Court Opinion

ID: 9404331
Source: CourtListenerOpinion
Date Created: 2023-06-22 19:03:02.317544+00
Date Added: 2024-06-11T17:20:13.194371
License: Public Domain

United States Tax Court

                         T.C. Memo. 2023-78

                        HENRY SEGGERMAN,
                            Petitioner

                                   v.

            COMMISSIONER OF INTERNAL REVENUE,
                        Respondent

                              —————

Docket No. 11122-22L.                              Filed June 22, 2023.

                              —————

Henry Seggerman, pro se.

Jane J. Kim and Mimi M. Wong, for respondent.

       MEMORANDUM FINDINGS OF FACT AND OPINION

      KERRIGAN, Chief Judge: The Petition in this case was filed in
response to a Notice of Determination Concerning Collection Action(s)
under IRC Section 6320 and/or 6330 (notice of determination) dated
April 11, 2022, sustaining the filing of a Notice of Federal Tax Lien
(NFTL) for the tax period ending May 31, 2001.

       This is a collection due process (CDP) case regarding the
collection of a restitution-based assessment (RBA) for the tax period
ending May 31, 2001. The liability results from petitioner’s entering
into a cooperation agreement with the U.S. Department of Justice (DOJ)
in United States v. Seggerman, No-13-CR-663 (S.D.N.Y. Aug. 27, 2019).
We consider whether respondent’s determination to sustain the NFTL
filing was an abuse of discretion.

      Unless otherwise indicated, statutory references are to the
Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times,
and regulation references are to the Code of Federal Regulations,

                           Served 06/22/23
                                    2

[*2] Title 26 (Treas. Reg.), in effect at all relevant times. We round all
monetary amounts to the nearest dollar.

                          FINDINGS OF FACT

       Some of the facts are stipulated and so found. The Stipulation of
Facts and the attached Exhibits are incorporated herein by this
reference. Petitioner resided in New York when he timely filed his
Petition.

       The liability involved the filing of a false Form 706, United States
Estate (and Generation-Skipping Transfer) Tax Return. Petitioner was
a co-executor of his father’s estate. His father died on May 19, 2001,
resulting in the RBA’s being attributed to petitioner’s tax period ending
May 31, 2001.

      The U.S. District Court for the Southern District of New York
ordered that petitioner “shall pay restitution in the total amount of
$4,218,140 to the United States Treasury.” It required that payments
be made in monthly installments of at least 10% of gross monthly
income. The payments were to commence within 30 days after the
judgment or release from custody, whichever was later. Petitioner paid
$619,872 to the U.S. Treasury on June 11, 2019, as part of the
cooperation agreement. He was released from custody in February
2020.

       As a result of the RBA, the Internal Revenue Service (IRS) filed
the NFTL against petitioner. On June 3, 2021, the IRS issued Letter
3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing
under IRC 6320. The NFTL indicated an unpaid balance of $3,542,640
for the tax period ending May 31, 2001.

       On July 13, 2021, petitioner submitted Form 12153, Request for
a Collection Due Process or Equivalent Hearing. He included an
attachment stating his reasons for the dispute: (1) he already paid part
of the taxes owed and had not been credited; (2) he had adhered to the
court-ordered payment schedule; and (3) the NFTL was filed
prematurely.

       On August 12, 2021, a settlement officer was assigned to
petitioner’s case. On September 16, 2021, the settlement officer held a
telephone conference with petitioner. Petitioner argued that the NFTL
should be withdrawn because it was affecting his ability to earn income;
he did not have documentation to support this assertion. The settlement
                                    3

[*3] officer explained that withdrawing the NFTL must be beneficial to
both the taxpayer and the IRS to withdraw the NFTL. Petitioner was
asked to prepare and submit Form 433–A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, with the
most recent paystub from his employer and the last three bank
statements by September 24, 2021.

       Petitioner did not submit the requested information. The
settlement officer allowed him until October 1, 2021, to respond or
submit the requested information. On October 7, 2021, the settlement
officer received a fax from petitioner with a Department of Corrections
report, a prepared statement, and a paystub. The settlement officer
granted petitioner an extension until October 15, 2021, to provide the
completed Form 433–A. She granted him subsequent extensions to
October 22, October 25, and finally November 1, 2021, to submit the
completed Form 433–A, bank statements, and paystubs.

       On November 3, 2021, the settlement officer received copies of
petitioner’s restitution paid in to the court, Form 433–A, bank
statements, a paystub from his employer, and a Social Security
statement. The settlement officer requested an Appeals Referral
Investigation from IRS Collections Operations to analyze petitioner’s
ability to pay. On March 22, 2022, the settlement officer was informed
that petitioner did not have the ability to pay more than the monthly
amounts required of him by the district court. The settlement officer
placed his account in currently not collectible status.

      The settlement officer informed petitioner that his Appeals case
would be closed, and the NFTL filing would be sustained until the
balance was satisfied. The settlement officer received no response and
on March 25, 2022, prepared the closing documents for petitioner’s case.

                                OPINION

I.    Section 6320

        Section 6320 requires the Commissioner to notify a taxpayer of
the filing of an NFTL. The notice must inform the taxpayer of his or her
right to a CDP hearing on the propriety of the filing. See § 6320(a)(3)(B).
In a section 6320 CDP hearing, taxpayers may raise any relevant issue
or request the consideration of a collection alternative. See §§ 6320(c),
6330(c)(2)(A).
                                     4

[*4] An issue is not properly raised at the CDP hearing if the taxpayer
fails to request consideration of that issue by the settlement officer or if
the taxpayer requests consideration but fails to present any evidence
after being given a reasonable opportunity to do so. See Treas. Reg.
§ 301.6320-1(f)(2), Q&A (F)(3). A taxpayer may challenge the existence
or amount of the underlying tax liability only if he or she did not receive
a notice of deficiency or otherwise have a previous opportunity to dispute
the liability. See §§ 6320(c), 6330(c)(2)(B).

II.   Standard of Review

       Section 6330(d)(1) provides this Court with jurisdiction to review
an appeal from the Commissioner’s determination to proceed with
collection activity. Where the validity of the underlying tax is properly
at issue, we review the matter de novo. Sego v. Commissioner, 114 T.C.
604, 610 (2000). Where the validity of the underlying tax is not properly
at issue, we review the Commissioner’s determination for abuse of
discretion. Goza v. Commissioner, 114 T.C. 176, 182 (2000).

       Following the CDP hearing the settlement officer must determine
whether proceeding with the proposed collection action is appropriate.
In making that determination the settlement officer is required to take
into consideration: (1) whether the requirements of any applicable law
or administrative procedure have been met; (2) any relevant issues
raised by the taxpayer; and (3) whether the proposed collection action
balances the need for the efficient collection of taxes with the legitimate
concern of the taxpayer that the collection action be no more intrusive
than necessary. § 6330(c)(3); see also Lunsford v. Commissioner, 117
T.C. 183, 184 (2001).

       This Court may review the settlement officer’s verification under
section 6330(c)(1) without regard to whether the taxpayer raised it at
the CDP hearing. §§ 6320(c), 6330(c)(1), (3)(A); see also Hoyle
v. Commissioner, 131 T.C. 197, 202–03 (2008), supplemented by 136 T.C.
463 (2011). A settlement officer is required to base the notice of
determination, in part, on the verification obtained under section
6330(c)(1) by ensuring that all legal requirements have been followed.
Hoyle, 131 T.C. at 201–02; see also § 6330(c)(3).

       Petitioner’s underlying liability was determined by a criminal
restitution order issued by the district court. The underlying liability is
not at issue in this judicial proceeding. See § 6201(a)(4)(C) (“The amount
of such [criminal] restitution may not be challenged by the person
                                     5

[*5] against whom assessed on the basis of the existence or amount of
the underlying tax liability in any proceeding authorized under this
title . . . .”); Bontrager v. Commissioner, 151 T.C. 213, 219 (2018).

       Abuse of discretion is therefore the proper standard of review.
Under that standard, we consider whether respondent’s administrative
determinations were “arbitrary, capricious, or without sound basis in
fact or law.” Giamelli v. Commissioner, 129 T.C. 107, 111 (2007).

III.   Discussion

       Petitioner argues that he never fell behind on the district court’s
payment schedule and that the NFTL was prematurely filed and
therefore should be withdrawn. See § 6323(j)(1)(A) (providing for
discretionary NFTL withdrawal if the notice was filed prematurely or
not in accordance with administrative procedures). Respondent argues
that he is not bound by the district court’s payment schedule because he
has independent authority to collect RBAs. Respondent also notes that
petitioner and the DOJ stipulated in the cooperation agreement that
“the existence of a payment plan set by the [c]ourt shall not bar
Governmental collection efforts against any of the defendant’s available
assets.”

       We agree with respondent. Section 6201(a)(4)(A) provides that
“[t]he Secretary shall assess and collect the amount of restitution . . . for
failure to pay any tax imposed under this title in the same manner as if
such amount were such tax.” We have determined that section
6201(a)(4) was intended to “vest the Secretary with independent
authority to assess and administratively collect criminal restitution.”
Carpenter v. Commissioner, 152 T.C. 202, 222 (2019), aff’d, 788 F. App’x
187 (4th Cir. 2019). Respondent is not bound by the payment schedule
set forth in the order for criminal restitution. See id. The NFTL was
properly filed.

       Petitioner next argues that the settlement officer abused her
discretion in refusing to withdraw the NFTL. He asserts that the NFTL
should be withdrawn because it affects his ability to pay down the RBA
and caused his retirement accounts to be closed out. Petitioner
submitted documents which demonstrated his ability to pay, but he did
not submit evidence showing how the NFTL affected his income or his
retirement accounts. Although his retirement accounts were closed,
there is no evidence linking the closure to the NFTL.
                                     6

[*6] We may consider only issues that had been raised properly when
the Appeals officer made her determination. See Giamelli, 129 T.C.
at 115. The taxpayer does not properly raise an issue during the hearing
if he fails to present to Appeals any evidence with respect to the issue
after being given a reasonable opportunity to present it. See Treas. Reg.
§ 301.6320-1(f)(2), Q&A (F)(3). Since petitioner did not submit evidence
demonstrating how the NFTL negatively affected his income or led to
the closure of his retirement accounts, there is no abuse of discretion.

       Even if petitioner had submitted evidence showing how the NFTL
affected his income or his retirement accounts, it is still within
respondent’s discretion to withdraw the NFTL. See Treas. Reg.
§ 301.6323(j)-1(c) (“If the Commissioner determines conditions for
withdrawal are present, the Commissioner may (but is not required to)
authorize the withdrawal.” (Emphasis added.)). We do not think that
the settlement officer abused her discretion in determining that the
NFTL should remain in place.

        The record reflects that the settlement officer satisfied all
requirements of section 6330(c)(3). Petitioner does not dispute that. In
conducting her analysis, we note that the settlement officer had
petitioner’s financial information reviewed to determine his ability to
pay the RBA. Since neither his income nor assets were sufficient to pay
the entire amount due, the settlement officer determined that it was not
in the Government’s best interest to withdraw the NFTL. See
§ 6323(j)(1)(D) (providing that the Commissioner may withdraw a notice
of lien if it is in the best interest of the taxpayer and the United States).
We do not think it was an abuse of discretion to deny the NFTL
withdrawal request on that basis.

IV.   Conclusion

       We conclude that the settlement officer did not abuse her
discretion. Therefore, we will sustain respondent’s NFTL filing.

      We have considered all of the arguments made and the facts
presented, and to the extent not discussed above, we conclude that they
are moot, irrelevant, or without merit.

      To reflect the foregoing,

      An appropriate decision will be entered.