T.C. Memo. 2019-22
UNITED STATES TAX COURT
MILTON E. MCMURTRY, JR., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4081-18L. Filed March 27, 2019.
Milton E. McMurtry, Jr., pro se.
Joseph E. Nagy and William Walter Kiessling, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to sections 6320(c) and 6330(d)(1) of the determination by
the Internal Revenue Service (IRS or respondent) to uphold the filing of a notice -2-
[*2] of Federal tax lien (NFTL).1 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 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 respondent’s
motion papers, including the attached declaration and exhibits. See Rule 121(b).
Petitioner resided in Arkansas when he filed his petition.
Petitioner filed Federal income tax returns for 2011 and 2013. For 2011 he
did not report all of his income; on the basis of third-party document matching, the
IRS assessed additional tax arising from the unreported income. For 2013 peti-
tioner did not pay the full amount of tax shown as due on his return; the IRS as-
sessed for that year the tax he reported as due. As of July 2017 petitioner’s
aggregate outstanding liability was $152,156.
In an effort to collect these unpaid liabilities the IRS sent petitioner, on July
13, 2017, a Notice of Federal Tax Lien Filing and Your Right to a Hearing. He
timely requested a CDP hearing, stating that he was unable to “pay this off.” He
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. -3-
[*3] checked the boxes marked “Installment Agreement,” “Offer In
Compromise,”2 and “I Cannot Pay Balance,” and he requested discharge of the
lien.3 He did not challenge the correctness of the assessed liabilities.
After receiving petitioner’s case a settlement officer (SO) from the IRS Ap-
peals Office reviewed his administrative file and confirmed that the tax liabilities
in question had been properly assessed and that all other requirements of appli-
cable law and administrative procedure had been met. On September 25, 2017, the
SO sent petitioner a letter scheduling a telephone CDP hearing for October 24,
2017. The SO informed petitioner that, in order for her to consider a collection
alternative, he needed to provide a completed Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, and copies of signed
tax returns for 2014 and 2015. Petitioner submitted none of these documents and
did not otherwise communicate with the SO before the hearing.
The SO conducted the CDP hearing on October 24 as scheduled. Petitioner
stated that he had previously submitted a Form 433-A to an IRS Service Center.
2 Petitioner stated that he had previously sent an “offer in compromise * * * to no avail.” The transcripts of his IRS account confirm the rejection of an offer- in-compromise for tax year 2013 on May 12, 2016. This was well before the filing of the NFTL at issue on June 28, 2017. 3 Petitioner also checked the box marked “Innocent Spouse Relief.” He later explained that he was seeking relief for his wife, who is not a party to this case. -4-
[*4] The SO checked the administrative record and confirmed that no Form 433-A
was on file; she asked him to supply a copy of the form he thought he had
submitted or to complete the blank Form 433-A she had mailed him earlier. She
reminded him that he also needed to send her copies of signed tax returns for 2014
and 2015 in order to be considered for a collection alternative.
Petitioner acknowledged these requirements and said that he would speak
with his accountant, complete the missing tax returns, and submit the Form 433-A.
The SO asked that he submit these documents by October 31, 2017. On October
30 petitioner contacted the SO and said he would mail the Form 433-A overnight,
which he did not do. More than six weeks later, having received none of the re-
quested information, the SO closed the case.
On January 26, 2018, the IRS issued petitioner a notice of determination
sustaining the NFTL filing, and he timely petitioned this Court.4 On December 19,
2018, respondent filed a motion for summary judgment, to which we directed peti-
tioner to respond. He filed no response.
4 Petitioner alleges in his petition that he had filed for bankruptcy under chapter 7 of the Bankruptcy Code, but he submitted no documentation suggesting that any bankruptcy case is pending now. His account transcripts do show a bankruptcy proceeding in 2015, but it was no longer pending as of August 25, 2015. The resolution of that bankruptcy case occurred well before the NFTL filing on June 28, 2017. -5-
[*5] Discussion
A. Summary Judgment Standard
The purpose of summary judgment is to expedite litigation and avoid costly,
unnecessary, and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). The Court 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. 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, by affidavit or otherwise, showing that there is a genuine dispute for trial.
Rule 121(d).
Because petitioner did not respond to the motion for summary judgment, we
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 no material
facts are in dispute and that this case is appropriate for summary adjudication.
B. Standard of Review
Neither section 6320(c) nor section 6330(d)(1) prescribes the standard of
review that this Court should apply in reviewing an IRS administrative determina- -6-
[*6] tion in a CDP case. The general parameters for such review are marked out
by our precedents. Where (as here) the underlying tax liability is not properly at
issue,5 the Court reviews the IRS decision for abuse of discretion. Goza v.
Commissioner, 114 T.C. 176, 182 (2000). 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).
C. Analysis
In deciding whether the SO abused her discretion in sustaining the collec-
tion action, we consider whether she: (1) properly verified that the requirements
of applicable law or administrative procedure have been met, (2) considered any
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T.C. Memo. 2019-22
UNITED STATES TAX COURT
MILTON E. MCMURTRY, JR., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4081-18L. Filed March 27, 2019.
Milton E. McMurtry, Jr., pro se.
Joseph E. Nagy and William Walter Kiessling, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to sections 6320(c) and 6330(d)(1) of the determination by
the Internal Revenue Service (IRS or respondent) to uphold the filing of a notice -2-
[*2] of Federal tax lien (NFTL).1 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 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 respondent’s
motion papers, including the attached declaration and exhibits. See Rule 121(b).
Petitioner resided in Arkansas when he filed his petition.
Petitioner filed Federal income tax returns for 2011 and 2013. For 2011 he
did not report all of his income; on the basis of third-party document matching, the
IRS assessed additional tax arising from the unreported income. For 2013 peti-
tioner did not pay the full amount of tax shown as due on his return; the IRS as-
sessed for that year the tax he reported as due. As of July 2017 petitioner’s
aggregate outstanding liability was $152,156.
In an effort to collect these unpaid liabilities the IRS sent petitioner, on July
13, 2017, a Notice of Federal Tax Lien Filing and Your Right to a Hearing. He
timely requested a CDP hearing, stating that he was unable to “pay this off.” He
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. -3-
[*3] checked the boxes marked “Installment Agreement,” “Offer In
Compromise,”2 and “I Cannot Pay Balance,” and he requested discharge of the
lien.3 He did not challenge the correctness of the assessed liabilities.
After receiving petitioner’s case a settlement officer (SO) from the IRS Ap-
peals Office reviewed his administrative file and confirmed that the tax liabilities
in question had been properly assessed and that all other requirements of appli-
cable law and administrative procedure had been met. On September 25, 2017, the
SO sent petitioner a letter scheduling a telephone CDP hearing for October 24,
2017. The SO informed petitioner that, in order for her to consider a collection
alternative, he needed to provide a completed Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals, and copies of signed
tax returns for 2014 and 2015. Petitioner submitted none of these documents and
did not otherwise communicate with the SO before the hearing.
The SO conducted the CDP hearing on October 24 as scheduled. Petitioner
stated that he had previously submitted a Form 433-A to an IRS Service Center.
2 Petitioner stated that he had previously sent an “offer in compromise * * * to no avail.” The transcripts of his IRS account confirm the rejection of an offer- in-compromise for tax year 2013 on May 12, 2016. This was well before the filing of the NFTL at issue on June 28, 2017. 3 Petitioner also checked the box marked “Innocent Spouse Relief.” He later explained that he was seeking relief for his wife, who is not a party to this case. -4-
[*4] The SO checked the administrative record and confirmed that no Form 433-A
was on file; she asked him to supply a copy of the form he thought he had
submitted or to complete the blank Form 433-A she had mailed him earlier. She
reminded him that he also needed to send her copies of signed tax returns for 2014
and 2015 in order to be considered for a collection alternative.
Petitioner acknowledged these requirements and said that he would speak
with his accountant, complete the missing tax returns, and submit the Form 433-A.
The SO asked that he submit these documents by October 31, 2017. On October
30 petitioner contacted the SO and said he would mail the Form 433-A overnight,
which he did not do. More than six weeks later, having received none of the re-
quested information, the SO closed the case.
On January 26, 2018, the IRS issued petitioner a notice of determination
sustaining the NFTL filing, and he timely petitioned this Court.4 On December 19,
2018, respondent filed a motion for summary judgment, to which we directed peti-
tioner to respond. He filed no response.
4 Petitioner alleges in his petition that he had filed for bankruptcy under chapter 7 of the Bankruptcy Code, but he submitted no documentation suggesting that any bankruptcy case is pending now. His account transcripts do show a bankruptcy proceeding in 2015, but it was no longer pending as of August 25, 2015. The resolution of that bankruptcy case occurred well before the NFTL filing on June 28, 2017. -5-
[*5] Discussion
A. Summary Judgment Standard
The purpose of summary judgment is to expedite litigation and avoid costly,
unnecessary, and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). The Court 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. 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, by affidavit or otherwise, showing that there is a genuine dispute for trial.
Rule 121(d).
Because petitioner did not respond to the motion for summary judgment, we
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 no material
facts are in dispute and that this case is appropriate for summary adjudication.
B. Standard of Review
Neither section 6320(c) nor section 6330(d)(1) prescribes the standard of
review that this Court should apply in reviewing an IRS administrative determina- -6-
[*6] tion in a CDP case. The general parameters for such review are marked out
by our precedents. Where (as here) the underlying tax liability is not properly at
issue,5 the Court reviews the IRS decision for abuse of discretion. Goza v.
Commissioner, 114 T.C. 176, 182 (2000). 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).
C. Analysis
In deciding whether the SO abused her discretion in sustaining the collec-
tion action, we consider whether she: (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 col-
lection action balances the need for the efficient collection of taxes with the legit-
imate concern of * * * [petitioner] that any collection action be no more intrusive
than necessary.” See sec. 6330(c)(3). Our review of the record establishes that the
SO properly discharged all of her responsibilities under section 6330(c).
5 Petitioner did not dispute his underlying liabilities at the CDP hearing and is thus precluded from challenging them here. 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. 301.6320-1(f)(2), Q&A-F3, Proced. & Admin. Regs. -7-
[*7] In his CDP hearing request petitioner checked the box marked “I Cannot
Pay Balance” and requested lien discharge. During the hearing the SO outlined
the documentation petitioner needed to submit to enable her to consider a collec-
tion alternative. To assist him in this endeavor she mailed blank IRS forms for
him to complete.
The SO gave petitioner ample time to submit the required documentation.
Cf. Szekely v. Commissioner, T.C. Memo. 2013-227, 106 T.C.M. (CCH) 375,
377. She informed him on September 25, a month before the hearing, of the need
to supply these documents. During the hearing she extended that deadline by
another week, to October 31. Petitioner contacted her by phone on October 30 and
stated that he would send her the Form 433-A by overnight mail, but he failed to
do this. The SO waited almost three months before closing the case and issuing
the notice of determination on January 26, 2018.
We have consistently held that it is not an abuse of discretion for an Ap-
peals officer to reject collection alternatives and sustain collection action where
the taxpayer has failed, after being given sufficient opportunities, to supply the re-
quired forms and supporting financial information. See Huntress v. Commission-
er, T.C. Memo. 2009-161; Prater v. Commissioner, T.C. Memo. 2007-241; Roman
v. Commissioner, T.C. Memo. 2004-20. We have likewise held that it is not an -8-
[*8] abuse of discretion for an Appeals officer to reject a collection alternative
where the taxpayer is not in compliance with his ongoing tax obligations, as
petitioner was not for his 2014 and 2015 tax years. See Hull v. Commissioner,
T.C. Memo. 2015-86, 109 T.C.M. (CCH) 1438, 1441; Internal Revenue Manual
pt. 5.14.1.4.2 (18) (Sept. 19, 2014).
Finding no abuse of discretion in any respect, we will grant summary judg-
ment for respondent and sustain the collection action. We note that petitioner is
free to submit to the IRS at any time, for its consideration and possible acceptance,
a collection alternative in the form of an offer-in-compromise or an installment
agreement, supported by the necessary financial information.
To reflect the foregoing,
An appropriate order and decision
will be entered.