Court Opinion

ID: 4365410
Source: CourtListenerOpinion
Date Created: 2019-02-07 06:01:35.255764+00
Date Added: 2024-06-11T14:48:13.263674
License: Public Domain

T.C. Memo. 2019-7

                         UNITED STATES TAX COURT

                  STEVEN SAMANIEGO, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

      Docket No. 18890-17L.                        Filed February 6, 2019.

      Steven Samaniego, pro se.

      Andrea M. Faldermeyer and Katherine Holmes Ankeny, for respondent.

                           MEMORANDUM OPINION

      LAUBER, Judge: In this collection due process (CDP) case, petitioner

seeks review pursuant to section 6330(d)(1)1 of the determination by the Internal

      1
       All statutory references are to the Internal Revenue Code 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.
                                        -2-

[*2] Revenue Service (IRS or respondent) to uphold a notice of intent to levy. The

IRS initiated the collection action with respect to petitioner’s Federal income tax

liabilities for 2012 and 2013. Respondent has moved for summary judgment

under Rule 121, contending that there are no disputed issues of material fact and

that his determination to sustain the proposed collection action was proper as a

matter of law. We agree and accordingly will grant the motion.

                                    Background

      The following facts are based on the parties’ pleadings and motion papers,

including the attached declarations and exhibits. See Rule 121(b). Petitioner, who

resided in California when he filed his petition, filed Federal income tax returns

for 2012 and 2013 but did not pay the tax shown as due. Nor did he pay the tax

after receiving an IRS notice and demand for payment. As of March 2016, his ag-

gregate outstanding liability for those two years was $39,021.

      Apart from his 2012-2013 liabilities, petitioner had outstanding tax liabili-

ties for 2007-2010. He had earlier requested an installment agreement for all open

years but had submitted an incomplete Form 433-A, Collection Information State-

ment for Wage Earners and Self-Employed Individuals. The IRS had informed

him that the form was incomplete, noting that he lived in a community property

State but had neglected to include any financial information relating to his wife.
                                         -3-

[*3] The IRS had accordingly rejected that earlier proposed installment

agreement.2

      On March 24, 2016, in an effort to collect petitioner’s unpaid liabilities for

2012 and 2013, the IRS issued him a Letter 1058, Final Notice of Intent to Levy

and Notice of Your Right to a Hearing. This notice informed petitioner that if he

wished to request a CDP hearing he needed to complete and submit within 30 days

a Form 12153, Request for a Collection Due Process or Equivalent Hearing.

      Petitioner completed the Form 12153 and faxed it to the IRS on April 25,

2016. In his hearing request he checked the box for “Installment Agreement” and

stated that he “d[id] not have the ability to pay in full.” He did not indicate an in-

tention to challenge his reported liability for either year in question.

      After receiving petitioner’s case a settlement officer (SO) from the Los

Angeles, California, Appeals Office confirmed that the liabilities in question had

been properly assessed and that all other requirements of applicable law and ad-

ministrative procedure had been met. The SO believed that petitioner’s hearing

      2
       His wife’s income and assets were relevant because collection of a tax-
payer’s liability “from the assets and income of * * * [his wife] is permitted under
California community property law to the extent such assets and income are com-
munity property.” Ranuio v. Commissioner, T.C. Memo. 2010-178, 100 T.C.M.
(CCH) 123, 129.
                                       -4-

[*4] request was untimely and hence that he was not entitled to a CDP hearing.

The SO therefore offered him an “equivalent hearing.”3

      On July 29, 2016, the SO sent petitioner a letter acknowledging receipt of

his hearing request and scheduling a telephone conference for August 29, 2016.

The SO informed petitioner that, if he wished to pursue an installment agreement,

he needed to submit a new Form 433-A with supporting financial information

covering his wife’s income and assets as well as his own. The SO also asked peti-

tioner to submit a copy of his wife’s individual income tax return for 2014. The

SO requested that petitioner submit all of these documents by August 15, 2016.

Petitioner submitted none of these documents and did not otherwise communicate

with the SO before the hearing.

      The telephone conference was held as scheduled on August 29, 2016. Peti-

tioner stated that he wished to protest the IRS examination for 2007-2009, but the

SO explained that the notice of levy covered the 2012-2013 tax years only. The

SO expressed willingness to consider a collection alternative for 2012 and 2013

      3
       An equivalent hearing resembles a CDP hearing in that it is held with the
IRS Appeals Office, the SO considers the same issues that would have been con-
sidered at a CDP hearing, and the SO generally follows the same procedures. See
Craig v. Commissioner, 119 T.C. 252, 258 (2002). The chief difference is that the
SO’s decision following an equivalent hearing is embodied in a “decision letter”
as opposed to a “notice of determination.” Ibid.
                                        -5-

[*5] but reminded petitioner that he needed to submit the requested financial

information, plus evidence that his wife had filed income tax returns for 2014 and

other years.

      The SO agreed to extend to September 12, 2016, the deadline for submis-

sion of these documents and supporting financial information. Eleven months

later, having received none of the requested information, the SO decided to close

the case. The SO noted that petitioner had not filed an individual income tax re-

turn for 2015 and that his wife had not filed returns for 2013-2015.

      On August 3, 2017, the IRS issued petitioner a decision letter sustaining the

levy, and he timely petitioned this Court for review. In his petition he alleged no

error by the IRS, other than in concluding that his CDP hearing request was un-

timely. On August 16, 2018, respondent filed a motion for summary judgment, to

which we directed petitioner to respond. He filed no response.4

      4
        Our order directing petitioner to respond was returned to the Court by the
U.S. Postal Service as “addressee unknown” and “unable to forward.” Rule
21(b)(4) of this Court’s Rules requires that the Court “shall be promptly notified”
by any party of a change of address. A form for that purpose appears in an appen-
dix to the Rules. See Form 10, Notice of Change of Address.
                                          -6-

[*6]                                  Discussion

A.     Jurisdiction

       A decision letter ordinarily does not constitute a “determination” within the

meaning of section 6330(d), and we normally lack jurisdiction to consider a tax-

payer’s challenge to the outcome of an equivalent hearing. See Kennedy v. Com-

missioner, 116 T.C. 255, 263 (2001). However, if the taxpayer has made a timely

request for a CDP hearing, and if the Appeals Office incorrectly offers the taxpay-

er an equivalent hearing instead, we have jurisdiction to consider a timely request

for review. Craig v. Commissioner, 119 T.C. 252, 259 (2002). In such circum-

stances, we treat “the ‘decision’ reflected in the decision letter * * * [as] a ‘deter-

mination’ for purposes of section 6330(d)(1).” Ibid.

       The IRS issued the Letter 1058 on March 24, 2016. Petitioner was required

to submit his request for a CDP hearing within 30 days. See sec. 6330(a)(3)(B);

sec. 301.6330-1(b)(1), Proced. & Admin. Regs. Because April 23, the 30th day

after the date on the notice, was a Saturday, the period for submitting the hearing

request was extended to the following Monday, April 25. See sec. 7503. Peti-

tioner’s request, which was received by the Appeals Office on April 25, was there-

fore timely. We conclude that the collection action reflected in the decision letter
                                        -7-

[*7] is a “determination” for purposes of section 6330(d) and that we have

jurisdiction to adjudicate this case. See Craig, 119 T.C. 259.

B.      Summary Judgment Standard

        The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). Under Rule 121(b), 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. 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. Ibid. However, the nonmoving party may

not rest upon the mere allegations or denials in 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. 520.

        Because petitioner did not respond to the motion for summary judgment, the

Court could enter a decision against him for that reason alone. See Rule 121(d).

We will nevertheless consider the motion on its merits. We conclude that there are

no material facts in dispute and that this case is appropriate for summary adjudica-

tion.
                                         -8-

[*8] C.      Standard of Review

      Where the validity of the taxpayer’s underlying tax liability is properly at

issue, we review the IRS’ determination de novo. Goza v. Commissioner, 114
T.C. 176, 181-182 (2000). Where (as here) the taxpayer’s underlying liability is

not before us, we review the IRS determination for abuse of discretion only. See

Thompson v. Commissioner, 140 T.C. 173, 178 (2013) (“A taxpayer is precluded

from disputing the underlying liability if it was not properly raised in the CDP

hearing.”); sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. Abuse of

discretion exists when a 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).

D.    Analysis

      In deciding whether the SO abused his discretion in sustaining the proposed

levy we consider whether he: (1) properly verified that the requirements of appli-

cable law or administrative procedure have been met, (2) considered any relevant

issues petitioner raised, and (3) considered “whether any proposed collection ac-

tion balances the need for the efficient collection of taxes with the legitimate con-

cern of * * * [petitioner] that any collection action be no more intrusive than
                                         -9-

[*9] necessary.” Sec. 6330(c)(3). Our review of the record establishes that the SO

properly discharged all of his responsibilities under section 6330(c).

      Taxpayers may raise at a CDP hearing relevant issues relating to the col-

lection action and are entitled to make offers of collection alternatives. See sec.

6330(c)(2). This right, however, carries with it certain obligations on the tax-

payer’s part. As provided in the regulations, “[t]axpayers will be expected to pro-

vide all relevant information requested by * * * [the Appeals officer], including

financial statements, for * * * [his] consideration of the facts and issues involved

in the hearing.” Sec. 301.6330-1(e)(1), Proced. & Admin. Regs.

      In his hearing request petitioner indicated his desire for a collection alterna-

tive, specifically an installment agreement. Section 6159 authorizes the Commis-

sioner to enter into an installment agreement if he determines that it will facilitate

full or partial collection of a taxpayer’s unpaid liability. See Thompson, 140 T.C.

at 179. Subject to exceptions not relevant here, the decision to accept or reject an

installment agreement lies within the Commissioner’s discretion. See Rebuck v.

Commissioner, T.C. Memo. 2016-3; Kuretski v. Commissioner, T.C. Memo.

2012-262, aff’d, 755 F.3d 929 (D.C. Cir. 2014); sec. 301.6159-1(a), (c)(1)(i),

Proced. & Admin. Regs. In reviewing the SO’s determination, we do not inde-

pendently evaluate what would be an acceptable collection alternative.
                                         - 10 -

[*10] Thompson, 140 T.C. at 179; Lipson v. Commissioner, T.C. Memo. 2012-

252, 104 T.C.M. 262, 264. Rather, our review is limited to determining

whether the SO abused his discretion; that is, whether his decision to reject the

taxpayers’ proposal was arbitrary, capricious, or without sound basis in fact or

law. Thompson, 140 T.C. at 179; Murphy, 125 T.C. 320.

      Although petitioner indicated a desire to enter into an installment agree-

ment, he did not provide the SO with any financial or other information that would

justify granting his request. The SO gave petitioner more than enough time to

submit the required documentation before closing the case. We have consistently

held that it is not an abuse of discretion for an Appeals officer to reject collection

alternatives and sustain collection action where the taxpayer has failed, after being

given sufficient opportunities, to supply the required forms and information. See

Huntress v. Commissioner, T.C. Memo. 2009-161, 98 T.C.M. 8, 10-11;

Prater v. Commissioner, T.C. Memo. 2007-241, 94 T.C.M. 209, 210;

Roman v. Commissioner, T.C. Memo. 2004-20, 87 T.C.M. 835, 838.

      In any event, IRS records show that petitioner was not current in his tax

filing obligation for the year 2015. The SO could properly have rejected any col-

lection alternative on this ground alone. See Cox v. Commissioner, 126 T.C. 237,

257-258 (2006), rev’d on other grounds, 514 F.3d 1119 (10th Cir. 2008); Hull v.
                                      - 11 -

[*11] Commissioner, T.C. Memo. 2015-86, 109 T.C.M. 1438, 1441.

Finding no abuse of discretion in any respect, we will grant summary judgment for

respondent and sustain the proposed collection action.

      To implement the foregoing,

                                               An appropriate order and decision

                                      will be entered for respondent.