                              T.C. Memo. 2014-180



                         UNITED STATES TAX COURT



    JERRY WAYNE GREEN AND RAMONA KAYE GREEN, Petitioners v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 26494-12L.                         Filed September 2, 2014.



      Jerry Wayne Green and Ramona Kaye Green, pro sese.

      John R. Bampfield, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      COHEN, Judge: This proceeding was commenced in response to a Notice

of Determination Concerning Collection Action(s) Under Section 6320 and/or

6330 with respect to petitioners’ Federal income tax liabilities for 2008, 2009, and

2010. The issue for decision is whether the settlement officer abused his
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[*2] discretion in sustaining the lien filings. Unless otherwise indicated, all

section references are to the Internal Revenue Code in effect at all relevant times.

                                FINDINGS OF FACT

      Material facts are contained in the administrative record of the exchanges

between petitioners and the Internal Revenue Service (IRS) Office of Appeals

(Appeals Office). That record has been stipulated. The stipulated facts are

incorporated in this opinion by this reference. Petitioners resided in Arkansas at

the time they filed their petition.

      Jerry Wayne Green (petitioner) owed Federal income tax assessed for 2008,

and petitioners owed Federal income tax assessed for 2009 and 2010. The IRS

had placed these three tax years in currently not collectible status. Nevertheless,

on May 22, 2012, the IRS sent to petitioners two Letters 3172, Notice of Federal

Tax Lien Filing and Your Right to a Hearing Under IRC 6320, with respect to

these years. In response to the lien notices, petitioners filed Form 12153, Request

for a Collection Due Process or Equivalent Hearing (section 6320 hearing

request), dated June 2012. In their section 6320 hearing request, petitioners

indicated, among other things, that they could not pay the tax balance due, they

wanted an offer-in-compromise, and they wanted a subordination, discharge, or

withdrawal with respect to the liens. Petitioners explained that they “cannot
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[*3] borrow money or refinance mortgage to pay as lien is on property”, and asked

for the liens to be removed on their home as they “only have [Social Security]

income to live on and no job prospects”.

      The Appeals Office settlement officer assigned to petitioners’ case

determined that petitioners did not meet lien withdrawal criteria because they had

been warned of the lien filings through previous notices. The settlement officer

sent to petitioners a letter dated September 26, 2012, scheduling a telephone

conference for October 15, 2012. This conference would be the primary

opportunity of the section 6320 hearing for petitioners to explain why they

disagree with the collection action and to discuss possible collection alternatives.

One paragraph of the letter read:

      You have stated that you would like a lien subordination or discharge,
      to possibly take out a home equity loan or to refinance your mortgage.
      You may access Publications 783 and 784 on our website
      www.irs.gov, which explains how to apply for both. You have also
      stated that you would like the lien withdrawn. A lien may be filed at
      any time to secure the government’s interest against other creditors.
      You have also had past warnings of a lien being filed. The lien was
      appropriately filed.

Additionally, the letter requested that petitioners complete and return, within 14

days, the enclosed Form 433-A, Collection Information Statement for Wage
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[*4] Earners and Self-Employed Individuals, and Form 656, Offer in Compromise,

with all applicable fees and schedules.

       The telephone conference took place on October 15, 2012, between the

settlement officer and petitioner. When asked, petitioner stated that he had not

accessed IRS Publications 783, Certificate of Discharge From Federal Tax Lien,

and 784, Certificate of Subordination of Federal Tax Lien. Petitioners did not

provide Form 433-A, Form 656, or any other information with respect to the issues

they raised in their section 6320 hearing request. Petitioner stated that he had

negative monthly disposable income but equity in his home and that he would try

to borrow money from his family to have the liens withdrawn. The settlement

officer concluded the conference by advising petitioner of his determination to

sustain the filing of the liens.

       The settlement officer verified that the requirements of all applicable laws

and administrative procedures had been met. On October 18, 2012, the Appeals

Office sent to each petitioner a Notice of Determination Concerning Collection

Actions(s) Under Section 6320 and/or 6330 sustaining the lien filings.

       Petitioner’s 2008 tax year liability was discharged in bankruptcy, and the

Federal tax lien for that year has been released. The petition will be dismissed for

mootness insofar as it relates to 2008.
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[*5]                                 OPINION

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

property rights of a taxpayer who is liable for taxes after a demand for payment of

the taxes has been made and the taxpayer fails to pay. The lien arises when the

assessment is made. See sec. 6322. The IRS files a notice of Federal tax lien to

preserve priority and put other creditors on notice. See sec. 6323. Section 6320(a)

requires the Secretary to send written notice to the taxpayer of the filing of a

notice of lien and of the taxpayer’s right to an administrative hearing on the

matter.

       The section 6320 hearing generally shall be conducted consistent with

procedures set forth in section 6330(c), (d), (e), and (g). Sec. 6320(c). At the

hearing, a taxpayer may raise any relevant issue, including challenges to the

appropriateness of the collection action and possible collection alternatives. Sec.

6330(c)(2)(A). A taxpayer is expected to provide all relevant information

requested by the Appeals Office for its consideration of the facts and issues

involved in the hearing. See sec. 301.6320-1(e)(1), Proced. & Admin. Regs.

       Where there is no dispute as to the underlying liabilities, we review the

actions of the Appeals Office for abuse of discretion. See Swanson v.

Commissioner, 121 T.C. 111, 119 (2003). Abuse of discretion may be found if an
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[*6] action is arbitrary, capricious, or without sound basis in fact or law. Giamelli

v. Commissioner, 129 T.C. 107, 111 (2007); Woodral v. Commissioner, 112 T.C.

19, 23 (1999). We do not consider issues that were not properly raised in the

section 6320 hearing. See Giamelli v. Commissioner, 129 T.C. at 113.

       Petitioners have not disputed their underlying tax liability or that the

Appeals Office performed the necessary verification under section 6330(c)(1).

Instead, petitioners chiefly contend that they want to refinance or to sell their

house to pay their outstanding tax liabilities but cannot do so because of the

remaining Federal tax lien. Petitioners argue that the IRS’ refusal to withdraw the

notice of Federal tax lien or to subordinate the lien or to discharge the subject

property will result in a windfall for the Government, as penalties and interest will

accumulate against petitioners, who have no other way of currently paying their

tax liabilities.

        In drafting the notice of determination, the settlement officer did not

address petitioners’ core issue regarding the lien. However, the record indicates

that the settlement officer did consider lien relief measures and discussed steps for

petitioners to take to apply for such relief. Petitioners did not follow the

settlement officer’s advice, did not provide any requested information to the

settlement officer, and did not establish the appropriateness of a withdrawal of the
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[*7] notice of tax lien or a subordination of the lien or a discharge of the property

subject to the lien.

      When a Federal tax lien is in place, the IRS is permitted to withdraw the

notice of Federal tax lien under four situations, including where “the withdrawal

of such notice will facilitate the collection of the tax liability” or “the withdrawal

of such notice would be in the best interests of the taxpayer * * * and the United

States.” Sec. 6323(j). The IRS may also subordinate a tax lien on specific

property by issuing a certificate of subordination. Sec. 6325(d). Somewhat

similarly, the IRS may also issue a certificate of discharge of any part of a property

subject to a Federal tax lien and without full payment being required. Sec.

6325(b)(1)-(3).

      All three of these lien relief measures, as expressed in statutes and

regulations, are permissive, and the IRS is not generally required to withdraw,

subordinate, or discharge even if the conditions of a measure are fully met. See,

e.g., Taggart v. Commissioner, T.C. Memo. 2013-113, at *16-*17 (“Section

6323(j) uses discretionary, not mandatory, language, and respondent is not

required to withdraw the lien even for one of the reasons stated in section

6323(j).”); sec. 301.6325-1(b)(1), Proced. & Admin. Regs. (providing that an

appropriate official may, in her or his discretion, issue a certificate of discharge of
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[*8] any part of a subject property under certain circumstances); sec.

301.6325-1(d)(1), Proced. & Admin. Regs. (providing that an appropriate official

may, in her or his discretion, issue a certificate of subordination of a lien under

certain circumstances). Accordingly, we cannot conclude that the settlement

officer abused his discretion with regard to these permissive lien relief measures,

especially in the light of petitioners’ failure to take the necessary steps to apply for

such measures and to provide relevant information during the section 6320

hearing.

         In reaching our decision, we have considered all arguments made, and, to

the extent not mentioned, we conclude that they are moot, irrelevant, or without

merit.

         To reflect the foregoing,


                                                   The petition will be dismissed as

                                            moot as to 2008, and decision will be

                                            entered for respondent with respect to

                                            petitioners’ 2009 and 2010 tax years.
