TAX COURT OPINION

Case: TGI Enterprises, Inc., an Oklahoma Corporation
Docket Number: 19157-07L
Judge: Gustafson
Opinion Type: memo
Filed: 06/01/2009
Pages: 22

- i. . a + : L 7 } . A ' : t . 4 ; i 3 "4 ) a ; 4 - eg T.C.: Memo. 3009-123 . . - | | 7 _ UNITED STATES TAX COURT _ | } TGI ENTERPRISES; INC., AN OKLAHOMA CORPORATION, Petitioner) v.? - COMMISSIONER OF INTERNAL! REVENUE, Respondent , , . Lo Is. . | Docket No. 19157-07L. Filed June 1, 2009. |. os : " an f A, - . . 4 ne er ' P failed to pay its self-reported. Federal: payroll. 7 ' taxes for various quarters in:2002-04, and R issued a notice of intent to levy. P requested a hearing under: ' I.R.C. sec. 6330, indicating a desire for a partial 4} payment installment agreement! R's Office of Appeals ¢ : requested that P provide financial information and - | agree to certain prepayment requirements. P did-not' provide all of the requested financial information and, : 'would not agree to R's prepayment requirements. R's ' ro Office of Appeals issued to Pia notice of determination ' in which it determined that a: levy was appropriate. Pye oS appealed that determination to this Court. ~ ho | Held: R's Office of Appeals did not abuse its ; discretion in denying P's proposal. for a partial ' , i. payment. installment agreement| when P did not provide to , 7 Appeals the financial information requested. : ; . . : { ' . . a wt ' : . . . . ao } a ; ZE™ JUN > 1 2009 of - . - 2 - 4 Paul H. Burgess, for petitioner. William F. Castor, for respondent. eb . MEMORANDUM OPINION a 7 . , ; ot \ . GUSTAFSON, Judge: This case is an appeal by petitioner TGI iL ~ . . _ Enterprises, Inc., an Oklahoma corporation (TGT) ,. under '| . : . section 6330(d).* TGI seeks our review of the determination by I the Internal' Revenue Service (IRS) to uphold a proposed levy on 4 ~ a7 . 'TGI's assets. . The levy is intended to collect payroll taxes for the quarters ending 06/2002, 09/2002, 12/2002, 03/2003, *12/2003, Bo 7 - 03/2004, 06/2004, 09/2004, and 12/2004.. This case was submitted. fully stipulated pursuant to Rule 122, reflecting the parties' agreement that: the relevant. facts could be presented without a trial... The parties', stipulation of October 21, 2008, and the attached exhibits are incorporated herein by this reference. | hk: i Background : ' 'At the time TGI filed its petition, it was an Oklahoma : i : corporation operating in Oklahoma. - i Pay . TGI's Nonpayment of Self-Reported Payroll Taxés 1 Hy . 1 Return, for the second, third, and fourth quarters of 2002, the U i TGI filed its Forms 941, Employer's Quarterly Federal Tax 4 \ {Except as otherwise noted, all section references are to the Internal Revenue Code (26 U.S.C.), and all Rule references are to the Tax Court Rules of Practice and Procedure. | i =3- h ae first and fourth quarters of 2003, and.all four quarters of 2004, and the IRS assessed the tax shown on the returns as follows: | . * , a . foo |. However, TGI failed to pay all of the tax liabilities reported 'on Period | ) "Assessment Date | : : Tax thd - 6/2002 a 12/15/2003 . $32,627.74) 9/2002 | 12/15/2003 an 2g,102.68) 12/2002, , 7 12/28/2403 a "29,887.49 vo | | 3/2003 gayay2003 32,657.93! i. peo a | 12/2003 SO 1/3/2908 a 32,108.38) | 3/2004 oo "1/3/2005, 99,538.19 6/2004 2/28/2005 "36,971.11, | 9/2004 ae 2/7/2085 sO 34,336.29 : 12/2004 ~~ 4/4/2005 : 45,244.00. | Oe | | each of the returns. on the | same "dates that 'the IRS assessed h ) the taxes against TCL, it also assessed penalties and interést for each period shown above and issu ued to TGI a Form cP 504, | : ; ' & fore be Notice of Balance Due, for each period. 'TGI did not pay the - ' | ; oe er se ' . i ! amounts due. B. "while the parties' stipulation of fact indicates that iTGI_ "failed to pay all of the liabilities reported on each of the' , returns", a review of TGI's transcript in the record indicates that TGI did not pay any of the tax liabilities reported on;any of the returns listed above, except that it made slightly over , half of the payments due for the last quarter of 2004. oy : t i t i t 'Trust Fund Taxes and Penalties \ The unpaid payroll taxes were a combination of TGI's portion of FICA tax,*? its employees' portion of FICA tax that TGI | withheld from its employees' wages and did not pay | over, and lincone tax that TGI withheld from its employees' wages: and did Ki . fnot pay over. That is, in addition to being required to deposit TcI' s own portion of FICA tax with the IRS, TGI was also . required to remit to the IRS its employees' portion of FICA.and income tax | - that TGI had withheld from its employees' wages, see secs. i 3102(b), 3403, but TGI did not do so. The FICA tax and. income tax that are withheld from employees' wages are held in trust for | 'the United States, see sec. 7501(a), and are known as téust fund | os : . t itaxes. oo 7 1 me - At the time these trust fund taxes were withheld from each employee' s wages but not remitted to the IRS, _ the management of 4 'Ter included Julie A. sawyer, Tracy C. "Copeland, Charles (Michael) Copeland, and Barbara S. Cross.* Since the foregoing { i *Federal Insurance Contributions Act or FICA tax is a payroll tax imposed on both employers and employees, secs. 3101, 3111, to fund Social Security and Medicare. j "Julie A. Sawyer was a longtime employee of TGI who was the bookkeeper in charge of preparing TGI's employment tax returns 'and remitting the tax due. Tracy C. Copeland was the president of TGI from January 1991 until December 2001, the CEO from January 2002 until sometime after December 2004, and one of its: owners, who had the authority to sign TGI's tax returns and payroll checks, as well as to obligate TGI. Michael Copeland was ithe secretary- treasurer of TGI and one of its owners. 'Barbara Ss. ; (continued. -) ' i i t H ( | i - 5 individuals were part of .the. Thanagejent of TGI and were possibly responsible for the: remittance of the unremitted trust fund: « F taxes, the IRS, on: May 27; 2005,. issued a "Form 4183, - ore Recommendation re: Trust Fund Recovery Penalty Assessment, thot proposing to assess personally against each individual listed | poe - z : 7 . 4 : * } above a liability of $239,433.38 under section 6672 to recover , 'the trust fund taxes they chad failed - 'to remit. 5 5. ee ee : : $70, 000 Loan From Trust. i 2 _. * | = In October (2006 TGI: borrowed. $70, 000 from. a trust belonging q x b. to: the parents of Michael Copeland,| one 'of the corporate 'I . . . { .| 0 ce - . { ; ; if : officers, to finance TGI's purchase of 'supplies to fulfill aj: .. 1 large order. The short-term loan wae secured by. the purchase iy order, the materials, thef finished. goods, and the receivable. 'created upon shipment. | TGI. repaid the .loan immediately upon). | "payment by its customer. There was, no formal .agreement with}: i respect to. this loan... When TGI. repaid the. loan..to the: trust it repaid $72,000--i.e., $70, 000 plus interest of 48. percent per a t annum. | ee | ae * a | . . . TGI's Negotiations With Collections. Bs t As.early as December 2006, -TGL 'began working with the. IRS's Revenue Officer Hal*Spannagel to ey to resolve TGI's outstanding , : . ° : anor i. . , . i *(. continued) Cross was the president Of TGI 'from January 2002 through october 2004. Ms. Cross was in charge of the day-to- day operations of _. TGI and managing the employees. '. Cross also had check-signing authority. i i -6- tax lilability.. TGI .proposed a partial payment installment i j agreement whereby TGI would pay $1,000 per month, with the "payment increasing to 'Si, 650 per month in September 2007. TGI alleges that the revenue officer orally agreed to a $1,606-per- | a month payment if certain conditions were met; i.e., the revenue officer. wanted to confirm some facts regarding the $70,000 loan. Phat TEI had repaid in October. 2006.: In a letter dated'April 25, 2007, from the revenue officer to TGI's counsel, 'the revenue officer stated - that . he needed proof that "the money originally came' from the trust, the trust was established by Mr. Copeland's father arid that the funds in the: trust did not. originate from TGI I co, - ; . Enterprises Inc or any of its officers." Presumably, the revenue : . officer wanted to confirm that the $70,000 was a repayment of a 'legitimate arm's-length loan and not a: diversion 'of-funds by TGI. However, TGI did not provide the: revenue officer with the information he requested; and because the trust refused. -to allow 'che IRS to inspect its books, the revenue officer denied TGI's 'installment proposal. - Commencement of CDP Proceedings 4 "AS a result of the failed attempt to:settle TGI's tax. a 'liability. on December 8, 2006;° the IRS issued to TGI ai Final ! 'Notice of Intent to Levy and Notice of Your Right to a Hearing. \TGI timely requested a collection due process (CDP) hearing by jsubmitting to the IRS on January 8, 2007, a Form 12153, Request | oF -7- for a Collection Due. Process or Equivalent Hearing. Attache _ | the Form 12153 was' a letter from TGI's counsel, Paul H. Burg which stated: . OU - a OAR { x t TGI and its officers are: 'beginning the« 'process of filin as to collectibility and perhaps effective tax administration. The officers will be filing based on t preceding and doubt .as'*to liability. 7 IRS Requests for Financial Information | on May 16, 2007, 'the IRS's Office of Appeals sent a let to TGI acknowledging that appeals had received TGI''s ; request a CDP hearing. Then, by letter dated June '5, 2007,.the IRS! Settlement officer "Greg Clark scheduled TGI's telephone 'CDP. hearing for June 26, 2007.° In that) June 5 letter, the sett officer advised TGI that in order for the. Office of Appeals: consider alternative collection methods such as an: installme i ' ' { agreement or offer in compromise, you must" provide*any items' t listed below." The only item listed was: Fe, i \ § e A-completed Collection Information Statement Form' a: to | ess, i Go offers in compromise. The company is filing based on Spur fo he I. fe | ber | for s } ement "to: nt | } i i f 4 i 433-A for all corporate owners 'and Form 433-B for businesses -with all line items of séction 7 completed. i \ : _ The settlement officer asked for' the requested information to be | submitted within 14 days and stated, "I cannot consider "et collection' alternatives at' your conference without this. information." On June 12 and July 12,- 2007, /teléphone conferences were t held, and on July 10, 2007, a face-to-face meeting was held ro : {: ' " t #| ny ' \ \ t { a - 8 - ij . . between the settlement officer and TGI's counsel. During the i oe . : ,f a course. of these conferences, TGI's counsel requested a partial | | , payment installment agreement. . The settlement officer advised TGI and its counsel that the requested Form 433-B, Collection Information Statement for Businesses, and Forms 433-A; Collection i eo ho. . ; . Information Statement for Wage Earners and Self-Employed - sd : Individuals, had not been provided, and.that a failure to provide the requested financial information was a basis for rejection of . the partial payment installment agreement. TGI's counsel agreed to supply this information by July 13,. 2007. og : However, TGI never provided this required information to the settlement officer. Nonetheless, the settlement officer was able 4 . i to obtain a partially completed Form 433-B that was in the collection file because it had been submitted.to the revenue officer 4 months earlier, on .or around March 12, 2007. TGI points out that its Form 433-B amounted to 99 pages and 'was. | . 4 accompanied by "over 100 bank statements." However, section 7 of \ aie - : , the Form 433-B was not sufficiently completed to allow the il ee ; es on : settlement officer to determine TGI's monthly income and expenses. Instead of completing each line item in section 7, TGI had inserted "$0.00" for total income and "$0.00" for total. expenses and had inserted "SEE page 4 of balance sheet" 'in the _ - : - Section 7 area asking for a specific breakdown of monthly 4 7 business income and expenses. Attached to the March 2007 Form 433-B was a variety of documents, such as.an accounts receivable report, a depreciation schedule; ard: bank records, but nothips | listing TGI's monthly income' and expenses The 'settlement || officer had particularly requestedthis missing information! in | i ; his June 5 letter, but TGI never 'provided it... - oo bh 4 mo os hoot rl _ Prepayment. Requirements _ Mame ese During the: CDP. hearing 'the: settlement officer' further =!|/ | t advised TGI's counsel that; "in accordance with: Internal Revenue' | Manual (IRM) guidelines, TGI would | be required to meet two Ho prepayment - requirements' before a. partial payment. installment a agreement would 'be. approved. rirst; the settlement officer!) informed TGL i that it would be expected to 'obtain another . $70,000 loan from.the trust 'belonging to Michael Copeland' s 'parentsi, ° 'Because TGI had recently, i.e. | onl oF about. October 31, 2008). | repaid its $70,000:loan to that trust. the settlement officer |. inferred that the trust might 'be willing to lend to TGI. Second, after reviewing' the. TGI Form 433-B{ that' was in the collection file, the settlement officer also required. TGI. to contribute. bos $20, 000 of equity it had ina 2002} amc Yukon. XL Denali sports utility vehicle. The settlement officer: concluded that: TGL's , -_ fot 'TGI did refer to "page 4 of the balance sheet", but this _ was an'apparent reference to.its Schedule' 'L on page 4 of its 2006 Form 1120S, U.S. 'Income. Tax Return for an S: Corporation, which: was attached to the Form 433-B.- We: do not find' the annual,|: | information contained therein for 'the year ending December | 31, 2006, to be helpful in determining with any precision TGI' Ss monthly income and expenses as of July 2007. ; : - 10.- Hl ' | H prepayments of these amounts--totaling $90,000--would decrease the risk. to the Government that TGI would continue to accrue - additional unpaid employment - tax liabilities. . The settlement officer also concluded that because of TGI's: failure to*provide income and expense information on its Form 433-B, TGI's lability ~ to pay its operating expenses and current taxes could not be. | verified. Therefore, the settlement officer: concluded that TGI | : . was. currently unable to pay its-operating expenses and current ue, a taxes. | As a'result, on..July 27, 2007, the Office of. Appeals issued to TGI:a Notice of Determination Concerning Collection Action (s). 'Under |Section 6320 and/or 6330, which sustained the proposed... levy to collect TGI's unpaid payroll taxes. _ The attachment to-~-the: Notice of Determination stated that "[t]he request: for a; Partial - i ' Payment Installment Agreement is denied based on * * * [TGI's] failure to submit completed financial . information; .and * * * (rer' 's] failure to agree to the prepayment required by the. Settlement Officer." re ops : 4 1 . i On August 24, 2007, TGI 'timely petitioned this Court to t . review; the notice of determination issued on July 27, 2007. The | , i eS oe . Bo 1 'The settlement officer's conclusion that TGI was unable to pay its current operating expenses and taxes was further: . bolstered by the fact that TGI had recently borrowed the: $70,000 from \the trust to cover its operating expenses, i.e., to} purchase- 'raw materials and pay for the necessary labor to complete an order, for a customer. wo | t 4 . - 11+ petition alleges four . -points 'of error in that determination, only two of which need to be resolved to 'dispose .of this case:' (1) That "the Office of Appeals' abused its discretion in not i approving an installment agreement as provided for by Code Sec. 6195 (a) [sic]"; and - 7 4 | (2) That the "Appeals Office: also labused" its discretion byl - | demanding certain Petitioner's individual shareholder to file * * * a Form 433-A, when {such shareholder is nota | responsible | or willful person." . . Say TGI then asked the Court. to. order "Respondent late) enter into: an ao p* i ; installment agreement: for $1, 606 per month pursuant to I.R. C. : . ; , f Sec. 6159 (a) ."* The. parties jointly moved to submit. the case under Rule 122, | : :] t i . _and the case is now before the Court for: decision without tial. ; | = we feo be : . q t : t : iH . " . - t , be ae ee i: nerve seme teste rennet ite - 7TGI also cites as error a) that "the Appeals Office abused its discretion [in requiring $90, 000 in prepayments] » because Petitioner has no authority to, force the Trust to-pay it $70, 000, the truck was not worth $20, 000, and Petitioner cannot borrow | $20,000 against it and still make a $2,700 per month payment", , "and (2) that the "Appeals Office abused its discretion by - concluding [TGI] was unable to pay} its operating expenses and = current taxes". Because we find that TGI's failure to provide: the requested financial information justified the settlement , officer's rejection of TGI's partial payment installment. . ros agreement proposal, we'need not decide . whether the settlement . officer abused his discretion in the other respects that. TGI: alleges. 2 a : 0 ve : | i This is the same '$2, 606° monthly payment amount that TG i alleges was orally agreed to by the revenue officer during the! IRS's pre-CDP collection review. \ - 12 - } ; . . Discussion a I. Applicable Legal Principles i. Collection. Review Procedure a a When a 'taxpayer : fails to pay any Federal tax liability within 10 days of notice and demand, the IRS may collect the unpaid tax by levy on the taxpayer's property, pursuant ito . section 6331. However, before the IRS may proceed with that levy, the taxpayer is entitled to administrative and judicial ) | ; reve pursuant to section 6330. Administrative review is carried out by way of a hearing before the Office of Appeals under section 6330(b) and fC); and if the taxpayer is dissatisfied with the outcome there, it. can appeal that | determination to the. Tax Court under section 6330(d), as TGI has lone. | The pertinent procedures for the agency-level CDP hearing are set forth in section 6330(c). First, the appeals officer 4 i must obtain verification from the Secretary that the requirements of any, applicable law or administrative procedure have been met. i L ; _ Sec. "6330(c) (1). Second, the taxpayer may "raise at the hearing if : In the case of a levy to collect a self-reported tax liability, the basic requirements (see sec. 6331(a), (d))-for which the appeals officer obtains verification are: the IRS's timely; assessment of the liability (secs. 6201(a) (1), 6501(a)); the giving to the taxpayer of notice and demand for payment of the liability (sec. 6303); and the giving to the taxpayer of notice: of intention to levy and of the taxpayer's right . toa hearing (secs. 6330(a), 6331(d)). A review of TGI's IRS: oe (continued. .) i t | | | - 13 + 4 any relevant \ 'issue relating to the unpaid tax or the proposed levy," including challenges to the appropriateness of the , , | collection action and. offers of collection alternatives. Ss " * e 6330 (c) (2) (A). Additionally, the taxpayer may contest the | . 4 n | existence and amount of the underlying tax 'iability, but only 7 he did not receive a notice of deficiency or otherwise have = an } | "opportunity 'to dispute the tax Liability.? Sec. "6330 (c) (2) (B) Tom + TGI's contentions pertain to the second of those sets Off 2 | a . . a issues--i.e., "relevant issue [s] relating to * * * the proposed . levy" under section 6330(c) (2) (A). B. Standard of Review When the underlying bax Liability is not at issue, we review the determination of the Office of ' 'Appeals for abuse: of discretion. Goza 'v. Commissioner, |114. T.C..176. (2000). TGI the IRS's determination for abuse of discretion;. that is, whether the determination was arbitrary, capricious, or: without sound basis in-fact: or law. . See Murphy 1 v: Commissioner, 125 T.c. 30 ' perenne, ta a °(, continued) : | transcript in the hearing record shows that the above i requirements were met; _and TGI does not dispute that the requirements of any.applicable law! or administrative procedure | were met in compliance with section 6330(c) (1)... . lopgt does not contest the underlying, self-reported s aes h } + } a { é t t 1 ' i \ Ss not. challenged 'its. underlying. liability. _Accordingly, we review a Oe nS 1 eke liability. Therefore, the underlying liability is not'at issue. See Goza v. Commissioner, 114 T.C. 176 (2000). | , | - 14 - oo | 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006); Sego v. j se . | . commissioner, 114 T.C. 604, 610 (2000). II. 'Whether the Appeals Officer Abused His Discretion in | Rejecting TGI's Proposed Collection Alternative i t 'The' IRS determined to proceed with its levy against TGI, and did not accept the proposal fora partial payment _ installment . ob ™ t . agreement, because TGI failed to fulfill two prerequisites for consideration of such an alternative: TGI failed to submit oy : financial information sufficient to- enable the IRS to evaluate | fb it il its collection potential; and TGI failed to agree to the 1 prepayment requirements determined by the settlement officer in accordance with the IRM. \ The Settlement Officer' s_ Proper De Novo Review "of TGI's | . Proposed Collection Alternative TGI argues that the settlement officer abused his discretion \ : . { ; ; because, rather than.address the narrow grounds upon which the revenue officer had previously rejected TGI's installment | _ : | proposal, i.e., that a former creditor of TGI (the trust) had refused to allow IRS inspection of its books, the settlement » | ? officer undertook a de novo review of the installment proposal and raised issues never considered by the revenue officer. TGI''s argument reflects a misunderstanding of the scope and purpose of i i lf a CDP hearing. By filing a Form 12153 requesting a CDP hearing, ' _TGI was not. merely appealing the denial of the installment proposal by. the revenue officer; instead, it was also appealing a : 4 5 concn epee t ia ut the proposed collection action, i.é., a levy upon its assets) to . : , tl - 1 ' collect:its unpaid payroll taxes. a Fn) Sp ee er Pursuant to section 6330(c)'(3)|, a determination by the' . - Office of Appeals must take into: consideration any. collection $ | alternative proposed by the taxpayer. - At the CDP hearing TGI's. counsel 'proposed a. partial payment ; 'installment. agreement. In H considering the viability of* that collection: alternative, the settlement officer properly considered all issues: regarding, GE' s eligibility fora partial payment installment agreement wnat = section 6330(c) (3) --not just isoues that: the revenue officer may have considered in the past. During, the course of a CDP hearing, fo the Office of Appeals conducts.-an independent review of a inde taxpayer' S circumstances: when considering a proposed collection alternative, and it is not. Limited) to a. revenue officer' Ss i). j previous review or findings. See Marks v.. Commissioner, T:¢. . . : . | Memo. 2008-226; Lloyd v.-CommiSSLORSE, T.C, Memo.*° 2008-15. :|. }.7 t Lo : Jt t ' Therefore, the settlement officer did not abuse his discretion!. ; | when he considered all issues related. to the proposed partial 1 'payment installment agreement, instead of. limiting his review to. | the narrow. grounds of the revenue officer's'prior denial... * , 7 . f 4 i» | f { z { . { : : : ' t t + i oe . . = 16 - B.. The Office of Appeals' Proper Denial of TGI' s Proposed Collection Alternative When TGI Failed To 'Provide Requested Financial Information i "TGI's petition argues that "the Office of Appeals abused its discretion in not approving an installment agreement as provided for by Code Sec. 6195(a) [sic]". We cannot agree. \ , cat 1. GI's Failure To Submit a Completed Form 433-B | iDuring a section 6330 hearing, "{t]axpayers wild be expected to provide all relevant information requested by. appeals, including financial statements, for its consideration of the | facts and issues involved in the hearing." Sec. 301.6330- in ; , L(e) (2), Proced. & Admin. Regs. An appeals officer may not i . consider a collection alternative unless the taxpayer has. provided adequate financial information, such as a current. Form 433-A. See Rev. Proc. 2003-71, sec. 4.03, 2003-2 chp, 517, 518; see also IRM pt. 5.14.2.2.1(1), (5). (July 12, 2005), . 5.14.7.4.1(5) (Sept. 30, 2004). The settlement officer was following the IRS's administrative guidelines when. he asked TGI to provide a completed financial statement (Form 433-B).4 See IRM I pt. 5:14.2.2.1(1), 5.14.7.4.1(5). It.was not an abuse of { , discretion for the settlement officer to reject TGI's proposed collection alternative when TGI failed to submit a Form 433-B with each line - item in section 7 completed. See Prater v. Commi'ssioner, T.C. Memo. 2007-241; Chandler v. Commissioner, T.C. i Memo. 2005-99; Roman v. Commissioner, T.C. Memo. 2004-20. This | - 17- is i i i i : finding alone: is: sufficient to sustain. the determination bythe! . Office of Appeals to proceed with + levy against | TG' s assets. to recover its unpaid payroll taxes. Nevertheless, we will-also | address the -related contention that! the settlement officer abused i mT his @iscretion by requesting Forms |433-A from all. oof TGI's Rho A ee i i corporate owners. .- oe caf ae . re 2.: TGI's. Failure To sunt Completed Forms 433 - A 7 hoOTRS In its petition TGI contended 'that the "Appeals Office, also atti tate abused its discretion by demanding-ja certain Petitioner's . . | . _ a ; . individual shareholder to file *-*.* a Form 433-A, when such | shareholder. is nota responsible. oa willful person." TGI does |. not. specifically allege: which individual shareholder should jhave | H . been excused from providing financial information. However ; int its response to the motion for summary judgment, Ter alleges| that a . a : j "[t] here are six shareholders of TGI. Of the six shareholders, ' i ot four are.minority shareholders/employees * * * who :-have never, been assessed_ the underlying tax *|* * [and] do not participate,. , : ae F . t in management of the company . a. TCL then states that "[t]here are - two, shareholders who are potentially liable. for, part - of the: taxes * * * [i.e. Tracy c.. Copeland and Barbara Ss. . Cross, but] they i i have consistently denied liability jfor the trust fund penalty and | have instituted 'Litigation' in the United States District court | | for the Northern District. of Oklahoma seeking relief from the ° h fe ; : : ae i | {. i i { - 18 - Government's: wrongful assessment."11 However, TGI never: a . , addrésses Michael Copeland's responsibility, as the -secretary- treasurer of TGI and one of its owners, for TGI's trust fund taxes,' even though he was listed on the. Form 4183 as a 'responsible person. It is reasonable to presume that a 'corporate btticer may be a responsible person under section 6672. See - ponaisia » v. United States, (215..Ct. Cl. 148, 565 P.24 663 !(1977); : see also Kamins v. Spyres, 540 P.2d 1208, 1210 (Okla. Civ. App. 1975) (quoting Monday v. United States, 421 F.2d 1210, 1214-1215 (7th, Cir. 1970)). We find that at least Tracy C. Copeland, 4 Barbara S. Cross, and Michael Copeland, 'as corporate officers | : charged. with general control over the corporation, were 'all i corporate owners and officers who were. possible responsible persoris for TGI's trust fund taxes. | The settlement officer was following administrative | Y t oaeae . ' toe : ; guidélines when he requested financial information fromiTGI's - | | that. will not fully pay all balances due before the expiration of it i bee . ; owners (Forms 433-A). See IRM pt. 5.14.7.4.1:1(6) (C), (7) (July t 6, 2005). Before the 'Secretary grants an installment agreement ithe collection period, i.e., a partial payment installment Phe fact that Tracy C. Copeland and Barbara S. Cross were disputing their liability for section 6672 penalties 'in District 'Court »litigation confirms that the IRS assessed the penalty against them as responsible persons and then defended that position in litigation. We cannot say that the settlement officer abused his discretion by taking that position in his own deliberations about TGI. Fu ; - 19 - { agreement , a Form 433- -A is required from all potentially ' responsible persons to show the extent to which the potentia 1 ; responsible persons have the ability to pay from 'current ass or income. Id. The tyvist "fund: recovery penalty (TFRP) unde ) section 6672 is "an alternative means of collecting unpaid t . 7 : boo | fund taxes when taxes are not fully coltectible from the. company/business that failed to. pay: the taxes. " IRM pt. . vi 8.25.1.1(2) (Oct. 19, 2007) ; see. also: Slodov v. United. States a Lo i 436 .U:S. .238 (1978) .- Therefore, before the IRS will excuse: : . . . 1 business from paying part of its tax liability--by granting, . ' partial payment .installment agreement--the administrative - guidelines direct the appeals oftiper to examine all other ;|: sources. of collection, including collection from possible ' dm gees ree meeey responsible persons. - ! The IRS had already assessed the TFRP against Tracy C.: Copeland and Barbara Ss. Cross, so they were certainly possible, responsible persons required to supply: their" financial. ' information under the IRS's administrative guidelines. Michael ~ i i Copeland, as an owner and an officer, was another possible ,- 4 : | responsible person. who should: have! been asked to supply his | financial information. As to' the other owners, the record: does . | ar not reveal the extent of their involvement with TGI,- but in| OE response to the motion for Summary} Judguent it indicated that "of the. six 'shareholders, four are _ minority shareholders/ 4 : _ 7 20 - | employees * * * [that] do not participate in the management of the company." Therefore, even though TGI characterized ithe other owners as not involved in the management of TGI, it admitted they were tat least employees. This classification alone (i.e., as non-officer employees) is not sufficient to exclude them from being possible responsible persons. Instead, whether 'these { : -employee-shareholders could be responsible for a TFRP would 'depend, on their duties and responsibilities within the company, Ai eos : . t i ; , and that information is missing from the record. The assertion ~ t that a}mere employee cannot be a responsible person is further | a ; , contradicted by TGI's own contention that Julie Sawyer--who was j , : an employee.and not an officer--was the primary culprit-in TGI's failure to pay its taxes.. Since the settlement officer could not. rule out the possibility that all of TGI's owners might have been responsible persons, it-was not an abuse of discretion for him to Hoo, ' request 'financial information in accordance with the IRM. See Orum v. Commissioner, 123 T.C. 1, 13 (2004), affd. 412.F.3d 819 (7th Cir. 2005); McClanahan v. Commissioner, T.C. Memo. 2008-161; Etkin v. Commissioner, T.C. Memo. 2005-245. _ i 1, | , ; Furthermore, when the settlement officer requested the financial information from all of TGI's owners, TGI did not provide the information for some 'and explain why the others - ghould: be exempt. Instead, TGI simply failed to supply any . : é - | information of any owner. It was not until the settlement 4 | officer sustained the levy that "TEI raised the' complaint that the {. requests were overbroad... Again, "Taxpayers will be expected provide all relevant information' requested by Appeals, including - financial statements, for its consideration 6f.the facts and issues involved inthe hearing." Sec. 301.6330-1(e) (1), Proced. J ., & Admin. . Regs. An "appeals officer imay. not consider a collection | to: : A y + t i i i | ' alternative. unless: the taxpayer has provided 'adequate finanéial! information, such as a current Form 433-A. 'See Rev. Proc. 2003-_ , i ai 71, sec. 4.03; see also IRM pt. 5. 14. 22.2. 1(1), (S)3 i 5.14.7.4.1(8); 5.14.7.4.1.1(6) (C), 1(7). | | | | | Since the~-particular collection alternative that TGI : - t . . ; proposed required the. settlement officer to obtain financial ; ty t information from all possible responsible persons for the trust: 4 fund taxes (see IRM pt. 5.14.7. 4. 11 : : t ' abuse of discretion for the settlement officer to reject TGI proposed collection alternative when none of the possible ; , | ; responsible persons supplied any financial information. . See) Prater v. Commissioner, T.C. Memo. 2007- 241; Chandler v. Commissioner, T. C. Memo. 2005-99; Roman Vv. Commissioner, T.C. 'Memo. 2004-20. This finding alone, as well, is sufficient t i b sustain the determination by the Office of Appeals to procee with levy against TGI's assets to recover its unpaid payroll taxes. . ee . I a . i i g : t 1(6)(C), (7)), it was not) ''s - 22 - ' We need not address. whether the settlement officer's request fox the $90,000 'in prepayments and his finding that TGI .could not pay 'its current' operating expenses and taxes were appropriate. Rathdi,. we are able to hold, on this. record, that the Office of Appeals did not abuse its discretion. in- upholding the proposed a levy to collect TGI's unpaid tax liabilities when TGI failed toprovide to the settlement officer the financial information he requested.: , 7 To reflect 'the foregoing, sy , An _ appropriate decision - will be entered. = 4 ait : J {