                  T.C. Summary Opinion 2006-83



                     UNITED STATES TAX COURT



                RUSSEL S. BANKSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22863-04S.             Filed May 22, 2006.


     Russel S. Bankson, pro se.

     Catherine G. Chang, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of sections 6330(d) and 7463 of the

Internal Revenue Code in effect when the petition was filed.   The

decision to be entered is not reviewable by any other court, and

this opinion should not be cited as authority.   Unless otherwise

indicated, all subsequent section references are to the Internal

Revenue Code in effect at relevant times.
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     This proceeding arises from a petition for judicial review

filed in response to a Notice of Determination Concerning

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

determination) sent to petitioner on November 4, 2004.   The issue

for decision is whether respondent abused his discretion in

sustaining a notice of Federal tax lien filed against petitioner.

                            Background

     Some of the facts have been stipulated, and they are so

found.   The record consists of the stipulation of facts and

supplemental stipulation of facts with attached exhibits,

additional exhibits introduced at trial, and the testimony of

petitioner.   At the time of filing the petition, petitioner

resided in Emeryville, California.

     Petitioner filed Federal income tax returns for the taxable

years 2000 and 2001 but did not pay the taxes reported thereon.

Respondent assessed the taxes shown on the returns, as well as

related penalties and interest, and filed a notice of Federal tax

lien against petitioner on May 29, 2003, in the total amount of

$13,220.86.   Respondent sent petitioner a Notice of Federal Tax

Lien Filing and Your Right to a Hearing Under IRC 6320 on June 3,

2003.

     Petitioner timely submitted a Form 12153, Request for a

Collection Due Process Hearing.   Petitioner also submitted an

offer-in-compromise (OIC), in which he offered to pay $3,800 to
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compromise his tax liabilities for the taxable years 2000 and

2001.1    The OIC was based on doubt as to collectibility.

Included with the OIC was a Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals.    The

Form 433-A states that petitioner is unemployed, earns no income,

and has monthly expenses of $745.    Also included with the OIC was

a letter from Heidi Bernd (Ms. Bernd).    The letter is dated June

6, 2003, and states: “I hereby confirm that Russel S. Bankson * *

* has resided in my household since 9/01/01 and does not pay

contractual rent.    He does, however, contribute to household

expenses as his available income allows.”

     Petitioner’s OIC was assigned to an Appeals officer, who

held an administrative hearing with petitioner by correspondence.

In April 2004, the Appeals officer sent petitioner a letter

requesting, inter alia, information about his employment history

and expenses, as well as “verification of income” for Ms. Bernd.

Petitioner’s reply letter reiterates that he is unemployed.      It

also explains that petitioner performs various personal services

for Ms. Bernd, such as chauffeuring and shopping, in exchange for

living with her.    The letter includes copies of petitioner’s

credit card statements for certain months in 2003, but does not

include verification of Ms. Bernd’s income.



     1
         Petitioner’s OIC also included the taxable years 1999 and
2002.    Those taxable years are not before the Court.
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     Petitioner and the Appeals officer exchanged additional

correspondence.   At some point during that time, respondent

learned that petitioner was president of an active California

corporation (the corporation).    This information is not listed in

the OIC or in petitioner’s letters to the Appeals officer.

Respondent sent petitioner a letter in August 2004 again

requesting his employment history, as well as “Financial and

other records with respect to any related corporations in which

you were an officer or shareholder.”

     Petitioner claims he did not receive respondent’s August

2004 letter.   He acknowledges, however, that he did not provide

respondent with certain financial information, including

information about the corporation, verification of Ms. Bernd’s

income, and a breakdown of the respective contributions toward

living expenses that he and Ms. Bernd made.   He also concedes his

OIC does not list any constructive income in the form of reduced

rent that he received from Ms. Bernd in exchange for performing

services for her.

     In November 2004, respondent issued petitioner a notice of

determination sustaining the filing of the notice of Federal tax

lien.   The notice of determination states:   (1) Petitioner failed

to provide adequate financial information, and (2) petitioner has
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the ability to pay his tax liabilities in full.2    The notice of

determination does not include an estimate of petitioner’s assets

and liabilities.   However, the record contains an undated

document titled “Appeals Case Memorandum” (the Appeals

memorandum).   This document states that petitioner “has a credit

line of $4,200” and “retirement funds of more than $2,300.     These

two assets total $6,500 (which is more than the amount

[petitioner] offered).”   Neither the notice of determination nor

the Appeals memorandum includes an estimate of petitioner’s

future income.

                            Discussion

     Section 6321 imposes a lien in favor of the United States on

all property and rights to property of a person when a demand for

the payment of the person’s liability for taxes has been made and

the person fails to pay those taxes.     Such a lien arises when an

assessment is made.   Sec. 6322.   Section 6323(a) requires the

Secretary to file a notice of Federal tax lien if the lien is to

be valid against any purchaser, holder of a security interest,

mechanic’s lienor, or judgment lien creditor.     Lindsay v.

Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th

Cir. 2003).



     2
       The notice of determination includes other grounds in
support of respondent’s position. Based on our resolution of
issue for decision infra, we do not address these additional
grounds.
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     Section 6320 provides that a taxpayer shall be notified in

writing by the Secretary of the filing of a notice of Federal tax

lien and provided with an opportunity for an administrative

hearing.   An administrative hearing under section 6320 is

conducted in accordance with the procedural requirements of

section 6330.   Sec. 6320(c).   At the administrative hearing, a

taxpayer is entitled to raise any relevant issue relating to the

unpaid tax, including a spousal defense or collection

alternatives such as an offer-in-compromise or an installment

agreement.   Sec. 6330(b) and (c)(2); sec. 301.6320-1(e)(1),

Proced. & Admin. Regs.   A taxpayer also may challenge the

existence or amount of the underlying tax liability, including a

liability reported on the taxpayer’s original return, if the

taxpayer “did not receive any statutory notice of deficiency for

such tax liability or did not otherwise have an opportunity to

dispute such tax liability.”    Sec. 6330(c)(2)(B); see also Urbano

v. Commissioner, 122 T.C. 384, 389-390 (2004); Montgomery v.

Commissioner, 122 T.C. 1, 9-10 (2004).

     At the conclusion of the hearing, the Appeals officer must

determine whether and how to proceed with collection, taking into

account, among other things, collection alternatives proposed by

the taxpayer and whether any proposed collection action balances

the need for the efficient collection of taxes with the
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legitimate concern of the taxpayer that the collection action be

no more intrusive than necessary.    See sec. 6330(c)(3).

     Section 6330(d) provides for judicial review of the

administrative determination in the Tax Court or a Federal

District Court, as may be appropriate.    Where the validity of the

underlying tax liability is properly at issue, the Court will

review the matter de novo.    Where the validity of the underlying

tax liability is not properly at issue, however, the Court will

review the Commissioner’s administrative determination for abuse

of discretion.     Goza v. Commissioner, 114 T.C. 176, 181-182

(2000).

     Here, petitioner does not seek to challenge his underlying

tax liabilities.    He disputes only the rejection of his OIC.    We

therefore review respondent’s determination for abuse of

discretion.   See Lunsford v. Commissioner, 117 T.C. 183, 185

(2001).

     Petitioner makes two main arguments.    First, although he

acknowledges refusing to provide respondent with certain

financial information, petitioner claims that such information

was irrelevant to his OIC.    Second, petitioner disputes the

determination that he was able to pay his tax liabilities in

full.   In particular, petitioner challenges the statement in the

Appeals memorandum that his $4,200 line of credit constitutes an

asset available for collection.
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     Section 7122(a) authorizes the Secretary to compromise any

civil case arising under the internal revenue laws.     Grounds for

compromise include doubt as to collectibility, which “exists in

any case where the taxpayer’s assets and income are less than the

full amount of the liability.”     Sec. 301.7122-1(b)(2), Proced. &

Admin. Regs.     Evaluation of an OIC based on doubt as to

collectibility requires complete financial information from the

taxpayer.   See Roman v. Commissioner, T.C. Memo. 2004-20.    Where

the taxpayer refuses to provide such information, the

Commissioner’s rejection of an OIC does not constitute abuse of

discretion.    See id.; Willis v. Commissioner, T.C. Memo.

2003-302; see also sec. 301.7122-1(d)(2), Proced. & Admin. Regs.

     Petitioner failed to provide complete financial information

to respondent.    For example, petitioner did not mention his role

as president of the corporation in his OIC and failed to supply

information on this subject when requested to do so.3   Petitioner

contends he did not have to provide such information because he

has no ownership interest in the corporation.    Even if this is

true, however, respondent was entitled to request information to



     3
       As mentioned supra, petitioner contends he did not receive
respondent’s August 2004 letter, which requests information about
any corporation in which petitioner was an officer or
shareholder. Even if this is true, however, both the Form 433-A,
Collection Information Statement for Wage Earners and Self-
Employed Individuals, and respondent’s April 2004 letter request
employment information. Petitioner nevertheless failed to
provide information about the corporation.
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verify this assertion and to determine whether petitioner earned

income from the corporation.

     Respondent also was entitled to request information

concerning petitioner’s living arrangements.   Petitioner

testified that he refused to provide income information for Ms.

Bernd because he did not wish to impose upon her.    The Internal

Revenue Manual (IRM) provides, however, that where a taxpayer

shares living expenses with a person who is not liable for the

taxes owed, the offer investigator “should secure sufficient

information concerning the not liable person to determine the

taxpayer’s proportionate share of the total household income and

expenses.”   IRM sec. 5.8.5.5.3(3) (May 15, 2004).   This

information allows the investigator to “Determine which expenses

are shared and which expenses are the sole responsibility of the

taxpayer.”   IRM sec. 5.8.5.5.3(3)a and d.4

     Petitioner also failed to provide a breakdown of the amount

he paid toward his living expenses or to include in his OIC the

value of the constructive income he received from Ms. Bernd.

See, e.g., Langlois v. Commissioner, T.C. Memo. 1988-415 n.7

(income includes payment in kind for services rendered), affd.


     4
       We have held that reliance on IRM guidelines in evaluating
collection alternatives does not constitute an abuse of
discretion. See, e.g., Orum v. Commissioner, 123 T.C. 1, 13
(2004), affd. 412 F.3d 819 (7th Cir. 2005); Etkin v.
Commissioner, T.C. Memo. 2005-245; Castillo v. Commissioner, T.C.
Memo. 2004-238; Schulman v. Commissioner, T.C. Memo. 2002-129.
                              - 10 -

without published opinion 886 F.2d 1316 (6th Cir. 1989).

Petitioner appears to argue that detailed income and expense

information was unnecessary because his expenses exceeded his

income; thus, even if he had constructive income, it was entirely

offset by the imputed rent he paid to Ms. Bernd.    As noted supra,

however, respondent required complete financial data to evaluate

petitioner’s OIC.   See Roman v. Commissioner, supra.   Petitioner

cannot selectively withhold information because he believes it to

be irrelevant.

     We conclude that petitioner failed to provide complete

financial information to respondent.   Respondent’s rejection of

petitioner’s OIC therefore does not constitute abuse of

discretion.   See id.; Willis v. Commissioner, supra.   With

respect to respondent’s determination of petitioner’s ability to

pay, we share petitioner’s concern about the statement in the

Appeals memorandum that petitioner’s $4,200 line of credit

constitutes an asset.   We can find no support in the IRM for this

position.   Based on our resolution of the case, however, we do

not decide whether this determination is correct.    In reaching

our holding, we have considered all arguments made, and, to the

extent not mentioned, we conclude that they are moot, irrelevant,

or without merit.
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    Reviewed and adopted as the report of the Small Tax Case

Division.

    To reflect the foregoing,


                                       Decision will be entered

                                  for respondent.
