Court Opinion

ID: 4334990
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:58:14.314912+00
Date Added: 2024-06-11T14:46:52.297865
License: Public Domain

123 T.C. No. 1

                UNITED STATES TAX COURT

         KEITH AND CHERIE ORUM, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 18317-02L.            Filed July 1, 2004.

     Ps filed joint Federal income tax returns for 1998
and 1999 but did not make full payment of the tax
liabilities. On June 23, 2000, R sent Ps by certified
mail a Notice of Intent to Levy and Notice of Your
Right to a Hearing for 1998. Ps did not file a sec.
6330, I.R.C., hearing request in response to this
notice. On Dec. 14, 2001, R sent Ps a Notice of Intent
to Levy and Notice of Your Right to a Hearing for 1998
and 1999. P sent R a sec. 6330, I.R.C., hearing
request dated Dec. 31, 2001, for 1998 and 1999.
     In February 2002, Ps submitted an offer-in-
compromise. R rejected the request on the basis of
financial information submitted by Ps.
     R granted Ps an equivalent hearing for 1998 and a
sec. 6330, I.R.C., hearing for 1999. During the
hearings, R requested additional financial information
from Ps by Aug. 9, 2002, to consider an installment
agreement. Ps failed to timely provide the additional
information. R issued a decision letter for 1998 and a
                               - 2 -

     notice of determination for 1999 which concluded that
     the proposed collection activities would be sustained.
          Ps filed a petition to dispute the decision letter
     and the notice of determination. R filed a motion to
     dismiss for lack of jurisdiction with respect to 1998.
          1. Held: The June 23, 2000, notice of intent to
     levy was sent to the last known address of Ps.
          2. Held, further, R’s motion to dismiss for lack
     of jurisdiction is granted. Ps did not file a sec.
     6330, I.R.C., hearing request within 30 days of the
     June 23, 2000, notice of intent to levy. See sec.
     6330(a)(3), I.R.C. The Dec. 14, 2001, notice of intent
     to levy did not entitle petitioners to a sec. 6330,
     I.R.C., hearing. Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-
     B4, Proced. & Admin. Regs. The decision letter
     subsequently issued does not provide a basis for the
     Court’s jurisdiction under sec. 6330(d)(1), I.R.C. See
     Moorhous v. Commissioner, 116 T.C. 263, 270 (2001);
     Kennedy v. Commissioner, 116 T.C. 255, 262 (2001).
          3. Held, further, R did not abuse his discretion
     in issuing the notice of determination for 1999, and
     the proposed collection action is sustained.

     Keith Orum, pro se.

     Sean R. Gannon, for respondent.

                              OPINION

     HAINES, Judge:   Respondent sent petitioner Keith Orum (Mr.

Orum) and petitioner Cherie Orum (Mrs. Orum) a Decision Letter

Concerning Equivalent Hearing Under Section 6320 and/or 6330

(decision letter) for 1998 and a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330

(notice of determination) for 1999.
                                - 3 -

     The issues for decision are:    (1) Whether the Court lacks

jurisdiction under section 6330(d)(1)1 with regard to 1998; and

(2) whether there was an abuse of discretion in the determination

that the proposed collection action for 1999 should be sustained.

                              Background

     Some of the facts have been stipulated.      The stipulated

facts and the attached exhibits are incorporated herein by this

reference.

     At the time of the filing of the petition, petitioners

resided in La Grange Park, Illinois.       Mr. Orum has lived at the

same address his entire life.    Mr. Orum is a patent attorney, and

Mrs. Orum is a zookeeper.

     Petitioners filed joint Federal income tax returns for 1998

and 1999 on November 29, 1999, and November 20, 2000,

respectively, but did not make full payments of the tax

liabilities when the returns were filed.

     On November 29, 1999, respondent assessed tax liabilities of

$63,683 plus additions to tax for 1998.      Respondent issued

petitioners three notices of demand for payment of the 1998 tax

liabilities and additions to tax on November 29, 1999, January 3,

2000, and February 7, 2000.

     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended. Amounts are rounded to
the nearest dollar.
                                 - 4 -

     On June 23, 2000, respondent sent petitioners, by certified

mail, a Letter 1058, Notice of Intent to Levy and Notice of Your

Right to a Hearing, for 1998 (June 23, 2000, notice).    The return

receipt for the June 23, 2000, notice was signed on June 26,

2000.

     On November 20, 2000, respondent assessed tax liabilities of

$38,661 plus additions to tax for 1999.    Respondent issued two

notices of demand for payment of the 1999 tax liabilities and

additions to tax on November 20 and December 11, 2000.

     On January 5, 2001, petitioners entered into an installment

agreement for the payment of the 1998 and 1999 tax liabilities.

Petitioners did not make all of the monthly payments as required

by the installment agreement schedule.    By December 2001, the

installment agreement was terminated.

     On December 14, 2001, respondent sent petitioners a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing for 1998 and 1999 (December 14, 2001, notice).      The taxes

owed with statutory additions, as set forth in the final notice,

were $41,435 and $44,345 for 1998 and 1999, respectively.

     Mr. Orum sent respondent a Form 12153, Request for a

Collection Due Process Hearing (hearing request), for 1998 and

1999, dated December 31, 2001.    On the hearing request,

petitioners stated:   “Desires continuation of payment plan.    Will

contact IRS agent by phone to discuss.    Have been working with
                               - 5 -

agents in Chicago.”   Mr. Orum proposed to Settlement Officer

Susan L. Vuicich (Ms. Vuicich) that petitioners be permitted to

satisfy the 1998 and 1999 tax liabilities through another

installment agreement.

     On or about February 7, 2002, petitioners submitted a Form

656, Offer in Compromise, and Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals.

     On June 20, 2002, respondent sent Mr. Orum a letter

scheduling an equivalent hearing for 1998 and a section 6330

hearing for 1999 by telephone for July 23, 2002, and requesting

Mrs. Orum’s signature on the hearing request.   The June 20, 2002,

letter also stated:

          You are not entitled to a Collection Due Process
     Hearing for 1998. According to our records a final notice
     was sent to you by certified mail for this year on June 22,
     2000.[2] However, you are entitled to an equivalent hearing.
     I have enclosed Publication 1660, which explains an
     equivalent hearing.

          You marked Form 12153 appealing the filed Notice of
     Federal Tax Lien. You are not entitled to a hearing on this
     issue as our records show no lien has been filed.

          You subsequently submitted an offer in compromise under
     doubt as to collectibility and Effective Tax Administration.
     I have returned this offer to you under separate cover. You
     can resubmit your offer once you are current with filing
     your tax returns. However, let me explain why your offer
     would not be accepted. It appears that based upon the
     financial information you provided you have the ability to

     2
        We note that the Form 4340, Certificate of Assessments,
Payments, And Other Specified Matters, and the ACS LT11 Certified
Mail List report that this notice was sent on June 23, 2000.
                               - 6 -

     pay in full over the life of the collection statute,
     therefore there is no doubt as to collectibility. The
     explanation you provided for Effective Tax Administration
     does not meet the economic hardship criteria for
     consideration of your offer.

          Our records show that you have not made any estimated
     payments for 2001 and 2002. You need to get current with
     your estimated tax payments for 2002 in order for me to
     consider any collection alternatives, such as an installment
     agreement to resolve your tax liabilities.

          Please make your estimated tax payments for 2002 prior
     to the conference, so that we can discuss any alternatives
     to the proposed levy action.

On July 29, 2002, respondent received a facsimile of the

completed hearing request containing the signatures of Mr. Orum

and Mrs. Orum.

     During the July 23, 2002, hearings, Ms. Vuicich requested

from Mr. Orum additional financial information by August 9, 2002,

for the Appeals Office to consider Mr. Orum’s request for another

installment agreement.   Such requested information included an

income and expense report on a cash basis for Mr. Orum’s

partnership for 2002, a copy of Mrs. Orum’s pay statement, copies

of the last 3 months of bank statements, copies of the most

recent home equity loan and motorcycle loan, a breakdown of

housing and transportation expenses, the amount of current State

and local income taxes, the amount of life insurance premium, and

the amount of out-of-pocket health care costs.
                               - 7 -

     On July 25, 2002, Ms. Vuicich sent Mr. Orum computer-

generated statements of account for 1998 and 1999.

     On September 25, 2002, Ms. Vuicich reported in her Case

Activity Record that petitioners had failed to provide the

requested information.   Ms. Vuicich also reported that Mr. Orum

was not current with his estimated tax payments and the financial

information she possessed was incomplete and unverified.

     On October 17, 2002, respondent sent petitioners a decision

letter for 1998.   The decision letter stated in part:

          Your due process hearing request was not filed within
     the time prescribed under Section 6320 and/or 6330.
     However, you received a hearing equivalent to a due process
     hearing except that there is no right to dispute a decision
     by the Appeals Office in court under IRC Sections 6320
     and/or 6330.

               *     *    *    *       *   *   *

          It has been determined that no relief is to be granted
     and that the proposed enforcement action (levy) is
     sustained. You failed to provide the additional financial
     information as requested in order for us to consider your
     request for an installment agreement.

Further, the attachment to the decision letter stated:

          You filed joint income tax returns for 1998 and   1999
     with a balance due. You were sent a final notice of    intent
     to levy by certified mail for 1998 on June 22, 2000.    You
     entered into an installment agreement for $5,000 per   month
     to pay taxes due for both 1998 and 1999. Your first    payment
     was due March 5, 2001.

          You did not make your monthly payments as required. A
     final notice was sent to you by certified mail on December
     14, 2001 for 1998 and 1999. You submitted Form 12153,
     Request for a Collection Due Process Hearing, which was
                              - 8 -

     received on January 4, 2002. Your request was not received
     timely for 1998. You are entitled to an equivalent hearing
     only for the proposed levy action for this year. * * *

     On October 17, 2002, respondent also sent petitioners a

notice of determination for 1999.   The “Summary of Determination”

stated:

     It has been determine [sic] that no relief is to be granted
     and that the proposed enforcement action (levy) is
     sustained. You failed to provide additional financial
     information as requested in order for us to consider your
     request for an installment agreement.

The attachment to the notice of determination stated:

          On your Form 12153, you requested the continuation of a
     payment plan. You raised no other issues on your written
     protest.

          Subsequent to making your request for a Collection Due
     Process Hearing, you submitted an Offer in Compromise, Form
     656 under doubt as to collectibility effective tax
     administration. Your offer was received February 11, 2002.
     The Settlement Officer assigned to your case returned your
     offer because you were not in compliance with filing
     required tax returns. We had no record of your Form 1065
     being filed for 1998 for Orum & Roth. The offer was
     returned with a letter dated June 20, 2002 explaining this.

          Keith Orum contacted the Settlement Officer on July 17,
     2002 to confirm the telephone conference and declined a
     face-to-face conference. The Settlement Officer reviewed
     her letter with Keith explaining the reasons why the offer
     would not be accepted. Those reason [sic] are as follows:

     •    The reason you provided for Effective Tax
          Administration does not meet the economic hardship
          criteria.

     •    Based upon the financial information you provided it
          appears you have the ability to pay the liabilities in
          full within the statutory period for collection
                               - 9 -

     •    You had not made any estimated tax payments for 2001
          and 2002

          Keith provided an adequate explanation why a Form 1065
     for 1998 was not filed. The only other partner resigned
     prior to 1998. The partnership dissolved, but Keith
     continued to use the partnership federal employer’s
     identification number (FEIN) for reporting employment tax
     returns. * * * Keith said he understood why an offer could
     not be considered and expressed an interest in an
     installment agreement.

               *    *     *    *       *   *   *

          A scheduled telephone conference was held on July 23,
     2002 at 10:10 a.m. EST with Keith Orum. The Settlement
     Officer reviewed the information on Form 433A with him and
     identified additional information needed in order to
     determine an appropriate amount for an installment
     agreement. The additional financial information was to be
     provided by August 9, 2002.

               *    *     *    *       *   *   *

          We received an estimated tax payment for 2002 in the
     amount of $8,500 on September 6, 2002 however; we have not
     received the additional financial information nor heard from
     you.

     BALANCING EFFICIENT COLLECTION AND INTRUSIVENESS

           You have failed to provide by an agreed deadline the
     additional financial information requested. This
     information is necessary in order for us to consider an
     installment agreement. Absent your willingness to provide
     this information, alternatives to the proposed levy action
     such as an installment agreement could not be considered.
     * * *

     On November 15, 2002, petitioners sent the Court a Petition

for Lien or Levy Action Under Code Section 6320(c) or 6330(d) to

dispute the decision letter for 1998 and the notice of

determination for 1999.   On January 21, 2003, petitioners sent

the Court an amended petition pursuant to a Court order.
                              - 10 -

     On July 30, 2003, respondent filed a motion to dismiss for

lack of jurisdiction with respect to 1998.   Petitioners filed an

objection to respondent’s motion.

     The Court held a hearing on respondent’s motion and trial

for this case in Chicago, Illinois, on September 23, 2003, in

which Mr. Orum appeared.   Mr. Orum stated that he was not

disputing the amounts of taxes owed for 1998 and 1999 but wanted

to establish another installment agreement to satisfy those

obligations.

                            Discussion

I.   Respondent’s Motion To Dismiss for Lack of Jurisdiction

     Section 6331(a) provides that if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after

notice and demand for payment, then the Secretary is authorized

to collect such tax by levy upon the person’s property.    Section

6331(d) provides that, at least 30 days before enforcing

collection by way of a levy on the person’s property, the

Secretary is obliged to provide the person with a final notice of

intent to levy, including notice of the administrative appeals

available to the person.

     Section 6330(a) provides that the Secretary shall notify a

person in writing of his or her right to a section 6330 hearing

with the Appeals Office regarding the proposed levy.   The written

notice must be given in person, left at the person’s dwelling or
                                - 11 -

usual place of business, or sent by certified or registered mail

to the person’s last known address.      Sec. 6330(a)(2).

     Section 6330(a)(2) provides that the prescribed notice

(notice of intent to levy) shall be provided not less than 30

days before the day of the first levy with respect to the amount

of the unpaid tax for the taxable period.      Further, section

6330(a)(3)(B) provides that the notice of intent to levy shall

explain that the person has the right to request a section 6330

hearing during the 30-day period under section 6330(a)(2).

     Where the Appeals Office issues a notice of determination to

the taxpayer following a section 6330 hearing regarding a levy

action, section 6330(d)(1) provides that the taxpayer will have

30 days following the issuance of such determination letter to

file a petition for review with this Court or a Federal District

Court, as may be appropriate.    Offiler v. Commissioner, 114 T.C.

492, 498 (2000).   This Court’s jurisdiction under section 6330

depends upon the issuance of a valid determination letter and the

filing of a timely petition for review.      Sec. 6330(d)(1);

Lunsford v. Commissioner, 117 T.C. 159, 164 (2001).

     The parties dispute whether a valid determination letter was

issued for 1998 to give the Court jurisdiction under section

6330(d)(1).   Respondent argues that this Court should dismiss the

case as to 1998 upon the grounds that the decision letter does

not constitute a determination sufficient to invoke the Court’s
                               - 12 -

jurisdiction pursuant to section 6330(d)(1).   In objecting to

respondent’s motion, petitioners argue that:   (1) They did not

receive the June 23, 2000, notice; and (2) the December 14, 2001,

notice offered petitioners a section 6330 hearing for 1998

because it was titled a “Final Notice”.

     A.   Was the June 23, 2000, Notice Sent to Petitioners’ Last
          Known Address?

     As noted above, the notice of intent to levy must be given

in person, left at the person’s dwelling or usual place of

business, or sent by certified or registered mail to the person’s

last known address.   Secs. 6330(a)(2) and 6331(d)(2); secs.

301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs.    The

regulations under sections 6330 and 6331 reference section

301.6212-2, Proced. & Admin. Regs., to define “last known

address”.   Secs. 301.6330-1(a), 301.6331-2(a)(1), Proced. &

Admin. Regs.   Under section 6212, in general, the Commissioner is

entitled to treat the address on a taxpayer’s most recent tax

return as the taxpayer’s last known address, unless the taxpayer

has given “clear and concise notification of a different

address.”   Kennedy v. Commissioner, 116 T.C. 255, 260 n.4 (2001);

Abeles v. Commissioner, 91 T.C. 1019, 1035 (1988); sec. 301.6212-

2(a), Proced. & Admin. Regs.

     Although respondent did not enter the June 23, 2000, notice

into the record, as proof of its mailing respondent provided

petitioners’ Form 4340, Certificate of Assessments, Payments, and
                              - 13 -

Other Specified Matters, for 1998, which reported that the notice

of intent to levy was issued on June 23, 2000, and a return

receipt was signed on June 26, 2000.   That certificate is

“generally regarded as being sufficient proof, in the absence of

evidence to the contrary, of the adequacy and propriety of

notices and assessments that have been made.”    Gentry v. United

States, 962 F.2d 555, 557 (6th Cir. 1992); see Schroeder v.

Commissioner, T.C. Memo. 2002-190; Kaeckell v. Commissioner, T.C.

Memo. 2002-114.   Further, respondent provided an ACS LT11

Certified Mail List for 1998 which reported that a Notice of

Intent to Levy and Notice of Your Right to a Hearing was sent to

petitioners by certified mail at “LaGrange Park, IL 60526-134603"

on June 23, 2000.   See Weber v. Commissioner, 122 T.C. 258, 259

n.3 (2004).

     We also note that the parties stipulated that petitioners

filed a tax return for 1998 before the June 23, 2000, notice was

issued, and Mr. Orum reported on his offer-in-compromise

application that he had been “current” with his tax liabilities

from 1981 until 1998.   Mr. Orum stated on his Form 433-A that he

has lived at the same address his entire life.   On the basis of

the record and the Commissioner’s practice of using the address

of a taxpayer’s most recently filed tax return as the last known

address, we find that the address used for the June 23, 2000,

notice was petitioners’ last known address.
                               - 14 -

     The only evidence that petitioners presented is testimony

from Mr. Orum that he and Mrs. Orum did not receive the June 23,

2000, notice.3    That testimony is inconsistent with the evidence

on the record.    After observing Mr. Orum’s demeanor at trial, the

Court found his testimony, on this point, not credible.       Mr. Orum

pointed to petitioners’ address listed on Ms. Vuicich’s Case

Activity Report which incorrectly listed petitioners’ ZIP Code.

We note that:    (1) the Case Activity Report was created after the

June 23, 2000, notice was sent to petitioners; and (2)

respondent’s official certified mailing list that reported the

mailing of the June 23, 2000, notice listed the correct ZIP Code.

Therefore, we do not accept Mr. Orum’s testimony on this point

and find that the June 23, 2000, notice was sent to petitioners’

last known address.

     B.    Does the Court Lack Jurisdiction Over 1998?

     Petitioners argue that the December 14, 2001, notice offered

them a section 6330 hearing for 1998 because it was titled a

“Final Notice” and the Commissioner can send only one notice of

intent to levy under section 6330(a)(1).       We disagree.

     Section 6330(a)(1) provides, in relevant part, that the

notice before levy “shall be required only once for the taxable

period to which the unpaid tax specified in paragraph (3)(A)

relates.”    Petitioners misinterpret this sentence.     We interpret

     3
          Mrs. Orum did not appear at trial.
                               - 15 -

this sentence to mean that the Commissioner need send only one

notice of intent to levy for a taxable period.   The Commissioner

may issue more than one notice of intent to levy to a taxpayer.

See sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs.

Although more than one notice may be issued, the taxpayer is

still entitled to only one hearing for the relevant tax period.

Sec. 6330(b)(2); sec. 301.6330-1(b)(1), Proced. & Admin. Regs.

     This interpretation is buttressed by the regulations under

section 6330, which provide:

         Q-B2. Is the taxpayer entitled to a CDP hearing when
     the IRS, more than 30 days after issuance of a CDP Notice
     under section 6330 with respect to the unpaid tax and
     periods, provides subsequent notice to that taxpayer that
     the IRS intends to levy on property or rights to property of
     the taxpayer for the same tax and tax periods shown on the
     CDP Notice?

         A-B2. No. Under section 6330, only the first pre-levy
     or post-levy CDP Notice with respect to the unpaid tax and
     tax periods entitles the taxpayer to request a CDP hearing.
     If the taxpayer does not timely request a CDP hearing with
     Appeals following that first notification, the taxpayer
     foregoes the right to a CDP hearing with Appeals and
     judicial review of Appeals’ determination with respect to
     levies relating to that tax and tax period. The IRS
     generally provides additional notices or reminders (reminder
     notifications) to the taxpayer of its intent to levy when no
     collection action has occurred within 180 days of a proposed
     levy. Under such circumstances, a taxpayer may request an
     equivalent hearing as described in paragraph (i) of this
     section.

               *    *    *     *    *   *    *

         Q-B4. If the IRS sends a second CDP Notice under
     section 6330 (other than a substitute CDP Notice) for a tax
     period and with respect to an unpaid tax for which a CDP
     Notice under section 6330 was previously sent, is the
                              - 16 -

     taxpayer entitled to a section 6330 CDP hearing based on the
     second CDP Notice?

         A-B4. No. The taxpayer is entitled to only one CDP
     hearing under section 6330 with respect to the tax and tax
     period. The taxpayer must request the CDP hearing within 30
     days of the date of the first CDP Notice for that tax and
     tax period.

Sec. 301.6330-1(b)(2), Q&A-B2, Q&A-B4, Proced. & Admin. Regs.

     On June 23, 2000, respondent sent petitioners a notice of

intent to levy for 1998 at their last known address.     Petitioners

did not send a hearing request until December 31, 2001, which is

beyond the 30-day filing period required by section 6330(a)(3).

Section 6330 does not authorize the Commissioner to waive the

time restrictions imposed therein.     Kennedy v. Commissioner, 116

T.C. at 262.   The fact that respondent, after the termination of

the intervening installment agreement, sent petitioners a second

notice of intent to levy on December 14, 2001, did not entitle

petitioners to a hearing as contemplated under section 6330(b).

See sec. 301.6330-1(b)(2), Q&A-B2, Proced. & Admin. Regs.

     Under the circumstances, respondent was not obliged to

conduct a section 6330 hearing as contemplated under section

6330(b).   See sec. 301.6330-1(i)(1), Proced. & Admin. Regs.       In

place of the section 6330 hearing, the Appeals Office granted

petitioners an equivalent hearing for 1998.     Id.   Thereafter, the

Appeals Office issued a decision letter to petitioners stating

that the proposed collection action was sustained.     Id.   The
                               - 17 -

decision letter does not constitute a notice of determination

under section 6330(d)(1) which would provide a basis for

petitioners to invoke the Court’s jurisdiction for 1998.       See

Moorhous v. Commissioner, 116 T.C. 263, 270 (2001); Kennedy v.

Commissioner, supra at 263.

     This case is distinguishable from Craig v. Commissioner, 119

T.C. 252 (2002), in which we held that we had jurisdiction under

section 6330(d)(1) when the Appeals Office issued a decision

letter to the taxpayer.    Id. at 259.   In Craig, the Commissioner

mailed to the taxpayer a notice of intent to levy on February 22,

2001.   Id. at 254.   On March 17, 2001, the taxpayer timely

requested a section 6330 hearing by mailing the Commissioner a

letter accompanied by unsigned Forms 12153.     Id. at 255.    On May

6, 2001, the Commissioner received signed Forms 12153 but granted

the taxpayer only an equivalent hearing.     Id. at 255-256.    A

decision letter was then issued to the taxpayer following the

equivalent hearing.    Id. at 256.   The Court held that “where

Appeals issued the decision letter to petitioner in response to

his timely request for a Hearing, we conclude that the ‘decision’

reflected in the decision letter issued to petitioner is a

‘determination’ for purposes of section 6330(d)(1).”     Id. at 259.

In the instant case, petitioners did not timely request a section

6330 hearing in response to the June 23, 2000, notice.    As a
                               - 18 -

result, we do not conclude that the decision in the decision

letter is a determination for purposes of section 6330(d)(1).

      We will grant respondent’s motion to dismiss for lack of

jurisdiction as to 1998 because the petition was not filed in

response to a notice of determination sufficient to confer

jurisdiction on the Court under section 6330(d)(1).

II.   Respondent’s Determination for 1999

      Petitioners argue that respondent abused his discretion in

the determination to sustain the proposed collection action for

1999 because respondent refused to process petitioners’ offer-in-

compromise and rejected petitioners’ request for an installment

agreement.

      As discussed above, before a levy may be made on any

property or right to property, a taxpayer is entitled to notice

of intent to levy and notice of the right to a fair hearing

before an impartial officer of the Appeals Office.     Secs. 6330(a)

and (b) and 6331(d).    If the taxpayer requests a section 6330

hearing, he may raise in that hearing any relevant issue relating

to the unpaid tax or the proposed levy, including challenges to

the appropriateness of the collection action and “offers of

collection alternatives, which may include the posting of a bond,

the substitution of other assets, an installment agreement, or an

offer-in-compromise.”    Sec. 6330(c)(2)(A).   A determination is

then made which takes into consideration those issues, the
                              - 19 -

verification that the requirements of applicable law and

administrative procedures have been met, and “whether any

proposed collection action balances the need for the efficient

collection of taxes with the legitimate concern of the person

that any collection action be no more intrusive than necessary.”

Sec. 6330(c)(3).

     Petitioners raise issues only as to collection alternatives,

in that they dispute respondent’s rejection of another

installment agreement and rejection of an offer-in-compromise.

We review the determination for an abuse of discretion because

the underlying tax liability is not at issue.    Lunsford v.

Commissioner, 117 T.C. 183, 185 (2001); Nicklaus v. Commissioner,

117 T.C. 117, 120 (2001).

     Respondent’s rejection of another installment agreement for

petitioners was not an abuse of discretion.   Installment

agreements are based upon the taxpayer’s current financial

condition.   See 2 Administration, Internal Revenue Manual (CCH),

sec. 5.19.1.5.4.1, at 18,299-65.   Respondent’s determination was

based on information petitioners provided to Ms. Vuicich.      See

Schulman v. Commissioner, T.C. Memo. 2002-129.   At the section

6330 hearing, Ms. Vuicich requested from Mr. Orum additional

financial information by August 9, 2002, for the Appeals Office

to consider Mr. Orum’s request for another installment agreement.

Petitioners failed to timely respond to Ms. Vuicich’s request.
                               - 20 -

As discussed with Mr. Orum at the section 6330 hearing, Ms.

Vuicich found the information provided on petitioners’ Form 433A

to be incomplete and unverified.   We find that the Appeals

officer could have reasonably rejected an installment agreement

proposal by petitioners on the basis of petitioners’ failure to

make the required monthly payments on the initial January 5,

2001, installment agreement that was terminated, and petitioners’

failure to timely provide the requested information to Ms.

Vuicich in order for her to consider another installment

agreement.

     Additionally, respondent’s determination not to enter into

an offer-in-compromise agreement with petitioners was not an

abuse of discretion.   Section 7122(a) authorizes the Secretary to

compromise any civil case arising under the internal revenue

laws.    The regulations set forth three grounds for the compromise

of a liability:   (1) Doubt as to liability; (2) doubt as to

collectibility; or (3) promotion of effective tax administration.

Sec. 301.7122-1T(b), Temporary Proced. & Admin. Regs., 64 Fed.

Reg. 39024 (July 21, 1999);4 see sec. 7122(c)(1).   Doubt as to

liability is not at issue in the instant case.

     The Secretary may compromise a liability on the ground of

doubt as to collectibility when “the taxpayer’s assets and income

     4
        Final regulations under sec. 7122 were promulgated
effective for offers-in-compromise pending on or submitted on or
after July 18, 2002. Sec. 301.7122-1(k), Proced. & Admin. Regs.
                              - 21 -

are less than the full amount of the assessed liability.”    Sec.

301.7122-1T(b)(3)(i), Temporary Proced. & Admin. Regs., supra.

Additionally, the Secretary may compromise a liability on the

ground of “effective tax administration” when:   (1) Collection of

the full liability will create economic hardship; or (2)

exceptional circumstances exist such that collection of the full

liability will be detrimental to voluntary compliance by

taxpayers; and (3) compromise of the liability will not undermine

compliance by taxpayers with tax laws.   Sec. 301.7122-1T(b)(4),

Temporary Proced. & Admin. Regs., supra; see 2 Administration,

Internal Revenue Service (CCH), sec. 5.8.11.2, at 16,385-15

(taxpayer’s liability may be eligible for compromise to promote

effective tax administration if not eligible for compromise based

on doubt as to liability or doubt as to collectibility, and

taxpayer has exceptional circumstances to merit the offer).

     Ms. Vuicich reviewed petitioners’ submitted financial

information and determined that an offer-in-compromise was not

appropriate on the basis of doubt as to collectibility and

promotion of effective tax administration.   Ms. Vuicich

communicated her determination to Mr. Orum in the June 20, 2002,

letter.   In a later telephone conversation, Mr. Orum told Ms.

Vuicich that he understood why an offer-in-compromise could not

be considered.   We received as an exhibit the financial

information before Ms. Vuicich and find that she could have
                                - 22 -

reasonably concluded that there are sufficient income and assets

to satisfy the tax liability.    On the basis of respondent’s

consideration of petitioners’ information, we conclude that

respondent’s refusal to enter into an offer-in-compromise was not

an abuse of discretion.   See Crisan v. Commissioner, T.C. Memo.

2003-318 (held the Commissioner’s refusal to enter into an offer-

in-compromise was not an abuse of discretion on the basis of a

review of the financial information submitted to the Appeals

officer).

     As a result, we hold that the determination to proceed with

collection for 1999 was not an abuse of respondent’s discretion,

and the proposed collection action is sustained.

     In reaching our holdings herein, we have considered all

arguments made, and, to the extent not mentioned above, we

conclude that they are moot, irrelevant, or without merit.

     To reflect the foregoing,

                                          An appropriate order and

                                     decision will be entered.