                       T.C. Memo. 2007-264



                     UNITED STATES TAX COURT



                NICHOLAS D. NEWTON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16911-05L.               Filed September 4, 2007.



     Nicholas D. Newton, pro se.

     William J. Gregg, for respondent.



                       MEMORANDUM OPINION


     CARLUZZO, Special Trial Judge:   In a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330,1

dated August 15, 2005, respondent concluded that it was



     1
       Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code of 1986, as amended, in effect
for the relevant period.
                                 - 2 -

appropriate to collect by levy petitioner’s outstanding 1981,

1983, and 1996 Federal income tax liabilities (petitioner’s

outstanding tax liabilities).    Neither the existence nor the

amounts of those liabilities have been placed in dispute.2    What

has been placed in dispute is respondent’s rejection of an offer-

in-compromise submitted by petitioner as a collection alternative

to respondent’s proposed levy.    According to petitioner, his

offer-in-compromise should have been accepted, and respondent’s

determination to collect by levy the outstanding tax liabilities

is an abuse of discretion.   Respondent disagrees, and, for the

following reasons, so do we.

                             Background

     Some of the facts have been stipulated and are so found.     At

the time the petition was filed, petitioner resided in Vermont.

     Because the existence or the amounts of petitioner’s

outstanding tax liabilities are not in dispute, we see little

point in burdening this opinion with the history of how those

liabilities arose.   Suffice it to say that as of July 2004, when

the relevant offer-in-compromise (the 2004 offer) was submitted

to respondent, those liabilities, including interest, penalties

and additions to tax, exceeded $600,000.




     2
       Consequently, we review respondent’s proposed collection
activity for abuse of discretion. Sego v. Commissioner, 114 T.C.
604, 610 (2000).
                                - 3 -

     From time to time, over the years, petitioner submitted

several other offers-in-compromise with respect to his

outstanding tax liabilities.    On January 8, 1997, a Notice of

Federal Tax Lien was filed with respect to petitioner’s

outstanding 1981 Federal income tax liability, which at the time,

exceeded $260,000.   On September 4, 1997, respondent accepted

petitioner’s $66,000 offer-in-compromise with respect to

petitioner’s 1981 income tax liability, but within months

petitioner defaulted on the payment plan that formed the basis

for that offer.   Before making the 2004 offer, petitioner made

several other offers-in-compromise (the prior offers), each in an

amount substantially more than the 2004 offer.    Respondent

rejected all of the prior offers upon the ground that the offers

did not adequately reflect petitioner’s ability to pay.

     By letter dated May 25, 2004, respondent advised petitioner

that his outstanding tax liabilities were subject to collection

by levy.   That letter also advised petitioner of his right to

request an administrative hearing in order to dispute the

proposed collection activity.    Petitioner did so in a timely

fashion, and on July 8, 2004, during the course of the

administrative hearing, petitioner submitted the 2004 offer as a

collection alternative to the proposed levy with respect to his

outstanding tax liabilities.    In the 2004 offer, petitioner

proposed to pay $1,000.
                                - 4 -

     In response to the 2004 offer, respondent’s settlement

officer considered petitioner’s financial situation, determined

that the 2004 offer of $1,000 did not reflect petitioner’s

ability to pay his outstanding tax liabilities, rejected that

offer-in-compromise, and caused the above-referenced notice of

determination to be issued.

                              Discussion

     At the administrative hearing, petitioner challenged the

appropriateness of respondent’s proposed collection activity and

offered a collection alternative.     See sec. 6330(c)(2)(A)(ii) and

(iii).   Needless to say, respondent is entitled to levy in order

to collect a taxpayer’s tax liability.     See sec. 6331.3

Furthermore, as he was required to do, the settlement officer

considered the collection alternative proposed by petitioner

during the administrative hearing.4     See sec. 6330(c)(3)(B).

     The record establishes that the settlement officer proceeded

in the manner contemplated by section 6330, and other than as


     3
       In general and subject to various conditions that need not
be discussed here, that section provides that if any person
liable to pay any tax neglects or refuses to pay such tax within
10 days after notice and demand for payment, the Commissioner is
authorized to collect such tax by levy on the person’s property.
     4
       The settlement officer invited petitioner to make an
offer-in-compromise commensurate with the amount that the
settlement officer determined petitioner’s financial situation
would allow. Petitioner now attacks the settlement officer’s
proposal. We focus on the settlement officer’s consideration and
rejection of the 2004 offer, not on the appropriateness of the
settlement officer’s proposal.
                               - 5 -

relates to the settlement officer’s rejection of petitioner’s

2004 offer, petitioner does not suggest otherwise.

     Nevertheless, as petitioner views that matter, respondent’s

determination to collect his outstanding tax liabilities by levy

is an abuse of discretion because the settlement officer

improperly rejected petitioner’s proposed collection alternative.

Specifically, petitioner argues that in rejecting the 2004 offer,

the settlement officer:   (1) Erroneously took into account as

potential sources of payment, certain assets previously

transferred to petitioner’s former spouse;5 and (2) failed to

take into account the vagaries of petitioner’s income.

     Assuming, without finding, that petitioner is correct on

both points, it remains that other sources of payment included in

the settlement officer’s analysis support the settlement

officer’s conclusion that the 2004 offer did not reflect




     5
       The parties dispute whether those assets are subject to
the Federal tax lien that arose prior to the transfer. See sec.
6321. Petitioner takes the position that the lien does not
attach, and, not surprisingly, respondent takes the position that
it does. Petitioner expected that this Court in this proceeding
would determine whether the lien did or did not attach to those
assets. Under the circumstances, we need not consider the point.
Furthermore, we note that issues regarding whether respondent’s
tax lien has attached to those assets may be cognizable in a
variety of other types of legal actions. See, e.g., secs. 7403,
7425, 7426; see also 28 U.S.C. sec. 2410 (2000).
                                 - 6 -

petitioner’s ability to pay his outstanding tax liabilities.6

After all, it doesn’t take much of a financial structure to

support a payment in excess of $1,000.

     Taking into account all of the facts and circumstances, we

are satisfied that respondent’s determination to collect by levy

petitioner’s outstanding tax liabilities is supported in law and

in fact.   It follows that the determination is not an abuse of

discretion, see Freije v. Commissioner, 125 T.C. 14 (2005), and

respondent may proceed with collection as proposed in the above-

referenced notice of determination.

     To reflect the foregoing,


                                         Decision will be entered

                                  for respondent.




     6
       For   example, the parties stipulated that at the time the
2004 offer   was under consideration by the settlement officer,
petitioner   “had a savings certificate of deposit with an account
balance of   $28,000”.
