                       T.C. Memo. 2008-30



                     UNITED STATES TAX COURT



           JOHN E. AND SANDRA L. WEST, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5376-06L.             Filed February 13, 2008.



     Stephen L. Christian, for petitioners.

     Spencer T. Stowe, for respondent.



                       MEMORANDUM OPINION

     SWIFT, Judge: Under section 6330, petitioners challenge

respondent’s notice of determination sustaining respondent’s levy

notice.

       Unless otherwise indicated, all section references are to

the Internal Revenue Code, and all Rule references are to the Tax

Court Rules of Practice and Procedure.
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     The primary issue for decision is whether respondent’s

Appeals Office abused its discretion in sustaining a notice of

intent to levy relating to petitioners’ outstanding 1993 Federal

income taxes.

                             Background

     The facts of this case have been submitted fully stipulated

under Rule 122 and are so found.

     At the time the petition was filed, petitioners resided in

Orange County, California.

     Petitioners have a history of failing to timely pay

estimated Federal income taxes due and failing to timely file

their Federal income tax returns.

     On April 24, 1998, petitioners and respondent agreed on an

offer-in-compromise (OIC) on the grounds of doubt as to

collectibility relating to approximately $148,350 in petitioners’

unpaid 1993 Federal income taxes.1     Among other things,

respondent’s acceptance of petitioners’ OIC was contingent on

petitioners’:   (1) Paying, within 60 days of respondent’s

acceptance of the OIC, to respondent $10,000 (OIC amount);

(2) timely filing Federal income tax returns that became due

during the 5-year period subsequent to their entering into the



     1
        Because of a credit offset, petitioners’ outstanding
Federal income tax liability for 1995 (including interest,
penalties, additions to tax, and interest) has been paid in full,
and any issue herein relating to 1995 is now moot.
                               - 3 -
OIC or until the OIC amount was paid in full, whichever was

longer (5-year compliance period); and (3) timely paying the

taxes reported due on their Federal income tax returns filed

during the 5-year compliance period.   Specifically, paragraph (d)

on petitioners’ Form 656, Offer in Compromise, stated:   “I/We

will comply with all provisions of the Internal Revenue Code

relating to filing my/our returns and paying my/our required

taxes for 5 years from the date the IRS accepts the offer”.

     Under the express terms of the OIC, if petitioners failed to

meet any of the express conditions of the OIC, respondent had the

right to revoke the OIC and to attempt to collect from

petitioners the full amount of petitioners’ unpaid 1993 Federal

income taxes.

     On May 7, 1998, petitioners paid to respondent the $10,000

OIC amount.   Petitioners’ 5-year compliance period thus began

when respondent accepted the OIC on April 24, 1998.

     During the 5-year compliance period, petitioners, among

other things, failed to pay estimated taxes, failed to timely

file their tax returns, and/or failed to timely pay taxes

reported due on their filed Federal income tax returns, as

follows:
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     Year                 Petitioners Failed To

     1998       Timely file their return
                Timely pay the tax liability stated on the return

     1999       Timely pay estimated taxes
                Timely pay the tax liability stated on the return

     2000       Timely pay the tax liability stated on the return

     2001       Timely file their return
                Timely pay the tax liability stated on the return

     2002       Timely pay estimated taxes
                Timely pay the tax liability stated on the return


     In April 2000, petitioners moved to a new address, but

petitioners did not notify respondent of their change of address.

Before this move, petitioners filed with respondent IRS Form

2848, Power of Attorney and Declaration of Representative, in

which petitioners directed respondent to send to petitioners’

representative copies of any correspondence sent to petitioners.

     Petitioners’ 2000, 2001, and 2002 Federal income tax returns

filed with respondent continued to show petitioners’ old address

and did not show the new address to which petitioners moved in

April 2000.   Petitioners did not otherwise notify respondent of

their new address until sometime after March 2004.

     From November 2002 through January 2004, respondent sent to

petitioners (at the old address shown on petitioners’ 2000, 2001,

and 2002 Federal income tax returns; namely, 23382 Via Chirpia,

Mission Viejo, CA) at least seven notices relating to various
                                - 5 -
late filing and late payment additions to tax and penalties that

respondent had assessed against petitioners relating to

petitioners’ 2000, 2001, and 2002 Federal income tax returns and

warning petitioners of the potential for default on the OIC that

had been entered into if petitioners did not pay the various

additions to tax and penalties that had been assessed against

them.

     Specifically, in November 2003, respondent mailed to

petitioners at their Via Chirpia, Mission Viejo, address a notice

alerting petitioners that the OIC was subject to likely

termination if petitioners’ outstanding additions to tax and

penalties for 2001 and 2002 were not paid.

     In January 2004, respondent mailed to petitioners (at the

Via Chirpia, Mission Viejo, address) a notice of default on the

OIC, informing petitioners that the OIC was terminated.

     On June 18, 2005, respondent mailed to petitioners a notice

of intent to levy and a notice of petitioners’ right to a hearing

relating to the approximate $148,350 balance of petitioners’

unpaid 1993 Federal income taxes.

     On July 21, 2005, petitioners filed a Form 12153, Request

for a Collection Due Process Hearing, with regard to respondent’s

notice of intent to levy, in which petitioners requested that

respondent reinstate the OIC.
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     On January 6, 2006, an Appeals Office hearing was held by

telephone conference among respondent’s Appeals Office,

petitioners, and petitioners’ attorney.

     On February 8, 2006, respondent’s Appeals Office issued to

petitioners a notice of determination sustaining respondent’s

levy notice.

     In the notice of determination, respondent’s Appeals Office

indicated that because petitioners had defaulted on the OIC and

because petitioners had not provided any financial or other

information applicable to other collection alternatives,

respondent’s levy notice was sustained.


                             Discussion

     Because the underlying tax liability is not in dispute, we

review the actions of respondent’s Appeals Office for abuse of

discretion.    See Goza v. Commissioner, 114 T.C. 176, 182 (2000).

Abuse of discretion occurs where the actions of the

Commissioner’s Appeals Office are arbitrary or capricious, lack

sound basis in law, or are not justifiable in light of the facts

and circumstances.    Woodral v. Commissioner, 112 T.C. 19, 23

(1999).

     Pursuant to section 6330(c)(3), respondent’s Appeals Office

must verify that the requirements of applicable law and

administrative procedure have been met, consider issues raised by

petitioners, and consider whether the proposed collection action
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balances the need for the efficient collection of taxes with

petitioners’ legitimate concern that respondent’s collection be

no more intrusive than necessary.

     In reviewing whether respondent’s Appeals Office abused its

discretion in sustaining respondent’s notice of intent to levy,

our analysis is governed by “general principles of contract law.”

See Dutton v. Commissioner, 122 T.C. 133, 138 (2004).

     Under the “material breach of contract” analysis applied in

Robinette v. Commissioner, 123 T.C. 85, 108 (2004), revd. 439

F.3d 455 (8th Cir. 2006), “If * * * [petitioners’] breach is

material and sufficiently serious, * * * [respondent’s]

obligation to perform may be discharged. * * * Not so, however,

if * * * [petitioners’] breach is comparatively minor.”

     On appeal, the Court of Appeals for the Eighth Circuit noted

that the failure to comply with an express condition of an OIC is

itself grounds for the Commissioner to revoke the OIC, regardless

of materiality.   Robinette v. Commissioner, 439 F.3d at 462.

     Generally, for purposes of section 6330, a notice mailed to

the taxpayer’s “last known address” is proper and sufficient.

Tadros v. Commissioner, 763 F.2d 89, 91 (2d Cir. 1985); Buffano

v. Commissioner, T.C. Memo. 2007-32.   In determining petitioners’

last known address, unless otherwise notified respondent may rely

upon petitioners’ most recently filed return.   See Abeles v.
                               - 8 -
Commissioner, 91 T.C. 1019, 1025 (1988); Brown v. Commissioner,

78 T.C. 215, 219 (1982).

     Petitioners argue that petitioners’ failure timely to file

tax returns, to pay estimated taxes, and to pay the various

additions to tax and penalties assessed against them during the

5-year compliance period did not constitute a material breach of

the OIC and did not justify respondent’s revocation of the OIC

and therefore that respondent’s Appeals Office abused its

discretion in sustaining respondent’s notice of intent to levy.

     We disagree.   The numerous instances of petitioners’ failure

to keep their tax obligations current during the 5-year

compliance period constitute, under any standard, a significant

and material breach of the requirements of the OIC.

     We need not address different standards that, in other

cases, might be considered and that might be applicable.    See Ng

v. Commissioner, T.C. Memo. 2007-8.

     Respondent mailed to petitioners a number of notices

alerting petitioners to the potential for default on the OIC and

giving petitioners opportunity to bring current their tax and

other payments due.

     Although petitioners moved to a new address, petitioners

failed to apprise respondent of their new address, and respondent

cannot now be faulted for mailing the notices to the address

shown on petitioners’ tax returns.     Petitioners, not respondent,
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must bear the consequences of petitioners’ failure to properly

file their tax returns with, or otherwise apprise respondent of,

petitioners’ new address.

     Petitioners argue that respondent should have, but did not,

mail to petitioners’ representative a copy of the various dunning

letters.    Failure of respondent to mail to petitioners’

representative a copy of a notice that was mailed to petitioners

provides no basis to reject respondent’s collection action in

this case.    See Amsler v. Commissioner, T.C. Memo. 1993-114

(notice generally will be valid even when a copy is not mailed to

a taxpayer’s representative so long as properly mailed to the

taxpayer); Foster v. Commissioner, T.C. Memo. 1982-115 (citing

Houghton v. Commissioner, 48 T.C. 656, 661 (1967)).

     Because of petitioners’ repeated violations of the

conditions of the OIC, respondent’s Appeals Office did not abuse

its discretion in sustaining the notice of intent to levy.      Other

arguments petitioners make herein have been considered and

rejected.

     To reflect the foregoing,


                                         Decision will be entered

                                   for respondent.
