t c memo united_states tax_court james e and cathy marlow petitioners v commissioner of internal revenue respondent docket no 18721-08l filed date mary michelle gillum and robert b nadler for petitioners martha j weber for respondent memorandum opinion dawson judge respondent issued a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination with respect to a final notice_of_intent_to_levy to collect petitioners’ unpaid federal income taxes assessed for and in response petitioners timely filed a petition pursuant to sec_6330 seeking a review of respondent’s determinations the issues for decision are whether respondent’s appeals officer obtained verification that requirements of any applicable law or administrative procedure were met as required by sec_6330 specifically whether codes on computerized records verify that the internal_revenue_service irs properly assessed petitioners’ federal income taxes for and without sending petitioners notices of deficiency petitioners deny signing and filing waivers of restrictions on assessment of the taxes and there are no waivers signed by petitioners agreeing to the assessments in the irs records if the appeals officer did not obtain verification that taxes were properly assessed whether the case should be remanded to the appeals_office to obtain the purported waivers if the case is not remanded whether respondent has met his burden of proving that petitioners waived the restrictions on assessments and the taxes were validly assessed and 1unless otherwise indicated all section references are to the internal_revenue_code as amended if the taxes were properly assessed whether respondent’s settlement officer abused her discretion in denying petitioners’ request for an offer-in-compromise oic background some of the facts and exhibits have been stipulated and are so found the stipulation of facts and the supplemental stipulation with attached exhibits are incorporated herein by this reference petitioners james marlow mr marlow and cathy marlow mrs marlow resided in tennessee when they filed their petition appealing respondent’s notice_of_determination mr marlow has a third grade education and mrs marlow has a seventh grade education for many years mr marlow was in the business of removing and hauling waste materials from rural appalachian coalfields he owned and operated the trucks used in his business mr marlow closed his business and retired in date because of serious health problems presently at age his only income is his social_security_benefit of approximately dollar_figure a month petitioners timely filed their joint federal_income_tax returns for and the returns were prepared by their tax preparer j and j accountants petitioners provided the return preparer with their receipts canceled checks and other information on date a fire destroyed petitioners’ residence along with all of their furniture personal_property and business records the irs selected petitioners’ income_tax return for examination on date revenue_agent karen jackson ra jackson sent petitioners a notice proposing to audit their return on date ra jackson met with mr marlow at the office of vicki mayes ms mayes petitioners’ agent for the purpose of auditing petitioners’ return mrs marlow did not attend the meeting although the audit notice was limited to the return ra jackson expanded the audit to include petitioners’ return the irs maintains an electronic version of ra jackson’s workpapers related to her examination of petitioners’ and returns the certified copy of the electronic version of ra jackson’s workpapers provided to the court on date includes a form_4318 examination workpapers index a form_9984 examining officer’s activity record notes workpapers lead sheets and copies of two forms income_tax examination changes showing ra jackson’s changes to petitioners’ and returns ra jackson’s interview summary in her workpapers indicates inter alia that petitioners had not used form_2848 power_of_attorney and declaration of representative to grant ms mayes a power_of_attorney ra jackson asked ms mayes to complete a form_2848 mr marlow took the completed form_2848 to mrs marlow for her signature and was to fax the form_2848 to ra jackson’s office mr marlow provided oral information about his business and business practices during and stated that he was not aware of any errors on his return he and ra jackson discussed specific items on the return ra jackson made changes to petitioners’ return by applying the percentages of the adjustments to items for to the items for she gave mr marlow the opportunity to collect information for that year and to schedule another meeting ra jackson’s workpaper titled marlow collectibility indicates that she considered collectibility for purposes of determining the scope of the audit she discussed installment_agreement procedures and offer-in-compromise procedures with mr marlow but could not initiate an installment_agreement because the time it would take petitioners to pay the liabilities was longer than she was authorized to approve after ra jackson returned to her office following the meeting with mr marlow she received a telephone call from mrs marlow to discuss possible payment options ra jackson told mrs marlow that she would send the appropriate forms and publications and offered to assist petitioners in preparing the forms she suggested that petitioners come to the irs walk-in office to prepare the forms and gave mrs marlow her office address ra jackson customarily records her examination activities and summaries on a form_9984 the form_9984 in the certified copy of ra jackson’s workpapers shows the following information about her meeting with mr marlow on date met with the tp had the initial interview reviewed records and issued the report tp will meet with his wife and return by went over appeal rights and privacy_act tp cannot pay-agreed to send him publications on payment received phone call from tp w we discussed payment options and told her i was sending publications the form_9984 indicates that on date ra jackson sent publications to petitioners there is no entry on ra jackson’s form_9984 for date the date forms signed by petitioners were to be returned to her the only entry on ra jackson’s form_9984 after the march entry is the last entry dated date which reads closed to gm without any reference to forms if ra jackson does not receive a signed form_4549 after she completes an audit she either prepares a 30-day_letter or telephones the taxpayers and asks if they would like to have a supervisory conference ra jackson normally documents such actions on the form_9984 and there are no entries on ra jackson’s form_9984 to indicate she took either action with respect to petitioners’ and deficiencies however neither are there any entries on the form_9984 indicating that ra jackson ever received forms from petitioners signed or unsigned that mr marlow and or mrs marlow signed forms agreeing that additional taxes were owed for and or that mr marlow or mrs marlow agreed on forms forms waiver_of_restrictions_on_assessment_and_collection of deficiency in tax and acceptance of overassessment or in any other writing to waive the restrictions on the assessments of the deficiencies ra jackson often does not record the receipt of a signed form_4549 on the form_9984 because she believes that the signed form_4549 in the file documents its receipt unfortunately there are no forms signed by petitioners in petitioners’ file moreover the two forms showing changes to petitioners’ and returns that are included in the certified copy of ra jackson’s workpapers the workpaper forms were not prepared by ra jackson at the time of the examination of petitioners’ and returns and are not actual copies of the forms she prepared at the conclusion of the examination this is evidenced by the following facts first ra jackson’s signature does not appear anywhere on the workpaper forms and her name is typed on the workpaper forms where the examining officer’s signature should appear second ra jackson prepared the forms for and and gave them to mr marlow on date when she concluded her examination but the workpaper forms are dated date and third and most telling the workpaper forms could not have been prepared on march or because the workpaper forms are labeled form_4549 rev and thus were not in use until date ra jackson closed petitioners’ case and sent it to her general manager for review and approval on date ra jackson’s general manager did not testify at trial and nothing in the record reveals any_action he may have taken regarding the assessments of petitioners’ deficiencies for and when a case is closed the revenue agent’s group manager sends the file forward for further processing using a form_3210 document transmittal if a case is closed as agreed the case is sent to central case processing ccp for assessment if a case is closed as unagreed the case is sent to technical services the irs maintains a system known as the examination returns control system ercs to control examination inventory and document the audit_trail of a case ercs statu sec_51 indicates the case is in transit to ccp for assessment ercs statu sec_21 indicates that the case is being sent to technical services the ercs will also show when the tax examiner returns the case file to the revenue agent’s group because the form_4549 is not properly executed the record does not identify the status of such an action before a case is sent from the revenue_agent to ccp the revenue agent’s general manager reviews the file to make sure that signed agreements are in the file and he will document on form_9984 either in handwriting or by other notation that he reviewed the file and submitted it to the ccp group for processing the form_9984 does not include a handwritten or other notation from ra jackson’s general manager indicating that he reviewed signed forms and submitted the file for processing respondent did not produce the form_3210 sending petitioners’ file to ccp for processing when an agreed closed_case is received in ccp it is assigned to a tax examiner who must verify that there is a signed form_4549 in the case file and check the figures on the documents if a tax examiner determines that the form_4549 is not properly executed ccp returns the case file to the revenue agent’s group no tax examiner testified that he or she verified that the forms in the case file were signed by petitioners the ercs report for petitioners’ account shows that petitioners’ and case was initially closed as agreed with statu sec_51 but later changed to statu sec_53 as special interest at the same time it was updated to statu sec_53 it was also assigned to a tax examiner and then again days later it went into statu sec_90 which is closed the record does not explain what statu sec_53 special interest means respondent did not issue petitioners a notice_of_deficiency for or on date the irs assessed additional taxes of dollar_figure for and dollar_figure for the assessed amount of dollar_figure for varies from the proposed assessment amount of dollar_figure listed by ra jackson on the workpaper form_4549 on date approximately months after the audit examination respondent sent petitioners a final notice_of_intent_to_levy and notice of your right to a hearing for and petitioners then sought assistance from the legal aid society of middle tennessee and the cumberlands their counsel mary michelle gillum ms gillum represented them during their cdp hearing mr marlow explained to ms gillum that he believed petitioners had paid all taxes owed for and but that he could not prove he was entitled to deductions disallowed during the audit because his records had been destroyed in the fire he hoped that ms gillum could help them compromise the liabilities because they could not afford to pay the assessed taxes on date ms gillum timely submitted on petitioners’ behalf a request for a face-to-face cdp hearing challenging their and tax_liabilities in the request petitioners’ counsel stated that petitioners had not received statutory notices of deficiency and had not had an opportunity to discuss the tax_liabilities with appeals and asserted that they qualified for a collection alternative such as currently not collectible status in the letter attached to the request petitioners’ counsel reiterated that petitioners had not received any notices of deficiency and that the examiner had made errors and unreasonable assumptions about petitioners’ self-employment_income and expenses petitioners’ case was assigned to settlement officer suzanne magee so magee so magee informed ms gillum in a letter dated date that the hearing would be a telephone conference on date she stated that petitioners were not entitled to a face-to-face hearing because they did not qualify for any collection alternatives additionally she stated that she could not consider the underlying tax_liabilities because petitioners had agreed to additional income_tax assessments for and by signing form_870 on date on date so magee requested petitioners’ and tax returns but at that time did not request the administrative files for those years subsequently so magee scheduled and held a face-to-face hearing on date before she held the cdp hearing so magee reviewed the computer files of petitioners’ and accounts at the cdp hearing ms gillum stated that petitioners would not be challenging the liabilities because they had lost all their documents in the fire she said that petitioners did not believe they had signed forms agreeing to additional taxes and requested that so magee provide copies of any forms that were signed by petitioners so magee said she did not have copies of the forms but had requested them she explained that the computer indicated that the petitioners had signed forms for and she said that if she received copies of the agreements to the assessments signed by petitioners she would forward them to petitioners’ counsel no agreements to the assessments signed by petitioners were ever provided to petitioners’ counsel at the cdp hearing petitioners’ counsel submitted on their behalf form_656 offer_in_compromise offering to settle all of petitioners’ tax debts for and also including for dollar_figure form 656-a application_for waiver of filing fee and payment form 433-a collection information statement for wage earners and self-employed individuals and financial information supporting items listed on the from 433-a so magee rejected petitioners’ oic on date respondent’s appeals_office issued the notice to petitioners determining that their financial condition rendered the proposed levy action inappropriate and therefore the accounts would be placed in currently not collectible status so magee stated in the attachment to the determination notice that she had verified that the irs followed all requirements of applicable law and administrative procedure and that the records showed that petitioners had agreed to the additional assessments she stated that she had verified through transcript analysis that the assessments were made pursuant to sec_6201 she stated that she had verified posting of tc for the correct date on all periods listed on the cdp hearing request per review of computer transcripts which means the levy action has been suspended and the collection_period allowed by statute to collect these taxes has been suspended by the appropriate computer codes for the tax periods at issue so magee stated that since petitioners had signed the appropriate documents agreeing with the additional assessments during the audit process they were barred from raising the tax_liabilities issue in the cdp hearing although petitioners’ counsel had requested copies of the documents during the face-to-face cdp hearing so magee stated in the attachment to the determination notice that petitioners’ counsel stated during their conference that petitioners were no longer raising the issue of their underlying liabilities in the hearing finally so magee concluded that petitioners’ oic was not an acceptable collection alternative because their reasonable collection potential is greater than the amount offered after respondent’s appeals_office issued the notice_of_determination so magee requested petitioners’ administrative files but she never received them the irs began searching for the administrative files for and in late date or about weeks before the trial the files including the forms were never found petitioners’ administrative files for and are not old enough to have been destroyed before the trial of this case ra jackson asked ccp personnel to search for petitioners’ administrative files but they were unable to find them however she did review the electronic case file laura fairchild ms fairchild is an irs program analyst assigned to the ercs unit who testified during the trial she made a special request for petitioners’ administrative files for and weeks before trial but did not receive them ms fairchild admitted that if the irs had followed normal procedures it would have petitioners’ administrative files with the original forms containing the signed waivers agreeing to the additional assessments for and i sec_6330 hearing discussion sec_6330 provides the general_rule that no levy may be made on any property or right to property of any taxpayer unless the secretary has provided days’ advance notice to the taxpayer of the right to an administrative hearing before the levy is carried out if the taxpayer makes a timely request for an administrative hearing it is conducted by the irs appeals_office before an impartial officer sec_6330 the taxpayer may raise any relevant issue during the hearing including appropriate spousal defenses and 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 sec_6330 the taxpayer also may raise challenges to the existence or amount of the underlying tax_liability if he she did not receive a notice_of_deficiency for that liability or did not otherwise have an opportunity to dispute it sec_6330 sec_6330 requires the appeals officer to obtain verification from the secretary that the requirements of any applicable law or administrative procedure have been met following the hearing the appeals_office issues a notice_of_determination indicating whether the proposed levy may proceed in making the determination the appeals officer must take into consideration the verification obtained under sec_6330 issues properly raised by the taxpayer and whether any proposed collection action balances the need for the efficient collection_of_taxes with the taxpayer’s legitimate concern that any collection action be no more intrusive than necessary sec_6330 under sec_6330 the taxpayer may petition this court to review the determination made by the appeals_office see sec_301_6330-1 proced admin regs this court has the authority to review an issue arising under the verification requirement of sec_6330 regardless of whether the taxpayer raised it at the cdp hearing 131_tc_197 ii verification as relevant here applicable law prohibits the irs from assessing a deficiency in income_tax unless either a notice_of_deficiency is mailed to the taxpayer at his last_known_address or the taxpayer has signed a valid waiver of restrictions on assessment of the tax sec_6213 d see also 126_tc_195 125_tc_14 taxpayers who have filed a joint federal_income_tax return under sec_6013 are treated separately for purposes of 2a notice_of_deficiency provides taxpayers with important procedural safeguards by allowing them days or days if the notice is addressed to a person outside the united_states to petition this court for a redetermination of the deficiency as a prerequisite to assessment 424_us_614 determining the validity of the assessment 44_tc_420 before assessing an income_tax deficiency with respect to a joint_return the irs must send a notice_of_deficiency to both spouses at their last_known_address or addresses or each must sign a waiver of restrictions on assessment of the tax a notice_of_deficiency sent to one spouse is ineffective against the other spouse a waiver signed by one spouse does not apply to the other spouse and a valid assessment cannot be made against the spouse who did not sign the waiver if a tax can be properly assessed without the issuance of a statutory_notice_of_deficiency the legal and procedural requirements that the appeals officer is required to verify under sec_6330 are that a valid assessment was made that notice_and_demand was issued that the liability was not paid and that the final notice_of_intent_to_levy and notice of your right to a hearing was issued to the taxpayer ron lykins inc v commissioner t c ___ ___ slip op pincite where the irs has assessed additional taxes from deficiencies in the tax reported on joint returns the appeals officer also must obtain verification that either valid notices of deficiency were 3federal taxes are assessed when they are formally recorded on a record of assessment sec_6203 the summary record of assessment must provide identification of the taxpayer the character of the liability assessed the taxable_period if applicable and the amount of the assessment sec_301_6203-1 proced admin regs sent to the taxpayers at their last_known_address or addresses or appropriate waivers were signed by each spouse see hoyle v commissioner supra manko v commissioner supra pincite freije v commissioner supra pincite an appeals officer’s determination to proceed with collection of an assessment made without obtaining verification that proper deficiency procedures were followed is an error as a matter of law and is therefore an abuse_of_discretion freije v commissioner supra pincite 121_tc_111 kovacevich v commissioner tcmemo_2009_160 upchurch v commissioner tcmemo_2007_181 sec_6330 does not require that an appeals officer rely upon a particular document in order to satisfy the verification requirement sec_6330 119_tc_252 forms certificate of assessments payments and other specified matters contain all the information required under sec_301_6203-1 proced admin regs and generally are sufficient verification that the taxes were assessed and remain unpaid jordan v commissioner t c slip op pincite citing 118_tc_162 however where additional income taxes over those reported on the taxpayer’s return are assessed form_4340 and other computerized records standing alone are not verification that the requirements of all applicable law and administrative procedure have been met as required by sec_6330 although computerized records may show that the tax was assessed and remains unpaid and that a notice_of_deficiency was sent or an irs waiver form has been received such records do not verify that the notice_of_deficiency was mailed to the taxpayer’s last_known_address or that the waiver form was not modified and signed by the taxpayer in such a situation if the taxpayer alleges that he did not receive a notice_of_deficiency and or denies that he waived the restrictions on assessment the appeals officer will be required to do more than consult the computerized records he must examine underlying documents hoyle v commissioner supra pincite n see also eg casey v commissioner tcmemo_2009_131 the appeals officer examined originals of notices of deficiency mailed to the taxpayer that were in the administrative file which showed usps markings indicating three notifications to the addressee and concluded that a notice_of_deficiency had been mailed to the taxpayer and that he had refused to claim it 4chief counsel notice cc-2006-019 pincite date states that an appeals officer may rely on a form_4340 to verify the validity of an assessment unless the taxpayer can identify an irregularity in the assessment procedure and acknowledges that where it is alleged that a notice_of_deficiency was not mailed the appeals officer may be required to examine underlying documents in addition to the tax transcripts such as the taxpayer’s return a copy of the notice_of_deficiency and the certified mailing list ra jackson audited petitioners’ and returns and determined that petitioners owed additional tax for each year over the amount they reported on their return unless petitioners signed a valid waiver for each year the irs could not assess those deficiencies without mailing notices of deficiency to petitioners at their last_known_address respondent concedes that notices of deficiency were not issued to petitioners for the deficiencies assessed for and consequently the assessments of the deficiencies were not valid if petitioners did not sign valid waivers of restrictions on assessments under sec_6213 and so magee was required to obtain verification that mr marlow and mrs marlow had each signed appropriate waivers before conducting the cdp hearing so magee did not request the administrative files for petitioners’ and tax years she did order petitioners’ and income_tax returns which presumably were in the administrative files but she never received them at the cdp hearing petitioners’ counsel requested copies of signed waiver forms so magee indicated that she was relying on computer entries showing signed forms and agreed to provide copies of the signed forms when she obtained them she later requested the administrative files but never received them her determination stated that she verified compliance with the applicable law and administrative procedure but it did not explain the basis for the and assessments the copies of computer files of petitioners’ accounts upon which so magee relied do not verify that petitioners executed and filed proper waivers required by sec_6213 sec_6213 unambiguously provides that the waiver must entail a signed notice in writing filed with the secretary it is important for the commissioner to keep a written signed waiver of restrictions on assessments on file in his administrative records because the waiver may not have been signed by either spouse or may have been signed by only one spouse filing a joint_return the waiver may have been signed after the statutory period for assessing the tax expired the waiver may have included only one year when more than one year is at issue or the waiver executed by the taxpayers may have included conditions that would invalidate the waiver we hold that so mcgee did not obtain verification that petitioners signed waivers of the restrictions on assessment of the additional taxes for and and thus did not obtain verification that all requirements of applicable law and administrative procedure had been met we have the discretion to remand a case to the appeals_office for consideration of a matter that was inadequately considered in the cdp hearing and there are circumstances in which a remand is appropriate to clarify a verification under sec_6330 see 131_tc_197 written waivers signed by petitioners would be the best evidence that they waived the restrictions on assessment of the additional taxes for and however so mcgee was unable to find the administrative files that should have included the forms purportedly signed by petitioners and respondent was unable to obtain them before or during the proceedings we think it unlikely that the forms or forms would be found were we to remand this case to the appeals_office in these circumstances we conclude remand is not necessary and would not be productive see 117_tc_183 ii validity of assessment sec_6501 generally provides that a valid assessment of income_tax_liability may not be made more than years after the later of the date the tax_return was filed or the due_date of the tax_return petitioners timely filed their return on or before date and filed their return on or before date respondent assessed the additional taxes for and on date within the 3-year period however sec_6213 dictates that an assessment of a tax_deficiency is invalid if the commissioner fails to issue a notice_of_deficiency or procure and keep on file a signed written waiver of the restrictions on assessment of the tax_deficiency notices of deficiency were not issued to petitioners respondent asserts petitioners signed the original forms consenting to the assessment of the additional taxes for and but concedes that the irs has been unable to find the administrative files containing the original forms petitioners contend that they did not file signed waivers of restrictions on assessment of the additional taxes for and in 119_tc_140 we held that the expiration of the assessment_period is a liability challenge subject_to de novo review in the present case petitioners challenge the validity of the underlying assessments on the ground they were entered in violation of the normal deficiency procedures thus we conclude that the validity of petitioners’ and assessments are subject_to a de novo review by this court 5respondent argues that pursuant to the court_of_appeals for the eighth circuit’s decision in 439_f3d_455 8th cir revg 123_tc_85 this court may not consider evidence beyond the administrative record because sec_6330 requires a de novo standard of review when the underlying liability is properly in issue the administrative record rule is not applicable to the validity of the assessment of that liability moreover the administrative record does not include petitioners’ administrative files the computerized records that make up the administrative record in this case are insufficient to establish that petitioners waived the restrictions on assessment of the taxes thus were we limited to the administrative record we would conclude that respondent has not met his burden of proving that petitioners had signed continued the commissioner has the burden of proving the existence and validity of signed waivers of restrictions on assessments cross v united_states 149_f3d_1190 10th cir 977_f2d_1067 7th cir 631_f2d_599 9th cir original forms prepared by ra jackson and signed by both petitioners would be the best evidence respondent has been unable to find the administrative files containing the forms purportedly signed by petitioners and the forms have not been provided to the court respondent asserts that in these circumstances he can bypass the best proof and rely on secondary or circumstantial evidence see fed r evid respondent contends that secondary evidence maintained by the irs in the form of several electronic databases and the testimony of witnesses establishe sec_5 continued valid waivers and further that the period for assessing the taxes has expired finally we think this case falls within the following exception to the administrative record rule recognized by the court_of_appeals in robinette v commissioner supra pincite citing 401_us_402 of course where a record created in informal proceedings does not adequately disclose the basis for the agency’s decision then it may be appropriate for the reviewing court to receive evidence concerning what happened during the agency proceedings 6respondent cites the unpublished opinion of the court_of_appeals for the tenth circuit in cross v united_states listed in the table pincite_f3d_1190 10th cir affirming the district_court that petitioners executed waivers agreeing to the deficiency assessments for and rule of the federal rules of evidence provides that where an original writing is lost or destroyed secondary evidence of the contents of the writing is admissible unless the proponent lost or destroyed the writings in bad faith see rodriguez v commissioner tcmemo_2009_22 mcmahon v commissioner tcmemo_1991_355 in order to show that a document is lost a party must show that a diligent but unsuccessful search occurred united_states v mcgaughey supra pincite cases are reviewed on a case-by-case basis a reasonable search means that the original document must be obtained by all means possible 352_f2d_1005 1st cir respondent asserts that petitioners signed the original forms prepared by ra jackson reporting the changes to petitioners’ and returns consenting to the assessment of additional taxes and waiving the restrictions on assessment so magee initially requested petitioners’ original and income_tax returns on date she later requested petitioners’ administrative files for those years but never received or reviewed them before making her determination ra jackson searched for the administrative files until late date or about weeks before trial ms fairchild also issued a special search request just weeks before trial the irs still had not found the administrative files the day before trial and respondent has not notified the court that the files were ever found petitioners’ files were not old enough to have been destroyed we therefore conclude that the original forms are lost and respondent may use secondary evidence to prove the contents of the forms however the evidence in this case--irs computerized records and the testimony of irs employees--does not convince us that either mr marlow or mrs marlow signed the forms ra jackson met with mr marlow but never with mrs marlow during the examination of petitioners’ and returns mr marlow never agreed that he owed the additional and taxes rather ra jackson assumed mr marlow agreed she testified as follows 7again respondent points to the unpublished opinion in cross v united_states supra see supra note wherein the court_of_appeals for the tenth circuit upheld the district court’s finding that the commissioner’s computerized records established that waivers had been signed by the taxpayer the cross case is distinguishable from this case in cross the taxpayers contested the validity of assessments years after the alleged assessment_date and testified that they could not recall whether they had signed a waiver form the court_of_appeals indicated that it would have been a much closer case if the taxpayers had testified that they believed they had not signed the waiver form by contrast in the instant case both petitioners testified under oath that they never agreed they owed additional taxes for and or signed any forms consenting to the assessments they immediately protested the assessments when they received a final notice_of_intent_to_levy which was within months of the examination the court did he ever expressly state to you that he agreed or not ra jackson well he never agreed or did not agree ms gillum so it is possible he agreed how you arrived at the assessments but maybe he didn’t understand how you determined he owed the amount of money ra jackson no it’s my understanding that he agreed to everything ra jackson sent mr marlow a letter on date proposing to audit his income_tax return he only had notice to bring his bank records for the audit during the examination of the return on date ra jackson expanded the scope of the audit to she made her proposed assessment solely from percentage changes she made on the return mr marlow did not have his bank records with him for even if ra jackson could have assumed that mr marlow agreed to the assessment it seems unlikely that she could have concluded that mr marlow agreed to the assessment in any event it does not mean that petitioners agreed to waive the restrictions on assessment for and thus relinquish their right to contest the validity of the assessment ra jackson testified that she did not mail mrs marlow a waiver form but gave mr marlow forms on date to return on march mrs marlow testified that she did not sign any forms including a waiver while ra jackson testified that she remembers seeing waivers signed by both petitioners her testimony appears to be inconsistent in some respects for example she testified that she typically signs her report--the form 4549--when she issues it and that she issued the forms reporting the changes to petitioners’ and returns on date her examination activities and summaries logged on the form_9984 confirm that the forms were issued on date however the workpaper forms are dated date respondent cites two other cases the first furniture mktg specialists inc defined benefit pension_plan v commissioner tcmemo_1993_501 involved a motion for summary_judgment that never reached the merits of the case the second huffmeyer v commissioner tcmemo_1987_48 permitted secondary evidence when the commissioner could not find an original or copy of a consent form extending the limitations_period for assessment in huffmeyer although the taxpayers were unable to remember whether they had signed a consent form their subsequent actions were consistent with a signed consent this case is different from huffmeyer in several respects first this case does not involve the execution of a form extending the period of limitations on assessment in sec_6501 it involves the execution of waiver forms that 8ra jackson explained that the date on the workpapers forms reflects the last date she ran the program to doublecheck the figures deprive petitioners of their right to petition proposed deficiency assessments in a prepayment forum pursuant to sec_6213 by using waiver forms whose existence is contested to deprive petitioners of their appeal rights is precisely the harm congress sought to avoid in enacting sec_6213 in both of the cases respondent cites notices of deficiency were sent to the taxpayers and they were given an opportunity to challenge the deficiencies in this court without first paying the assessments also sec_6501 does not require that the written waiver be filed with the secretary as required by section d second while ra jackson attested that she remembered seeing signed forms mr and mrs marlow each provided positive affirmations under oath that they did not agree with the assessments and most importantly they did not sign forms agreeing to waive the restrictions on assessment further ra jackson acknowledged that she did not meet with mrs marlow and was not sure whether mr marlow agreed or disagreed with the assessments at their date meeting but assumed he had agreed the commissioner’s internal procedures provide that the revenue agent’s group manager review the audit files and enter a handwritten or other note on form_9984 verifying signed waivers before submitting the files to ccp for further processing ra jackson’s form_9984 does not include a handwritten or other note from her group manager indicating that petitioners signed waivers or the date thereof further ra jackson’s form_9984 includes conditional anticipatory language written in the future tense stating that mr marlow would show mrs marlow the report and waivers on forms and that they should be returned to her by date third it appears that petitioners’ subsequent actions are consistent with their affirmations that they did not agree to the taxes or agree to waive their right to petition this court the initial audit took place on date and was closed on date just days later ra jackson expanded the audit to include on date but petitioners were given notice only of a audit and mr marlow’s bank records for were not available on date at their first real opportunity to dispute the taxes after audit petitioners raised liability challenges to the and assessments in their request for a cdp hearing just months later unlike the taxpayers in huffmeyer v commissioner supra petitioners had not agreed to prior or subsequent income_tax deficiency assessments although they remembered signing a form before the audit it was the power_of_attorney form for vicki mayes their power_of_attorney as noted by ra jackson did not extend to involvement in the audits and ra jackson did not share her proposed adjustments with ms mayes unlike the huffmeyers petitioners did not engage in a 5-year period of actions consistent with an agreement that they owed the taxes petitioners never agreed that they owed the additional taxes for and mr marlow believed that petitioners had accurately reported their taxes on their returns for and but he was unable to substantiate deductions disallowed by ra jackson because his records had been destroyed in the fire that had consumed petitioners’ residence and all their personal_property for that reason and because so magee had informed them that they would not be allowed to present liability challenges at the cdp hearing petitioners did not present proof of their claimed erroneous assessments at that hearing but ms gillum made it clear at that hearing that petitioners did not believe they had signed any waivers and she specifically requested copies of the forms because so mcgee had stated that the computerized records showed petitioners had filed such forms waiving the restrictions on assessments of the taxes for and although petitioners did not think they owed the additional taxes ms gillum focused most of her attention on petitioners’ oic because petitioners could never retrieve the records destroyed in the fire and they were worried about their inability to pay the additional taxes we are convinced that petitioners never agreed that they owed the additional taxes moreover respondent has not met his burden of proving that petitioners agreed to the assessments of the taxes or waived restrictions on the assessments in med practice solutions llc v commissioner tcmemo_2009_214 we remanded the case to the appeals_office for proper verification of compliance with applicable law we noted however by ordering a remand we do not mean to imply that verification of compliance with applicable law is optional for the appeals officer on the contrary it is plainly the intention of congress that such verification precede a collection determination in every case the appeals officer certainly may not give verification short shrift in his cdp hearings and then in the fraction of cases that eventually come before this court count on a remand to give him a second chance to fulfill that statutory obligation our review of the appeals officer’s verification under sec_6330 sometimes results in a finding based on the evidence that a given requirement of law has not been met and that an assessment is invalid see eg 125_tc_14 in appropriate circumstances a lack of evidence in the record eg evidence of a timely assessment might result not in a remand but in an affirmative finding based on a failure of proof that the requirement has not been met id n here we make the affirmative finding that the assessments of the taxes without first issuing notices of deficiency were invalid because petitioners never waived the restrictions on the assessments it is a bit ironic that petitioners could not prove that they did not underreport their taxes because they could not produce destroyed documents they assert would provide the proof and respondent is unable to prove that the additional taxes were properly assessed because the waivers purportedly signed by petitioners are lost iv conclusion we conclude that so magee abused her discretion in determining that the requirements of applicable law or administrative procedure as provided in sec_6330 were met in this case although respondent contends that the irs’ internal procedures support the presumptive existence of signed valid waivers by petitioners permitting deficiency assessments of their and income taxes and agreeing that they owe such taxes we find there are some flaws inconsistencies and irregularities which lead us to conclude on the basis of this record that the weight of the evidence shows that respondent has failed to carry his burden_of_proof under these particular facts and circumstances accordingly we hold that respondent’s assessments on date of petitioners’ additional income taxes for and are invalid having so held we do not need to consider whether respondent abused his discretion in denying the oic petitioners submitted to reflect the foregoing an appropriate decision will be entered


t c memo united_states tax_court commissioner of internal revenue respondent lee ang petitioner v docket no 13309-12l filed date ronald jay cohen for petitioner marissa j savit for respondent memorandum findings_of_fact and opinion laro judge this case involves a nominee and jeopardy_levy issued with respect to petitioner’s unpaid tax_liabilities for and years at issue petitioner petitioned the court under sec_6330 to review the in his petition petitioner also raised hi sec_2002 and tax years pursuant continued determination of the internal_revenue_service irs office of appeals appeals sustaining the nominee and jeopardy_levy findings_of_fact petitioner is a securities trader residing illegally in the united_states in or around shortly after he received a master of business degree from new york university petitioner began trading equity stocks using a proprietary method involving heavy leverage through trading pursuant to his proprietary method petitioner grew dollar_figure that his uncle lent him into more than dollar_figure million over a continued to our order dated date petitioner’ sec_2002 and tax years were dismissed for lack of jurisdiction all section references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure petitioner disputes that he resides in the united_states illegally on date the court ordered each party to file a memorandum of law setting forth petitioner’s immigration status on date the parties submitted briefs addressing petitioner’s immigration history on date petitioner entered the united_states on a b-2 visitor visa afterward petitioner remained in the united_states first on an f-1 student visa and later on an h-1b professional worker visa on date petitioner filed a form i-485 application_for permanent residence status with the u s immigration and naturalization service petitioner’s form i-485 application was denied on date since date petitioner has remained in the united_states with no valid immigration status at trial petitioner claimed that he chose to abandon his permanent resident application because of the negative tax consequences of becoming a permanent resident_of_the_united_states number of years petitioner claims that in or around he and his uncle entered into an agreement whereby petitioner’s trading profits would be split to his uncle and to petitioner in return for his uncle’s forgiveness of the dollar_figure loan this purported profit-sharing agreement had no end date in addition petitioner’s uncle had no involvement in petitioner’s trading activities tax returns for through petitioner failed to timely file his tax returns for the years at issue to report his trading income petitioner’s and returns were filed on date and hi sec_2001 return was filed on date in date before the expiration of the periods of limitation on assessment the parties executed form sec_872 consent to extend the time to assess tax extending the periods of limitation on assessment for each of the years at issue until date in date the parties executed an additional form_872 to extend the periods of limitation on assessment until date each form_872 was signed by petitioner’s attorney joe b cox petitioner argues that these form sec_872 were not properly executed and thus were invalid the record does not support petitioner’s assertion petitioner executed a form_2848 power_of_attorney and declaration of representative authorizing joe b cox to be his representative and mr cox signed the form sec_872 to extend the periods of limitation on assessment each of these form sec_872 was also signed by a representative of the irs we therefore find that the periods of continued prior tax_court proceeding on date respondent issued a notice_of_deficiency with respect to the years at issue on date petitioner filed a petition with this court at docket no shortly before trial was to commence on date the parties entered into a stipulation of settlement which detailed the facts of the deficiency case among the facts petitioner acknowledged was that he had received income from accounts that were held in his relatives’ names on date the parties entered into a decision document which set forth the following deficiencies in income_tax and additions to tax_year deficiency sec_6651 sec_6654 additions to tax dollar_figure big_number big_number big_number dollar_figure big_number big_number big_number -0- -0- -0- dollar_figure continued limitation on assessment were validly extended the decision document further stipulated that interest would be assessed as provided by law on the deficiencies and additions to tax on date respondent assessed that interest in the following amounts year interest dollar_figure dollar_figure dollar_figure dollar_figure in total petitioner’s unpaid tax_liabilities for the years at issue were approximately dollar_figure million in jeopardy_levy on date respondent assessed all underlying tax deficiencies and additions to tax for the years at issue in a detailed 13-page office_of_chief_counsel memorandum dated date irs attorney justin campolieta recommended that a notice of jeopardy_levy the decision of this court became final on date and the periods of limitation on assessment remained suspended for days ie until date see sec_6503 therefore respondent assessed all underlying tax deficiencies and additions to tax for the years at issue before the limitation periods had expired be served mr campolieta summarized the background of petitioner’s case as follows lee ang a joint citizen of singapore and belize is a very successful securities trader living illegally in the united_states during the tax years through mr ang earned millions of dollars in trading profits b ut he did not immediately file income_tax returns reporting this income it wasn’t until after the service opened a substitute-for-return examination of mr ang’s taxable_year that he submitted delinquent returns for the taxable years through during july of each of the returns with the exception of the return for the taxable_year reported a significant amount of gross_income but mr ang took the position that of that income was allocable to his uncle a foreign national under a verbal agreement to split profits which mr ang claimed he negotiated with his uncle shortly after graduating from n y u business school in by taking this position mr ang drastically reduced his taxable_income and reported relatively insignificant income_tax liabilities for the taxable years through emphasis added the memorandum also detailed the findings of an investigation conducted by the irs office_of_chief_counsel during petitioner’s deficiency case these findings were based on a significant number of discovery requests served on petitioner dozens of third-party_contacts witness interviews and numerous subpoenas the irs office of chief counsel’s investigation uncovered that mr ang placed significant assets including marketable and closely-held securities and real_property in the names of close family members in particular he placed cash in his mother’s hsbc account in order to purchase a valuable piece of property in queens that was mr ang also placed millions ultimately deeded to his uncle of dollars of personal funds in his mother’s and uncle’s schwab trading account he traded with these funds and earned a significant amount of profits but failed to report these profits or disclose these accounts to the service millions of dollars of funds in his mother’s trading account wire sic wired off-shore most recently a large wire transfer was made from his mother’s account to satisfy a mortgage on a piece of property held in the name of ocean ave llc mr ang also purchased a significant amount of stock in two closely-held corporations usa teleport inc and c-spectra inc and placed the majority of this stock in the names of family members at trial petitioner admitted that a house was purchased in queens in his uncle’s name but claimed that it was a distribution to his uncle under their profit- sharing_agreement petitioner however admits that his uncle cannot travel to the united_states because of health problems in addition the office of chief counsel’s investigation revealed that the property was originally purchased in the name of petitioner’s mother ngaw chee ang and was later transferred to his uncle the investigation further revealed that petitioner consistently supplied the address of the queens property as his home address on documents submitted to banks and other financial institutions for example according to revenue_officer mark skinner’s case notes from date irs_investigations revealed that dollar_figure million from the ib account had been transferred to a charles schwab account in ms ang’s name and several wire transfers had been made from the charles schwab accounts to foreign bank accounts at trial petitioner testified that although he routinely transferred money between accounts to clear trades pay real_estate development costs and pay household expenses he had not transferred any money abroad in the past nine years aside from a dollar_figure transfer to his father and uncle however we found petitioner’s testimony to be self-serving evasive and improbable and we decline to accept such uncorroborated testimony as true see 87_tc_74 ocean ave llc owns three real_estate properties in brooklyn new york one of which is a real_estate project currently under development pincite ocean avenue including his mother ngaw chee ang sometimes referred to as ms ang and uncle yong sai ang the investigation further revealed that petitioner had no assets in his name10 and that all of his assets cash securities real_property etc were held in the names of family members and nominee entities one of the financial accounts that the office_of_chief_counsel discovered during its investigation was an online interactive brokers ib trading account that petitioner had opened in his mother’s name the ib account was funded with wire transfers from accounts held in his uncle’s name and from global aggressive speculative fund an entity petitioner organized and funded to conduct personal trading activities with regard to the ib account the office_of_chief_counsel concluded that at various times from through the present funds have been wired into and out of the ib account from numerous sources including domestic and offshore bank accounts held in the names of mr ang’s family members at trial petitioner admitted that he had registered various investment shares in his uncle’s name with the securities_and_exchange_commission at trial petitioner admitted that he has no bank accounts in his name within the united_states the investigation uncovered that in one of these transfers dollar_figure had been wired into the ib account from an account which had been opened using his continued although the ib account is held in name by mr ang’s mother mr ang is in control of the account and as explained above uses the funds in the account for his own personal investment purposes a number of checks and recent wire transfers were paid to mr ang and to entities controlled by mr ang moreover it is clear that mr ang has control_over the funds in the ib account while ngaw chee ang lives in singapore the ip addresses used to log into the ib account indicate that all online activity has taken place in and around the greater new york city area where mr ang lives as of date there was roughly dollar_figure million in equity cash and securities positions in the ib account given mr ang’s knowledge of the service’s collection activity coupled with the ease and frequency with which he moves money in and out of this account including offshore it is highly unlikely that these funds will remain in this account for an extended period of time on the basis of these facts mr campolieta recommended that the irs take immediate action to collect from petitioner’s numerous nominees including the ib account held in his mother’s name on date respondent served a jeopardy_levy on the ib accountdollar_figure continued uncle’s passport and funded with a dollar_figure check both the signature on the passport and the signature on the check however had been forged at trial petitioner admitted that he has full control_over the ib account and that his mother who does not speak english or know how to use a computer is not involved with the management of the account the administrative record is ambiguous as to whether the jeopardy_levy was served on date or date however mark skinner the revenue_officer who had served the jeopardy_levy on petitioner’s ib account continued on date respondent issued a letter notice of jeopardy_levy and right of appeal to petitioner the letter notified petitioner that respondent had levied upon the ib account because respondent had determined that petitioner was moving assets out of the government’s reachdollar_figure collection_due_process proceedings on date petitioner sent a self-made document entitled request for administrative review of jeopardy_levy to respondent in which petitioner stated that he was in the process of negotiating an installment_payment schedule to meet his federal tax payment obligations when the jeopardy_levy was served on date petitioner mailed a form request for a collection_due_process or equivalent_hearing to respondent petitioner proposed continued credibly testified at trial that it had been dated date because jeopardy levies required prior approval from a group manager but that it was not mailed until date mr skinner’s testimony is further corroborated by his notes in the integrated collection system history transcript contrary to petitioner’s assertions the letter was signed by a representative of the irs mr skinner and included his contact telephone number in a memorandum of law dated date respondent conceded that petitioner’s letter was a proper request for administrative review under sec_7429 an offer-in-compromise as a collection alternative and objected to the jeopardy_levy a petitioner’s offer-in-compromise on date petitioner’s then attorney stephen b kass faxed a message to respondent requesting withdrawal of the levy on date petitioner mailed to respondent a form_656 offer_in_compromise offering to compromise his unpaid tax_liabilities for dollar_figure based on doubt as to collectibility the unpaid tax_liabilities were to be paid in monthly installments of dollar_figure attached was a form 433-a collection information statement for wage earners and self-employed individuals and financial documents which purported to show petitioner’s net_worth to be dollar_figure petitioner based his offer on the following assets dollar_figure cash from his bank accounts sundry assets he valued at dollar_figure a spyder race car valued for tax purposes at dollar_figure an interest in ocean ave llc which he valued at dollar_figure and investment accounts no detailed listing provided totaling dollar_figure on date respondent sent petitioner a letter stating that he would be contacted regarding his offer-in-compromise by date the letter informed him that he was required to make the proposed dollar_figure monthly payments while respondent evaluated his offer-in-compromise the letter further stated that f ailure to make the payments may result in returning your offer without further consideration petitioner never made any of the proposed payments the case was assigned to settlement officer joyce pechera settlement officer pechera on date on november and date respondent mailed letters to petitioner informing him that his request for a collection_due_process cdp hearing had been received and that settlement officer pechera would be his point_of_contact on date petitioner called settlement officer pechera who informed him that although a notice_of_levy had been served the money would be on hold until she made a decision on the offer-in-compromise unless collection became jeopardized that same day settlement officer pechera advised mr kass that petitioner was required to make his proposed monthly payments and that if they were not made she would return the offer-in-compromise upon review of petitioner’s offer-in-compromise settlement officer pechera noted that while petitioner provided a list of his bank accounts and balances he did not include the underlying bank statements on date settlement officer pechera sent to petitioner a letter entitled appeals received your request for a collection_due_process_hearing in which she informed him that an in-person cdp hearing had been scheduled for date she further informed petitioner that he needed to provide specific financial documents within days of the issuance of the letter and that he needed to immediately begin paying the proposed monthly installments of dollar_figure at petitioner’s request the deadline to submit the financial documents was extended to date and the cdp hearing was rescheduled for date settlement officer pechera received additional documentation from petitioner and reviewed it on date on the basis of a preliminary analysis of the documentation settlement officer pechera determined that petitioner had dissipated dollar_figure million from the ib account dollar_figure from an apple bank account and dollar_figure of sales proceeds for a ferrari the additional documentation however did not enable settlement officer pechera to independently verify petitioner’s financial situation for a number of reasons first the information petitioner provided was the same material that was presented with the offer-in-compromise her notes state that i’m unable to use this information as tp ie petitioner did not provide details on source_of_income and liabilities tp created an excel sheet on a yearly basis which i have no way of verifying the information provided second while petitioner submitted internet printouts of his lending accounts he did not provide information showing the total investments in the accounts third petitioner failed to provide documentation to verify that he held dollar_figure million in assets in three offshore bank accounts at bank of luxembourg credit suisse and pictet securities fourth petitioner asserted that he held a interest in an entity called polmero trust and that his uncle held the remaining but provided no documentation to substantiate the claim finally petitioner failed to provide documentation to establish the value of three real_estate properties owned by ocean ave llc b cdp hearing on date settlement officer pechera held the cdp hearing with petitioner and mr kass settlement officer pechera explained that because of the amount at issue acceptance of petitioner’s offer-in-compromise would require this purported ownership arrangement is in conflict with petitioner’s testimony throughout trial of a purported ownership arrangement with his uncle approval by irs headquarters and the department of justice doj the entire approval process would take at least six months petitioner asked settlement officer pechera to expedite the processing of his offer-in-compromise in discussing the offer-in-compromise petitioner disclosed that most of his assets were held in the names of relatives various llcs and trusts petitioner explained that ang ang llc was a holding_company which owned numerous assets including the offshore bank accounts of ocean ave llc and the levied ib account which petitioner stated was held in his mother’s name petitioner also asserted that he held a interest in ang ang llc with his uncle owning the balance however petitioner stated for purposes of the offer-in- compromise he and his uncle agreed to consider the assets as owned by petitioner with respect to his financial situation petitioner explained that he had no income instead he paid his dollar_figure per month living_expenses by taking funds from ang ang llc specifically he stated that the money came from the ib account as well as other investment accounts settlement officer pechera replied that if ang ang llc was a partnership the money he received was a distribution or a draw petitioner replied but it’s all in one umbrella petitioner failed to bring documentation to the cdp hearing to substantiate his ownership claims or his asset valuations settlement officer pechera granted petitioner additional time to provide the documentation she needed in order to properly evaluate petitioner’s assets and his collection potential the parties agreed to a due_date of date settlement officer pechera told petitioner to call her for an extension if he could not make that deadline during this meeting the parties never discussed the nominee and jeopardy_levy determination although settlement officer pechera was aware of petitioner’s request for administrative review of the jeopardy_levy petitioner’s request was not acted upon c settlement officer pechera’s rejection of petitioner’s offer-in-compromise petitioner did not provide the requested documentation by the date deadline nor did he request additional time to do so as a result settlement officer pechera was unable to evaluate his collection potential and rejected his offer-in-compromise on date settlement officer pechera closed the case at trial mr kass testified that petitioner did not order an appraisal for the real_estate development pincite ocean avenue until date on the basis of the office_of_chief_counsel memorandum the cdp hearing and her own investigation settlement officer pechera determined that the jeopardy_levy was reasonable pursuant to her own investigation settlement officer pechera discovered that the building pincite ocean avenue had been listed for sale--a fact that petitioner had not disclosed during the cdp conference on date after closing the case settlement officer pechera requested approval to sustain the jeopardy_levy action stating review of the facts presented shows tp is placing his assets beyond the reach of the government by transferring it to nominees and alter ego entities thus jeopardy_levy is warranted settlement officer pechera issued a notice_of_determination on date in the notice settlement officer pechera verified that notice_and_demand had been issued and that notice of petitioner’s right to a cdp review had been timely issued pursuant to sec_6330 however settlement officer pechera stated erroneously that petitioner’s request for administrative review of the jeopardy_levy dated date was untimely with respect to petitioner’s offer-in-compromise settlement officer pechera stated we are unable to properly evaluate your offer_in_compromise without the information we requested therefore your offer_in_compromise is rejected with respect to the jeopardy_levy she stated the facts presented and information contained in your administrative file met our criteria under which a jeopardy_levy can be issued therefore the issuance of the notice of jeopardy_levy was reasonable in your case ms ang’s bankruptcy proceedings while his offer-in-compromise was pending petitioner sought to prevent collection on another front on date shortly after respondent had levied upon the ib account petitioner’s mother filed for bankruptcy protection under chapter of the bankruptcy code to prevent the irs from seizing the money in the account at the end of date ms ang’s bankruptcy case was dismissed and interactive brokers released dollar_figure million to the irs immediately thereafter and before the irs could collect the funds ms ang again filed for bankruptcy relief this time under chapter of the bankruptcy code although petitioner and his mother had separate attorneys representing them petitioner made all the decisions in her bankruptcy proceedings moreover petitioner’s attorneys rather than ms ang’s attorneys dealt extensively with the department of justice in connection with ms ang’s bankruptcy case finally both petitioner’s and his mother’s attorneys were paid from the same whole family umbrella opinion this case involves a review of respondent’s determination to proceed with the collection of petitioner’s unpaid tax_liabilities for through i cdp review of jeopardy_levy collection is in jeopardy when at least one of the following conditions exists ‘the taxpayer is or appears to be designing quickly to depart from the united_states or to conceal himself or herself’ ‘the taxpayer is or appears to be designing quickly to place his or her or its property beyond the reach of the government either by removing it from the united_states by concealing it by dissipating it or by transferring it to other persons’ or ‘the taxpayer’s financial solvency is or appears to be imperiled ’ 133_tc_270 quoting sec_1_6851-1 income_tax regs when the commissioner determines that the collection of tax is in jeopardy the taxpayer is not afforded a prior opportunity for a hearing pursuant to sec_6330 to challenge the appropriateness of the levy before it is issued see sec_6330 however sec_6330 provides that the taxpayer against whom a jeopardy_levy is issued shall be given the opportunity for the hearing described in sec_6330 within a reasonable_time after the levy thus subsections d and f of sec_6330 confer upon a taxpayer against whom a jeopardy_levy has been issued an unqualified right to a postlevy hearing if timely requested and judicial review by this court 130_tc_222 as part of the hearing the commissioner must verify that the requirements of any applicable law or administrative procedure have been met sec_6330dollar_figure if the secretary makes a finding that the collection of tax is in jeopardy notice_and_demand for immediate payment of the tax may be made sec_6331 pursuant to sec_7429 a taxpayer may seek administrative review of a jeopardy_levy made under sec_6331 within days of receiving written notice of the levy when such a request for review is timely made the secretary shall determine whether the jeopardy_levy is reasonable under the circumstances sec_7429 reasonableness is something more than ‘not arbitrary or capricious’ and something less than ‘substantial evidence’ 103_tc_416 quoting 511_fsupp_193 d kan the commissioner bears the because an appeals officer must consider compliance with applicable law in a sec_6330 determination regardless of whether it is raised by the person challenging the collection action at the appeals hearing this court will review the appeals officer’s verification under sec_6330 without regard to whether the taxpayer raised it at the appeals hearing 131_tc_197 burden of proving that the levy was reasonable under the circumstances sec_7429 in the notice_of_determination settlement officer pechera erroneously determined that petitioner’s request for administrative review of the jeopardy_levy dated date was untimely petitioner however was not prejudiced thereby for several reasons discussed below furthermore for these same reasons we do not believe that a remand instructing respondent to conduct a review of the jeopardy_levy pursuant to sec_7429 would be productivedollar_figure first in requesting administrative review of a jeopardy_levy a taxpayer is required to submit evidence that the levy is unreasonable sec_301_7429-2 proced admin regs a request for the review of a jeopardy_levy under sec_7429 shall be in writing shall state fully the reasons for the request and shall be supported by such evidence as will enable the district_director to make the redetermination described in sec_7429 petitioner’s request for administrative review did not include any supporting evidence and contained only his summary denial that he was moving assets out of the government’s reach in our discretion we may remand a collection case to the appeals_office for further administrative review marlow v commissioner tcmemo_2010_113 99_tcm_1462 citing 131_tc_197 we decline to do so here second during his cdp hearing petitioner could have but did not challenge the appropriateness of the jeopardy_levy see sec_6330 providing that during a cdp hearing a taxpayer may raise any relevant issue with regard to the collection activities including challenges to the appropriateness of collection actions while petitioner argued in his cdp hearing request that the jeopardy_levy was inappropriate during his cdp hearing he abandoned the issue and chose to focus exclusively on his offer-in-compromisedollar_figure third as part of the cdp review settlement officer pechera independently concluded that the jeopardy_levy was reasonable we review settlement officer pechera’s determination for abuse_of_discretion see sego v commissioner on brief petitioner challenges the jeopardy_levy on the basis that it would cause him economic hardship see sec_301_6343-1 proced admin regs petitioner however did not raise the issue of economic hardship at his cdp hearing nor as a basis for his offer-in-compromise therefore petitioner may not raise this issue for the first time before this court see 129_tc_107 respondent argues sec_7429 precludes this court from reviewing the reasonableness of a jeopardy_levy we disagree sec_7429 provides that as a general matter the district courts of the united_states have exclusive jurisdiction over any civil_action brought under sec_7429 in this case we derive our jurisdiction to review respondent’s actions including the reasonableness of the jeopardy_levy under sec_6330 see 130_tc_222 holding that sec_6330 confers upon a taxpayer an unqualified right to a postlevy hearing and judicial review by this court of inter alia whether the commissioner improperly levied upon the continued t c an abuse_of_discretion is defined as any_action that is unreasonable arbitrary or capricious clearly unlawful or lacking in sound basis in fact or law see 439_us_522 112_tc_19 see also 682_f3d_149 1st cir holding that a reviewing court considers whether the factual and legal conclusions reached at a cdp hearing are reasonable not whether they are correct rev’g 135_tc_393 and tcmemo_2011_136 on the basis of the administrative record we hold that settlement officer pechera did not abuse her discretion in concluding that the jeopardy_levy was reasonable settlement officer pechera based her determination on the results of a detailed and comprehensive investigation by the office_of_chief_counsel her own investigation and the cdp hearing first on the basis of a preliminary analysis of the financial documentation that petitioner provided with his offer-in-compromise settlement officer pechera determined that petitioner had dissipated dollar_figure million from the ib account dollar_figure from an apple bank account and dollar_figure of sale proceeds from a ferrari second after conducting the cdp hearing and reviewing continued taxpayer’s assets 119_tc_356 the office_of_chief_counsel memorandum settlement officer pechera determined that petitioner was concealing assets from the government by placing assets in his relatives’ names and in various llcs and trusts in addition pursuant to her own investigation settlement officer pechera discovered that the building pincite ocean avenue had been listed for sale--a fact that petitioner had not disclosed on the basis of these facts we conclude that settlement officer pechera did not abuse her discretion in concluding that the jeopardy_levy was reasonable under the circumstances see 511_f3d_65 1st cir holding that jeopardy_levy was reasonable where the taxpayer transferred sale proceeds to his sons and those proceeds were thereafter held in brokerage accounts in the sons’ names aff’g tcmemo_2006_151 and 125_tc_201 bibby v commissioner tcmemo_2013_281 at holding that jeopardy_levy was reasonable where the taxpayer was dissipating funds and transferring funds to third parties at trial petitioner vigorously denied that he was concealing assets from the government or that any risk existed of assets’ being transferred or dissipated however the evidence petitioner introduced at trial buttresses rather than refutes respondent’s jeopardy_levy determination first petitioner testified that he has resided in the united_states for over years yet petitioner admits that while he has made over dollar_figure million by trading securities he has no assets in his name within the united_states instead all of the assets in the whole family umbrella are held in the name of his mother or his uncle neither of whom speaks english and neither of whom lives in the united_states petitioner has not provided a satisfactory explanation for why all his u s - based assets are held in his relatives’ names this fact is probative evidence that petitioner engaged in a scheme to conceal his assets from the irs second petitioner attempted to avoid taxation of the approximately dollar_figure million that he earned trading securities by claiming a purported profit- sharing_agreement with his uncle a foreign national who is exempt from u s taxation on the same basis petitioner seeks to avoid collection of his unpaid tax_liabilities by claiming ownership of merely of various assets in the whole family umbrella according to petitioner this purported arrangement was consideration for his uncle’s forgiveness of an dollar_figure debt however the purported profit-sharing agreement is wholly devoid of rational economic basis a transfer’s economic reality prevails over its form and a finding of economic reality turns on whether the transfer would have followed the same form had it been between the transferee and an independent lender estate of rosen v commissioner tcmemo_2006_115 91_tcm_1220 transfers between related parties are examined with special scrutiny id courts may disregard a transaction that as a whole does not have a rational economic basis compelled by business realities separate and apart from the resulting tax benefits buyuk llc v commissioner tcmemo_2013_253 at citing 435_us_561 petitioner’s purported profit-sharing agreement with his uncle is inconsistent with economic and business realities we are convinced that no economically rational actor dealing at arm’s length would assign of his substantial trading profits to another person without any termination conditions in exchange for the forgiveness of an dollar_figure debt we are equally convinced that no economically rational actor unmotivated by tax considerations would have stayed in such an arrangement as his profits soared to approximately dollar_figure million accordingly we conclude that the purported profit-sharing agreement was devised as part of a plan by petitioner to avoid paying income_tax to the irs and to impede the irs’ collection efforts third petitioner claimed that his mother owned dollar_figure million in the ib account however although petitioner claimed that he gave his mother dollar_figure in and dollar_figure in he did not file gift_tax returns disclosing such gifts until after his tax troubles had begun furthermore petitioner admitted that he chose the dollar_figure million amount because his research led him to conclude that any gift up to dollar_figure million would be exempt from gift_tax finally petitioner admitted that he does not remember where the money came from other than that it was from the whole family umbrella in the light of these facts we are convinced that this so-called gift is no more than a story concocted by petitioner to delay respondent’s collection effortsdollar_figure fourth petitioner admitted that the purpose of his mother’s two bankruptcy filings was to stall respondent’s collection efforts gabrielle hirz the doj attorney assigned to ms ang’s bankruptcy cases testified credibly that petitioner not his mother made the decisions in the bankruptcy proceedings in other words we note that petitioner did not argue at his cdp hearing that the ib account was wrongfully levied upon because of ms ang’s ownership we further note that even if some of the funds in the ib account did belong to ms ang petitioner does not have standing to assert her claim of ownership this court considers the doctrine_of standing to be ‘inherently applicable to our proceedings ’ 133_tc_270 quoting 66_tc_367 aff’d 566_f2d_1168 3d cir petitioner does not have standing in this proceeding to seek the return of money or property that does not belong to him under this doctrine a plaintiff generally must assert his own legal rights and interests and cannot rest his claim to relief on the legal rights of third parties id moreover sec_7426 provides that a person other than the taxpayer who is subject_to a wrongful_levy may bring an action in a district_court no such action was ever brought by ms ang petitioner abused the protections offered by the u s bankruptcy system to delay respondent’s collection efforts finally petitioner exercised full control_over the ib account and could transfer money from the account without restriction at trial petitioner admitted his mother neither manages nor has access to the ib account and that he has full control_over it in addition petitioner admitted that he withdrew dollar_figure million from the ib account to pay the mortgage for the ocean avenue building a property in which ms ang has no ownership_interest and which he valued at merely dollar_figure2 million in his offer-in-compromise finally brian hanley of ibg llc the parent company of ib credibly testified that as an enrollee of ib’s secured transaction processing program petitioner could transfer unlimited amounts from his ib account at any time for these reasons the evidence petitioner introduced at trial bolsters respondent’s jeopardy_levy determination ii offer-in-compromise petitioner also asserts that settlement officer pechera improperly rejected his offer-in-compromise where the validity of the underlying liabilities is not properly at issue we review the determination of the settlement officer for abuse_of_discretion sego v commissioner t c pincite 114_tc_176 at the cdp hearing the taxpayer may raise any relevant issue with regard to the collection activities including alternative means of collection such as an offer- in-compromise sec_6330 see also sego v commissioner t c pincite taxpayers are expected to provide all relevant information requested by the settlement officer including financial statements for his consideration of the facts and issues involved in the hearing sec_301_6330-1 proced admin regs sec_7122 authorizes the secretary to compromise a taxpayer’s income_tax_liability in general the decision to accept or reject an offer as well as the terms and conditions agreed to are left to the discretion of the commissioner a taxpayer is precluded from contesting the existence or amount of the underlying tax_liability at the cdp hearing unless the taxpayer did not receive a statutory_notice_of_deficiency or did not otherwise have an opportunity to dispute the underlying tax_liability sec_6330 petitioner received a notice_of_deficiency filed a petition in this court and settled his case consequently his tax_liabilities are not properly at issue in this matter see 478_f3d_450 2d cir holding that a taxpayer was precluded from later challenging his underlying tax_liability where his attorney consented to the tax_assessment thereby waiving his right to contest liability aff’g tcmemo_2006_27 sec_301_7122-1 c proced admin regs the grounds for the compromise of a tax_liability are doubt as to liability doubt as to collectibility and the promotion of effective tax_administration sec_301_7122-1 proced admin regs petitioner based his offer-in-compromise on doubt as to collectibility which exists in any case where the taxpayer’s assets and income are less than the full amount of the liability sec_301_7122-1 proced admin regs the commissioner will generally compromise a liability on the basis of doubt as to collectibility only if the liability exceeds the taxpayer’s reasonable collection potential ie that amount less than the full liability that the irs could collect through means such as administrative and judicial collection remedies 125_tc_301 aff’d 469_f3d_27 1st cir salazar v commissioner tcmemo_2008_38 95_tcm_1149 aff’d 338_fedappx_75 2d cir petitioner argues that settlement officer pechera abused her discretion when she suddenly and arbitrarily closed the case and that she did not conduct a valid and legitimate study of his reasonable collection potential we disagree petitioner based his offer-in-compromise on his own calculation of his reasonable collection potential and he submitted some documents regarding his assets in order for a settlement officer to calculate a taxpayer’s reasonable collection potential the taxpayer must provide all relevant financial information see sec_301_6330-1 proced admin regs it is well settled that a settlement officer properly exercises her discretion in rejecting a collection alternative such as an offer-in-compromise on the ground that the taxpayer failed to provide all financial information necessary to fully evaluate the taxpayer’s ability to pay ramdas v commissioner tcmemo_2013_104 at see 123_tc_1 aff’d 412_f3d_819 7th cir kansky v commissioner tcmemo_2007_40 93_tcm_921 settlement officer pechera requested that petitioner provide financial documentation to verify his reasonable collection potential calculation although she originally gave him days to comply at his request she extended the deadline by a month when she received petitioner’s submission settlement officer pechera noted that it consisted of the same documents previously submitted with his offer-in-compromise and thus did not verify his claims at the cdp hearing settlement officer pechera instructed petitioner to provide her with the requested documentation by date to allow her to verify his reasonable collection potential calculation when the deadline came and went settlement officer pechera determined that she was unable to properly evaluate petitioner’s offer-in-compromise consequently she rejected it petitioner admits that he did not timely provide the requested documentation nor request an extension of time while setting unreasonable deadlines can constitute an abuse_of_discretion see shanley v commissioner tcmemo_2009_17 97_tcm_1062 stating that an appeals officer’s unreasonable denial of a request for more time to submit that evidence would be an abuse_of_discretion settlement officer pechera extended deadlines on multiple occasions and even offered another extension upon request we therefore find that settlement officer pechera did not abuse her discretion in rejecting petitioner’s offer-in-compromise at trial petitioner admitted that he did not disclose a number of bank accounts in his offer-in-compromise but claims that those accounts were irrelevant because they each contained less than dollar_figure where an offer-in- compromise is based on a taxpayer’s ability to pay a taxpayer may not pick and choose which assets to disclose to the commissioner see sec_301_6330-1 proced admin regs taxpayers will 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 emphasis added moreover in relation to the dollar_figure cash from bank accounts that petitioner did disclose these accounts were highly relevant settlement officer pechera would have been within her discretion to reject petitioner’s offer-in-compromise on this basis alone furthermore petitioner never made any of the monthly dollar_figure payments he proposed as part of his offer-in-compromise therefore settlement officer pechera would have been within her discretion to reject petitioner’s offer-in- compromise on this basis as well see sec_7122 d c cf nasir v commissioner tcmemo_2011_283 102_tcm_558 holding that a taxpayer’s failure to make proposed payments enabled the irs to treat his offer-in-compromise as withdrawn in reaching our holdings we have considered all arguments made and to the extent not mentioned above we conclude they are moot irrelevant or without merit to reflect the foregoing decision will be entered for respondent