Kyereme v. Comm'r
Opinion
An appropriate order and decision will be entered.
P owed over $30,000 in income tax, penalty, and interest for 2004, but as a result of disability P was retired and was in financial hardship. R therefore halted tax collection from P and put P in "currently not collectible" status; but R filed a notice of lien against P and gave P notice of the filing. P requested a collection due process hearing before R's Office of Appeals ("Appeals") pursuant to
GUSTAFSON,
The specific issue to be decided is whether Appeals abused its discretion in sustaining the filing of the NFTL despite Mr. Kyereme's financial hardship. We hold that Appeals did not abuse its discretion, and we will grant the Commissioner's motion.
Consistent *175 with the principles of
Mr. Kyereme was a schoolteacher, but disabling health problems forced him to retire. He lacked adequate health insurance, so to cover his expenses he withdrew in 2004 funds that he had previously contributed to his retirement account. The funds so withdrawn were taxable income to him. In a prior case in this Court—
By May 2010 Mr. Kyereme's balance due to the IRS for 2004 (including interest) equaled $30,346.50. However, as a result of the financial hardship he was suffering, the IRS placed him in currently not collectible ("CNC") status, thereby determining not to attempt tax collection from him unless and until his financial circumstances *176 changed; and on May 10, 2010, the IRS sent him a letter (which is not in our record) that advised him of his CNC status. But to protect the Government's right to collect tax from any future income or assets Mr. Kyereme might acquire, the IRS filed an NFTL against him and mailed him a copy of that NFTL on May 13, 2010.
The NFTL advised Mr. Kyereme of his right to request a CDP hearing, and he timely submitted such a request to the IRS on Monday, June 14, 2010, on Form 12153, "Request for Collection Due Process or Equivalent Hearing". Attached to his CDP request was a statement that read as follows:
RE: Request for Withdrawal of Notice of Federal Tax Lien Given the suspension of collection actions (IRS letter dated May 10, 2010) based on my financial situation, my uncertain future income and hence the need to borrow from time to time to keep me going so as not to depend on public assistance, I am requesting that the "Notice of Federal Tax Lien" (filed on May 13, 2010), which would adversely affect my ability to borrow, be withdrawn to serve the best interests of the public. As I have explained to the IRS, disabling health problems forced me (a teacher who has substantially contributed *177 to society's knowledge pool by educating the youth since 1984) to give up my regular teaching job and health insurance and withdraw my total retirement contribution (75941.96 from 1984 to 2002) in 2004 to help me survive in the short term. Hence, I appealed to the IRS via the letter attached to my 2004 return and the amount withheld was refunded. This has gone a long way to facilitate my struggle to survive in the short run. All the retirement funds have been spent to keep me going, and even though I depend on occasional uncertain income from online instruction, the lack of benefits and poor enrollment make this source unreliable and inadequate to make ends meet without borrowing from time to time to smooth things out without resorting to public assistance. Hence, I am optimistic that the NFTL would be withdrawn to ensure a win/win outcome and avoid a lose/lose outcome for me and the public.
The requested CDP hearing took place by telephone on October 12, 2010. (Mr. Kyereme had been offered a face-to-face conference by letter, but he did not request a face-to-face conference.) In the determination letter that Appeals issued thereafter, that telephone conference is described as follows: On *178 October 12, 2010 the date of the conference, the Settlement Officer called you for the hearing and you requested that the lien be withdrawn. The Settlement Officer explained to you that the lien can be withdrawn only when it is filed in error and is released when the outstanding balance due is paid in full. Further, the Settlement Officer explained to you that in your case the lien was filed subsequent to placing your account in currently not collectible status to protect the Government's interest and the lien would remain filed until the outstanding balance due is paid in full. You requested that an exception be made in your case as you were a school teacher and currently the filed lien would impede your ability to borrow money and would create hardship. The Settlement Officer explained to you that lien cannot be withdrawn and asked if you would consider any collection alternative to resolve the outstanding balance due and you said no. The Settlement Officer informed you that your account would be placed in currently not collectible status.
On December 16, 2010, consistent with the settlement officer's comments made during that telephone conference, Appeals issued *179 a notice of determination that upheld the NFTL (and that left Mr. Kyereme in CNC status). An attachment to the notice of determination explained Appeals' determination as follows: On your Form 12153 you have requested the NFTL be withdrawn. The Settlement Officer has considered whether any of the criteria for allowing withdrawal of the lien existed in your case. The filing of the notice of lien was premature or otherwise not in accordance with administrative procedures of the Internal Revenue Service; The taxpayer had entered into an agreement under Withdrawal of the lien will facilitate collection of the tax liability; or Withdrawal of the lien would be in the best interests of the taxpayer (as determined by the National Taxpayer Advocate) and the United States. There is nothing in the Collection administrative file that indicates withdrawal of the filed lien should be considered and you have provided no additional *180 information that indicates the withdrawal of the filed lien should be considered. * * * The Appeals Office balanced the competing interests when finding the filing of the NFTL is appropriate. Based on an internal research your account has been placed in currently not collectible status due to hardship. As discussed above, the assessment(s) at issue are valid. Given your inability to meet your necessary living expenses and on grounds of hardship, your account is placed in currently not collectible status; retaining the NFTL balances the need for efficient collection with your concern that the collection action be no more intrusive than necessary.
On Tuesday, January 18, 2011, Mr. Kyereme timely filed his petition with this Court appealing the notice of determination by Appeals. Consistent with his position during the CDP hearing, his petition stated: (1) The Determination ignores my issue that not withdrawing the "Notice of Federal Tax *181 Lien" (which adversely affects my ability to borrow) will force me to depend on public assistance. (2) Withdrawing my retirement contribution (as a life-saving act that led to the tax) and borrowing from time to time to smooth things out have so far helped me survive without depending on public assistance, given my uncertain future income. (3) I am, hence, appealing to the Court to withdraw the lien to serve the best interests of the public by avoiding a lose / lose outcome for me and the public.
On April 24, 2012, the Commissioner filed a motion for summary judgment, supported by a declaration to which documents from the administrative record are attached. The Commissioner's motion asserts that the undisputed facts entitle him to judgment, and states: 13. The settlement officer determined that there was no basis to indicate that the notice of tax lien should be withdrawn. (Exhibit G to Declaration). 14. A further review of the settlement officer's report indicates that the settlement officer determined that 1) all requirements of applicable law had been met; 2) all issues raised by *182 the petitioner had been addressed; and 3) the filing of the notice of tax lien balanced the need for efficient collection of the taxes with the concern that the action be no more intrusive than necessary. (Exhibit G to Declaration). 16. The settlement officer thus acted within the settlement officer's discretion in sustaining the filing of the notice of federal tax lien.
By order of April 25, 2012, the Court directed Mr. Kyereme to file a response to the Commissioner's motion and stated as follows: If Mr. Kyereme disagrees with the facts set out in the IRS's motion, then his response should point out the specific facts in dispute. If he disagrees with the IRS's argument as to the law, then his response should also set out his position on the disputed legal issues. Q&As that the Court has prepared on the subject "What is a motion for summary judgment? How should I respond to one?" are available at ustaxcourt.gov/taxpayer_info_start.htm#START40 and are printed on the page attached to this order.
Mr. Kyereme complied with that order by submitting an opposition that states as follows: (1) The facts of the case, as documented via the respondent's declaration, are *183 not in dispute. (2) What is in dispute is the withdrawal of the "Notice of Federal Tax Lien," which is a discretionary tool the respondent may use, but which the petitioner argues is not necessary in this case. (3) Based on (4) As explained in the petition, withdrawing my retirement contribution (as a life-saving act that led to the tax) and borrowing from time to time to smooth things out have so far helped me survive without depending on public assistance, given my disabling health problems and hence uncertain future income. (5) Also, the suspension of collection implies if my situation improves significantly in the future, and I am able to fully contribute to society as I used to (by teaching the youth), the outstanding balance would be taken care of. But the "Notice of Federal Tax Lien" (which adversely impacts my credit history) would make such significant improvement in my situation difficult to achieve, and rather force me to depend on public assistance, if I want to keep going. THEREFORE, petitioner appeals to *184 the Court to withdraw the lien to serve the best interests of the public.
Where the pertinent facts are not in dispute, a party may move for summary judgment to expedite the litigation and avoid an unnecessary trial. Summary judgment may be granted where there is no genuine issue as to any material fact and a decision may be rendered as a matter of law.
When a taxpayer fails to pay any Federal income tax liability after demand,
For the agency-level CDP hearing before Appeals, the pertinent procedures are set forth in
First, the appeals officer must obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have *186 been met.
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.
Third, at the CDP hearing Appeals is to consider "whether any proposed collection action [here, *187 the filing of the NFTL] 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
Mr. Kyereme asked Appeals to withdraw the IRS's notice of lien. But contrary to his contention, 4*190 we find no abuse of discretion in Appeals' determination that lien withdrawal is not justified under The Secretary may withdraw a notice of a lien filed under this section and this chapter shall be applied as if the withdrawn notice had not been filed, if the Secretary determines that— (A) the filing of such notice was premature or otherwise not in accordance with administrative procedures of the Secretary, (B) the taxpayer has entered into an agreement under (C) the withdrawal of such notice will facilitate the collection of the tax liability, or (D) with the consent of the taxpayer or the National Taxpayer Advocate, the withdrawal of such notice would be in the best interests of the taxpayer (as determined by the National Taxpayer Advocate) and the United States.
Mr. Kyereme alleges that the NFTL will impede his ability to borrow money and that if he is unable to borrow, he may be forced—to the detriment of the public fisc—to rely on public assistance; but, he says, if he can borrow, then he may not need to do so—to the public's benefit.
We take as a fact that Mr. Kyereme is under financial hardship (to such an extent that the IRS has determined not to collect *191 tax from him at this time), so it is not impossible that his allegations about public assistance might be true. However,
To evaluate Mr. Kyereme's position that withdrawing the lien would benefit the public fisc, Appeals would have needed to know: the amount of Mr. Kyereme's intended borrowing; the disadvantage to Mr. Kyereme that the filing of the NFTL would actually cause; the type and amount of public assistance for which Mr. Kyereme would be eligible; the likelihood that he would not need that assistance if the NFTL was not left in place; and the likelihood that the IRS's lien *192 priority would not be superseded by other creditors if the NFTL was withdrawn. So far as our record shows, Appeals was left to surmise the answers to all of these questions. We cannot say that Appeals abused its discretion by rejecting Mr. Kyereme's unsupported contention.
Moreover, even if Mr. Kyereme had made a showing that the NFTL would result in his being forced to rely on public assistance, it would then have been within Appeals' discretion to decide whether it nonetheless did best serve the Government's interest to sustain the filing of the NFTL. To make that decision on the terms Mr. Kyereme suggests, Appeals would have had to make a plenary review of his financial standing with multiple governmental entities, not just the IRS. But the IRS is responsible for the collection of tax, not for the administration of public assistance, and not for evaluating a diffuse governmental interest in the taxpayer's net cash flow with all Government entities, State and Federal. Such an evaluation might be a daunting task, and there is no indication that Congress committed that task to the Federal tax collector in
We conclude that Appeals did not abuse its discretion in *193 determining Mr. Kyereme could not effectively invoke
To reflect the foregoing,
Footnotes
1. Unless otherwise indicated, all section references are to the Internal Revenue Code ("Code", 26 U.S.C.), and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. A taxpayer may contest the existence and amount of the underlying tax liability if he did not have a prior opportunity to dispute the tax liability.
Sec. 6330(c)(2)(B)↩ . However, in Mr. Kyereme's previous deficiency case, docket No. 3464-07, he did have a prior opportunity to dispute his liability, and he does not now contend otherwise. Therefore, Mr. Kyereme's underlying liability for 2004 is not at issue. Rather, we assume that he is liable for the tax and penalty that this Court previously determined.3. In the case of the lien notice filed against Mr. Kyereme, the basic requirements,
see sec. 6320 , for which the appeals officer was to obtain verification are: a timely assessment of the liability,secs. 6201(a)(1) ,6501(a) ; notice and demand for payment of the liability,sec. 6303 ; and notice of the filing of the lien notice and of the taxpayer's right to a CDP hearing,sec. 6320(a) and(b)↩ .4. Mr. Kyereme made no explicit contention to the effect that Appeals failed to properly balance intrusiveness against collection pursuant to
section 6330(c)(3)(C) . However, the considerations underlying Appeals' determination whether the withdrawal of a lien would be in the best interest of the taxpayer and the United States are similar to considerations that might be undertaken in the balancing of intrusiveness undersection 6330(c)(3)(C) . A filing of an NFTL (i.e., a public notice of the IRS's claim) is usually less intrusive than a levy (i.e., an involuntary collection of tax, such as a garnishment of wages or a seizure of a bank account); but an NFTL may nevertheless intrude: It may frustrate or complicate a taxpayer's desire to sell an asset, or (as Mr. Kyereme alleges) it may frustrate his attempt to borrow money, compelling the taxpayer (Mr. Kyereme asserts) to rely on public assistance.5. Although
section 6323(j)(1)(D) contemplates that the National Taxpayer Advocate (NTA) will have made a determination about the taxpayer's best interests, NTA involvement is not always required.See 26 C.F.R. sec. 301.6323(j)-1(b)(4)(ii)↩ , Proced. & Admin. Regs. ("If * * * a taxpayer requests the Commissioner to withdraw a notice and has not specifically requested the National Taxpayer Advocate (or his delegate) to determine the taxpayer's best interest, a finding by the Commissioner that the withdrawal of notice is in the best interest of the taxpayer will be sufficient to support withdrawal").
Case-law data current through December 31, 2025. Source: CourtListener bulk data.