                                                                         FILED
                                                              United States Court of Appeals
                                                                      Tenth Circuit
                      UNITED STATES COURT OF APPEALS April 15, 2009

                             FOR THE TENTH CIRCUIT                Elisabeth A. Shumaker
                                                                      Clerk of Court



    MICHAEL POINDEXTER,

                Petitioner-Appellant,

    v.                                                     No. 08-9008
                                                     (United States Tax Court)
    COMMISSIONER OF INTERNAL                           (T.C. No. 14979-05L)
    REVENUE,

                Respondent-Appellee.


                             ORDER AND JUDGMENT *


Before LUCERO, PORFILIO, and ANDERSON, Circuit Judges.


         Michael Poindexter settled his delinquent tax liability but later defaulted

under the terms of his agreement. His default prompted the Commissioner of

Internal Revenue to impose a levy for Mr. Poindexter’s entire original tax

liability. The Tax Court upheld the Commissioner’s decision, and Mr. Poindexter

appealed. We have jurisdiction under 26 U.S.C. § 7482(a)(1) and now affirm.


*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
                                          I

      Mr. Poindexter failed to pay his federal income taxes from 1990 to 1995.

Although his total delinquency exceeded $280,000, the Commissioner accepted an

offer-in-compromise (OIC) of $120,000. The OIC, accepted on November 21,

1997, required Mr. Poindexter to remain current on his taxes for the next five

years or until the deficiency was satisfied. In 2000 and 2001, however, he again

fell behind on his taxes. Consequently, the Commissioner notified him on

October 22, 2003, that he had thirty days to pay the deficiency or be found in

default of the OIC. The Commissioner warned that failure to timely pay the

deficiency would result in reinstatement of the entire original tax liability, less

payments received. One day after the deadline, Mr. Poindexter requested a

six-month extension; the Commissioner answered with a finding of default.

      On September 9, 2004, Mr. Poindexter received a “Final Notice - Notice of

Intent to Levy and Notice of Your Right to a Hearing” concerning his tax liability

from 1993 through 1995. Mr. Poindexter requested a collection due process

(CDP) hearing under 26 U.S.C. § 6330, but before the hearing paid his 2000 and

2001 taxes. He therefore urged the Commissioner to reinstate the OIC or accept a

new one based on doubt as to liability. The Commissioner refused and on

July 14, 2005, issued a final notice of determination. The Commissioner

concluded that Mr. Poindexter had defaulted under the OIC and that collection by

levy of his unpaid tax liabilities from 1993, 1994, and 1995 was appropriate.

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      Mr. Poindexter subsequently petitioned the United States Tax Court for

review, arguing, among other things, that the Commissioner’s finding of default

and collection by levy was an abuse of discretion. He claimed that he should

have been granted an extension to cure the default and that his breach was

immaterial. He also claimed the Commissioner should have accepted a new OIC

based on doubt as to liability. The Tax Court rejected these arguments and

upheld the Commissioner’s decision. In this court, Mr. Poindexter reasserts his

arguments that he should have been granted an extension, that there was no

material breach, and that the Commissioner refused to consider a new OIC.

                                         II

      “We review the Tax Court’s conclusions of law de novo and its factual

findings for clear error.” Lewis v. Comm’r, 523 F.3d 1272, 1274 (10th Cir. 2008).

Because the validity of Mr. Poindexter’s underlying tax liability was not at issue,

the Tax Court reviewed the Commissioner’s administrative determinations for an

abuse of discretion. See Goza v. Comm’r, 114 T.C. 176, 181-82 (2000). Thus,

we, too, evaluate the Commissioner’s decisions for an abuse of discretion.

      Mr. Poindexter first claims he should have been granted a six-month

extension to cure the default. He argues that the Internal Revenue Manual affords

defaulting taxpayers six months to cure, but he never received that opportunity.

This argument fails for at least four reasons. First, the Internal Revenue Manual

does not have the force of law and it confers no rights upon taxpayers. See

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United States v. Lockyer, 448 F.2d 417, 421 (10th Cir. 1971); see also Wheeler v.

Comm’r, 91 T.C.M. (CCH) 1194, at *3 n.9 (2006) (noting that the manual “was

designed to aid in the internal administration of the Internal Revenue Service, not

for the protection of taxpayers; thus, it is not binding upon and confers no rights

to taxpayers”). Second, the manual does not require the Commissioner to grant

defaulting taxpayers a six-month extension; it simply permits extensions under

appropriate circumstances. 1 Third, Mr. Poindexter failed to timely request an

extension within thirty days of the Commissioner’s warning of default. And

fourth, despite his untimely request for an extension of six months,

Mr. Poindexter waited more than a year – until December 21, 2004 – to pay his

deficiency. Under these circumstances, we perceive no abuse of discretion.

Mr. Poindexter’s insistence that the Commissioner failed to even consider

granting an extension is belied by the record. See, e.g., Ex. 22-J at 2 (“Had the

taxpayer paid [the taxes] within 6 months as was requested, I would have

considered reinstating the OIC.”).

1
      Mr. Poindexter relies on Internal Revenue Manual pt. 5.8.9.4(5) (2001),
which provides in part:

      If compliance [with an OIC] is not immediately secured, the offer
      will be evaluated in light of all information submitted by the service
      center and a decision will be made whether to terminate the offer or
      to consider temporary adjustment of its terms. If . . . [t]he taxpayer
      can pay the potential defaulted amount in 6 months or less . . . [t]hen
      . . . [t]he revenue officer can grant an extension of time to pay for no
      longer than 6 months. Future deferred payments must be made on
      time.

                                         -4-
       Mr. Poindexter also asserts his breach of the OIC was immaterial because

he paid his 2000 and 2001 taxes before the CDP hearing. He acknowledges that

timely payment of these liabilities was an express condition of the agreement, but

nevertheless contends that no harm was done. This is a meritless argument. The

parties agree that timely payment of Mr. Poindexter’s taxes was an express

condition of the OIC. Consequently, his failure to timely perform discharged the

Commissioner’s obligation to set-aside the original tax liability. See Robinette v.

Comm’r, 439 F.3d 455, 462 (8th Cir. 2006), rev’g 123 T.C. 85 (2004). The

question of materiality is relevant only to the extent that timely performance was

not an express condition of the agreement, id., which is simply not the case here.

Mr. Poindexter’s suggestion that we ought to disregard Robinette because his Tax

Court petition predated Robinette is patently meritless, as is his contention that

we ought to follow the Tax Court’s decision reversed by Robinette. And, it is of

no consequence that Mr. Poindexter later paid his taxes, because the breach

occurred when the taxes were not timely paid. His belated payment did not

retroactively undo the breach or render it harmless; it simply satisfied the

liability.

       Finally, Mr. Poindexter contends the Commissioner failed to consider

collection alternatives before imposing the levy. Under the Internal Revenue

Code, prior to approving a levy action, the Commissioner must consider proposed

collection alternatives such as the substitution of other assets, an installment

                                          -5-
agreement, or an offer-in-compromise. 26 U.S.C. § 6330(c); see Cox v. Comm’r,

514 F.3d 1119, 1124 (10th Cir. 2008). The Commissioner must also consider

“whether any proposed collection action 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.” 26 U.S.C. § 6330(c)(3)(C); Cox,

514 F.3d at 1124. Mr. Poindexter asserts that despite these provisions, the

Commissioner refused to consider his proposed OIC based on doubt as to liability

“arising out of [the] purported default.” Aplt. Br. at 14.

      It is worth noting, however, that Mr. Poindexter never actually submitted a

new OIC. Instead, his contention concerns the Commissioner’s unwillingness to

accept an OIC based on doubt as to liability, see 26 C.F.R. § 301.7122-1(b)(1),

because liability was not at issue, see R., Doc. 22 at 23-24. Mr. Poindexter

stresses that doubt as to liability remained a sound basis for a new OIC since he

was contesting his liability flowing from the default. But “a challenge to the

Commissioner’s determination that a taxpayer was properly deemed in default on

an OIC is not a dispute of the underlying tax liability.” Ng v. Comm’r, 93 T.C.M.

(CCH) 675, at *3 (2007). Hence, the Commissioner correctly recognized that an

OIC based on doubt as to liability was unacceptable. To the extent

Mr. Poindexter complains that the Commissioner improperly dissuaded him from

submitting his OIC based on doubt as to liability, there was no abuse of discretion

in discouraging a meritless proposal. See Robinette, 439 F.3d at 464.

                                          -6-
      In any event, the record amply demonstrates that the Commissioner

properly considered other collection alternatives and weighed the propriety of the

levy action. Indeed, notes from an appeals officer indicate that the Commissioner

considered reinstating the OIC but declined because Mr. Poindexter failed to

timely respond to the warning notice, failed to pay his delinquent taxes within the

six months he requested, and failed to pay his taxes from 2002, 2003, and 2004.

Further, the record indicates that the Commissioner encouraged Mr. Poindexter to

file a new OIC based on doubt as to collectibility, see 26 C.F.R.

§ 301.7122-1(b)(2), due to his divorce, fluctuating income, and bankruptcy

petition, but he refused. Similarly, the Commissioner encouraged Mr. Poindexter

to pursue an installment plan so as to avoid levy, but Mr. Poindexter insisted only

on an OIC based on doubt as to liability. With no remaining alternatives, the

Commissioner was compelled to proceed with the levy. In short, we are satisfied

that the Commissioner considered collection alternatives, accounted for

Mr. Poindexter’s hardships, and weighed whether the levy action was the least

intrusive means of collection. Accordingly, we find no abuse of discretion in the

Commissioner’s finding of default and imposition of levy.

      The judgment of the Tax Court is AFFIRMED.


                                                    Entered for the Court

                                                    Stephen H. Anderson
                                                    Circuit Judge

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