                        T.C. Memo. 2007-304



                      UNITED STATES TAX COURT



    ALFRED A. DIFFEE, JR. AND NORMA J. DIFFEE, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16567-06.              Filed October 9, 2007.



     Paul R. Tom, for petitioners.

     G. Chad Barton, for respondent.



                        MEMORANDUM OPINION


     MARVEL, Judge:   This matter is before the Court on

respondent’s motion for summary judgment, filed under Rule 121.1




     1
      All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code in effect for the years at issue. Some monetary
amounts are rounded to the nearest dollar.
                               - 2 -

                            Background

     This is an appeal from respondent’s determination upholding

the proposed use of a levy to collect petitioners’ unpaid Federal

income tax liabilities for 2001 and 2002.   Petitioners resided in

Oakhurst, Oklahoma, when the petition was filed.

     On July 2, 2005, respondent sent petitioners a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing for the

years at issue.   Petitioners timely submitted a Form 12153,

Request for a Collection Due Process Hearing.   In their request,

petitioners asserted that a levy would be “devastating” and

requested payment of their tax liabilities through an installment

agreement.

     On September 13, 2005, respondent sent petitioners a letter

acknowledging petitioners’ request for a section 6330 hearing.

On May 1, 2006, Settlement Officer Greg Clark (Officer Clark)

sent petitioners a letter scheduling a telephone conference on

May 23, 2006, to discuss collection alternatives.   In addition,

Officer Clark requested that petitioners produce a Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals (Form 433-A); Form 1040, U.S. Individual

Income Tax Return, for 2004 and 2005 (returns); proof of

estimated payments for 2005 and 2006; and copies of bank

statements for all accounts in petitioners’ name or held for

their benefit for the most current 3 months (bank statements).
                                - 3 -

     Petitioners submitted information requested by Officer

Clark.2   On their Form 433-A, petitioners reported the following

total income and total living expenses:

        Total income                   Total living expenses
   Source       Gross              Expense items        Actual
monthly                        monthly
Wages             $2,700.00    Food, clothing, misc.          $904
Net rental            250.00   Housing and utilities         1,004
Pension/Social                 Transportation                  814
  Security         2,152.83
    Total          5,102.83    Health care                     700
                               Taxes (income and FICA)       1,100
                                 Total                       4,522

     Officer Clark made several adjustments to petitioners’ total

income and total living expenses reported on their Form 433-A.

First, Officer Clark increased petitioners’ wage income to

$3,4323 using Norma J. Diffee’s (Mrs. Diffee) pay statement for

the period ending April 22, 2006.     Second, he decreased

petitioners’ housing and utilities to $932, the maximum allowed

under the national standards.    Third, Officer Clark reduced

petitioners’ transportation expense to $500, which reflected

their monthly motorcycle payment and operating expenses for the




     2
      We cannot determine from the record whether petitioners
provided proof of estimated payments for 2005 and 2006.
     3
      Officer Clark determined this amount by dividing Mrs.
Diffee’s total earnings for the first 16 weeks of 2006 by 16
weeks and then multiplying that number by 52 weeks. The total
was divided by 12 months to yield petitioners’ monthly wage
income. We calculated that the monthly wage income is $3,433
after rounding.
                               - 4 -

two vehicles petitioners disclosed on their Form 433-A.4    Fourth,

Officer Clark decreased petitioners’ tax expense to $871.    He

estimated petitioners’ Federal and State income taxes and their

tax under the Federal Insurance Contributions Act (FICA).

Officer Clark determined petitioners’ estimated Federal and State

income tax by multiplying by 63 percent the amount of income tax

reported on petitioners’ Federal income tax return and State

income tax return for 2005.   Officer Clark computed petitioners’

FICA tax from Mrs. Diffee’s earnings statement for the first 16

weeks of 2006.   Finally, Officer Clark reduced petitioners’

health care expense to $250 because petitioners did not provide

documentation or explanation of the $700 claimed on the Form 433-

A.   Officer Clark also considered that petitioners did not list

any medical expenses as an itemized deduction on their last filed

Federal income tax return.

     After all adjustments, Officer Clark determined that

petitioners had the ability to pay $2,377 per month5 under an

installment agreement.   The following table shows the amounts

Office Clark used in making his determination:




     4
      Petitioners disclosed that they owned a 2006 Honda Goldwing
motorcycle and a 1996 Ford Ranger.
     5
      Officer Clark determined this amount by reducing
petitioners’ total income by their total living expenses.
                                   - 5 -

         Total income                      Total living expenses
    Source   Gross monthly          Expense items       Actual monthly

Wages            $3,432        Food, clothing, misc.         $904
Net rental          250        Housing and utilities          932
Pension/Social
                 1
  Security           2,152     Transportation                  500
    Total            5,834     Health care                     250
                                                              1
                               Taxes (income and FICA)          871
                                 Total                      3,457
     1
      It appears that in making his calculations, Officer Clark
rounded petitioners’ pension/Social Security amount down and that
he rounded petitioners’ tax expense amount up. Both roundings
favor petitioners.

     On June 20, 2006, Officer Clark and petitioners’

representative held a telephone conference and discussed the

income and expenses listed on petitioners’ Form 433-A.         During

the conference, Officer Clark agreed to increase petitioners’

expenses by $500 per month for additional employment expenses.6

Officer Clark offered petitioners an installment agreement with

monthly payments of $1,877.

     On June 22, 2006, Officer Clark sent petitioners’

representative a Form 12257, Summary Notice of Determination,

Waiver of Right to Judicial Review of a Collection Due Process

Determination, and Waiver of Suspension of Levy Action, and a

Form 433-D, Installment Agreement.         On July 6, 2006, Officer

Clark telephoned petitioners’ representative to follow up on the

installment agreement.       Petitioners’ representative informed

Officer Clark that petitioners could not make the proposed

     6
      The increase in employment expenses was for Mrs. Diffee’s
meals on the road.
                                - 6 -

monthly payment under the installment agreement, and that they

requested that Officer Clark issue a notice of determination.    On

July 18, 2006, respondent issued petitioners a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330.

     On August 24, 2006, the petition was timely filed.

Petitioners allege that respondent ignored the reality of their

income, health status, and expenses, and therefore, respondent

abused his discretion.   Petitioners request the Court to set

aside respondent’s determination and consider other collection

alternatives.

     On May 10, 2007, we issued petitioners a notice setting

their case for trial during the Court’s October 15, 2007,

Oklahoma City, Oklahoma, trial session.    On July 24, 2007,

respondent filed a motion for summary judgment.    On July 30,

2007, we ordered petitioners to respond to respondent’s motion

for summary judgment by August 13, 2007.    Petitioners failed to

respond.

                             Discussion

I.   Summary Judgment

     Summary judgment is a procedure designed to expedite

litigation and avoid unnecessary, time-consuming, and expensive

trials.    Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681

(1988).    Summary judgment may be granted with respect to all or
                                - 7 -

any part of the legal issues presented “if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law.”     Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   The moving party bears the burden of establishing

that there is no genuine issue of material fact, and factual

inferences will be drawn in a manner most favorable to the party

opposing summary judgment.    Dahlstrom v. Commissioner, 85 T.C.

812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344

(1982).   The nonmoving party, however, cannot rest upon the

allegations or denials in his pleadings but must “set forth

specific facts showing that there is a genuine issue for trial.”

Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821.

II.   Section 6330

      Section 6330(a) provides that no levy may be made on any

property or right to property of any person unless the Secretary

has notified such person in writing of the right to a hearing

before the levy is made.    If the person makes a request for a

hearing, a hearing shall be held before an impartial officer or

employee of the Internal Revenue Service Office of Appeals

(Appeals Office).    Sec. 6330(b)(1), (3).   At the hearing, a
                                - 8 -

taxpayer may raise any relevant issue, including appropriate

spousal defenses, challenges to the appropriateness of the

collection action, and collection alternatives.   Sec.

6330(c)(2)(A).   A taxpayer may contest the existence or amount of

the underlying tax liability at the hearing if the taxpayer did

not receive a notice of deficiency for the tax liability in

question or did not otherwise have an earlier opportunity to

dispute the tax liability.   Sec. 6330(c)(2)(B); see also Sego v.

Commissioner, 114 T.C. 604, 609 (2000).

     Following a hearing, the Appeals Office must make a

determination whether the proposed levy action may proceed.    The

Appeals Office is required to take into consideration:   (1)

Verification presented by the Secretary that the requirements of

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

relevant issues raised by the taxpayer, and (3) whether the

proposed levy action appropriately balances the need for

efficient collection of taxes with a taxpayer’s concerns

regarding the intrusiveness of the proposed levy action.   Sec.

6330(c)(3).

     Section 6330(d)(1) grants this Court jurisdiction to review

the determination made by the Appeals Office in connection with

the section 6330 hearing.    Where the underlying tax liability is

not in dispute, the Court will review the determination of the

Appeals Office for abuse of discretion.    Lunsford v.
                                 - 9 -

Commissioner, 117 T.C. 183, 185 (2001); Sego v. Commissioner,

supra at 610; Goza v. Commissioner, 114 T.C. 176, 182 (2000).       An

abuse of discretion occurs if the Appeals Office exercises its

discretion “arbitrarily, capriciously, or without sound basis in

fact or law.”   Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

     Petitioners do not dispute their underlying tax liabilities

for any of the relevant years.    Accordingly, we shall review

respondent’s determination for abuse of discretion in deciding

whether to grant respondent’s summary judgment motion.

     In their petition, petitioners allege that respondent abused

his discretion by failing to consider the reality of petitioners’

income, health status, and expenses when determining petitioners’

ability to pay under an installment agreement.      Respondent argues

that he did not abuse his discretion by sustaining the proposed

levy.

     On the record presented in support of respondent’s summary

judgment motion, we conclude that there is no material fact in

dispute regarding the exercise of respondent’s discretion.

Petitioners did not file any response to respondent’s summary

judgment motion.   Because they did      not respond, we are left with

the task of reviewing the motion record without the benefit of

petitioners’ guidance.

     The record shows that Officer Clark did not abuse his

discretion by making adjustments to petitioners’ Form 433-A.
                                - 10 -

First, Officer Clark calculated Mrs. Diffee’s monthly wage income

by using the earnings statement provided by petitioners.       Her

earnings statement reported that she earned $12,673.92 for the

first 16 weeks of 2006.    Officer Clark used this number to

calculate petitioners’ monthly wage income.

     Second, Officer Clark adjusted petitioners’ housing and

utilities expense in accordance with the Internal Revenue

Service’s (Service) national standards.    Under the national

standards, the maximum monthly housing and utilities allowance

for a family of two in Tulsa County, where petitioners reside, is

$932.    Neither of these adjustments reflects an abuse of Officer

Clark’s discretion.    See McDonough v. Commissioner, T.C. Memo.

2006-234 (no abuse of discretion by Appeals officer for using the

housing and utilities standard allowances rather than taxpayer’s

actual expense).

     Third, Officer Clark did not abuse his discretion by

decreasing petitioners’ transportation expense.    Officer Clark

considered petitioners’ monthly operating expenses for two

vehicles and petitioners’ monthly motorcycle payment.7

        Fourth, Officer Clark did not abuse his discretion by

redetermining petitioners’ estimated tax expense.     In his

calculation, Officer Clark included Federal and State income



     7
      Petitioners did not have an outstanding loan on the Ford
Ranger.
                               - 11 -

taxes and the FICA tax.   Officer Clark computed petitioners’ FICA

tax from Mrs. Diffee’s earnings statement for the first 16 weeks

of 2006.

     Finally, Officer Clark decreased petitioners’ health care

expense.   His decision was based on several factors.   First,

petitioners did not provide Officer Clark with any documentation

or explanation regarding the $700 health care expense claimed on

the Form 433-A.    Second, petitioners did not claim any itemized

deductions for medical expenses on their Federal income tax

return for 2005.   Because petitioners failed to present any

evidence of Mr. Diffee’s medical condition during the section

6330 hearing, Officer Clark did not abuse his discretion by

reducing petitioners’ health care expense.

     The record discloses that Officer Clark adjusted his

calculations based on information he received from petitioners.

During a conference with petitioners’ representative, Officer

Clark agreed to increase petitioners’ expense by $500 per month

for Mrs. Diffee’s meals on the road.    This allowance reduced

petitioners’ monthly payment under the installment agreement to

$1,877.8   However, petitioners refused Officer Clark’s proposed

changes to their installment agreement and requested that he

issue the determination letter.



     8
      Officer Clark originally proposed a monthly payment of
$2,377.
                               - 12 -

     The uncontested record before us indicates that Officer

Clark’s adjustments were not arbitrary, capricious, or without

sound basis in law or fact.   See Woodral v. Commissioner, supra

at 23.    Officer Clark made reasonable adjustments by evaluating

petitioners’ disclosures on and attachments to their Form 433-A,

petitioners’ last filed Federal and State income tax returns, and

the Service’s national standards.   Accordingly, respondent did

not abuse his discretion in rejecting petitioners’ proposed

installment agreement and sustaining the proposed collection

action.

     We conclude that there is no genuine issue of material fact

requiring a trial in this case, and we hold that respondent is

entitled to the entry of a decision sustaining the proposed levy

as a matter of law.


                                          An appropriate order and

                                     decision will be entered.
