Specialty Staff, Inc. v. Comm'r ( 2012 )

T.C. Memo. 2012-253
UNITED STATES TAX COURT
SPECIALTY STAFF, INC., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 5216-11L, 5218-11L. Filed September 4, 2012.
Terrie A. Hellman (an officer), for petitioner.
Diane L. Worland, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
RUWE, Judge: This proceeding was commenced in response to two Notices
of Determination Concerning Collection Action(s) Under Section 63201
1
All section references are to the Internal Revenue Code, and all Rule
references are to the Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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[*2] and/or 6330. The case at docket No. 5216-11L arises from a petition filed in
response to a notice of determination sent to petitioner sustaining the proposed levy
with respect to its unpaid employment tax liability of $74,190.87 for the period
ending June 30, 2010. The case at docket No. 5218-11L arises from a petition filed
in response to a notice of determination sent to petitioner sustaining the filing of the
notice of Federal tax lien (NFTL) for its unpaid employment tax liabilities of
$148,827.56 and $64,502.11 for the periods ending March 31, 2009 and 2010,
respectively, and its unpaid unemployment tax liability of $7,925.37 for the period
ending December 31, 2009. The cases were consolidated for trial, briefing, and
opinion.
The issue for decision is whether the settlement officer abused her discretion
in rejecting petitioner’s requests to withdraw the lien and the proposed levy.
FINDINGS OF FACT
At the time the petitions were filed, petitioner had an Indiana mailing address.
Petitioner’s address was subsequently changed to a Nevada address.
On August 26, 2010, respondent sent petitioner a Letter 3172, Notice of
Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, advising
petitioner that an NFTL had been filed with respect to its unpaid employment and
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[*3] unemployment tax liabilities for the periods at issue and that petitioner could
request a hearing with respondent’s Office of Appeals. Petitioner timely submitted
a Form 12153, Request for a Collection Due Process or Equivalent Hearing, in
which it did not contest the underlying liabilities but instead requested that
respondent withdraw or discharge the NFTL.
On October 12, 2010, respondent sent petitioner a Letter 1058, Final Notice
of Intent to Levy and Notice of Your Right to a Hearing, advising petitioner that
respondent intended to levy to collect its unpaid employment tax liability for the
period ending June 30, 2010, and that petitioner could request a hearing with
respondent’s Office of Appeals.2 Petitioner timely submitted a Form 12153 in
which it did not contest the underlying liability but instead requested that respondent
refrain from making the proposed levy.
During the collection due process (CDP) hearings for the lien and the
proposed levy, the settlement officer advised petitioner’s president, Terrie Hellman,
that petitioner did not qualify for a discharge of the lien or withdrawal of the lien
and levy because it was not in compliance with deposit requirements and
2
Respondent also filed an NFTL and levied against petitioner for its unpaid
employment tax liability for the period ending September 30, 2010. Specialty Staff,
Inc. v. Commissioner, T.C. Memo. 2012-52, 2012 Tax Ct. Memo LEXIS 52, at *1-
*2.
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[*4] continued to accrue tax liabilities for each quarter. The settlement officer
reviewed respondent’s records and verified that for every quarter commencing with
the fourth quarter of 2007 through the fourth quarter of 2010, petitioner had not
made timely and adequate deposits of employment tax for the wages it reported as
paid on its Forms 941, Employer’s Quarterly Federal Tax Return. Additionally, the
settlement officer verified that petitioner had not made timely and adequate deposits
of unemployment tax it reported on its Forms 940, Employer’s Annual Federal
Unemployment (FUTA) Tax Return, for the periods ending December 31, 2008,
2009, and 2010.
On February 1, 2011, respondent issued petitioner a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the
proposed levy action. On February 1, 2011, respondent also issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320 and/or 6330
sustaining the filing of the NFTL. Petitioner timely filed petitions with this Court.
OPINION
Section 6331(a) provides that if any person liable to pay any tax neglects or
refuses to pay such tax within 10 days after notice and demand for payment, then
the Secretary is authorized to collect such tax by levy upon the person’s property.
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[*5] Section 6331(d) provides that, at least 30 days before enforcing collection by
way of a levy on the person’s property, the Secretary is obliged to provide the
person with a final notice of intent to levy, including notice of the administrative
appeals available to the person.
Section 6321 provides that, if any person liable to pay any tax neglects or
refuses to do so after demand, the amount shall be a lien in favor of the United
States upon all property and rights to property, whether real or personal, belonging
to such person. Section 6323 authorizes the Commissioner to file an NFTL.
Pursuant to section 6320(a) the Commissioner must provide the taxpayer with notice
of and an opportunity for an administrative review of the propriety of the NFTL
filing. See Katz v. Commissioner, 115 T.C. 329, 333 (2000).
If a taxpayer requests a CDP hearing in response to an NFTL or a notice of
intent to levy, it may raise at that hearing any relevant issue relating to the unpaid
tax, proposed levy, or lien. Secs. 6330(c)(2), 6320(c). Relevant issues include
challenges to the appropriateness of collection actions. Sec. 6330(c)(2)(A)(ii).
If a taxpayer’s underlying liability is properly at issue, the Court reviews
any determination regarding the underlying liability de novo. Goza v.
Commissioner, 114 T.C. 176, 181-182 (2000). Petitioner has the burden of proof
regarding its underlying liabilities. See Rule 142(a). A taxpayer is precluded
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[*6] from disputing the underlying liability if it was not properly raised in the CDP
hearing. See Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). Petitioner did
not raise its underlying tax liabilities in its requests for a CDP hearing. Petitioner
made no specific allegations or arguments regarding the correctness of the
underlying tax liabilities. Consequently, petitioner’s underlying tax liabilities are not
properly before the Court.
The Court reviews administrative determinations by the Commissioner’s
Office of Appeals regarding nonliability issues for abuse of discretion. Hoyle v.
Commissioner, 131 T.C. 197, 200 (2008); Goza v. Commissioner, 114 T.C. 182.
The determination of the Office of Appeals must take into consideration: (1) the
verification that the requirements of applicable law and administrative procedure
have been met; (2) issues raised by the taxpayer; and (3) whether any proposed
collection action balances the need for the efficient collection of taxes with the
legitimate concern of the person that any collection be no more intrusive than
necessary. Secs. 6330(c)(3), 6320(c); see Lunsford v. Commissioner, 117 T.C.
183, 184 (2001). The settlement officer properly based her determinations on the
factors required by section 6330(c)(3).
Petitioner contends that respondent’s settlement officer abused her
discretion in denying its requests for withdrawal of the lien and the proposed levy
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[*7] because withdrawal would have facilitated collection of petitioner’s liabilities
by allowing petitioner access to a potential line of credit. The settlement officer
considered petitioner’s continuous failure to comply with its deposit requirements
and its continuing accrual of significant unpaid employment and unemployment tax
liabilities and determined that withdrawal of the lien or proposed levy would be
inappropriate. This Court has previously held that a taxpayer’s history of
noncompliance, as well as its failure to be in current compliance with its Federal
income tax obligations, is a valid basis for the Commissioner’s rejection of a
collection alternative.3 See Martino v. Commissioner, T.C. Memo. 2009-43, 2009
Tax Ct. Memo LEXIS 44, at *12-*13; Londono v. Commissioner, T.C. Memo.
2003-99, 2003 Tax Ct. Memo LEXIS 100, at *7. Therefore, we find that the
settlement officer did not abuse her discretion in denying petitioner’s requests for
withdrawal of the lien and the proposed levy.
We hold that the determinations to proceed with collection were not an abuse
of the settlement officer’s discretion. We sustain respondent’s filing of the tax lien
and respondent’s intent to levy on petitioner’s property.
3
In Specialty Staff, Inc. v. Commissioner, T.C. Memo. 2012-52, we held that
there was not an abuse of discretion when the settlement officer declined to
withdraw a lien and a proposed levy because petitioner at that time was also not
current on its deposit requirements and continued to accrue significant unpaid
employment tax liabilities.
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[*8] In reaching our decision, we have considered all arguments made by the
parties, and to the extent not mentioned or addressed, they are irrelevant or without
merit.
To reflect the foregoing,
Decisions will be entered for
respondent.