Kurtz v. Comm'r

LARO, Judge: Petitioner, while residing in Illinois, petitioned the Court under section 6330(d) to review a determination of respondent's Office of Appeals (Appeals) sustaining a proposed levy upon petitioner's property.¹ Respondent proposed the levy to collect a $20,532 deficiency in petitioner's 2005 Federal income tax, a $4,106 addition to tax under section 6651(a)(1), and a $4,106 accuracy-related penalty under section 6662(a). Respondent has filed with the Court his motion for summary judgment under Rule 121. Although ordered to do so, petitioner did not file a response to respondent's motion. We shall grant respondent's motion.

Respondent selected petitioner's 2005 Federal income tax return for audit. As a result of that audit, respondent issued to petitioner a notice of deficiency dated August 7, 2008 (first notice of deficiency). In the first notice of deficiency respondent determined a $20,532 deficiency in petitioner's *169 2005 Federal income tax, a $4,106 addition to tax under section 6651(a)(1), and a $4,106 accuracy-related penalty under section 6662.

Respondent also selected petitioner's 2006 and 2007 Federal income tax returns for audit. As a result of that audit, respondent issued to petitioner and Nicole Jungstand Kurtz (Ms. Kurtz) a second notice of deficiency dated August 7, 2008 (second notice of deficiency). In the second notice of deficiency, respondent determined deficiencies of $24,624 and $18,956 in petitioner's 2006 and 2007 Federal income taxes, respectively, accuracy-related penalties under section 6662(a) of $4,925 and $3,791, respectively, and a $2,603 addition to tax under section 6651(a)(1) related to petitioner's 2006 Federal income tax return.

By letter dated March 15, 2009, petitioner's representative acknowledged receipt of the first and second notices of deficiency. Petitioner did not petition the Court to challenge respondent's determinations in the first notice of deficiency. Nor did petitioner and Ms. Kurtz petition the Court to challenge respondent's determinations in the second notice of deficiency. Respondent assessed the liabilities determined in the first and second notices *170 of deficiency in due course.

On April 9, 2009, respondent sent to petitioner a Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a Hearing (final levy notice), with respect to (1) petitioner's 2005 Federal income tax liability, and (2) petitioner and Ms. Kurtz's 2006 and 2007 Federal income tax liabilities. The final levy notice informed petitioner that respondent intended to levy upon his property to collect unpaid tax liabilities for 2005, 2006, and 2007. The final levy notice also advised petitioner that he was entitled to a hearing with Appeals to review the propriety of the proposed levy.

In response to the final levy notice petitioner sent to respondent Form 12153, Request for a Collection Due Process or Equivalent Hearing, for his 2005, 2006, and 2007 Federal income tax liabilities. On that Form 12153 petitioner asserted that the proposed levy was inappropriate because respondent's auditor did not evaluate the documentation which petitioner submitted in connection with his audit. Petitioner did not request an installment agreement or an offer-in-compromise on that Form 12153.

On March 19, 2010, a settlement officer in Appeals held a face-to-face collection *171 due process (CDP) hearing with petitioner's representative. The settlement officer determined that petitioner had been provided with several opportunities to dispute his 2005, 2006, and 2007 Federal income tax liabilities but was unable to convince respondent's auditor that he was not liable for those taxes. Following the CDP hearing Appeals issued to petitioner a notice of determination for 2005. Appeals also issued to petitioner and Ms. Kurtz a notice of determination for each of the years 2006 and 2007. By notice of determination dated April 6, 2010 (notice), Appeals sustained the proposed collection action for 2005.²

The notice stated that Appeals had verified or received verification that the requirements of applicable law and administrative procedure for the proposed levy had been met. That notice also stated that collection alternatives were discussed but none was initiated. That notice also determined that petitioner had been given several prior opportunities to dispute his 2005 Federal income *172 tax liability but failed to do so. Finally, the notice balanced the proposed collection action with the concern that such action be no more intrusive than necessary. On May 4, 2011, petitioner petitioned the Court.³

We decide whether to grant respondent's motion for summary judgment in this collection review proceeding.⁴Summary judgment may be granted with respect to any part of the legal issue in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials * * * show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b); Craig v. Commissioner,119 T.C. 252, 259-260 (2002). As the moving party, respondent bears the burden of establishing that there is no genuine issue of material fact. Dahlstrom v. Commissioner,85 T.C. 812, 821 (1985); Jacklin v. Commissioner,79 T.C. 340, 344 (1982). Although factual inferences will be drawn in a light most favorable to petitioner as the nonmoving party, petitioner cannot merely rest upon the *173 allegations or denials in the pleadings but must "set forth specific facts showing that there is a genuine issue for trial." See Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821. Respondent supports his motion for summary judgment with the pleadings, a declaration from the Appeals manager who supervised petitioner's CDP hearing, and various exhibits. Petitioner, in failing to respond to respondent's motion for summary judgment, has failed to raise any genuine issue of material fact. We therefore conclude that this case is ripe for summary judgment.

Section 6331(a) authorizes the Commissioner to levy upon a taxpayer's property where that taxpayer is liable for taxes but neglects or refuses to pay that liability within 10 days after notice and demand for payment. Section 6330 generally provides that the Commissioner may not proceed with collection by levy until the taxpayer has been given written notice and an opportunity for *174 a hearing with an impartial Appeals officer. See sec. 6330(a) and (b); Davis v. Commissioner,115 T.C. 35, 37 (2000). Following the CDP hearing Appeals must issue a notice of determination which sets forth its findings and decisions. See sec. 6330(c)(3); see also sec. 301.6330-1(e)(3), Q&A-E8, Proced. & Admin. Regs. Section 6330(d)(1) allows for judicial review of Appeals' determination where the taxpayer files a timely petition with the Court.

A taxpayer may generally challenge the existence or amount of an underlying tax liability only if he or she did not receive a statutory notice of deficiency for such liability or did not otherwise have an opportunity to dispute that tax liability. Sego v. Commissioner,114 T.C. 604, 609 (2000); see also sec. 6330(c)(2)(B). Where the underlying tax liability is not at issue, we review the Commissioner's administrative determination for abuse of discretion. Lunsford v. Commissioner,117 T.C. 183, 185 (2001); Goza v. Commissioner,114 T.C. 176, 181-182 (2000). Abuse of discretion exists where Appeals acted arbitrarily, capriciously, or without sound basis in fact or law. Murphy v. Commissioner,125 T.C. 301, 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006); *175 Woodral v. Commissioner,112 T.C. 19, 23 (1999). Petitioner received a notice of deficiency for 2005 and acknowledged receipt of that notice of deficiency through a letter from his representative. Because petitioner did not file a petition for redetermination within 90 days, he is precluded from challenging his 2005 tax liability. See Martinez v. Commissioner,T.C. Memo 2010-181. We thus review Appeals' determination to sustain the proposed levy for abuse of discretion. Goza v. Commissioner, supra.

Under section 6330(c)(3), the determination of an Appeals officer must consider (A) the verification that the requirements of applicable law and administrative procedure have been met, (B) any relevant issues relating to the unpaid tax or proposed levy, and (C) whether the proposed levy balances the need for efficient collection of tax with the taxpayer's legitimate concern that the collection action be no more intrusive than necessary. Here, the Appeals settlement officer addressed each of these requirements. She reviewed the Internal Revenue Service's transcripts and computer records of petitioner's account to determine that the requirements of applicable law and administrative procedure *176 had been met. See Neugebauer v. Commissioner,T.C. Memo 2003-292; Hack v. Commissioner,T.C. Memo 2002-243. The Appeals settlement officer considered the issues petitioner raised but determined that he could not contest the validity or amount of his underlying tax liability because he had been given a prior opportunity to do so. See Martinez v. Commissioner, supra.Finally, the Appeals settlement officer balanced the need for efficient collection of taxes against petitioner's legitimate concern that the proposed collection action be no more intrusive than necessary.

We conclude that Appeals did not abuse its discretion in sustaining the proposed levy on petitioner's property to satisfy his 2005 Federal income tax liability. Accordingly, we will grant respondent's motion for summary judgment.

To reflect the foregoing,

An appropriate order and decision will be entered.