Court Opinion

ID: 9390547
Source: CourtListenerOpinion
Date Created: 2023-04-27 19:01:58.551728+00
Date Added: 2024-06-11T17:18:35.369252
License: Public Domain

United States Tax Court

                                 T.C. Memo. 2023-52

                        LUDWIG PRUFER VOLLERS III,
                                Petitioner

                                             v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                       —————

Docket No. 37304-21L.                                              Filed April 27, 2023.

                                       —————

Ludwig Prufer Vollers III, pro se.

Gregory M. Hahn, Adriana E. Vargas, and Patsy A. Clarke, for respond-
ent.

                            MEMORANDUM OPINION

        LAUBER, Judge: In this collection due process (CDP) case, peti-
tioner seeks review pursuant to sections 6320(c) and 6330(d)(1) 1 of the
determination by the Internal Revenue Service (IRS or respondent) to
uphold collection actions for 2015–2019. The parties have filed a Stipu-
lation of Settled Issues in which they agree that petitioner’s underlying
liabilities for 2015–2019 are not in dispute. Respondent has filed a Mo-
tion for Summary Judgment as to the balance of the case, urging that
the settlement officer (SO) did not abuse his discretion in sustaining the
collection actions. Agreeing with respondent on that point, we will grant
his Motion.

        1 Unless otherwise indicated, all statutory references are to the Internal Revenue
Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax
Court Rules of Practice and Procedure. We round all monetary amounts to the nearest
dollar.

                                   Served 04/27/23
                                    2

[*2]                          Background

       The following facts are based upon the parties’ pleadings and the
Declarations and Exhibits attached to respondent’s Motion, which in-
clude the administrative record. See Rule 121(c). Petitioner resided in
Bellevue, Washington (Bellevue address), when he filed his Petition.

       Petitioner failed to comply with his Federal income tax obliga-
tions for 2015–2019. The IRS for those years timely assessed unpaid
tax, additions to tax under section 6651(a)(1) and (2), and interest. As
of November 14, 2022, petitioner’s outstanding liabilities for the five
years exceeded $112,000.

        On November 30, 2020, in an effort to collect petitioner’s unpaid
liabilities for 2015–2019, the IRS sent him a Letter 1058, Final Notice
of Intent to Levy and Notice of Your Right to a Hearing (levy notice).
The IRS mailed that levy notice to petitioner’s Bellevue address. Peti-
tioner timely submitted Form 12153, Request for a Collection Due Pro-
cess or Equivalent Hearing, listing the Bellevue address as his current
address. In his request he stated that he “need[ed] to see documentation
as to how the underpayment of tax was calculated for each year” and
checked the box “I cannot pay balance.”

       On January 21, 2021, the IRS filed a tax lien for tax years
2016–2019 and sent petitioner a Letter 3172, Final Notice of Federal
Tax Lien Filing and Your Right to a Hearing. Petitioner timely submit-
ted another Form 12153, listing the Bellevue address as his current ad-
dress and expressing interest in a collection alternative by checking the
box for “Offer in Compromise.” He again stated that he was “challenging
the calculations used to determine the tax due for the years at question.”

       Both of petitioner’s cases were assigned to an SO in the IRS Inde-
pendent Office of Appeals (Appeals). The SO reviewed petitioner’s file
and verified that all requirements of applicable law and administrative
procedure had been satisfied. On May 19, 2021, the SO mailed to peti-
tioner’s Bellevue address a letter scheduling a telephone conference for
June 29, 2021, at which both cases would be discussed.

      The May 19 letter informed petitioner that the telephone confer-
ence would be his main opportunity to explain why he disagreed with
the collection actions and discuss collection alternatives. The SO ex-
plained that he could not consider collection alternatives unless peti-
tioner submitted Form 433–A, Collection Information Statement for
Wage Earners and Self-Employed Individuals, with supporting financial
                                   3

[*3] information. If petitioner wished to propose an offer-in-compromise
(OIC), he was instructed also to submit Form 656, Offer in Compromise.
Finally, the SO noted that no collection alternative for 2015–2019 could
be considered unless petitioner came into compliance with his Federal
tax obligations by submitting a signed Form 1040, U.S. Individual In-
come Tax Return, for 2020. Petitioner did not respond to this letter and
did not supply any of these documents by the conference date.

       On June 29, 2021, at the scheduled time for the conference, the
SO called petitioner at the telephone number listed on his CDP hearing
request. When petitioner did not answer, the SO left a voice message
and asked petitioner to call him back. The next day, the SO sent peti-
tioner a “last chance” letter, again mailed to the Bellevue address, ad-
vising him of the missed telephone conference and affording him another
opportunity to provide, within two weeks, the requested forms and fi-
nancial information. The SO advised that if no additional information
was received by that deadline, the case would be closed on the basis of
the information then in the administrative file.

       On July 14, 2021, petitioner contacted the SO, stating that he had
not received the SO’s May 19 letter but that he still desired a telephone
conference. The SO replied that he was open to rescheduling the confer-
ence and agreed to email petitioner another copy of the May 19 letter,
which had outlined the documentation petitioner needed to submit. The
SO emphasized that he could not consider any collection alternative un-
less petitioner supplied that information.

       Petitioner agreed to review the SO’s May 19 letter and to contact
the SO on July 19, 2021, to reschedule the CDP hearing. But petitioner
did not contact the SO by that date or during the ensuing three months.
On October 26, 2021, having heard nothing from petitioner, the SO de-
cided to close the case.

       On November 22, 2021, the IRS sent petitioner a notice of deter-
mination sustaining the NFTL filing and the levy notice. Petitioner
timely petitioned this Court on December 27, 2021. The only issue
raised in his Petition was whether the IRS had correctly calculated his
taxable retirement income for 2015–2017. On November 7, 2022, the
parties filed a Stipulation of Settled Issues in which they agree that
“[p]etitioner does not dispute the underlying tax liability for taxable
years 2015, 2016, 2017, 2018, and 2019.”
                                    4

[*4] On December 23, 2022, respondent filed a Motion for Summary
Judgment, contending that he is entitled to summary judgment because
“petitioner does not challenge the underlying liabilities” and the SO “did
not abuse his discretion or act in an arbitrary and capricious manner.”
By Order served January 25, 2023, we directed petitioner to respond to
that Motion by February 23, 2023. Our Order advised that “under Tax
Court Rule 121, judgment may be entered against a party who fails to
respond to a motion for summary judgment.” Petitioner did not respond
to the Motion by our deadline or subsequently.

                               Discussion

I.    Summary Judgment Standard

       The purpose of summary judgment is to expedite litigation and
avoid costly, unnecessary, and time-consuming trials. See FPL Grp.,
Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant
summary judgment when there is no genuine dispute as to any material
fact and a decision may be rendered as a matter of law. Rule 121(a)(2);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17
F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judg-
ment, we construe factual materials and inferences drawn from them in
the light most favorable to the nonmoving party. Sundstrand Corp., 98
T.C. at 520. However, the nonmoving party may not rest upon mere
allegations or denials of his pleadings but instead must set forth specific
facts showing that there is a genuine dispute for trial. Rule 121(d); see
Sundstrand Corp., 98 T.C. at 520.

      Because petitioner did not respond to the Motion for Summary
Judgment, we could enter a decision against him for that reason alone.
See Rule 121(d). We will nevertheless consider the Motion on its merits.

II.   Standard of Review

        Sections 6320(c) and 6330(d)(1) do not prescribe the standard of
review that this Court should apply in reviewing an IRS administrative
determination in a CDP case. The general parameters for such review
are marked out by our precedents. Where the taxpayer’s underlying tax
liability is properly at issue, we review the IRS’s determination de novo.
Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,
114 T.C. 176, 181–82 (2000). Where (as here) the taxpayer’s underlying
liability is not before us, we review the IRS’s determination for abuse of
discretion only. Jones v. Commissioner, 338 F.3d 463, 466 (5th Cir.
2003); Goza, 114 T.C. at 182. Abuse of discretion exists when a
                                    5

[*5] determination is arbitrary, capricious, or without sound basis in
fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d,
469 F.3d 27 (1st Cir. 2006).

       Absent stipulation to the contrary, our decision in this case is ap-
pealable to the U.S. Court of Appeals for the Ninth Circuit. See
§ 7482(b)(1)(G)(i), (2). That Court has held that, where de novo review
is not applicable, the scope of review in a CDP case is confined to the
administrative record. See Keller v. Commissioner, 568 F.3d 710, 718
(9th Cir. 2009), aff’g in part T.C. Memo. 2006-166, and aff’g in part, va-
cating in part decisions in related cases. In such cases, our review is
limited to deciding whether the agency action is supported by the ad-
ministrative record and is “not arbitrary, capricious, an abuse of discre-
tion, or otherwise not in accordance with law.” Belair v. Commissioner,
157 T.C. 10, 17 (2021) (quoting Van Bemmelen v. Commissioner, 155
T.C. 64, 79 (2020)).

III.   Abuse of Discretion

       In deciding whether the SO abused his discretion in sustaining
the proposed collection actions, we consider whether he (1) properly ver-
ified that the requirements of applicable law and administrative proce-
dure were met, (2) considered relevant issues petitioner raised, and
(3) considered “whether any proposed collection action balances the need
for the efficient collection of taxes with the legitimate concern of [peti-
tioner] that any collection action be no more intrusive than necessary.”
§ 6330(c)(3); see § 6320(c). Our review of the record establishes that the
SO properly discharged all of his responsibilities under these provisions.

       In his CDP hearing requests petitioner checked the boxes for “Of-
fer in Compromise” and “I Cannot Pay Balance.” But he never proposed
a specific collection alternative, and he never submitted the required
forms or financial information. An SO does not abuse his discretion by
declining to consider collection alternatives where the taxpayer has not
proposed any. See McLaine v. Commissioner, 138 T.C. 228, 243 (2012);
Nimmo v. Commissioner, T.C. Memo. 2020-72, 119 T.C.M. (CCH) 1504,
1506. And we have consistently held that it is not an abuse of discretion
for an SO to sustain collection action where (as here) the taxpayer has
failed to supply information after being given repeated opportunities to
do so. See Giamelli v. Commissioner, 129 T.C. 107, 115–16 (2007); Hunt-
ress v. Commissioner, T.C. Memo. 2009-161, 98 T.C.M. (CCH) 8, 10–11;
Prater v. Commissioner, T.C. Memo. 2007-241, 94 T.C.M. (CCH) 209,
210. Finally, petitioner was not in compliance with his 2020 tax filing
                                    6

[*6] obligations, and the SO could properly have rejected a collection al-
ternative on this ground alone. See Cox v. Commissioner, 126 T.C. 237,
258 (2006), rev’d on other grounds, 514 F.3d 1119 (10th Cir. 2008); Boul-
ware v. Commissioner, T.C. Memo. 2014-80, 107 T.C.M. (CCH) 1419,
1424, aff’d, 816 F.3d 133 (D.C. Cir. 2016).

        When petitioner failed to participate in the original telephone
conference, the SO responded in a cooperative fashion, leaving him a
voice message and following up with a “last chance” letter. That letter
was sent to petitioner’s Bellevue address, his address of record with this
Court and the address he had used at all relevant times in corresponding
with the IRS. Petitioner does not deny having received the “last chance”
letter.

       Evidently in response to the “last chance” letter, petitioner con-
tacted the SO and asked to reschedule the conference. The SO agreed
and sent petitioner another copy of the May 19 letter, which outlined the
information required for consideration of a collection alternative. Peti-
tioner promised to contact the SO by July 19 to reschedule the CDP
hearing, but he failed to do so.

       Petitioner was clearly aware of what he needed to do and was
given ample opportunities to participate in a telephone conference. The
SO waited three months for a response from petitioner but heard noth-
ing. Given petitioner’s track record, the SO did not abuse his discretion
by closing the case when he did. See McAvey v. Commissioner, T.C.
Memo. 2018-142, 116 T.C.M. (CCH) 245, 249; Scholz v. Commissioner,
T.C. Memo. 2015-2, 109 T.C.M. (CCH) 1007, 1009 (“When an SO gives a
taxpayer an adequate period of time in which to respond, it is not an
abuse of discretion for the SO to move ahead after encountering radio
silence from the taxpayer.”); Shanley v. Commissioner, T.C. Memo.
2009-17, 97 T.C.M. (CCH) 1062, 1066 (finding no abuse of discretion
where Appeals closed the case after the taxpayer failed to respond to a
14-day deadline).

       Finding no abuse of discretion in any respect, we will grant sum-
mary judgment for respondent. We note that petitioner is free to submit
to the IRS at any time, for its consideration and possible acceptance, a
collection alternative in the form of an OIC or installment agreement
supported by the requisite financial information.

      To reflect the foregoing,

      An appropriate order and decision will be entered.