                               T.C. Memo. 2017-12



                        UNITED STATES TAX COURT



                   PAZZO PAZZO, INC., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket Nos. 6844-15L, 6845-15L,              Filed January 10, 2017.
                  6846-15L, 6848-15L.



      Andrew G. Paradis and E. Martin Davidoff, for petitioner.

      Brian J. Bilheimer, for respondent.



                          MEMORANDUM OPINION


      THORNTON, Judge: In these consolidated cases petitioner seeks review

pursuant to sections 6320(c) and 6330(d)(1) of the determinations by the Internal

Revenue Service (IRS) to uphold the filings of two notices of Federal tax lien
                                        -2-

[*2] (NFTL) and two notices of intent to levy.1 In each of these consolidated

cases, respondent has moved for summary judgment under Rule 121, contending

that there are no disputed issues of material fact and that his determinations to

uphold the collection actions were proper as a matter of law. We agree and thus

will grant the motions.

                                    Background

      The facts set forth below are based on the parties’ pleadings, respondent’s

motions, petitioner’s responses, and the attached documents. When it petitioned

the Court, petitioner had its principal place of business in New Jersey.

      Petitioner has a long history, dating back to at least 1998, of financial

difficulties and noncompliance with its Federal tax obligations. On May 31, 2002,

petitioner filed a bankruptcy petition under chapter 11 of the United States

Bankruptcy Code. In July 2004 petitioner’s chapter 11 plan of reorganization was

approved by the U.S. Bankruptcy Court for the District of New Jersey. This plan

included an IRS tax claim of $532,310 to be paid over six years according to a set

schedule.




      1
       All section 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 dollar amounts to the nearest dollar.
                                        -3-

[*3] On March 1, 2012, an IRS bankruptcy specialist sent petitioner’s president,

Lawrence Berger, a letter stating that Mr. Berger had failed to make any payments

for three years on the chapter 11 plan. The letter requested that Mr. Berger contact

the specialist by March 22, 2012, and noted that failure to meet this deadline could

result in the unpaid balances’ being referred for regular collection action.

Petitioner’s unpaid balances were subsequently placed back into regular

collection.

Notices and Collection Due Process (CDP) Hearing Requests

      At issue in these cases are three notices that respondent sent petitioner, two

CDP hearings, and two offers-in-compromise (OICs). The first notice, dated

October 23, 2012, was a Letter 1058, Final Notice of Intent to Levy and Notice of

Your Right to a Hearing, regarding unpaid taxes associated with (1) petitioner’s

Form 941, Employer’s Quarterly Federal Tax Return, for tax periods ending

March, June, and September 2002 and (2) its Form 940, Employer’s Annual

Federal Unemployment (FUTA) Tax Return, for taxable years 1999, 2001, and

2004. These liabilities totaled $255,552, including interest as of November 2,

2012. On November 8, 2012, petitioner timely filed a Form 12153, Request for a

Collection Due Process or Equivalent Hearing, requesting a face-to-face CDP

hearing. It stated that petitioner and Mr. Berger had made payments of $200,000
                                         -4-

[*4] in addition to the chapter 11 plan payments and that the bankruptcy specialist

had failed to take these amounts into account in his March 1, 2012, letter.

Petitioner requested a de novo review of all tax penalties and interest; proposed

(without offering any specific installment amount) an installment agreement to pay

the outstanding liabilities in full; and argued that paying any outstanding balance

would cause it undue hardship and that given the economic climate it could not

continue to make payments and operate its restaurant business.

      The second notice, dated November 6, 2012, was a Notice of Federal Tax

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

petitioner’s unpaid tax liabilities attributable to (1) its Form 941 for tax periods

ending June and December 2001, March, June, and September 2002 and (2) its

Form 940 for taxable years 1999, 2001, and 2004. These liabilities totaled

$208,635, including interest as of November 6, 2012.2 On December 6, 2012,

petitioner timely filed another Form 12153. This document, substantively




      2
        Although the tax periods referenced in this NFTL include those in the
October 23, 2012, Letter 1058, the amounts are different because of the inclusion
in the Letter 1058 of penalties and interest for the Form 941 tax period ending
June 2002 and the Form 940 taxable years 1999 and 2001.
                                        -5-

[*5] identical to the Form 12153 filed on November 8, 2012, contained identical

arguments and requests.3

      The third notice, dated April 25, 2013, was another Letter 1058 regarding

petitioner’s 2011 tax liability from Form 1120S, U.S. Income Tax Return for an S

Corporation, which showed an unpaid liability of $1,173. On May 24, 2013,

petitioner timely filed its third Form 12153, requesting a face-to-face CDP

hearing. The letter requested (1) a de novo review of all tax, penalties, and

interest, and (2) an installment agreement (without offering any specific

installment amount) to pay any balance of all delinquent periods.

Correspondence, CDP Hearings, and OICs

      On January 14, 2013, respondent sent petitioner letters confirming receipt of

its November 8 and December 6, 2012, requests for CDP hearings. The following

week, a settlement officer (SO) from the IRS Appeals Office began his review of

petitioner’s case and sent it a letter requesting a completed Form 433-B,

Collection Information Statement for Businesses.

      3
       For reasons not evident (and not relevant to these now-consolidated cases),
respondent treated petitioner’s November 8, 2013, submission as two separate
requests: one for the Form 941 periods and one for the Form 940 periods.
Although one hearing was conducted for both requests, respondent issued separate
notices of determination. Thus, the determinations with respect to the Form 941
periods and Form 940 periods were petitioned separately therefrom under docket
Nos. 6845-15L and 6844-15L, respectively.
                                        -6-

[*6] On March 26, 2013, the SO held a telephone CDP hearing with petitioner’s

representatives. This was the first of the two CDP hearings; it covered petitioner’s

November 8 and December 6, 2012, requests for CDP hearings. During the

hearing, the SO discussed petitioner’s request for an OIC.4 The SO set a deadline

of April 16, 2013, to receive petitioner’s OIC package. Petitioner’s

representatives expressed concern that credits for past payments were not being

allocated properly to the trust fund recovery penalties (TFRPs) assessed against

Mr. Berger.5 The SO clarified that this hearing was for petitioner--not for Mr.

Berger. No other issues were raised or discussed.




      4
       Despite petitioner’s Forms 12153 indicating that petitioner was requesting
an installment agreement, petitioner’s representatives discussed only an OIC to
resolve petitioner’s outstanding liabilities.
      5
       Sec. 6672(a) provides generally that any person who is required to
withhold and pay over any tax but who willfully fails to do so is liable for a TFRP
equal to the total amount evaded, not collected, or not accounted for and paid over.
The Commissioner is authorized to impose a TFRP on any “officer or employee of
a corporation, or a member or employee of a partnership who as such officer,
employee, or member is under a duty to perform” the duties referred to in sec.
6672. Sec. 6671(b). Petitioner failed to withhold and pay over taxes withheld
from the wages of its employees, and Mr. Berger was determined by the IRS to be
a responsible person who acted willfully with respect to those amounts. Thus,
amounts paid by either petitioner or Mr. Berger towards those withheld taxes
reduce the other’s liability accordingly. See United States v. Energy Resources
Co., 495 U.S. 545 (1990).
                                        -7-

[*7] On April 17, 2013, petitioner sent the SO a copy of its Form 1120S for

taxable year 2011 along with a profit and loss statement from the fourth quarter of

2012. For reasons not explained by the record, the Form 1120S was post-dated

December 13, 2013, and reported a net loss of $646,674. Petitioner also requested

an extension of time until April 23, 2013, to file its Form 433-B. The SO spoke

with petitioner’s representatives, who indicated that petitioner’s financial

information for the last three months showed a net positive income of $12,000;

they also discussed the submitted documents and agreed to April 30, 2013, as the

date for petitioner to submit its Form 433-B.

      On April 30, 2013, petitioner’s representatives telephoned the SO and

requested another extension, which the SO granted. On May 1, 2013, petitioner

filed Form 656, Offer in Compromise, and Form 433-B. This OIC offered to

compromise petitioner’s $704,200 of outstanding tax liabilities for $176,000,

payable in 24 monthly installments of $7,333. Form 433-B listed as petitioner’s

assets three Bank of America bank accounts (but provided no balances),

miscellaneous kitchen equipment valued at $50,000, and a liquor license valued at

$170,000. And after applying discount rates, it showed $176,000 in available

equity in assets. The Form 433-B also reported petitioner’s monthly business

income as $179,902 and its monthly expenses as $188,976, leaving a monthly
                                        -8-

[*8] deficit of $9,074 instead of the previously suggested net revenue of $12,000.

Finally, the offer stated that Mr. Berger would fund the OIC by borrowing against

assets not held in petitioner’s name.

      On May 10, 2013, petitioner’s OIC was reviewed by respondent’s Central-

ized Offer in Compromise unit (COIC). On May 23, 2013, the OIC was returned

as not processable on the basis that petitioner had failed to submit the required

$150 application fee and the initial payment of $7,333. The return letter also

noted that petitioner was not in compliance with its Federal income tax reporting

for taxable years 2010 and 2012. The letter instructed petitioner on how to fix the

defects (i.e., sending the appropriate payments and supporting financial

documentation and filing Forms 1120S for taxable years 2010 and 2012) and

submit a new OIC.

      On June 6, 2013, the SO noticed the rejection of petitioner’s OIC and after

reviewing his records discovered that although petitioner had not submitted the

required $150 application fee, it had submitted the requisite first payment of

$7,333. He followed up with petitioner’s representatives to help facilitate the

process. On June 18, 2013, petitioner resubmitted its OIC. This OIC included

numerous documents, including new Forms 656 and 433-B; the required

application fee and payments; petitioner’s 2010 Form 1120S and 2012 Form 7004,
                                         -9-

[*9] Application for Automatic Extension of Time to File Certain Business

Income Tax, Information, and Other Returns; and supporting financial

documentation. It reiterated petitioner’s original offer as well as its earlier

arguments.

      On June 21, 2013, while this resubmitted OIC was being processed, the IRS

sent petitioner a letter confirming receipt of petitioner’s May 24, 2013, request for

a CDP hearing. And on July 1, 2013, the SO handling petitioner’s first CDP

hearing was assigned to handle this one as well. The SO reviewed petitioner’s

administrative file; noted that he had not yet heard back from the COIC regarding

petitioner’s resubmitted OIC; and set a reminder to follow up in two weeks. Upon

following up, the SO noticed that the Automated Offer in Compromise (AOIC)

system reflected updated information from petitioner’s resubmitted OIC.

      On August 30, 2013, the SO performed an independent evaluation of

petitioner’s resubmitted OIC. He noted that although this OIC was deemed

processable, the profit and loss statement had not been updated. He telephoned

petitioner’s representatives to discuss these findings. Because of a system

malfunction and a two-week Government shutdown, the SO did not resume his

review of petitioner’s OIC until October 23, 2013.
                                        - 10 -

[*10] On October 24, 2013, the SO held petitioner’s second CDP hearing, focusing

this time on petitioner’s 2011 Form 1120S liability. Petitioner’s representatives

raised no issues apart from noting that the period at issue was included in the

resubmitted OIC. The SO discussed the terms of the OIC and requested that by

November 14, 2013, petitioner supply a valuation of both the restaurant equipment

and the liquor license, as well as a current profit and loss statement.

      In the course of a review on November 25, 2013, the SO’s supervisor noted

that petitioner still had several unresolved compliance issues and suggested that if

it had not yet submitted the information needed to compute its reasonable

collection potential (RCP), i.e., the asset appraisals and current profit and loss

statement, then the SO should close the case. The SO, however, gave petitioner

two additional weeks to submit the requested documentation.

      On December 18, 2013, having received none of the requested documents,

the SO telephoned petitioner’s representatives’ office. The office indicated that

the former representative no longer worked at the firm and suggested that the SO’s

October 24, 2013, request had not been properly passed along. The SO explained

that he needed petitioner’s assets appraised for the RCP calculation, and he

provided an extension until January 17, 2014, to receive the missing information.

The SO stated that if this deadline was not met, he would have to close the case.
                                         - 11 -

[*11] On January 6, 2014, petitioner obtained written appraisals of its restaurant

equipment and liquor license--$37,855 and $550,000, respectively--and sent that

information to the SO the following week. The SO reviewed the appraisals and

called petitioner’s representatives on February 4, 2014, to discuss his findings.

During their conversation the SO explained that the new appraisal of the liquor

license required petitioner to submit a new OIC to reflect the increased value.

Petitioner’s representatives agreed to revise and resubmit the OIC by February 18,

2014. The parties scheduled a followup telephone call for February 25, 2014.

      On February 18, 2014, petitioner sent the SO its revised Forms 656 and

433-B and supporting documentation. To reflect the new valuation, petitioner

increased its OIC to $470,284--payable in 24 installments of $19,595--to settle all

of its outstanding tax liabilities. The parties held their scheduled telephone

conference on February 25, 2014, discussing the revised OIC and the SO’s belief

that petitioner had failed to file its Federal tax returns for 2010 and 2012.6

Petitioner’s representatives were unaware of any noncompliance. The SO set

March 5, 2014, as the deadline for submitting the returns.




      6
       The record indicates that petitioner submitted its 2010 Form 1120S on June
18, 2013; respondent received it the following day. The SO discovered the
missing 2010 Form 1120S on April 16, 2014.
                                         - 12 -

[*12] On March 18, 2014, petitioner made its first payment of $19,291. Along

with the check, petitioner sent a letter designating this payment to certain trust

fund liabilities. Because the SO knew that petitioner’s representatives were

interested in resolving petitioner’s trust fund liabilities, which had given rise to

corresponding TFRPs assessed against Mr. Berger, he spent time ensuring that the

payment was correctly posted.

      Still waiting for petitioner’s Forms 1120S, which he had requested be

provided by March 5, 2014, the SO telephoned petitioner’s representatives on

March 26, 2014, and provided a one-week extension. On March 28, 2014,

petitioner sent the SO a letter containing an addendum to the earlier filed Form

656, copies of petitioner’s 2010 and 2012 Forms 1120S, and a copy of petitioner’s

2013 Form 7004. Upon receiving the requested documents, the SO began the OIC

closing process.

      On April 28, 2014, petitioner sent to the SO, along with the second

payment, a second letter updating its previous payment designation: Payments

were to be applied first to the unpaid employment taxes (trust fund portion,

penalties on the trust fund portion, interest on the non-trust-fund portion, non-

trust-fund portion, penalties on the non-trust-fund portion, and interest on the non-

trust-fund portion, in that order), then to the unpaid unemployment taxes
                                        - 13 -

[*13] (unemployment taxes, penalties on the unemployment taxes, and interest on

the unemployment taxes, in that order).

        On May 6, 2014, the SO spoke with petitioner’s representatives. He re-

quested an addendum be filed to fix a scrivener’s error and to update the list of tax

periods included in the OIC. The SO explained that in order to close the OIC, all

periods that petitioner wished to be included had to be assessed--the originally

included liabilities and the Form 1120S liabilities for 2010 and 2012. The

addendum was mailed the following day “delineat[ing] the types of tax and

periods to which * * * [petitioner’s February 18, 2014, OIC] relates”. This letter

expanded the list of tax liabilities to include petitioner’s Form 1120S liabilities for

taxable years 2010 and 2012; the letter acknowledged that these amounts had not

yet been assessed. By the time petitioner’s Forms 1120S were posted, on July 3,

2014, both of petitioner’s monthly payments were late; one was nearly a month

late.

        The SO continued to process petitioner’s OIC and ordered an asset search to

verify petitioner’s self-calculated RCP. The SO’s supervisor again reviewed the

case and confirmed that, as of August 11, 2014, the Appeals Office was still

waiting for the asset search. During the wait, petitioner made three additional

payments. For reasons unexplained by the record, these payments were not posted
                                         - 14 -

[*14] to the requested tax periods. The SO, however, sought to straighten out the

misallocation, reexamined the TFRPs assessed against Mr. Berger, and telephoned

petitioner’s representatives on September 30, 2014, to confirm the remaining

balances.

      The SO spoke with petitioner’s representatives again the following week,

explaining that there were still three trust fund periods with outstanding TFRP

balances assessed against Mr. Berger. Petitioner’s representatives confirmed that

future payments should be applied first to petitioner’s corresponding trust fund

liabilities and that respondent could apply any remaining payments in the

Government’s best interest. On October 9, 2014, petitioner’s representatives sent

the SO a fax, following up on their telephone call. The fax noted the pending OIC

and indicated that if it were accepted, all of petitioner’s outstanding liabilities

would be settled.

      The asset search was returned on October 15, 2014, indicating that peti-

tioner had no assets other than those disclosed. The SO received the asset-search

memorandum on October 31, 2014, which he discussed with petitioner’s

representatives that same day. During their conversation, the SO walked through

each trust fund tax assessed against petitioner (and the TFRP correspondingly
                                        - 15 -

[*15] assessed against Mr. Berger), noting that the trust fund portions of two

periods remained unsatisfied.

      On October 31, 2014, petitioner submitted its October payment. The SO

noted that this payment would satisfy all petitioner’s outstanding trust fund

liabilities. Petitioner timely submitted its November payment, and the SO

received from petitioner’s representatives, on December 1, 2014, substantiation of

two payments not previously listed in petitioner’s records. He spent time the

following day ensuring that the files were complete, that the RCP calculations

were accurate, and that upon his receiving confirmation of updated payment

information, the OIC could be recommended to be accepted.

      In January 2015 when he received confirmation of the payments’ applica-

tion, the SO noticed that three issues had arisen with petitioner’s OIC: (1) peti-

tioner had failed to file its Form 1120S for taxable year 2013; (2) the Form 433-B

needed to be recertified; and (3) petitioner had failed to make its December 2014

payment. On January 20, 2015, the SO explained these issues to petitioner’s

representatives. They agreed upon January 30, 2015, as the final deadline for

submission.

      On January 28, 2015, one of petitioner’s representatives spoke with the SO.

He explained that petitioner would be unable to submit the requested 2013 Form
                                         - 16 -

[*16] 1120S until the end of February; and not only would petitioner be unable to

submit the past-due December payment, but petitioner also would not be making

its January payment. The SO explained to the representatives that petitioner’s

compliance with its tax filings and OIC payments was of paramount importance

for the OIC’s acceptance; he reiterated the deadline of January 30, 2015.

Nonetheless, petitioner’s representatives requested another extension, until

February 14, 2015. The SO spoke with his supervisor about it. Although the

supervisor felt that petitioner had been given enough time, the SO convinced him

to extend the deadline until February 2, 2015.

      On February 2, 2015, one of petitioner’s representatives telephoned the SO.

Despite his earlier assertion that petitioner’s 2013 Form 1120S would not be ready

until the end of February, it was complete and ready for submission.

Unfortunately, the representative reported, petitioner was not in a position to make

either the December 2014 or the January 2015 payment; he again requested an

extension of time. The SO explained that petitioner’s compliance--or

noncompliance--with the terms of its own OIC would determine its acceptance.

      That afternoon the SO received an email from petitioner’s representatives

stating that petitioner had “unfortunately run into financial difficulties”; it reiter-

ated that petitioner’s “monthly income and expenses * * * [were] relatively
                                         - 17 -

[*17] unchanged” from those stated in petitioner’s June 8, 2013, and February 1,

2014, disclosures. The email acknowledged petitioner’s missing payments and

requested that petitioner be allowed to remit them along with the February 2015

payment--a sum of $57,873-- no later than February 23, 2015. In response, the SO

telephoned petitioner’s representatives and denied this final request for extension.

      The SO thereupon closed the case and on February 11, 2015, sent to peti-

tioner four notices of determination: (1) sustaining the proposed levy action with

respect to the Form 941 tax periods ending March, June, and September 2002 and

the Form 940 tax liabilities for taxable years 1999, 2001, and 2004; (2) sustaining

the notice of filing of Federal tax lien with respect to the Form 941 tax periods

ending December 2001 and March, June, and September 2002; (3) sustaining

notice of filing of Federal tax lien with respect to the Form 940 tax liabilities for

taxable years 1999, 2001, and 2004; and (4) sustaining the proposed levy action

with respect to the Form 1120S tax liability for taxable year 2011.

      Petitioner timely petitioned this Court with respect to each of the notices of

determination. Respondent filed in each case a motion for summary judgment

and, after the cases were consolidated, a motion to permit levy. Petitioner filed its

responses to the motions for summary judgment and the motion to permit levy
                                        - 18 -

[*18] along with a motion to remand. Respondent filed his response to

petitioner’s motion to remand.

                                     Discussion

I.    Respondent’s Motions for Summary Judgment

      The purpose of summary judgment is to expedite litigation and avoid

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

T.C. 678, 681 (1988). The Court 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. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

aff’d, 17 F.3d 965 (7th Cir. 1994). If a moving party properly makes and supports

a motion for summary judgment, “an adverse party may not rest upon the mere

allegations or denials of such party’s pleading” but must set forth specific facts, by

affidavit or otherwise, showing that there is a genuine dispute for trial. Rule

121(d).

      Upon due consideration of the parties’ motions, supporting declarations,

and responses thereto, we conclude that no material facts are in dispute and that

judgment may be rendered for respondent as a matter of law.
                                         - 19 -

[*19] A.     Standard of Review

      In an action such as this to review IRS administrative determinations under

sections 6320(c) and 6330(d)(1), if the underlying tax liability is properly at issue,

the Court reviews the IRS determinations de novo. Goza v. Commissioner, 114

T.C. 176, 181-182 (2000). Otherwise, the Court reviews the determinations 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).

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

a CDP proceeding only if the taxpayer received no notice of deficiency and

otherwise had no opportunity to contest the liability. See secs. 6320(c),

6330(c)(2)(B); sec. 301.6330-1(e)(3), Q&A-E2, Proced. & Admin. Regs. In any

event, a taxpayer’s underlying liability is not properly subject to judicial review

pursuant to section 6320(c) or section 6330(d)(1) if the issue was not properly

raised in the CDP hearing. See Thompson v. Commissioner, 140 T.C. 173, 178

(2013).

      Although each of petitioner’s Forms 12153 disputes the underlying

liabilities, neither petitioner nor its representatives raised the issue during either of

its CDP hearings. Petitioner similarly does not dispute its underlying liabilities in
                                        - 20 -

[*20] its petitions or response to respondent’s motion for summary judgment.

Since there is no dispute concerning the underlying tax liabilities, we review the

IRS’ determinations for abuse of discretion. See Goza v. Commissioner, 114 T.C.

at 182.

      B.     Analysis

      In deciding whether the SO abused his discretion in sustaining the collec-

tion actions, we consider whether he: (1) properly verified that the requirements

of any applicable law or administrative procedure have been met; (2) considered

any relevant issues petitioner raised; and (3) determined whether “any proposed

collection action balances the need for the efficient collection of taxes with the

legitimate concern of * * * [petitioner] that any collection action be no more

intrusive than necessary.” Sec. 6330(c)(3).

      The record establishes that the SO conducted several thorough reviews of

petitioner’s account, determined that the taxes had been properly assessed, and

verified that other requirements of applicable law and administrative procedure

were followed. Petitioner contends primarily that the SO abused his discretion in

rejecting its revised OIC--particularly by taking too long to evaluate the OIC and

by failing to provide adequate additional time for petitioner to bring itself into

compliance with its payment obligations. Petitioner also contends that the SO
                                        - 21 -

[*21] abused his discretion in failing to adequately consider petitioner’s

“economic hardship”.

      Section 7122(a) authorizes compromise of a taxpayer’s Federal income tax

liability. “The decision to entertain, accept or reject an offer in compromise is

squarely within the discretion of the appeals officer and the IRS in general.”

Gregg v. Commissioner, T.C. Memo. 2009-19 (quoting Kindred v. Commissioner,

454 F.3d 688, 696 (7th Cir. 2006)). Consequently, in reviewing this determina-

tion, we do not substitute our judgment for that of Appeals and decide whether in

our opinion petitioner’s OIC should have been accepted. See Keller v.

Commissioner, T.C. Memo. 2006-166, aff’d in part, 568 F.3d 710 (9th Cir. 2009).

Instead, we review this determination for abuse of discretion.

      Petitioner argues that it was an abuse of discretion for the SO to return its

OIC after having granted two extensions of time to return to compliance with its

OIC payment obligations because petitioner’s representative requested (and was

denied) an additional three-week extension of time. But petitioner’s argument

glosses over the statutory provision applicable here. Section 7122(c)(1)(B)(ii)

provides: “Any failure to make an installment (other than the first installment) due

under such offer-in-compromise during the period such offer is being evaluated by
                                       - 22 -

[*22] the Secretary may be treated by the Secretary as a withdrawal of such offer-

in-compromise.”

      Furthermore, an Appeals officer does not abuse his discretion by rejecting

an OIC where the taxpayer fails to fulfill the terms of the taxpayer’s own offer.

Tucker v. Commissioner, T.C. Memo. 2014-103, at *23-*24. Petitioner thrice

submitted Forms 656, offering to compromise its outstanding tax liability for a

substantially reduced amount. Each OIC offered to make certain monthly pay-

ments in an amount and on a date selected by petitioner. The text of each Form

656 mirrors section 7122(c)(1)(B)(ii) in stating, in boldface: “[Petitioner] must

continue to make these monthly payments while the IRS is considering the offer.

Failure to make regular monthly payments will cause your offer to be returned.” It

was not the SO’s duty or responsibility to ensure that petitioner made the pay-

ments it proposed. Because petitioner failed to live up to the terms of its own

offer, we find that the SO did not abuse his discretion in denying the request for

additional time and rejecting petitioner’s OIC.7

      7
       Petitioner argues that the Internal Revenue Manual (IRM) required the SO
to provide it with a 15-day extension of time from the date the SO brought the
missing payment to petitioner’s attention. See IRM 5.8.4.25.1(10) (June 1, 2010).
The IRM specifies, however, that a single 15-day extension of time will be
provided. At the time the SO notified petitioner’s representatives about the
missing December 2014 payment, on January 20, 2015, there was only one
                                                                      (continued...)
                                         - 23 -

[*23] Petitioner suggests that if the SO had not delayed the process and had

granted the requested extensions of time for petitioner to comply with its payment

obligations, the OIC would have been accepted. Consequently, petitioner

concludes, these cases should be remanded for further consideration. We disagree.

      The record convinces us that the SO could properly have rejected

petitioner’s OIC at various points during the pendency of petitioner’s CDP

hearings, for a variety of reasons. We will discuss four of those reasons below:

(1) missing, incomplete, or inaccurate financial information; (2) noncompliance

with Federal tax return filing obligations; (3) the valuation of petitioner’s assets;

and (4) noncompliance with the self-set terms of petitioner’s OIC.




      7
       (...continued)
missing payment. Upon failing to remit its January 2015 payment, petitioner was
not entitled to a 15-day extension of time to return to compliance. The SO could
have properly returned petitioner’s OIC when petitioner missed this payment.
Instead, the SO provided petitioner two days, and then three additional days, to
make the missing payments. On February 2, 2015--13 days after the SO brought
the missing December payment to petitioner’s attention--petitioner’s
representatives requested three additional weeks for petitioner to remit payment
for December 2014, January 2015, and February 2015. This strongly suggests that
even if the SO had originally provided petitioner 15 days (instead of 13 days) to
submit its missing December 2014 payment, petitioner would have been unable to
meet even that extended deadline. While the IRM contemplates taxpayers’
requesting a second extension of time, it does not require acceptance of such a
request.
                                          - 24 -

[*24]         1. Missing, Incomplete, or Inaccurate Financial Information

        It is well settled that an Appeals officer does not abuse his discretion in

rejecting a collection alternative where the taxpayer has failed, after being given

sufficient opportunities, to supply the requisite financial information. See, e.g.,

Hawkins v. Commissioner, T.C. Memo. 2015-245, at *9; Maselli v.

Commissioner, T.C. Memo. 2010-19, 99 T.C.M. (CCH) 1089, 1092 (2010);

Roman v. Commissioner, T.C. Memo. 2004-20, 87 T.C.M. (CCH) 835, 838

(2004). “Taxpayers must submit current financial data when proposing an OIC

based on doubt as to collectibility.” Reed v. Commissioner, 141 T.C. 248, 255

(2013). The SO provided petitioner at least five extensions of time to submit or

make current its financial information.

              2. Noncompliance With Federal Tax Return Filing Obligations

        The IRS’ established policy is to require taxpayers to be in compliance with

current filing and estimated tax payment requirements to be eligible for collection

alternatives. See id. at 256-257. Despite petitioner’s contention, an Appeals

officer is well within his discretion to require current compliance with Federal tax

return filings. Hartman v. Commissioner, __ F. App’x __, 2016 WL 3947575, at

*2 (3d Cir. July 22, 2016), aff’g T.C. Memo. 2015-129; Christopher Cross, Inc. v.

United States, 461 F.3d 610, 613 (5th Cir. 2006) (“The failure to timely pay owed
                                        - 25 -

[*25] taxes is a perfectly reasonable basis for rejecting an offer in compromise

relating to other unpaid taxes.”); Reed v. Commissioner, 141 T.C. at 257 (“[An

Appeals officer] does not abuse his discretion by returning an OIC based on a

taxpayer’s failure to meet current tax obligations.”).

      During the course of petitioner’s administrative proceedings, petitioner was

not in full compliance with its Federal income tax reporting until February 2,

2015, having at various times been out of compliance with filing requirements for

Forms 1120S for 2010, 2012, and 2013. On numerous occasions the SO sought

out petitioner’s representatives to notify them of the issue and repeatedly granted

extensions of time for submitting the missing returns. But for the SO’s efforts,

petitioner’s OICs might have been returned earlier in the CDP process.

             3. Valuation of Petitioner’s Assets

      The IRS may reject an OIC where the taxpayer’s RCP is greater than the

amount he proposes to pay. See Johnson v. Commissioner, 136 T.C. 475, 486

(2011), aff’d, 502 F. App’x 1 (D.C. Cir. 2013); Lindley v. Commissioner, T.C.

Memo. 2006-229 (finding that the Appeals officer did not abuse his discretion by

rejecting an OIC $25,535 below the taxpayer’s RCP), aff’d on this issue sub nom.

Keller v. Commissioner, 568 F.3d 710 (9th Cir. 2009). Appeals officers are

generally directed to reject offers substantially below the taxpayer’s RCP where
                                        - 26 -

[*26] the offer is premised, as was petitioner’s, on doubt as to collectibility. See

Rev. Proc. 2003-71, 2003-2 C.B. 517.

      Petitioner’s original OIC failed to list its then-current bank account

balances. And in both the first and resubmitted OICs, petitioner offered to

compromise its outstanding liabilities, exceeding $700,000, for $176,000–which

was based on a self-calculated RCP and self-defined asset valuations. One such

asset was petitioner’s liquor license, initially valued at $170,000. In evaluating

the OIC and in preparing for petitioner’s second CDP hearing, the SO realized that

if the RCP were to be based on the value of petitioner’s assets, they would need to

be appraised.

      During petitioner’s second CDP hearing on October 24, 2013, the SO dis-

cussed with petitioner’s representatives the need for appraisal of the kitchen

equipment and the liquor license. The SO provided petitioner multiple deadlines

for submitting this information, even providing a two-week extension contrary to

his supervisor’s recommendation that he close the case. When the appraisal was

submitted, it revealed that petitioner had undervalued the liquor license by

$380,000--more than twice the amount of its initial OIC. But instead of rejecting

the resubmitted OIC, the SO provided additional time for petitioner’s

representatives to submit a revised OIC.
                                        - 27 -

[*27]         4. Noncompliance With OIC Terms

        As discussed above, an Appeals officer does not abuse his discretion when

rejecting an OIC where the taxpayer fails to fulfill the terms of his own offer.

Tucker v. Commissioner, at *23-*24. During the time in which petitioner’s

revised OIC was being considered, the terms of the OIC required petitioner to

make 11 monthly payments. Of these payments, three were not timely paid, and

the final two were never paid. The SO provided two extensions of time for

petitioner to make the missing payments, but petitioner failed to meet either

deadline, instead asking for three more weeks and suggesting that it would

somehow obtain $58,785 to pay the two missing payments and the upcoming

February 2015 payment.

        For any of the reasons described above, the SO could have properly

returned or rejected petitioner’s OIC and closed the case. See Kreit Mech.

Assocs., Inc. v. Commissioner, 137 T.C. 123, 134 (2011) (holding that an Appeals

officer is not required to negotiate with a taxpayer indefinitely or wait any specific

amount of time after a CDP hearing to issue a notice of determination). The

record shows, however, the SO’s willingness to assist petitioner in returning to

compliance. We find no abuse of discretion in this regard.
                                        - 28 -

[*28] Petitioner suggests that respondent should have accepted its OIC based on

effective tax administration and that the proposed collection action would cause

economic hardship. Insofar as petitioner means to suggest that its economic

circumstances gave rise to “economic hardship” as a grounds for compromise,

within the meaning of section 301.7122-1(b), Proced. & Admin. Regs., the

argument is without merit. This regulation specifically restricts “economic

hardship” to individuals. Petitioner is not an individual; thus “economic hardship”

relief is not available here.

      In any event, we understand petitioner’s argument to be that the SO failed to

take into account its individual circumstances when he was performing the

balancing analysis under section 6330(c)(3). On the basis of our thorough review

of the extensive record in these cases, we find that the SO properly balanced “the

need for the efficient collection of taxes with the legitimate concern of * * *

[petitioner] that any collection action be no more intrusive than necessary.” Sec.

6330(c)(3). On several occasions, petitioner’s representatives conveyed to the SO

that petitioner’s revenue was negative every month and that petitioner had been in

some form of financial distress since at least 1998. But at no point did petitioner

or its representatives suggest that it could pay nothing towards its outstanding

liabilities. On the contrary, petitioner suggested the terms of each OIC, and the
                                        - 29 -

[*29] SO expressed willingness to accept each of them subject to petitioner’s

compliance with Federal tax filing and periodic payment requirements.

      The record reflects the SO’s willingness to work with petitioner to achieve a

satisfactory resolution. And despite his supervisor’s repeated instructions to close

the case, on several occasions the SO provided additional time for petitioner to

return to compliance. Finally, throughout this process, the SO sought to apprise

petitioner’s representatives of updates and work with them to return petitioner to

compliance. None of these facts is indicative of a decision void of consideration

of petitioner’s economic circumstances; the SO issued the notices of determination

only after petitioner failed to return to compliance with payments it had suggested

in the first instance. This was not an abuse of discretion.

      In its petitions, petitioner suggests that Mr. Berger “is in the process of

securing, and believes he has obtained, financing to enable [p]etitioner to become

current with the terms of the Amended Offer in Compromise.” Although such

circumstances might provide a reason for petitioner to submit another OIC to

respondent, they do not compel a conclusion that the SO abused his discretion.

      Petitioner finally argues that we should remand these cases for additional

consideration. We are not convinced it is necessary or would be productive to do

so. See Lunsford v. Commissioner, 117 T.C. 183, 189 (2001); Kakeh v.
                                        - 30 -

[*30] Commissioner, T.C. Memo. 2015-103, at *13. The purpose of a remand is

not to afford a “do over” for a taxpayer whose missteps during the CDP process

caused its OIC to be rejected. Kakeh v. Commissioner, at *13. It appears to us

that petitioner is seeking a “do over” here.

      Finding no abuse of discretion in any respect, we will grant respondent’s

motions for summary judgment and deny petitioner’s motion to remand.

II.   Respondent’s Motion To Permit Levy

      We turn now to respondent’s motion to permit levy. The effect of granting

this motion would be to allow the IRS to levy immediately in an effort to collect

petitioner’s tax liabilities discussed above, without waiting for the decisions in

these cases to become final.

      A taxpayer’s request for a CDP hearing automatically suspends the levy

process “for the period during which such hearing, and appeals therein, are pend-

ing.” Sec. 6330(e)(1); sec. 301.6330-1(g)(2), Q&A-G1, Proced. & Admin. Regs.

(“The suspension period continues until * * * the expiration of the time for

seeking judicial review or upon exhaustion of any rights to appeals following

judicial review.”).8 This suspension, however, “shall not apply to a levy action

      8
        Sec. 6320(c) provides that “[f]or purposes of this section, subsection[] * * *
(e) * * * of section 6330 shall apply.” Thus, the following discussion of sec.
                                                                        (continued...)
                                        - 31 -

[*31] while an appeal is pending if the underlying tax liability is not at issue in the

appeal and the court determines that the Secretary has shown good cause not to

suspend the levy.” Sec. 6330(e)(2); see Burke v. Commissioner, 124 T.C. 189,

196 (2005).

      Petitioner did not meaningfully challenge the existence or amount of its tax

liabilities for the years at issue at any stage of these proceedings. Accordingly, the

question is whether respondent has shown “good cause not to suspend the levy”

during the appeal process.9 Sec. 6330(e)(2).

      Section 6330 does not include a definition of the term “good cause”. We

have held, however, that the Commissioner may show good cause that a levy

should not be suspended where the taxpayer “used the collection review procedure

to espouse frivolous and groundless arguments and otherwise needlessly delay

collection.” Burke v. Commissioner, 124 T.C. at 196-197.

      Respondent has not shown good cause why the levy should be allowed to

proceed immediately. Our review of the extensive record does not show that


      8
      (...continued)
6330(e) applies equally to the liens at issue herein.
      9
        Much like the statute, the legislative history of sec. 6330 simply states that
“[l]evies will not be suspended during the appeal if the Secretary shows good
cause why the levy should be allowed to proceed.” H.R. Conf. Rept. No. 105-599,
at 266 (1998), 1998-3 C.B. 747, 1020.
                                        - 32 -

[*32] petitioner used the collection review process to espouse frivolous and

groundless arguments or otherwise needlessly delay collection. During the

collection review process petitioner’s arguments had at least colorable merit. And

despite the age of the underlying liabilities and petitioner’s contributions to the

delays in the OICs’ consideration, we do not believe that petitioner’s intent was to

needlessly delay respondent’s collection action. We will deny respondent’s

motion to permit levy.

      To reflect the foregoing,


                                                 Appropriate orders and decisions

                                        will be entered.
