Court Opinion

ID: 4336382
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:48:21.998269+00
Date Added: 2024-06-11T14:20:30.288084
License: Public Domain

T.C. Memo. 2007-67

                      UNITED STATES TAX COURT

         JAMES J. AND VERONICA L. CRISAN, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 15942-05L.            Filed March 22, 2007.

     James J. Crisan, pro se.

     Denise A. Diloreto, for respondent.

                        MEMORANDUM OPINION

     HAINES, Judge:   Petitioners filed a petition with this Court

in response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination) for 2001 and 2002 (years at issue).1   Pursuant to

     1
      Unless otherwise indicated, all section references are to
                                                   (continued...)
                                - 2 -

section 6330(d), petitioners seek review of respondent’s

determination.    The issue for decision is whether respondent

abused his discretion by sustaining the filing of a Federal tax

lien.

                             Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.    The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    Petitioners resided in

Warren, Ohio, when they filed their petition.

     Petitioners filed their Forms 1040, U.S. Individual Income

Tax Return, for 2001 and 2002 on October 20 and December 1, 2003,

respectively, and the amounts reported as due for those years

were assessed.    A notice and demand for payment was mailed to

petitioners within 60 days of each assessment as required under

section 6303.

     On November 4, 2004, Letter 1058, Final Notice of Intent to

Levy and Your Right to a Hearing (notice of levy), was mailed to

petitioners with respect to the years at issue.    The notice of

levy indicated that a Federal tax lien could be filed at any

time.    Petitioners acknowledged receipt of the notice of levy on

November 23, 2004, but failed to request a hearing.

     1
      (...continued)
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
                               - 3 -

     In late January 2005, the Government levied against the

wages of James J. Crisan (petitioner).   Petitioner immediately

contacted respondent’s Collection Division (Collections) and

began discussing payment options to satisfy the tax liabilities

for the years at issue.   Collections released the levy against

petitioner’s wages and informed him that no collection action

would be taken if he and his wife continued to work towards a

payment arrangement.   Collections gave petitioners until February

21, 2005, to submit financial information and arrange an

installment agreement.

     February 21, 2005, was a Federal holiday.   It was not until

February 23, 2005, that petitioner was able to reach Collections

by telephone to discuss the terms of an installment agreement.

The installment agreement between petitioners and respondent

became effective March 21, 2005.    In accordance with the

agreement, petitioner made an initial payment of $5,000 on March

30, 2005, and was to make monthly payments of varying amounts

until the liability was paid in full.

     On March 2, 2005, respondent mailed each petitioner a Notice

of Federal Tax Lien Filing and Notice of Your Right to a Hearing

Under IRC 6320 (notice of Federal tax lien), with respect to the

years at issue.   The notice of Federal tax lien advised

petitioners of an April 7, 2005, deadline to file a request for a
                               - 4 -

hearing.   The notice of Federal tax lien was recorded on March 7,

2005, with the Recorder of Trumbull County in Warren, Ohio.

     On April 4, 2005, petitioners submitted Form 12153, Request

for a Collection Due Process Hearing, in which they claimed the

notice of Federal tax lien should not have been filed because of

representations made by Collections personnel that no further

collection action would take place while they were negotiating an

installment agreement.   Petitioners also claimed that the notice

of Federal tax lien would impair their credit, making it

impossible to obtain financing.

     On July 13, 2005, a hearing was held by telephone between

petitioner and Settlement Officer Marlene M. Okajima-Garcia (Ms.

Okajima-Garcia), who had earlier mailed petitioners a letter

which listed the statutory requirements to obtain a withdrawal of

a notice of Federal tax lien pursuant to section 6323(j).   During

the hearing, petitioner argued that the Federal tax lien was

filed prematurely at the time he was negotiating an installment

agreement with Collections and, because petitioners entered into

an installment agreement, the notice of Federal tax lien should

be withdrawn.

     On July 22, 2005, respondent’s Appeals Office issued

petitioners the notice of determination sustaining the filing of

the notice of Federal tax lien and finding that none of the

statutory requirements for withdrawal pursuant to section 6323(j)
                                - 5 -

had been met.    In response to the notice of determination,

petitioners timely mailed their petition to this Court on August

22, 2005, and it was filed on August 29, 2005.     See sec.

6330(d)(1); sec. 301.6330-1(f), Proced. & Admin. Regs.

                               OPINION

I.     Standard of Review

       Because the underlying tax liability is not at issue, this

Court’s review under section 6330 is for abuse of discretion.

See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.

Commissioner, 114 T.C. 176, 182 (2000).    This standard requires

the Court to decide whether respondent’s rejection of

petitioner’s request to have the Federal tax lien withdrawn was

arbitrary, capricious, or without sound basis in fact or law.

See Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Keller v.

Commissioner, T.C. Memo. 2006-166; Fowler v. Commissioner, T.C.

Memo. 2004-163.

II.    Withdrawal of Notice of Federal Tax Lien

       The Federal Government obtains a lien against “all property

and rights to property, whether real or personal” of any person

liable for Federal taxes upon demand for payment and failure to

pay.    Sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293

(2004).    The lien arises automatically on the date of assessment

and continues until the tax liability is satisfied or the statute

of limitations bars enforcement of the lien.      Sec. 6322; Iannone
                                 - 6 -

v. Commissioner, supra at 293.    The notice of Federal tax lien is

filed with the appropriate State office or other government

office in order to validate the lien against any purchaser,

holder of a security interest, mechanic’s lienor, or judgment

lien creditor.   See sec. 6323(a); Lindsay v. Commissioner, T.C.

Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th Cir. 2003).

     Section 6323(j)(1) provides in pertinent part:

          SEC. 6323(j).    Withdrawal of Notice in Certain
     Circumstances.--

               (1) In general.--The Secretary may withdraw a
          notice of a lien filed under this section * * * if the
          Secretary determines that--

                      (A) the filing of such notice was
                 premature or otherwise not in accordance with
                 administrative procedures of the Secretary,

                      (B) the taxpayer has entered into an
                 agreement under section 6159 to satisfy the
                 tax liability for which the lien was imposed
                 by means of installment payments, unless such
                 agreement provides otherwise,

                      (C) the withdrawal of such notice will
                 facilitate the collection of the tax
                 liability, or

                      (D) with the consent of the taxpayer or
                 the National Taxpayer Advocate, the
                 withdrawal of such notice would be in the
                 best interests of the taxpayer (as determined
                 by the National Taxpayer Advocate) and the
                 United States.

     Petitioners contend the Appeals officer, Ms. Okajima-Garcia,

abused her discretion by failing to withdraw the notice of

Federal tax lien (1) under section 6323(j)(1)(A) because the
                                - 7 -

filing of the notice was premature; (2) under section

6323(j)(1)(B) because it was filed after an installment agreement

had been agreed to; and (3) under section 6323(j)(1)(D) because

it serves no useful purpose other than to damage petitioners’

credit rating.

     The notice of Federal tax lien was not filed prematurely.

Income tax liabilities were assessed against petitioners for the

years at issue on October 20 and December 1, 2003, respectively.

A notice and demand for payment was mailed to petitioners within

60 days of each assessment date.   See sec. 6303.   Respondent

issued a notice of levy on November 4, 2004, to which petitioners

did not respond.    A notice of Federal tax lien filing was mailed

to petitioners on March 2, 2005, and the lien was recorded on

March 7, 2005.   Filing of the Federal tax lien took place after

assessment and notice and demand, and at each step petitioners

were properly notified.

     Entering into an installment agreement does not preclude the

filing of a Federal tax lien, nor is the Commissioner required to

withdraw a Federal tax lien after an installment agreement has

become effective.   See Ramirez v. Commissioner, T.C. Memo. 2005-

179; Stein v. Commissioner, T.C. Memo. 2004-124.    Section

6323(j)(1) is permissive.   The Commissioner “may” withdraw a

Federal tax lien pursuant to section 6323(j)(1), but respondent’s
                                 - 8 -

failure to do so in this case is not an abuse of discretion.

Ramirez v. Commissioner, supra; Stein v. Commissioner, supra.

     Petitioners did not produce any evidence to support their

contention that the filing of the notice of Federal tax lien

would impair their ability to pay their outstanding liabilities.

On the basis of the facts presented, this Court holds that

respondent did not abuse his discretion in sustaining the filing

of the notice of Federal tax lien.

     In reaching these holdings, the Court has considered all

arguments made and, to the extent not mentioned, concludes that

they are moot, irrelevant, or without merit.

     To reflect the foregoing,

                                               Decision will be

                                         entered for respondent.