                        T.C. Memo. 2010-56



                     UNITED STATES TAX COURT



                 KENNY A. PEARCE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19796-07L.                Filed March 23, 2010.



     Kenny A. Pearce, pro se.

     William F. Castor, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     THORNTON, Judge:   Pursuant to section 6330(d), petitioner

seeks judicial review of respondent’s determination to proceed

with a proposed levy to collect petitioner’s unpaid Federal

income tax liability for 2000.1   The issues for decision are:


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                 - 2 -

(1) Whether respondent is prohibited from making the proposed

levy under section 6331(k)(2) because of a pending offer by

petitioner for an installment agreement; and (2) whether

respondent abused his discretion in rejecting an installment

agreement that petitioner offered during the collection due

process hearing (CDP hearing).

                         FINDINGS OF FACT

      On November 18, 2005, petitioner’s representative submitted

Form 9465, Installment Agreement Request, offering an installment

agreement to pay $1,500 per month toward petitioner’s Federal

income tax liabilities for 1996 and 1998 through 2004.    By letter

dated March 21, 2006, respondent’s revenue officer informed

petitioner’s representative that the installment agreement offer

had been denied and that he had 30 days to appeal the denial by

scheduling a conference with the revenue officer’s group manager

(the manager).   The letter also stated that additional

information was needed “to continue in the financial review”.

     In a letter dated April 18, 2006, petitioner’s

representative requested an appeal through respondent’s

Collection Appeals Program (CAP).    On April 20, 2006, the revenue

officer spoke with petitioner’s representative, advised him that

he needed to schedule a conference with the manager, and advised

him that respondent would provide information concerning the

amounts and conditions of an acceptable installment agreement
                                - 3 -

only if petitioner provided sufficient information to make such a

determination.

     On April 24, 2006, the manager spoke with petitioner’s

representative, who indicated that he wanted more time to discuss

an acceptable installment agreement amount with the revenue

officer.   By letter dated April 24, 2006, petitioner’s

representative withdrew the CAP request, stating that he would

first meet with the revenue officer and would then renew his CAP

request if they could not reach agreement.

     On May 8, 2006, petitioner’s representative spoke with the

revenue officer to learn what she might consider to be an

acceptable amount for an installment agreement.   The revenue

officer indicated that she was still reviewing petitioner’s bank

statements and other financial information and could not yet

provide an acceptable amount.   By letter dated June 7, 2006,

petitioner’s representative provided the revenue officer with

some additional bank statements and indicated a desire to “move

forward with the CAP process and/or conclude an Installment

Agreement.”

     On April 4, 2007, respondent sent petitioner a Letter 1058,

Final Notice--Notice of Intent to Levy and Notice of Your Right

to a Hearing, with respect to his 2000 Federal income tax

liability.    In response, on April 24, 2007, petitioner’s

representative submitted Form 12153, Request for a Collection Due
                               - 4 -

Process or Equivalent Hearing, indicating that petitioner

intended to make an installment agreement offer and that he

disagreed with the proposed levy because “A prior Installment

Agreement is still pending.”

     On July 11, 2007, respondent’s settlement officer held a CDP

hearing with petitioner’s representative.    The settlement officer

concluded that petitioner’s previous installment agreement offer

was no longer pending after April 24, 2006, when petitioner’s

representative withdrew the CAP request.    The settlement officer

stated that he could consider collection alternatives only if

petitioner were in compliance with filing requirements and the

financial information supported a proposal.    The settlement

officer stated that he would consider giving petitioner time to

file his delinquent 1997 Form 1040, U.S. Individual Income Tax

Return, if they could reach a resolution on a collection

alternative.   Petitioner’s representative indicated that

petitioner still wanted an installment agreement and thought that

$3,000 per month might be an appropriate amount.    The parties

agreed, however, that the financial information then available

was insufficient to determine petitioner’s ability to pay.

Accordingly, the settlement officer was unable to recommend an

installment agreement of $3,000 per month.    Petitioner’s

representative had no other proposal.
                                - 5 -

     On August 6, 2007, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination), with respect to

petitioner’s 2000 tax year, sustaining the proposed levy.      In the

notice of determination respondent determined that no installment

agreement offer was pending when the notice of intent to levy was

issued and that an installment agreement was not appropriate

because petitioner had failed to provide documentation needed to

determine his ability to pay and had failed to file his 1997 Form

1040.   Petitioner, residing in Arkansas, petitioned this Court

for review.

                               OPINION

A.   Collection Procedures

     Section 6330 requires the Secretary to furnish a person

notice and opportunity for a hearing before making a levy on the

person’s property.    At the hearing the person may raise any

relevant issue relating to the unpaid tax or proposed levy,

including spousal defenses, challenges to the appropriateness of

the collection action, and offers of collection alternatives.

Sec. 6330(c)(2)(A).    Once the Commissioner’s Appeals Office

issues a notice of determination, the person may seek judicial

review in this Court.    Sec. 6330(d)(1).

     Because petitioner has not challenged his underlying tax

liability, our review is for abuse of discretion.    Sego v.
                               - 6 -

Commissioner, 114 T.C. 604, 610 (2000).   Under this standard of

review, the question is whether respondent’s determination was

arbitrary, capricious, or without sound basis in fact or law.

See, e.g., Murphy v. Commissioner, 125 T.C. 301, 320 (2005),

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

     In his petition, petitioner assigns as error:   (1) That the

notice of intent to levy was improper because petitioner had made

an offer for an installment agreement that was still pending when

respondent issued the notice; and (2) respondent improperly

denied petitioner’s request for an installment agreement in the

CDP hearing.

B.   Pendency of Installment Agreement Offer

     The Internal Revenue Service (IRS) generally may not levy on

the property of a person who has pending an offer for an

installment agreement with respect to the unpaid tax.   Sec.

6331(k)(2)(A).   “A proposed installment agreement becomes pending

when it is accepted for processing.”   Sec. 301.6331-4(a)(2),

Proced. & Admin. Regs.   “The proposed installment agreement

remains pending until the IRS accepts the proposal, the IRS

notifies the taxpayer that the proposal has been rejected, or the

proposal is withdrawn by the taxpayer.”   Id.   If the IRS rejects

the offer, the prohibition against levy continues for another 30

days unless the person files an appeal with respondent’s Office

of Appeals, in which case the prohibition continues during the
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pendency of the appeal.     Sec. 6331(k)(2)(B); sec. 301.6331-

4(a)(1), Proced. & Admin. Regs.     If the IRS rejects a proposed

installment agreement and within 30 days the taxpayer makes a

good-faith revision of it, the prohibition on levy applies while

the revised proposal is pending.     Sec. 301.6331-4(a)(3), Proced.

& Admin. Regs.

     On November 18, 2005, petitioner, through his

representative, made an offer for an installment agreement to pay

his outstanding tax liabilities, including his 2000 tax

liability.   By letter dated March 21, 2006, the revenue officer

formally informed petitioner’s representative that the offer had

been rejected.     Petitioner nevertheless alleges that an

installment agreement offer was pending as of April 4, 2007, the

date the notice of intent to levy was issued with respect to his

2000 liability.2

     Petitioner has not filed a brief and has otherwise done

little to help the Court understand his position.     As best we

understand it, petitioner believes that on April 24, 2006, the



     2
      As a threshold matter, it might be questioned whether sec.
6331(k)(2) bars the IRS from issuing a notice of intent to levy,
as opposed to actually making a levy, during the pendency of an
installment agreement offer. Petitioner’s contentions assume
that it does, and respondent has not expressly argued otherwise.
Because we conclude that there was no installment agreement offer
pending either when respondent issued the notice of intent to
levy or when he made his final determination to proceed with the
proposed levy, we need not and do not give this issue further
consideration.
                               - 8 -

IRS effectively rescinded its March 21, 2006, denial of

petitioner’s installment agreement offer by acknowledging that

petitioner’s November 18, 2005, offer remained pending.     The

record does not support this position.   The record indicates that

by letter dated April 24, 2006, petitioner’s representative

withdrew his request for a CAP appeal, indicating that he wished

to meet with the revenue officer, ostensibly to discuss with her

what might be an acceptable installment agreement amount.    In

fact, petitioner’s representative and the revenue officer had

further communications but were unable to reach agreement on an

installment agreement.   Insofar as the record reveals, these

discussions did not result either in petitioner’s making a good-

faith revision of his November 18, 2005, offer or in the revenue

officer’s making an offer that might be considered to have been

pending when either the notice of intent to levy or the notice of

determination was issued.

     We further conclude that no appeal of the rejected

installment agreement offer was pending when respondent issued

either the notice of intent to levy or the notice of

determination.   In her March 21, 2006, letter rejecting

petitioner’s installment offer, the revenue officer advised

petitioner that he had 30 days to appeal by scheduling a

conference with her manager.   Although petitioner’s

representative requested an appeal in his April 18, 2006, letter,
                                - 9 -

he withdrew the request in his April 24, 2006, letter.      Insofar

as the record reveals, he never filed a new request for an

appeal, much less within the 30-day deadline set forth in the

revenue officer’s March 21, 2006, letter.

       Petitioner’s representative informally made a new offer for

an installment agreement during the CDP hearing.    As discussed

below, however, the settlement officer properly rejected it

before issuing the notice of determination.

       In sum, we conclude that there was no offer for an

installment agreement pending when respondent issued the notice

of intent to levy or the notice of determination.

C.     Installment Agreement Offer Proposed During CDP Hearing

       During the CDP hearing on July 11, 2007, petitioner’s

representative proposed a new installment agreement.    The

settlement officer rejected it partly because petitioner failed

to provide documentation necessary to determine his ability to

pay.    Although petitioner asserts in his petition that he

cooperated with the IRS in “every material respect”, the record

does not support this assertion.    We conclude that the settlement

officer did not abuse his discretion in rejecting the proposed
                              - 10 -

installment agreement.3   See Orum v. Commissioner, 123 T.C. 1, 13

(2004), affd. 412 F.3d 819 (7th Cir. 2005).

     To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.




     3
      As an additional ground for rejecting the proposed
installment agreement, the notice of determination cites
petitioner’s failure to file his 1997 Federal income tax return.
Petitioner attacks this determination on various grounds, none of
which we find to be well founded. In any event, because we
sustain respondent’s determination on other grounds, it is
unnecessary to address this issue further.
