Dwight F. and Theresa S. Delano v. Commissioner , 2011 T.C. Summary Opinion 105 ( 2011 )

T.C. Summary Opinion 2011-105UNITED 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.
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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
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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.
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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.
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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
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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
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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
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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.