                              T.C. Memo. 2018-179



                         UNITED STATES TAX COURT



              FRANKLIN DOUGLAS STOUT, JR., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 19261-17L.                        Filed October 24, 2018.



      Franklin Douglas Stout, Jr., pro se

      David Delduco, John W. Sheffield III, and Rubinder K. Bal, for respondent.



                           MEMORANDUM OPINION


      LAUBER, Judge: In this collection due process (CDP) case, petitioner

seeks review pursuant to section 6330(d)1 of the determination by the Internal



      1
       All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all monetary amounts to the nearest dollar.
                                         -2-

[*2] Revenue Service (IRS or respondent) to uphold the issuance of a notice of

intent to levy. The IRS initiated the collection action with respect to petitioner’s

Federal income tax liabilities for 2009, 2010, and 2012. Respondent has moved

for summary judgment under Rule 121, contending that there are no disputed

issues of material fact and that his determination to sustain the proposed collection

action was proper as a matter of law. We agree and accordingly will grant the

motion.

                                     Background

      The following facts are based on the parties’ pleadings and respondent’s

motion papers, including the attached declarations and exhibits. See Rule 121(b).

Petitioner resided in Georgia when he filed his petition.

      Petitioner did not file a Federal income tax return for 2009, 2010, or 2012.

For each year the IRS prepared a substitute for return (SFR) that met the require-

ments of section 6020(b). The IRS issued petitioner a notice of deficiency for

each year on the basis of the SFR.

      Petitioner petitioned this Court for review of the notices of deficiency for

2009 and 2010. Both cases were settled, and this Court entered stipulated deci-

sions on the basis of the parties’ agreements. Stout v. Commissioner, T.C. Dkt.

No. 888-15 (Dec. 14, 2015); Stout v. Commissioner, T.C. Dkt. No. 27755-14S
                                         -3-

[*3] (July 30, 2015). Both decisions are now final. On December 14, 2015, and

February 15, 2016, respectively, the IRS assessed the deficiencies and additions to

tax determined by this Court, plus applicable interest.

      In August 2015 respondent issued a notice of deficiency to petitioner for

2012. Petitioner does not dispute that this notice was properly mailed to his last

known address. When petitioner failed to petition this Court within 90 days of

that notice, the IRS assessed, on January 18, 2016, the tax liability it had deter-

mined for 2012.

      Petitioner did not pay any of these liabilities upon notice and demand for

payment. On February 20, 2017, in an effort to collect these outstanding liabili-

ties, the IRS sent petitioner a Notice of Intent to Levy and Notice of Your Right to

a Hearing. He timely requested a CDP hearing.

      In his hearing request petitioner did not check the box indicating that he

desired a collection alternative. Instead he asserted that “for the years 2009 and

2012 I do not owe all or part of the taxes.” The IRS received his hearing request

and promptly assigned it to a settlement officer (SO) in the Memphis, Tennessee,

Appeals Office.

      On May 16, 2017, the SO sent petitioner a letter scheduling a telephone

CDP hearing for June 22, 2017. The SO advised petitioner that she could not
                                         -4-

[*4] consider collection alternatives unless he submitted a Form 433-A, Collection

Information Statement for Wage Earners and Self-Employed Individuals, and

fulfilled his current Federal tax filing obligations. After determining that peti-

tioner had not filed returns for 2014, 2015, and 2016, the SO informed him that he

needed to file and supply her with copies of returns for these three years before

she could consider any collection alternative.

      The CDP hearing was held as scheduled on June 22, 2017. At that time

petitioner had not filed returns for 2014-2016 or submitted any financial documen-

tation. The SO gave him two weeks, until July 6, 2017, to submit the required

documents. To assist petitioner in preparing his delinquent returns, the SO agreed

to send him IRS records verifying his income. Petitioner said that he would call

her back and provide a fax number to enable her to forward the IRS records.

      Petitioner did not call back until July 6, 2017, the date by which he was sup-

posed to have supplied the delinquent returns. During this second call he provided

a fax number, and the SO faxed the income verification information to him. The

SO again extended the deadline, to July 15, 2017, for submitting the delinquent

returns, Form 433-A, and supporting financial information. Petitioner submitted

none of these documents by this third deadline.
                                         -5-

[*5] On July 17, 2017, petitioner contacted the SO with a number of questions,

which she addressed. She gave him new deadlines for submitting documents:

July 19 for the Form 433-A and July 25 for the delinquent tax returns. On July 19

the SO received from petitioner a fax that contained a Form 433-A with incom-

plete financial information. On the fax cover sheet petitioner stated that he was

“now working on the outstanding tax returns.” The SO reviewed the Form 433-A

and concluded that petitioner likely had the ability to pay in full his assessed tax

liabilities for 2009, 2010, and 2012.

      The SO attempted to call petitioner on July 27 and again on July 31 to dis-

cuss the status of the delinquent returns. On neither occasion was she able to

reach him or leave a voice message. On August 1, having received none of the

promised tax returns, the SO decided to close the case.

      On August 4, 2017, the IRS issued petitioner a notice of determination

sustaining the proposed levy, and he timely petitioned this Court for redetermina-

tion. He alleges in his petition that “it took [him] longer than expected” to have

his 2014-2016 tax returns completed but that he has now “completed the returns

that were requested.” On July 12, 2018, respondent filed a motion for summary

judgment, to which we directed petitioner to respond. He filed no response.
                                         -6-

[*6]                                 Discussion

A.     Summary Judgment Standard

       The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681 (1988). The Court may grant summary judgment when there is no

genuine dispute as to any material fact and a decision may be rendered as a matter

of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judg-

ment, we construe factual materials and inferences drawn from them in the light

most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520.

However, the nonmoving party may not rest upon mere allegations or denials of

his pleadings but instead must set forth specific facts showing that there is a

genuine dispute for trial. Rule 121(d); see Sundstrand Corp., 98 T.C. at 520.

       Because petitioner did not respond to the motion for summary judgment, the

Court could enter a decision against him for that reason alone. See Rule 121(d).

We will nevertheless consider the motion on its merits. We conclude that there are

no material facts in dispute and that this case is appropriate for summary

adjudication.
                                         -7-

[*7] B.      Standard of Review

      Neither section 6320(c) nor section 6330(d)(1) prescribes the standard of

review that this Court should apply in reviewing an IRS administrative determina-

tion in a CDP case. But our case law tells us what standard to adopt. Where the

validity of the taxpayer’s underlying tax liability is properly at issue, we review

the IRS’ determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182

(2000). Where (as here) the taxpayer’s underlying liability is not before us,2 we

review the IRS decision for abuse of discretion only. See id. at 182. Abuse of

discretion exists when a determination is arbitrary, capricious, or without sound

basis in fact or law. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d,

469 F.3d 27 (1st Cir. 2006).

C.    Analysis

      In determining whether the SO abused her discretion we consider whether

she: (1) properly verified that the requirements of any applicable law or admini-

strative procedure had been met, (2) considered any relevant issues petitioner

raised, and (3) determined whether “any proposed collection action balances the

      2
       Petitioner cannot now challenge his underlying tax liability for 2009, 2010,
or 2012 because he received a notice of deficiency for each of those years, two of
which he litigated in this Court. See sec. 6330(c)(2)(B); Sego v. Commissioner,
114 T.C. 604, 609 (2000); sec. 301.6330-1(e)(3), Q&A-E2, Proced. & Admin.
Regs.
                                         -8-

[*8] need for the efficient collection of taxes with the legitimate concern of * * *

[petitioner] that any collection action be no more intrusive than necessary.” See

sec. 6330(c)(3).

       Our review of the record establishes that the SO properly discharged all of

her responsibilities under section 6330(c). In his CDP hearing request petitioner

stated his belief that he owed no tax for 2009 or 2012. As noted supra note 2,

petitioner was precluded from challenging his underlying tax liabilities for 2009

and 2012, at the CDP hearing and in this Court, because he received notices of

deficiency for both years, which gave him a prior opportunity to challenge those

liabilities.

       Petitioner did not submit any offer of a collection alternative. Even if he

had, he was not in compliance with his tax filing obligations for tax years 2014-

2016. The SO could properly have rejected any proposed collection alternative on

that ground alone. See Cox v. Commissioner, 126 T.C. 237, 258 (2006), rev’d on

other grounds, 514 F.3d 1119 (10th Cir. 2008); Hull v. Commissioner, T.C.

Memo. 2015-86, 109 T.C.M. (CCH) 1438, 1441. The SO gave petitioner repeated

opportunities to comply with his current tax filing obligations, and she closed the

case only after petitioner had failed for the fourth time to comply with the

deadlines she set. IRS records show that, as of the date respondent filed his
                                         -9-

[*9] motion for summary judgment, petitioner’s returns for 2014, 2015, and 2016

remained unfiled.

      Finding no abuse of discretion in any respect, we will grant summary judg-

ment for respondent and sustain the proposed collection action. We note that peti-

tioner is free to submit to the IRS at any time, for its consideration and possible

acceptance, a collection alternative in the form of an offer-in-compromise or an

installment agreement, supported by the necessary financial information.

      To reflect the foregoing,


                                               An appropriate order and decision

                                        will be entered for respondent.
