TAX COURT OPINION

Case: Joshua David Grigonis
Docket Number: 27531-11SL
Judge: Haines
Opinion Type: bench
Filed: 01/11/2013
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 JOSHUA DAVID GRIGONIS, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) Docket No. 27531-11SL ) ) ) ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules bf 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 tran¼cript of the trial of this case before Judge Haines at San Francisco, Californialon November 29, 2012, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Harry A. Haines Judge Dated: Washington, D.C. January 11, 2013 SEjVED JAN 17 2013 UNITED STATES TAX COURT JOSHUA DAVID GRIGONIS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 27531-11SL. Joshua David Grigonis, pro se. Shannon Edelstone, for respondent. BENCH OPINION The Court has decided to render oral findings of fact and opinion in this case; and the followin 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. - 2 - Petitioner filed a petition with this Court in response to a notice of determination concerning collection actions under Section 6320 and/or 6330 (notice of determination) for 2005. Pursuant to Section 6330(d) Petitioner seeks review of Respondent's determination. The issue for decision is whether Petitioner is entitled to any relief from Respondent's determination that collection may proceed. The parties' stipulation of facts and first supplemental stimulation of facts and the attached exhibits are incorporated herein by this reference. Petitioner is an individual who maintained his legal residence in the state of California at the time his petition was filed. On or about May 19, 2008, Petitioner filed his 2005 federal income tax return, reporting a tax liability of $52,633, which Respondent subsequently assessed. Respondent applied Petitioner's withheld taxes of $16,635 as a credit against his 2005 tax liability. Petitioner did not fully pay the remainder of the assessed liability. Respondent subsequently assessed interest, as well as failure to file and failure to pay penalties, under Section 6651(a) (1) and 6651(a) (2). Respondent filed a notice of federal tax lien on September 1, 2010. Respondent issued a Letter 3172, "Notice of Federal Tax - 3 - Lien Filing and Your Right to a Hearing under Section 6320," with a response date of no later than October 8, 2010. Petitioner submitted a Form 12153, "Request for Due Process or Equivalent Hearing," which was timely mailed on October 7, 2010, and received by Respondent on O tober 13, 2010. In his request, Petitioner requested that the lien be withdrawn and that he be considered for an installment agreement or an offer in compromise. Appeals Officer Ken Johnson (Officer Johnson) sent Petitioner an initial contact letter dated March 23, 2011, scheduling a hearing for April 21, 2011. On April 21, 2011, Officer Johnson held a collection due process hearing (CDP hearing) with Petitioner. The Petitioner agreed to file a collection information statement and an offer in compromise, which he subsequently did on or about May 3, 2011. On the collection information statement Petitioner claimed $4,400 of housing allowance expenses per month because he was renting an apartment near his work and also paying a mortgage on his house. The house was located hundreds of miles away from his work. Petitioner did not explain this situation to the appeals officer or the offer specialist. Respondent's offer specialist prepared a financial analysis report and determined, among other things, that the housing allowance using the local standard should be $1,700 per month. The offer specialist also concluded that Petitioner could pay the full liability. The offer in compromise was rejected and returned to appeals on or about October 13, 2011. Officer Johnson sent Petitioner a letter dated the same date, requesting that Petitioner contact him to discuss the offer in. compromise rejection. The letter advised that if Petitioner did not reply by October 27, 2011, the lien and the offer in compromise rejection would be sustained. Petitioner did not respond to the letter. Petitioner was in Mexico when the letter was issued. He did not attempt to contact Officer Johnson. Respondent issued a notice of determination concerning collection action(s) under section 6320 and/or 6330 for 2005 to Petitioner on November 2, 2011, sustaining the lien. In response to the notice of determination, Petitioner filed his petition with this Court on December 1, 2011. Petitioner's position is that Respondent did not properly allow for Petitioner's expenses when calculating the amount Petitioner could pay for his offer and compromise. Specif·ically Petitioner contests the amount of the housing expense allowance. Petitioner does not challenge the underlying liability in this case. When the underlying tax 1 ability is not at issue we review Respondent's appeals office's determination for abuse of discretion. Goza v. Commissioner, 114 T.C. 176, 181 to 182 - 5 - (2000). An appeals officer abuses his discretion when he takes action that is arbitrary or capricious, lacks sound basis in law, or is not justifiable in light of the facts and circumstances. Willis v. Commissioner, T.C. Memo. 2003-302 (citing Mailman v. Commissioner, 91 T.C. 1079, 1084 (1988)). Before a lien may be filed against any property or right to property, a taxpayer is entitled to notice of federal tax lien and notice of the right to a fair hear ng before an impartial officer of the IRS Appeals Office, Section 6320 (a) and (b). Taxpayers may raise challenges to "the appropriateness of collection actions" and may make "offers of collection alternatives which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer in compromise," Section 6330 (c) (2) (A). The appeals officer must consider those issues, verify that the requirements of applicable law and administrative procedures have been met and considered "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary," Section 6330(c) (3) (C). When Petitioner submitted his offer in compromise, the offer in compromise was sent to an offer specialist to review. The offer specialist prepared a financial analysis report comparing the actual expenses listed on Petitioner's Collection Information Statement with national and local standards. Allowable expenses, according to the Internal Revenue Manual (IRM) Section 5.15.1.7, are "expenses that meet the necessary expense test." The necessary expense test is defined as expenses that are necessary to provide for a taxpayer and his or her family's health and welfare and/or production of income. The expenses must be reasonable. The total necessary expenses establish the minimum a taxpayer and family needs to live. There are three types of necessary expenses: national standards, local standards, and other expenses. National standards are those for food, clothing, other items, and health care expenses. IRM 5.15.1.7(3). Local standards are for two necessary expenses: housing and utilities and transportation. Taxpayers w111 normally be allowed the local standard or the amount actually paid, whichever is less. IRM 5.15.1.7(3). If the amount claimed is more than the total allowed.by housing and utility standards, the taxpayer must provide documentation to substantiate those expenses are necessary. IRM 5.15.1.9(1) (a). A deviation from the local standard is not - 7 - allowed merely because it is inconvenient for the taxpayer to dispose of valued assets or reduce excessive necessary expenses. IRM 5.15.1.7(9). Other expenses may be allowed if they meet the necessary expense test. The amount allowed must be reasonable considering the taxpayer's individual facts and circumstances. IRM 5.15.1.7(6). I am stating the IRM cites because they were referred to by the offer specialist in making her decisions. They are not necessarily authority for purposes of this Court's rulings, but they do show compliance with the standards set by the Internal Revenue Service and are cited for that reason. On his collection information statement Petitioner claimed that he lived in Alameda County, California, and had three dependents. The offer specialist who prepared the financial analysis report allowed housing expense in the amount of $2,705, which was the local standard for Alameda County, California, for 2011, the year the offer in compromise was submitted. Petitioner was given the opportunity, but did not explain any individual facts and circumstances to Officer Johnson that would have altered the conclusions reached by t e offer specialist. Under section 6330(c) (1), Officer Johnson verified that the requirements·of applicable law and administrative procedures were met. Through his review of the computerized transcripts of account, Officer Johnson determined that the Service properly - 8 - assessed Petitioner's income tax for 2005 and issued the proper collection notices. The Service's computerized transcripts of account provide presumptive evidence hat tax has been validly assessed and collection notices properly issued. Johnston v. Commissioner, T.C. Memo. 2004-224. Absent a showing by the taxpayer of an irregularity in Respondent's assessment procedure it is not an abuse of discretion for an appeals officer to rely on the computerized transcripts of account for purposes of compliance with Section 6330(c) (1). Roberts v. Commissioner, 118 T.C. 365(2002), aff'd, 329 F.3d 1224 (11th Cir. 2003); Craig v. Commissioner, 119 T.C. 252 (2002); Davis v. Commissioner, 115 T.C. 35 (2002). Petitioner raised no issues during the CDP hearing with respect to the rejection of the offer in compromise despite being given the opportunity to do so. He also raised no objections to the filing of the lien except for this statement that it was providing him difficulty in obtaining necessary loans. Officer Johnson appropriately held that the proposed collection action balances the need for efficient tax collection with the concern that the collection action be no more intrusive than necessary. Thus, Officer Johnson fully complied with the requirements of Section 6330 and there was no abuse of discretion. In reaching these holdings, the Court has considered all arguments made and to the extent not mentioned concludes that they are moot, irrelevant, or without merit. To reflect the foregoing, decision will be entered for Respondent authorizing collection to proceed. This concludes the Court's oral findings of facts and opinion.