                                           ROBERT FITZGERALD POUGH, PETITIONER v. COMMISSIONER
                                                    OF INTERNAL REVENUE, RESPONDENT

                                                        Docket No. 21954–07L.              Filed September 13, 2010.

                                                  R seeks to collect income taxes and sec. 6672, I.R.C., pen-
                                               alties by means of levy and lien. At the trial of this case P
                                               raised his inability to obtain a home equity loan unless the
                                               tax lien was released. P failed to timely raise this issue with
                                               the assigned Appeals officer although he was given a reason-
                                               able time to respond, to obtain a loan, and to have his counsel
                                               contact the Appeals officer. Regarding the income tax liabil-
                                               ities, P failed to submit amended income tax returns after
                                               being provided adequate time to do so. P had previously
                                               agreed to his liability under sec. 6672, I.R.C., after being
                                               offered an administrative hearing. Held: P did not properly
                                               raise the income tax liabilities with the Appeals officer and
                                               may not raise that issue in this case. See Giamelli v. Commis-
                                               sioner, 129 T.C. 107, 111 (2007). Held, further, P, having
                                               declined an administrative hearing, may not raise in this pro-
                                               ceeding the sec. 6672, I.R.C., liability. Held, further, because
                                               the Appeals officer gave P adequate time to submit the
                                               requested items, it was not an abuse of discretion to move
                                               ahead when P failed to submit them. Held, further, R’s pro-
                                               posed collection actions are sustained.

                                           Robert Fitzgerald Pough, pro se.
                                           Anne M. Craig, for respondent.

                                                                                   OPINION

                                         GOEKE, Judge: This case was commenced in response to a
                                      notice of determination concerning collection action sus-
                                      taining a notice of Federal tax lien and a proposed levy with
                                      respect to section 6672 1 civil penalties for three calendar
                                      quarters during 2006 and income taxes for years 2002
                                      through 2005. The issue for decision is whether the Internal
                                      Revenue Service (IRS) Appeals officer abused her discretion
                                      in determining to sustain the tax lien and the proposed levy.
                                      For the reasons stated herein, we conclude that the Appeals
                                      officer did not abuse her discretion.



                                        1 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect

                                      for the relevant period.


                                      344




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                                                                               Background
                                         Some of the facts have been stipulated and are so found.
                                      The stipulation of facts and the accompanying exhibits are
                                      incorporated herein by this reference. At the time the peti-
                                      tion was filed, petitioner resided in Florida.
                                         Petitioner is president of 911 Direct, Inc. (911 Direct),
                                      which sells, installs, and services equipment for police and
                                      fire dispatchers. 911 Direct was delinquent in paying trust
                                      fund taxes for quarters ending March 31, June 30, and Sep-
                                      tember 30, 2006.
                                         On December 6, 2006, petitioner and his representative
                                      met with an IRS revenue officer. The IRS thereafter issued to
                                      petitioner a Letter 1153(DO) proposing to assess section 6672
                                      penalties against petitioner for the unpaid trust fund taxes
                                      of 911 Direct. Petitioner did not appeal or contest the assess-
                                      ments proposed in the Letter 1153(DO). Petitioner signed
                                      Form 2751, Proposed Assessment of Trust Fund Recovery
                                      Penalty, agreeing to assessments against him of section 6672
                                      penalties for the unpaid trust fund taxes of 911 Direct.
                                         On February 2, 2007, petitioner filed delinquent 2002,
                                      2003, 2004, and 2005 income tax returns. Each return
                                      showed a balance due.
                                         On March 26, 2007, petitioner was issued a Final Notice
                                      of Intent to Levy and Notice of Your Right to a Hearing for
                                      his 2004 and 2005 income tax liabilities. On April 16, 2007,
                                      petitioner was issued a Final Notice of Intent to Levy and
                                      Notice of Your Right to a Hearing for his 2002 and 2003
                                      income tax liabilities. On April 18, 2007, petitioner was
                                      issued a Notice of Federal Tax Lien Filing and Your Right
                                      to a Hearing Under IRC 6320 for his 2004 and 2005 income
                                      tax liabilities. On April 27, 2007, petitioner was issued a
                                      Notice of Federal Tax Lien Filing and Your Right to a
                                      Hearing Under IRC 6320 for his 2002 and 2003 income tax
                                      liabilities. On May 22, 2007, petitioner was issued a Final
                                      Notice of Intent to Levy and Notice of Your Right to a
                                      Hearing for the trust fund recovery penalties (TFRPs). On
                                      June 5, 2007, petitioner was issued a Notice of Federal Tax
                                      Lien Filing and Your Right to a Hearing Under IRC 6320 for
                                      the TFRPs. Petitioner timely submitted requests for hearings
                                      in response to each Notice of Federal Tax Lien Filing and




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                                      346                135 UNITED STATES TAX COURT REPORTS                                        (344)


                                      Your Right to a Hearing Under IRC 6320 and Final Notice of
                                      Intent to Levy and Notice of Your Right to a Hearing.
                                         An IRS Appeals officer was assigned to hear petitioner’s
                                      requests. The Appeals officer determined that 911 Direct was
                                      not current on its 2007 Federal tax deposits (FTDs) and that
                                      petitioner was not in compliance with estimated payments of
                                      his income taxes for 2006 and 2007. The Appeals officer and
                                      petitioner held a telephone hearing on April 26, 2007. During
                                      the hearing, petitioner said he would be able to pay the
                                      TFRPs within 60 days, but he did not. Petitioner also said
                                      that his accountant incorrectly prepared petitioner’s tax
                                      returns for 2002 through 2005. Petitioner said he intended to
                                      file Forms 1040X, Amended U.S. Individual Income Tax
                                      Return, but he never did so. Additionally, petitioner orally
                                      requested an installment agreement of $200 a month, but he
                                      never submitted a Form 656, Offer in Compromise.
                                         The Appeals officer requested that petitioner file Form
                                      433–A, Collection Information Statement for Wage Earners
                                      and Self-Employed Individuals, and Form 433–B, Collection
                                      Information Statement for Businesses, and submit a 2006
                                      Profit and Loss (P&L) statement for 911 Direct. The Form
                                      433–A petitioner submitted showed equity of approximately
                                      $61,000 in real estate he owned. The P&L statement peti-
                                      tioner submitted showed 911 Direct had net income of
                                      $144,870 in 2006.
                                         On May 30, 2007, the Appeals officer determined that peti-
                                      tioner’s unpaid individual tax liabilities from Forms 1040,
                                      U.S. Individual Income Tax Return, for years 2002 through
                                      2005 would total $56,111 by October 28, 2007. On May 31,
                                      2007, the Appeals officer called petitioner and asked whether
                                      he would be able to pay this liability within 120 days by bor-
                                      rowing against his assets. Petitioner responded that he
                                      would be meeting with a loan officer at his bank in the next
                                      week to discuss refinancing his property in order to pay the
                                      individual liabilities. The Appeals officer told petitioner to
                                      notify her by June 14, 2007, if he was unable to secure suffi-
                                      cient financing to pay the individual liabilities within 120
                                      days. Petitioner called with questions on June 7, 2007, and
                                      reaffirmed his commitment to get back to the Appeals officer
                                      with further information on financing by the June 14, 2007,
                                      deadline. Petitioner did not get back to the Appeals officer.
                                      Petitioner represents that he inquired about a home equity




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                                      loan but was told he could not get one because of the liens
                                      which the IRS had filed on his home. Petitioner introduced no
                                      evidence that he had actually made such an inquiry with a
                                      bank. Petitioner further represents that he requested that
                                      the Appeals officer lift the liens so that he could apply for a
                                      loan. There is no evidence that such a request was made
                                      until July 10, 2007. At that time the Appeals officer did not
                                      release the liens.
                                         On June 19, 2007, petitioner informed the Appeals officer
                                      that he was preparing a request for abatement of penalties
                                      for all taxable years at issue, but he did not specify which
                                      penalties he was referring to. Petitioner said he would send
                                      the abatement request to the Appeals officer by July 9, 2007.
                                      Petitioner never sent such a request.
                                         On July 10, 2007, the Appeals officer called petitioner and
                                      informed him that records indicated that he had not made
                                      any FTDs for 911 Direct for the quarters ending March 31,
                                      and June 30, 2007. During the July 10, 2007, telephone call,
                                      petitioner claimed he would provide verification of compli-
                                      ance with the obligation to make FTDs for those quarters.
                                      Petitioner also requested an additional week to see whether
                                      he could get funds to fully pay his liabilities for income taxes
                                      and for TFRPs within 60 days. Petitioner did not provide
                                      verification of compliance by 911 Direct with its obligation to
                                      make the FTDs or provide information regarding full payment
                                      of his liabilities.
                                         On July 16, 2007, petitioner left a message for the Appeals
                                      officer that he had retained someone with a power of
                                      attorney to represent him. Petitioner stated the representa-
                                      tive would contact the Appeals officer the next day to discuss
                                      the case. No one did.
                                         On July 25, 2007, the Appeals officer again spoke with
                                      petitioner. Petitioner asked whether the Appeals officer had
                                      been contacted by his representative, and she responded that
                                      she had not. The Appeals officer informed petitioner that she
                                      planned to close the file. Petitioner said he would get in
                                      touch with the representative and have the person contact
                                      the Appeals officer the next day if the Appeals officer would
                                      delay closure of the file. The Appeals officer agreed to delay;
                                      however, again no one contacted her. On August 2, 2007, the
                                      Appeals officer closed the file.




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                                      348                135 UNITED STATES TAX COURT REPORTS                                        (344)


                                         On August 23, 2007, respondent sent petitioner a Notice of
                                      Determination Concerning Collection Action(s) Under Section
                                      6320 and 6330 (notice of determination). The notice of deter-
                                      mination sustained the proposed levy and the notices of Fed-
                                      eral tax lien (NFTLs) for all tax periods at issue. The notice
                                      of determination set forth a conclusion that the requirements
                                      of law and administrative procedure had been met and that
                                      the need for efficient collection justified the intrusiveness of
                                      the collection action. The notice of determination also stated
                                      that petitioner had not submitted a written request for an
                                      abatement of penalties, nor a Form 656; that neither an
                                      offer-in-compromise nor an installment payment would be an
                                      acceptable collection alternative given petitioner’s equity in
                                      assets and his earning capacity; and that petitioner was not
                                      in compliance with his income tax obligations for 2006 and
                                      2007, nor was 911 Direct in compliance with its obligation to
                                      make FTDs for 2007.
                                         Petitioner timely filed a petition for lien or levy action
                                      under sections 6320(c) and 6330(d) requesting a review of
                                      respondent’s collection action. The petition alleged that peti-
                                      tioner and 911 Direct were in compliance with all Federal
                                      tax filings and that no loans could be obtained to satisfy the
                                      liabilities.
                                         A trial was held on March 8 and 9, 2010, in Jacksonville,
                                      Florida. At trial petitioner testified extensively. Much of his
                                      testimony pertained to a separate hearing involving 911
                                      Direct which was not appealed to this Court and which is not
                                      at issue. Petitioner also testified that he was confused about
                                      all the actions taken against him and how to resolve them.
                                      Finally, petitioner testified that the income of 911 Direct as
                                      stated in the P&L statement was incorrect.

                                                                                Discussion
                                      I. Lien and Levy Hearings
                                        Section 6321 imposes a lien in favor of the United States
                                      on all property of a taxpayer liable for taxes after a demand
                                      for payment of the taxes has been made and the taxpayer
                                      fails to pay. The lien arises when the assessment is made.
                                      Sec. 6322. The Secretary must send a written notice to the
                                      taxpayer of the filing of a notice of lien and of the taxpayer’s
                                      right to a hearing on the matter. Sec. 6320(a). Similarly,




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                                      before proceeding with a levy, the IRS must issue a final
                                      notice of intent to levy and notify the taxpayer of the right
                                      to a hearing. Sec. 6330(a) and (b)(1). During the hearing, a
                                      taxpayer may raise any relevant issue, including challenges
                                      to the appropriateness of the collection action and possible
                                      collection alternatives. Sec. 6330(c)(2)(A). Following the
                                      hearing, the Appeals Office must make a determination
                                      whether the lien filing was appropriate and is required to
                                      consider: (1) Whether the Secretary has met the require-
                                      ments of applicable law and administrative procedure; (2) the
                                      relevant issues raised by the taxpayer; and (3) whether the
                                      proposed collection action appropriately balances the need for
                                      efficient collection of taxes with the taxpayer’s concerns that
                                      the collection action be no more intrusive than necessary.
                                      Sec. 6330(c)(3).
                                      II. Underlying Liabilities
                                        In a hearing a taxpayer may challenge the existence or
                                      amount of the underlying tax liability for any tax period if
                                      he did not receive a notice of deficiency for such liability or
                                      otherwise have an opportunity to dispute such tax liability.
                                      Sec. 6330(c)(2)(B). We address the underlying TFRP and
                                      income tax liabilities separately.
                                        Petitioner previously had an opportunity to challenge the
                                      TFRP liabilities when he received the Letter 1153(DO), but he
                                      did not do so. Instead, petitioner signed Form 2751, agreeing
                                      to assessment against him of the TFRPs. Therefore he was
                                      unable to contest the underlying TFRP liabilities in the
                                      hearing, and we may not consider them. Sec. 6330(c)(2)(B),
                                      (d).
                                        While petitioner told the Appeals officer that he intended
                                      to file amended income tax returns, petitioner did not do so
                                      over the period of nearly 7 months between the filing of his
                                      original Forms 1040 and the issuance of the notice of deter-
                                      mination. The underlying income tax liabilities were there-
                                      fore not challenged in the hearing, and we may not consider
                                      them. See sec. 6330(c)(2)(B), (d); Giamelli v. Commissioner,
                                      129 T.C. 107, 111 (2007); Newstat v. Commissioner, T.C.
                                      Memo. 2005–262.




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                                      350                135 UNITED STATES TAX COURT REPORTS                                        (344)


                                      III. Standard of Review
                                         Where a taxpayer’s underlying tax liability is not in dis-
                                      pute, the Court reviews the Commissioner’s determination
                                      for abuse of discretion. See Sego v. Commissioner, 114 T.C.
                                      604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182
                                      (2000). To establish an abuse of discretion, the taxpayer
                                      must prove that the decision of the Commissioner was
                                      arbitrary, capricious, or without sound basis in fact or in law.
                                      Giamelli v. Commissioner, supra at 111 (citing Woodral v.
                                      Commissioner, 112 T.C. 19, 23 (1999)); Tinnerman v.
                                      Commissioner, T.C. Memo. 2010–150. In reviewing for abuse
                                      of discretion, we generally consider only the arguments,
                                      issues, and other matters that were raised at the hearing or
                                      otherwise brought to the attention of the Appeals Office.
                                      Giamelli v. Commissioner, supra at 115; Tinnerman v.
                                      Commissioner, supra. Considering the facts of this case, we
                                      find that there was no abuse of discretion in the Appeals offi-
                                      cer’s determination to uphold the tax lien and the proposed
                                      levy against petitioner.
                                      IV. Whether the Decision To Sustain the Liens and Notices of
                                          Levy Was an Abuse of Discretion
                                           A. Whether the Secretary Has Met the Requirements of
                                              Applicable Law and Administrative Procedure
                                         Before issuance of a notice of determination, an Appeals
                                      officer must verify that all requirements of applicable law
                                      and administrative procedure have been met. Sec. 6330(c)(1),
                                      (3)(A). The Appeals officer determined that respondent fol-
                                      lowed the requirements of applicable law and administrative
                                      procedure in filing the liens and proposing to levy. The notice
                                      of determination noted that the liabilities were duly assessed
                                      and the requisite notices were mailed timely to petitioner.
                                      There is no evidence that the requirements of applicable law
                                      and administrative procedure were not satisfied.
                                           B. Relevant Issues Raised by Petitioner
                                        An Appeals officer is required to consider any relevant
                                      issue raised by a taxpayer during the course of a hearing,
                                      including challenges to the appropriateness of collection
                                      action and collection alternatives offered by the taxpayer.




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                                      Sec. 6330(c)(2)(A), (3)(B). We find that the Appeals officer
                                      adequately took into consideration the relevant issues peti-
                                      tioner raised and did not abuse her discretion.
                                         Petitioner expressed interest in an installment agreement
                                      of $200 per month. Petitioner also informed the Appeals
                                      officer that he wished to submit a request for abatement of
                                      penalties and that he was going to have his representative
                                      contact the Appeals officer. Finally, petitioner attempted to
                                      have the Appeals officer release the liens on his home so that
                                      he could apply for an equity loan. We address each of these
                                      matters in turn.
                                         We find the Appeals officer did not abuse her discretion in
                                      regard to petitioner’s expression of interest in an installment
                                      agreement. Petitioner did not submit a written proposal for
                                      such an agreement nor a Form 656 as is requisite for an
                                      offer-in-compromise. He was not current on his tax obliga-
                                      tions, and neither was his corporation. See Giamelli v.
                                      Commissioner, supra at 111–112 (‘‘Reliance on a failure to
                                      pay current taxes in rejecting a collection alternative does
                                      not constitute an abuse of discretion.’’); Nelson v. Commis-
                                      sioner, T.C. Memo. 2009–108. Although petitioner stated he
                                      would provide verification of his and 911 Direct’s compliance
                                      with tax obligations, he did not do so. In addition, the
                                      Appeals officer told petitioner that an installment agreement
                                      would not be acceptable given petitioner’s equity in assets
                                      and petitioner’s income from 911 Direct, as reported on Form
                                      433–A and the P&L statement. It was proper for the Appeals
                                      officer to consider these items when determining whether to
                                      accept such an offer-in-compromise. See Orum v. Commis-
                                      sioner, 123 T.C. 1, 14 (2004), affd. 412 F.3d 819 (7th Cir.
                                      2005); Schropp v. Commissioner, T.C. Memo. 2010–71.
                                         We also find the Appeals officer did not abuse her discre-
                                      tion by not waiting for petitioner’s representative to get in
                                      touch with her or by not waiting for petitioner to submit a
                                      written request for abatement of penalties. Petitioner failed
                                      to meet reasonable deadlines set by the Appeals officer
                                      relating to the representative and to the abatement of pen-
                                      alties request. This Court has found that when an Appeals
                                      officer gives a taxpayer an adequate timeframe to submit
                                      requested items, it is not an abuse of discretion to move
                                      ahead if the taxpayer fails to submit the requested items.
                                      Shanley v. Commissioner, T.C. Memo. 2009–17.




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                                        Petitioner represents that he attempted to get a loan but
                                      was denied outright because a tax lien had been placed on
                                      his home. It appears that on July 10, 2007, petitioner
                                      requested that the Appeals officer lift the lien so he could
                                      apply for a loan. Petitioner did not provide any evidence that
                                      he had in fact discussed obtaining a loan with a bank.
                                        By July 10, 2007, petitioner had already violated several
                                      deadlines, including the June 14, 2007, deadline to get back
                                      to the Appeals officer about obtaining a loan against the
                                      equity in his house. Given all the circumstances, including
                                      petitioner’s dilatory behavior, we find that the Appeals officer
                                      did not abuse her discretion in rejecting petitioner’s request
                                      to lift the liens so that he could apply for a home equity loan.
                                      See Shanley v. Commissioner, supra.
                                           C. Balancing the Need for Efficient Collection of Taxes
                                              With Concerns of Petitioner That Collection Be No More
                                              Intrusive Than Necessary
                                         The final item to be considered is ‘‘whether the 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.’’ Sec.
                                      6330(c)(3)(C). The Appeals officer performed a balancing test,
                                      finding that the liens and the potential levies did balance the
                                      needs of collection with the concerns of petitioner. We find
                                      the Appeals officer did not abuse her discretion in so finding.
                                      See, e.g., Castillo v. Commissioner, T.C. Memo. 2004–238.
                                         While petitioner orally suggested an installment plan, he
                                      did not make a written proposal in that respect nor submit
                                      a Form 656 as a predicate to an offer-in-compromise. There-
                                      fore, the Appeals officer was presented with no concrete pro-
                                      posal for a collection alternative.
                                         The Appeals officer was met with petitioner’s missed dead-
                                      lines and empty promises. The Appeals officer took into
                                      consideration the equity petitioner had in assets and the
                                      income his business was producing and the fact that peti-
                                      tioner was not current on his tax obligations. She gave peti-
                                      tioner an opportunity to file amended Forms 1040 and prove
                                      he was current on his tax obligations, but petitioner did nei-
                                      ther. When she told petitioner on July 25, 2007, that she




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                                      intended to close the file, yet again she gave petitioner
                                      another chance to have his representative contact her.
                                         Petitioner failed to promptly notify the Appeals officer
                                      when he was unable to obtain a home equity loan, failed to
                                      file amended Forms 1040, and failed to meet numerous dead-
                                      lines.
                                      V. Conclusion
                                         For the reasons discussed above, we find that the Appeals
                                      officer did not abuse her discretion in determining to sustain
                                      the tax lien and the proposed levy.
                                         To reflect the foregoing,
                                                                           Decision will be entered for respondent.

                                                                               f




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