Court Opinion

ID: 9964357
Source: CourtListenerOpinion
Date Created: 2024-04-29 19:01:50.530163+00
Date Added: 2024-06-11T08:25:21.256131
License: Public Domain

United States Tax Court

                               T.C. Memo. 2024-53

                              ELIZABETH WHITE,
                                   Petitioner

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     __________

Docket No. 10218-23L.                                          Filed April 29, 2024.

                                     __________

Elizabeth White, pro se.

Alexis T. Locklear, Victoria E. Cvek, and Nancy M. Gilmore, for
respondent.

                          MEMORANDUM OPINION

       LAUBER, Judge: In this collection due process (CDP) case peti-
tioner seeks review pursuant to section 6330(d)(1) 1 of the determination
by the Internal Revenue Service (IRS or respondent) to uphold a notice
of intent to levy. The notice relates to petitioner’s income tax liability
for 2019. Respondent has filed a Motion for Summary Judgment under
Rule 121, contending that there are no disputes of material fact and that
the settlement officer (SO) did not abuse his discretion in sustaining the
proposed levy. We agree and accordingly will grant the Motion.

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

Code, Title 26 U.S.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. We round all
monetary amounts to the nearest dollar.

                                 Served 04/29/24
                                           2

[*2]                                Background

       The following facts are based upon the pleadings, the parties’ Mo-
tion papers, Declarations, and attached Exhibits, which include the Ad-
ministrative Record of the CDP proceeding along with a Certificate of
Genuineness of the Administrative Record. See Rule 121(c). Petitioner
resided in Maryland when she filed her Petition.

       Petitioner filed a delinquent Federal income tax return for 2019.
On December 14, 2020, the IRS sent her a “math error” notice. See
§ 6213(b)(1). This notice informed petitioner that her tax for 2019 was
being adjusted upward on account of two errors on her return:
overstated withholding credits and miscalculation of her taxable Social
Security benefits. Although the notice informed petitioner of her right
to dispute these adjustments, she did not do so. As of August 2021, her
unpaid liability for 2019 (including additions to tax and interest) totaled
$6,924; she also had unpaid balances for other tax years.

       On August 16, 2021, in an effort to collect petitioner’s 2019 liabil-
ity, the IRS sent her a Notice of Intent to Seize Your Assets and of Your
Right to a Hearing (levy notice). This notice stated that it was addressed
to petitioner’s unpaid liability for the “[t]ax period ending December 31,
2019.” She timely requested a CDP hearing.

       In her hearing request petitioner checked the box for “Offer in
Compromise.” She listed the tax periods at issue as “2017–2019,”
although the levy notice concerned her liability for 2019 only. She indi-
cated that she had recently “paid over $7,000 to settle any taxes owed,”
referring to $7,141 of payments she had made between September 2019
and January 2020. But as the IRS had informed her in a letter dated
January 23, 2020, the IRS had applied the first $2,141 of those payments
against her 2017 liability (discharging it in full) and applied the remain-
ing $5,000 against her 2018 liability (reducing but not eliminating that
balance due). None of those payments served to reduce her 2019 liabil-
ity, the subject of the levy notice. 2

        2 Petitioner has also submitted CDP hearing requests relating to her

2015–2018, 2020, and 2021 tax years. But at the time she did so, the IRS had not yet
taken or proposed any collection action for any of those years. Taxpayers may request
a CDP hearing only in response to a specific notice of collection action. See Treas. Reg.
§ 301.6330-1(a)(3), Q&A-A6; id. para. (c)(2), Q&A-C3; Internal Revenue Manual
8.22.4.2.2 (Aug. 26, 2020). Petitioner’s hearing requests for years other than 2019 are
outside the scope of this case and are not before us. See Andre v. Commissioner, 127
T.C. 68, 74 (2006).
                                   3

[*3] On October 3, 2022, the IRS mailed petitioner a letter confirming
receipt of her request, advising that it would be forwarded to the IRS
Independent Office of Appeals (Appeals). On December 22, 2022, the
case was assigned to an SO in Appeals, who reviewed petitioner’s ac-
count and verified that all requirements of applicable law and adminis-
trative procedure had been satisfied. Specifically, he verified that the
tax for 2019 had been properly assessed, that notice and demand for
payment had been properly mailed to petitioner’s last known address,
that payments of $7,141 had been properly applied for other tax years,
and that petitioner’s balance for 2019 remained unpaid.

       On December 22, 2022, the SO sent petitioner a letter scheduling
a telephone conference for January 18, 2023. The SO informed her that
Appeals could consider a collection alternative only if she supplied a
completed Form 433–A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, with supporting financial infor-
mation. If petitioner wished to propose an offer-in-compromise (OIC),
she was instructed to submit Form 656, Offer in Compromise.

       On January 12, 2023, six days before the scheduled conference
call, petitioner spoke with the SO’s supervisor and requested copies of
the administrative file and other documents. During this conversation
petitioner requested a face-to-face (FTF) hearing; the SO’s supervisor
noted that an FTF hearing might be convened if petitioner submitted a
completed Form 433–A to enable consideration of a collection alterna-
tive. When petitioner replied that she was not interested in a collection
alternative, the supervisor informed her that the conference would take
place by telephone, to which she assented. Later that day, the supervi-
sor relayed this information to the SO, who sent petitioner the docu-
ments she had requested.

       The telephone conference was rescheduled to April 13, 2023. As
of that date, petitioner had indicated no intention to challenge her un-
derlying liability for 2019, had proposed no collection alternative, and
had submitted no financial documentation. During the call petitioner
stated that “she was going to submit another [hearing request] to cover
all the years that have balances due.” The SO explained that the current
hearing was limited to the 2019 tax year. He confirmed the dollar
amounts of her balances due for 2015, 2016, 2018, 2020, and 2021 but
advised that, before requesting another CDP hearing, “she has to receive
final notices for the tax years she wants to discuss.”
                                    4

[*4] On May 8, 2023, the SO decided to close the case. Petitioner had
not challenged her underlying liability for 2019, had stated that she was
not interested in a collection alternative for that year, and had declined
to supply the financial information necessary to consider a collection al-
ternative. On May 23, 2023, Appeals sent petitioner a notice of deter-
mination sustaining the proposed levy. It explained that, although pe-
titioner had checked the box for an OIC, Appeals could not consider that
collection alternative because she “did not submit an offer.”

      Petitioner timely petitioned this Court, asserting that the SO had
improperly denied her request for an FTF hearing and had neglected to
send her a copy of the administrative file as she had requested. She did
not challenge her underlying tax liability for 2019, apart from asserting
that she “had paid the current amount.” She asked that the “current
tax year [2019] be held in abeyance until all tax years in which a hearing
was requested be brought before the Court.” On February 14, 2024, re-
spondent filed a Motion for Summary Judgment, to which petitioner
timely responded.

                               Discussion

I.    Summary Judgment

       The purpose of summary judgment is to expedite litigation and
avoid unnecessary and time-consuming trials. FPL Grp., Inc. & Subs.
v. Commissioner, 116 T.C. 73, 74 (2001). We may grant summary judg-
ment 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 judgment, we con-
strue factual materials and inferences drawn from them in the light
most favorable to the nonmoving party. Sundstrand Corp., 98 T.C.
at 520. Where the moving party makes and properly supports a motion
for summary judgment, “the nonmovant may not rest on the allegations
or denials in that party’s pleading” but must set forth specific facts, by
affidavit or otherwise, showing that there is a genuine dispute for trial.
Rule 121(d). Finding that there exist no genuine disputes of material
fact, we conclude that summary adjudication is appropriate.

II.   Standard of Review

       Section 6330(d)(1) does not prescribe the standard of review that
this Court should apply in reviewing an IRS administrative determina-
tion in a CDP case. The general parameters for such review are marked
                                    5

[*5] out by our precedents. Where the taxpayer’s underlying tax liabil-
ity 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 the taxpayer’s underlying liability is
not properly in dispute, 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. A taxpayer may challenge her underlying
liability at a CDP hearing only if she did not receive a statutory notice
of deficiency or did not have a prior opportunity to dispute the liability.
See § 6330(c)(2)(B); Montgomery v. Commissioner, 122 T.C. 1, 9 (2004).

       Petitioner did not receive a statutory notice of deficiency with re-
spect to her 2019 tax liability but rather received a “math error” notice.
We generally lack deficiency jurisdiction to review adjustments relating
to mathematical errors. See § 6213(b)(1). But we have held that we
may, in a CDP case, review underlying liabilities arising from adjust-
ments not subject to our deficiency jurisdiction. See McNeill v. Commis-
sioner, 148 T.C. 481, 489 (2017).

       In determining whether the taxpayer had an opportunity to dis-
pute her underlying liability, the regulations distinguish between liabil-
ities that are subject to deficiency procedures and those that are not.
See Treas. Reg. § 301.6330-1(e)(3), Q&A-E2. Liabilities stemming from
mathematical errors are not generally subject to deficiency procedures.
See § 6213(b)(1). Thus, we assume arguendo that petitioner could have
challenged her 2019 liability at the CDP hearing. See § 6330(c)(2)(B);
Montgomery, 122 T.C. at 9.

        To preserve an underlying tax liability challenge in this Court, a
taxpayer must properly raise that challenge during the CDP hearing.
Thompson v. Commissioner, 140 T.C. 173, 178 (2013); see Giamelli v.
Commissioner, 129 T.C. 107, 113 (2007). “An issue is not properly raised
if the taxpayer fails . . . to present to Appeals any evidence with respect
to that issue after being given a reasonable opportunity to [do so].”
Treas. Reg. § 301.6330-1(f)(2), Q&A-F3; see Giamelli, 129 T.C.
at 112–16. In other words, the taxpayer must explain what she believes
her correct tax liability to be and supply the SO with some evidence to
support that position. See Giamelli, 129 T.C. at 112–16; Fleming v.
Commissioner, T.C. Memo. 2017-155, 114 T.C.M. (CCH) 180, 182 (citing
McRae v. Commissioner, T.C. Memo. 2015-132, 110 T.C.M. (CCH) 89,
91); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3.
                                           6

[*6] Petitioner did not submit to Appeals any evidence to dispute the
existence or amount of her 2019 tax liability, which stemmed from over-
claimed withholding credits and a miscalculation of taxable Social Secu-
rity benefits. Rather, she referred to $7,141 in payments she had re-
cently made and urged that these payments “settle[d] any taxes owed.”
But a dispute as to whether a payment was properly credited to the tax-
payer’s account for a particular tax year is not a challenge to her under-
lying tax liability. See Melasky v. Commissioner, 151 T.C. 89, 92 (2018),
aff’d, 803 F. App’x 732 (5th Cir. 2020). In any event, as the IRS had
informed her in January 2020, the payments to which she referred had
been credited against her outstanding tax liabilities for 2017 and 2018. 3
The record includes a copy of her account transcript for 2019, which
shows that none of the payments in question was applied against her
2019 liability. In the absence of conflicting evidence, IRS account tran-
scripts are sufficient to establish specific facts. See Triola v. Commis-
sioner, T.C. Memo. 2014-166, 108 T.C.M. (CCH) 185, 187 (finding ac-
count transcript sufficient to establish a balance); Lenihan v. Commis-
sioner, T.C. Memo. 2006-259, 92 T.C.M. (CCH) 463, 470 (finding account
transcript sufficient to establish nonpayment of estimated tax).

       In sum, petitioner did not properly raise an underlying liability
challenge to her 2019 tax liability during the CDP hearing. Rather, she
contended that her tax for 2019 had been paid. That contention did not
constitute a challenge to her underlying liability, and the contention in
any event was incorrect. We accordingly review the SO’s action for
abuse of discretion only.

III.    Abuse of Discretion

       Abuse of discretion exists when a determination is arbitrary, ca-
pricious, or without sound basis in fact or law. See Murphy v. Commis-
sioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006). In
deciding whether the SO abused his discretion, we consider whether he
(1) properly verified that the requirements of applicable law or admin-
istrative procedure were met, (2) considered relevant issues petitioner

         3 It is standard IRS practice to apply tax payments against the taxpayer’s old-

est outstanding liabilities, unless the taxpayer specifically designates the payments to
a particular tax year. See Estate of Adell v. Commissioner, T.C. Memo. 2014-89, 107
T.C.M. (CCH) 1463, 1466 (citing Davis v. United States, 961 F.2d 867, 878 (9th Cir.
1992)); see also Rev. Proc. 2002-26, § 2.02, 2002-1 C.B. 746, 746 (stating that if no
designation is made, the payments will be allocated by the IRS to periods in the order
of priority that it deems will serve its best interest). Petitioner does not contend that
she designated her payments of $7,141 to the 2019 tax year.
                                           7

[*7] raised, and (3) considered “whether any proposed collection action
balances the need for the efficient collection of taxes with the legitimate
concern of [petitioner] that any collection action be no more intrusive
than necessary.” See § 6330(c)(3). Our review of the record establishes
that the SO properly discharged all of his responsibilities under these
provisions.

       The SO confirmed that all applicable legal and administrative re-
quirements had been met. See § 6330(c)(1). He verified that the math
error notice had been sent to petitioner’s last known address and that
her 2019 tax liability had been properly assessed. 4 He also verified that
petitioner had a balance due for 2019, noting that the $7,141 of pay-
ments to which she referred had been credited against her 2017 and 2018
tax liabilities. The principal issue petitioner raised at the CDP hearing
was her desire to challenge her liabilities for other years. But the SO
correctly explained that the only year before him was 2019 and that (in
any event) no levy or lien notice had yet been issued for the other years.

       Petitioner asserts that the SO did not provide her with copies of
the documents she requested, including the administrative file. But the
SO’s case activity record shows that he mailed her a copy of the admin-
istrative record and the other requested documents on January 12, 2023.
The record includes a signed letter, dated January 12, 2023, confirming
that fact.

       Petitioner contends that Appeals abused its discretion by not of-
fering her an FTF hearing. But as the SO’s supervisor explained to her,
an FTF hearing was unjustified once she disavowed any interest in a
collection alternative for 2019. In any event, we have repeatedly held
that section 6330 does not require an FTF hearing. See Katz v. Commis-
sioner, 115 T.C. 329, 337–38 (2000); see also Treas. Reg.
§ 301.6330-1(d)(2), Q&A-D6 (stating that a proper hearing may occur by
telephone, correspondence, or review of documents). An SO’s denial of
an FTF hearing does not constitute an abuse of discretion where (as

        4 The IRS may assess (and attempt to collect) tax in an amount greater than

the amount reported on a return, without first issuing a notice of deficiency to the
taxpayer, if that greater amount is based on mathematical or clerical errors found on
the return. See § 6213(b)(1). If the taxpayer requests abatement of the assessment
within 60 days of a notice of math error, the IRS must abate the assessment and use
deficiency procedures to reassess. See § 6213(b)(2)(A). Petitioner received a math error
notice and did not object to assessment of the adjustments therein. Thus, no statutory
notice of deficiency was required for petitioner’s 2019 liability, and the SO was not
required to verify the mailing of such a notice.
                                    8

[*8] here) a taxpayer fails to present relevant evidence and neglects to
provide requested documents. See McRae, 110 T.C.M. (CCH) at 92.

        Despite indicating in her CDP hearing request that she was in-
terested in an OIC, petitioner did not propose an OIC or any other spe-
cific collection alternative. Even if she had done so, she submitted none
of the required forms or financial information. The SO could properly
have rejected any proposed collection alternative on either ground. See
Gentile v. Commissioner, T.C. Memo. 2013-175, 106 T.C.M. (CCH) 75,
77 (no alternative proposed), aff’d, 592 F. App’x 824 (11th Cir. 2014);
Coleman v. Commissioner, T.C. Memo. 2010-51, 99 T.C.M. (CCH) 1213,
1215 (no financial information provided), aff’d, 420 F. App’x 663 (8th
Cir. 2011).

       The record shows that the SO performed a balancing test, finding
that the proposed levy action adequately balanced the need for efficient
tax collection with petitioner’s concerns. We conclude that the SO did
not abuse his discretion in sustaining the proposed levy. 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 an installment agreement, supported by the requisite financial infor-
mation. Such an offer could cover her liabilities for multiple tax years.

      To reflect the foregoing,

      An appropriate order and decision will be entered.