TAX COURT OPINION

Case: Scott T. Blackburn
Docket Number: 27721-14L
Judge: Goeke
Opinion Type: bench
Filed: 06/26/2018
Pages: 13

CLC UNITED STATES TAX COURT WASHINGTON, DC 20217 SCOTT T. BLACKBURN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 27721-14 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 hearing in the above case before Judge Joseph Robert Goeke at New Orleans, Louisiana 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, petitioner's Motion for Reconsideration of Findings or Opinion Pursuant to Rule 161, filed May 7, 2018 and petitioner's Motion to Vacate or Revise Pursuant to Rule 162, filed May 7, 2018, will be denied. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. June 26, 2018 SERVED Jun 27 2018 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge Joseph Robert Goeke June 15, 2018 Scott T. Blackburn v. Commissioner of Internal Revenue Docket No. 27721-14L 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 10 opinion is rendered pursuant to the authority provided in 11 12 13 Internal Revenue Code section 7459(b) and Rule 152 of the Tax Court Rules of Practice and Procedure. The section references hereinafter are to the Internal Revenue Code 14 Sections which are relevant to the issues before the Court 15 16 17 18 19 20 and Rule references are to the Tax Court Rules of Practice and Procedure. This Court previously rendered an opinion in this matter. Blackburn v. Commissioner, 150 T.C. 9 (2018). Petitioner challenges that opinion and the resulting decision in two motions: one to vacate the 21 decision and one to withdraw the opinion. The bench 22 opinion we render today addresses those motions. Our 23 previous opinion stated on the tenth page as follows: "At 24 the hearing on this motion petitioner conceded that there 25 were no other issues regarding the determination by the enµot,,nsolopwitionsees:rlberametlwwwmerbenaet 4 1 2 3 4 5 6 7 8 9 settlement officer." Petitioner specifically challenges this statement in petitioner's motions. While)Sem-not addressing the accuracy of the statement in our previous opinion, we set a hearing relative to the motions which was held on June 14, 2018. The purpose of the hearing was to permit the petitioner to articulate what issues petitioner asserts had not been conceded and how such issues would lead to a different result in this case. 10 The hearing on June 14, 2018 focused on whether 11 petitioner, in the remand of this case to the Appeals 12 Division of the Internal Revenue Service, provided the 13 information requested by the settlement officer and 14 whether the settlement officer's request for certain items 15 was reasonable. 16 17 This is a collection case on which we have jurisdiction based upon section 6330(d). The procedural 18 history of this case which is pertinent begins with a 19 20 joint motion to remand the case to appeals which was filed by the parties and granted by the Court. This joint 21 motion filed several years ago was based upon a change in 22 23 24 circumstances because the petitioner became divorced at the end of 2014. On remand, the settlement officer conducted an administrative hearing process with the 25 petitioner and petitioner's counsel. That process 1 2 3 4 5 6 7 involved requests for additional information. Two of those requests are especially important in the determination which the settlement officer made in denying petitioner's request for an offer in compromise. The two items which the settlement officer requested are complete bank records for an account over which the petitioner had a power of attorney, but which he 8 maintains was properly his mother's account, and a second 9 mortgage application which the petitioner submitted to a 10 bank in support of a successful request for a second 11 mortgage on property. It is uncontested that neither of 12 these items was completely provided to the settlement 13 officer. And in fact, the application for the second 14 mortgage was not provided even in part. 15 16 17 18 19 A trial in this court was held after a supplemental notice of determination was issued by the settlement officer. This trial was held on November 2nd, 2016. In respondent's pre-trial memorandum which preceded that trial, respondent described the issue before the 20 Court as follows: 21 "Did respondent settlement officer abuse her 22 discretion when she rejected petitioner's $173,304 offer 23 24 25 in compromise (submitted in 2013) based upon current (2015) financial information that did not include all relevant financial information that was requested?" The record of that trial is the basis for the 6 parties' arguments whether the settlement officer properly denied consideration of petitioner's offer in compromise. The record in that case supports respondent's assertion that the settlement officer, Pam D. Rush, requested American Gateway Bank account records and a submitted and approved second mortgage loan application. Regarding the second mortgage .loan application, petitioner testified at trial as follows: "O There's a second mortgage on the house now that was not there in 2013? "A "Q correct. When did you obtain the second mortgage, Mr. Blackburn? "A "O "A "Q It was after my wife left in November. So late 2014? Yes, sir. Mr. Blackburn, did you ever request a copy of the application for that second mortgage from the bank? "A I did, about a year later, I guess, approximately. I was asked for that information, and the bank had been purchased or sold, or I'm not exactly sure what they did, and they had a new system and they were not able to 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 follows: provide me the copy of the loan application. And they didn't give it to me for several months after the request had been made because it was 7 back in files -- or hard files, I believe." Transcript pages 44 and 45. Subsequent testimony by the petitioner is as "Q You said earlier that you requested a copy of your loan application? "A "Q Yes, sir. And did you ever get a copy of the loan application? "A "O Yes, I did. And did you ever forward a copy of the loan application to the Service? "A The answer to that question is it came in well after the audit, or whatever its called, was taking place and was not something -- it was too late, is what I understood. "Q So you have something relevant to the inquiry that Ms. Rush did? "A "O I did finally get a copy of it, yes. And you could have presented it today in trial? "A Not necessarily, because I would have have 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 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 to go find it. It was an email. 8 So I probably could find it, but no, I did not bring it. "O So you had it at one point; you might have lost it? "A It's buried somewhere on my desk, would be my guess, or in my email. I received it after all the paperwork had been sent in and everything she was wanting was available. When she asked for it, I didn't have it. I couldn't get it. The bank told me they would get it to me as soon as they could. And it was several months down the road when they finally did send it to me." Transcript pages 57-58. After the November 2nd, 2016 trial, this Court 16 allowed the parties to confer for several weeks regarding 17 18 a possible settlement. But petitioner has never produced the missing bank records or the second mortgage loan 19 application. 20 21 22 A hearing under section 6330 allows "a taxpayer to challenge the propriety of a pending tax lien or levy, to verify that a collection action against him is 23 appropriate under the law, and to offer alternatives" to 24 25 the proposed collection action. 'fucker v. Commissioner 676 F.3d 1129, 1131 (D.C. Cir. 2012). A taxpayer may also pnµos,nsolopentiermeezeteruwilwwwhat 9 in certain circumstances challenge the underlying tax liability itself. However, petitioner does not challenge the underlying liability in the present case. Collection proceedings are generally informal and may comprise "informal oral and written communications between the IRS and the taxpayer. " Dalton v. Commissioner, 682 F.3d 149, 155 (1st Cir. 2012). At the end of the process "the IRS is tasked with deciding whether it is reasonable to proceed with its 1 2 3 4 5 6 7 8 9 10 intended collection action." Id. See also section 11 12 13 14 15 16 17 18 19 20 6330(c)(3). (The proposed levy must "balance 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.") Whereas here, the underlying tax liability is not in issue, the determination the IRS Office of Appeals is a collection due process issue which is subject to a hearing held by the Office of Appeals. That determination is reviewed by both the Tax Court and the Court of Appeals for abuse of discretion. § _eee Kindred v. Çommissioner, 454 21 F.3d 688, 698 (7th Cir. 2006); Living Case Alternatives of 22 Utica v. United States, 411 F.3d 621, 625 (6th Cir. 2005). 23 Under this deferential standard of review, which takes 24 into account both the informal nature of the collection 25 proceeding and the limited scope, the determinations of 10 1 2 3 4 the settlement officer are set aside only if they are unreasonable in light of the record compiled in the appeals office. Dalton, 682 F.3d at 1554-55. Petitioner's argument in support of Petitioner's 5 motion and the likelihood that petitioner could sustain a 6 7 8 9 10 11 12 position that the settlement officer's actions were unreasonable is that the omitted records were not produced, but they were incorrectly sought by the settlement officer as the settlement officer's review should have been limited to records that existed before· the case was remanded to the settlement officer, and that it was inappropriate for the settlement officer to review 13 certain information which arose before the case was 14 15 16 17 18 19 20 21 22 23 24 25 remanded. o .o -be arguments which petitioner did raise at the hearing on their motions to reconsider the Court's opinion, we first Regarding the pnpow250lopers onseex,1bemett isaa note that based on petitioner's assertion that the petitioner could not obtain the loan application and that petitioner has never had the loan application, we find petitioner's position to be inconsistent with the factual 11 record. Regarding petitioner's legal argument, this case was remanded to appeals by an agreement of the parties, as we previously stated. The remand was agreed to by the parties because of a change in circumstances. 1 2 3 4 5 6 7 8 9 10 Petitioner's arguments relative to their motions to 11 reconsider the Court's opinion assert that in such a . 12 situation the settlement officer's review should be 13 limited and that it is inappropriate for the settlement 14 officer to pursue records about events which might have 15 arisen before the case was remanded, which would fall 16 under the definition of changes in circumstances. The 17 established law regarding the appropriate actions of a 18 19 settlement officer in reviewing an offer in compromise simply do not support such an assertion. § e_e Murphy v. 20 Commissioner, 125 T.C. 301, 322-323 (2005). 21 22 Changes in circumstances are open for inquiry upon remand as a matter of common sense. Here, the second 23 mortgage application is obviously relevant to review of 24 25 the offer in compromise. Petitioner's assertions to the bank to support his ability to pay the mortgage are highly (973)4064250|operathmseescrisermetjuverwascrawrsmet 12 1 2 relevant and an appropriate area of inquiry for the settlement officer to consider. Since this second 3 mortgage was obtained after the initial appeals 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 determination but before the remand, petitioner's assertions that the settlement officer should not have pursued this matter are borderline specious. Petitioner's arguments are also inconsistent with Code section 6330 itself. Section 6330(d)(3) provides as follows: "The Internal Revenue Service Office of Appeals shall retain jurisdiction with respect to any determination made under this section including subsequent hearings requested by the person who requested the original hearing on issues regarding (A) collection actions taken or proposed with respect to such determination; and (B) after the person has exhausted all administrative remedies, a change in circumstances with respect to such person which effects such determination." Here, a change in circwastances led to a remand to appeals. Petitioner's arguments would restrict the settlement officer's ability to investigate such a change in circumstances. The informal dialog E investigation process envisioned by a section 6330 hearing would be totally frustrated by petitioner's position. Finally, we note that this Court, as we've 25 previously stated, provided the petitioner numerous 13 opportunities to seek settlement after this case was pending before the Court. Regarding those opportunities, petitioner consistently failed to provided respondent with the requested loan application. Even.though, based upon his own testimony, he had the loan application. It is not unreasonable to conclude that this application was not deemed by the petitioner to be helpful to his arguments before the government. We find that this provides further support for the reasonableness of the actions of the 1 2 3 4 5 6 7 8 9 10 settlement officer in seeking the loan application and 11 deciding that the offer in compromise should not be 12 granted. 13 14 The record indicates that the settlement officer considered all of the petitioner's contentions and 15 verified compliance with all applicable laws and 16 regulations. We also find that the settlement officer 17 18 considered collection action via levy based upon the need for efficient tax collection balanced by 19 petitioner's legitimate concerns that the petitioner not 20 21 22 23 be subject to collection actions which were more intrusive than necessary. We conclude that Settlement Officer Rush did not abuse her discretion in sustaining the levy. This was the 24 underlying basis for our original opinion, and it is a 25 basis to reject the two motions to reconsider our opinion øn)4064250]epeenthusesreibeesmett wwwascrbeisaet and the resulting decision. 14 This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 9:58 a.m., the above-entitled matter was concluded.) . . 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