                          T.C. Memo. 2004-50



                     UNITED STATES TAX COURT



                 ALBERT G. COOPER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8163-02L.              Filed March 5, 2004.


     Joseph P. Nigro, for petitioner.

     Edward J. Laubach, Jr., for respondent.



                          MEMORANDUM OPINION


     WELLS, Chief Judge:     The instant case is before us on

respondent’s motion for summary judgment pursuant to Rule 121.

Pursuant to section 6330, respondent determined that the proposed

collection action, relating to petitioner’s 1991 and 1995 taxable

years, was appropriate.     Petitioner contends that respondent’s

motion for summary judgment should be denied because respondent
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did not consider a letter petitioner allegedly sent to respondent

declaring petitioner’s intent to pursue a collection alternative

or an offer in compromise.   All section references are to the

Internal Revenue Code, as amended, and all Rule references are to

the Tax Court Rules of Practice and Procedure.

                             Background

     The parties’ moving papers contain certain statements of

fact which the parties do not dispute and are set forth as facts

for the purpose of deciding the instant motion.    Petitioner

resided in McKees Rocks, Pennsylvania, when the petition was

filed.

     On December 16, 1991, petitioner filed a chapter 11

reorganization case with the U.S. Bankruptcy Court for the

Western District of Pennsylvania.   An amended plan of

reorganization was confirmed in 1992.     On November 5, 1996, the

plan was converted from a chapter 11 case to a chapter 7 case.

Respondent issued a proof of claim relating to petitioner’s 1991

and 1995 taxable years.

     On August 11, 2001, respondent issued petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing,

relating to the 1991 and 1995 taxable years.    On August 30, 2001,

respondent received petitioner’s request for a hearing.    In the

request for a section 6330 hearing, petitioner stated:    “We

disagree with the assessed balances and statutory additions based
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on the fact that payments were made to the Internal Revenue

Service that have not been credited.”

     On November 16, 2001, respondent’s Appeals officer contacted

petitioner by telephone to conduct a section 6330 hearing.        In a

letter dated December 14, 2001, from the Appeals officer to

petitioner, the Appeals officer provided petitioner with a

transcript of account for the years in issue.       The Appeals

officer’s letter stated:

     This is in response to our phone conversation on
     November 16, 2001.

               *    *      *   *       *   *    *

     When we last spoke the plan was for me to provide you
     with these transcripts. You were to then study them
     and advise me if there were any missing credits or, if
     any taxes have not yet been abated according to the
     Bankruptcy Court discharge order.

     In a letter dated January 14, 2002, petitioner replied to

the Appeals officer’s letter and stated:

     A review of the transcripts reveals several discrepancies:

     1. The amounts that have been paid that have not been
     credited to our clients account. It appears that the
     amounts paid have been credited on the statement, but the
     amounts have not been applied to reduce the tax obligations
     of the Debtor;

     2. Failure to credit penalties discharged in bankruptcy.
     The Debtor filed for Chapter 11 Bankruptcy in 1991. His
     case was subsequently converted to a Chapter 7 in 1996. The
     Debtor did receive a discharge in Chapter 7 of all his
     unsecured obligations. It is our contention that all the
     penalties that have been assessed by the Internal Revenue
     Service through 1996 should have been abated by the Internal
     Revenue Service, since they were a general unsecured
     obligation. The transcripts that you have provided do not
                              - 4 -

     reflect any abatement of penalties that were assessed
     against the Debtor. Consequently, all account balances
     shown for each year commencing in 1989 through the year 1997
     are incorrect.

     On January 23, 2002, the Appeals officer replied to

petitioner’s January 14, 2002, letter.   The Appeals officer’s

letter stated:

          You also stated that penalties discharged in
     bankruptcy were not credited. I have consulted with
     one of the local Bankruptcy Specialists who has advised
     me that the penalties in your client’s case were not
     dischargeable. Taxes will not be dischargeable if the
     due date for a tax return is within 3 years of the
     bankruptcy petition date. Also, when a case converts
     from Chapter 11 to Chapter 7, it carries the same
     original petition date. Although, according to the
     dates in your letter, your client’s bankruptcy
     converted to Chapter 7 in 1996, the petition date for
     purposes of determining dischargeability goes back to
     the original filing in 1991.

     Accordingly, my determination, at this time, would have
     to be that the balances shown due are correct. If I
     have misstated or misunderstood either the facts or the
     law relating to some aspect of this matter, please
     correct me and provide a citation that supports your
     position. I will certainly reconsider all of this if
     my analysis is not consistent with the facts and law.

     If you wish to explore payment options, I can assist
     you in that matter. Options may include either an
     installment payment agreement, an offer in compromise
     or, possibly, a suspension of collection action pending
     an improvement in your client’s financial situation.

     Form 656 is enclosed for your use and information. In
     that booklet you will also find financial statements
     (Forms 433-A&B). If anything other than a short-term
     payment plan is sought, your client will have to submit
     the appropriate financial statement in support of the
     proposal they wish to make.

     I am faxing this letter to you this morning. The
     original will be in the mail along with the Form 656.
                               - 5 -

     If you have questions or concerns, please give me a
     call. I would like your reply by February 4, 2002. If
     I do not hear from you by that time, I will close my
     case and issue a Determination Letter that will advise
     you of your client’s right to contest the determination
     by filing suit in Tax Court.

     Petitioner responded to the Appeals officer’s letter, by

letter sent by petitioner’s counsel to respondent on January 30,

2002, in which petitioner requested an extension of time to reply

to respondent’s January 23, 2002, letter.    Petitioner’s counsel

indicated that petitioner was employed as a truck driver, and

that he was out of town.   Petitioner’s counsel requested an

extension of 30 days from February 4, 2002, to review the

contents of the Appeals officer’s letter.

     On April 4, 2002, respondent issued a notice of

determination for the years in issue, sustaining the amounts

sought to be collected by levy.   The notice of determination

stated:

     No evidence has been presented to show that the amounts
     shown due are incorrect. You have not demonstrated
     that any portion of these liabilities was discharged in
     bankruptcy. You have not proposed a collection
     alternative. The proposed collection action is
     sustained.

     Attachment 3193, attached to the notice of determination,

indicated that petitioner “expressed concern for the fact that

there are missing credits and for the fact that bankruptcy should

have discharged a portion of what is due.”   The Appeals officer

indicated that petitioner did not question the appropriateness of
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the collection action or raise any collection alternatives.

Moreover, Attachment 3193 stated:

     Taxpayer has not demonstrated that there are any
     missing credits and has not refuted the Service’s claim
     that these liabilities were never discharged in
     bankruptcy. A telephonic hearing was held with the
     representative. A deadline for responding was set,
     and, later, extended at the request of the
     representative. I have not received a reply to my
     offer to consider other collection alternatives.

     Absent a cooperative response from the taxpayer, I must
     sustain the proposed levy action.

     On May 6, 2002, petitioner filed a petition in this Court.

On May 20, 2003, respondent’s Appeals officer signed an affidavit

which states:

          2. I have examined the purported letter from Attorney
     Nigro to me dated March 4, 2002, a copy of which is attached
     hereto as Exhibit 1.

          3. To the best of my knowledge, I never received this
     letter, Exhibit 1. If I had received this letter, it would
     now be part of the administrative file in this case.

          4. If I had received this letter before Appeals
     issued the Notice of Determination to Mr. Cooper on
     April 4, 2002, I would have given Mr. Cooper a short
     period of time to formally submit an offer in
     compromise. If an offer was not formally submitted, I
     would have still issued the Notice of Determination.

          5. On January 23, 2002, I provided Attorney Nigro
     with a Form 656, Offer in Compromise, instructional
     booklet and forms which he could have used to submit an
     offer to me before Appeals issued the Notice of
     Determination on April 4, 2002.

                           Discussion

     Petitioner contends that respondent failed to consider his

March 4, 2002, letter, which announced petitioner’s intent to
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pursue collection alternatives or an offer in compromise.

Respondent contends that petitioner’s March 4, 2002, letter was

not received and petitioner did not make an offer in compromise

or propose collection alternatives.

     “Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.”     Florida Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).     A motion for summary

judgment may be granted where there is no dispute as to a

material fact and a decision may be rendered as a matter of law.

See Rule 121(a) and (b).1     The moving party bears the burden of

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

factual inferences are viewed in a manner most favorable to the

other party.   See Craig v. Commissioner, 119 T.C. 252, 260 (2002)

(citing Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985)).      The

party opposing summary judgment must set forth specific facts

which show that a question of genuine material fact exists and

may not rely merely   on allegations or denials in his pleadings.




     1
      Rule 121(b) provides:

     A decision shall thereafter be rendered 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. * * *
                                - 8 -

See Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322,

325 (1988); Casanova Co. v. Commissioner, 87 T.C. 214, 217

(1986).

     In the instant case, the Appeals officer’s January 23, 2002,

letter, responding to petitioner’s January 14, 2002, letter,

addressed the issue of an offer in compromise or collection

alternatives.   Petitioner’s January 30, 2002, letter, sent in

reply to the Appeals officer’s January 23, 2002, letter, stated

that petitioner’s counsel was attempting to contact petitioner in

an effort to discuss the issues proposed in respondent’s January

23, 2002, letter.    Petitioner’s January 30, 2002, letter

indicated that an extension of time for reply to the Appeals

officer’s January 23, 2002, letter was necessary because

petitioner, a truck driver, was unavailable to consider the

Appeals officer’s letter.

     The attachment to the notice of determination refers to the

Appeals officer’s January 23, 2002, letter to petitioner and

indicates that the period for petitioner to respond to that

letter was extended.    However, according to respondent, no

communication from petitioner was received regarding that issue.

     Petitioner contends that his counsel sent respondent a

letter on March 4, 2002, in which petitioner sought to negotiate

an offer in compromise or a collection alternative with the

Appeals officer.    Petitioner alleges that letter states:   “After
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discussing this matter with our client, he has requested that we

pursue a collection alternative on his behalf.    Our client would

like to pursue an Offer and Compromise.”   Respondent contends

that petitioner did not send the alleged March 4, 2002, letter.

     Section 6330(c)(2)(A)(iii) requires the Commissioner’s

Appeals officer to consider “offers of collection alternatives,

which may include posting of a bond, the substitution of other

assets, an installment agreement, or an offer-in-compromise.”

See Goza v. Commissioner, 114 T.C. 176, 180-182 (2000).       We

review the Commissioner’s determinations under section

6330(c)(2)(A)(iii) under an abuse of discretion standard.          Sego

v. Commissioner, 114 T.C. 604, 609-610 (2000); Goza v.

Commissioner, supra.

     The correspondence between petitioner and the Appeals

officer indicates that respondent was aware that petitioner was

interested in seeking an offer in compromise.    Respondent

included the offer in compromise materials in the January 23,

2002, letter to petitioner.   Petitioner’s January 30, 2002,

letter requested an extension of time to file a response to that

letter.   The notice of determination refers to such an extension

of time to file a response.   Petitioner contends that his March

4, 2002, letter stated that he wanted to seek an offer in

compromise or enter into a collection alternative with

respondent.
                              - 10 -

     We view these facts in the light most favorable to

petitioner as the nonmoving party.     See Naftel v. Commissioner,

85 T.C. 527, 529 (1985).   Upon review of the facts and

allegations contained in the parties’ moving papers, we conclude

that petitioner has alleged specific facts which indicate that a

factual controversy exists.   Our examination of the

correspondence between petitioner and respondent leads us to

conclude that the parties contemplated further negotiations

toward an offer in compromise and that the March 4, 2002, letter,

even though it may not have been received by respondent, was sent

to achieve that purpose.   Accordingly, we hold that respondent

has not proved that there is no genuine issue of material fact

and that a decision may be rendered as a matter of law on the

issue before us in the instant motion.2    See id.   Accordingly,

respondent’s motion for summary judgment will be denied.

     On the basis of the foregoing,

                                      An appropriate order will be

                               issued.




     2
      Respondent contends that petitioner conceded all issues
relating to the 1991 taxable year, pursuant to Rule 34(b)(4).
Having denied respondent’s motion for summary judgment, we note
that petitioner may move to amend the petition to include the
1991 taxable year. See Rule 41.
