TAX COURT OPINION

Case: Stephen & Carolann Lampf
Docket Number: 24428-09L
Judge: Vasquez
Opinion Type: memo
Filed: 11/29/2011
Pages: 10

T.C. Memo. 2011-282 I UNITED STATES TAX COURT STEPHEN AND CAROLANN LAMPF, Pe,titioner v. COMMISSIONER OF INTERNAL REVENUE, Respo dent Docket No. 24428-09L. Fil d Nove er 29, 2011. Stephen Lampf, for petitioners. Donald M. Brachfeld, for respondent. MEMORANDUM FINDINGS OF FACT AND OPIN]ON VASQUEZ, Judge: Pursuant to section 6330 (d),/ petitioners 4 ; ·| seek review of respondent's determination to proceed with collection of their unpaid 2005 Federal income tax liability. 1 Unless otherwise indicated, all sectiion re erences are to the Internal Revenue Code . - 2 - The issue for decision is w ether respondent abused his discretion by sustaining thë proposed collection activity.2 FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulations of facts ar d the attached exhibits are incorporated herein by this reference. At the time they filed the petition, petitioners resided in New Jersey. On February 12, 200'7, etitioners filed their Federal income tax return for 2005 but fai ed to pay the tax shown on the return as due. On March 17, 2009, respondent issued .to petitioners a Final Notice of Intent to Levy and Notice of Your Right to a Hearing relating to their oÚtstanding income tax liability for 2005.3 On March 30, 2009, r spondent received petitioners' See Foil v. Commissioner , 92 T . C . 376, 418 (1989) , 2 Petitioners argue for the first time on brief that the settlement officer was not a!n impartial officer or employee as required under sec. 6330 (b) (Í3) . Although generally we will not consider issues that are rai]sed for the first time at trial or on brief, we note that the record does not support petitioners' argument . affd. 920 F.2d 1196 (5th Cirf. 1990); Markwardt v. Commissioner, 64 T.C. 989, 997 (1975). Internal Revenue Service (IPS) Office of Appeals (Appeals) employee is considered to be "impextial" if he or she had "'no prior involvement with respect v. Commissioner, T.C. Memo. 2004-30 (quoting sec. 6330 (b) (3)) . Petitioners offered no evidence that the settlement officer had any prior involvement with trhe liability at -issue . Moreover, nothing in the record suggests that the settlement officer involved in petitioners' hearing wa.s demonstrably biased. Criner v. Commissioner, T.C. Memo. 2003-328. For purposes of sec. 6330(b) (3), an. See to the unpaid tax'" at issue. Day 3 The notice also related to petitioners' outstanding income tax liability for 2007. Petitioners paid in full their . (continued. . . . ) - 3 - timely.filed Form 12153, Request for a Collection Due Process or Equivalent Hearing. Petitiohers sought to settle their tax liability at issue through an offer-in-compromise (OIC) based on doubt as to collectibility. Petitioners do not d spute the underlying tax liability. Settlement Officer Stacey Simpson (Officer S mpson) was the IRS Appeals settlement officer assigned to petiti ners' case. On May 15, 2009, Officer Simpson sent petitioners a etter (May 15 letter) regarding their requested collection due. rocess hearing (CDP hearing). The May 15 letter stated that Off cer Simpson could consider collection alternatives, such as a OIC, only if petitioners provided her with the items listed in the letter. The listed items included: (1) A copy of petitio ers' signed and filed Federal income tax return for 2008;.(2) a c mpleted Form 656, Offer in Compromise;. (3) a $150 application ee; (4) a ! verification of 20-percent payment of lump-sum of er; añd (5) a completed Form 433-A, Collection Information Stat ment for Wage Earners and Self-Employed Individuals, including ll.required. attachments; i.e., earnings statements., statement for checking and savings accounts, and biils or statements for monthly recurring expenses for the 3 months before the da e of the Form 433-A. Officer Simpson instructed petitioners to send the listed k 3(...continued) tax liability for 2007; and this Court granted respondent's motion to dismiss as moot taxable year 2007. items to. her within 14 days from the date of the May 15 letter. The May 15 letter further s ated: [ "I cannot consider collectiion alternatives at your conference without this information." A telephone CDP hearing was .ultimately scheduled for June 9, 2009. On June 2, 2009, petitioner Stephen Lampf (Mr. Lampf) faxed to Officer Simpson Form 656, a copy of a check for $1,150 (the $150 application fee plus 20 ipercent of the lump-sum offer), and Form 433-A. Petitioners atta hed to the Form 433-A· copies of: (1) Mr. Lampf's Form W-2, Wage and Tax Statement, for 2008; (2) p.etitioners' Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, for 2008; and (3) petitioners' Form 1040A, U!S. Individual Income Tax Return, for 2007. Petitioners did t attach copies of their checking account statements or docuinents verifying their monthly expenses. In the fax, Mr. Lampf told Office Simpson: "Should you need verification of the expenses on Form 433-A, Ms. Deza Lazar of Newark Appeals should be able sto rovide that to you, as it was previously submitted on Jul 1, 2008.."4 On June 3, 2009, Officer Simpson sent the following fax to Mr. Lampf : "Any information you' have to send to me ( [Form] 656 4 Petitioners had prev ously submitted a Form 433-A in connection with a prior OIC relating to their tax liabilities for 1997 and 2000 through 2005. The documentation submitted with that OIC would relate to the 3 months before July 2008 and not June 2, 2009, Form 433-A. That OIC was ultimately rejected. the 3-month period before the w/payment and supporting documentation to * * * [Form 433-A] ) should be in my office before the scheduled conference date of 6/9/2009." Petitioners did not send any additional supporting documentation. During the hearing OffiÈer Simpson eÉplained to Mr. Lampf that she was unable to consider a collection alternative because petitioners had not provided the required supportihg documentation to Form 433-A. Mr. Lampf r plied hat he had faxed Officer Simpson a copy of Form 433-A. Officer Simpson stated that the information Mr. Lampf faxed could not be processed. The hearing was terminated shortly thereafter; Officer Simpson's June 9, 2009, entry in her case activity yecord gtates that she told Mr. Lampf she was unable to consider a collection alternative because he had not provided supportinÒ documentation. After the hearing, Mr. Lampf asked Officet Simpson to issue a notice of determination. On June 12, 2009, Appeals issued to petitioners a Notice of Determination Concerning Collection Actiog(s) Under Section 6320 and/or 6330 (notice of determination) sustaining; the proposed levy. The notice of determination stated that tlhe information petitioners faxed Officer Simpson could not be processed. 11 I. The Parties' Arguments · . OPINION Petitioners assert that Offi er·Simpson abused her discretion by refusing to consider their OIC. Specifically, petitioners argue that Officer:Simpson refused to consider the OIC because she had only copies of the required forms and not the originals . Respondent counters that the OIC was not considered because petitioners failed to submit the required financial information. . II. Abuse of Discretion Section 6330 (a) provides that the Secretary shall furnish a taxpayer with written notice of his right to a hearing before any property is levied upon. Section 6330. further provides that the taxpayer may request admini trative review of the .matter (in the form of a hearing) within a 30-day period. Sec. 6330 (a) and (b) . Pursuant to section 63 0 (c) (2) (A) , a taxpayer may raise at the section 6330 hearing an relevant issue with regard to the Commissioner's collection_aqtivities, including spousal defenses, challenges to the appropriateness of the Commissioner's intended collection action, and altednative means of collection. Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114 T.C. 176, 180 (2000). Petitioners' underlying tax liability is not in dispute; thus, the Court reviews Appeals' determination for abuse of discretion. See Sego v. Commissioner, supra at 61(0; Goza v. Commissioner, supra at 182. To establish abuse of| discretion, the taxpayer must show that the decision complaingd of || is arbitrary, capricious, or without sound basis in fact or law. Giamelli v. Commissioner, 129 T.C. 107, 111 (2007) (citing Sego V. Commissioner, supra at 610, and Woodral v. Commissioner, 112 T.C. 19, 23 (1999)); see Murphy v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006). In reviewing for abuse of discretion, we gene(cid:16)040allyconside(cid:16)040only he arguments, issues, and other matters thåt were raiseÓ at thé CDP hearing or otherwise brought to the att(cid:16)040ntionof Appéals. Giamelli v. Commissioner, supra at 115; Magana v. Commissioner, 118 T.C. 488, 493 (2002); see also sec. 301.6330-1(f) (2), Q&A-F3, Proced. & Admin. Regs. 4 Section 7122(a) authorizes the Commissioner to compromise a taxpayer's outstanding liabilities. The regulatigns and t| procedures under section 7122 provide the exclusive method of effecting a binding nonjudicial compromise. Laurins v. Commissioner, 889 F.2d 910, 912 (9th Cir. 1989), iaffg. Norman v. Commissioner, T.C. Memo. 1987-265; Litwak v. Commissioner, T.C. Memo. 2009-292. Section 301.7122-1(d) (1 , Proced. & dmin. egs., provides: An offer to compromise a tax liability purs ant to section 7122 must be submitted Nccording to the pro edures, and in the form and manner, prescribed by the Secrëtary. An offer to compromise a tax liability must bè made in writing, must be signed by.the taxpa er under penalty of perjury, and must contain all of the Secretary. the inf rmation prescribed or requested by * * * See Nash v. Commissioner, T C. Me o. 20.08-250; Harbaugh v. Commissioner, T.C. Memo. 2003-316 An OIC can be processed when the IRS determines that the offer was submitted on the proper version of Form 656 and Form 433-A, the taxpayer is not bankrupt, the taxpayer enclosed the application fee, and the offer meets any other·minimum requirements set by the IRS. See Rev: Proc. 2003-71, sec. 5.01, 2003-2 C.B. 517, 518. An OIC must be submitted on a special form prescribed by the Secretary Laurins v. Commissioner, supra at 912. Section 601.203(b),. Statement of Procedural Rules, provides that "Offers ln compromlse are regulred to be submitted on Form 656, properly executed, and accompanied by a financial statement on Form 433 (if based on in bilit to pay)." Form 433-A requires taxpayers to include documentation to support their claimed incom and expenses. See Rev. Proc. 2003- 71, sec. 4.03, 2003 2 C.B. t 518 (stating that the "offer should include all information nec ssary to:verify the grounds for compromise"). The supporting documentation includes copies of earnings statements, checki g acc unt statements, and bills or statements for monthly recu ring Èxpenses. See Form 433-A (2008). Taxpayers are required to provide copies (of the above items for the 3 months before the date the Form 433-A is submitted. Id. Petitioners failed to attach all of the required supporting documentation to Form 433-A. Petitioners did not attach copies of their checking account statements or bills for their monthly expenses for the 3 preceding months. Mr.iLampf'Å instruction to Officer Simpson to obtain verification of petitioners' expenses from their prior OIC does not satisfy the Form 43Ý-A requirement for supporting documentation. Even if Officer Simpson had been able to obtain the documentation from pet tioners' previous OIC, the documentation would not have covered the required timeframe (i.e., would not have covered the 3 months before petitioners' submitting Form 433-A). Officer Simpson warned Òetitioners tÈat sheÉcould not consider their request for an OIC without the required documents.' It is not an abuse of discretion for h settlement s Petitioners have not shown that O¾ficer Simpson refused the required to consider their OIC because she did not have originals. Respondent's position that Officer Simpson refused to consider the OIC because petitioners did not provide all information is supported by the evidence. record, Officer Simpson stated that she was unable to consider the OIC because petitioners failed to provide hey the required information. This is consistent with the communications between Officer Simpson and petition rs before th¼ heari¼g. Officer Simpson's May 15 letter to petitioners informed them that she would not be able to considek an OIC if they did not provide her with the required information. After receiving pétitioners' Form (continued...) In her!case activity - 10 - officer to reject collection alternatives and sustain the proposed collection. action n the basis of the taxpayer's failure to submit requested financi l information. Kendricks v. Commissioner, 124 T . C. 69, 9 (2005) ; see . Cavazos v. Commissioner, T.C. Memo. 20 8-257 Accordingly, Officer Simpson did not abuse her discretion by- not, considering an. OIC. Nothing in the record- justif es a conclusion that Officer Simpson abused her discretidn, and petitioners have not shown that Appeals' determination to sustain the notice of . intent to levy was arbitrary, capricious, o without sound basis in fact or law. See Giamelli v. Commissioner, supra at 111. To reflect the foregoing, Decision will be entered for respondent. s ( . . . continued) 433-A without the required attachments, Officer Simpson sent Mr. Lampf a fax on- June 3 reminding him that she needed all the required attachments to Forin 433-A before the scheduled CDP hearing.