ROBERT FITZGERALD POUGH, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Docket No. 21954-07L.
United States Tax Court
Filed September 13, 2010.
GOEKE, Judge
135 T.C. 344
Anne M. Craig, for respondent.
OPINION
GOEKE, Judge: This case was commenced in response to a notice of determination concerning collection action sustaining a notice of Federal tax lien and a proposed levy with respect to
Some of the facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. At the time the petition was filed, petitioner resided in Florida.
Petitioner is president of 911 Direct, Inc. (911 Direct), which sells, installs, and services equipment for police and fire dispatchers. 911 Direct was delinquent in paying trust fund taxes for quarters ending March 31, June 30, and September 30, 2006.
On December 6, 2006, petitioner and his representative met with an IRS revenue officer. The IRS thereafter issued to petitioner a Letter 1153(DO) proposing to assess
On February 2, 2007, petitioner filed delinquent 2002, 2003, 2004, and 2005 income tax returns. Each return showed a balance due.
On March 26, 2007, petitioner was issued a Final Notice of Intent to Levy and Notice of Your Right to a Hearing for his 2004 and 2005 income tax liabilities. On April 16, 2007, petitioner was issued a Final Notice of Intent to Levy and Notice of Your Right to a Hearing for his 2002 and 2003 income tax liabilities. On April 18, 2007, petitioner was issued a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under
An IRS Appeals officer was assigned to hear petitioner‘s requests. The Appeals officer determined that 911 Direct was not current on its 2007 Federal tax deposits (FTDs) and that petitioner was not in compliance with estimated payments of his income taxes for 2006 and 2007. The Appeals officer and petitioner held a telephone hearing on April 26, 2007. During the hearing, petitioner said he would be able to pay the TFRPs within 60 days, but he did not. Petitioner also said that his accountant incorrectly prepared petitioner‘s tax returns for 2002 through 2005. Petitioner said he intended to file Forms 1040X, Amended U.S. Individual Income Tax Return, but he never did so. Additionally, petitioner orally requested an installment agreement of $200 a month, but he never submitted a Form 656, Offer in Compromise.
The Appeals officer requested that petitioner file Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and Form 433-B, Collection Information Statement for Businesses, and submit a 2006 Profit and Loss (P&L) statement for 911 Direct. The Form 433-A petitioner submitted showed equity of approximately $61,000 in real estate he owned. The P&L statement petitioner submitted showed 911 Direct had net income of $144,870 in 2006.
On May 30, 2007, the Appeals officer determined that petitioner‘s unpaid individual tax liabilities from Forms 1040, U.S. Individual Income Tax Return, for years 2002 through 2005 would total $56,111 by October 28, 2007. On May 31, 2007, the Appeals officer called petitioner and asked whether he would be able to pay this liability within 120 days by borrowing against his assets. Petitioner responded that he would be meeting with a loan officer at his bank in the next week to discuss refinancing his property in order to pay the individual liabilities. The Appeals officer told petitioner to notify her by June 14, 2007, if he was unable to secure sufficient financing to pay the individual liabilities within 120 days. Petitioner called with questions on June 7, 2007, and reaffirmed his commitment to get back to the Appeals officer with further information on financing by the June 14, 2007, deadline. Petitioner did not get back to the Appeals officer. Petitioner represents that he inquired about a home equity
On June 19, 2007, petitioner informed the Appeals officer that he was preparing a request for abatement of penalties for all taxable years at issue, but he did not specify which penalties he was referring to. Petitioner said he would send the abatement request to the Appeals officer by July 9, 2007. Petitioner never sent such a request.
On July 10, 2007, the Appeals officer called petitioner and informed him that records indicated that he had not made any FTDs for 911 Direct for the quarters ending March 31, and June 30, 2007. During the July 10, 2007, telephone call, petitioner claimed he would provide verification of compliance with the obligation to make FTDs for those quarters. Petitioner also requested an additional week to see whether he could get funds to fully pay his liabilities for income taxes and for TFRPs within 60 days. Petitioner did not provide verification of compliance by 911 Direct with its obligation to make the FTDs or provide information regarding full payment of his liabilities.
On July 16, 2007, petitioner left a message for the Appeals officer that he had retained someone with a power of attorney to represent him. Petitioner stated the representative would contact the Appeals officer the next day to discuss the case. No one did.
On July 25, 2007, the Appeals officer again spoke with petitioner. Petitioner asked whether the Appeals officer had been contacted by his representative, and she responded that she had not. The Appeals officer informed petitioner that she planned to close the file. Petitioner said he would get in touch with the representative and have the person contact the Appeals officer the next day if the Appeals officer would delay closure of the file. The Appeals officer agreed to delay; however, again no one contacted her. On August 2, 2007, the Appeals officer closed the file.
Petitioner timely filed a petition for lien or levy action under
A trial was held on March 8 and 9, 2010, in Jacksonville, Florida. At trial petitioner testified extensively. Much of his testimony pertained to a separate hearing involving 911 Direct which was not appealed to this Court and which is not at issue. Petitioner also testified that he was confused about all the actions taken against him and how to resolve them. Finally, petitioner testified that the income of 911 Direct as stated in the P&L statement was incorrect.
Discussion
I. Lien and Levy Hearings
II. Underlying Liabilities
In a hearing a taxpayer may challenge the existence or amount of the underlying tax liability for any tax period if he did not receive a notice of deficiency for such liability or otherwise have an opportunity to dispute such tax liability.
Petitioner previously had an opportunity to challenge the TFRP liabilities when he received the Letter 1153(DO), but he did not do so. Instead, petitioner signed Form 2751, agreeing to assessment against him of the TFRPs. Therefore he was unable to contest the underlying TFRP liabilities in the hearing, and we may not consider them.
While petitioner told the Appeals officer that he intended to file amended income tax returns, petitioner did not do so over the period of nearly 7 months between the filing of his original Forms 1040 and the issuance of the notice of determination. The underlying income tax liabilities were therefore not challenged in the hearing, and we may not consider them. See
Where a taxpayer‘s underlying tax liability is not in dispute, the Court reviews the Commissioner‘s determination for abuse of discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). To establish an abuse of discretion, the taxpayer must prove that the decision of the Commissioner was arbitrary, capricious, or without sound basis in fact or in law. Giamelli v. Commissioner, supra at 111 (citing Woodral v. Commissioner, 112 T.C. 19, 23 (1999)); Tinnerman v. Commissioner, T.C. Memo. 2010-150. In reviewing for abuse of discretion, we generally consider only the arguments, issues, and other matters that were raised at the hearing or otherwise brought to the attention of the Appeals Office. Giamelli v. Commissioner, supra at 115; Tinnerman v. Commissioner, supra. Considering the facts of this case, we find that there was no abuse of discretion in the Appeals officer‘s determination to uphold the tax lien and the proposed levy against petitioner.
IV. Whether the Decision To Sustain the Liens and Notices of Levy Was an Abuse of Discretion
A. Whether the Secretary Has Met the Requirements of Applicable Law and Administrative Procedure
Before issuance of a notice of determination, an Appeals officer must verify that all requirements of applicable law and administrative procedure have been met.
B. Relevant Issues Raised by Petitioner
An Appeals officer is required to consider any relevant issue raised by a taxpayer during the course of a hearing, including challenges to the appropriateness of collection action and collection alternatives offered by the taxpayer.
Petitioner expressed interest in an installment agreement of $200 per month. Petitioner also informed the Appeals officer that he wished to submit a request for abatement of penalties and that he was going to have his representative contact the Appeals officer. Finally, petitioner attempted to have the Appeals officer release the liens on his home so that he could apply for an equity loan. We address each of these matters in turn.
We find the Appeals officer did not abuse her discretion in regard to petitioner‘s expression of interest in an installment agreement. Petitioner did not submit a written proposal for such an agreement nor a Form 656 as is requisite for an offer-in-compromise. He was not current on his tax obligations, and neither was his corporation. See Giamelli v. Commissioner, supra at 111-112 (“Reliance on a failure to pay current taxes in rejecting a collection alternative does not constitute an abuse of discretion.“); Nelson v. Commissioner, T.C. Memo. 2009-108. Although petitioner stated he would provide verification of his and 911 Direct‘s compliance with tax obligations, he did not do so. In addition, the Appeals officer told petitioner that an installment agreement would not be acceptable given petitioner‘s equity in assets and petitioner‘s income from 911 Direct, as reported on Form 433-A and the P&L statement. It was proper for the Appeals officer to consider these items when determining whether to accept such an offer-in-compromise. See Orum v. Commissioner, 123 T.C. 1, 14 (2004), affd. 412 F.3d 819 (7th Cir. 2005); Schropp v. Commissioner, T.C. Memo. 2010-71.
We also find the Appeals officer did not abuse her discretion by not waiting for petitioner‘s representative to get in touch with her or by not waiting for petitioner to submit a written request for abatement of penalties. Petitioner failed to meet reasonable deadlines set by the Appeals officer relating to the representative and to the abatement of penalties request. This Court has found that when an Appeals officer gives a taxpayer an adequate timeframe to submit requested items, it is not an abuse of discretion to move ahead if the taxpayer fails to submit the requested items. Shanley v. Commissioner, T.C. Memo. 2009-17.
By July 10, 2007, petitioner had already violated several deadlines, including the June 14, 2007, deadline to get back to the Appeals officer about obtaining a loan against the equity in his house. Given all the circumstances, including petitioner‘s dilatory behavior, we find that the Appeals officer did not abuse her discretion in rejecting petitioner‘s request to lift the liens so that he could apply for a home equity loan. See Shanley v. Commissioner, supra.
C. Balancing the Need for Efficient Collection of Taxes With Concerns of Petitioner That Collection Be No More Intrusive Than Necessary
The final item to be considered is “whether the 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.”
While petitioner orally suggested an installment plan, he did not make a written proposal in that respect nor submit a Form 656 as a predicate to an offer-in-compromise. Therefore, the Appeals officer was presented with no concrete proposal for a collection alternative.
The Appeals officer was met with petitioner‘s missed deadlines and empty promises. The Appeals officer took into consideration the equity petitioner had in assets and the income his business was producing and the fact that petitioner was not current on his tax obligations. She gave petitioner an opportunity to file amended Forms 1040 and prove he was current on his tax obligations, but petitioner did neither. When she told petitioner on July 25, 2007, that she
Petitioner failed to promptly notify the Appeals officer when he was unable to obtain a home equity loan, failed to file amended Forms 1040, and failed to meet numerous deadlines.
V. Conclusion
For the reasons discussed above, we find that the Appeals officer did not abuse her discretion in determining to sustain the tax lien and the proposed levy.
To reflect the foregoing,
Decision will be entered for respondent.