TAX COURT OPINION

Case: Mitchell H. Salter
Docket Number: 10343-17L
Judge: Goeke
Opinion Type: bench
Filed: 03/29/2018
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 MITCHELL H. SALTER, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 10343-17 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 petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at San Francisco, California containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for petitioner. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. March 29, 2018 SENED MAR 3 0 2018 1 2 Bench Opinion by Judge Joseph Robert Goeke March 8, 2018 3 Mitchell H. Salter v. Commissioner of Internal Reverte 4 5 6 7 8 9 10 11 12 13 14 15 Docket No. 10343-17L 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. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This opinion is rendered pursuant to section 4 9(b) of the Internal Revenue Code and Rule 152 of the Tax Court I;ules of Practice and Procedure. Section references throt.qhout this bench opinion are to the Internal Revenue Code At the time the petition in this case was :iled, the Petitioner was a resident of California. This case is 16 before the Court based upon our authority to review timely 17 18 requesu for post-hearing review of settlement office hearings pursuant to section 6330 involving collect.on 19 action proposed by the Internal Revenue Service. The 20 21 22 23 24 collection action in the present case, which is sub ect to our review, is a proposed levy. The levy is to col ect ' delinquent income tax liabilities which the Petitioner admits he owes for the years 2006 through 2009. I In our review of these delinquent liabili Les,I 25 we do not consider the circumstances that caused them to (973)406-2250|operations@eserbetsmet|www.escrbers.net 1 2 3 4 5 6 7 8 9 10 11 12 be delinquent, initially. Rather, we focus on the Petitioner's current situation and whether the Government's collection activities conform with statttorp law pursuant to the Petitioner's current financial status. Since the Petitioner concedes he owes the noney which the Respondent is attempting to collect, the underlying liability is not at issue in this case. Fhen that is the situation, we review the Government's determination, as verified by the settlement officer for abuse of discretion. Goza v. Commissioner, 114 T.C. 176 (2000). The burden of showing that the appeals officer':; determination was arbitrary or capricious rests witf the 13 Petitioner. Pacific First Federal Savings v. 14 Commissioner, 101 T.C. 117, 121 (1993). 15 In the present case, the Petitioner cooperated 16 with the settlement officer and submitted informatien to 17 18 19 20 21 support his position that he was unable to pay any federal taxes in addition to his current federal tax liabilities because of his limited financial resources. We beljeve the settlement officer carefully reviewed Petitioner s financial information, but for the reasons we will explain 22 herein, we believe the settlement officer did abuse his 23 discretion in determining that the Petitioner was ab..e to 24 25 pay tax liabilities each month. The settlement officer's determination tu:ns (973)406-2250|operationsperrbersnet|www.escrbetsmet 5 1 2 3 4 5 6 7 8 9 primarily in the analysis, as presented by Respondent, on the question of whether the Petitioner could reduce the amount of the liability which he might pay by life insurance premiums in the amount of $189 per month. Eliminating these life insurance premiums and also ecme state tax liabilities from the amounts which the Petitioner projected he needed to spend every month, the settlement officer determined that the Petitioner cctld pay tax liabilities on his delinquent income tax 10 liabilities in the amount of $145 per month. 11 12 13 14 15 16 17 In analyzing the Petitioner's expenses, ag claimed, we note that certain state liabilities were not considered by the settlement officer. These delingt ent amounts are not determinative of the outcome, howevèr. From our review of the Petitioner and his demeanor a nd his testimony regarding his health status, we believe that i was an abuse of discretion to determine that the 18 Petitioner could pay amounts every month in light of his 19 precarious health status. And we believe the potent al 20 that he would have expenses to maintain his current health 21 22 23 24 25 exceed the amounts that the settlement officer projected the Petitioner could pay. We note that the Petitioner is attempting o be current on his income tax liabilities for the presen year based upon the analysis, the amounts he's paying to he (973)406-2250|operationsperrbetsmet|www.escrbersaet 6 Internal Revenue Service every month aed-which amount is $200. While we encourage the Petitioner to continue to do that, we do believe it is an abuse of discretion to find that the Petitioner, given his age and health statue, could pay more than that amount to the Internal Reverue Service. We believe our analysis is consistent witr the Internal Revenue manual in this regard. Respondent points us to the Internal Revenue manual provisions that piovide that the schedules of living expenses submitted by tLe taxpayers, which are analyzed by the settlement officer, are used to determine monthly income available to pay the taxpayer's liability. However, the factors that are analyzed in making that determination include the taxpayer's age, the taxpayer's health, and the cost of living in the area in which the taxpayer resides. The Internal Revenue manual, as cited in . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Respondent's trial memorandum, also includes consideratiön 19 of extraordinary circumstances such as potential med1cal 20 catastrophes. While we certainly wish the Petitione 21 maintains reasonable health, we note his dental expenses 22 and just his age leads us to believe that the compu- ations 23 made by the settlement officer overlooked the high 1 24 likelihood of additional medical expenses of the 25 Petitioner. And therefore, we believe that the ana.7sis (973)406-2250|operationseerribersmt|www.escrbers.net by the settlement officer is not consistent with the Internal Revenue manual provisions cited in Respondert's 7 trial memorandum. While we understand the difficult job the settlement officer faced and we understand the simple mathematics that the settlement officer used in not permitting the Petitioner to reduce his monthly schecule of living expenses by the payment of insurance premjyms, ' we believe the insurance premiums should not be the 1 2 3 4 5 6 7 8 9 10 definitive focal point of an analysis whether the 11 Petitioner's subject to levy. Rather, while the 12 elimination of the insurance premiums from the analysis 13 would provide, as the settlement officer determined, an 14 15 amount of roughly $145 or even less, frankly, consicering state tax liabilities that the Petitioner might have 16 available to pay delinquent tax liabilities, we bel:eve 17 18 19 20 this amount is inconsistent with the Petitioner's actual cost of living and the potential for major medical expenses the Petitioner faces going forward. Therefore, from our review of the record and the 21 Petitioner's demeanor and his health status, we find that 22 23 24 25 there was an abuse of discretion in this case, and ue rule for the Petitioner. A decision in accord with our opinion which will not sustain the proposed levy action will be entered, 973)406-2250|operationsperrbannet|www.escrbersmet This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:56 a.m., the above-entitled matter was concluded.) 8 . 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 asan (973)406-2250|operationseescrbersnet|wwwascribers.net