T.C. Memo. 2021-141
UNITED STATES TAX COURT
BRIAN K. BUNTON AND KAREN A. BUNTON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20438-19L. Filed December 28, 2021.
Brian K. Bunton and Karen A. Bunton, pro sese.
Aimee R. Lobo-Berg, Melissa D. Lang, Catherine J. Caballero, and Ara
Derhartonian, for respondent.
MEMORANDUM OPINION
WEILER, Judge: Petitioners, Brian K. Bunton and Karen A. Bunton, timely
petitioned this Court pursuant to section 6330(d)(1) 1 to review a determination of
Unless otherwise indicated, all section references are to the Internal 1
Revenue Code as in effect at all relevant times, and all Rule references are to the
Served 12/28/21 -2-
[*2] the Internal Revenue Service (IRS) Office of Appeals (Appeals) 2 sustaining a
levy upon petitioners’ State tax refund to collect a tax liability arising from tax
year 2016. The Commissioner of Internal Revenue (respondent) filed his answer,
and the parties subsequently filed a motion to submit this case for decision
under Rule 122, reflecting their agreement that the relevant facts could be
presented without trial. For the reasons set forth below, we find that Appeals did
not abuse its discretion in upholding the IRS’ enforcement action against
petitioners.
Background
The parties filed a stipulation of facts and attached exhibits to the stipulation
including the administrative record 3 of petitioners’ matter before Appeals. Those
Tax Court Rules of Practice and Procedure. All monetary amounts are rounded to the nearest dollar. 2 On July 1, 2019, the IRS Office of Appeals was renamed as the Internal Revenue Service Independent Office of Appeals. See Taxpayer First Act, Pub. L. No. 116-25, sec. 1001(a), 133 Stat. at 983 (2019). As the events in this case largely predate that change, we use the name in effect at the times relevant to this case, i.e., the Office of Appeals. 3 The facts in this opinion are derived from the administrative record developed before Appeals. In Robinette v. Commissioner, 123 T.C. 85, 95 (2004), rev’d, 439 F.3d 455 (8th Cir. 2006), we held that “when reviewing for abuse of discretion under section 6330(d), we are not limited by the Administrative Procedure Act * * * and our review is not limited to the administrative record”. However, the Court of Appeals for the Ninth Circuit has concluded otherwise, -3-
[*3] stipulated facts are so found and are incorporated herein by this reference.4
Petitioners resided in California when they filed their petition.
In April 2017 petitioners jointly filed Form 1040, U.S. Individual Income
Tax Return, for tax year 2016, reporting their address as xxxx5 Pepperwood Way,
holding that the so-called record rule applies to collection due process (CDP) cases involving an abuse of discretion standard before this Court. See Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009), aff’g in part T.C. Memo. 2006- 166, and aff’g in part, rev’g in part decisions in related cases; see also Belair v. Commissioner, 157 T.C. 10 (2021) (explaining the application of the administrative record rule). Under sec. 7482(b)(1)(G), appeal of this case would lie in the Court of Appeals for the Ninth Circuit, absent a stipulation by the parties to the contrary. Accordingly--and in circumstances when the underlying liabilities are not at issue--our review of Appeals’ determination for abuse of discretion in the instant case is limited by the record rule. See Golsen v. Commissioner, 54 T.C. 742, 756-757 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971). 4 The parties submitted this case under Rule 122, and we ordered the parties to file simultaneous briefs, setting a schedule for opening and reply briefs. In his reply brief respondent lodged a general objection to all facts in petitioners’ opening brief for failure to include a proposed findings of fact in accordance with Rule 151(e)(3). Specifically, respondent argues that petitioners’ opening brief “contain[s] multiple, compound and unnumbered statements of fact instead of single, numbered and concise statements.” Rule 151(e)(3) requires an opening brief to contain proposed findings of fact in the form of numbered statements based on the record, with reference to the pages of the transcript, exhibits, or other sources relied upon to support the statements. Although petitioners did not include proposed findings of fact as required under Rule 151(e)(3), they included in their opening and reply briefs references to the administrative record, objections to respondent’s proposed findings, and citations of the record. It is this Court’s function to resolve the differences in the parties’ proposed findings of fact, subject to objections, and adopt its own findings of fact on the basis of the record before the Court. See sec. 7459. 5 The address has been partially redacted for confidentiality. -4-
[*4] San Jose, California (Pepperwood Way). Shortly thereafter petitioners’ 2016
Form 1040 was selected for examination by the IRS. On June 1, 2017, the IRS
sent petitioners a letter scheduling an appointment for August 3, 2017, to discuss
unreported income from two 2016 Forms W-2, Wage and Tax Statement. On their
Form 1040 petitioners did not report their wages as listed on the Forms W-2 but
instead attached two Forms 4852, Substitute for Form W-2, Wage and Tax
Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., along with a signed cover
letter stating:
We are private sector workers. We do not live or work in Washington, D.C., Puerto Rico, Guam or any Federal territory. We do not work for the U.S. Federal Government. We do not make any income from foreign transactions and we are not foreigners living in the United States who derive any income. Therefore, payments made to us by these private sector companies did not result from any taxable activity and do not constitute any taxable income under relevant law.
On June 12, 2017, after examining petitioners’ Form 1040, the IRS sent
petitioners a letter and a copy of the revenue agent’s examination report indicating
that they had unreported income of $153,759 and $179,418 from Fulcrum
Bioenergy and Virgin America, respectively.6
6 This IRS correspondence was a standard IRS Letter 915, commonly known as a 30-day letter. The letter included publications on the examination process and advised petitioners of their right to request a conference with Appeals. -5-
[*5] On or about June 1, 2017, the IRS submitted to the U.S. Postal Service
(USPS) an “Address Information Request” or “Postal Tracer” to confirm
petitioners’ Pepperwood Way address. On or about June 23, 2017, the IRS
received confirmation from the USPS that mail was deliverable to petitioners at
this address.
On August 2, 2017, petitioners’ representative under a power of attorney,
Tim D. Brewer, faxed to respondent Forms 2848, Power of Attorney and
Declaration of Representative, for petitioners. The Forms 2848 were properly
executed by petitioners and reported Pepperwood Way as their mailing address.
On September 1, 2017, the IRS closed the examination of petitioners’ 2016
Form 1040 and mailed by certified mail a statutory notice of deficiency (SNOD) to
the Pepperwood Way address, determining a tax deficiency of $80,488 and an
accuracy-related penalty under section 6662(a) of $16,097.7 The SNOD informed
petitioners that their last day to file a petition with this Court was November 30,
2017. A copy of the SNOD was also sent to Mr. Brewer on September 1, 2017.
The USPS returned the SNOD addressed to Pepperwood Way in its original
7 Respondent later conceded the accuracy-related penalty under sec. 6662 for tax year 2016 “due to lack of timely managerial approval”. -6-
[*6] envelope stamped “unclaimed” to the IRS. Petitioners did not file a petition
with this Court disputing the SNOD.
On October 8, 2018, approximately one year after issuing the SNOD, the
IRS sent petitioners a Notice CP92, Seizure of Your State Tax Refund and Notice
of Your Right to a Hearing (levy notice).8 The Levy Notice also informed
petitioners of their right to request a CDP hearing. Petitioners timely requested a
hearing by submitting Form 12153, Request for a Collection Due Process or
Equivalent Hearing. However, on their completed Form 12153, they failed to
include their phone number and did not check any box requesting a collection
alternative. Instead, they checked the “Other” box on their Form 12153 and stated
as follows:
We are disputing the alleged taxes and penalties associated with these taxes. We would like verification that the IRS performed all the procedures that are required by law. We would like to request a face- to-face hearing closes[sic] to where we live, which we intend to record. If at the end of the hearing it is found that we owe the tax, then we would like to discuss all the available collection alternatives available to us.
8 Respondent levied against $12 of petitioners’ State tax refund and applied it to their balance due for tax year 2016. -7-
[*7] On March 5, 2019, the IRS sent petitioners a letter requesting that they file
their overdue Form 1040 for tax year 2017. Petitioners did not submit a tax
return for 2017.
On May 31, 2019, a settlement officer was assigned to petitioners’ case.
Shortly after her assignment the settlement officer reviewed the IRS account
transcripts for petitioners’ tax year 2016. The settlement officer confirmed that the
SNOD was sent to petitioners’ Pepperwood Way address, reviewed the certified
mail list for the copies of the SNOD sent to petitioners, pulled the tracking
information based on the tracking numbers for the mailed copies of the SNOD, and
reviewed copies of the SNOD and the envelope marked “unclaimed” by the USPS
and returned to the IRS. The settlement officer also established, on the basis of her
review of IRS transcripts, that the IRS had mailed notice and demand to petitioners
on or about March 5, 2018.
On July 1, 2019, the settlement officer sent a letter to petitioners scheduling
a telephone hearing for August 14, 2019, and offering a face-to-face conference or
written correspondence hearing as an alternative. The letter further stated that the
settlement officer intended to contact petitioners’ representative and provided her
telephone number in case petitioners’ representative needed to reschedule the
conference. In addition the letter included a copy of the previously issued SNOD -8-
[*8] and stated that petitioners would not be able to dispute the underlying tax
liability because the IRS had properly issued the SNOD and mailed it to their last
known address. The settlement officer’s letter stated that they could submit
evidence as to why the SNOD “was not claimed and/or returned unclaimed to the
[S]ervice”. The letter also advised that in order to be considered for any collection
alternatives, petitioners needed to submit a completed Form 433-A, Collection
Information Statement for Wage Earners and Self-Employed Individuals, as well
as their delinquent Forms 1040 for tax years 2017 and 2018. A copy of the
settlement officer’s letter was sent to Mr. Brewer.
On August 10, 2019, petitioners sent the settlement officer a letter titled:
“[In] re: our year 2016 Collection Due Process Hearing; [y]our July 1, 2019 letter;
please [a]bate these taxes which have been imposed in violation of certain Internal
Revenue Code”. In the letter petitioners cited section 301.6330-1(d), Proced. &
Admin. Regs., and requested a face-to-face meeting with Appeals in an office
location closest to their residence. Although they did not dispute the fact that the
Pepperwood Way address was their last known address, they contended that the
IRS never sent notice and demand and that the SNOD was “void as a matter of
law” because it did not contain a written declaration under penalty of perjury. -9-
[*9] Petitioners also questioned whether the person who signed the SNOD had
delegated authority to issue such notices.
On August 14, 2019, the date of the scheduled CDP hearing, the settlement
officer contacted Mr. Brewer. Mr. Brewer informed her that he no longer
represented petitioners. The settlement officer informed Mr. Brewer that she
intended to call petitioners directly; however she was unable to do so since
petitioners had provided no telephone number on their Form 12153. On August
16, 2019, the settlement officer received petitioners’ letter dated August 10, 2019.
On August 19, 2019, the settlement officer sent petitioners a letter stating
that they had missed their CDP conference on August 14, 2019. The letter again
advised petitioners to send in the requested information, i.e., Form 433-A and
outstanding tax returns, within 14 days. On September 17, 2019, petitioners sent
the settlement officer a second letter stating they still wanted a face-to-face hearing
at an Appeals office closest to their residence to “go over all of the issues
[petitioners] brought up in [their] August 10, 2019 letter”. However, petitioners
furnished no additional documentation or information with this second letter.
On October 15, 2019, Appeals issued to petitioners a Notice of
Determination Concerning Collection Actions for tax year 2016 (notice of
determination). In the summary portion of the notice of determination, Appeals - 10 -
[*10] stated that the notice of intent to levy was appropriate under the
circumstances and Appeals sustained the levy. 9 More specifically, the notice of
determination stated that the settlement officer reviewed the records and
information petitioners had furnished to ensure that the assessment was properly
made for the 2016 tax liability; notice and demand for payment was properly
mailed to their last known address; there was a balance due when the notice of
intent to levy was issued; and the settlement officer had no prior involvement with
respect to the specific tax period in Appeals.
On the basis of the settlement officer’s review of the case, Appeals denied
petitioners’ request for a face-to-face hearing. The notice of determination
concluded that a face-to-face meeting was not allowed because petitioners were
barred under section 6330(c)(2)(B) from challenging the underlying tax liability
during the CDP hearing. Moreover, because petitioners failed to request a
collection alternative, the notice of determination concluded that the levy is
appropriate in this case.
9 The Notice of Determination states that the notice of intent to levy was appropriate under the circumstances. However, the record shows that a notice of levy on petitioners’ State tax refund rather than a notice of intent to levy was sent to petitioners. - 11 -
[*11] Discussion
I. Standard of Review
Under section 6330(d)(1) we have jurisdiction to review the determination
by Appeals in a CDP case. See also Clark v. Commissioner, 125 T.C. 108 (2005)
(holding that the Court has jurisdiction under section 6330(d) to review the
determination of Appeals sustaining the levy upon a taxpayer’s State tax refund).
Where the taxpayer’s underlying tax liability is properly at issue, the Court reviews
the liability determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182
(2000). The taxpayer may challenge the validity of his tax liability in a CDP
hearing only if he did not receive a notice of deficiency or otherwise have a prior
opportunity to contest the liability. See 6330(c)(2)(B); see also Sego v.
Commissioner, 114 T.C. 604, 609 (2000). The Court will review the other
administrative determinations by Appeals for abuse of discretion. See Craig v.
Commissioner, 119 T.C. 252, 260 (2002). Abuse of discretion exists when the
determination was 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). - 12 -
[*12] II. Challenge to the Underlying Liability
Since raised by petitioners the Court will first consider whether their
underlying tax liability is at issue.
A. The Legal Standard To Challenge the Underlying Liability
Section 6330(c) prescribes the matters that the taxpayer may raise at a CDP
hearing; namely, “any relevant issue relating to the unpaid tax” including “the
appropriateness of collection actions”. Sec. 6330(c)(2)(A)(ii). However, the
taxpayer may not raise issues relating to the existence or amount of the underlying
tax liability if the taxpayer has received a notice of deficiency or the taxpayer
otherwise had an opportunity to dispute the tax liability. See sec. 6330(c)(2)(B).
Therefore, we must first determine whether petitioners received an SNOD or
otherwise had an opportunity to challenge the underlying tax liability. See id.
The Court’s determination of whether a taxpayer has received a notice of
deficiency, precluding a challenge to the underlying tax liability under section
6330(c)(2)(B), is made “[o]n the preponderance of the evidence”. Sego v.
Commissioner, 114 T.C. at 611. The Commissioner generally has prevailed in
foreclosing challenges to the underlying liability under section 6330(c)(2)(B)
where he establishes that a notice of deficiency was mailed to the taxpayer’s last
known address and the taxpayer fails to offer credible evidence to rebut the - 13 -
[*13] presumption of official regularity and of delivery. See, e.g., Klingenberg v.
Commissioner, T.C. Memo. 2012-292, at *14-*15, aff’d, 670 F. App’x 510 (9th
Cir. 2016); Rivas v. Commissioner, T.C. Memo. 2012-20, 2012 WL 141745, at *5;
Cyman v. Commissioner, T.C. Memo. 2009-144, 2009 WL 1748863, at *4-*5;
Casey v. Commissioner, T.C. Memo. 2009-131, 2009 WL 1606226, at *4; Bailey
v. Commissioner, T.C. Memo. 2005-241, 2005 WL 2591914, at *5. If a notice of
deficiency is mailed to the taxpayer at the taxpayer’s last known address, actual
receipt of the notice is immaterial; the notice is valid.10 See, e.g., United States v.
Zolla, 724 F.2d 808, 810 (9th Cir. 1984).11
We have also held that the IRS was justified in believing that a notice
of deficiency was mailed to the correct address and that the taxpayer simply failed
10 The taxpayer’s last known address is the address that appears on the taxpayer’s most recently filed and properly processed Federal tax return unless the IRS is given clear and concise notification of a different address. Sec. 301.6212- 2(a), Proced. & Admin. Regs. 11 Where a taxpayer specifically alleges in a CDP hearing that he never received a notice of deficiency, an Appeals officer cannot rely solely on tax transcripts to verify that a notice has been sent. See Hoyle v. Commissioner, 131 T.C. 197, 205 n.7 (2008), supplemented by 136 T.C. 463 (2011). Instead, the Appeals officer is to review the actions of the IRS when the notice of deficiency was issued and the underlying documents to confirm that the correct mailing address was used to send the notice of deficiency to the taxpayer. Id. Even when the notice was properly mailed, a taxpayer may be able to challenge the underlying liability when he or she can establish nonreceipt of the notice. Id.; see, e.g., Nguyen v. Commissioner, T.C. Memo. 2020-97, at *10. - 14 -
[*14] to claim it, when the notice was returned to the IRS marked “unclaimed” and
there was no evidence in the record that the IRS was aware either before or
immediately after the mailing of the notice of deficiency that the address of record
was incorrect. See Thomas v. Commissioner, T.C. Memo. 1998-438, aff’d without
published opinion, 194 F.3d 1305 (4th Cir. 1999).
B. Petitioners’ Argument Challenging the Underlying Liability
Throughout the CDP proceeding petitioners sought to challenge the
underlying liability. However, the record shows that an SNOD for tax year 2016
was sent to petitioners by certified mail at the Pepperwood Way address on
September 1, 2017. A copy of the SNOD was also sent to petitioners’
representative, Mr. Brewer. The administrative record reflects that the IRS had
submitted to the USPS an “Address Information Request” or “Postal Tracer” for
petitioners’ current address and received confirmation that mail was deliverable to
them. The IRS had verified their current mailing address before issuing the
SNOD, the same address they reported on their Forms 2848.
Before Appeals petitioners failed to provide any specific evidence to explain
why the SNOD was not claimed and/or returned unclaimed to the IRS. They do
not dispute that the Pepperwood Way address was their last known address when - 15 -
[*15] the SNOD was mailed to them, nor did they offer any evidence that they
provided the IRS with any address other than the Pepperwood Way address.
The administrative record reflects that the settlement officer exercised
reasonable diligence in determining that copies of the SNOD were properly sent to
petitioners’ last known address. First, the settlement officer confirmed that the
Pepperwood Way address was their last known address and that the IRS properly
sent the SNOD to this mailing address. Next, she reviewed the certified mailing
list, copies of the SNOD, and the envelope marked “unclaimed” by the USPS to
confirm that the IRS sent the SNOD to them. Thus, as they have failed to offer any
credible evidence to the contrary, petitioners are deemed to have received the
SNOD and to have had a prior opportunity to challenge the underlying tax liability.
See sec. 6330(c)(2)(B); Hoyle v. Commissioner, 131 T.C. 197, 205 n.7 (2008),
supplemented by 136 T.C. 463 (2011).
Consequently, petitioners were properly precluded from challenging the
underlying tax liability at the CDP hearing, and their underlying tax liability is not
properly before the Court. See Sego v. Commissioner, 114 T.C. at 611; Cyman v.
Commissioner, 2009 WL 1748863, at *5. - 16 -
[*16] III. Review of Appeals’ Determination
Because the validity of petitioners’ underlying tax liability is not properly at
issue, we will now review respondent’s other administrative determinations for
abuse of discretion. In reviewing for abuse of discretion we will reject the
determination of the Appeals Office only if the taxpayer proves that the
determination was arbitrary, capricious, or without sound basis in fact or law. See
Rules 142(a), 122(b); Murphy v. Commissioner, 125 T.C. at 308. We do not
substitute our judgment for that of Appeals but consider whether Appeals, in the
course of making its determination: (1) verified that the requirements of applicable
law and administrative procedure have been met; (2) considered all relevant issues
raised by the taxpayer, including offers of collection alternatives such as an offer-
in-compromise; and (3) determined whether any proposed or actual 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. Sec. 6330(c)(3).
IV. Prior Notice and Demand
Under section 6331(a), if any taxpayer liable to pay any tax neglects or
refuses to do so after notice and demand, the Commissioner is authorized to collect
the unpaid amount by way of levy. In general a taxpayer must be provided with - 17 -
[*17] written notice of the legal right to a CDP hearing and an opportunity for a
hearing before a levy on the taxpayer’s property may be initiated. Secs. 6331(d),
6330(a)(1). Once notice is given by the IRS, the taxpayer has 30 days from the
date of the notice to request a CDP hearing. Secs. 6331(d)(2), 6330(a)(2);
sec. 301.6330-1(a), Proced. & Admin. Regs. A CDP hearing request made by the
taxpayer within the 30-day period will generally stay any proposed IRS collection
activity until Appeals has issued a determination. See sec. 6330(e). However, in
limited instances levies are permitted before the taxpayer is notified of the right to
a CDP hearing, one example being a State tax refund levy. See sec. 6330(f)(2);
see also sec. 301.6330-1(a)(2)(i), Proced. & Admin. Regs.
Notwithstanding the requirements of sections 6330 and 6331, after an
assessment has been made, the IRS must first notify the taxpayer as soon as
practicable, but no later than 60 days after the assessment, of the amount of tax due
along with demand for payment. Sec. 6303(a); Conway v. Commissioner, 137
T.C. 209, 218-219 (2011), aff’d sub nom. Nakano v. Commissioner, 552 F. App’x
724 (9th Cir. 2014). Although no particular form of notice is required, notice and
demand must be sent by mail to the taxpayer’s last known address or left at their
dwelling or usual place of business. Sec. 6303(a). Without notice and demand the
IRS cannot levy against the taxpayer’s property. Sec. 6331(d); see also Romano- - 18 -
[*18] Murphy v. Commissioner, 152 T.C. 278, 294 (2019) (outlining the process in
which the IRS obtains a tax lien under secs. 6321 and 6322).
V. Analysis
A. Verification That the Requirements of Applicable Law and Administrative Procedure Were Met
When issuing a notice of determination, Appeals must verify that all
requirements of applicable law and administrative procedure have been met by the
IRS. Sec. 6330(c)(1), (3)(A); Hoyle v. Commissioner, 131 T.C. at 202.
Petitioners argue that they cited several applicable statutes and regulations in
connection with their CDP hearing request. According to petitioners, Appeals’
deeming their arguments “frivolous” suggests that Appeals has not verified that the
requirements of applicable law and administrative procedure have been met
because citations of statutes and regulations are valid statements of law and
therefore these legal arguments cannot possibly be “frivolous”. Petitioners further
argue that Appeals failed to address any of the verification of legal and
administrative procedure issues raised in their August 10, 2019, letter, thereby
violating section 6330(c)(2)(A). Finally, petitioners argue that they did not receive
prior notice and demand from the IRS as required by section 6303(a). The Court
finds petitioners’ arguments to be without merit. The settlement officer
determined that the IRS followed the requirements of applicable law and - 19 -
[*19] administrative procedure in issuing the Levy Notice. The notice of
determination noted that petitioners’ tax for 2016 was duly assessed, and the
requisite notices were timely mailed to petitioners at their last known address.
As respondent correctly argues, the IRS need not send the taxpayer a notice
of the opportunity for a hearing before levy when it levies on a State tax refund.
See sec. 6330(f)(2). And while this exception to notice and opportunity for a
hearing before levy does not (and cannot) waive the legal requirement of prior
notice and demand under section 6303(a), Conway v. Commissioner, 137 T.C.
at 219, the record before the Court shows that notice and demand was sent to
petitioners by the IRS on or about March 5, 2018, in compliance with section 6303.
Because there is no credible evidence before the Court that the requirements of
applicable law and administrative procedure were not satisfied, we conclude that
the settlement officer did not abuse her discretion in making her determination as
to this requirement. 12
B. Relevant Issues Petitioners Raised
Appeals is required to consider any relevant issue raised by a taxpayer
during a hearing, including challenges to the appropriateness of collection action
12 Notice and demand need only be sent to the taxpayer’s last known address (rather than actually received) to be valid. See sec. 6303(a); Arroyo v. Commissioner, T.C. Memo, 2013-112, at *5. - 20 -
[*20] and collection alternatives offered. The only remaining issue petitioners
raise is that the settlement officer inappropriately attempted to contact petitioners’
former representative, Mr. Brewer, and failed to contact them on the date of their
scheduled CDP hearing. Thereafter they requested a face-to-face meeting in an
Appeals office closest to the place of their residence, but their request was denied.
They contend that they were not afforded a face-to-face hearing and in fact, a CDP
hearing never occurred.
In the letter scheduling the telephone conference, the settlement officer
stated that she planned on contacting petitioners’ representative, Mr. Brewer. She
also sent a copy of the letter to Mr. Brewer. Both letters included the settlement
officer’s phone and fax numbers and advised them to contact her in case the
conference needed to be rescheduled. Even though both petitioners and Mr.
Brewer were informed of the settlement officer’s intention to contact Mr. Brewer
on the day of the telephone hearing and had ample time to communicate with the
settlement officer, they never informed her that the hearing was to be held with
petitioners and not with their representative. On the day of the scheduled hearing,
the previously filed power of attorney was still valid; no revocation had been
received by the Appeals Office. The settlement officer requested that petitioners’
representative submit a revocation of the power of attorney and provided her fax - 21 -
[*21] number. Yet no such form followed. Because petitioners had not provided a
telephone number in their Form 12153 nor in the subsequent letters, the settlement
officer was unable to call them on the day of the scheduled hearing.
Furthermore, the settlement officer did not abuse her discretion in denying
petitioners a face-to-face meeting. 13 Throughout the CDP proceeding, petitioners
only sought to improperly challenge the underlying liability. They did not request
a collection alternative, and the record shows that they never submitted the
financial information, Form 433-A, that was required for evaluation of their ability
to pay the liabilities. The settlement officer also requested that they submit their
2017 and 2018 Forms 1040, but they failed to submit the outstanding tax returns by
the deadline without explanation. Consequently, Appeals properly determined that
they were not entitled to a face-to-face hearing. Although they argue that no
13 Petitioners also argue that Appeals abused its discretion by not granting their request for a face-to-face Appeals hearing at the closest Appeals office to their home. However, their argument regarding their right to a face-to-face hearing is misplaced. There is no abuse of discretion when a face-to-face hearing is denied because a taxpayer refused to present nonfrivolous arguments, file past-due returns, and submit financial information. Toth v. Commissioner, T.C. Memo. 2010-227. Once a taxpayer is given a reasonable opportunity for a hearing and fails to avail himself of that opportunity (as in this case), the Court may sustain the Commissioner’s determination to proceed on the basis of an Appeals officer’s review of the case file. See Rivas v. Commissioner, T.C. Memo. 2012-20, 2012 WL 141745, at *5 (citing Bean v. Commissioner, T.C. Memo. 2006-88, Ho v. Commissioner, T.C. Memo. 2006-41, and Leineweber v. Commissioner, T.C. Memo. 2004-17). - 22 -
[*22] hearing was held, petitioners were given opportunities to participate in a
telephone conference and to provide any evidence for Appeals to consider, and
they failed to take advantage of these opportunities. On the basis of these facts, we
find that the correspondence between the parties constituted a CDP hearing in this
case. See Kipp v. Commissioner, T.C. Memo. 2015-7. We hold that the
settlement officer did not abuse her discretion in denying petitioners’ request for a
face-to-face hearing and that she considered all relevant issues as required under
section 6330(c)(3).
C. Balancing the Need for Efficient Collection of Taxes With Concerns That Collection Be No More Intrusive Than Necessary
Finally, the Court must consider whether Appeals balanced 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)(C).
Petitioners never submitted the requisite financial information or outstanding tax
returns. The record shows that the settlement officer performed a balancing test
based on the information she had and concluded that the levy on petitioners’ State
tax refund balanced the needs of collection with the concerns of petitioners.
We have considered all of the arguments that the parties made, and to the
extent they are not addressed herein we consider them moot, irrelevant, or without
merit. - 23 -
[*23] To reflect the foregoing,
An appropriate decision
will be entered.