Bujosa v. Comm'r , 2007 Tax Ct. Summary LEXIS 69 ( 2007 )

T.C. Summary Opinion 2007-64
UNITED STATES TAX COURT
ORLANDO BUJOSA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19816-03S. Filed April 26, 2007.
Ralph J. Pocaro, for petitioner.
Joseph J. Boylan, for respondent.
NIMS, Judge: This case was heard pursuant to the provisions
of section 7463 of the Internal Revenue Code in effect when the
petition was filed. 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. Unless
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otherwise indicated, all subsequent section references are to the
Internal Revenue Code as amended, and all Rule references are to
the Tax Court Rules of Practice and Procedure.
This case arises from a petition for judicial review filed
in response to a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (notice of
determination). The issues for decision are: (1) Whether
petitioner may challenge his underlying tax liabilities; (2) if
he may, whether remand to Appeals is necessary; and (3) if remand
is not necessary, whether respondent’s rejection of petitioner’s
offer-in-compromise constitutes an abuse of discretion.
Background
This case was submitted fully stipulated pursuant to Rule
122, and the facts as stipulated are so found. The stipulations
of the parties, with accompanying exhibits, are incorporated
herein by this reference. At the time he filed the petition,
petitioner resided in Linden, New Jersey.
Petitioner earned nonemployee compensation from L&P Trucking
in the amounts of $22,815 for 1987 and $20,830 for 1988, which
amounts were reported on Forms 1099-MISC, Miscellaneous Income.
In 1988 petitioner also received $2,341 in wages reported on Form
W-2, Wage and Tax Statement (Form W-2), from The Newark Group and
wages reported on Form W-2 in the amount of $45 from Beacon Hill
Club. However, petitioner failed to file income tax returns for
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taxable years 1987 and 1988. Respondent mailed statutory notices
of deficiency for 1987 and 1988 to petitioner at his last known
address on March 9, 1994. Petitioner did not request judicial
review of these deficiencies.
On February 5, 2002, respondent issued and mailed a Final
Notice - Notice of Intent to Levy and Notice of your Right to a
Hearing regarding taxable years 1987 and 1988 to petitioner.
This notice sought to collect taxes and additions to tax in the
amounts of $9,973.28 and $12,467.41, respectively, for 1987 and
$11,091.20 and $11,194.60, respectively, for 1988. Petitioner
timely requested a hearing regarding the proposed collection
action. Petitioner received a hearing consisting of telephone
conferences on November 25, 2002, and March 25, 2003. The
discussions primarily centered around an offer-in-compromise
(OIC), as the Appeals officer advised that petitioner’s
underlying tax liabilities would not be considered.
After several attempted submissions, on April 23, 2003,
petitioner finally made a complete and reviewable offer based on
doubt as to collectibility. The Appeals officer forwarded the
OIC to respondent’s offer specialist for consideration. The
offer specialist reviewed the offer and made repeated requests of
petitioner for additional information. Petitioner failed to
respond to any of the requests, so respondent’s offer specialist
returned the OIC to the Appeals officer. The Appeals officer
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subsequently made the determination that the proposed levy action
was appropriate for the taxable years 1987 and 1988, and a Notice
of Determination was issued.
Discussion
Before a levy may be made on any property or right to
property, a taxpayer is entitled to notice of the Commissioner’s
intent to levy and notice of the right to a fair hearing before
an impartial officer of the Internal Revenue Service (IRS)
Appeals Office. Secs. 6330(a) and (b), 6331(d). Taxpayers may
raise challenges to “the appropriateness of collection actions”
and may make “offers of collection alternatives, which may
include the posting of a bond, the substitution of other assets,
an installment agreement, or an offer-in-compromise.” Sec.
6330(c)(2)(A). The Appeals officer must consider those issues,
verify that the requirements of applicable law and administrative
procedures have been met, and consider “whether any proposed
collection action balances the need for the efficient collection
of taxes with the legitimate concern of the person [involved]
that any collection action be no more intrusive than necessary.”
Sec. 6330(c)(3)(C).
After the IRS Appeals hearing process, section 6330 gives
this Court jurisdiction to review the Appeals officer’s
determination. In an appeal to this Court pursuant to section
6330(d), a taxpayer may raise in his petition any issues that he
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raised at the Appeals hearing. See sec. 301.6330-1(f)(2), Q&A-
F5, Proced. & Admin. Regs. Where the underlying tax liability is
properly at issue, we review the Appeals determination with
respect to the existence and amount of tax liability de novo.
Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Commissioner, 114 T.C. 176, 181-182 (2000). When the underlying
tax liability is not properly at issue, we review the Appeals
officer’s determination using an abuse of discretion standard.
Id.
Underlying Tax Liability
First, we must decide whether petitioner’s underlying tax
liabilities are properly at issue. Petitioner’s petition raises,
and only raises, the issue of his underlying tax liabilities. In
addition to checking the “redetermination of deficiency box,” he
stated that he “was a truck driver in 1987-1988 and did not have
the income so as to owe these taxes.” In his request for a
hearing, he indicated on the Form 12153, Request for a Collection
Due Process Hearing, that he had filed his taxes every year and
was not aware of any deficiency. But, during the course of his
hearing and in response to his assertion on the Form 12153, the
Appeals officer told petitioner that his underlying tax
liabilities would not be considered, and the hearing proceeded
accordingly.
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A taxpayer may raise the issue of the underlying tax
liability only if he or she did not receive a statutory notice of
deficiency or did not otherwise have an opportunity to dispute
such tax liability. Sec. 6330(c)(2)(B). Actual receipt of the
notice of deficiency is required. Tatum v. Commissioner, T.C.
Memo. 2003-115. Generally, no challenge to the underlying tax
liability is allowed where there is evidence that a notice of
deficiency was mailed to the taxpayer and no factors are present
to rebut the presumption of delivery. See Sego v. Commissioner,
supra at 611. Where the taxpayer denies receipt of the notice of
deficiency and the Commissioner provides only a copy addressed to
the taxpayer and no evidence of its actual mailing, receipt for
purposes of section 6330(c)(2)(B) is not presumed. Calderone v.
Commissioner, T.C. Memo. 2004-240. In the present case,
petitioner asserted that he was not aware of any deficiency.
Respondent has offered only copies of the notices of deficiency
addressed to petitioner and concedes on brief that actual
delivery cannot be proven. Therefore, petitioner was entitled to
challenge his underlying tax liabilities in his hearing, and the
Appeals officer erred in not allowing petitioner’s arguments on
that issue.
Our de novo review of respondent’s determination with
respect to petitioner’s underlying tax liabilities permits us to
consider and resolve the issue. See Priestly v. Commissioner,
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T.C. Memo. 2003-267, affd. 125 Fed. Appx. 201 (9th Cir. 2005).
In the case before us, remand to Appeals for consideration of
petitioner’s tax liabilities would be neither necessary nor
productive. See Lunsford v. Commissioner, 117 T.C. 183, 189
(2001); Sapp v. Commissioner, T.C. Memo. 2006-104; Priestly v.
Commissioner, supra. Further, a remand to respondent’s Appeals
Office would, more likely than not, needlessly delay the
collection of petitioner’s tax liabilities plus related additions
to tax and interest, which, if the proper amounts have been
assessed, are already long overdue. Priestly v. Commissioner,
supra.
Upon examination of the record, we find that petitioner has
offered nothing to indicate that any adjustment to respondent’s
assessments for 1987 and 1988 is warranted. Petitioner
stipulated to the receipt of income from the multiple sources for
both taxable years at issue. Further, petitioner advanced
nothing but nebulous protests against the assessed tax
liabilities. His petition simply asserted that he “was a truck
driver in 1987-1988 and did not have the income so as to owe
these taxes.” His Form 12153 stated only that he had filed his
taxes every year, that he was not aware of the liabilities, that
he never owned a company, that he did not have any records
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reflecting the 15-year-old liabilities, and that he wanted to fix
the matter. Petitioner’s challenge lacks any substance, and the
underlying tax liabilities stand as assessed by respondent.
Levy Action
Having established that petitioner’s tax liabilities were as
determined by respondent under our de novo review standard, we
now review respondent’s determination to proceed with collection
under an abuse of discretion standard. Under this standard, a
determination will be affirmed unless action was taken that was
arbitrary or capricious, lacks sound basis in fact, or is not
justifiable in light of the facts and circumstances. Mailman v.
Commissioner, 91 T.C. 1079, 1084 (1988).
In the case before us, petitioner did not expressly
challenge the Appeals officer’s determination with respect to
collection, so we must first decide whether this determination is
even properly before the Court. In his petition, petitioner
checked the box for redetermination of a deficiency and
explicitly only raised the issue of his tax liabilities. While
Rule 331(b)(4) provides that any issue not raised in the petition
is deemed conceded, the circumstances in this case allow us to
consider the issue. Consideration of the issue is proper so long
as petitioner’s failure to provide notice to respondent did not
prejudice respondent. See Pagel, Inc. v. Commissioner, 91 T.C.
200, 212 (1988), affd. 905 F.2d 1190 (8th Cir. 1990); Martin v.
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Commissioner, T.C. Memo. 2003-288, affd. 436 F.3d 1216 (10th Cir.
2006). Here, the notice of determination concerning collection
action was attached to the petition. Respondent acknowledged on
brief that this was a “Petition for Lien or Levy Action under
Code Section 6320(c) or 6330(d).” Further, respondent
contemplated a challenge to the Appeals officer’s rejection of
petitioner’s OIC, which was the only subject of the hearing. So,
respondent cannot be considered surprised or prejudiced by the
Court’s consideration of this issue.
We must therefore decide whether respondent’s rejection of
petitioner’s offer-in-compromise was an abuse of discretion.
Section 7122 provides respondent with the authority to grant an
offer-in-compromise as an alternative to collection action.
Respondent grants an OIC when there is a doubt as to the actual
tax liability, doubt as to collectibility, or for other purposes
relating to effective tax administration. Sec. 301.7122-1,
Proced. & Admin. Regs.; 1 Administration, Internal Revenue Manual
(CCH), sec. 5.8.1.1.2, at 16,253.
Petitioner’s offer based on doubt as to collectibility was
taken under consideration by respondent’s offer specialist.
Doubt as to collectibility “exists in any case where the
taxpayer’s assets and income are less than the full amount of the
liability.” Sec. 301.7122-1(b)(2), Proced. & Admin. Regs.
Evaluation of an OIC based on doubt as to collectibility requires
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complete financial information from the taxpayer. Roman v.
Commissioner, T.C. Memo. 2004-20. Where the taxpayer fails to
provide the necessary information, rejection of the OIC does not
constitute an abuse of discretion. See id.; Willis v.
Commissioner, T.C. Memo. 2003-302. In this case, respondent’s
OIC specialist made, and petitioner failed to respond to,
repeated requests for additional information. Therefore, we hold
that there was no abuse of discretion in the rejection of
petitioner’s OIC. Respondent’s determination to proceed with
collection is upheld.
Decision will be entered
for respondent.