                         T.C. Memo. 2011-187



                       UNITED STATES TAX COURT



                SIMONE’S BUTTERFLY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13230-10L.             Filed August 8, 2011.



     Tamara W. Ashford, for petitioner.

     William J. Gregg, for respondent.



                         MEMORANDUM OPINION


     HALPERN, Judge:    This case is before us to review a

determination (determination) by respondent’s Appeals Office

(Appeals) to proceed with collection of petitioner’s unpaid

Federal income taxes, penalties, and interest for 2003 and for

2005 through 2008.   Each party has moved for summary adjudication

in his (or its) favor (respondent’s motion and petitioner’s
                               - 2 -

motion, respectively), and each has responded, objecting to the

other’s motion (petitioner’s objection and respondent’s

objection, respectively).   We shall grant respondent’s motion and

deny petitioner’s motion.

     Unless otherwise indicated, section references are to the

Internal Revenue Code presently in effect, and Rule references

are to the Tax Court Rules of Practice and Procedure.   All dollar

amounts have been rounded to the nearest dollar.

     We may grant summary judgment “if the pleadings, answers to

interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law.”   Rule 121(b).   The

moving party has the burden of proving that there is no genuine

issue of material fact, and factual inferences will be read in a

manner most favorable to the party opposing summary judgment.

See, e.g., Anonymous v. Commissioner, 134 T.C. 13, 15 (2010)

(citing Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985)).

                            Background

     The following facts are gathered from the pleadings,

respondent’s motion and the declaration of Gail Dickerson (Ms.

Dickerson) in support thereof, petitioner’s motion, and the two

objections.   There appears to be no disagreement as to the

following facts.
                               - 3 -

     Petitioner is a corporation with its principal place of

business in Washington, D.C.   It filed Federal income tax returns

for 2003 and for 2005 through 2008 showing tax liabilities, which

were not paid.   Respondent assessed the tax liabilities and other

amounts.

     On June 1, 2009, respondent issued to petitioner a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing (levy notice) concerning unpaid taxes, penalties, and

interest totaling $44,905 for 2003 and for 2005 through 2007.    In

response, petitioner timely submitted to Appeals a Form 12153,

Request for a Collection Due Process or Equivalent Hearing,

addressing “2003-2005” and proposing an offer-in-compromise as a

collection alternative (levy request).

     On July 30, 2009, respondent mailed to petitioner a Notice

of Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320 (lien notice) concerning petitioner’s 2008 tax year and

showing an amount owed of $6,643.   In response, petitioner timely

submitted to Appeals a Form 12153 addressing “2006-2008”, dated

August 1, 2009, and proposing neither a collection alternative

nor a loan subordination, discharge, or withdrawal (lien

request).

     An Appeals employee, Settlement Officer Gail Dickerson, was

assigned both the levy request and the lien request (together,
                               - 4 -

requests).   Ms. Dickerson had no previous experience with

petitioner for the taxable years in question.

     By letter to petitioner dated February 16, 2010 (February 16

letter), Ms. Dickerson scheduled a telephone conference with

petitioner for April 13, 2010, requesting that someone from

petitioner call her at a specific time.   The letter requested

that petitioner submit certain documents and information,

including a Form 433-B, Collection Information Statement for

Businesses, a signed tax return for 2009, and evidence of

petitioner’s having made estimated tax payments for 2009 and

2010.   Petitioner provided no information in response to the

February letter, and no one from petitioner contacted Ms.

Dickerson at the time of (or with respect to) the scheduled

telephone conference.

     By letter to petitioner dated April 13, 2010 (April 13

letter), Ms. Dickerson advised petitioner of its failure to

provide the requested information or make the requested telephone

call.   Ms. Dickerson gave petitioner until April 27, 2010, to

provide the requested information for her consideration and

stated that Appeals would (thereafter) promptly issue a

determination.

     On April 14, 2010, Tamara Ashford, Esq. (Ms. Ashford),

petitioner’s representative, left a voice mail message for Ms.

Dickerson, stating that someone from petitioner had called her
                               - 5 -

that day and advised her that the individual had forgotten about

the conference call scheduled for the day before.1    Ms. Dickerson

faxed to Ms. Ashford a copy of the April 13 letter.

     Ms. Ashford did provide Ms. Dickerson information and

documents, under cover of her letter dated April 27, 2010

(Ashford letter).   In the Ashford letter, she states, among other

things, that petitioner made no estimated tax payments for 2009

and, as of the date of the letter, had made none for 2010.    She

also states that, pursuant to a request for extension of time to

file, petitioner had not yet filed its 2009 return.    Copies of

the extension request form and of a draft of the 2009 return

accompanying the Ashford letter show “Tentative total tax” of

zero (and no payment accompanying the extension request) on the

extension request form and “Total tax” of $10,405 on the return

(with no indication of any available credit or payment of tax).

Indeed, the draft 2009 return shows an estimated tax penalty of

$150.

     The Ashford letter states that, with respect to its 2003

through 2008 tax liabilities, petitioner “would like, and is

prepared, to compromise these liabilities or enter into an


     1
      In its petition, petitioner avers: “Petitioner was unaware
of * * * [the February 16 letter] until April 14, 2010[,] because
the letter was received initially by Petitioner’s accountant and
not forwarded to Petitioner until it was too late to reschedule
the conference.” The February 16 letter is addressed to
petitioner at the address, absent the suite number, petitioner
listed as its address on the requests.
                               - 6 -

installment agreement to resolve these matters.”    It does not,

however, set forth the terms of any compromise or propose the

terms of an installment agreement.

     The Ashford letter also states, among other items, that it

is accompanied by a completed Form 433-B.   The Form 433-B

contains no entry under the heading “Accounts/Notes Receivable”.

It shows total monthly business income of $15,000 and total

monthly business expenses of $14,197, the difference being $803.

On a separate page accompanying the letter, monthly business

income is stated to be $15,360, and monthly expenses total

$14,012, the difference being $1,348.

     Ms. Dickerson’s case activity records state her conclusion

that, because petitioner’s submitted bank records show regular

deposits from Lockheed Martin, there must have been an account

receivable that was not shown on the submitted Form 433-B.      She

notes the different statements of monthly business income and

expenses (net income of either $803 or $1,348).    She notes

petitioner’s unpaid 2008 and 2009 Federal income tax and its

failure to make estimated tax payments for 2009 and 2010.      She

concludes that, because of its failures to pay both its past

income tax liabilities and its current (2010) estimated income

tax liabilities, “taxpayer continues to pyramid these

liabilities”.   She concludes that the requirements of applicable
                              - 7 -

law and administrative procedure have been met.    She determines

that collection should proceed by lien and levy.

     The determination is dated May 10, 2010, addresses 2003 and

2005 through 2008, is signed by D.A. Daigle, Team Manager, and

contains the following summary of determination:

          Neither the taxpayer nor the representative called
     as scheduled for the conference. After a last chance
     letter was issued, again requesting information be
     submitted, some of the information was received. After
     review of the collection case file, master file record,
     and information submitted by the taxpayer, a
     determination was made to sustain the issuance of the
     Notice of Intent to Levy and Notice of Lien filing due
     to all legal and procedural requirements having been
     met. The taxpayer did not submit complete financial
     information, or verification of current compliance with
     form 1120 estimated tax payments. Therefore, the
     taxpayer was not eligible for a collection alternative
     and the case is being returned to the Collection
     function for the appropriate action.

     Attached to the determination is a fuller explanation of the

determination, apparently by Ms. Dickerson.   With respect to

balancing the need for efficient collection with taxpayer concern

that the collection action be no more intrusive than necessary,

see sec. 6330(c)(3)(C), the attachment states:

          Although less intrusive alternatives such as
     offers and installment agreements exists [sic], the
     taxpayer’s failure to make an acceptable proposal,
     submit complete financial information, and provide
     proof of current compliance with Form 1120 estimated
     tax payments, balances against them; and so while more
     intrusive, the Government’s proposed levy action and
     the lien filing are appropriate, and the actions are
     sustained.
                               - 8 -

      In response to the determination, petitioner timely filed

the petition, asking that we review the determination “relating

to Petitioner’s federal income tax liabilities for the taxable

years ended December 31, 2003 through December 31, 2008”.2     The

petition assigns as error only that respondent abused his

discretion by issuing the determination.3   It prays that we

determine that the notice is invalid and that petitioner is

entitled to a collection due process or equivalent hearing.

                            Discussion

I.   Introduction

      Section 6331(a) authorizes the Secretary to levy against

property and property rights when a taxpayer liable for taxes

fails to pay those taxes within 10 days after notice and demand

for payment.   Section 6331(d) requires the Secretary to send the

taxpayer written notice of the Secretary’s intent to levy, and



      2
      Since the determination does not address 2004, there is
nothing in the determination for us to review with respect to any
collection action for that year. See sec. 6330(d)(1). We shall,
therefore, with respect to 2004, dismiss this case for lack of
jurisdiction. See Offiler v. Commissioner, 114 T.C. 492, 498
(2000).
      3
      Rule 331, concerning the commencement of a lien and levy
action, addresses in par. (b) thereof the content of the
petition. Rule 331(b)(4) provides in pertinent part that the
petition shall contain: “Clear and concise assignments of each
and every error which the petitioner alleges to have been
committed in the notice of determination. Any issue not raised
in the assignments of error shall be deemed to be conceded.”
Respondent not objecting to the lack of specificity, we shall
overlook it.
                               - 9 -

section 6330(a) requires the Secretary to send the taxpayer

written notice of his right to a hearing before Appeals at least

30 days before any levy.   A taxpayer receiving a notice of

Federal tax lien has hearing rights similar to the hearing rights

accorded to a taxpayer receiving a notice of intent to levy.    See

sec. 6320(c).

     After the hearing, an Appeals officer must determine whether

and how to proceed with collection, taking into account, among

other things, collection alternatives the taxpayer proposed and

whether any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the

taxpayer that the collection action be no more intrusive than

necessary.   See sec. 6330(c)(3).

     Where, as here, the underlying tax liability is not at

issue, we review Appeals’ determination for abuse of discretion.4

See Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).    An

Appeals officer abuses her discretion when she “takes action that

is arbitrary or capricious, lacks sound basis in law, or is not

justifiable in light of the facts and circumstances.”     Willis v.


     4
      Secs. 301.6320-1(f)(2), A-F3, and 301.6330-1(f)(2), A-F3,
Proced. & Admin. Regs., provide that in seeking Tax Court review
of a notice of determination, the taxpayer can ask the Court to
consider only an issue that was raised in the taxpayer’s sec.
6320 and/or 6330 hearing. See Giamelli v. Commissioner, 129 T.C.
107, 113 (2007); Magana v. Commissioner, 118 T.C. 488, 493
(2002). Petitioner did not raise its underlying tax liabilities
in the requests.
                              - 10 -

Commissioner, T.C. Memo. 2003-302 (citing Mailman v.

Commissioner, 91 T.C. 1079, 1084 (1988)).

II.   The Motions

      In respondent’s motion, he argues that Appeals (acting

through Ms. Dickerson) complied with the requirements of section

6330(c)(3) to (1) verify that the requirements of applicable law

and administrative procedure have been met, (2) consider issues

raised by petitioner, and (3) 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.    Because

Ms. Dickerson complied with the requirements of section

6330(c)(3), respondent continues, Appeals did not abuse its

discretion in sustaining the lien notice and determining to

proceed by levy to collect the unpaid taxes.   Therefore, he

concludes, respondent’s motion should be granted.

      In petitioner’s objection, it argues that respondent’s

motion should be denied because the “determination was in direct

violation of section 6330(c)(3)(C) [requiring consideration of

balance between efficient collection and intrusiveness of

collection means] and [therefore] constituted an abuse of

discretion.”   In particular, petitioner argues that Ms. Dickerson

improperly precluded petitioner from entering into an installment

agreement because of its failure to pay estimated taxes.    It
                             - 11 -

further argues that Ms. Dickerson did not engage “in the

‘thorough’ review and analysis of petitioner’s financial

statements * * * required by section 6330” and therefore did not

discover “that petitioner has the ability [to] pay approximately

$1350 monthly” to satisfy “in a timely and reasonable manner”

petitioner’s liabilities.

     Petitioner argues that its motion should be granted for the

same reasons it argues that respondent’s motion should be denied.

     In respondent’s objection, he claims:

     [Ms. Dickerson] reviewed the information submitted at
     the last minute on behalf of petitioner. The review by
     * * * [her] revealed discrepancies for both income and
     expense items between the information on Form 433-B,
     Collection Information Statement for Businesses, and
     data on a separate typed sheet. The $1,350 amount
     proposed in the Motion is not expressed or otherwise
     deciphered from the administrative record for this
     case. Additionally, an understatement of accounts
     receivable, an asset, on Form 433-B was also indicated
     from a review by * * * [Ms. Dickerson]. Finally, it
     was noted by * * * [her] that petitioner's Form 1120,
     U.S. Corporation Income Tax Return, for each of the
     taxable years 2008 and 2009 reported unpaid balances
     due, without any estimated tax payments, and
     petitioner's counsel admitted that no estimated
     corporate income tax payments were made for the taxable
     year 2010. In sum, respondent’s lien notice filing and
     proposed collection action were sustained. [Fn. ref.
     omitted.]

Respondent argues that rejection of a proposed installment

agreement because a taxpayer has not paid current taxes is not an

abuse of discretion.
                                - 12 -

III.   Analysis

       A.   Introduction

       The levy notice, dated June 1, 2009, addresses 2003 and 2005

through 2007.     The levy request does not mention 2006 and 2007.

The lien notice, dated July 30, 2009, addresses only 2008.      The

lien request, dated August 1, 2009, addresses “2006-2008”.      The

determination addresses 2003 and 2005 through 2008.      While it

seems to us that the lien request was not a timely response for

2006 and 2007 to the levy notice, see sec. 301.6330-1(c)(2),

Proced. & Admin. Regs., respondent has not raised that point,

and, since we sustain respondent’s levy action anyway, we shall

not further address the apparent anomaly.

       B.   Discussion

       Petitioner does not contest that, in making the

determination, Ms. Dickerson complied with the requirements of

section 6330(c)(3)(A) and (B) to (1) verify that the requirements

of applicable law and administrative procedure have been met and

(2) consider issues raised by petitioner.    It argues only that,

in violation of section 6330(c)(3)(C), she erred in determining

that the notice of lien and the proposed levy are no more

intrusive than necessary.    In particular, it claims she erred in

precluding petitioner from entering into an installment agreement

because of its failure to pay estimated taxes.
                               - 13 -

     We disagree.    The information available to Ms. Dickerson

shows that petitioner had over $50,000 of unpaid taxes for years

beginning in 2003.    It appears to have provided her an incomplete

Form 433-B, and it did provide her with inconsistent financial

information.   Ms. Ashford suggested an installment agreement, but

she provided no terms.    Moreover, Ms. Dickerson’s decision to

preclude petitioner from entering into an installment agreement

because of its failure to pay estimated taxes was based on

applicable procedures contained in the Commissioner’s Internal

Revenue Manual (IRM).5   According to those procedures, in

determining whether a taxpayer is eligible for an installment

agreement an IRS employee must:

     Analyze the current year’s anticipated tax liability.
     If it appears a taxpayer will have a balance due at the
     end of the current year, the accrued liability may be
     included in an agreement. Compliance with filing,
     paying estimated taxes, and federal tax deposits must
     be current from the date the installment agreement
     begins. * * *

IRM pt. 5.14.1.4.1(19) (Sept. 26, 2008) (emphasis added).

Respondent avers, and petitioner does not deny, that petitioner

made no estimated tax payments for 2010.



     5
      The Internal Revenue Manual (IRM) provides procedures for
entering into installment agreements that allow taxpayers to pay
their tax liabilities over time. See IRM ch. 5.14-Installment
Agreements (2010). That chapter contains criteria concerning
taxpayer filing and compliance that must be considered before
determining that the best method of paying delinquent taxes is
through an installment agreement. IRM pt. 5.14.1.4.1(1) (Sept.
26, 2008).
                               - 14 -

      Estimated tax payments, intended to ensure that current

taxes are paid, are a significant component of the Federal tax

system, and Ms. Dickerson was entitled to rely on their absence

in reaching her conclusions.    See Cox v. Commissioner, 126 T.C.

237, 258 (2006), revd. on other grounds 514 F.3d 1119 (10th Cir.

2008); Schwartz v. Commissioner, T.C. Memo. 2007-155.      In fact,

petitioner’s circumstances illustrate one of the reasons for

requiring current compliance before granting collection

alternatives such as an offer-in-compromise or an installment

agreement; namely, the risk of pyramiding tax liability (i.e.,

that failure to pay current tax liabilities might result in an

increasing total tax liability notwithstanding some payment of

past tax liabilities).   See Orum v. Commissioner, 412 F.3d 819,

821 (7th Cir. 2005), affg. 123 T.C. 1 (2004).

IV.   Conclusion

      Petitioner assigned error to the determination in only the

most general terms.   In petitioner’s motion and in petitioner’s

objection, it refines its assignment by claiming that the notice

of lien and the proposed levy are more intrusive than necessary

and that petitioner should have been allowed an installment

agreement to pay its delinquent taxes.    For the reasons stated,

we disagree on both counts.    Ms. Dickerson did not act

arbitrarily or capriciously, nor did she lack sound basis in law,

nor was her decision unjustifiable in the light of the facts and
                             - 15 -

circumstances in front of her.    She did not, therefore, abuse her

discretion in recommending that the lien remain and that

respondent may continue with the levy.    See Willis v.

Commissioner, T.C. Memo. 2003-302.

     Respondent is entitled to summary judgment in his favor.


                                      An appropriate order of

                                 dismissal for lack of jurisdiction

                                 with respect to 2004 and an order

                                 and decision will be entered.
