DocketNumber: Docket No. 24581-14L.
Citation Numbers: 113 T.C.M. 1435, 2017 Tax Ct. Memo LEXIS 127, 2017 T.C. Memo. 95
Judges: PARIS
Filed Date: 5/31/2017
Status: Non-Precedential
Modified Date: 11/21/2020
An appropriate order and decision will be entered.
PARIS,
The following facts are based on the parties' pleadings and motion papers, including the attached exhibits and affidavits.See
On April 18, 2014, respondent issued to petitioner a Letter 1058, Final Notice--Notice of Intent to Levy and Notice of Your Right to a Hearing. In response petitioner timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, seeking to enter into a $6,000-per-month installment agreement for its unpaid employment tax liability. The CDP hearing request stated that if respondent were permitted to levy, petitioner's difficulty with Medicare and Medicaid collections would render it unable to pay either its employment tax balance or its current taxes. Petitioner's CDP hearing request, however, did not dispute the underlying employment tax liability; petitioner checked the collection alternative boxes for "Installment Agreement" and "I Cannot Pay Balance".
Respondent mailed petitioner*129 a letter dated June 6, 2014, acknowledging receipt of petitioner's CDP hearing request, and SO Alcorte subsequently mailed to petitioner a letter scheduling a CDP hearing for August 28, 2014. SO Alcorte's *98 letter advised petitioner that it did not qualify for consideration of an installment agreement because it was not in compliance with its employment tax deposit requirements for the taxable period ending June 30, 2014. The letter further advised petitioner that to qualify for a collection alternative it had to provide to SO Alcorte the following items no later than August 12, 2014: (1) a completed Form 433-B, Collection Information Statement for Businesses, and (2) evidence that it had made the required Federal employment tax deposits for the current taxable period. SO Alcorte informed petitioner that respondent could not consider collection alternatives without the information requested.
Petitioner did not submit the requested Form 433-B until August 26, 2014, two days before the scheduled hearing, asserting that the proposed levy would result in "economic hardship" and, therefore, "this situation * * * mandate[s] the release of the proposed levy". The Form 433-B was signed by petitioner's*130 president, Sam Jewell, and listed among petitioner's assets accounts receivable from Private Pay, Medicaid Oklahoma, Medicare, and Insurance CoPay--with a combined balance of $444,196.43--for the period April 30 through June 30, 2014.*99 The Form 433-B also listed petitioner's monthly income of $322,941.18 and monthly expenses of $276,793, for a net monthly income of $46,148.18.
In preparation for the CDP hearing SO Alcorte reviewed the administrative record and noted in her case activity report that petitioner did not appear to qualify for an installment agreement because its assets in accounts receivable were sufficient to pay the outstanding liability in full. She noted on petitioner's Form 433-B that its net monthly income was $46,148.18.
On August 28, 2014, the parties held the scheduled CDP hearing. Petitioner's representative did not contest petitioner's underlying tax liability but instead reiterated that it would suffer economic hardship if the proposed collection action were sustained. SO Alcorte explained to petitioner's representative that she would not consider petitioner's economic hardship argument because the economic hardship exception under
The purpose of summary judgment is to expedite litigation and avoid unnecessary and time-consuming trials.
Where the validity of the underlying tax liability is properly at issue in a collection case, the Court will review the matter on a de novo basis.
In deciding whether the SO abused her discretion in sustaining the proposed collection action, the Court considers whether she: (1) properly verified that the requirements of any applicable law or administrative procedure have been met; *102 (2) considered any relevant issues petitioner raised; and (3) determined whether "any proposed collection*133 action balances the need for the efficient collection of taxes with the legitimate concern of * * * [petitioner] that any collection action be no more intrusive than necessary."
Review of the record reveals that SO Alcorte conducted a thorough review of petitioner's account, determined that the taxes had been properly assessed, and verified that other requirements of applicable law and administrative procedure were followed.
Petitioner's primary contention is that
Petitioner*134 argues alternatively that SO Alcorte abused her discretion in rejecting its installment agreement request and in failing to adequately consider its "economic hardship" in the balancing analysis required by
In its discretion, the IRS may enter into an installment agreement if it determines that doing so will facilitate full or partial collection of a tax liability.
Petitioner argues that it was an abuse of discretion for SO Alcorte to reject its proposed installment agreement. The record, however, demonstrates that SO Alcorte's rejection of petitioner's installment agreement was proper*135 for either of her reasons: (1) the value of petitioner's assets exceeded the underlying liability and (2) petitioner was not in compliance with its Federal employment tax deposit obligations.Petitioner's Assets SO Alcorte rejected petitioner's proposed installment agreement after determining that it could fully or partially satisfy its tax liability--$88,239.49--by liquidating or borrowing against its assets--$444,196.43 in accounts receivable *105 alone.See In rejecting petitioner's proposed installment agreement, SO Alcorte also noted that petitioner was not in compliance with its current Federal*136 employment tax deposit obligations. Established IRS policy requires taxpayers to be in *106 compliance with current filing and estimated tax payment requirements to be eligible for collection alternatives. Petitioner argues that SO Alcorte abused her discretion because--even though it was not in compliance--she failed to consider that its inability to remain current with its Federal tax deposits was a result of its nonreceipt of Medicare and Medicaid funding from the Federal and State Governments. For support, petitioner cites In Unlike the taxpayer in Petitioner next argues that SO Alcorte either*138 did not conduct the required statutory balancing test or did not explain her reason for concluding that its *108 requirements were met. Petitioner suggests that it "proposed a viable collection alternative that it could afford to pay on a monthly basis while staying current on its federal tax deposit payments that was less intrusive than enforced levy action". This Court also found in At the time petitioner requested this installment agreement, the submitted Form 433-B showed that its monthly income exceeded its monthly expenses with a net monthly income of $46,148.18. SO Alcorte noted petitioner's accounts receivable, which were together sufficient to pay the outstanding liabilities in full.*139 These accounts included delayed payments from Medicare and Medicaid, but petitioner did not suggest that they would be unpaid. Although petitioner complains of the possibility of being forced to close its doors to its patients and employees, this Court finds that SO Alcorte gave due *109 weight to petitioner's specific circumstances. The Government's interest in efficiently collecting petitioner's liability simply tipped the scale the other way. Furthermore, it is well established that rejecting a collection alternative because of noncompliance with estimated tax payment requirements does not violate the proper balancing requirement. Next, petitioner argues that SO Alcorte's review of the documents it provided before the CDP hearing violates its Petitioner does not argue that SO Alcorte had prior involvement in an earlier, non-CDP matter; rather, it argues that, because she had reviewed petitioner's documents before the CDP hearing, SO Alcorte was not impartial. Petitioner is incorrect. The regulations clearly state that prior involvement means that an Appeals officer actually participated*141 in an earlier, non-CDP matter. SO Alcorte verified that she had not had any prior involvement with respect to the specific tax period at issue. Because SO Alcorte did not participate in a prior non-CDP matter concerning the same tax, taxpayer, and tax period at issue, she was an eligible Appeals officer to preside over the CDP hearing. Accordingly, *111 the undisputed material facts establish that SO Alcorte did not abuse her discretion by reviewing the information petitioner had provided before its CDP hearing. Finally, petitioner argues that the Court should remand this case for additional consideration. The Court is not convinced that a remand is necessary or would be productive. Finding no abuse of discretion, the Court will grant respondent's motion for summary judgment and deny petitioner's. The Court has considered*142 all of the arguments made by the parties, and to the extent they are not addressed herein, they are considered unnecessary, moot, irrelevant, or without merit. To reflect the foregoing,
1. Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Each party requests that certain of the other's affidavits and exhibits be stricken from the record because they were not part of the original administrative record. Although there exists conflicting authority as to whether the Court's review in CDP cases is limited to the administrative record, neither the U.S. Court of Appeals for the Tenth Circuit nor the U.S. Court of Appeals for the D.C. Circuit has specifically ruled on the issue. The Court denies both requests.↩
3. The record reflects that $305,378.09 of petitioner's total accounts receivable was owed by the Federal and State Government agencies referenced above.↩
4. Regardless of whether petitioner could have contested its underlying liability at the CDP hearing, this Court may consider a challenge to such a liability only if the taxpayer properly raised it before the SO,
5. In
6. The Court finds disingenuous petitioner's argument that SO Alcorte's notes in her case activity report constituted a predetermination. The notes indicate SO Alcorte's preparation for petitioner's CDP hearing and reflect a thorough review of the late-submitted Form 433-B and its attachments. This is not an abuse of discretion.↩
7. SO Alcorte noted in her case activity report that "there are enough equity in assets as well as the excess monthly income shows negative figure than proposed". And petitioner points to this as an example of SO Alcorte's abuse of discretion. However, even assuming that the quoted sentence means that she thought petitioner's net income was negative--instead of positive $46,148.18 per month this mistake was of no consequence to her ultimate decision in the notice of determination, which does not mention petitioner's income. Any actual error was harmless since an accurate reflection of petitioner's positive net income would have been another reason to reject its proposed $6,000-per-month installment agreement.
Cox v. Comm'r , 126 T.C. 237 ( 2006 )
Reed v. Commissioner , 141 T.C. 248 ( 2013 )
Lindsay Manor Nursing Home, Inc. v. Comm'r , 113 T.C.M. 3994 ( 2017 )
Murphy v. Commissioner of IRS , 469 F.3d 27 ( 2006 )
Keith Orum and Cherie Orum v. Commissioner of Internal ... , 412 F.3d 819 ( 2005 )
Alessio Azzari, Inc. v. Commissioner , 136 T.C. 178 ( 2011 )
Thompson v. Commissioner , 140 T.C. 173 ( 2013 )
Keller v. Commissioner , 568 F.3d 710 ( 2009 )
Sundstrand Corporation v. Commissioner of Internal Revenue , 17 F.3d 965 ( 1994 )
Christopher Cross, Inc. v. United States , 461 F.3d 610 ( 2006 )
Sundstrand Corp. v. Commissioner , 98 T.C. 518 ( 1992 )
Sego v. Commissioner , 114 T.C. 604 ( 2000 )
Florida Peach Corp. v. Commissioner , 90 T.C. 678 ( 1988 )