ., loan . . Petitioner did not provide any .evidence that-he had in fact discussed obtaining a loan with a bank . By July 10, 2007 , petitioner had,-already violated several deadl .ines, : including the June 14 , 2007, deadline to get back to" the Appeals officer about obtaining a loan against .the equity in his house . Given all the circumstances , ; including petitioner's- dilatory behavior , we find that the-Appeals officer°did,not abuse her discretion in rejecting petitioner ' s, .request to-lift thel, liens so that he could apply for a home equity loan . See Shanlev v . Commissioner , supra . C . . Balancing the Need for Efficient Collection of Taxes ; With Concerns of Petitioner That Collection Be No More Intrusive Than Necessary The final = item to be considered is "whether the proposed , .: collection action balances the'need for the efficient collection 1 5 taxes with the-legitimate concern of the person that any collection action be no more intrusive than necessary ." Sec . :6330(c) (3) (C) . The Appeals officer performed a balancing test , finding that the liens and the potential levies did balance the needs of collection with the concerns of . petitioner . We find the !Appeals officer did not abuse her discretion in so'finding . See, e .g ., Castillo v . Commissioner, T .C . Memo . 2004-238 . While petitioner orally suggested an installment plan, h {did not mall le .a written proposal in that respect nor submit a For m 1656 as a p edicate to an offer-in-compromise . Therefore, the Appeals of f icer was presented with no concrete proposal for a collection alternative . The Ap peals officer . was met with petitioner' s missed !deadlines a nd empty promises . The Appeals officer took int o considerati on. the equity petitioner had in assets and the income this busines s was producing and the fact that petitioner was not rcurrent on is tax obligations . She gave petitioner a n ,opportunit y to file amended Forms 1040 and prove he was current 'on his tax obligations, but petitioner did neither . When she told petiti ner on July 25, 2007, that she intended to close the file, yet a ain she, gave' petitioner another chance to have his representa t ive contact her . Petiti ner failed to promptly notify the Appeals officer when he was unable to obtain a home equity loan, failed to file amended Forms 1040,,: and failed to .,meet numerous deadlines . .= V . Conclusion. For the, reasons discussed above, we find that .the_Appeals officer did . not abuse her discretion in determining to sustain . for respondent . 9-