                               T.C. Memo. 2017-148



                         UNITED STATES TAX COURT



                  STEVEN J. FELDMAN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 1719-16L.                          Filed July 27, 2017.


      Steven J. Feldman, pro se.

      Kathleen K. Raup, for respondent.



                           MEMORANDUM OPINION



      RUWE, Judge: This case concerns petitioner’s appeal of respondent’s

determination to sustain the filing of a notice of Federal tax lien (NFTL) to collect

petitioner’s unpaid tax liabilities for taxable years 2009, 2010, 2011, 2012, and

2013 (years in question). The issue before the Court is whether to grant
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[*2] respondent’s motion for summary judgment (motion) pursuant to Rule 121.1

Respondent contends that no genuine dispute exists as to any material fact and that

the determination to maintain an NFTL filed under section 6323 should be

sustained. Petitioner responded twice to respondent’s motion but did not contest

respondent’s material factual allegations. After reviewing these allegations along

with the attached declaration and exhibits, we conclude that no material facts that

respondent relies on are in dispute and that this case is appropriate for summary

adjudication.

                                    Background

      Petitioner resided in Pennsylvania when he filed his petition.

      Petitioner filed income tax returns for the years in question but failed to pay

all liabilities reported on the returns. Respondent assessed all tax shown on the

returns.

      On or about June 18, 2010, petitioner requested and was granted an

installment agreement to pay his outstanding tax liability for the 2009 taxable

year. Petitioner made payments until April 2013 but then defaulted. Respondent

terminated the agreement on September 30, 2013. In April 2014 respondent

      1
       Unless otherwise indicated, all Rule references are to the Tax Court Rules
of Practice and Procedure, and all section references are to the Internal Revenue
Code in effect at all relevant times.
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[*3] initiated a levy on petitioner’s Social Security benefits and on June 18 and

July 16, 2014, received two separate payments of $299.25, which were applied

against petitioner’s outstanding tax liability for the 2009 taxable year.2

      On or about June 30, 2014, petitioner submitted to respondent a Form 656,

Offer in Compromise (Form 656 OIC), for his unpaid tax liabilities for the years in

question. Respondent accepted petitioner’s offer-in-compromise (OIC).

Petitioner’s OIC was for $7,440 and required an initial offer payment of $310, an

application fee of $186, and monthly payments of $311. Petitioner submitted the

initial offer payment and application fee with his OIC but failed to make a single

required monthly payment.

      Respondent sent petitioner a letter dated February 19, 2015, to his last

known address, advising him that the OIC was closed for nonpayment. Petitioner

denies that the letter was sent to the proper address, but he did receive it. In a

letter dated March 16, 2015, petitioner requested that respondent reconsider

closing the OIC.

      On March 17, 2015, respondent sent petitioner a Letter 3172, Notice of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, advising

petitioner that respondent had filed an NFTL for petitioner’s unpaid tax liabilities

      2
          Respondent’s 2014 levy action is not at issue in this case.
                                        -4-

[*4] for the years in question and that petitioner could receive a hearing with the

Internal Revenue Service (IRS) Office of Appeals.

      On April 22, 2015, petitioner submitted, via facsimile, to respondent a

timely Form 12153, Request for a Collection Due Process or Equivalent Hearing

(request for a CDP hearing), in which he did not contest the underlying liabilities

but instead argued that the NFTL should be withdrawn because it was filed while

he had an outstanding request with respondent to reconsider rejecting his OIC, his

expenses exceeded his income, and collection action would create an undue

hardship because of his illness and physical disability.

      On June 12, 2015, a settlement officer (SO) from the IRS Office of Appeals

verified and acknowledged receipt of petitioner’s request for a CDP hearing. The

SO sent petitioner a letter dated July 17, 2015, advising him that the SO had

received his request for a CDP hearing and scheduling a conference call for

August 12, 2015. The letter explained to petitioner that his OIC that was rejected

on February 19, 2015, would not be reconsidered and requested that petitioner

submit by August 4, 2015: (1) a completed Form 656 OIC and a completed Form

433-A, Collection Information Statement for Wage Earners and Self-Employed

Individuals, if petitioner would like to file a new OIC; (2) proof of current

payment compliance; (3) a Form 433-A and attached earnings statements, bank
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[*5] account statements, life insurance account statements, and investment account

statements if petitioner wished to demonstrate financial hardship and have his

accounts placed in currently not collectible (CNC) status; and (4) a completed

Form 12277, Application for Withdrawal of Filed Form 668 (Y), Notice of Federal

Tax Lien, if petitioner wanted respondent to consider petitioner’s request to have

the NFTL withdrawn.

      On August 4, 2015, petitioner contacted the SO and requested and was

granted an extension to provide the requested documents until August 25, 2015.

On August 13, 2015, the SO told petitioner that he needed to increase his tax

withholding to come into current payment compliance. Petitioner acknowledged

this but told the SO that he could not afford to increase his withholding.

      On August 25, 2015, petitioner provided the requested documents, except

for the Form 656 OIC. On August 26, 2015, petitioner and respondent had a

conference call. Petitioner told the SO that he would file a new OIC at a future

date. The SO told petitioner that she needed substantiation for the expenses listed

on petitioner’s Form 433-A and that petitioner would be entitled to the lesser of

the maximum local or national standards, or his actual expenses. Petitioner was

granted an extension until September 14, 2015, to substantiate the expenses.
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[*6] On September 10, 2015, petitioner and the SO had a conference call.

Petitioner told the SO that he had no withholding for the 2015 taxable year, and

the SO advised petitioner that he was ineligible for a collection alternative if he

was not in payment compliance.

      On September 15, 2015, petitioner hand delivered documents to the SO to

support his request to have his accounts placed in CNC status.

      On October 14, 2015, respondent requested additional substantiation for

out-of-pocket health care expenses, which petitioner agreed to provide by October

18, 2015. The SO was informed on October 29, 2015, that petitioner had failed to

provide the requested substantiation.

      On November 6, 2015, the SO determined, from the documents petitioner

provided, that his monthly income exceeded monthly expenses by $1,002. On the

same day, the SO sent petitioner a letter offering an installment agreement if

petitioner provided proof that he was in current payment compliance and advising

him that she was scheduling a conference call for December 4, 2015, to conclude

the CDP hearing.

      On December 3, 2015, the SO declined petitioner’s request that the NFTL

be withdrawn and on December 4, 2015, considered all issues petitioner raised at

the CDP hearing.
                                         -7-

[*7] On December 10, 2015, respondent issued petitioner a Notice of

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

for the years in question, and petitioner timely petitioned this Court alleging: (1)

respondent erroneously determined that he was not eligible to have his accounts

placed in CNC status; (2) respondent did not provide petitioner with sufficient

time to submit documentation to the IRS Office of Appeals; and (3) respondent

wrongfully determined that the lien should not be withdrawn.

                                     Discussion

A. Summary Judgment

      Summary judgment is designed to expedite litigation and to avoid

unnecessary and expensive trials. Shiosaki v. Commissioner, 61 T.C. 861, 862

(1974). Under Rule 121(b), the Court may grant summary judgment when there is

no genuine dispute as to any material fact and a decision may be rendered as a

matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d,

17 F.3d 965 (7th Cir. 1994). The burden is on the moving party to demonstrate

that no genuine issue as to any material fact remains and that he is entitled to

judgment as a matter of law. FPL Grp., Inc. v. Commissioner, 116 T.C. 73, 74-75

(2001). In deciding whether to grant summary judgment, we view the evidence in

the light most favorable to the nonmoving party. Bond v. Commissioner, 100 T.C.
                                         -8-

[*8] 32, 36 (1993). However, the nonmoving party is required “to go beyond the

pleadings and by * * * [his] own affidavits, or by the ‘depositions, answers to

interrogatories, and admissions on file,’ designate ‘specific facts showing that

there is a genuine issue for trial.’” Celotex Corp. v. Catrett, 477 U.S. 317, 324

(1986); see also Rauenhorst v. Commissioner, 119 T.C. 157, 175 (2002); FPL

Grp., Inc. & Subs. v. Commissioner, 115 T.C. 554, 559 (2000). On the basis of

the record, we conclude that there is no genuine dispute of material fact and that a

decision may be rendered as a matter of law.

B. Standard of Review

      Petitioner does not challenge his underlying tax liabilities but challenges the

administrative determination by respondent to sustain an NFTL to facilitate

collection of petitioner’s outstanding tax liabilities for the years in question. The

Court reviews administrative determinations by the IRS Office of Appeals

regarding nonliability issues for abuse of discretion. Hoyle v. Commissioner, 131

T.C. 197, 200 (2008); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). A

determination is an abuse of discretion if it is arbitrary, capricious, or without

sound basis in fact or law. Murphy v. Commissioner, 125 T.C. 301, 308, 320

(2005), aff’d, 469 F.3d 27 (1st Cir. 2006).
                                         -9-

[*9] C. Analysis

      The determination of the IRS Office of Appeals must take into

consideration: (1) the verification that the requirements of applicable law and

administrative procedure have been met; (2) issues raised by the taxpayer; and (3)

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. Secs. 6320(c), 6330(c)(3); see also

Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). Our review of the record

establishes that the SO properly considered all of these factors when making her

determination.

      Petitioner contends that he is insolvent and therefore eligible to have his

accounts placed in CNC status. To be eligible to have his accounts placed in CNC

status, the taxpayer must demonstrate that, on the basis of his assets, equity,

income, and expenses, he has no apparent ability to make payments on the

outstanding tax liabilities. See Foley v. Commissioner, T.C. Memo. 2007-242, 94

T.C.M. (CCH) 210, 212 (2007). A taxpayer’s ability to make payments is

determined by calculating the excess of income over necessary living expenses.

Internal Revenue Manual pt. 5.16.1.2 (Jan. 1, 2016). An SO does not abuse her

discretion when she employs local and national standards to calculate the
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[*10] taxpayer’s expenses and ability to pay. See Friedman v. Commissioner, T.C.

Memo. 2013-44, at *10; Marks v. Commissioner, T.C. Memo. 2008-226, 2008

WL 4489075. In reviewing for abuse of discretion, the Court does not substitute

its judgment for that of the SO or recalculate the taxpayer’s ability to pay. See

O’Donnell v. Commissioner, T.C. Memo. 2013-247, at *15.

      The SO determined petitioner’s income on the basis of his Social Security

benefits and pension payments. Petitioner’s living expenses were computed using

the documents he provided and the national and local standards. After reviewing

this information, respondent determined that petitioner could make installment

agreement payments of $1,002 per month. Therefore, we find that the SO did not

abuse her discretion in concluding that petitioner was not eligible to have his

accounts placed in CNC status.

      Petitioner contends that he was “rushed” to provide the documentation

requested by the SO. When the IRS Office of Appeals gives the taxpayer a

specific timeframe to submit requested items, it is not an abuse of discretion to

move ahead if the taxpayer fails to submit the requested items. Pough v.

Commissioner, 135 T.C. 344, 351 (2010); Glossop v. Commissioner, T.C. Memo.

2013-208, at *17. Further, an SO is not required to negotiate indefinitely or wait
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[*11] any specific time before issuing a determination. Kuretski v. Commissioner,

T.C. Memo. 2012-262, at *11, aff’d, 755 F.3d 929 (D.C. Cir. 2014).

      Petitioner has not pointed to any specific evidence that he felt rushed to

provide, and it appears from the record that petitioner submitted all evidence that

he felt was necessary. Even if petitioner did not submit all evidence requested by

the SO or that he felt was necessary, he was given adequate time. The SO required

petitioner to provide documents within a certain timeframe. Petitioner requested

and was granted multiple extensions from August through December 2015 to

submit various documents. The SO was not required to indefinitely wait for

petitioner to be satisfied that he had provided all of the documents that he felt were

necessary. Therefore, we find that the SO did not abuse her discretion by

concluding the CDP hearing on December 4, 2015.

      Petitioner contends that respondent’s filing of the NFTL was premature and

not in accordance with proper administrative procedures because the NFTL was

filed while an OIC was under consideration and before the end of the period to

dispute the OIC’s rejection. In pertinent part, section 6323(j) provides that

respondent may withdraw an NFTL if he determines: (1) the filing of the NFTL

was premature or not in accordance with administrative procedures; (2) the

taxpayer entered into an installment agreement, unless the agreement provides
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[*12] otherwise; (3) the withdrawal will facilitate collection; or (4) with the

taxpayer’s consent the lien’s withdrawal “would be in the best interests of the

taxpayer * * * and the United States.”

       Respondent’s filing of the NFTL was not premature, and it was filed in

accordance with administrative procedures. Although the NFTL was filed on

March 17, 2015, while petitioner’s OIC was being reconsidered, respondent is not

precluded from filing an NFTL while an OIC is being considered. Baltic v.

Commissioner, 129 T.C. 178, 180 n.4 (2007); Taggart v. Commissioner, T.C.

Memo. 2013-113, at *15. Therefore, we find that respondent’s filing of the NFTL

was not premature.

      Petitioner was not a party to an installment agreement with respondent when

the NFTL was filed; and petitioner did not present any evidence that withdrawal of

the NFTL would facilitate collection or be in the best interests of petitioner and

the United States.

      Finding no abuse of discretion in any respect, we will grant summary

judgment for respondent and sustain the proposed collection action.

      To reflect the foregoing,

                                                        An appropriate order and

                                                  decision will be entered.
