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CHARLES M. GLOSSOP, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentGlossop v. Comm'rDocket No. 13972-11L.
United States Tax Court T.C. Memo 2013-208; 2013 Tax Ct. Memo LEXIS 217; 106 T.C.M. (CCH) 229;September 3, 2013, Filed*217An appropriate order and decision will be entered.
Neal J. Shapiro andPaul J. Quast , for petitioner.Shaina E. Boatright andKristin M. Timmons , for respondent.BUCH, Judge.BUCHMEMORANDUM OPINION BUCH,
Judge : This case is before the Court on cross-motions for summary judgment. The issue for decision is whether respondent abused his discretion in sustaining a proposed levy to collect petitioner's unpaid trust fund recovery penalties for periods ending March 31, 2005, through March 31, 2006. Because *209 we conclude that the underlying liability is not properly at issue and that respondent did not abuse his discretion in rejecting collection alternatives, we will grant respondent's motion.Background At the time the petition was filed, Mr. Glossop resided in Minnesota.
During 2006 Mr. Glossop was president and owner of Maple Crest Landscape, LLC. In late 2006 Mr. Glossop learned that the company controller he hired was harassing employees and stealing from the business. After Mr. Glossop fired the controller, he found notices from the IRS regarding unpaid employment taxes.
Around this same time Mr. Glossop's marriage was ending. It was formally dissolved on June 25, 2007, when a family court entered *218 findings of fact and divided the marital assets. Mr. Glossop retained 100% of Maple Crest (valued at $1,500,000), 100% of Hantho Farms, LLC (another entity he owned that was valued at $400,000), a Britannia bank account (valued at approximately $28,000), a home with equity, and various real estate interests. He was also assigned tax liabilities of approximately $650,000 relating to one or more of his businesses. In *210 late 2007 Mr. Glossop sold Maple Crest to his operations manager for $752,330.39. *219 "proposing offer in compromise". Mr. Glossop also provided a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, on which he listed "wages" *211 located through public and internal records that Mr. Glossop did not disclose on his Form 433-A. Mr. Glossop and his representative provided documents and explanations in response to each set of requests, but each submission raised additional questions, no submission was complete standing on its own, and even the various submissions taken together were incomplete in the aggregate.
On January 19, 2010, respondent received Mr. Glossop's Form 656, Offer in Compromise, in which he proposed to settle his trust fund recovery penalty liability for $12,550, payable *220 in monthly installments of $250, on the basis of doubt as to collectibility. On the Form 656 Mr. Glossop did not provide a description or explanation of what circumstances would affect his ability to fully pay the trust fund recovery penalty liability, nor did he include information regarding the source of the funds from which he intended to pay the offered amount.
On March 12, 2010, Offer Specialist Joe Kennedy sent Mr. Glossop a letter notifying him that the offer-in-compromise had been assigned for consideration. The letter also included a list of documents that the offer specialist required in order to evaluate the offer and posed questions the offer specialist had regarding various discrepancies in the documents that Mr. Glossop previously had provided. The offer specialist requested a response by April 12, 2010. On April 20 the offer *212 specialist made a second request for information and documents to be provided by May 7. The request included documents that had previously been requested of, but not provided by, Mr. Glossop.
Again, Mr. Glossop and his representative provided documents and explanations in response to each set of requests, but no submission was complete and each submission *221 raised additional questions. For example, Mr. Glossop provided a draft 2009 Form 1040 in which he listed income of $32,083 and alimony paid of $65,300, which raised the question of whether Mr. Glossop had additional undisclosed income or other undisclosed assets at his disposal from which he paid the alimony. Additionally, the offer specialist included in his calculations certain assets that had been owned by Mr. Glossop but had been dissipated, because Mr. Glossop had failed to timely provide documents that reflected the disposition of those assets.
On May 18, 2010, the offer specialist sent Mr. Glossop a letter stating that based on review of the documents Mr. Glossop provided, the offer specialist determined that Mr. Glossop could fully pay the liability. That letter requested any additional information within 14 days. After receiving no additional information, the offer specialist sent Mr. Glossop a letter proposing to reject the *213 offer if Mr. Glossop did not provide any additional information within 30 days and also providing instructions on how to request Appeals reconsideration. On August 16, 2010, respondent sent Mr. Glossop a letter acknowledging his appeal of the offer specialist's *222 decision to reject the offer-in-compromise and notifying him that the case had been received by the Office of Appeals. After initially assigning the case to the St. Paul, Minnesota, Office of Appeals, respondent later reassigned the case to the Kansas City, Missouri, Office of Appeals. In February 2011 respondent issued Mr. Glossop a letter acknowledging receipt by the Office of Appeals of his case for consideration, and in early March Settlement Officer Paul Mazan sent Mr. Glossop a letter scheduling his collection due process hearing for later that month. In that letter, Mr. Mazan requested information that would clarify Mr. Glossop's collection potential, including the following:
• A Form 433-B, Collection Information Statement for Businesses, for all businesses in which Mr. Glossop had an ownership interest;
• Information showing Mr. Glossop's 2010 income, such as Forms 1099-Misc, Miscellaneous Income, or Forms W-2, Wage and Tax Statement;
• A copy of Mr. Glossop's divorce decree; and
*214 • *223 Documents supporting Mr. Glossop's disputes with the IRS' evaluation of his collection potential that underlay his disagreement with the offer specialist's decision to reject the offer-in-compromise.
There were several shortcomings in the information provided by Mr. Glossop. He never provided his 2010 Form 1040 or a Schedule C, Profit or Loss From Business, for Hantho Farms, although *225 he did provide a preliminary financial statement for Hantho Farms. Nor did he document the balance in the Britannia account. And it appears that Mr. Glossop had not satisfied the delinquent employment tax quarterly payment for 2010 before the notice of determination was issued.
On May 10, 2011, respondent issued a Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or6330 sustaining the proposed *216 levy. This determination was based on Mr. Glossop's (1) failure to provide all requested financial information, (2) his noncompliance with his employment tax obligations, and (3) his ability to pay more than he had offered. The notice of determination included an asset and equity table used by the offer specialist and updated by Mr. Mazan to calculate Mr. Glossop's collection potential and an explanation of his three-year income average computation to arrive at the amounts of average monthly income and allowable expenses. Mr. Glossop timely filed a petition disputing the determination to sustain the proposed levy.While this case has been pending Mr. Glossop submitted to respondent's counsel a second offer-in-compromise. Respondent's counsel did not forward the request *226 for processing because the form was incomplete. Although respondent's counsel allowed Mr. Glossop additional time to provide the missing information, Mr. Glossop never provided the additional information.
The parties filed cross-motions for summary judgment. On February 6, 2013, respondent filed a motion for summary judgment. On March 8, 2013, Mr. Glossop filed a memorandum in opposition to respondent's motion for summary judgment and his own motion for summary judgment.
*217 Discussion Either party may move for summary judgment regarding all or any part of the legal issues in controversy. *227 for trial. *218
Underlying liability When the underlying tax liability is properly at issue, we review the Commissioner's determination de novo; when the validity of the underlying tax liability is not properly at issue, we review the Commissioner's administrative determination for an abuse of discretion. *228 liability or did not otherwise have an opportunity to dispute that tax liability.
section 6672 , which were assessed for the failure to collect, account for, and pay over income tax and employment taxes of employees.Generally, a taxpayer must raise an issue at a collection due process hearing to preserve it for this Court's consideration. *219 the underlying liability in the petition. Therefore, the underlying liability is not at issue in this case and we review respondent's notice of determination for abuse of discretion. *229 taxpayer may prove an abuse of discretion by showing that the Commissioner exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. Collection Alternatives
A taxpayer may raise collection alternatives that may include an installment agreement or an offer-in-compromise. *220
Section 7122(a) authorizes the IRS to compromise a liability. To make an offer-in-compromise of a liability, a taxpayer must submit a Form 656 or otherwise describe his income, assets, and other financial information that would be included on Form 656.section 7122(a) set forth three grounds for the compromise of a tax liability: (1) doubt as to liability; (2) doubt *230 as to collectibility; or (3) promotion of effective tax administration. *221 guidelines for basic living expenses in evaluating the adequacy of proposed installment agreements and offers-in-compromise. *231 and utilities standard allowances rather than the taxpayer's actual expenses. Reasonable Collection PotentialOn January 19, 2010, respondent received Form 656 *232 from Mr. Glossop, proposing to pay $12,550 to compromise the trust fund recovery penalty liability, *222 and indicating the offer was based on doubt as to collectibility. Although Mr. Glossop provided documents throughout the year and a half the offer was under review, he never provided complete and up-to-date financial information. As a result, it was not an abuse of discretion for respondent to use a three-year income average to calculate Mr. Glossop's monthly income based primarily on the profits of Hantho Farms. Likewise, respondent did not abuse his discretion in calculating Mr. Glossop's allowable monthly expenses using national and local standards.
Both the offer specialist and Mr. Mazan used the documents Mr. Glossop provided to identify and adjust the values of his assets. Based on the documents provided at the time of each calculation, both calculations show that Mr. Glossop had sufficient assets and future income to fully pay the liability. As a result, Mr. Glossop's reasonable collection potential was in excess of his offer and the offer was rejected in part on that basis. *233 Glossop alleges various errors in respondent's calculation of average monthly income; instead, he alleges his correct monthly disposable income to be $773 per month, rather than the $8,641 determined by the Office of Appeals. Assuming Mr. Glossop's calculation is correct, that amount was more than three *223 times his proposed monthly payment of $250. Additionally Mr. Glossop never documented the Britannia account, which at one point held $28,000—an amount more than twice his offer of $12,550. Again, the IRS may reject an offer-in-compromise because the taxpayer's ability to pay is greater than the amount he proposes to pay. Noncompliance
No statutory or regulatory provision requires that *234 taxpayers be afforded an unlimited opportunity to supplement the administrative record. *224 additional documents, two weeks passed after the hearing before Mr. Mazan prepared the notice of determination. Mr. Glossop did not provide a 2010 Form 1040 or Schedule C, nor did he provide a signed Form 433-A or signed Form 433-B. He never provided any documentation regarding the Britannia account, one reason his second offer was rejected.
When an Appeals officer gives a taxpayer an adequate timeframe to submit requested items, it is not an abuse of discretion to move ahead if the taxpayer fails to submit the requested items. *235 Mr. Glossop was given more than a year and a half to provide the documents that he wanted respondent to consider, and he was given additional time to provide the Britannia account information and to correct his unpaid 2010 employment tax liability. But he didn't do so.
With respect to Mr. Glossop's unpaid estimated tax payments and unpaid employment tax liabilities, "[r]eliance on a failure to pay current taxes in rejecting a collection alternative does not constitute an abuse of discretion." *225 Glossop's failure to pay his estimated tax and the employment tax liabilities that accrued during the review of the offer.
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. *236 The settlement officer properly based the determination on the factors required by
section 6330(c)(3) .Conclusion We conclude that respondent did not abuse his discretion in rejecting the offer-in-compromise and sustaining the proposed levy. Thus, we will deny petitioner's motion for summary judgment and grant respondent's motion for summary judgment.
To reflect the foregoing,
An appropriate order and decision will be entered .Footnotes
1. Although the allocation of purchase price in the purchase agreement assigns a portion of the sale price to State sales tax, there is no mention of Maple Crest's Federal tax liabilities in the purchase agreement documents in the record.↩
2. Mr. Glossop's draft 2009 Form 1040, U.S. Individual Income Tax Return, lists no wages but reported business income from Hantho Farms of $32,083, the entirety of its profit.↩
3. Mr. Glossop received no wages; rather, he received business income from Hantho Farms.↩
4.
See Rule 121(a)↩ . Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect at all relevant times.5.
See Naftel v. Commissioner , 85 T.C. 527">85 T.C. 5276.
See Sundstrand Corp. v. Commissioner , 98 T.C. 518">98 T.C. 518aff'd ,17 F.3d 965">17 F.3d 965↩ (7th Cir. 1994).7.
See FPL Grp., Inc. v. Commissioner , 115 T.C. 554">115 T.C. 554Bond v. Commissioner , 100 T.C. 32">100 T.C. 32Naftel v. Commissioner , 85 T.C. at 529↩8.
See Celotex Corp. v. Catrett , 477 U.S. 317">477 U.S. 317Sundstrand Corp. v. Commissioner , 98 T.C. at 520see also Rule 121(d)↩ .9.
Sego v. Commissioner , 114 T.C. 604">114 T.C. 604Goza v. Commissioner , 114 T.C. 176">114 T.C. 17610.
See sec. 6330(c)(2)(B)↩ .11.
Perkins v. Commissioner , 129 T.C. 58">129 T.C. 58Magana v. Commissioner , 118 T.C. 488">118 T.C. 488sec. 301.6330-1(f)(2), Q&A-F5↩ , Proced. & Admin. Regs.12.
See Sego v. Commissioner , 114 T.C. at 610Goza v. Commissioner , 114 T.C. at 181-182↩13.
See Giamelli v. Commissioner , 129 T.C. 107">129 T.C. 10714.
Sec. 6330(c)(2)(A)(iii)↩ .15.
See Veneziano v. Commissioner , T.C. Memo. 2011-160Kendricks v. Commissioner , 124 T.C. 69">124 T.C. 6916.
See Godwin v. Commissioner , T.C. Memo. 2003-289aff'd ,132 Fed. Appx. 785">132 Fed. Appx. 785 (11th Cir. 2005);sec. 301.7122-1(d)(1)↩ , Proced. & Admin. Regs.17.
Sec. 301.7122-1(b)↩ , Proced. & Admin. Regs.18.
See Johnson v. Commissioner , 136 T.C. 475">136 T.C. 475aff'd ,502 Fed. Appx. 1">502 Fed. Appx. 1 (D.C. Cir. 2013);see also Rev. Proc. 2003-71 , sec. 4.02(2),2 C.B. 517">2003-2 C.B. 517↩ .19.
See Johnson v. Commissioner , 136 T.C. at 485↩20.
See Speltz v. Commissioner , 124 T.C. 165">124 T.C. 165aff'd ,454 F.3d 782">454 F.3d 782 (8th Cir. 2006);Fernandez v. Commissioner , T.C. Memo. 2008-210↩21.
See Diffee v. Commissioner , T.C. Memo. 2007-304McDonough v. Commissioner , T.C. Memo. 2006-234aff'd in part sub nom. Keller v. Commissioner , 568 F.3d 710">568 F.3d 710↩22.
See Johnson v. Commissioner , 136 T.C. at 486see also Fargo v. Commissioner , 447 F.3d 706">447 F.3d 706aff'g T.C. Memo. 2004-13↩ .23.
See Murphy v. Commissioner , 125 T.C. 301">125 T.C. 301Fowler v. Commissioner , T.C. Memo 2004-163">T.C. Memo 2004-163aff'd ,469 F.3d 27 (1st Cir. 2006) ;Woodral v. Commissioner , 112 T.C. 19">112 T.C. 19Keller v. Commissioner , T.C. Memo. 2006-166aff'd in part ,568 F.3d 710↩ (9th Cir. 2009) .24.
See Johnson v. Commissioner , 136 T.C. at 486see also Fargo v. Commissioner , 447 F.3d at 709-710↩25.
See Johnson v. Commissioner , 136 T.C. at 486see also Fargo v. Commissioner , 447 F.3d at 709-710↩26.
See Keller v. Commissioner , 568 F.3d at 718see also Vanmali v. Commissioner , T.C. Memo. 2012-100Atchison v. Commissioner , T.C. Memo. 2009-8↩27.
Roman v. Commissioner , T.C. Memo. 2004-20↩28.
See Pough v. Commissioner , 135 T.C. 344">135 T.C. 344Shanley v. Commissioner , T.C. Memo. 2009-17↩29.
Giamelli v. Commissioner , 129 T.C. at 111-112Orum v. Commissioner , 123 T.C. 1">123 T.C. 1aff'd ,412 F.3d 819 (7th Cir. 2005)) ;see also Pough v. Commissioner , 135 T.C. at 351↩30.
Sec. 6330(c)(3) ;see also Lunsford v. Commissioner , 117 T.C. 183">117 T.C. 183
Document Info
Docket Number： Docket No. 13972-11L.
Judges： BUCH
Filed Date： 9/3/2013
Precedential Status： Non-Precedential
Modified Date： 4/18/2021