                        T.C. Memo. 2003-263



                      UNITED STATES TAX COURT


      ROBERT M. GALVIN AND CHRISTINE GALVIN, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1994-02L.             Filed September 9, 2003.


     Robert M. Galvin and Christine Galvin, pro sese.

     John M. Tkacik, Jr., for respondent.



                        MEMORANDUM OPINION


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

response to the Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination).   The issue for decision is whether there was an

abuse of discretion in the determination that collection action

could proceed for 1980, 1981, 1982, 1983, 1984, 1988, 1989, 1990,

1991, 1992, 1993, 1994, 1997, and 1998 (years in issue).
                                 - 2 -

     Unless otherwise indicated, all section references are to

the Internal Revenue Code for the relevant year.   Amounts are

rounded to the nearest dollar.

                            Background

     All of the facts have been stipulated.   The stipulated facts

and the attached exhibits are incorporated herein by this

reference.

     Petitioners resided in Port Clinton, Ohio, at the time they

filed their petition.   At the time of filing the petition,

petitioner Robert M. Galvin (Mr. Galvin) was 75 years old and in

poor health.   Mr. Galvin had practiced law for 26 years.

     Petitioners entered into six installment agreements to pay

their unpaid tax liabilities on which they defaulted by failing

to make required payments and to timely pay other tax

liabilities.

     On February 22, 2000, petitioners submitted to respondent

Form 433-A, Collection Information Statement for Individuals.

Based upon the income and expense information provided by

petitioners, respondent determined that $790 per month could be

paid.   Petitioners rejected the proposal.

     On May 5, 2000, a Final Notice--Notice of Intent to Levy and

Notice of Your Right to a Hearing was sent to petitioners.    The

taxes owed, as set forth in the final notice, including additions

to tax, penalties, and statutory interest, were as follows:
                               - 3 -

                 Year                    Assessed Liability

                 1980                    $ 56,537
                 1981                      19,925
                 1982                      24,517
                 1983                       8,364
                 1984                      10,943
                 1988                         530
                 1989                       5,992
                 1990                      15,231
                 1991                       9,420
                 1992                       2,709
                 1993                       1,713
                 1994                       1,465
                 1997                       1,865
                 1998                       2,189


     On May 22, 2000, petitioners filed Form 12153, Request for a

Collection Due Process Hearing.   A hearing was conducted on

August 3, 2001, with Appeals Officer Douglas Kane (Mr. Kane).

Based upon supplemental income and expense information provided

by petitioners, Mr. Kane reduced the payment required from $790

to $721 per month.

     On October 1, 2001, petitioners sent respondent a letter

offering $250 per month until the expiration of the statutory

period of collection.   The earliest statutory period of

collection was set to expire during 2005.

     On October 22, 2001, respondent sent a letter which rejected

the $250 per month offered by petitioners and proposed a $721 per

month payment for 2 years.   Mr. Kane stated in the letter:

                 I do believe that I could justify reducing the
          number of years that payments would be made on an
          installment offer in compromise. This would be based
                                - 4 -

          on your age, health, and the age of the tax
          liabilities. * * *

     Mr. Kane and Mr. Galvin also met on November 9, 2001, to

discuss collection alternatives.    The $721 offer made by Mr. Kane

was not accepted, and Mr. Galvin offered no other collection

alternatives.

     On December 28, 2001, a notice of determination was sent to

petitioners which stated:

          It has been determined that the proposed levy action is
          sustained. The Internal Revenue Service has complied
          with code and procedural requirements in collecting the
          tax.

                    *       *   *    *    *    *    *

                 The only issue that you raised was that you
          could not pay $790 per month that was determined by the
          revenue officer to be required. After updating your
          income and expense information it was determined that
          payments of $721 per month would be required. The
          problem is that some of your expenses do not fall
          within the IRS allowable expense guidelines. These
          include tuition and related expenses for your children
          and credit card debt payments.

                 An installment agreement is not possible because
          payments of even $721 per month would never fully pay
          the liabilities. The IRS can only grant an installment
          agreement that provides for full payment within the
          statutory period for collection. An installment offer
          in compromise was discussed in detail but you have not
          pursued this alternative. The proposed levy action is
          therefore sustained.

     On January 24, 2002, petitioners filed a Petition for Lien

or Levy Action Under Code Section 6320(c) or 6330(d).   On

February 21, 2002, petitioners filed an Amended Petition for Lien
                               - 5 -

or Levy Action under Code Section 6320(c) or 6330(d) which

stated:

                 I have eleven children aged 47 to 21. Six have
          college degrees; two are close to degree completion.
          All are taxpaying citizens and student loan paying
          citizens in some cases. My indirect contribution to
          tax coffers is large and ongoing.

                    *    *     *    *     *   *    *

          Most of our funds help our children who with student
          loans and in spite of work need help with emergencies
          and medical matters, etc. These aren’t allowable with
          you, but they are real. This month one my [sic]
          paychecks paid for my youngest daughter’s deductible
          car insurance in order for her to obtain her car back
          from repairs after an accident (not her fault) and her
          car insurance. She has a child, goes to college, work
          and daycare. You may not call this a necessity I do
          [sic].

                    *    *     *    *     *   *    *

               My petition for relief is simple.   Declare this
          account uncollectible.

The amended petition also stated that the “levy or enforcement of

lien would be punitive and destructive to taxpaying citizens and

their family at a loss not a gain to the Federal Government”.

     Prior to the issuance of this opinion, the Court held a

conference call with the parties to determine whether a

settlement could be reached.   It became apparent to the Court

that settlement could not be reached.

                             Discussion

     Petitioners do not dispute that the amount of taxes owed,

additions to tax, penalties, and statutory interest assessed are
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correct.    Where the validity of the underlying tax liability is

not properly at issue, we review respondent’s determination for

abuse of discretion.    Sego v. Commissioner, 114 T.C. 604, 610

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

     From our review of the record, we conclude Mr. Kane

attempted to help petitioners substantially by offering a

reasonable payment amount with reasonable payment terms to

satisfy substantial tax liabilities after appropriately applying

the procedures available to petitioners.

     Pursuant to section 6330, petitioners are entitled to only

one hearing during which they may raise any relevant issue

relating to the proposed levy, including challenges to the

appropriateness of the collection action and offers of collection

alternatives. Sec. 6330(b)(2), (c)(2)(A).   Respondent, in fact,

held two hearings with petitioners, the first on August 3, 2001,

with both petitioners present, and the second on November 9,

2001, with only Mr. Galvin present.

       Petitioners have, on six different occasions, defaulted on

installment agreements entered into with respondent for the years

in issue.   We conclude Mr. Kane’s rejection of petitioners’ offer

to pay $250 per month to satisfy tax liabilities in excess of

$160,000 was reasonable.

     Respondent’s proposal for an offer in compromise to pay $721

per month for a 2-year period to fully satisfy petitioners’ tax
                                - 7 -

liabilities for the years in issue was based upon income and

expense figures provided by petitioners and was computed under

the guidelines provided in the Internal Revenue Manual.    We

reviewed respondent’s computations and conclude that they are

reasonable.    McCorkle v. Commissioner, T.C. Memo. 2003-34;

Schulman v. Commissioner, T.C. Memo. 2002-129.

     The passage of the Internal Revenue Service Restructuring

and Reform Act of 1998, Pub. L. 105-206, sec. 3462(a), 112 Stat.

764, which added section 7122(c) to the Code, resulted in the

issuance of new regulations substantially changing offer-in-

compromise procedures found in section 7122.   The traditional

grounds for compromise had been doubt as to liability and doubt

as to collectibility.   Sec. 301.7122-1(b)(1) and (2), Proced. &

Admin. Regs.

     Offers in compromise can now be considered for the

“promotion of effective tax administration” if collection of the

full amount of the liability creates an economic hardship.      Sec.

301.7122-1(b)(3), Proced. & Admin. Regs.   The addition of this

category allowed factors such as advanced age and serious illness

to be considered to determine if economic hardship existed.     2

Administration, Internal Revenue Manual (CCH), sec. 5.8.11.2, at

16,385-15.    In addition, the Internal Revenue Service announced

it would allow, in appropriate cases, a short-term payment option

that gives taxpayers up to 2 years to pay the entire amount
                                 - 8 -

offered.   2 Administration, Internal Revenue Manual (CCH), sec.

5.8.1.3.5, at 16,256.

     Mr. Kane properly applied these procedures to arrive at the

proposal offered to petitioners.    Petitioners’ challenges to the

appropriateness of the collection action were based upon Mr.

Galvin’s poor health and the possibility that he would be unable

to continue to work.    Mr. Kane took these factors, as well as the

age of the tax liabilities, into consideration in making

respondent’s proposal.

     Petitioners have not presented any evidence or persuasive

arguments to convince us that respondent abused his discretion.

See Black v. Commissioner, T.C. Memo. 2002-307.    As a result, we

hold the issuance of the notice of determination was not an abuse

of respondent’s discretion and respondent may proceed with

collection.

     In reaching our holding herein, we have considered all

arguments made, and to the extent not mentioned above, we

conclude them to be moot, irrelevant, or without merit.

     To reflect the foregoing,

                                               Decision will be

                                          entered for respondent.
