Court Opinion

ID: 6338165
Source: CourtListenerOpinion
Date Created: 2022-05-05 19:01:54.288821+00
Date Added: 2024-06-11T09:25:09.766360
License: Public Domain

United States Tax Court

                                 T.C. Memo. 2022-46

                                  NEIL WOLFSON,
                                     Petitioner

                                            v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                       —————

Docket No. 21343-21L.                                               Filed May 5, 2022.

                                       —————

Neil Wolfson, pro se.

Massimiliano Valerio and Marc L. Caine, for respondent.

                           MEMORANDUM OPINION

       LAUBER, Judge: In this collection due process (CDP) case peti-
tioner seeks review pursuant to sections 6320(c) 1 and 6330(d)(1) of the
determination by the Internal Revenue Service (IRS or respondent) to
uphold collection action. Respondent has filed a Motion for Summary
Judgment under Rule 121. Concluding that the settlement officer (SO)
did not abuse his discretion, we will grant the Motion.

                                      Background

      The following facts are based on the parties’ pleadings and motion
papers, including the attached declaration, supplemental declaration,
and exhibits. Petitioner resided in New York when he filed his Petition.

        1 Unless otherwise indicated, all statutory references are to the Internal Reve-

nue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are
to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times,
and all Rule references are to the Tax Court Rules of Practice and Procedure.

                                   Served 05/05/22
                                            2

[*2] Petitioner did not collect and pay over employment taxes report-
able on Form 941, Employer’s Quarterly Federal Tax Return, for the pe-
riods ending March 31, June 30, and September 30, 2012. The IRS ac-
cordingly assessed civil penalties against him under section 6672 (com-
monly called trust fund recovery penalties or TFRPs). As of November
2020, his TFRP liabilities totaled about $25,000.

        On November 27, 2020, in an effort to collect these liabilities, the
IRS sent petitioner a notice of Federal tax lien (NFTL) filing (lien no-
tice). The record initially before the Court did not include a copy of the
lien notice. Instead, the declaration filed in support of respondent’s Mo-
tion for Summary Judgment attached a copy of a Letter 1058, Final No-
tice of Intent to Levy (levy notice), dated November 6, 2020. Respondent
later submitted a supplemental declaration from the SO that attached
a copy of the lien notice.

       Petitioner timely submitted Form 12153, Request for a Collection
Due Process or Equivalent Hearing. As the basis for his CDP hearing
request, he checked the box for “Filed Notice of Federal Tax Lien” and
indicated that he sought discharge of the lien. He also checked the boxes
for “Installment Agreement,” “Offer in Compromise,” and “I Cannot Pay
Balance.” He stated that “[t]axes were filed in 2013 and it is now 2020.”2

       Petitioner’s case was assigned to an SO in the IRS Independent
Office of Appeals (Appeals). The SO verified that the TFRPs had been
properly assessed, that “the Service followed all legal and procedural
requirements with respect to the issuance of the NFTL filing,” and that
all other legal and administrative requirements had been satisfied.

       On April 26, 2021, the SO sent petitioner a letter scheduling a
telephone conference for May 25, 2021. This letter stated that, for the
SO to consider collection alternatives, petitioner would need to submit
the following: Form 433–A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, and supporting documentation,
and Form 656, Offer in Compromise. For the SO to consider a lien

         2 Petitioner attached to his CDP hearing request a copy of the first page of the

levy notice, but this was apparently inadvertent. He did not check the box on the Form
12153 to request a hearing for a “proposed levy or actual levy.” The SO’s letter ac-
knowledging his Form 12153 stated: “You made your request for a lien hearing regard-
ing the Notice of Federal Tax Lien on time.” There is no reference in the SO’s case
activity record or in the notice of determination to a levy notice or a request for a hear-
ing regarding a levy notice. At no point did petitioner advise the SO or this Court that
he was seeking a hearing regarding a levy notice.
                                   3

[*3] discharge, petitioner was advised that he needed to submit a Form
14135, Application for Certificate of Discharge of Property from Federal
Tax Lien. He would also need to come into compliance with his Federal
tax obligations by submitting a signed Form 1040, U.S. Individual In-
come Tax Return, for 2019. Petitioner did not submit any of these doc-
uments by the conference date.

        On May 25, 2021, the day of the scheduled telephone conference,
petitioner called the SO and asked that the conference be rescheduled.
The SO agreed and rescheduled the conference for June 17, 2021. On
June 17, petitioner’s representative contacted the SO for the telephone
conference. The representative asked whether the SO could defer the
conference to a later date, but the SO declined to do so, noting that the
conference had already been postponed once. The SO explained to peti-
tioner’s representative “the conditions of a lien discharge” and noted
that submission of a Form 14135 was a prerequisite to securing such
relief.

       During the two months since the conference was originally sched-
uled, petitioner had submitted no financial information, had submitted
no documentation in support of lien discharge, had made no proposal for
any other collection alternative, and had failed to come into tax compli-
ance by submitting a return for 2019. The SO accordingly informed pe-
titioner’s representative that “a Notice of Determination will be issued
based on the information discussed.” He stated that petitioner’s “case
will be forwarded to collection” and that petitioner and his representa-
tive “will be able to work out a collection alternative with the Revenue
Officer once the Taxpayer is in filing compliance.” The representative
replied that she did not wish to raise any other issues.

       On July 23, 2021, having received no documentation or further
communication from petitioner or his representative, the SO decided to
close the case. On August 5, 2021, Appeals issued petitioner a notice of
determination concluding that the NFTL filing “was an appropriate ac-
tion and is therefore upheld. Documentation was not submitted during
the hearing to warrant discharge of the lien under IRC § 6325(b).” The
SO stated in an attachment to the notice of determination: “IRC
§ 6320(c)(3)(C) requires that I determine if the NFTL filing balances the
need for efficient collection of taxes with the legitimate concern of the
                                           4

[*4] Taxpayer . . . . I balanced the competing interests in finding NFTL
filing appropriate.” 3

       Petitioner timely petitioned this Court. The only issue raised in
his Petition is a request to “waive penalties” because his failure to pay
over trust fund taxes was allegedly the result of an “unforeseeable” and
“unintentional error.” He did not explicitly dispute the SO’s decision to
uphold the NFTL filing, but he attached a copy of the notice of determi-
nation upholding the NFTL.

        On January 25, 2022, respondent filed the Motion for Summary
Judgment. Respondent contends that he is entitled to summary judg-
ment because “petitioner does not challenge the underlying tax liabili-
ties” and the SO “did not abuse his discretion or act in an arbitrary and
capricious manner.” Petitioner timely replied to respondent’s Motion,
attaching to his Response a copy of a “financial statement” consisting of
a list of assets and liabilities, which he says he faxed to the IRS in Jan-
uary 2021, several months before the SO first contacted him about the
CDP hearing.

                                     Discussion

A.      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). The Court may grant sum-
mary judgment when there is no genuine dispute as to any material fact
and a decision may be rendered as a matter of law. Rule 121(b);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17
F.3d 965 (7th Cir. 1994). Where the moving party properly makes and
supports a motion for summary judgment, “an adverse party may not
rest upon the mere allegations or denials of such party’s pleading” but
must set forth specific facts showing a genuine dispute for trial. Rule
121(d).

        3 The IRS issued a duplicate notice of determination to petitioner’s wife, Mon-

ica Wolfson, but she did not petition this Court in response to that notice. She is not a
party to this case. See Moorhous v. Commissioner, T.C. Memo. 2003-183, 85 T.C.M.
(CCH) 1538, 1538 n.1.
                                    5

[*5] B.      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
out by our precedents. Where the validity of a taxpayer’s underlying
liability is properly at issue, we review the IRS 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 at issue, we review the IRS decision for abuse of discre-
tion only. Jones v. Commissioner, 338 F.3d 463, 466 (5th Cir. 2003);
Goza, 114 T.C. at 182. Abuse of discretion exists when a determination
is arbitrary, capricious, or without sound basis in fact or law. See Mur-
phy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st
Cir. 2006).

        Petitioner stated in his Petition that he wished the Court to
“waive penalties.” The phrase “underlying tax liability” includes TFRPs,
see Mason v. Commissioner, 132 T.C. 301, 316 (2009), so we conclude
that petitioner is attempting to challenge his underlying liability. How-
ever, he is precluded from doing so because he did not raise that issue
at the CDP hearing. See Giamelli v. Commissioner, 129 T.C. 107, 115
(2007). Indeed, petitioner admitted in his Response to the Motion for
Summary Judgment that he first raised the issue of penalties with IRS
collection officials on September 3, 2021, almost a month after Appeals
issued the notice of determination. Accordingly, petitioner’s underlying
liability for the TFRPs is not properly at issue, and we will review the
IRS determination for abuse of discretion only.

C.    Abuse of Discretion

       In deciding whether the SO abused his discretion in sustaining
the collection action, we consider whether he (1) properly verified that
the requirements of applicable law or administrative procedure have
been met, (2) considered any relevant issues petitioner raised, and
(3) considered “whether any proposed collection action balances the need
for the efficient collection of taxes with the legitimate concern of [peti-
tioner] that any collection action be no more intrusive than necessary.”
§ 6330(c)(3). Our review of the record establishes that the SO properly
discharged all of his responsibilities under section 6330(c).

      In his CDP hearing request petitioner checked the boxes for lien
discharge, “Installment Agreement,” “Offer in Compromise,” and “I
                                           6

[*6] Cannot Pay Balance.” But he never proposed a specific collection
alternative, and he never submitted any of the documentation necessary
to the SO’s consideration of a collection alternative. An SO does not
abuse his discretion by declining to consider collection alternatives
where the taxpayer has not proposed any, see Nimmo v. Commissioner,
T.C. Memo. 2020-72, 119 T.C.M. (CCH) 1504, 1506, or has failed to sub-
mit the required documentation, see Sullivan v. Commissioner, T.C.
Memo. 2012-337, 104 T.C.M. (CCH) 713, 718; Coleman v. Commissioner,
T.C. Memo. 2010-51, 99 T.C.M. (CCH) 1213, 1215, aff’d, 420 F. App’x
663 (8th Cir. 2011). Finally, petitioner was not in compliance with his
2019 tax filing obligations. An SO does not abuse his discretion when
he declines to consider a collection alternative for a taxpayer who is not
in filing compliance. See Boulware v. Commissioner, T.C. Memo. 2014-
80, 107 T.C.M. (CCH) 1419, 1424, aff’d, 816 F.3d 133 (D.C. Cir. 2016);
Treas. Reg. § 301.6320-1(d)(2), Q&A-D8.

       Petitioner allegedly submitted a one-page summary of his per-
sonal finances to the IRS in January 2021. We do not know to whom he
sent this, but it cannot have been the SO assigned to his case, because
the SO was not assigned to his case until April of that year. In any
event, petitioner’s summary is far less detailed than the Form 433–A
and supporting documentation that the SO requested. Petitioner also
represents that he submitted his 2019 tax return to the IRS on Decem-
ber 26, 2021. Assuming that representation to be true, petitioner took
this step more than four months after Appeals issued the notice of de-
termination (on August 5, 2021). What petitioner mailed to the IRS be-
fore Appeals opened his case or several months after Appeals issued the
notice of determination is not relevant in ascertaining whether the SO
abused his discretion. 4

       The SO gave petitioner and his representative ample time to sub-
mit the required documentation. Appeals did not issue the notice of de-
termination until seven weeks after the rescheduled CDP hearing and
three months after the SO initially requested documents from peti-
tioner. Finding no abuse of discretion in any respect, we will grant re-
spondent’s Motion for Summary Judgment and sustain the collection ac-
tion as to all tax periods.

         4 Petitioner also complains that respondent served a copy of the Motion for

Summary Judgment on him at his New York address of record, even though he is cur-
rently living in Florida. He does not allege that he did not receive respondent’s Motion;
in fact, he timely filed a Response. It is the taxpayer’s obligation to notify this Court
if his address has changed. See Rule 21(b)(4).
                                   7

[*7]   To reflect the foregoing,

       An appropriate order and decision will be entered.