T.C. Summary Opinion 2018-18
UNITED STATES TAX COURT
ALLEN A. VEST, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13295-16S L. Filed April 4, 2018.
Allen A. Vest, pro se.
Kristen I. Nygren and Susan S. Canavello, for respondent.
SUMMARY OPINION
NEGA, Judge: This case was heard pursuant to the provisions of section
7463 of the Internal Revenue Code in effect when the petition was filed.1
1 All section references are to the Internal Revenue Code in effect at all relevant times. All monetary amounts are rounded to the nearest dollar. -2-
Pursuant to section 7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent for any other case.
Petitioner seeks review of a Notice of Determination Concerning Collection
Action(s) Under Section(s) 6320 and/or 6330 (notice of determination) sustaining
a proposed levy action with respect to petitioner’s unpaid Federal income tax (tax)
liabilities for years 2012 and 2014 (years at issue).
Background
Some of the facts are stipulated and are so found. The stipulation of facts
and the attached exhibits are incorporated herein by this reference. At the time he
filed his petition with this Court, petitioner resided in Louisiana.
Petitioner filed tax returns for the years at issue, reporting a balance due for
each of those years. Petitioner, however, failed to pay these balances in full when
due. For each year at issue, respondent promptly assessed the total tax shown in
petitioner’s return, as well as applicable interest and additions to tax under section
6651(a)(2) for failure to timely pay and section 6654 for failure to pay estimated
tax (collectively, unpaid liabilities). To satisfy his unpaid liabilities petitioner
arranged installment agreements with respondent for the years at issue.2
2 Petitioner’s installment agreement for 2012 was established on November 18, 2013. His installment agreement for 2014 was established on June 27, 2015. -3-
Petitioner is the sole shareholder of Vestco Tennis Courts, Inc. (Vestco).
Vestco had an outstanding tax balance due for years 2005 and 2007 and was,
additionally, in arrears with respect to the repayment of a loan that it owed to the
U.S. Small Business Administration (SBA). At a time not established by the
record, and in order to recover Vestco’s nontax past-due balance, the SBA
requested that the Department of the Treasury retain and remit to the SBA any
overpayment in tax that might be made by Vestco, pursuant to section 6402(d)
(Treasury offset program).
On November 26, 2013, petitioner mailed respondent a $10,000 check
drawn on a Vestco checking account. The check lacked any instruction directing
respondent to credit the payment against any specific account and, in the absence
of any direction to the contrary, respondent applied that check against Vestco’s
liabilities for 2005 and 2007. The payment exceeded Vestco’s unpaid tax and
resulted in a $7,333 overpayment being credited to Vestco’s account balance
(Vestco overpayment). Rather than collecting and redirecting the overpayment to
the SBA, respondent contacted petitioner seeking direction as to how petitioner
wished to apply the Vestco overpayment. Petitioner requested that respondent
apply the Vestco overpayment against his unpaid tax balance for 2012. -4-
Initially, respondent applied the Vestco overpayment to petitioner’s account
as requested. This reduced but did not eliminate petitioner’s balance due for 2012.
Under the terms of the Treasury offset program, however, respondent’s action was
in error, as the SBA held a priority claim to the Vestco overpayment and
respondent was required to collect and remit it accordingly. On July 8, 2014,
respondent reversed his erroneous application of the Vestco overpayment against
petitioner’s 2012 balance, remitted the Vestco overpayment to the SBA, and
notified petitioner of this transaction. As a result of respondent’s corrective
measures, petitioner’s 2012 balance due reverted to its previously assessed
amount.
During the 14 months that followed, petitioner continued to make monthly
installment payments toward his outstanding balance for 2012, but he ceased
doing so in October 2015. This resulted in a default on his installment agreements
for the years at issue.3 On November 11, 2015, in an effort to collect petitioner’s
remaining unpaid balances for the years at issue, respondent sent petitioner a
Letter LT-11, Notice of Intent to Levy and Notice of Your Right to a Hearing
(levy notice). In response, petitioner timely requested a collection due process
3 At the time of his installment agreement default petitioner remained liable for assessed unpaid balances of $8,467 and $20,289 for tax years 2012 and 2014, respectively. -5-
(CDP) hearing, alleging that his 2012 balance was paid in full, but declining to
contest the levy notice with respect to his 2014 balance due.
On April 21, 2016, petitioner and an officer of respondent’s Office of
Appeals (Appeals officer) participated in a telephone CDP hearing. During that
hearing, petitioner sought to dispute only the propriety of respondent’s remittance
of the Vestco overpayment to the SBA. The Appeals Officer explained to
petitioner that, under section 6402(g), disputes as to any payment made under the
Treasury offset program must be made to the Federal agency so paid, here the
SBA.
Petitioner did not request to be considered for any collection alternatives,
nor raise any other concerns with the assessment of his tax liabilities or additions
to tax for the years at issue. The Appeals Officer confirmed that respondent had
adhered to all applicable law and administrative procedure in assessing and
instituting an action for the collection of petitioner’s unpaid balances for the years
at issue, and sustained the proposed levy.
Discussion
Section 6330 requires the Commissioner to notify a taxpayer if he intends to
levy on that taxpayer’s property. The notice must inform the taxpayer of his or her
right to a CDP hearing regarding the proposed levy. Sec. 6330(a). In a CDP -6-
hearing taxpayers may raise any relevant issue or request the consideration of a
collection alternative. Sec. 6330(c)(2)(A). Taxpayers may not challenge the
existence or amount of the underlying tax liability unless they did not otherwise
have a prior opportunity to do so. Sec. 6330(c)(2)(B).
Independent of any issues raised by the taxpayer, the Appeals Officer
administering the CDP hearing must verify that the Commissioner met the
requirements of all applicable law and administrative procedure. Sec. 6330(c)(1).
After considering all issues raised by the taxpayer and completing the verification
required by statute, the Appeals officer will issue a notice of determination. Id.
Taxpayers dissatisfied with the conclusions therein may appeal to this Court for
review of that administrative determination. Sec. 6330(d).
When the amount or existence of an underlying tax liability was properly at
issue in the CDP hearing, we review that aspect of the Appeals Officer’s
determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
As to issues other than the underlying liability, we review the determination for an
abuse of discretion, to ensure that the determination was not arbitrary, capricious,
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T.C. Summary Opinion 2018-18
UNITED STATES TAX COURT
ALLEN A. VEST, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13295-16S L. Filed April 4, 2018.
Allen A. Vest, pro se.
Kristen I. Nygren and Susan S. Canavello, for respondent.
SUMMARY OPINION
NEGA, Judge: This case was heard pursuant to the provisions of section
7463 of the Internal Revenue Code in effect when the petition was filed.1
1 All section references are to the Internal Revenue Code in effect at all relevant times. All monetary amounts are rounded to the nearest dollar. -2-
Pursuant to section 7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent for any other case.
Petitioner seeks review of a Notice of Determination Concerning Collection
Action(s) Under Section(s) 6320 and/or 6330 (notice of determination) sustaining
a proposed levy action with respect to petitioner’s unpaid Federal income tax (tax)
liabilities for years 2012 and 2014 (years at issue).
Background
Some of the facts are stipulated and are so found. The stipulation of facts
and the attached exhibits are incorporated herein by this reference. At the time he
filed his petition with this Court, petitioner resided in Louisiana.
Petitioner filed tax returns for the years at issue, reporting a balance due for
each of those years. Petitioner, however, failed to pay these balances in full when
due. For each year at issue, respondent promptly assessed the total tax shown in
petitioner’s return, as well as applicable interest and additions to tax under section
6651(a)(2) for failure to timely pay and section 6654 for failure to pay estimated
tax (collectively, unpaid liabilities). To satisfy his unpaid liabilities petitioner
arranged installment agreements with respondent for the years at issue.2
2 Petitioner’s installment agreement for 2012 was established on November 18, 2013. His installment agreement for 2014 was established on June 27, 2015. -3-
Petitioner is the sole shareholder of Vestco Tennis Courts, Inc. (Vestco).
Vestco had an outstanding tax balance due for years 2005 and 2007 and was,
additionally, in arrears with respect to the repayment of a loan that it owed to the
U.S. Small Business Administration (SBA). At a time not established by the
record, and in order to recover Vestco’s nontax past-due balance, the SBA
requested that the Department of the Treasury retain and remit to the SBA any
overpayment in tax that might be made by Vestco, pursuant to section 6402(d)
(Treasury offset program).
On November 26, 2013, petitioner mailed respondent a $10,000 check
drawn on a Vestco checking account. The check lacked any instruction directing
respondent to credit the payment against any specific account and, in the absence
of any direction to the contrary, respondent applied that check against Vestco’s
liabilities for 2005 and 2007. The payment exceeded Vestco’s unpaid tax and
resulted in a $7,333 overpayment being credited to Vestco’s account balance
(Vestco overpayment). Rather than collecting and redirecting the overpayment to
the SBA, respondent contacted petitioner seeking direction as to how petitioner
wished to apply the Vestco overpayment. Petitioner requested that respondent
apply the Vestco overpayment against his unpaid tax balance for 2012. -4-
Initially, respondent applied the Vestco overpayment to petitioner’s account
as requested. This reduced but did not eliminate petitioner’s balance due for 2012.
Under the terms of the Treasury offset program, however, respondent’s action was
in error, as the SBA held a priority claim to the Vestco overpayment and
respondent was required to collect and remit it accordingly. On July 8, 2014,
respondent reversed his erroneous application of the Vestco overpayment against
petitioner’s 2012 balance, remitted the Vestco overpayment to the SBA, and
notified petitioner of this transaction. As a result of respondent’s corrective
measures, petitioner’s 2012 balance due reverted to its previously assessed
amount.
During the 14 months that followed, petitioner continued to make monthly
installment payments toward his outstanding balance for 2012, but he ceased
doing so in October 2015. This resulted in a default on his installment agreements
for the years at issue.3 On November 11, 2015, in an effort to collect petitioner’s
remaining unpaid balances for the years at issue, respondent sent petitioner a
Letter LT-11, Notice of Intent to Levy and Notice of Your Right to a Hearing
(levy notice). In response, petitioner timely requested a collection due process
3 At the time of his installment agreement default petitioner remained liable for assessed unpaid balances of $8,467 and $20,289 for tax years 2012 and 2014, respectively. -5-
(CDP) hearing, alleging that his 2012 balance was paid in full, but declining to
contest the levy notice with respect to his 2014 balance due.
On April 21, 2016, petitioner and an officer of respondent’s Office of
Appeals (Appeals officer) participated in a telephone CDP hearing. During that
hearing, petitioner sought to dispute only the propriety of respondent’s remittance
of the Vestco overpayment to the SBA. The Appeals Officer explained to
petitioner that, under section 6402(g), disputes as to any payment made under the
Treasury offset program must be made to the Federal agency so paid, here the
SBA.
Petitioner did not request to be considered for any collection alternatives,
nor raise any other concerns with the assessment of his tax liabilities or additions
to tax for the years at issue. The Appeals Officer confirmed that respondent had
adhered to all applicable law and administrative procedure in assessing and
instituting an action for the collection of petitioner’s unpaid balances for the years
at issue, and sustained the proposed levy.
Discussion
Section 6330 requires the Commissioner to notify a taxpayer if he intends to
levy on that taxpayer’s property. The notice must inform the taxpayer of his or her
right to a CDP hearing regarding the proposed levy. Sec. 6330(a). In a CDP -6-
hearing taxpayers may raise any relevant issue or request the consideration of a
collection alternative. Sec. 6330(c)(2)(A). Taxpayers may not challenge the
existence or amount of the underlying tax liability unless they did not otherwise
have a prior opportunity to do so. Sec. 6330(c)(2)(B).
Independent of any issues raised by the taxpayer, the Appeals Officer
administering the CDP hearing must verify that the Commissioner met the
requirements of all applicable law and administrative procedure. Sec. 6330(c)(1).
After considering all issues raised by the taxpayer and completing the verification
required by statute, the Appeals officer will issue a notice of determination. Id.
Taxpayers dissatisfied with the conclusions therein may appeal to this Court for
review of that administrative determination. Sec. 6330(d).
When the amount or existence of an underlying tax liability was properly at
issue in the CDP hearing, we review that aspect of the Appeals Officer’s
determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
As to issues other than the underlying liability, we review the determination for an
abuse of discretion, to ensure that the determination was not arbitrary, capricious,
or without sound basis in fact or law. Murphy v. Commissioner, 125 T.C. 301,
320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006); Goza v. Commissioner, 114 T.C. at
182. -7-
The only issue raised by petitioner relates to the propriety of respondent’s
remittance of the Vestco overpayment to the SBA. That action, however, does not
relate to Mr. Vest in his individual capacity. It relates to Vestco, which although it
is Mr. Vest’s wholly owned corporation, is a separate and distinct taxpayer that is
not a party here. Therefore, it is not appropriate for us to review that action in this
proceeding. In addition, even if review of that action were appropriate here,
insofar as petitioner requests this Court review the validity of respondent’s
administrative actions taken with respect to the Vestco overpayment, we lack the
jurisdiction to provide petitioner the review he seeks. See Terry v. Commissioner,
T.C. Memo. 2016-88, at *7 n.3.
Section 6402(d), the Treasury offset program, requires the Commissioner,
upon receiving notice from any Federal agency that a taxpayer owes a past-due
legally enforceable debt to that agency, to reduce the amount of any overpayment
due that taxpayer by the amount of such debt and remit that amount to the
notifying Federal agency.
This duty is mandatory upon the Commissioner and overrides any request
by the taxpayer that an overpayment be credited or refunded otherwise. Sec.
301.6402-6(g)(3), Proced. & Admin. Regs.; see Terry v. Commissioner, at *7-*8.
In this regard, the terms of the Treasury offset program place the Commissioner in -8-
the limited and purely ministerial role of collecting those debts referred to him by
other Federal agencies. Wooten v. Commissioner, T.C. Memo. 2003-113, slip op.
at 10-11.
Pursuant to section 6402(g), “[n]o court of the United States shall have
jurisdiction to hear any action, whether legal or equitable, brought to restrain or
review” the Commissioner’s offsets to overpayments made pursuant to the
Treasury offset program. The Commissioner is barred from providing
administrative review of the same. Id.; sec. 301.6402-6(l), Proced. & Admin.
Regs. Petitioner’s sole allegation of error here is that respondent’s remittance of
the Vestco overpayment to the SBA was inappropriate. As stated, we decline to
engage in any substantive review of this issue. See Jordan v. Commissioner, T.C.
Memo. 2006-95, slip op. at 9-10, aff’d, 226 F. App’x 15 (1st Cir. 2007).
The administrative record establishes that the Appeals Officer took all steps
to verify that respondent complied with the requirements of applicable law and
administrative procedure in assessing petitioner’s unpaid liabilities and in
proposing to collect petitioner’s balance due. Thus, on the record before us, we
sustain the notice of determination and the related collection action. -9-
We have considered all the other arguments made by the parties, and to the
extent not discussed above, find those arguments to be irrelevant, moot, or without
merit.
To reflect the foregoing,
Decision will be entered
for respondent.