Dwight F. and Theresa S. Delano v. Commissioner

2011 T.C. Summary Opinion 105

• Court: United States Tax Court
• Decided: August 29, 2011
• Docket: 14093-10S
• Status: Unpublished

Opinion

T.C. Summary Opinion 2011-105

UNITED STATES TAX COURT

DWIGHT F. AND THERESA S. DELANO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14093-10S. Filed August 29, 2011.

Dwight F. and Theresa S. Delano, pro se.

Derek W. Kelley, for respondent.

PANUTHOS, Chief Special Trial 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 This case

is before the Court on respondent’s motion for summary judgment.

1 Unless otherwise indicated, subsequent section 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. - 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.

Background

Petitioners resided in Massachusetts at the time they filed

the petition.

Petitioners filed their 1998, 2000, 2002, 2003, and 2004

Federal income tax returns late. A balance remained unpaid for

each of these years. Respondent mailed petitioners a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing.

On a timely filed Form 12153, Request for a Collection Due

Process or Equivalent Hearing, petitioners requested an offer-in-

compromise (OIC) as a collection alternative.

Settlement Officer Tracy L. Sisung (SO) sent a letter to

petitioners on March 5, 2010, scheduling a collection due process

(CDP) hearing for May 3, 2010. In that letter the SO informed

petitioners that they had to (1) submit a Form 433-A, Collection

Information Statement for Wage Earners and Self-Employed

Individuals, and bank statements, and (2) become current with

their Federal income tax return filings before an OIC could be - 3 -

considered.2 Petitioner Dwight F. Delano (Mr. Delano)

participated in a telephone CDP hearing with the SO on May 3,

2010. At the time of the CDP hearing petitioners had not filed

current Federal income tax returns or submitted a Form 433-A.

During the CDP hearing Mr. Delano explained to the SO that

he believed the balance due for the taxable year 2004 was not

accurate and that it should reflect additional payments made.

Mr. Delano did not provide documentation or specific information

during the administrative proceedings to support that position.

The SO mailed account transcripts for taxable years 1998, 2000,

2003, 2004, and 2005 to petitioners after the CDP hearing. The

record does not reflect whether petitioners responded to the SO

regarding the mailed account transcripts.

On May 20, 2010, respondent mailed petitioners a notice of

determination sustaining the proposed levy action. Petitioners

timely filed a petition with the Tax Court, seeking to dispute

their underlying tax liabilities and requesting an OIC. Mr.

Delano argues that the transcript for 2004 does not reflect all

payments made. Respondent denies that the transcript reflecting

the balance due for 2004 is incorrect.

2 The Federal income tax returns that the SO referred to are for taxable year 2005 for Theresa S. Delano and taxable years 2006, 2007, and 2008 for both petitioners. - 4 -

Respondent asserts that as a matter of law he is entitled to

summary judgment in that (1) the existence and amounts of the tax

liabilities are correct and (2) he did not abuse his discretion

in denying collection alternatives because Mr. Delano did not

provide financial information or documentation. Petitioners

object to respondent’s motion for summary judgment.

Discussion

Summary judgment serves to expedite litigation and avoid

unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). Either party may move for

summary judgment upon all or any part of the legal issues in

controversy. Rule 121(a). We may grant summary judgment only if

there are no genuine issues of material fact and the moving party

is entitled to judgment as a matter of law. Rule 121(b); Naftel

v. Commissioner, 85 T.C. 527, 529 (1985). Respondent, as the

moving party, bears the burden of proving that no genuine issue

exists as to any material fact and that he is entitled to

judgment as a matter of law. See FPL Group, Inc. & Subs. v.

Commissioner, 115 T.C. 554 (2000); Bond v. Commissioner, 100 T.C.

32, 36 (1993); Naftel v. Commissioner, supra at 529. In deciding

whether to grant summary judgment, the factual materials and the

inferences drawn from them must be considered in the light most

favorable to the nonmoving party. See FPL Group, Inc. & Subs. v. - 5 -

Commissioner, supra; Bond v. Commissioner, supra at 36; Naftel v.

Commissioner, supra at 529.

Standard of Review

Where the underlying liability is properly at issue, we

review the Commissioner’s determination de novo; where the

validity of the underlying tax liability is not properly at

issue, the Court will review the Commissioner’s administrative

determination for abuse of discretion. Sego v. Commissioner, 114

T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182

(2000).

Petitioners may prove abuse of discretion by showing that

respondent exercised his discretion arbitrarily, capriciously,

or without sound basis in fact or law. See Giamelli v.

Commissioner, 129 T.C. 107, 111 (2007). When a hearing officer

is unable or refuses to consider collection alternatives because

of a taxpayer’s failure to provide financial information, courts

have held that there was no abuse of discretion. Schwersensky v.

Commissioner, T.C. Memo. 2006-178; see also Lance v.

Commissioner, T.C. Memo. 2009-129.

The Appeals officer’s determination must take into

consideration (a) the verification that the requirements of any

applicable law or administrative procedure have been met, (b)

issues raised by the taxpayer, and (c) whether any proposed

collection action balances the need for the efficient collection - 6 -

of taxes with the legitimate concern of the person that any

collection be no more intrusive than necessary. See sec.

6330(c)(3).

Underlying Tax Liability

Petitioners did not receive a notice of deficiency for the

years at issue and had no prior opportunity to raise the issue of

the existence or amounts of the underlying tax liabilities before

the CDP hearing. Section 6330(c)(2)(B) provides that the

existence and amount of the underlying tax liability can be

contested at an Appeals Office hearing only if the person did not

receive a notice of deficiency for the tax in question or did not

otherwise have an earlier opportunity to dispute the tax

liability. See Montgomery v. Commissioner, 122 T.C. 1 (2004);

see Sego v. Commissioner, supra at 609; see Goza v. Commissioner,

supra at 180-181. There is no dispute in this case that Mr.

Delano properly raised the underlying tax liabilities at the CDP

hearing, and accordingly we review the determination de novo.

Mr. Delano stated at the CDP hearing that he expected a

third party to make payments on the 2004 liability, which would

result in a smaller balance due for that year. As indicated, the

SO mailed petitioners the account transcripts for taxable years

1998, 2000, 2003, 2004, and 2005 on May 3, 2010. Respondent

requested during the administrative proceedings that petitioners

provide documents to show any additional payments they believe - 7 -

were made for the 2004 liability that were not reflected in the

transcript. Petitioners did not provide documentation during the

administrative proceedings to show that any additional payments

should have been applied to the outstanding tax liabilities. Nor

did Mr. Delano assert in response to the pending motion that he

had any evidence to support the claim that additional payments

were made on the 2004 liability. Mr. Delano conceded at the

hearing that he had no documentation to substantiate any

alternative or additional payments toward his tax liabilities

that were not already reflected in the amounts due. There is no

genuine issue of material fact regarding the underlying tax

liabilities, and respondent is entitled to judgment as a matter

of law on this issue.

Collection Alternative

A taxpayer may raise collection alternatives that may

include an installment agreement or an OIC. Secs. 6320(c),

6330(c)(2)(A)(iii). An OIC is authorized under section 7122(a).

Taxpayers who wish to propose an OIC must submit a Form 656,

Offer in Compromise. See Godwin v. Commissioner, T.C. Memo.

2003-289, affd. 132 Fed. Appx. 785 (11th Cir. 2005). No

statutory or regulatory provision requires that taxpayers be

afforded an unlimited opportunity to supplement the

administrative record. Roman v. Commissioner, T.C. Memo. 2004-

20. The statute requires only that a taxpayer be given a - 8 -

reasonable chance to be heard before the issuance of a notice of

determination. Id.

Petitioners failed to provide the SO the required financial

information during the CDP hearing (the delinquent returns were

not filed, and petitioners did not submit Form 433-A).

Respondent sustained the proposed levy and issued a notice of

determination to petitioners on May 20, 2010, because the

requested documents had not been submitted.

It is not an abuse of discretion to reject an OIC because of

a lack of necessary financial information during a CDP hearing.

Schwersensky v. Commissioner, supra; see also Lance v.

Commissioner, supra. Petitioners have not shown that

respondent’s determination to proceed with the levy because of

petitioners’ unpaid tax liabilities for 1998, 2000, 2002, 2003,

and 2004 and failure to submit the Form 433-A was arbitrary,

capricious, or without sound basis in fact or law. There are no

genuine issues of material fact remaining, and respondent is

entitled to judgment as a matter of law.3

To reflect the foregoing,

An appropriate order and

decision will be entered.

3 Petitioners requested additional time to submit an OIC. Respondent agreed at the hearing that if the motion for summary judgment were to be granted, an OIC could still be considered if petitioners submitted the proper paperwork.