DocketNumber： Docket No. 15706-12L
Judges： GUSTAFSON
Filed Date： 5/29/2014
Status： Non-Precedential
Modified Date： 4/18/2021
Decision will be entered for respondent.
In response to R's notice of intent to levy and notice of Federal tax lien filing, P's request for a collection due process ("CDP") hearing under
GUSTAFSON, At the time he filed his petition herein, Mr. Tucker resided in Minnesota. The stipulated record Mr. Tucker's 2009 liability Mr. Tucker does not dispute his underlying tax liability. On his 2009 Federal income tax return, Mr. Tucker reported an income tax liability of $127,761 and tax withheld of $15,187. With his income tax return, Mr. Tucker included a partial2014 Tax Ct. Memo LEXIS 105">*107 payment of $600. The IRS summarily assessed the amount of tax shown on the return, plus statutory interest and a penalty pursuant to On February 7, 2011, the IRS issued to Mr. Tucker a "Final Notice of Intent to Levy and Notice of Your Right to a Hearing". Mr. Tucker's unpaid balance for tax year 2009 (with accruals for interest and additions for the late payment of tax) was $121,529.34 at that time. On March 8, 2011, the IRS issued to Mr. Tucker a "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under Mr. Tucker thereafter timely submitted Forms 12153, "Request for a Collection Due Process or Equivalent Hearing", which were also signed by his attorney. On those Forms 12153, Mr. Tucker checked the boxes to indicate a desire for an OIC.2014 Tax Ct. Memo LEXIS 105">*108 you own, including their fair market value and verification of any encumbrances." By letter dated June 9, 2011, Mr. Tucker's attorney requested a face-to-face hearing in St. Paul, Minnesota, and *108 included with the request a Form 433-A, "Collection Information Statement for Wage Earners and Self-Employed Individuals". The Form 433-A reported $2,000 worth of equity in personal assets described as "VARIOUS". On August 5, 2011, Appeals sent to Mr. Tucker a letter scheduling his CDP hearing for September 9, 2011, and stated that in order for Appeals to consider alternative collection methods, Mr. Tucker needed to provide within 14 days (i.e., by August 19, 2011): (1) bank statements from May 1 through July 31, 2011; (2) wage and income information from May 1 through July 31, 2011; (3) mortgage statements for May, June, and August 2011; and (4) a list of personal assets. Mr. Tucker failed to provide all the requested2014 Tax Ct. Memo LEXIS 105">*109 documentation to Appeals by the August 19, 2011, deadline. Instead, in a letter dated September 2, 2011 (i.e., one week before the scheduled CDP hearing), Mr. Tucker's attorney responded that certain financial information was unavailable and stated that he would fax the requested bank statements later that week. On September 7, 2011, Mr. Tucker provided only the requested bank records to Appeals. During a telephone call with Appeals on September 9, 2011, Mr. Tucker's attorney and Appeals agreed to conduct Mr. Tucker's CDP hearing via telephone, and the Appeals officer requested the additional financial information for the second time, which Mr. Tucker's attorney agreed to provide by September 26, 2011. Mr. Tucker *109 submitted some financial documentation over the course of the next few weeks but did not provide a list of personal assets as requested by Appeals. In a letter dated September 9, 2011, Mr. Tucker's attorney stated that Mr. Tucker had in his possession an NBA championship ring that was not listed on his Form 433-A. He estimated "that the ring may have value of approximately $10-20,000" but stated that it had not been appraised. In a letter dated September 27, 2011, Mr. Tucker's2014 Tax Ct. Memo LEXIS 105">*110 attorney notified Appeals that he would like to submit an OIC as part of his appeal. The letter stated: "The terms of the offer are as follows: $100 per month payable each month for six months, followed by $30,000 payable over three years at $833 per month." Attached to the letter was a Form 656, "Offer in Compromise", a payment of the filing fee, and the first payment under the schedule Mr. Tucker proposed in his OIC, as required by You must continue to make these monthly payments while the IRS is considering the offer. Failure to make regular monthly payments will cause your offer to be returned. * * * * e) Once an authorized IRS official signs this form, my offer is considered pending as of that signature date and it remains pending until the IRS accepts, rejects, returns, or terminates my offer or I *110 withdraw my offer. An offer will be considered withdrawn when the IRS receives my written notification of withdrawal by personal delivery or certified mail or when I inform the IRS of my withdrawal by other means and the IRS acknowledges in writing my intent to withdraw the offer. Immediately following the receipt of his OIC, Appeals forwarded Mr. Tucker's OIC to the IRS's Brookhaven Centralized Offer in Compromise Unit ("COIC") for consideration. On November 6, 2011, the COIC sent Mr. Tucker a letter confirming receipt of his OIC. In this letter, the COIC noted that the "periodic payment offer includes your proposed payment schedule. *111 1) Updated Form 433-A 2) Statement regarding current employment status and verification of any income. 3) Current bank statements and2014 Tax Ct. Memo LEXIS 105">*112 statement regarding source of all deposits 4) Mortgage balance 5) 401k balance 6) Statement regarding disposition of proceeds from distributions 7) Proof of payment of life insurance expenses 8) Proof of payment of health insurance expenses 9) Proof of payment of child care expenses 10) Statement regarding status of business - Trent Tucker's Hoops Club, Inc. The COIC processed Mr. Tucker's OIC but determined that it could not calculate his reasonable collection potential ("RCP")—which must be determined as a prerequisite to approval of an OIC—because Mr. Tucker had not provided the requested financial information. As a result, on January 11, 2012, the COIC returned the OIC offer to Appeals for further consideration. By separate letters dated January 12, 2012, both Mr. Tucker and his attorney were informed of the recommendation by the COIC that Mr. Tucker's2014 Tax Ct. Memo LEXIS 105">*113 OIC should be returned: *112 After Mr. Tucker's OIC was returned in January 2012 Mr. Tucker's attorney continued to work with Appeals to discuss the OIC. During a telephone call on February 7, 2012, the Appeals Officer confirmed with Mr. Tucker's attorney that the OIC had been returned but stated that the offer had not yet been officially rejected and would not be rejected until he (the Appeals Officer) made the final decision. Appeals then made its third request for additional financial information by reiterating that it would need Mr. Tucker to provide to Appeals by February 24, 2012, the additional information requested by the COIC, and stating that if the information was not provided, Appeals would make a decision on the OIC on the basis of the information available.2014 Tax Ct. Memo LEXIS 105">*114 agreed that an IA was no longer a viable option because Mr. Tucker was no longer working. In a letter dated *113 February 19, 2012, Mr. Tucker's attorney noted that the NBA championship ring was not insured, that there was no insurance appraisal of the ring, and that Mr. Tucker's income at the time was approximately $400 per month. On February 27, 2012, Mr. Tucker's attorney contacted Appeals and requested a face-to-face meeting, which Appeals scheduled for March 23, 2012. Mr. Tucker and his attorney met with Appeals but still did not provide the additional financial information requested on February 7, 2012. At the face-to-face meeting on March 23, 2012—and for the fourth time overall—the Appeals Officer renewed his request for the financial information and set a deadline of April 6, 2012, for providing that information. The Appeals Officer noted that he would make a determination on the basis of information available to him if no additional information was provided by that deadline. In April 2012 Mr. Tucker's attorney provided certain records to Appeals ("the April 2012 records"), including: a Form 433-A dated April 5, 2012; investment account records; life insurance account records; and bank statements. The IRS's records reflect that it received the April 2012 records, and we assume (in Mr. Tucker's favor) that Appeals received them before the April 6, 2012, deadline. *114 In the April 2012 records, Mr. Tucker asserted that the mortgage loan for his town home had already been foreclosed upon. On his April 2012 Form 433-A, Mr. Tucker again represented that he had equity totaling $2,000 in property he described as "VARIOUS". The Form 433-A made no mention of the NBA championship ring in Mr. Tucker's possession, nor did it itemize his personal assets as Appeals had requested. Also included in the April 2012 records were bank statements for Mr. Tucker's checking account and retirement accounts showing minimal or no balance. On April 18, 2012, Mr. Tucker's attorney spoke with Appeals via telephone. Appeals—for the fifth time—requested information regarding Mr. Tucker's personal assets, including the value of Mr. Tucker's NBA championship2014 Tax Ct. Memo LEXIS 105">*116 ring—specifically, whether the ring was insured and, if so, for what amount. (The next day Mr. Tucker's attorney advised by letter: "His ring is not insured, so there is no insurance appraised value.") Appeals also inquired about an updated employment status for Mr. Tucker and asked who would be making the periodic payments, since Mr. Tucker's Form 433-A reported insufficient income to make *115 those payments. Finally, Appeals raised the issue of why the periodic payments had not been made since December 2011:2014 Tax Ct. Memo LEXIS 105">*118 payments -why haven't they been made? * * * [Mr. Tucker's attorney] was under the impression the OIC had been rejected by COIC. I noted that it was their preliminary decision to return the OIC because requested fianancial [sic] information wasn't received.
On May 16, 2012, Appeals issued to Mr. Tucker a "Notice of Determination Concerning Collection Action(s) Under On Form 12153, you checked the INSTALLMENT AGREEMENT and OFFER IN COMPROMISE boxes. During the CDP hearing on September 9, 2011, POA [i.e., power of attorney] Johnson indicated the taxes may be uncollectible at this time and that an OIC may be filed in the future. I requested additional financial information be provided to substantiate the claim. On September 29, 2011 I received a completed OIC, which was forwarded to our Centralized OIC unit for consideration. Per the letter they sent you, it was being returned to Appeals for consideration because financial information they requested was not provided. I worked with you to determine if the OIC could be accepted. In a conversation with POA Johnson on April 18, 2012 I requested additional employment and asset information, and explained that the OIC had not been rejected and therefore TIPRA payments must be made. No other issues were raised. * * * You filed an Offer in Compromise. The OIC was forwarded to our Centralized Offer in Compromise Unit, who determined that you did not provide the requested financial information and they forwarded the case back to Appeals for a final decision. I reviewed the information and noted that there were no dissipated assets to consider as part of the OIC, however there were personal assets to consider. I also noted that the financial information does not show any ability to make the monthly payment outlined in the agreement; however POA Johnson indicated that payment assistance would come *118 from your girlfriend. As noted, you did not demonstrate an ability to make monthly payments toward the liability. As such, an Installment Agreement is not2014 Tax Ct. Memo LEXIS 105">*121 appropriate at this time. To consider an account uncollectible, you must demonstrate an inability to pay the liability. You have shown an inability to make monthly payments, however as noted in conversation with your POA Johnson, * * * * In order for a federal tax lien to have priority against competing interests, The Service must file a NFTL pursuant to *119 Pursuant to Policy Statement 5-1, enforcement action is a necessary component of a voluntary tax system. It is my determination that the levy action, although intrusive, is now the appropriate action. [Emphasis added.]
Mr. Tucker timely filed a petition in this Court on June 19, 2012, challenging the determination by Appeals. The petition alleges that Appeals erred because: (1) the COIC failed to provide an explanation as to what financial information it lacked when it returned Mr. Tucker's OIC to Appeals; (2) the Appeals Officer issued a notice of determination sustaining the lien and levy without sufficient notice to Mr. Tucker; (3) Mr. Tucker did not receive sufficient procedural opportunity to have an OIC considered during his CDP hearing; and (4) Appeals erred in failing to place Mr. Tucker in currently not collectible status because his NBA championship ring's value is speculative and the ring is an uncollectible personal item.
On October 21, 2013, the parties submitted a joint motion2014 Tax Ct. Memo LEXIS 105">*123 for leave to submit the case under
If a taxpayer fails to pay any Federal income tax liability after notice and demand,
At the CDP hearing, the Appeals Officer must determine whether the proposed collection action may proceed. In the case of a notice of intent to levy, the procedures for the agency-level CDP hearing before Appeals are set forth in
First, the Appeals Officer must verify that the requirements2014 Tax Ct. Memo LEXIS 105">*125 of any applicable law and administrative procedure have been met by IRS personnel.
Second, the taxpayer may "raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including" challenges to the appropriateness of the collection action and offers of collection alternatives.
Additionally, the 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 a prior opportunity to dispute the tax liability.
Finally, the2014 Tax Ct. Memo LEXIS 105">*126 Appeals Officer must 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."
When Appeals issues its determination, the taxpayer may "appeal such determination to the Tax Court", pursuant to
Here we review Appeals' non-acceptance of an OIC.
Mr. Tucker submitted to the IRS an OIC by which he proposed to compromise his Federal income tax liability for tax year 2009 for payments totaling $30,600. As of December 8, 2011, when the IRS evaluated Mr. Tucker's offer, his outstanding balance for those years was approximately $222,345. Thus, Mr. Tucker offered to pay about 14% of what he owed. The basis for Mr. Tucker's offer was "doubt as to collectibility". That is, he proposed that the IRS should accept payment of only 14% of the liability because there was doubt whether the IRS would ever be able to collect more.
For purposes of evaluating an OIC, doubt as to collectibility exists "where the taxpayer's assets and income are less than the full amount of the liability."
Mr. Tucker contends that the COIC's letter returning his OIC to Appeals amounted to a rejection of his OIC and that this rejection relieved him of any responsibility to continue making the required periodic payments, because (he says) Appeals agreed with him that he was no longer required to make those payments. The evidence does not support this contention.
Rather, Form 656 had explicitly warned Mr. Tucker: "You must continue to make these monthly payments while the IRS is considering the offer. Failure to make regular monthly payments will cause your offer to be returned." And Mr. Tucker's OIC had explicitly acknowledged that "my offer is considered pending as of that signature date and it remains pending until the IRS accepts, rejects, returns, or terminates my offer or I withdraw my offer." The IRS's letter dated January 12, 2012, informed Mr. Tucker that "
After being considered by the COIC, Mr. Tucker's OIC was returned to Appeals because the COIC had requested substantiation of his financial information, and he did not furnish all of the requested information necessary for proper evaluation of his offer. He contends that no explanation was given to him as to what financial information was required in order for Appeals to consider his OIC, and that he fully complied with Appeals' information requests—but again, the evidence does not support this contention, and the facts detailed above show otherwise.
Mr. Tucker submitted2014 Tax Ct. Memo LEXIS 105">*130 two Forms 433-A with some supporting documentation at the CDP hearing. After reviewing the financial statements with Mr. Tucker's attorney, the Appeals Officer on several occasions requested that Mr. Tucker provide additional information related to his income and assets. In particular, the Appeals Officer requested more detailed information about real property Mr. Tucker owned, his pensions and retirement accounts, his vehicles, *127 and his personal property—including the NBA championship ring in his possession. The IRS's record does show receipt of some financial information. However, Mr. Tucker does not allege, and our record does not show, that he ever provided the requested information regarding the value of his NBA championship ring. (Rather, his counsel's last statement about that ring was simply that there was no "insurance appraised value", leaving uncorroborated his previous estimate of $10,000 to $20,000.) As a result, we must conclude that Mr. Tucker failed to provide adequate financial information to enable the Appeals Officer to determine his financial situation.
Mr. Tucker contends, however, that the value of his NBA championship ring was speculative, that it therefore should2014 Tax Ct. Memo LEXIS 105">*131 not affect his RCP, that he is otherwise "without substantial assets", and that his failure to itemize his assets was therefore immaterial. But it was Mr. Tucker's representative who volunteered that the value of the ring was $10,000 to $20,000, and Appeals can hardly be criticized for taking his statement at face value. Property of a delinquent taxpayer is not exempt from levy merely because the property's value is speculative or unspecified.
Mr. Tucker's petition characterized the ring as a "personal item", perhaps implying (though without providing any legal support for the argument) that the ring is a "personal effect" exempt from levy under
Assuming (without deciding) that the ring could be among Mr. Tucker's "personal effects", the value of the ring—and thus the missing financial information—would still have been essential to Appeals' consideration of Mr. Tucker's OIC.
Because Mr. Tucker failed to submit essential requested financial information about the value of his personal assets, he failed to provide the Appeals Officer with all of the financial information necessary to fully evaluate his ability to pay his tax liability. For that reason, the Appeals Officer did not abuse his discretion in refusing to accept any collection alternative based on doubt as to collectibility.
As an alternative to considering his OIC on the basis of doubt as to collectibility, Mr. Tucker asked Appeals to consider his OIC on the basis of a claim of "effective tax administration" ("ETA"). Regulations adopted pursuant to
Mr. Tucker's petition invokes ETA in asserting that "the ring is a personal item that should not be considered for potential collection under principles of 'effective tax administration'." This issue substantially overlaps with, if it is not *131 the mere equivalent of, the issue already discussed above in part II.A.2. We cannot tell, but2014 Tax Ct. Memo LEXIS 105">*135 it is possible that Mr. Tucker also means to argue that, for the sake of ETA, the IRS should not levy on items that have "personal" or sentimental significance—a proposition for which he cites no authority and which we cannot sustain. However sincere a claim of sentimental value may be, it is, by its nature, virtually impossible to verify; and no expert could opine about (nor could any court definitively determine) the presence or absence of sentimental value in a ring, a piece of furniture, a baseball card collection, or any other asset. If such an argument succeeded, it would protect from levy an asset that has fair market value—and that would be subject to levy if held by another taxpayer—simply because of its emotional significance to its particular owner. "Effective tax administration" does not require the IRS to make tax collection contingent on such intangible variables.
In his petition Mr. Tucker asserts that the "Appeals Officer without notice terminated the CDP proceedings through issuance of the Notice of Determination, on the basis that no valid Offer in Compromise had been submitted." The evidence does not show that the CDP proceedings were "terminated2014 Tax Ct. Memo LEXIS 105">*136 without notice". Rather, as detailed above, Mr. Tucker failed on multiple occasions across *132 a period of months to provide key financial information necessary for Appeals (and the COIC) to consider his OIC; specifically, Mr. Tucker failed to satisfy Appeals' repeated requests for further information regarding the NBA championship ring. Appeals does not abuse its discretion when it rejects an OIC because a taxpayer does not provide all of the necessary financial information during the CDP hearing process.
We can find no issue raised by Mr. Tucker that was not considered and addressed by the Appeals Officer. Appeals did not abuse its discretion in closing Mr. Tucker's CDP hearing and issuing him a notice of determination.
The IRS's Office2014 Tax Ct. Memo LEXIS 105">*137 of Appeals did not abuse its discretion in denying Mr. Tucker's OIC and sustaining the notice of Federal tax lien and proposed levy to collect his unpaid income tax for 2009. As a result
1. Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986 (codified in 26 U.S.C., and referred to herein as "the Code") as in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
2. The burden of proof is generally on the taxpayer,
3. The stipulated record consists of: (1) the facts alleged in Mr. Tucker's petition filed with this Court on June 19, 2012, to the extent they are admitted in respondent's answer filed July 10, 2012; (2) the exhibits attached to respondent's motion for summary judgment filed August 14, 2013; (3) the administrative record attached to the declaration of Christina L. Cook in support of respondent's motion for summary judgment filed August 14, 2013; and (4) the exhibits attached to Mr. Tucker's response to respondent's motion for summary judgment filed on September 5, 2013.↩
4. Mr. Tucker also checked the box to indicate interest in an installment agreement ("IA"), but he has agreed that an IA is no longer an appropriate collection alternative because of his current employment status, and he did not propose an IA. We therefore do not consider this issue.↩
5. In a letter dated February 7, 2012, the Appeals Officer requested that Mr. Tucker provide the additional financial information requested by the COIC and gave a deadline of February 24, 2012, to provide it.↩
6. Mr. Tucker alleges that the entry dated April 18, 2012, is inaccurate in stating that Appeals notified his attorney of the continued responsibility to make the required periodic payments after his original OIC was returned to Appeals from the COIC. However, Mr. Tucker does not point to any evidence that refutes Appeals' assertion that it notified him of the continuing obligation, and we can find none in the record.↩
7. The initial and periodic payments required by
8. The regulation authorizes a compromise "when the Secretary determines that, although collection