                               T.C. Memo. 2020-12



                         UNITED STATES TAX COURT



                   MOISES A. AVILES, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 17039-18L.                        Filed January 15, 2020.



      Moises A. Aviles, pro se.

      Sheri A. Wight, Hans Famularo, and Kim-Khanh Nguyen, for respondent.



                           MEMORANDUM OPINION


      LAUBER, Judge: In this collection due process (CDP) case, petitioner

seeks review pursuant to sections 6320(c) and 6330(d)(1)1 of a determination by



      1
       All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all monetary amounts to the nearest dollar.
                                         -2-

[*2] the Internal Revenue Service (IRS or respondent) to uphold collection

actions. The questions for decision are (1) whether petitioner may challenge his

underlying tax liabilities in this Court and (2) whether the settlement officer

abused her discretion in denying petitioner’s request for currently not collectible

(CNC) status or (in the alternative) an installment agreement (IA). Respondent

has moved for summary judgment under Rule 121, contending that there are no

disputed issues of material fact and that his determinations to sustain the proposed

collection actions were proper as a matter of law. We agree and accordingly will

grant the motion.

                                     Background

      The following facts are based on the parties’ pleadings and motion papers,

including the attached affidavits and exhibits. Petitioner resided in California

when he timely filed his petition.

      Petitioner is a self-employed attorney. For 2012-2016 he filed Federal in-

come tax returns, reporting a tax due for each year. For each year he failed to pay,

through estimated tax payments or otherwise, the tax shown as due on his return.

For each year the IRS assessed the tax shown as due.

      In an effort to collect petitioner’s unpaid liabilities the IRS proceeded with

two collection actions. On December 12, 2017, it sent him a Notice of Federal
                                         -3-

[*3] Tax Lien Filing and Your Right to a Hearing (lien notice) for tax years 2012-

2015. On January 9, 2018, it sent him a notice of intent to levy (levy notice)

covering tax years 2012-2016. As of the latter date the IRS had assessed interest

on the deficiencies and additions to tax under section 6651(a)(2), so that

petitioner’s outstanding tax liability for the five years totaled $71,519.

      In response to these notices petitioner timely submitted separate Forms

12153, Request for a Collection Due Process or Equivalent Hearing. On both

forms he stated that he could not pay the balance due and asked that the IRS pro-

vide him with “an accounting” of his payments for each year. On neither form did

he indicate an intention to challenge his underlying tax liability for any period.

      Petitioner’s hearing request with respect to the lien notice was assigned to a

settlement officer (SO1) in the IRS Appeals Office in Memphis, Tennessee, and

his hearing request with respect to the levy notice was assigned to a settlement

officer (SO2) in a different IRS office. The SOs conferred, and SO2 agreed to

transfer the levy case to SO1. Before doing so, SO2 verified that petitioner’s tax

liabilities for 2012-2016 had been properly assessed and that all other legal and

administrative requirements had been satisfied.

      Upon receiving the entire case, SO1 reconfirmed that the assessments were

proper and that all legal and administrative requirements had been met. On April
                                         -4-

[*4] 12, 2018, SO1 scheduled a telephone conference for May 17, 2018, to address

both notices. SO1 advised petitioner that, in order for her to consider a collection

alternative, he would need to provide: (1) a copy of his Federal income tax return

for 2017; (2) verification of estimated tax payments for 2018; and (3) a completed

Form 433-A, Collection Information Statement for Wage Earners and Self-Em-

ployed Individuals, with supporting financial information.

      On May 8, 2018, petitioner sent SO1 a letter stating that he had not yet filed

his 2017 return but attaching copies of invoices for business expenses he had in-

curred during 2017 and 2018. He supplied no evidence that he had received an

extension of time to file his 2017 return. He did not enclose a completed Form

433-A and did not substantiate payment of any estimated tax for 2018.

      On May 17, 2018, SO1 called petitioner for the scheduled hearing, but he

was not available. SO1 left him a voice message, to which he did not respond. On

May 22, 2018, SO1 sent him a “last chance” letter noting that he had missed the

scheduled conference and instructing him to send her, within 14 days, any infor-

mation that he wished her to consider.

      On May 31, 2018, SO1 received from petitioner a partially completed Form

433-A, which left empty the portion of the form regarding his monthly income and

expenses. On June 14, 2018, SO1 called petitioner and instructed him to submit a
                                         -5-

[*5] fully completed Form 433-A by June 18, 2018, which he did. Taking

petitioner’s self-reported income and expenses at face value, SO1 determined that

he could pay at least $383 per month toward his tax liabilities and was thus

ineligible for CNC status. Petitioner did not make a specific IA proposal during

the CDP hearing, and SO1 noted that he would be ineligible for such relief in any

event because IRS records showed that had made no estimated tax payments for

2018.

        On July 30, 2018, SO1 issued to petitioner notices of determination sustain-

ing the two proposed collection actions. Petitioner timely petitioned this Court for

review, asserting that “an accounting should be done” as to what he owed and that,

after this accounting, he “would owe a lesser amount.” He also contended that

SO1 erred in denying him CNC status or (in the alternative) an IA.

        On October 11, 2019, respondent filed a motion for summary judgment con-

tending that the proper standard of review is abuse of discretion and that SO1 did

not abuse her discretion in any respect. Petitioner opposed that motion, contend-

ing that de novo review is required. He addressed only the applicable standard of

review and alleged no facts showing a genuine dispute for trial.
                                        -6-

[*6]                                 Discussion

A.     Summary Judgment Standard

       The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681 (1988). Under Rule 121(b) we may grant summary judgment when

there is no genuine dispute as to any material fact and a decision may be rendered

as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judg-

ment, we construe factual materials and inferences drawn from them in the light

most favorable to the nonmoving party. Ibid. However, the nonmoving party may

not rest upon the mere allegations or denials in his pleadings but instead must set

forth specific facts showing that there is a genuine dispute for trial. Rule 121(d);

see Sundstrand Corp., 98 T.C. at 520. Petitioner has not identified any material

fact in dispute, and we find that this case is appropriate for summary adjudication.

B.     Standard of Review

       Neither section 6320(c) nor section 6330(d)(1) prescribes the standard of

review that we should apply in reviewing an IRS administrative determination in a

CDP case. The general parameters for such review are marked out by our prece-

dents. Where the validity or amount of the taxpayer’s underlying liability is at
                                         -7-

[*7] issue, we review the Commissioner’s determination de novo. Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000). Where the taxpayer’s underlying

liability is not properly before us, we review the IRS action for abuse of discretion.

Id. at 182. Abuse of discretion exists when a determination is arbitrary,

capricious, or without sound basis in fact or law. See Murphy v. Commissioner,

125 T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006).

C.    Underlying Tax Liabilities

      A taxpayer may challenge the existence or amount of his underlying liability

in a CDP proceeding only “if the person did not receive any statutory notice of de-

ficiency for such tax liability or did not otherwise have an opportunity to dispute

* * * [it].” Sec. 6330(c)(2)(B). Petitioner was entitled at the CDP hearing to dis-

pute the tax liabilities as reported on his 2012-2016 returns, because he did not

have a prior opportunity to dispute them. See ibid.; Montgomery v. Commission-

er, 122 T.C. 1, 8-9 (2004) (noting that a taxpayer may dispute his underlying liabi-

lity where he had reported the liability on his return).

      However, a taxpayer must properly present an underlying liability challenge

at the CDP hearing in order to preserve that challenge for judicial review. See

Thompson v. Commissioner, 140 T.C. 173, 178 (2013) (“A taxpayer is precluded

from disputing the underlying liability if it was not properly raised in the CDP
                                          -8-

[*8] hearing.”); Giamelli v. Commissioner, 129 T.C. 107, 113-114 (2007) (same);

sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs. “‘An issue is not

properly raised if the taxpayer fails * * * to present * * * any evidence with

respect to that issue after being given a reasonable opportunity to’ do so.”

Moriarty v. Commissioner, T.C. Memo. 2017-204, 114 T.C.M. (CCH) 441, 443

(quoting section 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.), aff’d per

order, 2018 WL 4924349 (6th Cir. Sept. 19, 2018); see Obeirne v. Commissioner,

T.C. Memo. 2018-210, at *9.

      Petitioner did not raise at the CDP hearing a proper challenge to his under-

lying tax liabilities for 2012-2016. He submitted no amended returns showing

what he believed his correct tax liabilities to be. Nor did he submit any other evi-

dence relevant to those liabilities; the invoices attached to his May 8, 2018, letter

related to expenses he incurred in 2017 and 2018. His vague request that the IRS

provide him “an accounting” of his tax payments was insufficient to raise a cog-

nizable underlying liability challenge.

      Petitioner does not contend that he properly challenged his underlying lia-

bilities during the CDP hearing. Rather, he asks that we revisit our holding in Gia-

melli, 129 T.C. at 113-114, to the effect that an Appeals Office challenge is re-

quired in order to preserve this issue for judicial review. We are not inclined to do
                                        -9-

[*9] so. We have repeatedly relied on Giamelli for the proposition that a taxpayer

must dispute his underlying liability in the CDP hearing to preserve that argument

for this Court’s review. See, e.g., Carpenter v. Commissioner, 152 T.C. 202, 220

(2019), aff’d, __ F. App’x. __ (4th Cir. Dec. 19, 2019); Klein v. Commissioner,

149 T.C. 341, 349 (2017); LG Kendrick, LLC v. Commissioner, 146 T.C. 17, 34

(2016), aff’d, 684 F. App’x 744 (10th Cir. 2017); Kraft v. Commissioner, 142 T.C.

259, 265 (2014); Thompson, 140 T.C. at 178.

      Petitioner notes that, in an Opinion issued before Giamelli, we stated that

the Appeals Office generally would not abuse its discretion “in failing to consider

arguments, issues, or other matter not raised by taxpayers or not otherwise brought

to the attention of respondent’s Appeals Office.” Magana v. Commissioner, 118

T.C. 488, 493 (2002). This statement concerned abuse-of-discretion review of

collection alternatives; it did not address the conditions attending de novo review

of underlying tax liabilities. See id. at 492-493. In any event the taxpayer in Gia-

melli advanced the same argument petitioner makes here, and we rejected it. See

Giamelli, 129 T.C. at 115 (citing Magana, 118 T.C. at 493). We decline to revisit

our holding in Giamelli and accordingly hold that SO1’s actions are reviewable for

abuse of discretion only. See Goza, 114 T.C. at 182.
                                        - 10 -

[*10] D.     Abuse of Discretion

      In reviewing an SO’s determinations we consider whether she: (1) properly

verified that the requirements of applicable law or administrative procedure have

been met, (2) considered any relevant issues petitioner raised, and (3) considered

“whether any proposed collection action balances the need for the efficient collec-

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

action be no more intrusive than necessary.” See sec. 6330(c)(3). Our review of

the record establishes that the SOs properly discharged all of their responsibilities

under section 6330(c).

      In his hearing request petitioner sought CNC status and (in the alternative)

an IA. To be entitled to have his account placed into CNC status, the taxpayer

must demonstrate that, on the basis of his assets, equity, income, and expenses, he

has no apparent ability to make payments on the outstanding tax liability. See

Foley v. Commissioner, T.C. Memo. 2007-242, 94 T.C.M. (CCH) 210, 212; Inter-

nal Revenue Manual (IRM) pt. 5.16.1.1 (Aug. 25, 2014). A taxpayer’s ability to

make payments is determined by calculating the excess of income over necessary

living expenses. Rosendale v. Commissioner, T.C. Memo. 2018-99, at *9; IRM

pt. 5.16.1.2 (Jan. 1, 2016). Petitioner’s Form 433-A showed that his monthly

income exceeded his monthly expenses by $383. If we assume arguendo that he
                                        - 11 -

[*11] could have verified all of his reported expenses, he would still fail to qualify

for CNC status, and SO1 did not err in so concluding.

      Nor did SO1 abuse her discretion in declining to consider an IA. Petitioner

made no concrete IA proposal during the CDP hearing, and SO1 was not obligated

to propose one for him. See Gentile v. Commissioner, T.C. Memo. 2013-175, 106

T.C.M. (CCH) 75, 77, aff’d, 592 F. App’x 824 (11th Cir. 2014); Veneziano v.

Commissioner, T.C. Memo. 2011-160, 102 T.C.M. (CCH) 22, 24.2

      In any event, petitioner supplied no evidence that he had filed a return for

2017, that he had received an extension to file that return, or that he had made

estimated tax payments for 2018. SO1 could properly have declined to consider

an IA for those reasons alone. See Giamelli, 129 T.C. at 111-112; Starkman v.

Commissioner, T.C. Memo. 2012-236; IRM pt. 5.14.1.4.2(18) (Sept. 19, 2014)

(“Compliance with filing * * * [and] paying estimated taxes * * * must be current

from the date the installment agreement begins.”). The requirement of current

compliance as a condition of executing an IA “ensures that current taxes are paid


      2
       The record indicates that petitioner previously had an IA, which was sus-
pended in December 2015 because of his default, and that he had called the IRS in
March 2017 with a request that it be reinstated. He mentioned during the CDP
hearing that he had received no response to his request. But he made no specific
IA proposal to SO1, and she could not have abused her discretion in failing to
consider such relief. See Kendricks v. Commissioner, 124 T.C. 69, 79 (2005).
                                        - 12 -

[*12] and avoids ‘the risk of pyramiding tax liability.’” Hull v. Commissioner,

T.C. Memo. 2015-86, 109 T.C.M. (CCH) 1438, 1441 (quoting Schwartz v.

Commissioner, T.C. Memo. 2007-155, slip op. at 8). Finding no abuse of

discretion in any respect, we will grant summary judgment for respondent and

sustain the proposed collection actions.3

      To reflect the foregoing,


                                                 An appropriate order and decision

                                       will be entered for respondent.




      3
       In his response to the summary judgment motion petitioner implies that his
financial circumstances may have changed since the notices of determination were
issued. If so, he is free to submit to the IRS at any time, for its consideration and
possible acceptance, a proposed collection alternative supported by the required
financial information.
