T.C. Memo. 2019-7
UNITED STATES TAX COURT
STEVEN SAMANIEGO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18890-17L. Filed February 6, 2019.
Steven Samaniego, pro se.
Andrea M. Faldermeyer and Katherine Holmes Ankeny, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to section 6330(d)(1)1 of the determination by the Internal
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. -2-
[*2] Revenue Service (IRS or respondent) to uphold a notice of intent to levy. The
IRS initiated the collection action with respect to petitioner’s Federal income tax
liabilities for 2012 and 2013. 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 proposed 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 motion papers,
including the attached declarations and exhibits. See Rule 121(b). Petitioner, who
resided in California when he filed his petition, filed Federal income tax returns
for 2012 and 2013 but did not pay the tax shown as due. Nor did he pay the tax
after receiving an IRS notice and demand for payment. As of March 2016, his ag-
gregate outstanding liability for those two years was $39,021.
Apart from his 2012-2013 liabilities, petitioner had outstanding tax liabili-
ties for 2007-2010. He had earlier requested an installment agreement for all open
years but had submitted an incomplete Form 433-A, Collection Information State-
ment for Wage Earners and Self-Employed Individuals. The IRS had informed
him that the form was incomplete, noting that he lived in a community property
State but had neglected to include any financial information relating to his wife. -3-
[*3] The IRS had accordingly rejected that earlier proposed installment
agreement.2
On March 24, 2016, in an effort to collect petitioner’s unpaid liabilities for
2012 and 2013, the IRS issued him a Letter 1058, Final Notice of Intent to Levy
and Notice of Your Right to a Hearing. This notice informed petitioner that if he
wished to request a CDP hearing he needed to complete and submit within 30 days
a Form 12153, Request for a Collection Due Process or Equivalent Hearing.
Petitioner completed the Form 12153 and faxed it to the IRS on April 25,
2016. In his hearing request he checked the box for “Installment Agreement” and
stated that he “d[id] not have the ability to pay in full.” He did not indicate an in-
tention to challenge his reported liability for either year in question.
After receiving petitioner’s case a settlement officer (SO) from the Los
Angeles, California, Appeals Office confirmed that the liabilities in question had
been properly assessed and that all other requirements of applicable law and ad-
ministrative procedure had been met. The SO believed that petitioner’s hearing
2 His wife’s income and assets were relevant because collection of a tax- payer’s liability “from the assets and income of * * * [his wife] is permitted under California community property law to the extent such assets and income are com- munity property.” Ranuio v. Commissioner, T.C. Memo. 2010-178, 100 T.C.M. (CCH) 123, 129. -4-
[*4] request was untimely and hence that he was not entitled to a CDP hearing.
The SO therefore offered him an “equivalent hearing.”3
On July 29, 2016, the SO sent petitioner a letter acknowledging receipt of
his hearing request and scheduling a telephone conference for August 29, 2016.
The SO informed petitioner that, if he wished to pursue an installment agreement,
he needed to submit a new Form 433-A with supporting financial information
covering his wife’s income and assets as well as his own. The SO also asked peti-
tioner to submit a copy of his wife’s individual income tax return for 2014. The
SO requested that petitioner submit all of these documents by August 15, 2016.
Petitioner submitted none of these documents and did not otherwise communicate
with the SO before the hearing.
The telephone conference was held as scheduled on August 29, 2016. Peti-
tioner stated that he wished to protest the IRS examination for 2007-2009, but the
SO explained that the notice of levy covered the 2012-2013 tax years only. The
SO expressed willingness to consider a collection alternative for 2012 and 2013
3 An equivalent hearing resembles a CDP hearing in that it is held with the IRS Appeals Office, the SO considers the same issues that would have been con- sidered at a CDP hearing, and the SO generally follows the same procedures. See Craig v. Commissioner, 119 T.C. 252, 258 (2002). The chief difference is that the SO’s decision following an equivalent hearing is embodied in a “decision letter” as opposed to a “notice of determination.” Ibid. -5-
[*5] but reminded petitioner that he needed to submit the requested financial
information, plus evidence that his wife had filed income tax returns for 2014 and
other years.
The SO agreed to extend to September 12, 2016, the deadline for submis-
sion of these documents and supporting financial information. Eleven months
later, having received none of the requested information, the SO decided to close
the case. The SO noted that petitioner had not filed an individual income tax re-
turn for 2015 and that his wife had not filed returns for 2013-2015.
On August 3, 2017, the IRS issued petitioner a decision letter sustaining the
levy, and he timely petitioned this Court for review. In his petition he alleged no
error by the IRS, other than in concluding that his CDP hearing request was un-
timely. On August 16, 2018, respondent filed a motion for summary judgment, to
which we directed petitioner to respond. He filed no response.4
4 Our order directing petitioner to respond was returned to the Court by the U.S. Postal Service as “addressee unknown” and “unable to forward.” Rule 21(b)(4) of this Court’s Rules requires that the Court “shall be promptly notified” by any party of a change of address. A form for that purpose appears in an appen- dix to the Rules. See Form 10, Notice of Change of Address. -6-
[*6] Discussion
A. Jurisdiction
A decision letter ordinarily does not constitute a “determination” within the
meaning of section 6330(d), and we normally lack jurisdiction to consider a tax-
payer’s challenge to the outcome of an equivalent hearing. See Kennedy v. Com-
missioner, 116 T.C. 255, 263 (2001). However, if the taxpayer has made a timely
request for a CDP hearing, and if the Appeals Office incorrectly offers the taxpay-
er an equivalent hearing instead, we have jurisdiction to consider a timely request
for review. Craig v. Commissioner, 119 T.C. 252, 259 (2002). In such circum-
stances, we treat “the ‘decision’ reflected in the decision letter * * * [as] a ‘deter-
mination’ for purposes of section 6330(d)(1).” Ibid.
The IRS issued the Letter 1058 on March 24, 2016. Petitioner was required
to submit his request for a CDP hearing within 30 days. See sec. 6330(a)(3)(B);
sec. 301.6330-1(b)(1), Proced. & Admin. Regs.
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T.C. Memo. 2019-7
UNITED STATES TAX COURT
STEVEN SAMANIEGO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18890-17L. Filed February 6, 2019.
Steven Samaniego, pro se.
Andrea M. Faldermeyer and Katherine Holmes Ankeny, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to section 6330(d)(1)1 of the determination by the Internal
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. -2-
[*2] Revenue Service (IRS or respondent) to uphold a notice of intent to levy. The
IRS initiated the collection action with respect to petitioner’s Federal income tax
liabilities for 2012 and 2013. 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 proposed 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 motion papers,
including the attached declarations and exhibits. See Rule 121(b). Petitioner, who
resided in California when he filed his petition, filed Federal income tax returns
for 2012 and 2013 but did not pay the tax shown as due. Nor did he pay the tax
after receiving an IRS notice and demand for payment. As of March 2016, his ag-
gregate outstanding liability for those two years was $39,021.
Apart from his 2012-2013 liabilities, petitioner had outstanding tax liabili-
ties for 2007-2010. He had earlier requested an installment agreement for all open
years but had submitted an incomplete Form 433-A, Collection Information State-
ment for Wage Earners and Self-Employed Individuals. The IRS had informed
him that the form was incomplete, noting that he lived in a community property
State but had neglected to include any financial information relating to his wife. -3-
[*3] The IRS had accordingly rejected that earlier proposed installment
agreement.2
On March 24, 2016, in an effort to collect petitioner’s unpaid liabilities for
2012 and 2013, the IRS issued him a Letter 1058, Final Notice of Intent to Levy
and Notice of Your Right to a Hearing. This notice informed petitioner that if he
wished to request a CDP hearing he needed to complete and submit within 30 days
a Form 12153, Request for a Collection Due Process or Equivalent Hearing.
Petitioner completed the Form 12153 and faxed it to the IRS on April 25,
2016. In his hearing request he checked the box for “Installment Agreement” and
stated that he “d[id] not have the ability to pay in full.” He did not indicate an in-
tention to challenge his reported liability for either year in question.
After receiving petitioner’s case a settlement officer (SO) from the Los
Angeles, California, Appeals Office confirmed that the liabilities in question had
been properly assessed and that all other requirements of applicable law and ad-
ministrative procedure had been met. The SO believed that petitioner’s hearing
2 His wife’s income and assets were relevant because collection of a tax- payer’s liability “from the assets and income of * * * [his wife] is permitted under California community property law to the extent such assets and income are com- munity property.” Ranuio v. Commissioner, T.C. Memo. 2010-178, 100 T.C.M. (CCH) 123, 129. -4-
[*4] request was untimely and hence that he was not entitled to a CDP hearing.
The SO therefore offered him an “equivalent hearing.”3
On July 29, 2016, the SO sent petitioner a letter acknowledging receipt of
his hearing request and scheduling a telephone conference for August 29, 2016.
The SO informed petitioner that, if he wished to pursue an installment agreement,
he needed to submit a new Form 433-A with supporting financial information
covering his wife’s income and assets as well as his own. The SO also asked peti-
tioner to submit a copy of his wife’s individual income tax return for 2014. The
SO requested that petitioner submit all of these documents by August 15, 2016.
Petitioner submitted none of these documents and did not otherwise communicate
with the SO before the hearing.
The telephone conference was held as scheduled on August 29, 2016. Peti-
tioner stated that he wished to protest the IRS examination for 2007-2009, but the
SO explained that the notice of levy covered the 2012-2013 tax years only. The
SO expressed willingness to consider a collection alternative for 2012 and 2013
3 An equivalent hearing resembles a CDP hearing in that it is held with the IRS Appeals Office, the SO considers the same issues that would have been con- sidered at a CDP hearing, and the SO generally follows the same procedures. See Craig v. Commissioner, 119 T.C. 252, 258 (2002). The chief difference is that the SO’s decision following an equivalent hearing is embodied in a “decision letter” as opposed to a “notice of determination.” Ibid. -5-
[*5] but reminded petitioner that he needed to submit the requested financial
information, plus evidence that his wife had filed income tax returns for 2014 and
other years.
The SO agreed to extend to September 12, 2016, the deadline for submis-
sion of these documents and supporting financial information. Eleven months
later, having received none of the requested information, the SO decided to close
the case. The SO noted that petitioner had not filed an individual income tax re-
turn for 2015 and that his wife had not filed returns for 2013-2015.
On August 3, 2017, the IRS issued petitioner a decision letter sustaining the
levy, and he timely petitioned this Court for review. In his petition he alleged no
error by the IRS, other than in concluding that his CDP hearing request was un-
timely. On August 16, 2018, respondent filed a motion for summary judgment, to
which we directed petitioner to respond. He filed no response.4
4 Our order directing petitioner to respond was returned to the Court by the U.S. Postal Service as “addressee unknown” and “unable to forward.” Rule 21(b)(4) of this Court’s Rules requires that the Court “shall be promptly notified” by any party of a change of address. A form for that purpose appears in an appen- dix to the Rules. See Form 10, Notice of Change of Address. -6-
[*6] Discussion
A. Jurisdiction
A decision letter ordinarily does not constitute a “determination” within the
meaning of section 6330(d), and we normally lack jurisdiction to consider a tax-
payer’s challenge to the outcome of an equivalent hearing. See Kennedy v. Com-
missioner, 116 T.C. 255, 263 (2001). However, if the taxpayer has made a timely
request for a CDP hearing, and if the Appeals Office incorrectly offers the taxpay-
er an equivalent hearing instead, we have jurisdiction to consider a timely request
for review. Craig v. Commissioner, 119 T.C. 252, 259 (2002). In such circum-
stances, we treat “the ‘decision’ reflected in the decision letter * * * [as] a ‘deter-
mination’ for purposes of section 6330(d)(1).” Ibid.
The IRS issued the Letter 1058 on March 24, 2016. Petitioner was required
to submit his request for a CDP hearing within 30 days. See sec. 6330(a)(3)(B);
sec. 301.6330-1(b)(1), Proced. & Admin. Regs. Because April 23, the 30th day
after the date on the notice, was a Saturday, the period for submitting the hearing
request was extended to the following Monday, April 25. See sec. 7503. Peti-
tioner’s request, which was received by the Appeals Office on April 25, was there-
fore timely. We conclude that the collection action reflected in the decision letter -7-
[*7] is a “determination” for purposes of section 6330(d) and that we have
jurisdiction to adjudicate this case. See Craig, 119 T.C. at 259.
B. 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). Under Rule 121(b), we 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. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),
aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judg-
ment, we construe factual materials and inferences drawn from them in the light
most favorable to the nonmoving party. Ibid. However, the nonmoving party may
not rest upon the mere allegations or denials in his pleadings but instead must set
forth specific facts showing that there is a genuine dispute for trial. Rule 121(d);
see Sundstrand Corp., 98 T.C. at 520.
Because petitioner did not respond to the motion for summary judgment, the
Court 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 there are
no material facts in dispute and that this case is appropriate for summary adjudica-
tion. -8-
[*8] C. Standard of Review
Where the validity of the taxpayer’s underlying tax liability is properly at
issue, we review the IRS’ determination de novo. Goza v. Commissioner, 114
T.C. 176, 181-182 (2000). Where (as here) the taxpayer’s underlying liability is
not before us, we review the IRS determination for abuse of discretion only. 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. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. 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).
D. Analysis
In deciding whether the SO abused his discretion in sustaining the proposed
levy we consider whether he: (1) properly verified that the requirements of appli-
cable law or administrative procedure have been met, (2) considered any relevant
issues petitioner raised, and (3) considered “whether any proposed collection ac-
tion balances the need for the efficient collection of taxes with the legitimate con-
cern of * * * [petitioner] that any collection action be no more intrusive than -9-
[*9] necessary.” Sec. 6330(c)(3). Our review of the record establishes that the SO
properly discharged all of his responsibilities under section 6330(c).
Taxpayers may raise at a CDP hearing relevant issues relating to the col-
lection action and are entitled to make offers of collection alternatives. See sec.
6330(c)(2). This right, however, carries with it certain obligations on the tax-
payer’s part. As provided in the regulations, “[t]axpayers will be expected to pro-
vide all relevant information requested by * * * [the Appeals officer], including
financial statements, for * * * [his] consideration of the facts and issues involved
in the hearing.” Sec. 301.6330-1(e)(1), Proced. & Admin. Regs.
In his hearing request petitioner indicated his desire for a collection alterna-
tive, specifically an installment agreement. Section 6159 authorizes the Commis-
sioner to enter into an installment agreement if he determines that it will facilitate
full or partial collection of a taxpayer’s unpaid liability. See Thompson, 140 T.C.
at 179. Subject to exceptions not relevant here, the decision to accept or reject an
installment agreement lies within the Commissioner’s discretion. See Rebuck v.
Commissioner, T.C. Memo. 2016-3; Kuretski v. Commissioner, T.C. Memo.
2012-262, aff’d, 755 F.3d 929 (D.C. Cir. 2014); sec. 301.6159-1(a), (c)(1)(i),
Proced. & Admin. Regs. In reviewing the SO’s determination, we do not inde-
pendently evaluate what would be an acceptable collection alternative. - 10 -
[*10] Thompson, 140 T.C. at 179; Lipson v. Commissioner, T.C. Memo. 2012-
252, 104 T.C.M. (CCH) 262, 264. Rather, our review is limited to determining
whether the SO abused his discretion; that is, whether his decision to reject the
taxpayers’ proposal was arbitrary, capricious, or without sound basis in fact or
law. Thompson, 140 T.C. at 179; Murphy, 125 T.C. at 320.
Although petitioner indicated a desire to enter into an installment agree-
ment, he did not provide the SO with any financial or other information that would
justify granting his request. The SO gave petitioner more than enough time to
submit the required documentation before closing the case. We have consistently
held that it is not an abuse of discretion for an Appeals officer to reject collection
alternatives and sustain collection action where the taxpayer has failed, after being
given sufficient opportunities, to supply the required forms and information. See
Huntress v. Commissioner, T.C. Memo. 2009-161, 98 T.C.M. (CCH) 8, 10-11;
Prater v. Commissioner, T.C. Memo. 2007-241, 94 T.C.M. (CCH) 209, 210;
Roman v. Commissioner, T.C. Memo. 2004-20, 87 T.C.M. (CCH) 835, 838.
In any event, IRS records show that petitioner was not current in his tax
filing obligation for the year 2015. The SO could properly have rejected any col-
lection alternative on this ground alone. See Cox v. Commissioner, 126 T.C. 237,
257-258 (2006), rev’d on other grounds, 514 F.3d 1119 (10th Cir. 2008); Hull v. - 11 -
[*11] Commissioner, T.C. Memo. 2015-86, 109 T.C.M. (CCH) 1438, 1441.
Finding no abuse of discretion in any respect, we will grant summary judgment for
respondent and sustain the proposed collection action.
To implement the foregoing,
An appropriate order and decision
will be entered for respondent.