                        T.C. Memo. 2006-217



                      UNITED STATES TAX COURT



           IRVING AND ELAINE STEINBERG, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14135-05L.                 Filed October 16, 2006.



     Gerald W. Kelly, Barry H. Cantor, and Cheryl R. Frank, for

petitioners.

     Derek W. Kaczmarek, for respondent.



                        MEMORANDUM OPINION

     SWIFT, Judge:   This matter is before us under Rule 121 on

respondent’s motion for summary judgment.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and
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all Rule references are to the Tax Court Rules of Practice and

Procedure.

                              Background

     At the time the petition was filed, petitioners resided in

Las Vegas, Nevada.

     For 1990, 1991, 1992, and 1993, petitioners filed with

respondent their joint Federal income tax returns.   For these

years petitioners still owe respondent approximately $750,000 in

cumulative total Federal income taxes, including accrued

interest.

     In November of 2003, petitioners sold their home and

purchased for $589,000 a new home in an expensive neighborhood of

Las Vegas, Nevada, paying $122,000 as a cash downpayment.   None

of the proceeds from the 2003 sale of petitioners’ prior home was

used by petitioners to make a payment on petitioners’ outstanding

Federal income taxes for 1990, 1991, 1992, and 1993.

     On March 8, 2004, in an effort to collect petitioners’

unpaid Federal income taxes, respondent mailed to petitioners a

notice of intent to levy on petitioners’ property.

     On March 15, 2004, petitioners filed a request for a hearing

with respondent’s Appeals Office challenging respondent’s

proposed levy and seeking approval of an offer-in-compromise, in

which petitioners offered to make a total payment of $77,000 with

regard to their Federal income taxes for 1990 through 1993.
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     Beginning September 9, 2004, petitioners, petitioners’

attorney, and respondent held a series of phone calls and written

correspondence relating to petitioners’ Appeals Office hearing.

Some financial information was submitted by petitioners, and

respondent’s Appeals officer reviewed that material and asked

petitioners for additional information.

     Petitioners submitted some additional financial information

to respondent’s Appeals Office, but certain financial information

that had been requested by respondent’s Appeals officer was not

provided by petitioners.   For example, petitioners never

submitted documents requested by respondent’s Appeals officer

that would have established the fact of payment of petitioners’

medical and drug expenses.

     Based on the financial information petitioners submitted,

respondent’s Appeals officer determined that petitioners had

significantly more discretionary monthly income, equity in

assets, and realizable collection potential (RCP) than

petitioners would acknowledge.    The figures petitioners and

respondent’s Appeals officer respectively calculated are set

forth below:

                                         Petitioners   Respondent
      Discretionary Monthly Income        $        0    $   2,937
      Equity in Assets                        82,853     319,535
      RCP                                  127,087       460,511
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     The disagreement between petitioners and respondent’s

Appeals officer focused on whether certain alleged life insurance

and medical and drug expenses should be treated as discretionary

or as nondiscretionary expenses and on whether petitioners had

adequately established that they actually were incurring and

paying the expenses being claimed.       During the Appeals Office

hearing, petitioners did not submit the documentation necessary

to substantiate their payment of the disputed expenses.

     The chart below sets forth the respective amounts

petitioners claim and respondent would allow for life insurance

and medical and drug expenses:


        Type of Expenses           Petitioners          Respondent
        Life Insurance                   $2,311             $   500
        Medical and Drug                  1,553              1,200


     Petitioners’ alleged life insurance expenses are based on

whole life insurance policies on the life of each petitioner.

Respondent’s offer-in-compromise guidelines allow taxpayers’

expenses only for term life insurance coverage.       See

2 Administration, Internal Revenue Manual (CCH), sec. 5.15.1.10,

at 17,662 (May 1, 2004).

     Under section 6330, where a taxpayer’s underlying tax

liability is not in dispute, our standard of review over

respondent’s Appeals Office’s determination on a taxpayer’s
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appeal of a notice of levy is whether respondent’s Appeals Office

abused its discretion.   Lunsford v. Commissioner, 117 T.C. 183,

185 (2001).   We are asked to affirm, as a matter of summary

judgment, respondent’s Appeals Office’s determination to reject

petitioners’ offer-in-compromise and to sustain respondent’s

notice of levy.

     We may grant summary judgment where there remains no

material fact issue and where a party is entitled to judgment as

a matter of law.   Rule 122(a); Dahlstrom v. Commissioner, 85 T.C.

812, 821 (1985); Espinoza v. Commissioner, 78 T.C. 412, 416

(1982).

     The administrative file herein establishes that respondent’s

Appeals officer reviewed petitioners’ financial data that was

properly and timely submitted during the Appeals Office’s

consideration of petitioners’ appeal, that petitioners failed to

submit to respondent’s Appeals Office requested information on

time, and that petitioners spent over $100,000 in cash as a

downpayment to purchase an expensive new home at a time when they

had substantial Federal income taxes due.

     Based on these facts, we conclude as a matter of law that

respondent’s Appeals Office did not abuse its discretion in

issuing the notice of determination rejecting petitioners’ offer-

in-compromise and sustaining respondent’s levy notice.
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     The question before us is not whether respondent’s Appeals

Office would have decided differently had it received additional

information.   Rather, the question before us is whether

respondent’s Appeals Office acted appropriately and within its

proper discretion based on information it received during the

Appeals Office consideration of petitioners’ appeal.       The record

before us answers that question in the affirmative.

     Petitioners now claim additional legal expenses,

transportation expenses, and income averaging in order to

establish that respondent’s calculation during the Appeals Office

hearing of petitioners’ RCP was too high.

     These items constitute new issues and will not be allowed.

See Magana v. Commissioner, 118 T.C. 488, 493-494 (2002).

Furthermore, as we stated in Murphy v. Commissioner, 125 T.C.

301, 315 (2005), when Appeals officers make reasonable requests

for relevant documentation from taxpayers and taxpayers do not

produce the documentation in a reasonable time, the Appeals

officer commits no abuse of discretion in making a determination

without regard to the missing information.

     For the reasons stated, we shall grant respondent’s motion

for summary judgment.

     To reflect the foregoing,


                                         An appropriate order and

                                 decision will be entered for

                                 respondent.
