Savoy v. Comm'r , 108 Tax Ct. Mem. Dec. (CCH) 168 ( 2014 )

T.C. Memo. 2014-162
UNITED STATES TAX COURT
GREGORY SCOTT SAVOY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12316-12L. Filed August 12, 2014.
P has a serious and sometimes disabling illness, and did not
timely file a return for the 2007 tax year. R prepared a substitute for
return pursuant to I.R.C. sec. 6020(b), issued a notice of deficiency,
and assessed the tax. Thereafter, R issued P a notice of proposed
levy. After an initial administrative hearing, R issued a notice of
determination not to sustain the levy for the 2007 tax year. The
notice of determination placed P in “currently not collectible” status
and stated that R would file a notice of lien to protect its interests as
creditor. P timely petitioned the Tax Court to review the initial notice
of determination. Before trial, R moved to remand the case because it
acknowledged that Appeals had failed to give proper weight to P’s
illness in not allowing him sufficient time to prepare and file the
delinquent returns to determine his correct tax liability for 2007. The
Court granted R’s motion to remand over P’s objection, and R
conducted a supplemental CDP hearing. After the supplemental
hearing, R issued a supplemental notice of determination, which
again did not sustain R’s levy and again placed P in “currently not
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[*2] collectible” status, but did not state that the IRS would file a
notice of lien. P objects to this supplemental notice of determination.
Held: Appeals properly considered the issues P raised during
his CDP hearing when issuing its supplemental notice of
determination.
Held, further, Appeals did not abuse its discretion in deciding
(a) not to sustain the decision of the IRS to issue a levy for the 2007
tax year, (b) to place P in “currently not collectible” status, and (c) to
forgo filing a notice of Federal tax lien.
Gregory Scott Savoy, for himself.
James G. Hartford, for respondent.
MEMORANDUM OPINION
GUSTAFSON, Judge: This collection due process (“CDP”) case brought
under section 6330(d)(1)1 is before the Court on cross-motions for summary
judgment filed by respondent, the Commissioner of the Internal Revenue Service
(“IRS”), and petitioner, Gregory Scott Savoy. The only issues for decision are:
(1) whether the IRS Office of Appeals (“Appeals”) properly considered the issues
raised by Mr. Savoy during his CDP hearing and supplemental hearing when
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986 (26 U.S.C., “the Code”), as in effect at the relevant times,
and all Rule references are to the Tax Court Rules of Practice and Procedure.
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[*3] issuing its supplemental notice of determination (we hold that it did); and
(2) whether Appeals abused its discretion in its final determination (a) not to
sustain the collection actions of the IRS to issue a notice of intent to levy to collect
Mr. Savoy’s Federal income tax due for the 2007 tax year, but rather (b) to place
him in “currently not collectible” (“CNC”) status for all years for which he
showed a balance due, and (c) not to file a notice of lien to preserve the
Government’s interest as a creditor (we hold that it did not). Accordingly, we will
grant summary judgment for the Commissioner and will deny Mr. Savoy’s cross-
motion.
Background
There is no dispute as to the following facts:
Petitioner’s circumstances
Mr. Savoy is recovering from a serious and sometimes disabling illness.
Despite his illness, he is often employed. From his assertions that he should be
allowed time to file or amend his Federal income tax returns for a period of years
evidently beginning in 2003, we assume that he was employed from 2003 through
at least 2012 and that he earned income in those years.
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[*4] Tax liability, notice of deficiency, and notice of proposed levy
For the single year at issue in this case, 2007, Mr. Savoy was required to file
a tax return by mid-April 2008 (i.e., more than 6 years ago), but he did not do so.
The IRS therefore prepared a substitute for return (“SFR”) pursuant to section
6020(b), issued a notice of deficiency to Mr. Savoy, and (when he did not file a
petition pursuant to section 6213(a), challenging that determination) assessed the
tax. Mr. Savoy alleges, and we assume for purposes of the Commissioner’s
motion, that he did not receive this notice. Thereafter, the IRS issued to Mr.
Savoy a notice of proposed levy dated May 27, 2011.2
Request for CDP hearing
Mr. Savoy timely requested a CDP hearing before Appeals by submitting a
Form 12153, “Request for a Collection Due Process or Equivalent Hearing”, dated
June 23, 2011 (i.e., more than three years ago). On that Form 12153 Mr. Savoy
stated the relevant tax periods were the eight years 2003 through 2010. For the
years 2003 through 2006, the IRS denied Mr. Savoy a CDP hearing because it
2
Mr. Savoy alleges that the May 2011 notice of proposed levy was sent to
the wrong address. However, he did receive the notice and did timely request his
CDP hearing. He had apparently not filed a tax return for at least eight years
(making it appear likely that the address had once been his address and that he had
not notified the IRS of his new address), and he does not seem to contend that the
address was not, for the IRS, his “last known address” (emphasis added) for
purposes of section 6331(d)(2)(C).
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[*5] concluded that the request was not timely as to those periods; for the years
2008 through 2010, the IRS denied him a CDP hearing because it concluded that
no notice of proposed levy or notice of Federal tax lien had been issued to Mr.
Savoy for those tax years. For the tax year 2007, however, the IRS acknowledged
Mr. Savoy’s CDP request as timely and proceeded with the CDP hearing.
Initial CDP hearing
It appears that Mr. Savoy made two principal contentions in the initial CDP
hearing: First, Mr. Savoy attempted to dispute his tax liability for 2007 in that
CDP hearing. In that connection he filed an amended 2007 tax return on
September 7, 2011 (i.e., more than three years late, and more than 2½ years ago).
Mr. Savoy asserts--and we assume in his favor--that the September 7, 2011,
amended return for 2007 had “copious errors”. Specifically, Mr. Savoy asserted in
a letter to Appeals dated March 13, 2012:
3. TAX LIABILITY IS IN ERROR-- Because of the IRS’s
insensitivity to * * * [Mr. Savoy’s medical condition] and related side
effects, a wholly unrealistic schedule was imposed on the taxpayer,
under duress of further Levy, and ten years of returns[3] were
3
Mr. Savoy elsewhere complains that he should now be given more time to
prepare the 10 years’ tax returns. However, in light of his statement that the
returns were “assembled” and “done”, we infer that his point is that he needs to
prepare corrected returns for those years. His returns for years other than 2007 are
not at issue here, and as we explain below, the IRS has put him in CNC status and
(continued...)
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[*6] assembled hastily, despite my on-going pleas for a relaxed
schedule. * * * I managed to get the returns done, yet, because of the
pressure, I omitted one of my larger daily deductions; my daily meals
in the field as a freelancer. That comprises a large number. Many
days I work 14 hours and take two meals within that work period.
* * * Also, a single digit not carried over in math, resulted in the IRS
incorrectly refilling [sic] my tax penalty in great error. Because I
copied the taxes from a worksheet into the archival forms, I merely
entered the wrong digit in the 10,000 level of dollars. If the IRS
merely added my components of schedule A they would see that it
equals not 12,000. In other words, this is a cosmetic error, and if that
1 is changed to a 2, then all of the math adds up.
Thus, it is possible that corrections of errors might reduce Mr. Savoy’s 2007 tax
liability.4
Second, on his Form 12153, Mr. Savoy had checked the box indicating he
desired to make an “Offer in Compromise” (“OIC”). By letter of February 6,
2012, Appeals scheduled a telephone CDP hearing for March 2, 2012. The letter
stated that “you must be in full compliance and submit financial information with
a request for a face to face hearing”, but it did not specify what full compliance
might require (e.g., submission of returns for certain years), nor what the
3
(...continued)
thus has effectively permitted him to take whatever time he wishes to file whatever
he wishes.
4
However, Mr. Savoy later volunteered in a motion for extension filed
December 17, 2013, that “indeed, it’s also possible that I owe the IRS much more
money than incorrectly posted currently; we simply don’t know--because of the
hasty and forceful manner in which the returns were coerced.”
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[*7] “financial information” was. Our record does not show all the
communication that may have transpired between the parties, but on March 15,
2012, Appeals sent Mr. Savoy another letter that stated: “I never received the
information from you”. The record does not show that Mr. Savoy proposed an
OIC on Form 656.
The Commissioner now acknowledges that “[i]t appears, based on the
information in the administrative file that respondent’s Office of Appeals failed to
give proper weight to petitioner’s illness in not allowing him sufficient time to
prepare and file the delinquent returns to determine his correct liability for tax year
2007.” Rather, at the premature conclusion of the initial CDP hearing, Appeals
issued to Mr. Savoy a “Notice of Determination” that did not sustain the proposed
levy; that determined Mr. Savoy should be put in CNC status; and that stated that
“[a] Notice of Federal Tax Lien will be filed to protect the government’s interest
as a creditor.”
Tax Court petition and remand
On May 15, 2012 (i.e., more than two years ago), Mr. Savoy timely filed his
petition in this Court, alleging (among other things) errors in his assessed tax
liability. The petition stated a Maryland address for Mr. Savoy. On March 27,
2013, the Commissioner moved to remand the case to Appeals. The
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[*8] Commissioner acknowledged that Mr. Savoy had not been given an adequate
opportunity to challenge his underlying liability for 2007 at the CDP hearing and
asked the Court to remand for a supplemental hearing. Mr. Savoy objected to the
remand, but the Court --over Mr. Savoy’s objection--remanded the case to Appeals
for further consideration. Our order of March 28, 2013, stated:
In particular--
• If Mr. Savoy intends to show that his income tax liability
for 2007 is less than the IRS has assessed, then he should
present to Appeals the information proving his actual
liability.
• To the extent Mr. Savoy claims that he is entitled to
deductions or credits that the IRS did not previously
allow, he should document the pertinent expenditures
and substantiate his entitlement to those deductions and
credits.
Mr. Savoy moved for reconsideration on April 9, 2013; by our order dated
April 17, 2013 (issued well over a year ago), we denied the motion for
reconsideration and confirmed that the case would be remanded.
Supplemental CDP hearing
Appeals conducted a supplemental CDP hearing pursuant to our order. By
letter of April 9, 2013, the Appeals officer stated to Mr. Savoy: “For me to
consider alternative collection methods such as an installment agreement or offer
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[*9] in compromise, * * * you must have filed all federal tax returns required to be
filed.” The letter named in particular the years 2011 and 2012 (for the latter of
which the return was due April 15, 2013). The record does not show that
Mr. Savoy ever submitted an OIC on Form 656 or otherwise proposed a specific
collection alternative.
During the supplemental hearing, Mr. Savoy mailed the settlement officer a
copy of a motion to vacate and motion for default judgment that he had filed with
the Court. Attached to his motion to vacate was a copy of the original Appeals
documentation in which he had contested the underlying liability. The settlement
officer acknowledged receipt of these items and stated that she considered them
before rendering her supplemental notice of determination on July 18, 2013. That
supplemental notice of determination stated:
Appeals has determined, based on verified financial information, that
your tax accounts are currently not collectible. This does not mean
that the liabilities are no longer owed. It means that we have
determined that they are currently not collectible and no collection
actions will be taken (except application of future refunds) unless or
until we determine that collection should resume.
Like the original notice of determination, this supplemental notice determined not
to sustain the levy against Mr. Savoy and put into CNC status all tax years
showing a balance due and explicitly stated that the determination did not prevent
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[*10] him from filing amended returns. Unlike the original notice of
determination, the supplemental notice did not assert that the IRS would file a
notice of Federal tax lien to protect its interest as a creditor.
Further Tax Court proceedings
On September 13, 2013, the Commissioner filed a motion for summary
judgment asking us to sustain the supplemental notice of determination, which, as
to collection matters, is favorable to Mr. Savoy. However, the supplemental
determination does not reflect any adjustment to Mr. Savoy’s 2007 income tax
liability. In his motion, the Commissioner states that, although Mr. Savoy
challenged the correctness of the underlying tax liability during his CDP hearing,
Mr. Savoy failed to provide documentation regarding his underlying liability
during either the initial CDP hearing or the supplemental CDP hearing. Mr. Savoy
filed an objection on October 23, 2013, in which he asserted his desire to “present
any effect it has all had on the accuracy of this Petitioner’s tax liability as currently
misperceived by the IRS”. Mr. Savoy also denied that he failed to participate in
the supplemental hearing, implying that the documentation provided to Appeals
should suffice to continue disputing his underlying liability.
However, we could not tell at the time of his objection whether Mr. Savoy
had actually presented evidence that would substantiate the meals deductions he
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[*11] claims were omitted from his return or any other adjustment affecting his
liability, nor whether he had submitted evidence that would suggest an error in a
potential tax penalty. We therefore issued our order of December 6, 2013, in
which we--
ORDERED that Mr. Savoy shall file, no later than January 6,
2014, a supplemental objection to the IRS’s motion for summary
judgment. In that supplement, he shall succinctly list each adjustment
that should be made to his 2007 tax return that he believes will reduce
his 2007 liability. (Presumably this list will include the meal
deduction that he mentioned in his request for a CDP hearing, and it
should include any other deduction or credit that he believes needs
correction for 2007.) He shall also explain any challenge he has as to
any penalty the IRS has asserted for 2007, and the basis for his
challenge. To that supplement, he shall attach all of the documentary
evidence that he would offer at trial to substantiate his entitlement to
those adjustments affecting his underlying 2007 tax liability and
penalty liability. * * *
That is, our order asked Mr. Savoy to list the adjustments and attach the
documentation by January 6, 2014, a date that was--
• nine months after we ordered the remand and directed Mr. Savoy to
“present to Appeals the information proving his actual liability” and
to “document the pertinent expenditures and substantiate his
entitlement to those deductions and credits”;
• a year and a half after he filed his petition in this Court, challenging
his underlying liability as assessed;
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[*12] • 2½ years after he requested his CDP hearing, challenging his
underlying liability as assessed; and
• 5½ years after the return was due.
On December 17, 2013, the Court received “Petitioner’s Motion for
Extension of Time”. This motion did not explicitly state the date to which an
extension was requested, but stated that Mr. Savoy would need six months to
“assemble an archival 1040 form”, and requested that he be given “six
months * * * to reassemble the facts of his life into the form of an accurate 1040
form”. The motion was construed as a request for a six-month extension of the
Court’s January 6, 2014, deadline (i.e., an extension to June 2014) to provide a list
of his proposed adjustments with supporting documentation. We denied the
requested extension by our order of December 20, 2013, because Mr. Savoy had
already had 68 months to assemble the information but had not done so.5
5
Our order denying Mr. Savoy the extension that he had requested stated:
“The denial of Mr. Savoy’s motion is, however, without prejudice to his
requesting an extension if, by January 13, 2013, either (a) counsel who is admitted
to practice in this Court files a notice of appearance on Mr. Savoy’s behalf, or
(b) an appropriate person files with the Court a Motion to Be Recognized as Next
Friend” under Rule 60(d). Mr. Savoy’s filing of January 3, 2014, seemed to
indicate that he declined this suggestion, and since then there has not been any
filing, on behalf of Mr. Savoy, of a notice of appearance or a motion to be
recognized as next friend.
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[*13] On January 3, 2014, Mr. Savoy filed two motions with the Court: a
“Motion to Review and Make Determination” (which the Court treated as a
motion for summary judgment) and a “Supplemental Objection” (which the Court
treated as an objection to the Commissioner’s motion for summary judgment). In
his supplemental objection, Mr. Savoy states that he has “no further supplemental
information or material and the previous Objection filed against the Motion for
Summary Judgment still stands” (emphasis in original). Despite the Court’s
repeated and explicit orders to do so, Mr. Savoy has not provided (either to this
Court or to Appeals) an amended Form 1040, “U.S. Individual Income Tax
Return”, for the tax year 2007, nor has he produced any information that would
support his claim that his 2007 tax liability, as reported on the 2007 return as filed,
was incorrect.
Discussion
I. General legal principles
A. Summary judgment standards
Where the pertinent facts are not in dispute, parties may move for summary
judgment to expedite the litigation and avoid an unnecessary trial. Fla. Peach
Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted where there is no genuine dispute as to any material fact, and a decision
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[*14] may be rendered as a matter of law. Rule 121(a) and (b); Sundstrand Corp.
v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).
The party moving for summary judgment bears the burden of showing that there is
no genuine dispute as to any material fact, and factual inferences will be drawn in
the manner most favorable to the partying opposing summary judgment.
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). This case can be resolved
on the basis of the undisputed facts.
B. Standard of review
Where the validity of the underlying tax liability is properly at issue, we
review that matter de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000);
Goza v. Commissioner, 114 T.C. 176, 182 (2000).
The Court reviews for abuse of discretion the administrative determinations
by the Commissioner’s Appeals Office regarding nonliability issues. Hoyle v.
Commissioner, 131 T.C. 197, 200 (2008); Goza v. Commissioner, 114 T.C. 182.
Because nonliability issues are before us, we review the determinations regarding
those issues for abuse of discretion. In determining abuse of discretion, we
consider whether the determination was arbitrary, capricious, or without sound
basis in fact or law. See, e.g., Murphy v. Commissioner, 125 T.C. 301, 320
(2005), aff’d, 469 F.3d 27 (1st Cir. 2006); Woodral v. Commissioner, 112 T.C. 19,
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[*15] 23 (1999). The Court does not conduct an independent review and
substitute its own judgment for that of the settlement officer. Murphy v.
Commissioner, 125 T.C. 320. If the settlement officer follows all statutory and
administrative guidelines and provides a reasoned, balanced decision, the Court
will not re-weigh the equities. Thompson v. Commissioner, 140 T.C. 173, 179
(2013).
C. Tax Court jurisdiction
This Court is a court of limited jurisdiction. It may therefore exercise
jurisdiction only to the extent expressly provided by statute. Breman v.
Commissioner, 66 T.C. 61, 66 (1976). In addition, jurisdiction must be shown
affirmatively, and a party invoking our jurisdiction bears the burden of proving
that we have jurisdiction over the party’s case. Fehrs v. Commissioner, 65 T.C.
346, 348 (1975); Wheeler’s Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C.
177, 180 (1960). With respect to collection actions, this Court’s jurisdiction under
section 6330(d) depends on the issuance of a valid determination letter and the
filing of a timely petition for review. Meyer v. Commissioner, 115 T.C. 417, 421
(2000); Offiler v. Commissioner, 114 T.C. 492, 498 (2000). Except as specifically
provided by the Code, “no suit for the purpose of restraining the assessment or
collection of any tax shall be maintained in any court by any person”. Sec.
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[*16] 7421(a). The Court’s jurisdiction in levy actions brought pursuant to section
6330(d) is limited to determining whether Appeals’ notice of determination should
be sustained. Therefore, to the extent that Mr. Savoy requests other relief, we
cannot grant it.
D. Collection review procedure
Section 6330 generally provides that taxpayers are entitled to administrative
and judicial review before the Commissioner may collect unpaid tax by way of a
levy on the taxpayer’s property. Administrative review is carried out by
requesting a CDP hearing with the IRS Office of Appeals. If the taxpayer is
dissatisfied with the outcome there, he may appeal that determination to the Tax
Court. Sec. 6330(b), (d).
The pertinent procedures for the administrative CDP hearing are set forth in
section 6330(c). First, the Appeals officer must obtain verification from the
Secretary that the requirements of any applicable law or administrative procedure
have been met. Sec. 6330(c)(1). The record reflects that the settlement officer
obtained proper verification during Mr. Savoy’s initial and supplemental CDP
hearing, and Mr. Savoy did not contest that verification during his CDP hearing or
in his Tax Court petition. Second, a taxpayer may raise any issue relevant to the
unpaid tax or proposed collection action at the hearing, including challenges to the
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[*17] appropriateness of the collection action and offers of collection alternatives
(such as Mr. Savoy’s suggestion of an OIC). Sec. 6330(c)(2)(A). Additionally, a
taxpayer may contest the existence and amount of the underlying tax liability, but
only if he did not receive a notice of deficiency or otherwise have an opportunity
to dispute the tax liability. Sec. 6330(c)(2)(B).
II. Issues raised at the hearing
Mr. Savoy raised five “issues” in both his CDP hearing and Tax Court
petition challenging the notice of determination:
A. “Due diligence”
Mr. Savoy contends that “The first Levy”--i.e., evidently a notice of
proposed levy for income tax for years prior to 2007--was issued without “due
diligence” because it was sent to a wrong address, and that he was therefore
deprived of the opportunity for a CDP hearing as to those prior years. However,
Mr. Savoy has not petitioned this Court to review such a levy.
Contentions about a notice of proposed levy for years prior to 2007 are
outside our jurisdiction in this case. See sec. 6330(d)(1); Freije v. Commissioner,
125 T.C. 14, 28 (2005) (“In exercising * * * jurisdiction [under section
6330(d)(1)], we do not determine whether any collection action with respect to the
nondetermination year may proceed, but only whether collection action may
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[*18] proceed in the determination year.” (Emphasis added.)). Because the May
24, 2010, notice of determination and the July 18, 2013, supplemental notice of
determination--the sole means by which this Court has jurisdiction--concern only
the tax year 2007, we lack jurisdiction to consider levies concerning any tax years
other than 2007.6
B. “Civil Rights Violations”
Mr. Savoy contends at length and in detail that, in light of his medical
condition, Appeals violated the Rehabilitation Act of 1973 (“Rehabilitation Act”),
Pub. L. No. 93-112, secs. 500-504, 87 Stat. at 390-394 (codified as amended at 29
U.S.C. secs. 701-796 (2006)).7 The chief alleged violation appears to be Appeals’
6
To the extent that there might be any supposed connection between the
IRS’s proposed collection for 2007 at issue here and any proposed collection of
“extra-jurisdictional liabilities”, see Sullivan v. Commissioner, T.C. Memo.
2009-4, slip op. at 20, those other liabilities are effectively rendered moot since
the supplemental notice of determination at issue here put into CNC status “all
years showing a balance due”.
7
The Rehabilitation Act of 1973 (“Rehabilitation Act”), Pub. L. No. 93-112,
sec. 504, 87 Stat. at 394 (codified as amended at 29 U.S.C. sec. 794(a) (2006)),
reaches “any program or activity conducted by any Executive agency”. Mr. Savoy
also complains of violations of the Americans with Disabilities Act of 1990
(“ADA”), Pub. L. No. 101-336, 104 Stat. 327, but the ADA does not apply to
Federal agencies. See Pitts v. Commissioner, T.C. Memo. 2010-101, slip op. at
22-23. However, the ADA’s definition of “disability” has been explicitly
incorporated into the Rehabilitation Act. For its definition, Rehabilitation Act sec.
504(a), 29 U.S.C. sec. 794(a), refers to “section 705” of 29 U.S.C.; and 29 U.S.C.
(continued...)
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[*19] insistence that he file multiple returns in a short period of time.8 To the
extent Mr. Savoy seeks a determination that the IRS violated the Rehabilitation
Act, we lack jurisdiction over that subject matter, which jurisdiction has instead
been conferred on the District Courts.9 The related issue we can decide is whether
Appeals abused its discretion, either in its handling of the CDP hearing or in its
determination, by refusing to make reasonable accommodations in favor of a
disabled taxpayer--an issue implicated in three aspects of this case:
7
(...continued)
section 705(9)(B) provides: “The term ‘disability’ means * * * for purposes of
* * * subchapter[] * * * V * * * of this chapter”, the meaning given it in 42 U.S.C.
section 12102 (2006). That incorporated definition of “disability” is from 42
U.S.C. section 12102 (2006), which is part of the codification of the ADA. The
“disability” definition as it now appears in 42 U.S.C. section 12102 was
substantially amended by the ADA Amendments Act of 2008, Pub. L. No.
110-325, sec. 4, 122 Stat. at 3555. Thus, the definition of “disability” as it appears
in the Rehabilitation Act does, by means of its incorporation of 42 U.S.C. section
12102, reflect the definition of “disability” as enacted in the ADA and as amended
in the ADA Amendments Act of 2008.
8
The complaint pertains to IRS enforcement of “levy one” (i.e., the levy for
pre-2007 taxes), but the IRS’s motion to remand admits that similar demands were
made in the 2007 CDP hearing.
9
Even if the IRS violated the Rehabilitation Act, a point which the
Commissioner denies and which the Court does not address, the proper remedy for
Mr. Savoy is provided in 31 C.F.R. part 17 (2013) and does not involve the Tax
Court. If a disabled person is dissatisfied with a final agency decision under the
Rehabilitation Act, he may file an appeal with the appropriate Federal District
Court. See 29 U.S.C. sec. 794(a); 42 U.S.C. secs. 2000d through 2000d-7 (2006).
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[*20] 1. Opportunity to challenge the 2007 liability
The IRS conceded that Appeals did abuse its discretion at the initial CDP
hearing by insufficiently taking Mr. Savoy’s disability into account in setting the
deadline for his submission of information challenging his underlying liability for
2007 (i.e., an amended 2007 return and supporting documentation). In light of
that concession, we ordered a remand so that Mr. Savoy could have his due
opportunity to challenge that liability. He contends that the remand was
inadequate, and we discuss that contention in part II.C below under his third issue
(“Tax Liability is in Error”).
2. Non-acceptance of OIC
On his request for a CDP hearing, Mr. Savoy indicated an interest in an
OIC; and he has sometimes seemed to contend that Appeals abused its discretion
by insisting in April 2013 that he file his 2011 and 2012 returns as a prerequisite
to its considering an OIC. However, Mr. Savoy never actually submitted an OIC
or proposed any other collection alternative, and he has focused instead on
challenging his underlying liability for 2007. By definition, Appeals cannot abuse
its discretion by failing to accept a collection alternative that the taxpayer never
proposed. See Reed v. Commissioner, 141 T.C. 248, 254 (2013) (“A taxpayer
must propose an OIC for it to be considered during the
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[*21] collection hearing.”); see also Godwin v. Commissioner, T.C. Memo.
2003-289 (“Taxpayers who wish to propose an offer in compromise must submit a
Form 656, Offer in Compromise, which requests financial information from the
taxpayer so that the IRS can determine whether the offer should be accepted”),
aff’d, 132 Fed. Appx. 785 (11th Cir. 2005).
3. Collection activity
To the extent Mr. Savoy still contends that, in its supplemental notice of
determination, Appeals abused its discretion by its decisions with respect to
collection activity, that contention must be rejected. Appeals did not sustain the
notice of levy that prompted this proceeding; and Appeals did not propose even
the filing of a notice of lien. Rather, Appeals determined to grant Mr. Savoy CNC
status for all tax years showing a balance due. Consequently, he may make
payments on whatever schedule he is able, and the IRS will not proceed with
involuntary collection. Certainly, Appeals did not abuse its discretion in
determining not to sustain collection actions and instead to place Mr. Savoy in
CNC status for all tax years showing a balance due. CNC status grants Mr. Savoy
relief from all collection activity and thus by definition accommodates his
disability to the maximum extent possible. Such a determination gives Mr. Savoy
an indefinite time within which to assemble the necessary documentation and file
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[*22] amended returns for any tax period as to which he believes his assessed
liability is excessive. Moreover, he can submit an OIC or other collection
alternative if he wishes to do so.
C. “Tax Liability is in Error”
Mr. Savoy contends that the tax assessed for several years (including 2007),
on the basis of his self-prepared returns, was in error because of the haste with
which he was required to prepare his returns. Since the issue of his 2007 liability
was not resolved on remand, it is now the subject of our review.
The Court considers an underlying tax liability on review only if the
taxpayer properly raised the issue during the CDP hearing. 26 C.F.R. secs.
301.6320-1(f)(2), Q&A-F3, 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.;
see also Giamelli v. Commissioner, 129 T.C. 107, 115 (2007). A taxpayer does
not properly raise the issue of an underlying tax liability if he requests
consideration but “fails to present to Appeals any evidence with respect to that
issue after being given a reasonable opportunity to present such evidence.” See
26 C.F.R. sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
We assume in his favor that Mr. Savoy might need as long as six months to
assemble the information described in our order of December 6, 2013. However,
since April 2008 when his original return was due, he has had more than six years
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[*23] to assemble the information but evidently he has not done so. He should
have assembled the information before the conclusion of his initial CDP hearing in
April 2012 (more than two years ago), but evidently he did not do so. Failing that,
he should have assembled the information in response to our explicit remand order
in March 2013, but he evidently did not do so. Even considering only that latest
instance, he had not just six months to do so, but nine months from the time of our
remand order until the deadline of January 6, 2014, but evidently he did not do so.
Moreover, even at this late date, Mr. Savoy admits he does not even know whether
the amount assessed against him is too great or too small. For all Mr. Savoy
knows, he owes more than the IRS has assessed.
Mr. Savoy’s motion for an extension might have been understandable had
our order of December 6, 2013, been a first call for this information, but it was
not. It was instead our attempt to give Mr. Savoy one last chance to present
information that he had been obligated to assemble previously, on multiple
occasions. Mr. Savoy missed the Court’s January 6, 2014, deadline to file his
supplemental objection to the Commissioner’s motion for summary judgment.
Mr. Savoy has failed to present to this Court any evidence supporting a
challenge to the underlying liability. Taking into account his disability, he has
certainly been afforded a “reasonable opportunity” to provide evidence disputing
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[*24] the tax liability, see 26 C.F.R. sec. 301.6330-1(f)(2), Q&A-F3, but has not
done so. We therefore find that Mr. Savoy did not properly challenge the
existence or amount of the underlying tax liability for 2007.
D. “Currently Uncollectible”
Mr. Savoy agrees with Appeals’ decision that he should have CNC status
and its decision not to sustain the proposed levy, but he disputes the
appropriateness of the filing of a notice of lien, which was foretold in the
explanation attached to Appeals’ initial notice of determination. However, unlike
the initial notice of determination issued April 18, 2012, Appeals’ supplemental
notice of determination did not state that the IRS would file a notice of lien. (The
record contains no evidence that the IRS has filed a notice of Federal tax lien; and
Mr. Savoy’s petition does not concern such a notice. If the IRS does file a notice
of lien, Mr. Savoy will be entitled to a hearing on that filing, pursuant to
section 6320(b).) Accordingly, any contention in this case against the
appropriateness of the filing of a notice of lien is moot.
E. “Full Life Assay”
Mr. Savoy contends that an evaluation of the accomplishments of his entire
life will show that over the years he has contributed great value to our country and
has taken action that saved the Government much money. He apparently suggests
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[*25] that this should be taken into account in deciding whether the IRS should be
permitted to collect tax that he owes. That is, he asks us to make a plenary review
of his contributions (monetary and otherwise) as against his liabilities in general.
Mr. Savoy’s request for a “Full Life Assay” will not be granted. We have
jurisdiction only to review the IRS’s proposed collection as to 2007 (not to review
his liabilities for his whole life). While our review can and does take account of
amounts he has paid in money, Mr. Savoy cannot satisfy his tax obligations with
intangible contributions or supposed savings that he has facilitated for the
Government, so we will not attempt to assign values to those non-payments.
III. Conclusion
The record demonstrates no abuse of discretion by Appeals in issuing its
supplemental notice of determination not to sustain the proposed levy but instead
to put Mr. Savoy in CNC status. As required by section 6330(c)(3)(C), the
settlement officer evaluated the proposed collection action (here, the proposed
levy) by balancing the need for efficient collection of taxes with Mr. Savoy’s
concerns that such action be no more intrusive than necessary, especially in light
of his medical condition, and determined not to proceed with collection but instead
to put Mr. Savoy into CNC status. Few determinations could be as beneficial to
Mr. Savoy. Though he continues to owe a tax liability (which accrues interest),
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[*26] Mr. Savoy is free from the pressures of a pending levy or notice of lien when
preparing amended returns or proposing a collection alternative (if he decides to
do so). We cannot find any abuse of discretion in the settlement officer’s
supplemental notice of determination, and we therefore sustain it. As to the other
issues Mr. Savoy raises, the Court lacks jurisdiction to grant the relief Mr. Savoy
seeks. To give effect to this opinion,
An appropriate order and decision
will be entered for respondent.