TAX COURT OPINION

Case: Robert Briscoe
Docket Number: 21369-09L
Judge: Colvin
Opinion Type: bench
Filed: 11/12/2010
Pages: 10

UNITED STATES TAX COURT 20 217 WASH INGTON, D . C . ROBERT BRISCOE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent . ) ) ) ) ) ) ) ) ) Docket No. 21369-09L O R D E R Pursuant to Rule 152 (b) , Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith the pages of the findings of to petitioner and to respondent a copy of transcript of the above case before Special Trial Judge Lewis R. Carluzzo at Boston, Massachusetts, on September 30, 2010, containing his oral rendered at the conclusion of trial. fact and opinion the trial of In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered for respondent. (Signed) Lewis R. Cariuzzo Special Trial Judge Dated: Washington, D.C. November 12, 2010 SERVED sov 3 5 2010 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 3 Bench Opinon by Special Trial Judge Lewis R. Carluzzo Briscoe v. Commissioner Docket No. 21369-09L September 30, 2010 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. Unless otherwise indicated, section references contained in this bench opinion are to the Internal Revenue Code of 1986 as amended in effect for the relevant period. Rule references are to the Tax Court rules of practice and procedure. This Section 6330(d) proceeding is assigned pursuant to the provisions of Section 7443A(b) (4) and Rules 180 through 182. This bench opinion is made pursuant to the authority granted by Section 7459(b) and Rule 152. This case is before the Court on Respondent's motion for summary judgment filed May 13, 2010 and supplemented on September 2, 2010. Petitioner's objection to Respondent's motion was electronically filed on July 30, 2010. A hearing was conducted on Respondent's motion on September 27, 2010 in Boston, Massachusetts. Nina P. Ching appeared on behalf of Respondent and argued in support of the motion. James J. Lombardi, Heritage Reporting Corporation (202) 628-4888 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 4 III appeared on behalf of Petitioner and argued in opposition to the motion. Giving due regard the representations made in Respondent's motion as supplemented, the statements contained in Petitioner's objection to Respondent's motion, and taking into account the presentations made by the parties at the hearing, the Court is satisfied that there are no genuine issues as to any material facts in this case. Consequently, disposition of the case upon summary judgment is appropriate. Rule 121(b), Sundstrand Corp. v. Commissioner 98 T.C. 518, 520(1992), affirmed 17 F 3rd 965 (7th Circuit 1994). In a notice of determination concerning collection action(s), Under Section 6320 and/or 6330, dated August 27, 2009, Respondent determined that a levy is an appropriate collection action with respect to Petitioner's outstanding Section 6672 tax liabilities and related amounts for the second, third and fourth quarters of 1999, the first, second, third and fourth quarters of 2000, and the second and fourth quarters of 2001, (the underlying liabilities.) The underlying liabilities arose and were assessed against Petitioner in due course as the responsible officer of a corporation or corporations owned or controlled by him. The underlying Heritage Reporting Corporation (202) 628-4888 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 5 liabilities were assessed only after Petitioner was given the opportunity to challenge the existence or the amount of those underlying liabilities through available administrative procedures. The record does not disclose whether Petitioner took advantage of those administrative procedures, but, the mere opportunity to have done so precludes him from challenging the underlying liabilities in this proceeding. See Section 6330(c) (2) (]B). Consequently, the only issue for decision is whether Respondent's determination to levy, in order to collect the underlying liabilities, is an abuse of discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). The undisputed facts relevant to the resolution of the above stated issue can be easily summarized. Because all or portions of the underlying liabilities remained unpaid as of September 8, 2008, by letter bearing that date, Petitioner was notified of Respondent's intent to levy an order to collect those liabilities. The letter further notified Petitioner of his right to request an administrative hearing in order to challenge that collection action, see Section Heritage Reporting Corporation (202) 628-4888 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 6 6330(a), which he did. In his request for an administrative hearing, Petitioner indicated that an offer in compromise should be considered as a collection alternative to the levy. Petitioner's request also notes that the underlying liabilities have "been paid or should have been paid via a payment of $298,000 to the IRS through a payment from a lien on the sale of his primary property." Claiming that a tax has been paid, of course, is construed to be a challenge to the existence of that tax. See Boyd v. Commissioner, 117 T.C. 127, 131 (2001), which, as noted above, Petitioner is not entitled to do in this proceeding. Nevertheless, it is now clear that the proceeds from the sale of Petitioner's "primary property" were applied against Petitioner's Federal tax liabilities other than the underlying liabilities. At the administrative hearing, which was conducted through correspondence and over the .telephone with Respondent -- between Respondent's settlement officer and Petitioner's representative, Petitioner submitted an offer in compromise based upon doubt as to collectibility (the OIC), see Section 7122, Section 301.7122-1(b) (2), procedural and administrative regs. Heritage Reporting Corporation (202) 628-4888 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 7 According to the OIC, Petitioner proposed to pay slightly less than $5,000 in satisfaction of the underlying liabilities which, at the time, amounted to slightly more than $50,000. In response to Petitioner's OIC, Respondent settlement officer requested certain additional financial information relating to Petitioner and relating to a corporation or corporations owned or controlled by Petitioner. Some of the information was supplied. Other requested information, such as the value of a patent or patents held by Petitioner was not provided to the settlement officer because, according to Petitioner, it was difficult to value the patent or patents. Respondent settlement officer considered the OIC against Petitioner's financial profile and took into account (1) Petitioner's records demonstrating his discretionary spending, (2) amounts spent -- amounts Petitioner spent during the relevant time period to acquire and renovate his personal residence, (3) royalty income received by Petitioner from the patent or patents that he held, and, (4) a statement of monthly income and expenses submitted to the settlement officer, which statement Petitioner later disavowed. Heritage Reporting Corporation (202) 628-4888 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 8 Following his consideration, Respondent settlement officer, by letter dated August 27, 2009, notified Petitioner that the OIC was rejected because "an amount larger than the offer appears to be collectible." See Section 1.7122-1(f) procedural and administrative regs. The above referenced notice of determination followed soon thereafter. In matters such as this, the failure of the taxpayer to submit financial information requested in connection with a collection alternative, in and of itself, can be grounds for sustaining Respondent's proposed collection activity, see Long v. Commissioner, T.C. Memo. 2010-7, and the cases on that point cited in that opinion. There is some question in this case whether Petitioner fully complied with the settlement officer's request for additional information. For purposes of the motion here under consideration, however, we resolve this uncertain in Petitioner's favor and proceed as though he did. According to Petitioner, Respondent's determination to proceed with the intended levy, rather than compromise the underlying liabilities consistent with the OIC is an abuse of discretion. As Heritage Reporting Corporation (202) 628-4888 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 9 we have previously noted, "whether an abuse of discretion has occurred depends upon whether the exercise of discretion is without sound basis in fact or law." Freije v. Commissioner, 125 T.C. 14, 23 (2005). We have further noted that, although we might disagree with the conclusion of a settlement officer, it does not mean that the settlement officer's conclusion was arbitrary and capricious and without sound basis in fact or law. In reviewing Respondent's discretionary administrative acts, as we are called to do here, we do not, as we have stated, substitute our judgment for the judgment of Respondent's settlement officer, see Patton v. Commissioner, 116 T.C. 206, 210 (2001). According to Petitioner, the financial information supplied to the settlement officer, including the monthly statement of income and expenses prepared by Petitioner misled (my term, not Petitioner's), if you will, the settlement officer to erroneously conclude that a larger portion of the underlying liabilities was collectible. According to Petitioner, his attempt to correct the income shown on the monthly statement of income and expenses was not properly taken into account in the settlement officer's decision to reject the OIC and allow the Heritage Reporting Corporation (202) 628-4888 1 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 10 proposed collection action (the levy) to proceed. The settlement officer's log, however, demonstrates that Petitioner's claim to have less income than shown in the monthly statement of income and expenses was taken into account. Set against the other financial information available to and reviewed by the settlement officer, it would seem that Petitioner's claim was not so much ignored by the settlement officer as it was considered not persuasive. In concluding that Petitioner's financial status would allow payment in excess of the amount proposed in the OIC, the settlement officer relied on Petitioner's various financial statements rather than on Petitioner's belated claim. We do not view the settlement officer's decision in that regard to be arbitrary and capricious. This is especially true considering that the financial information reviewed by the settlement officer supports the settlement officer's conclusions. The settlement officer's rejection of the OIC was not an abuse of discretion. In all other respects, the record demonstrates that Respondent has proceeded as required under Section 6330 and Petitioner does not suggest otherwise. Heritage Reporting Corporation (202) 628-4888 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 11 Respondent's determination to proceed with collection as determined in the above referenced notice of determination will be sustained. In closing, we think it appropriate to note that our disposition of this case in no way precludes Petitioner from pursuing other collection alternatives independent of Section 6330 and otherwise acceptable to Respondent, such as, a revised offer in compromise or an installment agreement. See Section 6330(d) (2). To reflect the foregoing, an appropriate order and decision will be entered. This concludes the Court's oral finding of fact and opinion in this case. All right. We're going to recess. I am going to consider one last bench opinion, which will probably take me a little bit of time to finish up. So, I'd like to see Ms. Blondin and Ms. Rossi. Why don't you come on back in the chambers and we'll see where we go from here. THE CLERK: All rise. (Whereupon, at 11:57 a.m., the bench opinion in the above-entitled matter was concluded.) // // // Heritage Reporting Corporation (202) 628-4888