                        T.C. Memo. 2002-307



                      UNITED STATES TAX COURT



    CAROL A. BLACK AND WILLIAM R. ADAMS, JR., Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6443-01L.              Filed December 17, 2002.



     Carol A. Black and William R. Adams, Jr., pro sese.

     Jack T. Anagnostis, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   The petition in this case was filed in

response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330.     The issues for

decision are whether the Appeals officer conducting the hearing

abused his discretion in refusing to accept petitioners’ proposal

for an installment agreement and whether petitioners are liable
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for additions to tax under section 6651(a) that had been assessed

as a result of petitioners’ late-filed returns.   Unless otherwise

indicated, all section references are to the Internal Revenue

Code in effect for the years in issue.

                         FINDINGS OF FACT

     Petitioners were both lawyers who resided in Philadelphia,

Pennsylvania, when they filed the petition in this case.

Petitioner William R. Adams, Jr. (Adams), operated his own law

firm from 1982.   For 1991 through 1994, Adams incurred tax

liabilities of $163,583.49, including additions to tax for late

filing, late payment, and failure to pay estimated tax.    These

liabilities were paid in September 1996.

     Adams kept his own business records and entered information

from them into a computer software program to generate printouts

that he provided to his accountant to prepare tax returns.    Adams

kept the records at his place of business.

     Petitioners filed joint Federal income tax returns, Forms

1040, U.S. Individual Income Tax Return, for 1995, 1996, and 1997

between 2 and 12 months after extended filing dates.   Petitioners

did not fully pay the tax shown as due on the returns filed for

1995, 1996, and 1997.   On Schedules C, Profit or Loss From

Business, for Adams’s law practice, attached to the Forms 1040,

petitioners reported gross receipts of $435,206 for 1995,

$345,550 for 1996, and $416,364 for 1997.
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       Respondent assessed the tax liabilities shown on

petitioners’ Forms 1040 for 1995, 1996, and 1997 and assessed

additions to tax under section 6651(a)(1) for late filing,

section 6651(a)(2) for failure to pay tax, and section 6654(a)

for failure to make estimated tax payments for each year.      As of

June 9, 1999, petitioners still owed tax for each year.    On that

date, respondent sent to petitioners a notice of intent to levy

that advised petitioners of their right to a hearing under

section 6330.    Petitioners requested the hearing.

       At the hearing conducted by an Appeals officer, petitioners

requested that they be permitted to enter into an installment

agreement as an alternative to collection by levy.    Petitioners

also requested abatement of the additions to tax based on Adams’s

illness from diabetes during the years in which the returns were

due.    To determine whether petitioners were financially able to

make monthly payments under the installment agreement to pay

fully their outstanding tax liabilities, the Appeals officer

requested, and petitioners provided, Form 433-A, Collection

Information Statement for Individuals, dated March 1, 2000.

According to petitioners’ statement, their monthly expenses

exceeded their total income.    To support their request for

abatement of penalties, petitioners submitted the medical file of

Adams concerning his diabetes that petitioners claimed disabled

him from October 1996 through March 20, 2000.
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     On April 25, 2001, the Appeals officer sent a notice of

determination to petitioners.    The notice determined that

petitioners had not provided a financial statement showing that

they could make monthly payments to support their request for an

installment agreement.   Accordingly, the Appeals officer

determined that the proposed levy was appropriate.    The notice of

determination did not mention the requested abatement of

additions to tax.   The Appeals officer did, however, consider

petitioners’ request for abatement of the additions to tax and

declined to abate the amounts because he saw no link between the

medical condition and either the late filings or the failure to

pay the tax shown on the returns.

                                OPINION

     Petitioners requested and received a hearing conducted under

section 6330.   Section 6330(c)(2) provides:

          (2) Issues at hearing.--

               (A) In general.--The person may raise at the
          hearing any relevant issue relating to the unpaid
          tax or the proposed levy, including--

                     (i) appropriate spousal defenses;

                     (ii) challenges to the appropriateness
                of collection actions; and

                     (iii) offers of collection alternatives,
                which may include the posting of a bond, the
                substitution of other assets, an installment
                agreement, or an offer-in-compromise.

               (B) Underlying liability.--The person may
          also raise at the hearing challenges to the
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          existence or amount of the underlying tax
          liability for any tax period if the person did not
          receive any statutory notice of deficiency for
          such tax liability or did not otherwise have an
          opportunity to dispute such tax liability.

With respect to petitioners’ proposed installment agreement, we

review the settlement officer’s determination for abuse of

discretion.   Lunsford v. Commissioner, 117 T.C. 183, 185 (2001);

Nicklaus v. Commissioner, 117 T.C. 117, 120 (2001).     To the

extent that petitioners’ underlying liability is an issue, we

review the Appeals officer’s determination de novo.     Landry v.

Commissioner, 116 T.C. 60, 62 (2001).

     Petitioners presented neither evidence nor argument that

would persuade us that an installment agreement was an

appropriate alternative to enforced collection.   A fortiori, they

have not presented any evidence or persuasive argument that the

settlement officer abused his discretion in refusing to accept an

installment agreement.   Compare Schulman v. Commissioner, T.C.

Memo. 2002-129, in which we considered in detail the financial

information submitted to the settlement officer and concluded

that there was no abuse of discretion when the settlement officer

declined an installment agreement sought by the taxpayers.

     Petitioners presented extensive testimony concerning Adams’s

physical limitations due to diabetes.   Petitioners’

delinquencies, however, continued over a period of years that

cannot be excused by reference to Adams’s illness.     Petitioners’
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accountant testified that he advised Adams that one of the

options to assure that his returns were properly prepared and

timely filed was to pay a bookkeeper to put the information in a

form that would allow the accountant to prepare the return.

Adams testified that he did not want to incur the additional

expense to hire and employ a bookkeeper.     The accountant and

Adams made a deliberate choice to file the returns late and then

to seek to abate the penalties that they knew would result from

late filing.

     Petitioners argue that illness of a taxpayer may constitute

reasonable cause for late-filed returns and late payment of tax.

We are unpersuaded that illness is the cause of petitioners’

continuing delinquency.   Petitioners cite no case where the

taxpayers’ delinquency continued over a period of years while the

taxpayers failed to take steps necessary, and readily taken, to

cause their tax returns to be filed on time.     Petitioners are

educated, intelligent, and able to sustain a business that

produced substantial income.   Their failure to comply with their

annual duty to file tax returns is unexcused.     There is no basis

for concluding that they are not liable for the statutory

additions to tax that follow those delinquencies.

                                            Decision will be entered

                                       for respondent.
