Christopher Lambert v. Commissioner

T.C. Memo. 2020-53
UNITED STATES TAX COURT
CHRISTOPHER LAMBERT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10134-18L. Filed May 6, 2020.
Christopher Lambert, pro se.
Derek W. Kelley and Michael E. D’Anello, for respondent.
MEMORANDUM OPINION
NEGA, Judge: Petitioner seeks review pursuant to sections 6320(c) and
6330(d)1 of respondent’s determination in an agency-level collection due process
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code (Code) in effect at all relevant times, and all Rule references are to
the Tax Court Rules of Practice and Procedure. All monetary amounts are
(continued...)
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[*2] (CDP) proceeding to sustain the filing of a notice of Federal tax lien (NFTL)
in an action to collect section 6672 trust fund recovery penalties (TFRPs) assessed
against petitioner for failing to collect and pay over employment taxes of CJB
Concrete Forms, Inc., for the quarterly periods September 2004 through December
2006 (periods at issue). Respondent has moved for summary judgment under Rule
121, and petitioner has not filed any response to respondent’s motion. For the
reasons explained below, we will grant the motion.
Background
The following facts are based on the pleadings and the administrative
record.2
CJB Concrete Forms, Inc.
Petitioner was the vice president and secretary of CJB Concrete Forms, Inc.,
a business located in Massachusetts that operated during the periods at issue. As a
result of its operations, CJB Concrete Forms, Inc., incurred the obligation to pay
Federal employment or excise taxes. Petitioner had the duty to perform and the
1
(...continued)
rounded to the nearest dollar.
2
Respondent has filed exhibits to his motion for summary judgment and a
separate declaration of the settlement officer (SO) with attached exhibits. These
exhibits constitute the administrative record.
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[*3] power to direct the acts of collection, accounting for and paying over trust
fund monies of CJB Concrete Forms, Inc.; however, the required funds were not
withheld or paid over to the Internal Revenue Service (IRS) for the periods at
issue.
The trust fund recovery penalties
On December 15, 2010, a revenue officer prepared Form 4183,
Recommendation re: Trust Fund Recovery Penalty Assessment, that was signed
that same day by the group manager, the revenue officer’s immediate supervisor.
The TFRPs approved on the Form 4183 were assessed for the quarterly periods
from March 2004 through December 2008 and totaled $85,752. Two responsible
parties were listed on the Form 4183: petitioner and the president of CJB
Concrete Forms, Inc.
On December 16, 2010, the IRS sent petitioner Letter 1153, Trust Fund
Recovery Penalty Letter, indicating its proposal to assess the TFRPs and enclosing
Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, that set forth
the amounts of outstanding employment taxes that should have been withheld or
excise taxes that should have been paid (trust fund taxes), as well as the TFRPs
proposed to be assessed in respect of each quarter corresponding with the unpaid
trust fund taxes. Petitioner filed a timely written protest of his liability for the
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[*4] TFRPs. After he was afforded a conference with the IRS Appeals Office3 that
did not result in settlement, the IRS assessed the TFRPs that are the basis of this
CDP case on July 4, 2011.
Notice of Federal tax lien
On November 28, 2017, respondent issued by letter to petitioner a notice of
NFTL filing for each TFRP assessed for the periods at issue, for a total unpaid
balance of $51,849.4 Each notice of NFTL filing informed him of his right to a
CDP hearing under section 6320. Petitioner timely requested a CDP hearing for
the periods at issue on Form 12153, Request for a Collection Due Process or
Equivalent Hearing. When prompted to “[c]heck the most appropriate box for the
reason you disagree with the filing of the lien or the levy”, petitioner did not select
a check-the-box option but instead wrote “[r]easonable expenses exceeding my
income” and “[s]ome of these taxes should have been paid by former partner”.
Petitioner checked the boxes for the following collection alternatives:
3
This office is now called the “Independent Office of Appeals”. See sec.
6320(b)(1) (as amended by the Taxpayer First Act, Pub. L. No. 116-25, sec. 1001,
133 Stat. at 983) (2019).
4
Respondent asserts that IRS records show the TFRPs were reduced on
account of payments made for some of the periods at issue by petitioner’s former
partner under the terms of an offer-in-compromise.
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[*5] “Installment Agreement”, “Offer in Compromise”, and “I Cannot Pay
Balance”. With respect to collection alternatives the Form 12153 instructed:
If, during your CDP Hearing, you think you would like to discuss a
Collection Alternative to the action proposed by the Collection
function it is recommended you submit a completed Form 433A
(Individual) and/or Form 433B (Business), as appropriate, with this
form. * * *
Petitioner did not include a Form 433A, Collection Information Statement for
Wage Earners and Self-Employed Individuals (or 433B, Collection Information
Statement for Business), with his request for a CDP hearing.
On January 30, 2018, the IRS acknowledged petitioner’s request in a letter
that specifically stated: “[B]efore we can consider your request for a collection
alternative, we need additional information. Please complete the enclosed Form
433-F”. This letter indicated that the IRS had not received a completed Form 656,
Offer in Compromise, and it requested its completion for consideration of an offer-
in-compromise. On February 20, 2018, an SO from the IRS Appeals Office sent
petitioner a letter scheduling a telephone CDP conference for March 13, 2018, for
the express purpose of discussing petitioner’s “disagree[ment] with the collection
action or * * * alternatives to the collection action”. The SO informed petitioner
that
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[*6] to consider alternative collection methods such as an installment
agreement or offer in compromise, you must provide * * * [a]
Completed Collection Information Statement Form 433-A for
individuals * * * I can’t consider collection alternatives without the
information requested. I am enclosing the necessary forms and a
return envelope for your convenience. [Emphasis added.]
The administrative record reveals that on the same day the SO sent this letter he
reviewed IRS records and determined, among other things, that petitioner had
previously appealed the IRS’ determination to assess TFRPs to the IRS Appeals
Office, which had upheld the determination. The SO also spent significant time
reviewing IRS records to determine that the requirements of applicable law and
administrative procedure had been met for the administrative steps taken in
petitioner’s case.
On the date and time scheduled for petitioner’s telephone CDP conference
the SO placed a telephone call to him but received no answer and had no
opportunity to leave a message. Although the SO’s original letter to petitioner
provided the SO’s name, employee ID, telephone number, and fax number,
petitioner did not contact the SO for the telephone conference. The SO sent
petitioner a letter on the day of the scheduled telephone CDP conference briefly
reciting his attempts to contact petitioner for a “telephone Collection Due Process
conference” and indicated that petitioner had an additional 14 days to provide any
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[*7] additional information to the SO, including any information requested in
previous correspondence, and that after such time elapsed the Appeals Office
would “make a determination in the hearing you requested by reviewing the
Collection administrative file and whatever information you provided”. Petitioner
did not respond or provide any of the requested information.
On May 9, 2018, respondent issued to petitioner a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330 finding that the
NFTL was appropriate and enclosing a summary of the actions taken during the
CDP proceeding and the determination by the SO to sustain the lien action. The
summary recited the SO’s attempts to contact petitioner, the fact that no
Form 433-A was received, and the SO’s independent review of the IRS’ collection
actions. The SO concluded that “the IRS followed all legal and procedural
requirements, and the actions taken or proposed were appropriate under the
circumstances.”
Tax Court proceedings
Petitioner timely filed his petition in this Court arguing that: (1) he was not
provided a hearing to discuss his proposed collection alternatives; (2) payment of
the tax would be a financial hardship on his family; (3) the statute of limitations
provided him a defense; (4) his former partner is responsible for the tax and settled
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[*8] with the IRS; and (5) he provided the requested information timely.
Petitioner resided in Rhode Island when the petition was filed.
Respondent has filed a motion for summary judgment and documents in
support thereof, arguing that petitioner is precluded from challenging the TFRP
assessment and that the determination of the SO sustaining the NFTL should be
upheld. Twice petitioner was ordered to respond to respondent’s motion; no
response has been filed, and the periods set for any response have lapsed. At the
calendar call corresponding with the trial date originally set in this case, petitioner
stated: “I have no defenses to the motion.”
Discussion
I. Summary judgment
The purpose of summary judgment is to expedite litigation and avoid
unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
The Court may grant summary judgment when there is no genuine dispute as to
any material fact and a decision may be rendered as a matter of law. Rule 121(b);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965
(7th Cir. 1994). In deciding whether to grant summary judgment, we draw factual
inferences in the light most favorable to the nonmoving party, Sundstrand Corp. v.
Commissioner, 98 T.C. at 520--in this instance, petitioner. However, petitioner
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[*9] “may not rest upon the mere allegations or denials” but rather “must set forth
specific facts showing that there is a genuine dispute for trial.” See Rule 121(d). If
appropriate, a decision may be entered against a party who fails to respond to a
motion for summary judgment. Id. Although petitioner has failed to respond to
respondent’s motion for summary judgment, we do not enter a decision on that
basis alone but instead consider respondent’s motion on its merits and conclude
that no material facts are in genuine dispute and that this case is appropriate for
summary adjudication.
II. CDP procedure: standard and scope of review
Section 6321 imposes a lien in favor of the United States arising by
operation of law on all property and rights to property of a taxpayer where the
taxpayer neglects or refuses to pay after demand “any tax * * * including any
interest, additional amount, addition to tax, or assessable penalty” for which the
taxpayer is liable. The lien imposed by section 6321 arises at the time the liability
is assessed. Sec. 6322. Under section 6323(a) and (f) the IRS is authorized to file
an NFTL (distinct from the lien itself) but must, “not more than 5 business days
after the day of the filing”, notify the taxpayer of the filing of the NFTL and his
right to an administrative hearing before an impartial officer in the Appeals
Office--the agency-level CDP hearing. See sec. 6320(a)(2), (b).
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[*10] In the agency-level CDP hearing, the SO is required to: first, verify that the
requirements of any applicable law or administrative procedure have been met by
IRS personnel, see sec. 6330(c)(1), (3)(A); second, consider any relevant issues
the taxpayer has properly raised at the hearing that relate to the liability at issue,
including the appropriateness of the collection action and offers of collection
alternatives, with the caveat that the taxpayer may contest the existence and
amount of the underlying liability only if he did not receive a statutory notice of
deficiency or otherwise have an opportunity to dispute the liability, see sec.
6330(c)(2), (3)(B); and third, determine “whether any proposed collection action
balances the need for the efficient collection of taxes with the legitimate concern
of the person that any collection action be no more intrusive than necessary”, sec.
6330(c)(2), (3)(C). A taxpayer is “expected to provide all relevant information
requested by Appeals, including financial statements, for its consideration of the
facts and issues involved in the hearing.” Sec. 301.6320-1(e)(1), Proced. &
Admin. Regs.
If the taxpayer is dissatisfied with the outcome of the CDP hearing, he can
appeal that determination to the Tax Court, as petitioner has done. Secs. 6320(c),
6330(d)(1). Where the underlying tax liability is properly at issue, the taxpayer is
entitled to de novo review. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
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[*11] We review issues that do not relate to the underlying tax liability for abuse
of discretion. Id. at 182. Because petitioner had a prior opportunity to dispute his
liability for the TFRPs before the IRS Appeals Office, he was not entitled to
challenge the underlying liability at the CDP hearing, see sec. 6330(c)(2)(B); we
accordingly review the SO’s actions only for abuse of discretion. Under this
standard we decide whether the determination was arbitrary, capricious, or without
sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320
(2005), aff’d, 469 F.3d 27 (1st Cir. 2006). Absent a stipulation to the contrary,
this case would be appealable to the U.S. Court of Appeals for the First Circuit.
See sec. 7482(b). We restrict the scope of our review to the administrative record.
Murphy v. Commissioner, 469 F.3d at 31; see also Kasper v. Commissioner,
150 T.C. 8, 19 n.13 (2018).
III. Penalty approval under section 6751(b)
Section 6751(b)(1) requires that the “initial determination” of a penalty be
approved in writing by the immediate supervisor of the individual making that
determination; the approval must occur before the first time the “proposed
adjustments are communicated to the taxpayer formally as part of a
communication that advises the taxpayer that penalties will be proposed”. Clay v.
Commissioner, 152 T.C. 223, 249 (2019), appeal filed (11th Cir. Nov. 6, 2019);
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[*12] see also Belair Woods, LLC v. Commissioner, 154 T.C. __, __ (slip op. at
15-16) (Jan. 6, 2020) (“[T]he ‘initial determination’ of a penalty assessment will
be embodied in a formal written communication to the taxpayer, notifying him that
the Examination Division has completed its work and has made a definite decision
to assert penalties.”).
In Chadwick v. Commissioner, 154 T.C. __, __ (slip op. at 11-17) (Jan. 21,
2020), we held that a TFRP assessed pursuant to section 6672(a) is a “penalty”
imposed by the Code to which the requirements of section 6751(b)(1) are
applicable. The Form 4183 in the administrative record shows that the immediate
supervisor of the revenue officer in this case approved the TFRPs on December
15, 2010, one day before the Letter 1153--the first formal communication of the
IRS’ initial determination to assess the TFRPs--was mailed to petitioner. The
Form 4183 here is uncontroverted evidence of timely written supervisory
approval; it is sufficient to show compliance with section 6751(b). Accord
Blackburn v. Commissioner, 150 T.C. 218, 224 n.4 (2018); see Chadwick v.
Commissioner, 154 T.C. at __ (slip op. at 17-18). Accordingly, we find no abuse
of discretion in the SO’s implicit determination that the requirements of applicable
law were met in this regard.
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[*13] IV. Analysis of CDP proceedings
The facts set forth in the administrative record show that the SO complied
with his statutory duties: He verified that the requirements of applicable law and
administrative procedure had been met, considered the issues raised by petitioner
to the extent of the information provided, and properly weighed the proposed
collection action, balancing the need for the efficient collection of taxes against
petitioner’s legitimate concern that any collection action be no more intrusive than
necessary. Petitioner contests that he was provided a hearing, but the record
shows that he was afforded an adequate opportunity to raise issues with the SO
regarding the TFRP collection action. Sec. 301.6320-1(d)(2), A-D6, Proced. &
Admin. Regs.; see, e.g., Leibold v. Commissioner, T.C. Memo. 2012-210, slip op.
at 14 (holding that IRS acted within its discretion to proceed with NFTL without
face-to-face pre-collection hearing where all applicable law and administrative
procedure was followed and taxpayer failed to offer any collection alternatives,
raise permitted nonliability issue, or provide financial information requested by
IRS); Peter D. Dahlin Attorney at Law, P.S. v. Commissioner, T.C. Memo. 2007-
310, slip op. at 9 (“[O]nce a taxpayer has been given a reasonable opportunity for
a hearing but has failed to avail himself of that opportunity, then the
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[*14] Commissioner may make a determination to proceed with collection based
upon a review of the case file.”).
Petitioner also raised a statute of limitations issue in his petition. The TFRP
assessments all occurred on July 4, 2011, well within the 10-year period of
limitations on collection after assessment under section 6502.5 We have
acknowledged that our precedent contains some ambiguity as to whether the
expiration of the period of limitations on collection is properly considered a
challenge to the underlying tax liability (and therefore subject to de novo review).
See Weiss v. Commissioner, 147 T.C. 179, 187 (2016), aff’d, 2018 WL 2759389
(D.C. Cir. May 22, 2018). While petitioner had the opportunity to challenge the
underlying TFRP liabilities before assessment, he has not had a prior opportunity
to raise a challenge based on the 10-year period of limitations on collection in a
collection proceeding. See, e.g., Jordan v. Commissioner, 134 T.C. 1, 8 (2010)
(concluding that de novo review would apply in such a circumstance),
supplemented by T.C. Memo. 2011-243. But we conclude that the result in this
5
We construe petitioner’s challenge to the period of limitations as relating to
the statute of limitations applicable to collection, see sec. 6502, rather than
assessment, see sec. 6501. However, we observe that the SO verified that the IRS
had complied with the period of limitations on assessment of the liability. See
secs. 6201(a), 6501(a), 6672(b); Dinino v. Commissioner, T.C. Memo. 2009-284,
slip op. at 18.
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[*15] case would be the same under either standard of review, as the
uncontroverted facts in the administrative record show that the period of
limitations on collection after assessment had not expired upon the filing of the
NFTL. See Weiss v. Commissioner, 147 T.C. 187. Therefore petitioner cannot
prevail on this basis.
Petitioner also asserted as a potential ground for relief that his former
partner at CJB Concrete Forms, Inc., is responsible for the taxes and settled with
the IRS. But before the assessment of the TFRPs at issue here, petitioner received
a Letter 1153 and fully availed himself of the opportunity to contest the
assessment of the liability for the TFRPs in a prior CDP hearing. This action
constituted a prior opportunity to dispute that liability which now precludes us
from entertaining this claim. See Pough v. Commissioner, 135 T.C. 344, 349
(2010).6
Petitioner also raised the issue that payment of the tax would work a
financial hardship on his family, but he provided none of the information
6
We note that sec. 6672 allows the IRS to seek collection simultaneously
from multiple responsible persons until such time as the outstanding liabilities are
satisfied in full; a responsible person cannot avoid collection on the ground that
the IRS should first collect the tax from someone else. See Bletsas v.
Commissioner, T.C. Memo. 2018-128, at *11-*12, aff’d, 784 F. App’x 835 (2d
Cir. 2019).
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[*16] necessary for the SO to consider payment alternatives. Petitioner’s assertion
that he provided the information that the IRS requested in a timely manner is
simply not supported by the record. Although petitioner requested a collection
alternative, contrary to the assertions in his petition we find that he did not provide
any of the financial information requested by the SO despite continued prompts
for the information over the course of months of correspondence, nor did he
participate in the telephone conference that he was notified would provide him the
opportunity to discuss those matters. Even after the SO attempted to hold the
telephone conference, the SO sent a letter prompting petitioner again to provide
the requested information, but to no avail.
The SO does not abuse his discretion when he rejects a collection
alternative because of the taxpayer’s failure to provide the necessary financial
information during the CDP hearing. Olsen v. United States, 414 F.3d 144, 154
(1st Cir. 2005); Pough v. Commissioner, 135 T.C. 351. We therefore conclude
that there is no genuine dispute of material fact requiring a trial in this case. We
hold that respondent is entitled as a matter of law to the entry of a decision
sustaining the filing of the NFTL.
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[*17] To reflect the foregoing,
An appropriate order and decision
will be entered.