                     T.C. Summary Opinion 2011-20



                        UNITED STATES TAX COURT



                   LARRY KEITH HODGES, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 20606-09S.              Filed February 28, 2011.




        Larry Keith Hodges, pro se.

        Dennis R. Onnen, for respondent.



     MORRISON, Judge:     This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.     Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and

this opinion shall not be treated as precedent for any other

case.     All section references are to the Internal Revenue Code of

1986, as amended.
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                            Background

     Pursuant to section 6330(d)(1), Larry Keith Hodges asks this

Court to review the notice of determination issued by the IRS

Appeals Office sustaining the filing of a notice of federal tax

lien to collect income taxes he owes for 1999, 2000, 2002, and

2003.

     On September 2, 2008, the IRS filed a notice of federal tax

lien to collect Hodges’ income tax liability for the years 1999,

2000, 2002, and 2003.   The IRS mailed a notice of this filing to

Hodges on September 2, 2008.    Hodges requested an administrative

hearing with the Appeals Office.   In his request he asked the

Appeals Office to consider an offer-in-compromise and to withdraw

the lien notice.   In a March 5, 2009 letter, the Appeals Office

requested documents to substantiate Hodges’ assets, debts,

income, and expenses.   On April 21, 2009, the Appeals Office sent

Hodges a letter scheduling a telephone conference with him for

May 14, 2009, at 1 p.m. and giving him the option of appearing in

person.   The letter requested the following financial documents:

copies of bank statements and canceled checks for the last six

months, documentation of loan balances and the amount of the

monthly payments, and documentation of medical expenses.   On May

14, 2009, Settlement Officer Penny of the Appeals Office called

Hodges at the scheduled time.   Hodges told Penny he could no

longer afford an offer-in-compromise.    Hodges instead asked that
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collection activity be suspended.     Penny asked Hodges for the

same financial documents requested in the April 21, 2009 letter.

Hodges did not submit the requested financial documents.     As a

result, the Appeals Office determined that a suspension of

collection efforts based upon Hodges’ inability to pay was not

justified.   By a notice dated July 30, 2009, the Appeals Office

sustained the filing of the notice of federal tax lien.     Hodges

filed a petition with the Tax Court to challenge the

determination.   Hodges resided in Kansas when he filed his

petition.

                            Discussion

1.   Rules Governing Collection Hearings

     When a taxpayer fails to pay any federal income tax

liability after demand, section 6321 imposes a lien in favor of

the United States on all the property of the delinquent taxpayer,

and section 6323 authorizes the IRS to file notice of that lien.

However, within five business days after filing a notice of

federal tax lien, the IRS must provide written notice of that

filing to the taxpayer.   Sec. 6320(a).    After receiving such a

notice, the taxpayer may request an administrative hearing before

the Appeals Office.   Sec. 6320(a)(3)(B), (b)(1).    Administrative

review is carried out by a hearing before the Appeals Office

pursuant to section 6330(b) and (c).     At the hearing the Appeals

Officer must verify that the requirements of applicable law and
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administrative procedure have been met, consider the issues

properly raised by the taxpayer, and consider whether the

proposed collection action balances the need for efficient

collection of taxes with the taxpayer’s concern that any

collection action be no more intrusive than necessary.     Sec.

6330(c)(3).   A taxpayer dissatisfied with the outcome of the

hearing may appeal the notice of determination to the Tax Court

under section 6330(d), as Hodges has done.     Where the underlying

liability is not at issue, we review the determination of the

Appeals Office for abuse of discretion.     That is, we decide

whether the determination was arbitrary, capricious, or without

sound basis in fact or law.   See Murphy v. Commissioner, 125 T.C.

301, 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006).     Since the

underlying liability is not at issue in this case, we review the

determination of the Appeals Office for abuse of discretion.

2.   The Appeals Office Did Not Abuse Its Discretion by Deciding
     Not To Declare Hodges’ Tax Liabilities in Currently-Not-
     Collectible Status.

     The notice of determination stated that the Appeals Office

verified that the requirements of applicable law and

administrative procedure had been met, and Hodges does not

dispute that the requirements were met.     The issue Hodges raised

concerns collection alternatives.     Hodges requested that the

Appeals Office suspend collection activity against him on the

ground of financial hardship.   Suspension of collection activity
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is, in the parlance of the governing statutory provisions, a

“collection alternative” that the taxpayer may propose, see sec.

6330(c)(2)(A)(iii), and that the Appeals Office must “take into

consideration”, sec. 6330(c)(3)(B); Pitts v. Commissioner, T.C.

Memo. 2010-101, slip. op. at 19.    The Internal Revenue Manual

(IRM) makes provision for a taxpayer’s account to be declared

“currently not collectible” in cases of “hardship”.    See IRM pts.

1.2.14.1.14 (Nov. 19, 1980) (Policy Statement 5-71), 5.16.1.2.9

(May 5, 2009).1   However, the regulations state that “Taxpayers

will be expected to provide all relevant information requested by

Appeals, including financial statements, for its consideration of

the facts and issues involved in the hearing.”    Sec. 301.6320-

1(e)(1), Proced. & Admin. Regs.    It could hardly be otherwise.

For a taxpayer to justify suspension of collection on the ground

that the account should be deemed “currently not collectible”--

i.e., that the taxpayer cannot afford to pay the liability--the

taxpayer must, of course, show an inability to pay the liability.

To do so, the taxpayer must reveal what money is available and

what expenses must be borne.   To obtain this information, the

Appeals Office made two requests for financial documents from




     1
      This IRM provision seems to indicate that currently-not-
collectible status is a collection alternative to a levy action,
not a lien action. We review Hodges’ entitlement to currently-
not-collectible status nonetheless because the notice of
determination considered it.
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Hodges--but Hodges failed to submit the documents.2       In the

absence of those documents, the Appeals Office did not abuse its

discretion by declining to put Hodges’ account into currently-

not-collectible status.   See also Pitts v. Commissioner, supra.

3.   Other Issues

     The Appeals Office was required to consider whether the

intrusiveness of filing a notice of tax lien against Hodges was

balanced by the need to collect the unpaid taxes.        See sec.

6330(c)(3)(C).   The notice of determination says that this

consideration was taken into account by the Appeals Office.

Nothing in the record indicates otherwise.     In addition, there is

no evidence that any of the circumstances permitting the

withdrawal of the notice of lien exist.     See sec. 6323(j)(1).

                            Conclusion

     The Appeals Office did not abuse its discretion when it

denied currently-not-collectible status to Hodges and upheld the

filing of the notice of a federal tax lien.

     To reflect the foregoing,


                                            Decision will be entered

                                       for respondent.




     2
      Hodges testified that he has suffered from strokes that
have periodically handicapped him. He did not testify that his
condition prevented him from sending the requested financial
documents to the IRS.
