                       T.C. Memo. 2007-302



                     UNITED STATES TAX COURT



                   STUART HULT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2116-05L.             Filed October 4, 2007.



     Stuart Hult, pro se.

     Jamie J. Song, for respondent.



                       MEMORANDUM OPINION


     CARLUZZO, Special Trial Judge:   In a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330,1

dated January 5, 2005, respondent determined that the Notice of



     1
       Section references are to the Internal Revenue Code of
1986, as amended, in effect for the relevant period. Rule
references are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

Federal Tax Lien, filed on or about October 21, 2003, is an

appropriate collection device with respect to petitioner’s

outstanding Federal income tax liabilities for the years 1996

through 1999, inclusive, which liabilities, including additions

to tax and interest, at the time totaled more than $56,000

(petitioner’s outstanding tax liabilities).

     The issue for decision is whether respondent abused his

discretion:2   (1) By refusing to release or withdraw the above-

referenced Notice of Federal Tax Lien, and/or (2) by rejecting

petitioner’s proposed collection alternative.

                            Background

     The absence of a stipulation of facts notwithstanding,

see Rule 91, the relevant facts in this case are relatively

straightforward and easily summarized.

     Petitioner’s outstanding tax liabilities arise from

amounts reported on Federal income tax returns.   As best as can

be determined from the record, each return was filed late, and

the unpaid tax liability shown on each return is attributable


     2
       In his request for an administrative hearing, petitioner
alleged that the “IRS assigns arbitrary amounts due without
providing any basis for its outstanding amount determinations”.
Similarly, in the petition, petitioner alleges that “lien
collection amounts are arbitrary”. Because nothing was submitted
supporting those allegations during either the administrative
hearing or the trial, we do not consider petitioner to have
challenged the existence or the amount of his outstanding tax
liabilities. Consequently, we review respondent’s collection
action for abuse of discretion. Sego v. Commissioner, 114 T.C.
604, 610 (2000).
                                 - 3 -

either entirely or largely to the imposition of the alternative

minimum tax.   See sec. 55.

     In an offer-in-compromise dated October 26, 2000 (the 2000

offer), petitioner proposed to satisfy his outstanding tax

liabilities with an $8,256 cash offer, payable within 90 days

from the date the offer was accepted by respondent.    The 2000

offer, which was received by respondent on November 2, 2000, was

based upon “doubt as to collectability”.    Along with the 2000

offer, petitioner submitted various financial information and

documents in support of his claim that he had “insufficient

assets and income to pay the full amount” of his outstanding tax

liabilities.

     The manner in which the 2000 offer was handled by respondent

is not entirely clear–-to say that it languished would be

somewhat of an understatement.    According to petitioner, the 2000

offer was transferred from one of respondent’s offices to

another, over and over again.    In the meantime, petitioner

suffered the horror of being present at the World Trade Center

during the September 11, 2001, terrorist attack, apparently lost

his job, and moved from New York to Vermont, where he resided

when the petition was filed in this case.

     In a letter dated June 16, 2003, petitioner was advised that

the 2000 offer was assigned to Revenue Officer Joseph Barry

(Mr. Barry).   In the opening paragraph of the letter, Mr. Barry
                                - 4 -

apologized to petitioner “for the long delay in getting back” to

him.    The letter went on to note that Mr. Barry had “reviewed the

[2000] offer file carefully” and concluded that “all of it is too

dated to be of any use in evaluating” the 2000 offer.    Mr. Barry

noted that he needed “current information and documentation to

accurately evaluate” the 2000 offer.    In addition to numerous

specific requests for additional information and documentation,

Mr. Barry requested that petitioner provide “copies of all 2002

W-2s received by anyone in * * * [petitioner’s] household”.

Although petitioner was married during all times relevant to this

proceeding, his outstanding tax liabilities did not arise from

joint returns.

       Petitioner’s presentation at trial makes it clear that at

the time he received Mr. Barry’s letter, he was less than pleased

with the situation.    Nevertheless, in a letter dated July 25,

2003, he responded to Mr. Barry’s request for current financial

information.    For the most part he complied; however, in response

to the request for information regarding his spouse, petitioner

noted that his filing status for the years to which his

outstanding tax liabilities and the 2000 offer relate was

“married filing separately”.    Petitioner, in effect, objected to

Mr. Barry’s request for information relating to petitioner’s

wife.
                               - 5 -

     From representations made in petitioner’s July 25 letter, it

appears that along with the letter, petitioner submitted a new

offer-in-compromise (the 2003 offer).3   According to the 2003

offer, petitioner proposed to satisfy his outstanding tax

liabilities with a cash offer of $1,000 payable within 90 days

from the date that respondent accepted it.   As in the case of the

2000 offer, the 2003 offer was based upon “doubt as to

collectability”.

     In a letter dated August 6, 2003, from Mr. Barry, petitioner

was asked to supplement some of his responses, and once again,

Mr. Barry requested information relating to the 2002 income of

petitioner’s wife.   According to Mr. Barry, the income of

petitioner’s wife was “relevant to * * * petitioner’s offer”.

Elsewhere in the letter, petitioner was advised that “for the IRS

to accept an offer based upon doubt as to collectability, the

amount offered must be at least equal to the taxpayer’s net

equity in assets”.   On the basis of an analysis of petitioner’s

financial status included in the letter, Mr. Barry concluded that

petitioner’s “current offer does not appear to meet that

criterion”.   It cannot be determined whether references to

petitioner’s “offer” or “current offer” made in the August 6



     3
       The exact date that the 2003 offer was submitted cannot be
determined. It is referenced in petitioner’s July 25, 2003,
letter to Mr. Barry but dated July 27, 2003. Mr. Barry
acknowledged receipt of the 2003 offer on Aug. 25, 2003.
                               - 6 -

letter relate to the 2000 offer or the 2003 offer.    Be that as it

may, it is clear that from August 2003 the focus of the parties

was on the 2003 offer.4

     Mr. Barry’s August 6 letter to petitioner also advised

petitioner that Mr. Barry intended to file a Notice of Federal

Tax Lien unless petitioner appealed his decision to do so in the

manner explained in the letter.   Mr. Barry’s decision to file a

Notice of Federal Tax Lien was made, at least in part, in order

to establish the priority of the Government’s interest in real

estate owned by petitioner.   See sec. 6323.

     Petitioner’s response to Mr. Barry’s August 6 letter came in

a letter dated September 12, 2003.     Petitioner provided some of

the additional information but once again refused to provide

information regarding his wife’s 2002 income.5




     4
       In a memorandum dated Sept. 25, 2003, Mr. Barry notes that
the 2000 offer was “returned”. Otherwise the ultimate
disposition of the 2000 offer remains as much a mystery as its
status from July 2000 through June 2003.
     5
       The dispute between Mr. Barry and petitioner on this point
is somewhat puzzling inasmuch as the information sought was
apparent from a copy of the 2002 joint Federal income tax return
filed by petitioner and his wife. The return shows adjusted
gross income of $149,421. It appears that the 2002 joint return
was reviewed by Mr. Barry, and petitioner must have been aware
that Mr. Barry had access to that return.
     It should also be noted that, under the circumstances, Mr.
Barry’s request for petitioner’s wife’s income was consistent
with sec. 301.7122-1(c)(2)(ii)(A), Proced. & Admin. Regs.
                               - 7 -

     In a Form 9423, Collection Appeal Request, dated September

23, 2003, petitioner appealed Mr. Barry’s decision to file a

Notice of Federal Tax Lien.   In that document petitioner argued

that a Notice of Federal Tax Lien should not be filed because,

among other reasons:   (1) The 2003 offer was still pending; (2)

filing the notice would add to the health problems he was

suffering as a survivor of the terrorist attack on the World

Trade Center; (3) he was cooperating fully with respondent in

attempting to resolve his tax problems; (4) filing the notice

would adversely affect his ability to obtain credit; and (5)

filing the notice could adversely affect his ability to secure

future employment.

     Petitioner’s appeal of Mr. Barry’s decision to file a Notice

of Tax Lien was handled by Appeals Officer Deborah L. Ross.

After conferring with petitioner’s representative, Ms. Ross, in a

comprehensive memorandum dated October 20, 2003, that addresses

each of the arguments advanced by petitioner, “sustained” Mr.

Barry’s decision to file a Notice of Federal Tax Lien with

respect to petitioner’s outstanding tax liabilities.   The letter

advising petitioner of Ms. Ross’s decision, and the reasons for

that decision, also notified petitioner that if he were to

“successfully negotiate an acceptable offer-in-compromise, the

lien would be released upon payment of the amount offered”.
                                 - 8 -

     As noted above, on or about October 21, 2003, a Notice

of Federal Tax Lien was filed with respect to petitioner’s

outstanding tax liabilities (the NFTL).   By letter dated

October 27, 2003, petitioner was advised of the event and

notified of his right to request an administrative hearing to

dispute it, which he did in a request dated November 27, 2003.

     A short time earlier, by letter dated November 19, 2003,

petitioner was advised that the 2003 offer had been rejected

because:   (1) It was “less than * * * [petitioner’s] reasonable

collection potential”; and (2) petitioner had “failed to provide

the requested information and documentation” about his wife’s

income and expenses.   That letter also advised petitioner that he

could appeal the rejection of the 2003 offer, which he did by

letter dated December 18, 2003.

     Petitioner’s request for an administrative hearing with

respect to the NFTL and his appeal of the rejection of the 2003

offer were assigned to Settlement Officer Michael Blais (Mr.

Blais).    For reasons discussed in a memorandum dated December 15,

2004, Mr. Blais upheld the rejection of the 2003 offer.

     During the administrative hearing conducted in connection

with the NFTL, petitioner offered an installment agreement as an

alternative collection action.    Under the terms of the proposed

installment agreement, petitioner offered to pay $100 per month
                               - 9 -

towards his outstanding tax liabilities.   Mr. Blais rejected

the proposed installment agreement because it would not allow

petitioner’s outstanding tax liabilities to be paid within the

applicable periods of limitation.   Having previously upheld the

rejection of the 2003 offer, Mr. Blais further concluded that the

NFTL was an appropriate collection action with respect to

petitioner’s outstanding tax liabilities, and he caused the

above-referenced notice of determination that forms the basis for

this case to be issued on January 5, 2005.

                            Discussion

     Petitioner availed himself of three separate, albeit more or

less related, administrative appeals that preceded this

proceeding.   He appealed Mr. Barry’s (the revenue officer)

decision to file the NFTL; he appealed Mr. Barry’s rejection of

the 2003 offer; and he challenged the filing of the NFTL in a

section 6320(c) hearing.   Technically, only his challenge to the

filing of the NFTL is reviewable in this proceeding.   After all,

as noted in countless opinions, we are a Court of limited

jurisdiction, and our jurisdiction in this proceeding is

established exclusively, and limited, by section 6330(d).

     Consequently, even though the appeal of the rejection of the

2003 offer and petitioner’s request for a section 6320(c) hearing
                                - 10 -

were considered by the same settlement officer, Mr. Blais,6 and

even though the issues raised in those proceedings were

inexorably intertwined so that, more likely than not, the

determination that the NFTL was an appropriate collection action

must have been, at least to some extent, influenced by the

decision with respect to the rejection of the 2003 offer, we do

not consider the appropriateness of that decision because the

2003 offer was not submitted during the course of the section

6320(c) administrative hearing.     See sec. 301.6320-1(f)(2),

Q&A-F3, Proced. & Admin. Regs.7

         Instead, our focus is on respondent’s rejection of the

installment agreement offered by petitioner during the section

6320 administrative hearing, and respondent’s refusal to withdraw

or release the NFTL.     According to petitioner:   (1) The

installment agreement should have been accepted in lieu of the

NFTL; and (2) the NFTL should not have been filed while the 2003

offer was under consideration.     Petitioner advances several other

procedural grounds (some of which will be addressed below) in



     6
       Sec. 6330(b)(3) provides, in relevant part: “The hearing
under this subsection shall be conducted by an officer or
employee who has had no prior involvement with respect to the
unpaid tax * * * before the first hearing under * * * section
6320. A taxpayer may waive the requirement of this paragraph.”
Petitioner does not suggest that Mr. Blais should not have been
assigned to both matters.
     7
       Mr. Blais upheld the rejection of the 2003 offer under
procedures established under sec. 7122(e).
                             - 11 -

support of his position that respondent’s refusal to withdraw or

release the NFTL is an abuse of discretion.8   According to

respondent, neither the rejection of petitioner’s proposed

collection alternatives nor the other grounds raised by

petitioner give rise to the relief that he seeks.   For the

following reasons, we agree with respondent.

     Petitioner’s claim that it was improper to file the NFTL

while the 2003 offer was under consideration is easily rejected.

Unlike section 6331(k)(1), which precludes a levy while an offer-

in-compromise is under consideration, there is no such

restriction in section 6321, which provides:   “If any person

liable to pay any tax neglects or refuses to pay the same after

demand, the amount * * * shall be a lien in favor of the United

States upon all property and rights to property, whether real or

personal, belonging to such person.”



     8
       Petitioner also argues that the NFTL is invalid because:
(1) He did not receive notice as required under sec. 6320(a)(2) -
a moot point as a timely sec. 6320(c) hearing was requested,
Call v. Commissioner, T.C. Memo. 2005-289, affd. 230 Fed. Appx.
758 (9th Cir. 2007); and (2) the NFTL was not signed, which is
not necessary. See Milam v. Commissioner, T.C. Memo. 2004-94.
     Petitioner also complains about the manner in which he was
treated by various Internal Revenue Service employees in
connection with the collection of his outstanding tax
liabilities. We need not address those complaints, however,
because even if legitimate, none would have any impact on his
entitlement to the relief he seeks in this proceeding.
     Among other complaints raised by petitioner that will not be
addressed here are: (1) Respondent took an unreasonably long
time to consider the 2000/2003 offer; and (2) Mr. Barry is
incompetent.
                              - 12 -

     In addition to the lien that arises under section 6321,

sometimes referred to as a “secret lien”, a notice of Federal tax

lien filed in accordance with section 6323 operates to protect

the Government’s interest in a taxpayer’s property against the

claims of other creditors of the taxpayer.    Consistent with the

purpose of section 6323, in this case, the NFTL was filed in

order to protect the Government’s interest in certain real estate

owned by petitioner and his spouse.    It was not improper for

respondent to file the NFTL while the 2003 offer was under

consideration, and respondent’s refusal to withdraw or release

the lien on that ground is not an abuse of discretion.

     Section 6159 allows the Commissioner “to enter into written

agreements with any taxpayer under which such taxpayer is allowed

to make payment on any tax in installment payments”, if the

Commissioner “determines that such agreement will facilitate full

or partial collection of such liability.”    We begin our

consideration of petitioner’s claim that respondent should have

accepted his proposed installment agreement in lieu of the NFTL

by noting that an installment agreement is not necessarily an

alternative to a notice of Federal tax lien.    In those situations

where the taxpayer and the Commissioner have entered into an

installment agreement, a notice of Federal tax lien may still be

filed.   See Crisan v. Commissioner, T.C. Memo. 2007-67; sec.

301.6159-1(d)(3), Proced. & Admin. Regs.
                                - 13 -

     As it stands, to be entitled to the relief he seeks in this

case, petitioner must establish that, in and of itself,

respondent’s refusal to agree to the installment agreement that

he proposed during the administrative hearing was an abuse of

discretion.   This he has failed to do.

     Accepting or rejecting an installment agreement proposed by

a taxpayer is within the discretion of the Commissioner.    See

sec. 301.6159-1(b)(1)(i), Proced. & Admin. Regs.   Discretionary

decisions made in response to an installment agreement proposed

by a taxpayer will not be upset unless it is demonstrated that

the decision was arbitrary in one way or another and could not be

supported in law and in fact.    See Freije v. Commissioner, 125

T.C. 14 (2005); Schulman v. Commissioner, T.C. Memo. 2002-129.

In this case, the settlement officer took into account

petitioner’s outstanding tax liabilities and reviewed what

financial information petitioner submitted.

     Based upon his review, the settlement officer noted that the

installment agreement proposed by petitioner would not be

sufficient to pay off petitioner’s outstanding tax liabilities

within the applicable periods of limitation.   After reviewing

petitioner’s financial situation, the settlement officer also

concluded that the installment agreement proposed by petitioner

did not accurately represent petitioner’s ability to pay.    We

do not substitute our judgment for the settlement officer’s on
                              - 14 -

such matters.   See Murphy v. Commissioner, 125 T.C. 301, 320

(2005), affd. 469 F.3d 27 (1st Cir. 2006).    Whether we agree or

disagree on the point is unimportant.   It can hardly be said the

settlement officer’s conclusion was in any way arbitrary,

capricious, or without sound basis in fact.   Respondent’s refusal

to accept the installment agreement proposed by petitioner during

the section 6320 administrative hearing was not an abuse of

discretion.

     At the section 6320(c) administrative hearing, petitioner

challenged the appropriateness of respondent’s proposed

collection activity and offered a collection alternative.    See

sec. 6330(c)(2)(A)(ii) and (iii).   The record establishes that

the settlement officer took into account petitioner’s challenge,

considered petitioner’s collection alternative, and otherwise

proceeded in the manner contemplated by sections 6320 and 6330.

Petitioner has not called our attention to any specific

provisions of the relevant statutes, regulations, or provisions

of the Internal Revenue Manual that the settlement officer has

violated or failed to take into account.

     Considering all of the facts and circumstances, we are

satisfied that respondent’s determination that the NFTL is an

appropriate collection action with respect to petitioner’s

outstanding tax liabilities is supported in law and in fact.    It

follows that the determination is not an abuse of discretion, see
                             - 15 -

Freije v. Commissioner, supra, and respondent may proceed with

collection as proposed in the above-referenced notice of

determination.

     To reflect the foregoing,


                                     Decision will be entered

                                 for respondent.
