                           T.C. Memo. 2017-11



                     UNITED STATES TAX COURT



ESTATE OF RUBEN A. MYERS, DECEASED, KEN NORTON, EXECUTOR,
                        Petitioner v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent



   Docket No. 20823-15L.                        Filed January 10, 2017.



          P asks us to review a determination by IRS Appeals sustaining
   a lien notice and a notice of proposed levy to collect delinquent
   installment payments of estate tax. The gravamen of P's complaint is
   that R abused his discretion during the 10-year period before the
   delinquency by not pursuing collection from nonprobate assets not
   under P's control. Following the CDP hearing, the settlement officer
   prioritized collection actions first against nonprobate assets and
   certain jointly owned probate property. P misunderstands the I.R.C.
   sec. 6324(a)(1) special estate tax lien, which attaches automatically
   on the date of death to the gross estate without any action by R and
   which lapses in 10 years. P also misunderstands the scope of our
   review under I.R.C. sec. 6330(d). We do not conduct broad-ranging
   inquiry into the means by which R has sought to collect estate tax
   over the years since decedent's death. Our narrow focus is on
   whether the settlement officer abused his discretion in sustaining the
   filing of the lien notice and the proposed levy notice. Moreover, we
   will not remand this case for consideration of changed circumstances
                                         -2-

[*2] because the 10-year duration of the special estate tax lien lapsed
     during the pendency of this case after R froze collection actions on
     the filing of the petition. Although the special estate tax lien has
     lapsed, the period for asserting I.R.C. sec. 6324(a)(2) transferee
     liability may be open.

             Held: IRS Appeals' determination is sustained.



      William Burwell Sellers, for petitioner.

      Edwin B. Cleverdon, for respondent.



                            MEMORANDUM OPINION


      HALPERN, Judge: This case is before the Court to review a determination

(determination) made by the Internal Revenue Service (IRS) Appeals Office

(Appeals) following a collection due process (CDP) hearing conducted pursuant to

sections 6320(b) and (c) and 6330(b) and (c).1 The determination was that

respondent's issuance of a notice of Federal tax lien (NFTL) should be sustained

and that, as explained in more detail infra pp. 11-15, respondent may proceed by

levy, seizure, or litigation to collect unpaid estate tax. Petitioner assigned

      1
       Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986, as amended and in effect when the petition was filed, and
all Rule references are to the Tax Court Rules of Practice and Procedure. We
round all dollar amounts to the nearest dollar.
                                        -3-

[*3] numerous errors to the determination. Respondent denies any error. We

review the determination pursuant to section 6330(d)(1).

                                    Background

Introduction

      The parties have submitted this case for decision without a trial pursuant to

Rule 122. They have stipulated certain facts and the authenticity of certain

documents. In pertinent part, Rule 122(a) provides that "[a]ny case not requiring a

trial for the submission of evidence (as, for example, where sufficient facts have

been admitted, stipulated, established by deposition, or included in the record in

some other way) may be submitted". Rule 151(e) addresses the form and content

of briefs. Paragraph (e)(3) thereof requires the inclusion in an opening brief of

proposed findings of fact, based on the evidence, with reference to the pages of the

transcript or the exhibits or other sources relied upon to support the proposed

finding. In his opening brief, petitioner proposes that we find some facts the

source of which he identifies as the "Summary of Facts" section of his pretrial

memorandum. Respondent objects to those proposed findings as well as to certain

others the source of which respondent correctly identifies as allegations in the

petition that respondent denied in the answer as not being supported by the factual

record in this case. We agree that petitioner's proposed findings that respondent
                                          -4-

[*4] objects to are not supported by the factual record, and we will disregard them.

The facts stipulated are so found, and the documents stipulated are accepted as

authentic.

Summary of Facts

      When he filed the petition, petitioner resided in Heflin, Alabama.

      Respondent is here attempting to collect unpaid estate tax. Decedent,

Ruben A. Myers, passed away on November 15, 2005. On February 15, 2007,

petitioner filed a Federal estate tax return and began making installment payments

of estate tax pursuant to sections 6161 and 6166. From 2007 through 2013,

petitioner timely made the required payments. In 2014, petitioner became

delinquent in those payments. Revenue Officer (RO) Dale Baustert was assigned

to collect the delinquent payments. On or about October 7, 2014, RO Baustert

filed the NFTL with the appropriate authority. Soon thereafter, he notified

petitioner that the NFTL had been filed and of his right to a CDP hearing. On

October 29, 2014, RO Baustert notified petitioner of respondent's intent to levy to

collect the delinquent tax and of petitioner's right to a CDP hearing (levy notice).

As stated in the levy notice, petitioner's unpaid liability for estate tax, interest, and

penalties was then $380,289.
                                          -5-

[*5] In response to both the NFTL and the levy notice, petitioner timely

submitted to Appeals a Form 12153, Request for a Collection Due Process or

Equivalent Hearing, asking for an offer-in-compromise (OIC), stating that he was

unable to pay the balance due, and requesting withdrawal of the NFTL. Petitioner

did not dispute the underlying estate tax liability, interest, or penalties at issue.

      After petitioner submitted the Form 12153, RO Baustert made an

inappropriate contact with the settlement officer assigned to conduct petitioner's

CDP hearing. The case was, for that reason, assigned to another settlement

officer, Settlement Officer (SO) Stephan Harding.

      SO Harding sent petitioner a letter on March 9, 2015, scheduling a

face-to-face CDP hearing for April 9, 2015. His letter requested that, within 14

days, petitioner provide him with financial and other information, including a

completed Form 656, Offer in Compromise, as well as documentation supporting

the withdrawal of the lien and any other documentation petitioner wished SO

Harding to review. Petitioner provided SO Harding with the financial information

requested, but he did not submit a Form 656.

      SO Harding held the hearing as scheduled. At the hearing, he verified the

following.
                                         -6-

[*6] (a) The requirements of any applicable law or administrative procedure had

been met.

      (b) IRS records confirmed the proper issuance of the notice and demand,

the NFTL, and the notice of a right to a CDP hearing.

      (c) Respondent properly assessed the tax shown on the CDP notice.

      (d) Notice and demand for payment was mailed to petitioner's last known

address.

      (e) There was a balance due when the NFTL filing was requested.

      (f) He (SO Harding) had no prior involvement with respect to the specific

tax periods either in Appeals or in Compliance.

      (g) The IRS followed all legal and procedural requirements, and the actions

taken were appropriate under the circumstances.

      At the hearing, petitioner stated that, for him to pay the delinquent estate tax

liability from probate assets, he would have to sell family farmlands that would be

difficult to liquidate, and he suggested that the IRS take action to collect the

delinquent liability from third parties who had received cash or liquid assets

attributable to decedent that were included in the gross estate but that were not

probate assets. He represented that, under Alabama law, he had no access to

nonprobate assets as a source of funds to pay the estate tax liability.
                                         -7-

[*7] On July 15, 2015, Appeals sent to petitioner a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330 of the Internal

Revenue Code (notice).2 The notice recited SO Harding's determination to sustain

the filing of the NFTL and the issuance of the levy notice. He explained that,

because petitioner had not submitted a Form 656, and on the basis of the financial

information petitioner provided, he had concluded that petitioner was not eligible

for an OIC. He rejected the alternative of an installment agreement because

petitioner had not requested one and, on the basis of the provided financial

information, he had determined that such an agreement would not be appropriate.

He determined, on the basis of the financial information petitioner provided, that

petitioner did not qualify for noncollectible status or hardship.

      With respect to petitioner's suggestion that the IRS should satisfy the estate

tax liability from nonprobate assets, SO Harding stated that he had taken into

account petitioner's concerns, balancing those concerns against respondent's


      2
        The notice is signed by Darrell Pharms, Appeals Team Manager. The
notice itself contains only a "Summary of Determination"; it is, however,
accompanied by an attachment that appears to be SO Harding's memorandum
supplying the detail behind the summary of determination and repeating it
verbatim. Moreover, in the motion, respondent speaks of the settlement officer's
making the necessary determination to proceed with collection. We will,
therefore, for the most part, speak in terms of SO Harding's making the
determination to proceed with collection.
                                         -8-

[*8] collection policies (as laid out in the Internal Revenue Manual). He

determined that the IRS would "pursue collection of * * * [the estate] taxes first

from the nonprobate assets and [certain real property in which petitioner had a

partial interest]". He sustained RO Baustert's proposed levy "subject to this

[aforesaid] sequence of levying/sale/collection from estate assets."

      Finally, with respect to withdrawal of the NFTL, he explained that

petitioner had not provided the documentation necessary to support withdrawal of

the notice, and, on the basis of the information available, he had concluded that

there was insufficient justification to withdraw it.

      Petitioner filed the petition on August 17, 2015.

      The special estate tax lien provided for in section 6324, discussed infra p.

13, expired on November 15, 2015, 10 years after decedent's death.

      Respondent has not taken any action to attach or otherwise pursue

collection of the estate tax liability with respect to nonprobate assets.

                                      Discussion

I.    Introduction

      Our task is to determine whether SO Harding erred in determining to sustain

the filing of the NFTL and the issuance of the levy notice. Although petitioner
                                           -9-

[*9] assigned numerous errors to that determination,3 in both his opening and

reply briefs, petitioner states only the following two issues to be decided:

"Whether the Commissioner abused his discretion by failing to file a lien against

the non-probate assets before the statute of limitations ran which foreclosed on the

possibility of collecting from non-probate assets, and determining that levying

probate assets of the estate was efficient." We will limit our consideration to those


      3
          Petitioner assigned the following errors.

              a. The Commissioner failed to take into account the significant
      doubt as to the ability to collect the liability given the size of the
      liability, the previous payments made, the decline in value of the
      assets and the non-probate assets which the Petitioner cannot seize or
      otherwise access.

            b. The Commissioner failed to take into account all the facts
      and circumstances surrounding the assessment against Petitioner, the
      proposed levy and the lack of viable collection alternatives.

            c. The Commissioner failed to utilize his equitable power to
      determine that holding the Petitioner liable for additional tax would
      be unfair and inequitable.

            d. The Revenue Officer assigned to this case, Dale Baustert
      engaged in ex-parte communications with [sic] substantially
      prejudiced the Petitioner and his attempts to reach a resolution of the
      outstanding tax liability.

             e. The Commissioner failed to remove Mr. Baustert from the
      case and reassign it as the Petitioner request [sic] on several occasions
      to an officer who was not prejudiced against Petitioner.
                                          - 10 -

[*10] issues in determining whether SO Harding erred in sustaining the filing of

the NFTL and the issuance of the levy notice. See, e.g., Bernstein v.

Commissioner, 22 T.C. 1146, 1152 (1954) (holding against the taxpayer with

respect to an issue because, among other things, the taxpayer did not press the

issue on brief), aff'd per curiam, 230 F.2d 603 (2d Cir. 1956); Lime Cola Co. v.

Commissioner, 22 T.C. 593, 606 (1954) ("Petitioners in their brief do not argue

anything about * * * [the issue]; and, although they do not expressly abandon the

issue * * * we presume they no longer press it.").

II.   Standard of Review

      Sections 6320 and 6330 provide a taxpayer the right to notice and the

opportunity for an Appeals hearing before the Commissioner can collect unpaid

taxes by means of a lien or levy against the taxpayer's property. Where the

validity of the taxpayer's underlying tax liability is not at issue (as it is not here),

the Court reviews Appeals' determination regarding collection actions under an

abuse of discretion standard of review. E.g., Sego v. Commissioner, 114 T.C. 604,

610 (2000). In reviewing for abuse of discretion, we must uphold Appeals'

determination unless it is arbitrary, capricious, or without sound basis in fact or

law. See Murphy v. Commissioner, 125 T.C. 301, 325 (2005), aff'd, 469 F.3d 27

(1st Cir. 2006). We do not substitute our judgment for that of the Appeals officer,
                                        - 11 -

[*11] and we do not decide independently whether we believe the levy should

proceed or the NFTL should be withdrawn. See id. at 320. Instead, we consider

whether, in the course of making its determination, Appeals (1) verified that the

requirements of applicable law and administrative procedure have been met, (2)

considered any relevant issue raised by the taxpayer that relates to the unpaid tax

or the proposed levy, including any collection alternative, and (3) determined

whether any proposed collection action balances the need for the efficient

collection of taxes with the legitimate concern of the person that any collection

action be no more intrusive than necessary. See sec. 6330(c)(1)-(3).

III.   Analysis

       A.    The Determination To Proceed With Collection

       Petitioner is responsible for payment of the estate tax due on account of the

transfer of decedent's taxable estate. See secs. 2001(a), 2002. That is so

notwithstanding that the gross estate may include property that was not owned by

decedent at the time of his death, that did not pass through probate, and, thus, that

was never in petitioner's possession (i.e., nonprobate assets). See sec. 20.2002-1,

Estate Tax Regs. Once petitioner became delinquent in paying the estate tax,

respondent both filed an NFTL with respect to the probate property under

petitioner's control and notified him of respondent's intent to levy to collect the
                                        - 12 -

[*12] unpaid tax. See secs. 6321, 6331(d)(1). Petitioner invoked his rights to a

CDP hearing, at which he was entitled to raise "any relevant issue relating to the

unpaid tax or the proposed levy". See sec. 6330(c)(2)(A). Petitioner requested

that respondent first pursue collection of the delinquent estate tax from the holders

of nonprobate assets included in the gross estate. SO Harding was

accommodating to that suggestion, and he included in the determination the

statement that the IRS would "pursue collection of * * * [the estate] taxes first

from the nonprobate assets".

      It is true that if the estate tax is not paid when due the Commissioner may

pursue collection from transferees and others who receive, or had on the date of

the decedent's death, nonprobate assets includible in the gross estate under

sections 2034 through 2042. See secs. 6324(a)(2), 6901(a)(1)(A)(ii), (h).

Moreover, a lien for estate tax attaches at the date of the decedent's death to every

part of the gross estate whether or not the property comes into the possession of an

executor or administrator. See sec. 6324(a)(1); sec. 301.6324-1(a)(1), Proced. &

Admin. Regs.

      A principal aspect of petitioner's complaint with respect to the

determination is that "[t]he Commissioner abused his discretion by failing to file a

lien against the non-probate assets". Apparently, petitioner is referring to the
                                         - 13 -

[*13] actions (or nonactions) of SO Baustert and, perhaps, other collection

personnel in failing to file the special (section 6324) estate tax lien before

petitioner defaulted on his payment obligation and respondent undertook

administrative collection actions. We say that because petitioner states: "Despite

having full authority under IRS Section 6324 * * * the revenue officer in the case

sat idly by for ten (10) years, and refused to attach the non-probate assets from the

estate."

      We first observe that petitioner misunderstands section 6324. Unlike the

general tax lien provided for in section 6321, which was the subject of the NFTL

and which attaches to all property belonging to a taxpayer after assessment,

demand, and nonpayment of the tax and which secures the payment of all types of

Federal taxes, including estate taxes, the special estate tax lien comes into being

without assessment or notice and demand automatically on the date of death, and it

attaches to all of the property the value of which is included in the gross estate

whether or not the property comes into the possession of the executor or

administrator. It continues for 10 years unless, before the end of the 10-year

period, the estate tax is paid in full or becomes unenforceable by expiration of the

period of limitations on collection. See sec. 6324(a)(1). Petitioner's claim that

respondent abused his discretion by failing to file a special estate tax lien against
                                       - 14 -

[*14] the nonprobate assets the value of which was included in decedent's gross

estate is without merit, since that lien came into existence upon decedent's death

without the necessity of respondent's doing anything.

      Putting aside petitioner's misunderstanding of the special estate tax lien, the

gravamen of his argument seems to be that the NFTL and the levy notice are not

efficient and the least intrusive means to collect the remaining estate tax because

respondent unreasonably delayed for 10 years proceeding against nonprobate

assets, and the unreasonableness of that delay is shown by SO Harding's belated

decision that respondent should so proceed. Petitioner explains:

             As part of the balancing analysis done by the IRS, the Notice of
      Determination noted that the non-probate assets should be attached
      first. From this determination, it can be undisputed that the IRS
      viewed the attachment of the non-probate assets as no more intrusive
      than necessary. The IRS had ten (10) years to attach the non-probate
      assets and for reasons known only to the Commissioner, his agents
      failed to take any action to secure an interest in the non-probate assets
      for the payment of the tax liability. * * * [S]uch inaction clearly
      worked to the detriment of the estate. Therefore, it is unreasonable
      that the Commissioner * * * would attach the probate assets. * * *
      The petitioner should not suffer due to the dilatory actions of the IRS
      which clearly constitute an abuse of discretion.

      Petitioner's argument reflects a basic misunderstanding of the scope of our

review under section 6330(d)(1). The statute does not give us license to conduct a

broad-ranging inquiry into the means by which respondent has sought to collect
                                        - 15 -

[*15] estate tax from petitioner over the many years since decedent's death. Our

focus is a narrow one: We ask only whether SO Harding abused his discretion in

sustaining the filing of the lien notice and the proposed levy action.

      Petitioner makes no argument that SO Harding failed to verify that issuance

of the lien notice and the proposed levy action met the requirements of any

applicable law or administrative procedure. Nor does petitioner identify any

arguments he made at the hearing that SO Harding failed to consider. In

particular, SO Harding considered, and honored, petitioner's request that

respondent take action to avoid the need to proceed against family farmlands to

secure payment of the estate tax due. SO Harding determined that respondent

should pursue collection of the tax first from nonprobate assets and from parcels

of real estate other than the family farmlands and proceed against the farmlands

only if the amounts obtained from those other sources proved inadequate to satisfy

the outstanding liability. Thus, petitioner can hardly complain that the collection

action SO Harding recommended failed to "balance[] the need for the efficient

collection of taxes with the legitimate concern of * * * [petitioner] that any

collection action be no more intrusive than necessary." Cf. sec. 6330(c)(3)(C).
                                         - 16 -

[*16] On the record before us, we find that SO Harding did not abuse his

discretion in determining to sustain the filing of the lien notice and, subject to the

specified sequence of collection actions, the proposed levy action.

      B.     Postdetermination Events

      We are left only to consider that, as the parties have stipulated, the section

6324 special estate tax lien encumbering the nonprobate assets included in the

gross estate expired on November 15, 2015, and respondent has not taken any

action to attach or otherwise pursue collection of the estate tax liability with

respect to nonprobate assets. Those are events occurring after Appeals issued the

determination on July 1, 2015. And while pursuant to our authority under section

6330(d) to review CDP determinations we may take into account changed

circumstances, see Churchill v. Commissioner, T.C. Memo. 2011-182, 2011 WL

3300235, at *6 ("[W]e do have authority to remand a CDP case for consideration

of changed circumstances when remand would be helpful, necessary, or

productive."), petitioner has not convinced us that a remand would be helpful,

necessary, or productive. Respondent explains that, pursuant to his collection

procedures, he froze collection actions three months before the special estate tax

lien lapsed when, on August 17, 2015, petitioner filed the petition. See Internal

Revenue Manual (IRM) pt. 5.1.9.3.5.1 (June 24, 2014) (stating that levy actions
                                        - 17 -

[*17] are suspended on filing of timely CDP notice). "In other words," argues

respondent, "[he] agreed to petitioner's request to pursue non-probate assets, but

petitioner's actions prevented the collection action from going forward."

      The regulations provide that the section 6324 special estate tax lien may be

enforced by administrative levy. Sec. 301.6331-1(a)(1), Proced. & Admin. Regs.

Notably, it may also be enforced by judicial foreclosure. See, e.g., United States v.

Davis, 52 F.3d 781 (8th Cir. 1995). In general, levy actions that are the subject of

a CDP hearing are suspended during the period of the hearing and any appeal. See

sec. 6330(e)(1). Nonlevy collection actions, such as initiating judicial proceedings

to collect the tax that gives rise to a CDP hearing, are permitted during that period.

See secs. 301.6320-1(g)(2), Q&A-G3, 301.6330-1(g)(2), Q&A-G3, Proced. &

Admin. Regs. We have no evidence of why respondent did not pursue judicial

proceedings to foreclose on the estate's nonprobate assets, but it may have been his

judgment that there was insufficient time given the apparent absoluteness of the

lien's 10-year duration. See sec. 6324(a)(1); Davis, 52 F.3d 781 (10-year period is

durational); United States v. Cleavenger, 517 F.2d 230 (7th Cir. 1975) (same).

IRM pt. 5.17.2.9.1(2) (Dec. 12, 2014) states that the IRS will follow Davis and

Cleavenger; "lien foreclosure must be completed before expiration of ten years."
                                        - 18 -

[*18] We see no grounds for remand in respondent's suspension of collection

action during the pendency of this action.

      Before we close, we point out that there may still be ways for respondent to

collect the estate tax liability from third parties. For example, the period of

limitations applicable to the personal liability imposed on transferees and others

by section 6324(a)(2) is not the 10-year period from the date of death provided in

section 6324(a)(1). It is the 10-year collection period provided in section 6502(a)

running from the date of assessment. See United States v. Bevan, No. 2:07-cv-

1944 MCE JFM PS, 2008 WL 5179099, at *6 (E.D. Cal. Dec. 10, 2008); United

States v. Degroft, 539 F. Supp. 42, 44 (D. Md. 1981). We do not know the date

the estate tax was assessed, but the parties have stipulated that the estate tax return

was filed February 15, 2007, a date that almost certainly was before the date the

estate tax was assessed. The 10-year period for imposing personal liability is

probably still open.

IV.   Conclusion

      We will sustain Appeals' determination sustaining the filing of the lien

notice and the proposed levy action.


                                        Decision will be entered for respondent.
