12-2446-ag
Williams v. Comm'r



                     U NITED S TATES C OURT OF A PPEALS
                          F OR THE S ECOND C IRCUIT

                           August Term 2012

  (Submitted:    May 13, 2013               Decided:      May 21, 2013)

                        Docket No. 12-2446-ag

                        _____________________

                          O LIVER W. W ILLIAMS ,

                                                Petitioner-Appellant,

                          H ARRIET S. W ILLIAMS ,

                                                Petitioner,

                                      V.


                 C OMMISSIONER   OF   I NTERNAL R EVENUE ,

                                                Respondent-Appellee.

                        _____________________

Before:
          C HIN and L OHIER , Circuit Judges, and S WAIN , District

          Judge. *

                        _____________________


    *
          The Honorable Laura Taylor Swain, of the United States
District Court for the Southern District of New York, sitting by
designation.
             Appeal from an Order and Decision of the United

States Tax Court (Armen, J.) granting summary judgment in

favor of the Commissioner of Internal Revenue and

sustaining a proposed levy to recover outstanding income

tax liabilities for the 2000, 2001, and 2002 taxable years.

             A FFIRMED .

                           _____________________

                           Oliver W. Williams, pro se, Ossining, New
                                York, Petitioner-Appellant.

                           Patricia McDonald Bowman, Joan I.
                                Oppenheimer, for Kathryn Keneally,
                                Assistant Attorney General, United
                                States Department of Justice, Tax
                                Division, Washington, District of
                                Columbia, for Respondent-Appellee.
                            _____________________

P ER C URIAM :

             Petitioner-appellant Oliver W. Williams, an

attorney, appeals pro se from an Order and Decision dated

May 14, 2012 of the United States Tax Court (Armen, J.)

granting summary judgment in favor of respondent-appellee

Commissioner of Internal Revenue (the "Commissioner") and

sustaining a proposed levy to collect outstanding income




                                     -2-
tax liabilities owed by Williams and his wife for the 2000,

2001, and 2002 taxable years.     We affirm.

                         BACKGROUND

            Between 1995 and 2002, Williams and his wife

("taxpayers") underpaid their federal income taxes.          In

2006, the Internal Revenue Service (the "IRS") notified

taxpayers that it planned to seek a federal tax lien

against the outstanding tax liability.       The tax court ruled

against the taxpayers, sustaining the IRS's proposed tax

lien, and on appeal -- where taxpayers did not contest the

underlying tax liability for those taxable years -- we

affirmed.    See Williams v. Comm'r, 299 F. App'x 92, 93-94

(2d Cir. 2008) (summary order).

            By 2010, of the tax liability at issue in the

previous litigation, only three years of income tax

liability remained in dispute:       2000, 2001, and 2002.        On

October 15, 2010, the IRS sent taxpayers a Final Notice of

Intent to Levy and of Your Right to a Hearing.       The notice

stated that the IRS intended to levy $17,949.76,

$22,698.26, and $19,955.01, inclusive of penalties and

interest, for the 2000, 2001, and 2002 taxable years,

                               -3-
respectively.   In addition, the IRS notified taxpayers of

their right to contest the levy in a collection due process

("CDP") hearing.   Taxpayers, proceeding without

representation, timely requested a CDP hearing; they (1)

claimed they had no tax liability; (2) contended that, even

if tax were owed, it was not collectible; and (3)

challenged certain IRS procedures.

         By letter dated January 25, 2011, Thomas A.

Conley, a settlement officer with the IRS Office of Appeals

("Appeals Office") scheduled a February 24, 2011 telephone

conference with taxpayers.   The letter indicated that

Conley could not consider collection alternatives unless

taxpayers completed a Collection Information Statement and

verified their income and expenses.   Conley further

informed taxpayers that they were required to submit all

outstanding federal income tax returns.   In response, on

three separate occasions, taxpayers requested an in -person

hearing in New York City; Conley told them, however, that

an in-person CDP hearing was not possible unless taxpayers

provided the requested information.   Taxpayers did not




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comply with the document request and did not call in for

the scheduled telephone conference.

            On March 21, 2011, the Appeals Office issued a

Notice of Determination sustaining the proposed levy.

Taxpayers timely filed a petition in the tax court,

appealing the determination and alleging, inter alia, that

the Appeals Office had failed to grant them a face-to-face

CDP hearing and wrongly sustained the levy.       The

Commissioner moved for summary judgment, arguing that

Conley had acted within his discretion in sustaining the

levy without granting the request for an in-person hearing.

The tax court granted the motion.       Williams timely

appealed.

                           DISCUSSION

A.   Standard of Review

            We review decisions of the tax court "in the same

manner and to the same extent as decisions of the district

courts in civil actions."    IRC § 7482(a)(1).    Hence, w e

review de novo a grant of summary judgment by the tax

court.   See Eisenberg v. Comm'r, 155 F.3d 50, 53 (2d Cir.

1998).   To review the tax court's grant of summary

                               -5-
judgment, we must also review the decision by the Appeals

Office.      We have not, however, established the appropriate

standard of review for an appeal arising from a CDP

hearing. 1

             The CDP hearing was created by the IRS

Restructuring and Reform Act of 1998.      Pub. L. No. 105 -206,

§ 3401, 112 Stat. 685, codified at IRC § 6330.        It provided

a taxpayer with an opportunity to challenge an IRS levy

before seizure through an independent appeals process.        See

IRC § 6330(a)(1).      Although the statute codifies the right

to judicial review of the IRS appeals process by a tax

court, see IRC § 6330(d)(1), it does not identify the

standard of review.      The legislative history, however, is

instructive:



     1
          We have repeatedly set forth the standard of review in
summary orders, see Sher v. Comm'r, 381 F. App'x 62, 63-64 (2d
Cir. 2010) (summary order) (abuse of discretion review when
appellants do not contest underlying tax liability in CDP
hearing); Salazar v. Comm'r, 338 F. App'x 75, 77 (2d Cir. 2009)
(summary order) (same); Reichle v. Comm'r, 303 F. App'x 987, 988
(2d Cir. 2008) (summary order) (same); Block v. Comm'r, 301 F.
App'x 75, 77 (2d Cir. 2008) (summary order) (de novo review of
tax court decisions, applying the same standards as the tax
court: review of CDP hearings for abuse of discretion where
underlying liability is not contested and de novo review when it
is), but we have not issued a precedential opinion in this
respect.
                                -6-
    Where the validity of the tax liability was
    properly at issue in the hearing, and where the
    determination with regard to the tax liability is
    a part of the appeal, no levy may take place
    during the pendency of the appeal. The amount of
    tax liability will in such cases be reviewed by
    the appropriate court on a de novo basis. Where
    the validity of the tax liability is not properly
    part of the appeal, the taxpayer may challenge the
    determination of the appeals officer for abuse of
    discretion.

H.R. Conf. Rep. No. 105-599, at 266 (1998).     Many courts

have adopted this tiered standard of review.     See Kindred

v. Comm'r, 454 F.3d 688, 694 (7th Cir. 2006); Robinette v.

Comm'r, 439 F.3d 455, 458-59 & n.2 (8th Cir. 2006); Living

Care Alts. of Utica, Inc. v. United States, 411 F.3d 621,

626 (6th Cir. 2005).   See also Dalton v. Comm'r, 682 F.3d

149, 155-56 (1st Cir. 2012) (reviewing factual and legal

conclusions for reasonableness, which is "part and parcel"

of the abuse of discretion inquiry).     We expressly adopt

that standard today.   Therefore, because Williams has

abandoned his challenges to the validity of the underlying

tax liability, he may challenge the Appeals Office's

decision only for abuse of discretion.     See Jones v.

Comm'r, 338 F.3d 463, 466 (5th Cir. 2003) (per curiam) ("In

a collection due process case in which the underlying tax

                             -7-
liability is properly at issue, the Tax Court (and hence

this Court) reviews the underlying liability de novo and

reviews the other administrative determinations for an

abuse of discretion.").

B.   Determination Without Face-to-Face CDP Hearing

     1.   Applicable Law

          Before the IRS imposes a levy, it must notify a

taxpayer of his right to request a CDP hearing.     IRC

§ 6330(a)(1).   As part of the hearing, the Appeals Office

must verify "that the requirements of any applicable law or

administrative procedure have been met."   Id. § 6330(c)(1).

A CDP hearing, although it provides a taxpayer with an

opportunity to be heard, is "informal in nature" and does

not require a face-to-face meeting.   Treas. Reg.

§ 301.6330-1(d)(2), A-D6.   A taxpayer who presents

"relevant, non-frivolous reasons" for disagreeing with the

proposed levy will "ordinarily" be offered an in-person

hearing, id. at A-D7; a face-to-face meeting, however, is

not required.   In fact, a CDP "hearing" may consist of "one

or more written or oral communications" between the Appeals

Office and the taxpayer or merely a "review of the

                             -8-
documents in the case file."       Id. at A-D6 & A-D7.    Even if

the CDP hearing consists of an in-person meeting or a

telephone conversation, a "transcript or recording . . . is

not required."     Id. at A-D6.

            At the CDP hearing, the taxpayer may challenge the

propriety of the collection action, propose a collection

alternative, or raise any other releva nt issue pertaining

to the unpaid tax.     Id. § 6330(c)(2)(A).      Generally,

however, a taxpayer may not challenge the underlying tax

liability unless he "did not otherwise have an opportunity

to dispute such tax liability."         Id. § 6330(c)(2)(B); see

also Deutsch v. Comm'r, 478 F.3d 450, 452 (2d Cir. 2007)

(petitioner's attorney consented to tax assessment and

waived right to contest liability, precluding a later

challenge).    The IRS may request, and a taxpayer "will be

expected to provide[,] all relevant information requested

by Appeals, including financial statements, for its

consideration of the facts and issues involved in the

hearing."     Treas. Reg. § 301.6330-1(e)(1).      Moreover, if

offering collection alternatives, a taxpayer must first

file all required tax returns before seeking an in -person

                                  -9-
conference.   See id. § 301.6330-1(d)(2), at A-D8 (noting

that IRS generally will not entertain offers to compromise

in person unless the taxpayers would be eligible in other

circumstances).

    2.   Application

         Williams argues that Conley abused his discretion

by issuing a determination on the proposed levy without

first affording him an in-person CDP hearing.     This

argument has no merit.

         As an initial matter, Williams assumes that he is

entitled to a face-to-face conference.    This misstates the

law, and numerous courts have concluded that the IRS may

issue a final determination without an in-person hearing.

See, e.g., Murphy v. Comm'r, 469 F.3d 27, 30 (1st Cir.

2006) (CDP hearing process is informal and "no face-to-face

meetings are necessary"); Kindred, 454 F.3d at 691 n.7, 695

n.19 (CDP hearings need not be face-to-face); see also

Treas. Reg. § 301.6330-1(d)(2), A-D6.

         Moreover, the IRS was justified in denying a face-

to-face hearing here for three reasons.   First, Williams

presented Conley with only frivolous arguments.     See Treas.

                             -10-
Reg. § 301.6330-1(d)(2), A-D7 & A-D8.     He challenged his

underlying tax liability even though he had received "an

opportunity to dispute such tax liability" in the prior

litigation.    IRC § 6330(c)(2)(B); see Williams, 299 F.

App'x at 93.    He also argued that collection was time-

barred even though a tolling statute extended the statute

of limitations for the duration of any CDP hearing and

subsequent related appeals.     See IRC § 6502(a)(1) (ten-year

statute of limitations for collection of taxes); id. §

6330(e)(1) (tolling statute); see also Lunsford v. Comm'r,

117 T.C. 183, 189 (2001) (taxpayers who abandoned arguments

and raised only previously-rejected legal arguments were

not entitled to CDP hearing).

           Second, despite requests from Conley to do so,

Williams never submitted the 2009 tax return or the other

requested documentation.    The IRS will not grant a face-to-

face hearing to "a taxpayer who wishes to make an offer to

compromise" but has not yet filed required returns or made

certain deposits of tax.    Treas. Reg. § 301.6330-1(d)(2),

at A-D8.   Because Williams did not comply with the document

request, Conley acted within his discretion to deny an in-

                              -11-
person hearing.   See, e.g., Klingenberg v. Comm'r, 104

T.C.M. (CCH) 470, at *7 (2012) (no abuse of discretion to

deny face-to-face hearing where, inter alia, taxpayer never

submitted requested financial information or tax returns) ;

see also Rodriguez v. Comm'r, 85 T.C.M. (CCH) 1414, at *4-5

(2003).

          Third, Conley consulted internal IRS procedures

before denying the face-to-face hearing.   These guidelines

directed the Appeals Office to deny in-person hearing

requests when a taxpayer made only frivolous or dilatory

arguments, or did not file all required returns.

Accordingly, Conley did not abuse his discretion by denying

an in-person hearing or by sustaining the proposed levy,

and, therefore, the tax court did not err by so conclu ding.

                         CONCLUSION

          For the foregoing reasons, the Order and Decision

of the tax court is AFFIRMED.




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