                  T.C. Summary Opinion 2003-165



                     UNITED STATES TAX COURT



            GUNTER R. AND JAY R. WALL, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13998-02S.            Filed December 11, 2003.


     Gunter R. Wall, pro se.

     Paul J. Krazeise, Jr., for respondent.



     GOLDBERG, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7463.1   The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.   This case arises from a petition for

judicial review filed in response to a Notice of Determination

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


     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended.
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The issue for decision is whether respondent may proceed with

collection of tax liabilities for the year 1999.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    Petitioners resided in

Louisville, Kentucky, on the date the petition was filed in this

case.

     Petitioner husband (petitioner) currently is employed as a

teacher at Indiana University Southeast and the Kentucky

Community College Technical Educational System, and he teaches

military classes at Fort Knox.    Petitioner previously had been

employed at the Sears credit card center in Louisville in

addition to his teaching positions, but he no longer is employed

by Sears.    Petitioner wife is not employed.   Both petitioners

receive Social Security benefits.

     Petitioners filed Federal income tax returns in each of the

years 1989 through 2001.    In each year the return reflected an

amount due after subtracting withheld amounts from the total tax

liability.    Petitioners did not remit payment for the outstanding

liability in any of the years.    In taxable year 2001, the last

year for which return information is available, petitioners

reported $44,591 in wage income and $13,269 in Social Security

benefits, an adjusted gross income of $56,175, and a tax

liability of $5,021.    Only $1,896 had been withheld from
                               - 3 -

petitioner’s income for Federal taxes.    Petitioners have declined

to adjust the amounts being withheld from their income or make

quarterly estimated tax payments.   While the record is unclear as

to the exact amount that petitioners now owe in taxes, additions

to tax, and interest for all of the years from 1989 through 2001,

the parties agree that the total amount is in excess of $50,000.

     In response to initial collection attempts, petitioners

submitted to respondent a statement of income and expenses.    This

statement included a proposed installment agreement2 which called

for a $50 monthly payment to satisfy petitioners’ total

outstanding tax liability.3   On July 15, 2001, respondent mailed

to petitioners, via certified mail, a Final Notice--Notice of

Intent to Levy and Notice of Your Right to a Hearing, with

respect to petitioners’ 1999 tax liability.   The notice reflected

an outstanding liability of $3,750.19 for that year.   In response

to this notice, petitioners filed a Request for a Collection Due

Process Hearing.   In this request, petitioners stated that they

disagreed with the levy notice because:


     2
      While petitioners submitted a proposal for an installment
agreement, they declined to submit an offer-in-compromise in an
effort to settle their total tax liability. Petitioners declined
to do so in a letter which stated that petitioner “looked at the
offer in compromise [forms] and can see no reasonable offer to
pay off $49,100, plus the $3,293 we owe for 2001.”
     3
      Nothing in the record suggests that petitioners have
offered a collection alternative with respect to 1999 apart from
the proposed installment agreement for their total tax liability.
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     IRS collection will not consider expected change to income,
     health expenses, etc. on Form 433-F mailed on 5/24/01. IRS
     collection will not accept a $50.00 monthly payment “an
     amount we can pay” per Publication 594.

Pursuant to petitioners’ request, an Appeals officer conducted

two telephonic hearings with petitioner.

     On July 29, 2002, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330, in which respondent found the Notice of Intent to

Levy for 1999 to be proper and determined that collection of the

tax liabilities for that year should proceed.   The notice of

determination states that the following issues were raised by

petitioners at the hearing:

          IRS will not consider unexpected changes to income and
     expenses. During our conversation on 07-10-2002, I
     explained that if we entered into an installment agreement
     and subsequent to that agreement income decreased, then you
     should notify IRS of the change in income. The same is true
     for allowable expenses. If medical increased, or if you
     purchased a car, then the proper adjustment would be made to
     expenses, resulting in a decreased payment amount.
          You would like to pay $50.00 monthly. As explained to
     you, based on your current average monthly income of $5,222
     vs. allowable expenses totaling $4,324, you have the ability
     to pay $898 monthly. We cannot consider $50 monthly. You
     stated $50 is the maximum you can pay.

The notice further stated:

           Collection alternatives must be considered within the
     guidelines and policies of the Internal Revenue Service. We
     do not have a provision to enter into an installment
     agreement for $50 monthly considering the total amount owed,
     $898 disposable income, and that you continue to owe each
     year. We suggested that you decrease the number of
     dependents claimed on your W-4 Form (so you won’t owe each
     year), however, your response was that you refuse to do
     this.
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     Before a levy may be made on any property or right to

property, a taxpayer is entitled to notice of intent to levy and

notice of the right to a fair hearing before an impartial officer

of the Appeals office.   Secs. 6330(a) and (b), 6331(d).     If the

taxpayer requests a hearing, he may raise in that 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, which may include

the posting of a bond, the substitution of other assets, an

installment agreement, or an offer-in-compromise”.    Sec.

6330(c)(2)(A).   A determination is then made which takes into

consideration those issues, the verification that the

requirements of applicable law and administrative procedures have

been met, and “whether any proposed collection of taxes 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”.   Sec. 6330(c)(3)(C).

     An installment agreement generally requires the payment of a

tax liability in full.   Sec. 6159(a).   In certain cases,

respondent allows taxpayers to treat tax years separately,

classifying some years as “currently not collectible” while

allowing other years to be paid in full under an installment

agreement.   Willis v. Commissioner, T.C. Memo. 2003-302.
                               - 6 -

Petitioners have not argued that any portion of their outstanding

tax liability is uncollectible.

     Because petitioners do not dispute the underlying tax

liability, we review respondent’s determination for an abuse of

discretion.   Sec. 6330(d); Goza v. Commissioner, 114 T.C. 176,

181-182 (2000).

     We find that respondent’s rejection of petitioners’ proposed

installment agreement was not an abuse of discretion.

Respondent’s determination was based on the information provided

by petitioners to the Appeals officer which reflected their

current financial condition.   See Crisan v. Commissioner, T.C.

Memo. 2003-318; Schulman v. Commissioner, T.C. Memo. 2002-129.

The Appeals officer reasonably could have determined, on the

basis of petitioners’ submitted income and expense information,

that petitioners’ proposed installment payment of $50 per month

should have been rejected.   We note that such a payment would

have been far from adequate to satisfy petitioners’ tax liability

within the collection periods of limitation.   See Willis v.

Commissioner, supra.   Furthermore, contrary to petitioners’

assertions to the contrary, the fact that petitioners have

consistently underpaid their taxes since 1989, yet have refused

to adjust withholding or to begin making estimated tax payments,

is also relevant to the determination of the adequacy of their

offer.
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     The only argument that petitioners set forth in their

petition is their disagreement with respondent’s calculation of a

reasonable installment payment.    Petitioners’ disagreement

primarily rests on their assertions that (a) respondent

overstated the amount of petitioners’ income in prior years, (b)

petitioners’ income is subject to change due to petitioner’s age

and the temporary nature of his employment, and (c) petitioners’

expenses are likely to increase, especially in light of certain

medical expenses.   We need not address the individual amounts

which entered into respondent’s calculation.     Petitioners have

maintained that they are unable to make more than a $50 monthly

payment, an amount that respondent did not abuse his discretion

in rejecting.   We therefore hold that respondent’s issuance of

the notice of determination was not an abuse of discretion and

respondent may proceed with collection of the tax liability by

levy upon petitioners’ property.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                       Decision will be entered

                               for respondent.
