Louis A. and Christine Cox v. Commissioner , 126 T.C. No. 13 ( 2006 )

126 T.C. No. 13UNITED STATES TAX COURT
LOUIS A. AND CHRISTINE COX, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 21733-03L, 14693-04L. Filed May 3, 2006.
Ps’ 1999 and 2000 taxable years became the subject
of IRS collection activity through issuance of notices
of intent to levy. Appeals Officer S thereafter
conducted a simultaneous equivalent hearing with
respect to 1999 and collection hearing pursuant to sec.
6330, I.R.C., with respect to 2000. A principal focus
during that proceeding was the availability of
collection alternatives. The Appeals Office sustained
the proposed collection activity in November of 2003.
Meanwhile, Ps’ 2001 and 2002 taxable years had likewise
become the subject of a notice of intent to levy. Ps’
request for a hearing regarding these years was
assigned to S, who began his consideration thereof in
early 2004. Collection alternatives were again a
primary issue raised. Following a hearing with S, a
notice of determination sustaining the proposed levy
action was issued in July of 2004.
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Held: The administrative record and notices of
determination underlying these cases are sufficient to
support meaningful judicial review.
Held, further, the Appeals officer was not
disqualified from conducting the collection hearing for
2001 and 2002 on account of prior involvement within
the meaning of sec. 6330(b)(3), I.R.C., nor does the
record otherwise call into question his impartiality.
Held, further, because the record does not show any
abuse of discretion, R’s determinations to proceed with
collection action, except to the extent modified by
settlements between the parties, are sustained.
Theodore H. Merriam and Kevin A. Planegger, for petitioners.
Frederick J. Lockhart, Jr., for respondent.
OPINION
WHERRY, Judge: These consolidated cases arise from
petitions for judicial review filed in response to Notices of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330.1 The issue for decision is whether respondent may
proceed with collection of income tax liabilities for years 2000,
2001, and 2002.
1
Unless otherwise indicated, section references are to
the Internal Revenue Code of 1986, as amended, and Rule
references are to the Tax Court Rules of Practice and Procedure.
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Background
These cases were submitted fully stipulated pursuant to Rule
122. The stipulations of the parties, with accompanying
exhibits, are incorporated herein by this reference.
Petitioners are husband and wife. Petitioner Louis A. Cox
(Mr. Cox) is a consulting engineer and software developer.
Throughout the years in issue, he operated a sole proprietorship
providing engineering and software services under the name of Cox
Associates. In addition, in 2001 and 2002, Mr. Cox also provided
consulting services through Cox Associates, Inc., an S
corporation. Mr. Cox and petitioner Christine Cox (Mrs. Cox)
each held a 50-percent stock ownership interest in this
corporation. Generally, the corporation handled larger projects
involving subcontractors and/or government contracts. Smaller
projects were handled through the sole proprietorship. Mrs. Cox
provided accounting, bookkeeping, and administrative services for
the businesses.
Following an extension of time, petitioners timely filed a
joint Form 1040, U.S. Individual Income Tax Return, for 1999 in
October of 2000. They reported adjusted gross income of
$325,748, taxable income of $276,971, total tax of $101,094,
total payments of $1,000, and an amount owed (after an addition
of $4,222 from Form 2210, Underpayment of Estimated Tax by
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Individuals, Estates and Trusts) of $104,316. The return was not
accompanied by payment.
The Internal Revenue Service (IRS) assessed the reported
amounts for 1999, as well as further additions to tax and
interest, on November 11, 2000, and sent petitioners a notice of
balance due. Petitioners apparently entered into an installment
agreement in December of 2000 and made a number of payments, but
an assessed balance remained at the termination of the agreement.
On March 14, 2002, a Final Notice - Notice of Intent to Levy and
Notice of Your Right to a Hearing, was issued to petitioners for
1999.
Petitioners filed a joint Form 1040 for 2000 on April 12,
2002. They reported adjusted gross income of $442,932, taxable
income of $381,450, total tax of $145,393, no payments, and an
amount owed (with addition as in 1999) of $151,954. Again no
payment accompanied the return. Assessment of the reported
amounts, along with additions to tax and interest, was made on
May 20, 2002, and a notice of balance due was sent on that date.
On October 31, 2002, the IRS issued to petitioners a Final
Notice - Notice of Intent To Levy and Notice of Your Right to a
Hearing, with respect to their 2000 liability. On November 27,
2002, petitioners’ representative, Theodore H. Merriam
(Mr. Merriam) submitted to the IRS two Forms 12153, Request for a
Collection Due Process Hearing, one pertaining to 1999 and the
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other to 2000. With each he enclosed an attachment explaining
petitioners’ disagreement with the proposed levy. Cover
materials from Mr. Merriam communicated an understanding that the
Form 12153 for 1999 would be treated as a request for an
“equivalent” hearing. With respect to both years, petitioners
sought less intrusive methods of collection, “including but not
limited to * * * an installment agreement or an offer in
compromise”, and requested abatement of delinquency additions to
tax.
By a letter dated May 23, 2003, Bruce H. Skidmore
(Mr. Skidmore), the Appeals officer to whom petitioners’ case had
been assigned, scheduled a hearing for June 18, 2003, and
provided general information concerning the requisites for an
installment agreement or offer-in-compromise. The letter noted
that consideration of collection alternatives required taxpayers
to be in current compliance with filing and payment obligations
and to submit current financial information; i.e., Form 433-A,
Collection Information Statement for Wage Earners and Self-
Employed Individuals, and/or Form 433-B, Collection Information
Statement for Businesses. The hearing was twice rescheduled at
petitioners’ request, on grounds of needing more time to prepare
and submit returns for 2001 and 2002 and Forms 433-A and B. A
telephone conference was eventually set for August 12, 2003.
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Meanwhile, on July 24, 2003, petitioners filed a Form 1040
for 2001. The return reported adjusted gross income of $190,054,
taxable income of $104,746, total tax of $38,175, total payments
of $6,000, and an amount owed (after a $1,511 Form 2210 addition)
of $33,686. No payment was made with the return. Amounts due,
with further additions to tax and interest, were assessed on
September 8, 2003, at which time a notice of balance due was
sent.
The scheduled telephone conference for 1999 and 2000 was
conducted on August 12, 2003. The participants discussed the
changing nature of petitioners’ business and their financial
circumstances. To wit, Mr. Cox’s consulting endeavors had
previously focused on the telecommunications industry, where work
had since “dried up” due to the economic downturn. He was at
that time soliciting a more diversified clientele, but contracts
were smaller and income reduced. It was agreed that petitioners
would provide Forms 433 by the end of August for the
consideration of collection alternatives, and options discussed
included an offer-in-compromise or currently not collectible
status.
On August 28, 2003, Mr. Merriam telephoned Mr. Skidmore to
request 3 more weeks to submit financial information and to
communicate that petitioners’ 2002 Form 1040 had been mailed.
The return for 2002 was timely filed, pursuant to extensions,
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when it was received on August 29, 2003. The return reported
adjusted gross income of $464,889, taxable income of $423,722,
total tax of $146,460, total payments of $487, and an amount owed
(again including a $1,569 Form 2210 addition) of $147,542. No
payment was submitted with the return. Amounts due, with
additions to tax and interest, were assessed on October 6, 2003,
and a notice of balance due was sent.
On September 19, 2003, Kevin A. Planegger (Mr. Planegger),
another representative of petitioners’ employed at the same firm
as Mr. Merriam, sent two letters to Mr. Skidmore. One presented
explanation and reasoning with respect to petitioners’ request
that additions to tax for 2000 be abated. The other asked that
petitioners be granted a further extension to October 3, 2003, to
provide financial and collection information. Mr. Planegger also
called on October 1, 2003, and requested still more time.
Mr. Skidmore then sent a letter dated October 16, 2003,
setting a deadline of October 27, 2003, for “full and complete
financials” from petitioners and addressing the arguments that
petitioners had proffered concerning the additions to tax. On
October 27, 2003, Mr. Planegger sent to Mr. Skidmore a completed
Form 433-A for petitioners and Form 433-B for Cox Associates,
Inc., each signed on October 24, 2003, as well as a letter
discussing certain of the income and expense items reflected
thereon. The Form 433-A showed monthly income of $14,457 and
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expenses of $14,648. The expenses included housing and utility
costs of $7,081, attributable to multiple mortgages
overencumbering petitioners’ residence (valued at $900,000 in the
Form 433-A), and life insurance costs of $2,959. The cover
letter explained that the home secured indebtedness obtained to
finance petitioners’ business activities and that the life
insurance on Mr. Cox’s life was a condition for such financing.
The Form 433-B incorporated an attached profit and loss statement
for January through July of 2003 showing total income of $139,261
and expenses of $137,361.10, resulting in net income of
$1,899.90.
Mr. Skidmore reviewed the information submitted and
documented his analysis in extensive notes. By a letter dated
October 31, 2003, he communicated to petitioners his preliminary
conclusions and underlying concerns with respect to current
compliance, to claimed expenses and his inability to reconcile
amounts on the Forms 433 with bank and financial statements
provided, and to collection alternatives. Mr. Planegger spoke
with Mr. Skidmore by telephone on November 10, 2003, and
requested to have until the end of the month to prepare a
response to the letter. Mr. Skidmore indicated that with the
delays to date he was inclined to proceed but would look at
anything received while the case was still in his hands.
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Mr. Skidmore completed his consideration and calculated
monthly net income of $8,550 (total income of $14,457 less
allowable expenses of $5,907), for a collection potential from
petitioners’ future income over 60 months of $513,000, plus net
realizable equity in assets of $34,161. In this computation,
Mr. Skidmore allowed only standard housing expenses of $1,299 as
documentation relating to the $7,081 was unclear and the cost of
maintaining a home was not converted to a business expense merely
by use as security for alleged business loans. He also
disallowed the life insurance expenses as nothing showed that it
was not a personal asset benefiting petitioners and completely
under their control. Mr. Skidmore did not find that any
collection alternatives were appropriate on the record presented,
but he did conclude that the addition to tax for failure to file
timely for 1999 should be abated.
On November 17, 2003, petitioners sent a letter to
Mr. Skidmore responding to the conclusions in his October 31,
2003, letter. Therein they presented further argument regarding
compliance, housing expenses, and collection alternatives. They
emphasized their alleged efforts to return to compliance,
defended their housing costs or alternatively requested a year to
modify any expenses deemed excessive, and repeatedly advocated
for placement of their accounts in “currently uncollectible
status”, acknowledging that neither an installment agreement nor
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an offer-in-compromise was a viable option in their
circumstances.2
On November 25, 2003, the IRS issued to petitioners a
Decision Letter Concerning Equivalent Hearing Under Section 6320
and/or 6330 of the Internal Revenue Code with respect to 1999,
sustaining the proposed levy collection action but abating the
late filing addition. Likewise, also on November 25, 2003, a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 was issued to petitioners with respect
to 2000.3 The notice summarized the determination as follows:
2
It appears from the record that the Nov. 17, 2003, letter
may have been received by the IRS after Mr. Skidmore completed
his consideration of petitioners’ 1999 and 2000 case. However,
as indicated infra, the substance of the information therein was
fully considered by Mr. Skidmore in conjunction with his
subsequent review of petitioners’ 2001 and 2002 tax years and did
not alter (and thus would not as to 1999 and 2000 have altered)
his conclusions. Any timing issues are immaterial on these
facts.
3
It appears from the administrative file that the IRS
prepared two notices of determination dated Nov. 25, 2003, with
respect to petitioners’ 2000 tax year. The notices are identical
except for the certified mail numbers handwritten on the first
pages and the fact that one is signed by Appeals Team Manager
Marianne Hudson and the other is signed by Appeals Team Manager
Wesley D. Anderson. It is unclear if both were sent to
petitioners. Perhaps, despite being addressed to both
petitioners, one was intended for Mr. Cox and the other for
Mrs. Cox. In any event, petitioners attached the notice signed
by Marianne Hudson to their petition for 2000, and it is that
notice that the parties annexed to the stipulation of facts and
stipulated was the document upon which the case at docket No.
21733-03L was based. Consistent with the parties’ approach, the
Court will treat the stipulated notice as the operative document
for purposes of this proceeding and will disregard the possible
(continued...)
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Your lack of current tax compliance defeated the
finding of collection alternatives, and the financial
information you provided indicated an ability to make
significant payments on the outstanding tax, if not
fully pay it over the next few years. You did not
evidence that a levy would be overly intrusive. You
did not show reasonable cause for penalty abatement.
Petitioners filed a petition with this Court challenging the
November 25, 2003, determination on December 22, 2003, at which
time they resided in Denver, Colorado.
In the meantime, on October 20, 2003, the IRS had issued to
petitioners a Final Notice - Notice of Intent To Levy and Notice
of Your Right to a Hearing with respect to 2001 and 2002.
Petitioners timely submitted a Form 12153, received by the IRS on
November 19, 2003, in response to the notice of intent to levy.
An attachment explaining their disagreement essentially reprised
(almost verbatim) the points made in their November 17, 2003,
letter to Mr. Skidmore and focused on a request for placement of
their accounts in currently not collectible status.
This case was again assigned to Mr. Skidmore. By a letter
dated April 8, 2004, Mr. Skidmore offered a hearing to be held on
April 27, 2004. On April 20, 2004, petitioners’ representative
called and requested that Mr. Skidmore recuse himself and have a
different Appeals officer handle the 2001 and 2002 case on
account of Mr. Skidmore’s work on prior years. Upon review of
3
(...continued)
second copy.
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that request with a supervisor, it was determined that
reassignment was not required and would only create delay. Mr.
Skidmore contacted petitioners’ representative with the foregoing
information, and the two scheduled a telephonic hearing for May
19, 2004.
On May 19, 2004, Mr. Planegger called and, pursuant to his
request for more time to complete updated Forms 433-A and 433-B,
the hearing was rescheduled for June 8, 2004. In a followup
letter of the same date, Mr. Planegger confirmed the hearing
appointment and a June 4, 2004, deadline to submit updated
financial information. The letter also reiterated objection to
Mr. Skidmore’s consideration of the case. After two additional
requests from petitioners’ representative to postpone, the
hearing was reset for June 22, 2004, with the revised financial
data to be provided by June 18.
Under cover of a letter dated June 17, 2004, petitioners
sent a profit and loss statement for Cox Associates, Inc.,
showing a net loss of $12,996.81 during the January through April
2004 period, an income statement for Mr. Cox’s sole
proprietorship showing a net loss of $2,094 for the same period,
a purported “Personal Balance Sheet” for petitioners, and copies
of various bank statements. The letter stated that petitioners’
assets and liabilities had not changed since Forms 433-A and 433-
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B were submitted the previous year, and no revised forms were
provided.
Mr. Skidmore again documented his consideration of and
concerns with the information provided in extensive notes. He
noted the uncorroborated or unexplained nature of much of what
was supplied, an inability to reconcile various claimed figures
with the documentation, the high cashflow through and commingling
between bank accounts, the apparent failure to make lifestyle
changes to reduce expenses since requesting a year to do so in
November of 2003, and the seemingly continued problems with
filing and payment requirements. These concerns were discussed
at the ensuing hearing conducted on June 22, 2004.
On July 13, 2004, a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 was issued to
petitioners with respect to 2001 and 2002. The notice summarized
the determination: “The only issue you raised for consideration
was that you be found to be currently not collectible. The
financial information you provided did not establish that. There
were no procedural errors found, neither was it found that a levy
would be overly intrusive.” Petitioners’ petition challenging
this notice, having been timely mailed, was filed on August 16,
2004, at which time they continued to reside in Denver, Colorado.
Each petition raised a number of largely identical
assignments of error, disputing the conclusions in the
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determinations as to: (1) Intrusiveness of the proposed
collection actions; (2) current tax law compliance; (3) ability
to pay and interpretation of submitted financial information; (4)
availability of currently not collectible status for unpaid
liabilities; (5) abatement of delinquency additions to tax; and
(6) adequacy of the administrative record for judicial review.
With respect to the proceeding for 2001 and 2002, petitioners
also alleged that they were denied their right to a fair hearing
before an impartial Appeals officer with no prior involvement in
the case.
As previously indicated, these cases were submitted fully
stipulated. In conjunction with that submission, the parties
filed a stipulation of settled issues in which they agreed to
additions to tax under section 6651(a)(1) for taxable years 2000
and 2001 to the extent of 50 percent of the amounts assessed and
to abatement of the remaining 50 percent for each year.
Discussion
I. Collection Actions--General Rules
Section 6331(a) authorizes the Commissioner to levy upon all
property and rights to property of a taxpayer where there exists
a failure to pay any tax liability within 10 days after notice
and demand for payment. Sections 6331(d) and 6330 then set forth
procedures generally applicable to afford protections for
taxpayers in such levy situations. Section 6331(d) establishes
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the requirement that a person be provided with at least 30 days’
prior written notice of the Commissioner’s intent to levy before
collection may proceed. Section 6331(d) also indicates that this
notification should include a statement of available
administrative appeals. Section 6330(a) expands in several
respects upon the premise of section 6331(d), forbidding
collection by levy until the taxpayer has received notice of the
opportunity for administrative review of the matter in the form
of a hearing before the IRS Office of Appeals. Section 6330(b)
grants a taxpayer the right to a fair hearing before an impartial
Appeals officer upon request.
Section 6330(c) addresses the matters to be considered at
the hearing:
SEC. 6330(c). Matters Considered at Hearing.--In
the case of any hearing conducted under this section--
(1) Requirement of investigation.--The
appeals officer shall at the hearing obtain
verification from the Secretary that the
requirements of any applicable law or
administrative procedure have been met.
(2) Issues at hearing.--
(A) In general.--The person may raise at
the hearing any relevant issue relating to
the unpaid tax or the proposed levy,
including--
(i) appropriate spousal defenses;
(ii) challenges to the
appropriateness of collection actions;
and
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(iii) 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.
(B) Underlying liability.--The person
may also raise at the hearing challenges to
the existence or amount of the underlying tax
liability for any tax period if the person
did not receive any statutory notice of
deficiency for such tax liability or did not
otherwise have an opportunity to dispute such
tax liability.
Once the Appeals officer has issued a determination
regarding the disputed collection action, section 6330(d) allows
the taxpayer to seek judicial review in the Tax Court or a
District Court, depending upon the type of tax. In considering
whether taxpayers are entitled to any relief from the
Commissioner’s determination, this Court has established the
following standard of review:
where the validity of the underlying tax liability is
properly at issue, the Court will review the matter on
a de novo basis. However, 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).]
II. Analysis
A. Adequacy of the Administative Record and Notices of
Determination
Petitioners raise certain alleged procedural defects that
they argue preclude legitimate judicial review of the
administrative proceedings. The thrust of their argument appears
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to be that the absence of a more formal record of the hearing or
any significant administrative record, coupled with vague and
conclusory notices of determination, prevents meaningful review.
As this Court has noted on a number of occasions, hearings
conducted under sections 6320 and 6330 are informal proceedings,
not formal adjudications. Katz v. Commissioner, 115 T.C. 329,
337 (2000); Davis v. Commissioner, 115 T.C. 35, 41 (2000). There
inheres no right to subpoena witnesses or documents in connection
with these hearings. Roberts v. Commissioner, 118 T.C. 365, 372
(2002), affd. 329 F.3d 1224 (11th Cir. 2003); Nestor v.
Commissioner, 118 T.C. 162, 166-167 (2002); Davis v.
Commissioner, supra at 41-42. Taxpayers are entitled to be
offered a face-to-face hearing at the Appeals Office nearest
their residence. Where the taxpayer declines to participate in a
proffered face-to-face hearing, hearings may also be conducted by
telephone or correspondence. Katz v. Commissioner, supra at 337-
338; Dorra v. Commissioner, T.C. Memo. 2004-16; sec. 301.6330-
1(d)(2), Q&A-D6 and D7, Proced. & Admin. Regs. Furthermore, once
a taxpayer has been given a reasonable opportunity for a hearing
but has failed to avail himself or herself of that opportunity,
we have approved the making of a determination to proceed with
collection based on the Appeals officer’s review of the case
file. See, e.g., Taylor v. Commissioner, T.C. Memo. 2004-25,
affd. 130 Fed. Appx. 934 (9th Cir. 2005); Leineweber v.
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Commissioner, T.C. Memo. 2004-17; Armstrong v. Commissioner, T.C.
Memo. 2002-224; Gougler v. Commissioner, T.C. Memo. 2002-185;
Mann v. Commissioner, T.C. Memo. 2002-48.
The Court has also ruled that taxpayers are entitled,
pursuant to a request made under section 7521(a)(1), to audio
record section 6330 hearings. Keene v. Commissioner, 121 T.C. 8,
19 (2003). Nonetheless, we have never held or implied that any
particular type of record is a necessary prerequisite for
meaningful review. Rather, our precedent and the administrative
records underlying each of those proceedings counsel that a broad
continuum exists in terms of the evidence we have found
sufficient to support judicial consideration.
Furthermore, precedent from other courts speaks with like
import. The Court of Appeals for the Sixth Circuit dealt with
this issue at some length in Living Care Alternatives of Utica,
Inc. v. United States, 411 F.3d 621 (6th Cir. 2005).
Acknowledging that the record in collection cases is in many
instances “surprisingly scant”, the court nonetheless went on to
explain: “No transcript or official record of the hearing is
required and, accordingly, one rarely exists.” Id. at 625.
The Courts of Appeals for the First and Eighth Circuits have also
generally endorsed this view. Robinette v. Commissioner, 439
F.3d 455, 459, 461-462 (8th Cir. 2006), revg. on other grounds
123 T.C. 85 (2004); Olsen v. United States, 414 F.3d 144, 150-151
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(1st Cir. 2005). Petitioners look to Mesa Oil, Inc. v. United
States, 86 AFTR 2d 2000-7312, at 2000-7317, 2001-1 USTC par.
50,130, at 87,101 (D. Colo. 2000), for support, but even the
District Court in that case stated:
The government is correct that these rulings and
provisions support the informal nature of the hearing.
Yet informality does not completely obviate the need
for a record of some sort. While a full stenographic
record is not required, there must be enough
information contained in the documentation created by
the IRS for a court to draw conclusions about statutory
compliance and whether the AO abused his or her
discretion. * * *
Here, the parties have stipulated and included in the record
the full Appeals Office administrative file, including the
collection function investigative file incorporated therein, for
each of the years in issue. These materials contain extensive
contemporaneous notes by IRS personnel as well as the
correspondence between the parties. Mr. Skidmore’s notes of what
transpired at the section 6330 hearings are a notable feature of
this compendium. Taken together, the assemblage provides a
singularly clear portrayal of administrative developments as they
occurred. In addition, petitioners do not contend ever to have
made a request under section 7521 to record the hearing. On the
facts of these cases, the Court is satisfied that the
administrative record is adequate for proper judicial review.
See Living Care Alternatives of Utica, Inc. v. United States,
supra at 629-630 (distinguishing Mesa Oil, Inc. v. United States,
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supra); Olsen v. United States, supra at 155-156 (concluding that
an administrative record containing an offer-in-compromise, the
Appeals officer’s communications and the taxpayer’s responses,
and the Appeals officer’s conclusions was sufficient); see also
Robinette v. Commissioner, supra at 461-462 (agreeing with Olsen
v. United States, supra).
A similar conclusion is warranted with respect to
petitioners’ related assertion that the notices of determination
are too vague and conclusory to comport with, and to facilitate
judicial review consistent with, due process. Petitioners
complain that the notices lack a cogent explanation of the
Appeals officer’s analysis showing how he considered and weighed
all of the evidence and issues raised by petitioners.
Section 6330(c)(3) provides that a determination for
purposes of the statute must take into account: (1) Verification
that requirements of applicable law and procedure have been met;
(2) issues raised by the taxpayer at the hearing; and (3) whether
the proposed collection action balances the need for efficient
collection with concern that collection be no more intrusive than
necessary. Regulations elaborate as follows:
The Notice of Determination will set forth Appeals’
findings and decisions. It will state whether the IRS
met the requirements of any applicable law or
administrative procedure; it will resolve any issues
appropriately raised by the taxpayer relating to the
unpaid tax; it will include a decision on any
appropriate spousal defenses raised by the taxpayer; it
will include a decision on any challenges made by the
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taxpayer to the appropriateness of the collection
action; it will respond to any offers by the taxpayer
for collection alternatives; and it will address
whether the proposed collection action represents a
balance between the need for the efficient collection
of taxes and the legitimate concern of the taxpayer
that any collection action be no more intrusive than
necessary. The Notice of Determination will also set
forth any agreements that Appeals reached with the
taxpayer, any relief given the taxpayer, and any
actions the taxpayer or the IRS are required to take.
Lastly, the Notice of Determination will advise the
taxpayer of the taxpayer’s right to seek judicial
review within 30 days of the date of the Notice of
Determination. [Sec. 301.6330-1(e)(3), A-E8(i),
Proced. & Admin. Regs.]
The notices of determination precipitating these cases
expressly address verification of legal and procedural
requirements, issues raised, and balancing of efficiency and
intrusion. While petitioners would apparently like to see even
greater detail, the discussions provided as to each of the
foregoing components are sufficient to enable the Court to follow
the Appeals officer’s reasoning and conclusions. Furthermore,
the Court is mindful that a notice of determination, as a single,
relatively succinct document following an often lengthy
administrative process, must necessarily be to some degree
summary in nature.
For example, petitioners direct our attention to the fact
that they offered collection alternatives, including an offer-in-
compromise and currently not collectible status, and argue that
Mr. Skidmore failed adequately to address these issues in the
notices of determination. They emphasize that the November 25,
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2003, notice does not mention currently not collectible status.
However, both notices discuss collection alternatives and
highlight specific reasons why these were rejected. Although the
November 25, 2003, notice does not use the words “currently not
collectible status”, it enumerates particular problems with
respect to petitioners’ ability to qualify for “an Offer in
Compromise or other collection alternative”, and the grounds
listed are patently relevant to evaluation of currently not
collectible status. In point of fact, the majority of
petitioners’ complaints about the notices would seem to relate
more to the possibility of an abuse of discretion, and hence will
be dealt with infra, than to the legal sufficiency of the
documents.
The Court concludes that both the administrative record and
the notices of determination are sufficient to support judicial
review.4
4
We note that we do not decide or reconsider whether we are
limited to the administrative record in conducting our review, as
that is not at issue in these cases.
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B. Impartiality of the Appeals Officer
Petitioners have, throughout the administrative and
litigation process, consistently objected to the consideration of
their 2001 and 2002 years by Mr. Skidmore on grounds of prior
involvement. Section 6330(b)(3) subsumes in the statutory right
to a fair hearing the requirement of an impartial officer: “The
hearing under this subsection shall be conducted by an officer or
employee who has had no prior involvement with respect to the
unpaid tax specified in subsection (a)(3)(A) before the first
hearing under this section or section 6320. A taxpayer may waive
the requirement of this paragraph.” Petitioners’ position is
that Mr. Skidmore’s looking into their 2001 and 2002 liabilities
in connection with his handling of the 1999 and 2000 years
constitutes disqualifying prior involvement. They also allege
more generally that prejudice engendered by his prior dealings
with them prevented Mr. Skidmore from taking an unbiased look at
their 2001 and 2002 years.
With respect to the key phrase “prior involvement”,
regulations amplify the statutory language as set forth below:
Q-D4. What is considered to be prior involvement
by an employee or officer of Appeals with respect to
the tax and tax period or periods involved in the
hearing?
A-D4. Prior involvement by an employee or officer
of Appeals includes participation or involvement in an
Appeals hearing (other than a CDP hearing held under
either section 6320 or section 6330) that the taxpayer
may have had with respect to the tax and tax periods
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shown on the CDP Notice. [Sec. 301.6330-1(d)(2), Q&A-
D4, Proced. & Admin. Regs.]
Hence, both the statutory and the regulatory language
suggest a relatively permissive standard under which
participation in earlier collection proceedings would not
constitute disqualifying prior involvement for purposes of
section 6320 or 6330. Legislative history is supportive of such
a construction, providing:
The conferees anticipate that the IRS will combine
Notice of Intent to Levy and Notice of Lien hearings
whenever possible. If multiple hearings are held, it
is expected that, to the extent practicable, the same
appellate officer will hear the taxpayer with regard to
both lien and levy issues. If the taxpayer requests a
hearing following receipt of a Notice of Lien or Notice
of Intent to Levy and, prior to the date of the
hearing, receives the other notice, the scheduled
hearing will serve for both purposes and the taxpayer
is obligated to raise all relevant issues at such
hearing. [H. Conf. Rept. 105-599, at 266 (1998), 1998-
3 C.B. 747, 1020.]
Thus, given the above authorities, there can be little doubt that
some form of exception to the bar on prior involvement is
countenanced and intended for participation in earlier collection
proceedings. However, by their terms, the foregoing appear to be
directed toward multiple proceedings where the same year or years
are specifically the subject of the collection actions. Proper
application to proceedings where different tax periods are in
issue is less explicit.
Caselaw, too, offers only limited guidance. This Court has
characterized the policy of the bar as follows: “The
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impartiality requirement ensures that a hearing officer has had
no prior involvement in the determination and assessment of the
underlying tax liability that is the subject of the hearing.”
Criner v. Commissioner, T.C. Memo. 2003-328. Our dispositions to
date have relied principally on the fact that the Appeals
employee personally “did not participate in, and was not involved
in, any previous Appeals Office hearing” concerning the tax
periods that were the subject of those cases. Day v.
Commissioner, T.C. Memo. 2004-30; Harrell v. Commissioner, T.C.
Memo. 2003-271. Our cases have not explored the contours of the
exception for prior involvement in earlier section 6320 or 6330
proceedings.
Nor is jurisprudence from other courts particularly
enlightening. Few cases seem to address the meaning of prior
involvement, much less in the context in which it is framed here.
Moreover, some of what little exists is at least arguably more
restrictive than the statute itself and, accordingly, offers
minimal assistance. For example, in Cox v. United States, 345 F.
Supp. 2d 1218, 1224 (W.D. Okla. 2004), the District Court
remanded a case to Appeals on unrelated procedural grounds with
the following instruction: “The court finds that, at least in
the circumstances presented here, the statute’s requirement that
the presiding officer must have had no prior involvement with the
unpaid tax disqualifies the original appeals officer from re-
- 26 -
hearing the matter.” The court does not mention the statutory
exception for an Appeals officer’s involvement in other section
6320 or 6330 proceedings concerning a taxpayer. Mesa Oil, Inc.
v. United States, 86 AFTR at 2000-7316 to 7317, 2001-1 USTC par.
50,130 at 87,100 to 87,101, can be read to imply that even
reviewing the IRS administrative file before contacting the
taxpayer for a hearing might constitute disqualifying prior
involvement. Yet any such prohibition would seem to infringe
upon realities of the administrative process and possibly even
other requirements of the statute itself; e.g., those pertaining
to verification.
Against this backdrop, the Court cannot conclude that the
situation now before us represents the type of harm that the
restriction on prior involvement was intended to prevent. Two
potential rationales, both drawn from the language of the statute
and regulations, lead to this result. First, as a technical
matter, the subsequent years have never been the subject of;
i.e., been directly in dispute in, a proceeding before the IRS.
To the extent that there has never technically been a proceeding
concerning the later years, a fortiori there cannot have been
disqualifying involvement in a proceeding by IRS personnel. The
regulatory definition in particular, phrased in terms of an
earlier “Appeals hearing * * * with respect to the tax and tax
periods”, suggests that prior involvement contemplates a
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situation where the specific year or years were the explicit
target of an administrative proceeding. See sec. 301.6330-
1(d)(2), A-D4, Proced. & Admin. Regs. Stated otherwise, the
regulations indicate that prior involvement as used in the
section 6330 context does not arise where consideration of later
years was peripheral to a proceeding the subject of which was an
earlier year or years.
Second, from a practical standpoint, the law clearly permits
multiple collection hearings with respect to a given period to be
conducted by the same Appeals officer when that period is, for
example, the subject of multiple notices under section 6320
and/or 6330. Logically, then, it is difficult to argue that an
appreciably greater or different harm could ensue where a period
is first considered informally in the course of one collection
proceeding initiated regarding another period and then becomes
the direct subject of a subsequent proceeding. It would make
little substantive sense to have operation of the exception turn
on mere coincidences of timing in the issuance of the various
actionable notices.
In addition, given the practical realities that collection
problems often develop or continue serially over a number of
years and that many Appeals Offices are small with limited staff,
a construction that could progressively disqualify an entire
office vis-a-vis a taxpayer with multiple years in arrears would
- 28 -
be unworkable. Likewise, since much of the relevant information
would remain unchanged regardless of the period under
consideration, wasteful redundancy could be sanctioned by too
narrow a reading of the exception, and the avoidance thereof
likely formed part of the reasoning behind inclusion of the
exception in the statute. Accordingly, the Court concludes that
Mr. Skidmore’s consideration of the 2001 and 2002 years during
the collection hearing process concerning 2000 did not lead to
disqualification on grounds of prior involvement as that
terminology is used in section 6330(b)(3).
The foregoing conclusion does not, however, necessarily end
the inquiry with respect to a potential violation of section
6330(b)(3). The question remains as to whether the provision
also incorporates a general requirement of impartiality, in the
sense of no prejudice or bias, that might have been transgressed
on these facts. The Court has spoken briefly to this point in
the context of a lien action under section 6320:
Section 6320(b)(3) limits the definition of “impartial
officer” * * *, and that definition does not address,
and arguably does not permit, a challenge to the
objectivity of the hearing officer who presides over a
hearing under sections 6320 and 6330. However, we
shall assume without deciding, for purposes of this
analysis, that sections 6320 and 6330 permit a
challenge in appropriate cases to a demonstrably biased
hearing officer. See secs. 6320(c), 6330(c)(2)(A) (A
person may raise at the hearing any relevant issue
relating to the proposed collection action including
the enumerated issues). [Criner v. Commissioner, T.C.
Memo. 2003-328.]
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Taking the same approach of assuming arguendo that a claim
advancing prejudice is colorable under the section, we again find
it unnecessary to decide the underlying issue of statutory
construction in that petitioners’ allegations of bias are not
borne out by the totality of the record. Petitioners highlight
two factual circumstances in support of their position. First,
petitioners focus on a reference to “a baseless claim for
inflated housing and insurance costs” in notes made by
Mr. Skidmore on April 26, 2004, recording his activity in
processing the 2001 and 2002 case. The April 26, 2004, entry
reads, in relevant part:
Review of the case for 1999-2000 (closed five months
ago) found that the issues raised were collection
alternatives, and that they qualified for none because
they made a baseless claim for inflated housing and
insurance costs in an effort to show they had no
ability to pay, seeking to justify a lifestyle at the
expense of the government. Specifically, it was
concluded that “You did not provide sufficient
financial information so that these could be
specifically evaluated, but what you did provide
evidenced two significant problems: (1) The testimony
provided indicated no projection of future income could
now be made with confidence in its accuracy. This
would defeat the making of a projection of your future
ability to pay. It is suggested that you again
consider these alternatives after your new business
income has a sufficient history upon which to base
projections. (2) Analysis of your income and expenses
showed large discretionary income which could be
applied to your tax liabilities.” I called the Rep. to
inquire if they had different issues for 2001-2002, and
what they wished to do about the scheduled hearing * *
*
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Thus, while the remark complained of by petitioners may
sound harsh standing alone, it was made in the context of a
review which went on to consider and accurately to summarize the
particular reasons for the result reached in the earlier matter.
Moreover, as the facts found above indicate, Mr. Skidmore then
proceeded to grant repeated requests from petitioners for more
time to prepare for the hearing and to submit updated financial
information. His notes also document and discuss his analysis of
the financial materials ultimately provided by petitioners,
commenting in detail about specific items and why they continued
to fall short of establishing petitioners’ qualification for
collection alternatives. This accommodation of petitioners’
scheduling needs and careful review of the particular evidence
offered indicates a willingness to consider anew the merits of
petitioners’ then-existing circumstances and is the antithesis of
prejudgment.
The second factual point emphasized by petitioners in their
quest to show bias is the timing of Mr. Skidmore’s conclusion
that a determination letter should be issued; i.e, that the
decision was made on the same day as the hearing was held.
Again, however, the record reveals nothing inappropriate.
Petitioners submitted their financial documentation prior to the
hearing and offered nothing further at the conference that would
justify delay for additional review. Mr. Skidmore’s notes with
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regard to the hearing, conducted with petitioners’
representative, close as follows:
We discussed the financials and my conclusions. He
could name no specific modifications to expenses. He
had no response to my statement that it appeared the
941s were overdue. We agreed this TP needed an OIC,
but I explained why he could not qualify now. Rep.
said he agreed they would have to look down the road
for an OIC in the future. He wanted a Determination
Letter, and will surely appeal to Tax Court, just for
delay. He did not name any respect in which he
disagreed with my findings.
On this record, and even assuming that section 6330(b)(3)
subsumes a requirement of impartiality in a broad or generalized
sense, the Court is satisfied that Mr. Skidmore conducted a
thorough review of the 2001 and 2002 years that belies
allegations of being tainted by prejudice.
C. Appropriateness of the Collection Determinations
Having concluded that alleged procedural shortcomings do not
preclude judicial review or otherwise invalidate the
determinations at issue, the Court turns to whether the
determinations to proceed with collection should be sustained on
the merits. At the outset, it should be reiterated that with the
settlement by the parties of the controverted additions to tax,
no issue of underlying liability remains in dispute.
Accordingly, we review respondent’s determinations to proceed
with collection for abuse of discretion. Action constitutes an
abuse of discretion under this standard where arbitrary,
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capricious, or without sound basis in fact or law. Woodral v.
Commissioner, 112 T.C. 19, 23 (1999).
Petitioners contend that the determinations generating these
cases evince an abuse of discretion on three principal grounds:
(1) Failure to satisfy the verification requirement of section
6330(c)(3)(A); (2) failure to address or properly to evaluate all
issues raised by petitioners per the mandate of section
6330(c)(3)(B); and (3) failure properly to weigh intrusion per
section 6330(c)(3)(C). Respondent disagrees with each claim.
Section 6330(c)(3)(A) incorporates a directive that the
determination take into consideration the section 6330(c)(1)
“verification from the Secretary that the requirements of any
applicable law or administrative procedure have been met.” The
referenced requirements are not further illuminated by statute or
regulation. The Court has repeatedly rejected challenges based
on this provision where the Appeals officer had secured formal or
informal transcripts showing both that the subject taxes were
properly assessed and that the taxpayer had been notified of
those assessments through issuance of notices of balance due.
Burke v. Commissioner, 124 T.C. 189, 194-195 (2005); Roberts v.
Commissioner, 118 T.C. at 371 n.10; Nestor v. Commissioner, 118
T.C. at 166; Lunsford v. Commissioner, 117 T.C. 183, 188 (2001).
Mr. Skidmore did so here.
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Petitioners maintain, however, that more is demanded. They
rely on the following passage from legislative history:
During the hearing, the IRS is required to verify
that all statutory, regulatory, and administrative
requirements for the proposed collection action have
been met. IRS verifications are expected to include
(but not be limited to) showings that:
(1) the revenue officer recommending the
collection action has verified the taxpayer’s
liability;
(2) the estimated expenses of levy and sale
will not exceed the value of the property to be
seized;
(3) the revenue officer has determined that
there is sufficient equity in the property to be
seized to yield net proceeds from sale to apply to
the unpaid tax liabilities; and
(4) with respect to the seizure of the assets
of a going business, the revenue officer
recommending the collection action has thoroughly
considered the facts of the case, including the
availability of alternative collection methods,
before recommending the collection action. [H.
Conf. Rept. 105-599, at 264 (1998), 1998-3 C.B.
747, 1018.]
According to petitioners, the fourth enumerated item is
applicable to their circumstances. They contend that it imposes
an “elevated review” and was improperly ignored in the
determinations.
The difficulty with petitioners’ position is that the
statute as enacted requires by its terms verification “that the
requirements of any applicable law or administrative procedure
have been met.” Sec. 6330(c)(1). Petitioners have alerted us to
no law or administrative procedure that would direct revenue
officers to engage in the specific analysis suggested, much less
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document such analysis in a manner or form that would enable
objective verification thereof by an Appeals officer in some
future proceeding. Moreover, the structure of section 6330 as
enacted is such that the Appeals officer is expressly instructed
to consider collection alternatives, presumably de novo, and
courts are granted jurisdiction to review the Appeals officer’s
exercise of discretion, not that of an earlier revenue officer.
Petitioners’ approach does not harmonize with the language of the
statute. The Court concludes that the verification requirement
was met on the facts of these cases.
Petitioners also advance complaints with respect to the
Appeals officer’s consideration of issues they raised in
connection with the hearing. These complaints, apparently
seeking to show contravention of section 6330(c)(3)(B), center on
the interrelated categories of compliance and collection
alternatives. Regarding compliance, neither party disputes that
current compliance with tax laws is generally considered a
prerequisite, under established IRS policy, of eligibility for
collection alternatives. See, e.g., Rodriguez v. Commissioner,
T.C. Memo. 2003-153; Londono v. Commissioner, T.C. Memo. 2003-99;
Tabak v. Commissioner, T.C. Memo. 2003-4. Nor is there any
material disagreement that petitioners’ compliance record for the
years in issue was, in petitioners’ words, “not exemplary” or, in
respondent’s characterization, “abysmal”. Petitioners argue,
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however, that respondent has improperly focused on past, as
opposed to current, compliance; that petitioners were in at least
“substantial” compliance with their Federal tax obligations for
2003 forward; and that their noncompliance for earlier years was
justified by circumstances beyond their control. Hence, they
maintain that Mr. Skidmore improperly relied on noncompliance in
support of his determinations.
Undoubtably, the administrative record shows that
Mr. Skidmore looked in detail at the filing and payment history
for the years in issue. Such a review would seem to be inherent
in the very nature of the proceedings and does not raise a
spectre of impropriety. The fact that he may also have believed
erroneously that returns for 1996, 1997, and 1998 were filed late
likewise does not eliminate the possibility that he may have
appropriately relied on current noncompliance in recommending
that levy action be sustained. More salient is the fact that his
notes and the communications sent to petitioners reflect an
ongoing concern with failure to make sufficient provision for
estimated taxes.
When petitioners filed their 2003 return in August of 2004,
pursuant to an extension, they reported tax of $22,508 but only
$414 of withholding and no estimated payments. Although here
petitioners paid the balance of the tax due with the return, they
obviously were not in compliance with estimated payment
- 36 -
obligations throughout the pendency of their cases before
Mr. Skidmore from early 2003 to mid-2004. The notice of
determination for 2000 was issued on November 25, 2003, and that
for 2001 and 2002 was issued on July 13, 2004. Estimated
payments, intended to ensure that current taxes are paid, are a
significant component of the Federal tax system, and Mr. Skidmore
was entitled to rely on their absence in reaching his
conclusions. In fact, petitioners’ circumstances illustrate one
of the reasons for requiring current compliance before granting
collection alternatives such as an offer-in-compromise or an
installment agreement; namely, the risk of pyramiding tax
liability. See Orum v. Commissioner, 412 F.3d 819, 821 (7th Cir.
2005), affg. 123 T.C. 1 (2004).
As to alleged mitigating circumstances during the years in
issue, the Court understands that petitioners had little control
over medical exigencies or an industry slowdown. Petitioners
claim that these circumstances establish that financial
inability, rather than lack of desire, was responsible for their
dilatory filings and payments. Again, however, current
compliance is most germane. In addition, as Mr. Skidmore noted
repeatedly, petitioners’ assertions of financial hardship are
difficult to square with the substantial cashflow through their
accounts. Mr. Skidmore concluded that petitioners’ broad
assertions of business need and use did not satisfactorily
- 37 -
explain why some of the extensive funds could not be employed to
pay taxes, and the Court concurs.
On the matter of collection alternatives, petitioners on
brief specifically find fault with Mr. Skidmore’s evaluation of
currently not collectible status and of an offer-in-compromise.
The Internal Revenue Manual (IRM) provides for the reporting of
accounts as currently not collectible, pursuant to which accounts
are removed from active inventory. IRM, sec. 5.16.1.1 (Sept.
2005). The IRM enumerates a variety of reasons that will support
currently not collectible status, including where collection
would create undue hardship by leaving taxpayers unable to meet
necessary living expenses. Id.; see also Willis v. Commissioner,
T.C. Memo. 2003-302.
Petitioners’ claims of financial hardship rest in large part
on the inclusion in their living expenses of housing costs
greatly in excess of the amount considered standard for their
geographic area; i.e., $7,081 claimed versus a $1,299 standard
allowance. Petitioners attempted to explain and justify their
housing expenditures in their October 27 and November 17, 2003,
letters to Mr. Skidmore and in the attachment to their Form 12153
for 2001 and 2002 (which is substantially identical to the
November 17 letter). They indicated that the figure represented
payments made on three loans overencumbering their home and
offered the following generalized statement in explanation: “The
- 38 -
loan money proceeds were used to help finance the development of
the optical network optimization software at a time when the
anticipated return was many times the amount of the loans.” They
also described their house as “extensively modified to include
facilities to operate a successful consulting business”,
mentioning that rooms were used to store books, records, and
equipment, as well as to meet with clients. By way of apparent
analogy and without any support, they then “respectfully
[suggested] that a $5,000 or $6,000 per month business expense
for renting commercial office space would be allowed with very
little scrutiny.”
Mr. Skidmore, in his analysis of petitioners’ financial
circumstances for purposes of collection alternatives did not
accept housing expenses in excess of the standard allowance. He
also removed a claimed $2,959 life insurance expense from the
computation. Petitioners’ explanation of that expense, in their
October 27, 2003, letter had likewise been limited to a
generalized: “U.S. Bank required Mr. Cox to have a life
insurance policy for the lines of credit which were approved
based on the business income as well as the equity in the house.
The whole-life policy also provides a potential ‘line of credit’
for the business.” Petitioners allege on brief that
Mr. Skidmore’s failure to consider their business rationale for
these expenses reveals an abuse of discretion.
- 39 -
The Court disagrees. Petitioners’ broad-brushed intonations
of business justification lack any sufficient corroboration in
the record. While evidence may support the existence of and
payments on mortgage loans and the life insurance policy, the
documents proffered provide no link to business use. There has
been no adequate effort by petitioners to trace the proceeds of
the loans to any business-related outlays or to connect the
insurance policy to any specific business-related agreement or
transaction. Mr. Skidmore’s unwillingness to credit petitioners’
generalized, unsubstantiated assertions at face value hardly
connotes an abuse of discretion.
Moreover, the inconsistencies between, and lack of
evidentiary support for, a substantial number of the amounts
shown in the financial materials submitted by petitioners largely
vitiate the possibility of any convincing portrayal of hardship.
It simply is unclear what funds were available and where they
were going. For Mr. Skidmore to conclude that the record did not
adequately establish currently not collectible status for
petitioners’ accounts was reasonable.
Like reasoning would also apply with respect to other forms
of collection alternative. Petitioners state on brief that the
Appeals officer refused to consider an offer-in-compromise
because of difficulty in projecting future income. They fault
him for not explaining why a 3- or 5-year average, allegedly
- 40 -
sanctioned in the IRM, could not be used. On this point, suffice
it to say that petitioners’ representative during the
administrative process expressed concurrence in the
unavailability of an offer-in-compromise, and petitioners never
submitted an actual offer, a concrete proposal for Mr. Skidmore
to consider. Discretion typically cannot be exercised, much less
abused, in the abstract. See, e.g., Kendricks v. Commissioner,
124 T.C. 69, 79 (2005); Neugebauer v. Commissioner, T.C. Memo.
2003-292.
Finally, petitioners frame challenges to the determinations
in issue on the dictates of section 6330(c)(3)(C). They
summarize their allegations in this regard as set forth below:
In both Notices of Determination, the Appeals
Officer recognizes that the petitioners had
“significant financial problems.” * * * Levies would
only serve to harass the taxpayers, jeopardize full
collection by scaring off customers/clients (who
receive notices of levy) and make remaining in
compliance impossible. In his Notices of
Determination, the Appeals Officer did not offer any
explanation or analysis why the IRS needs the most
intrusive collection possible, did not justify why
liquidation of the business was necessary to ensure
collection, or detail why the plaintiff’s offer of
collection alternatives was not appropriate (other than
the compliance issue which was addressed in the
petitioners’ November 17, 2003 letter). The Appeals
Officer simply did not consider the impact that his
determinations would have on these taxpayers, and did
not perform the required balancing test. By neglecting
to consider the impact of its determination on the
plaintiff, the Appeals Office was unable to
legitimately examine whether the collection action was
more intrusive than necessary.
- 41 -
The short answer to this challenge is that, as detailed
above, petitioners did not during the administrative process
establish the propriety of any alternative to counterbalance
against the proposed levies. The notices of determination so
communicate, observing that because petitioners did not present
any acceptable alternatives, it did not appear that any less
intrusive action would “meet the liability”. They explicitly
address the balancing analysis and appropriately highlight
several of the facts undergirding Mr. Skidmore’s conclusions.
Furthermore, petitioners’ contentions that Mr. Skidmore came to
these conclusions “summarily” are contradicted by the record.
The body of notes and correspondence compiled reveals instead
that the focus of Mr. Skidmore’s efforts throughout the entire
process centered upon attempting to obtain and evaluate
information concerning petitioners’ financial circumstances in
light of possible eligibility for collection alternatives. The
notes also make reference specifically to intrusiveness and his
thinking thereon. His eventual determinations that asking the
Government merely to wait and see did not afford a reasonable and
viable option were neither arbitrary, nor capricious, nor
baseless.
In conclusion, the facts of these cases do not establish any
abuse of discretion. The Court will sustain respondent’s
proposed collection actions as to taxable years 2000, 2001, and
- 42 -
2002, except to the extent modified by the referenced settlements
between the parties. To reflect the foregoing,
Appropriate decisions
will be entered.