Court Opinion

ID: 9950758
Source: CourtListenerOpinion
Date Created: 2024-03-14 19:03:05.756532+00
Date Added: 2024-06-11T14:36:38.597651
License: Public Domain

United States Tax Court

                                 T.C. Memo. 2024-31

                        GEORGE MCDONALD WHITE,
                                Petitioner

                                            v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                       __________

Docket No. 23133-22L.                                          Filed March 14, 2024.

                                       __________

George McDonald White, pro se.

Ka (Matt) Tam, Nhi T. Luu, and Catherine J. Caballero, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       FRIED, Special Trial Judge: In a Notice of Determination
Concerning Collection Action(s) Under Section 6320 1 and/or 6330 (notice
of determination), dated September 20, 2022, respondent determined
that it was appropriate to collect by levy petitioner’s outstanding 2016
federal income tax liability (underlying liability).

       The issue for decision is whether the Internal Revenue Service
(IRS) Independent Office of Appeals (Appeals) abused its discretion in
sustaining the proposed collection action.

        1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, regulation references are
to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times,
and Rule references are to the Tax Court Rules of Practice and Procedure.

                                   Served 03/14/24
                                    2

[*2]                     FINDINGS OF FACT

       The absence of a stipulation of facts notwithstanding, see Rule 91,
the relevant facts are relatively straightforward and easily summarized.
Petitioner resided in Maryland when he timely filed his Petition.

       Petitioner’s 2016 federal income tax return showed a balance due,
which he did not pay when he filed the return. In due course, respondent
assessed the tax shown on the return together with interest and an
addition to tax for failure to timely pay and notified petitioner of the
balance due.

       On August 16, 2021, respondent issued to petitioner a Notice
CP90, Notice of Intent to Seize Your Assets and of Your Right to a
Hearing, with respect to petitioner’s underlying liability. In response,
petitioner timely submitted Form 12153, Request for a Collection Due
Process or Equivalent Hearing. He requested consideration of an
installment agreement and further requested “freezing collection
proceedings until [his] circumstances improved.”

       On May 26, 2022, an IRS Appeals Officer (AO), to whom
petitioner’s case was assigned, sent to petitioner Letter 4837, Appeals
Received Your Request for a Collection Due Process Hearing. The AO
requested a completed Form 433–A, Collection Information Statement
for Wage Earners and Self-Employed Individuals, signed tax returns for
tax years 2018 through 2021, proof of estimated tax payments, and
financial documentation. Petitioner submitted Form 433–A and some of
the requested financial documentation.

       During the collection due process (CDP) proceeding, petitioner
informed the AO that the primary reason for the liability was that the
company he worked for erroneously failed to withhold federal taxes. The
AO requested that if petitioner’s intent was to request reasonable cause
penalty abatement on the basis of this error, then petitioner should
submit his request in writing with supporting documentation. Petitioner
did not do so. The AO also advised petitioner on several occasions that a
collection alternative could not be pursued until petitioner had filed the
missing tax returns for tax years 2018 through 2021.

      After a financial analysis, the AO determined that petitioner
could make monthly payments toward an installment agreement.
Alternatively, the AO determined that petitioner had sufficient equity
in both his primary residence and rental property to fully pay the
underlying liability. Because of petitioner’s failure to demonstrate
                                    3

[*3] current compliance with the filing of tax returns or estimated tax
payments and his failure to submit requested documentation, the AO
determined that petitioner was not eligible for a collection alternative.

      On September 20, 2022, respondent issued the notice of
determination upholding the proposed levy with respect to petitioner’s
underlying liability. An attachment to the notice stated, among other
things, that petitioner had not challenged his underlying liability at any
time during the CDP proceeding.

                               OPINION

I.    Standard of Review

        We have jurisdiction to review a determination by Appeals
pursuant to section 6330(d)(1). Where the validity of the underlying tax
liability is properly at issue, we review the determination regarding the
underlying tax liability de novo. Sego v. Commissioner, 114 T.C. 604,
610 (2000); Goza v. Commissioner, 114 T.C. 176, 181–82 (2000). We
review all other determinations for abuse of discretion. Sego, 114 T.C.
at 610; Goza, 114 T.C. at 182. In reviewing for abuse of discretion, we
uphold the determination of Appeals unless it is arbitrary, capricious,
or without sound basis in fact or law. Murphy v. Commissioner, 125 T.C.
301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006); Taylor v.
Commissioner, T.C. Memo. 2009-27, 2009 WL 275721, at *9.

II.   Underlying Liability

       A taxpayer may challenge the underlying tax liability during a
CDP proceeding if the taxpayer did not receive a statutory notice of
deficiency for the liability or did not otherwise have the opportunity to
dispute the liability. I.R.C. § 6330(c)(2)(B); see also Montgomery v.
Commissioner, 122 T.C. 1, 8–9 (2004) (holding that taxpayers are
allowed to challenge the underlying liability where the taxpayers self-
assessed their underlying liability and did not receive a statutory notice
of deficiency). The Court may consider the challenge only if the taxpayer
properly raised it during the CDP proceeding before the AO. Giamelli v.
Commissioner, 129 T.C. 107, 115 (2007). An issue is not properly raised
if the taxpayer fails to request Appeals consideration of the relevant
issue or if the taxpayer requests consideration but fails to present any
evidence after being given an adequate opportunity to do so. LG
Kendrick, LLC v. Commissioner, 146 T.C. 17, 34 (2016), aff’d, 684 F.
App’x 744 (10th Cir. 2017); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3.
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[*4] Because the assessment for 2016 was based upon a liability
reported as due on a return filed for that year, see I.R.C. § 6201(a)(1),
and petitioner had no prior opportunity to dispute it, he was entitled to
challenge the existence or amount of that liability during the CDP
hearing, see Montgomery, 122 T.C. at 9–10. The record is unclear as to
whether petitioner raised a challenge to the underlying liability during
the CDP hearing. Even assuming arguendo that he did, during the CDP
hearing petitioner did not “present to Appeals any evidence with respect
to that issue after being given a reasonable opportunity to present such
evidence.” Treas. Reg. § 301.6330-1(f)(2), Q&A-F3; see also LG Kendrick,
LLC, 146 T.C. at 34 (holding that taxpayer did not properly raise issue
of underlying liability where it failed to produce evidence regarding
liabilities during CDP hearing). Moreover, petitioner did not raise the
issue in the Petition or at trial. In view of the foregoing, we conclude
that petitioner has not properly raised the issue before Appeals or this
Court, and the underlying liability is not properly at issue. Accordingly,
we will review respondent’s notice of determination for abuse of
discretion. See Sego, 114 T.C. at 610; Goza, 114 T.C. at 182.

III.   Abuse of Discretion

       Petitioner bears the burden of proving that the AO’s actions
constituted an abuse of discretion. See Rule 142(a); see also Woodral v.
Commissioner, 112 T.C. 19, 23 (1999). This Court has consistently held
that an AO does not abuse his discretion in rejecting a collection
alternative where he finds that the taxpayer is not in current compliance
with tax laws. See Balsamo v. Commissioner, T.C. Memo. 2012-109,
2012 WL 1231985, at *4; see also Sullivan v. Commissioner, T.C. Memo.
2019-153, at *11–12.

       Upon review of petitioner’s IRS account transcripts, the AO
ascertained that petitioner had not filed federal income tax returns for
2018 through 2021 and was not current with his estimated tax
payments. The record shows, and petitioner acknowledges, that the AO
repeatedly advised petitioner that he needed to cure these defects, but
petitioner did not submit the requested returns or evidence that he had
made his estimated tax payments. That being so, the AO’s refusal to
accept collection alternatives proposed by petitioner during the CDP
proceeding was not an abuse of discretion.

      The record reflects that the AO satisfied the procedural
requirements imposed by section 6330, and petitioner does not suggest
otherwise. It follows that respondent’s determination to proceed with
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[*5] collection of petitioner’s 2016 tax liability in accordance with the
notice of determination is sustained. 2

       To reflect the foregoing,

       An appropriate decision will be entered.

         2 We note that petitioner is free to come into filing compliance and submit to

the IRS at any time, for its consideration and possible acceptance, a collection
alternative in the form of an installment agreement or a request for currently not
collectible status, supported by the requisite documentation and proof of compliance
with tax laws.