                               T.C. Memo. 2016-88



                         UNITED STATES TAX COURT



                    GARY I. TERRY, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 13062-14L.                        Filed May 3, 2016.



      Gary I. Terry, pro se.

      John D. Ellis, for respondent.



                           MEMORANDUM OPINION


      LAUBER, Judge: In this collection due process (CDP) case, petitioner

seeks review pursuant to section 6330(d)(1)1 of the determination by the Internal



      1
       All statutory 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 monetary amounts to the nearest dollar.
                                        -2-

[*2] Revenue Service (IRS or respondent) to uphold a notice of intent to levy. The

parties have filed cross-motions for summary judgment under Rule 121. There

exist no disputes of material fact, and we agree with respondent’s position. We

will accordingly grant his motion for summary judgment and deny petitioner’s.

                                    Background

      The following facts are derived from the parties’ pleadings and motions, in-

cluding the attached affidavits and exhibits. See Rule 121(b). Petitioner resided

in North Carolina when he filed his petition.

      During 1996 and 1997 contracting officers at the General Services Admin-

istration (GSA) determined that petitioner had been overpaid on Government con-

tracts and demanded that he pay restitution. Petitioner alleges that the GSA com-

mitted errors in making its determination.2 The GSA, through the Department of

Justice, notified the IRS that petitioner owed “a past-due legally enforceable debt,”




      2
        The GSA’s claim for restitution arose out of petitioner’s involvement with
SCAT, Inc., his wholly owned corporation. Petitioner’s involvement with this
entity has been well documented, and he has pursued numerous lawsuits seeking
redress against (among others) the GSA, the Small Business Administration,
various Department of Justice attorneys, various bankruptcy trustees, and at least
one Federal judge. See, e.g., Terry v. SBA, 699 F. Supp. 2d 49, 50-52 (D.D.C.
2010) (noting petitioner’s various unsuccessful attempts to relitigate his GSA
debt); Terry v. Sparrow, 328 B.R. 450, 453-454 (Bankr. M.D.N.C. 2005)
(describing factual background of petitioner’s debt).
                                         -3-

[*3] sec. 6402(d)(1), and requested that the IRS collect this debt through the

Treasury Offset Program.

      Petitioner timely filed his Federal income tax return for 2011 showing an

overpayment of $1,745. Rather than refunding this sum to petitioner, the IRS used

it to offset in part his GSA debt. On January 28, 2013, petitioner filed an amended

return for 2011, reporting an additional tax liability of $550; he remitted no pay-

ment with this amended return. The IRS accepted petitioner’s amended return and

assessed the additional tax shown thereon plus applicable penalties and interest.

Because his original overpayment had already been applied to reduce the GSA

debt, the tax liability reported on his amended return gave rise to a balance due.

      In an effort to collect this unpaid tax liability, the IRS in September 2013

issued petitioner a Final Notice of Intent to Levy and Notice of Your Right to a

Hearing. Petitioner timely requested a CDP hearing, stating that he “did not owe

all or part of the taxes.” He did not seek a collection alternative and did not allege

inability to pay the balance due. A settlement officer from the IRS Appeals Office

(SO1) was assigned to his case.

      On February 4, 2014, petitioner called SO1 and asked for a face-to-face

hearing; she informed him that he needed to make this request in writing. He also

asked that she provide him a signed copy of the document authorizing the offset of
                                         -4-

[*4] his 2011 overpayment; she replied that she could not obtain this document

and suggested that he might wish to file a Freedom of Information Act request.

Petitioner did not dispute the tax shown as due on his amended return but insisted

that the GSA debt was invalid because of official misconduct.

       SO1 determined that she had no authority to reverse the offset of petition-

er’s original overpayment because that offset was completed before petitioner’s

amended return was filed. On February 5, 2014, she sent petitioner a letter:

(1) proposing a telephone CDP hearing on March 20; (2) reminding petitioner to

file a written request for a face-to-face hearing if he wished one; and (3) asking

petitioner to supply a completed Form 433-A, Collection Information Statement

for Wage Earners and Self-Employed Individuals, if he desired a collection

alternative. In this letter, SO1 offered an installment agreement under which

petitioner would make monthly payments of $25. (Petitioner never responded to

this offer.)

       On February 25, petitioner called SO1, repeated his request for a copy of the

document authorizing the offset, and asked that his CDP hearing be reassigned to

another settlement officer. Two days letter, another settlement officer (SO2) sent

petitioner a letter stating that: (1) the case had been reassigned to her; (2) she

could not reverse the offset because the amended return was received after the
                                        -5-

[*5] offset occurred; and (3) the telephone CDP hearing was still scheduled for

March 20. On March 10, petitioner sent SO2 a facsimile reiterating his request for

a face-to-face hearing.

      SO2 called petitioner on March 20 for the scheduled telephone hearing. He

repeated his assertions that the GSA debt was invalid and asked SO2 to reschedule

the hearing so she could consider that claim. SO2 explained that this was not a

valid reason for rescheduling the hearing because she had no authority to recon-

sider the validity of the GSA debt. Petitioner told SO2 that he did not wish to dis-

cuss the case further; asked that she issue him a final notice of determination; and

ended the call.

      Two weeks later SO2 responded to petitioner’s request for a face-to-face

hearing, asking him to provide within 14 days a list of the issues he wished to

discuss. When petitioner failed to respond to this letter, SO2 closed the case and

sent him, on May 12, 2014, the notice of determination underlying this case.

Petitioner timely sought review in this Court, and on August 6, 2015, respondent

moved for summary judgment. On September 8, 2015, petitioner responded to this

motion and filed a cross-motion for summary judgment.
                                        -6-

[*6]                                Discussion

A.     Summary Judgment and Standard of Review

       Summary judgment is intended to expedite litigation and avoid unnecessary

and expensive trials. We may grant summary judgment when there is no genuine

dispute concerning any material fact and a decision may be rendered as a matter of

law. Rule 121(b); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002).

The parties agree on all questions of material fact and have expressed that con-

sensus by filing cross-motions for summary judgment. We conclude that the ques-

tion presented is appropriate for summary adjudication.

       Where (as here) there is no challenge to the amount of a taxpayer’s under-

lying tax liability,3 we review the IRS determination for abuse of discretion. Goza

v. Commissioner, 114 T.C. 176, 181-182 (2000). Abuse of discretion exists when

       3
       Petitioner did not challenge during the CDP hearing or in the petition his
underlying tax liability for 2011. He is thus precluded from disputing that liability
here. See Thompson v. Commissioner, 140 T.C. 173, 178 (2013) (“A taxpayer is
precluded from disputing the underlying liability if it was not properly raised in
the CDP hearing.”); sec. 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.
Where a taxpayer in a CDP hearing disputes an alleged misapplication of a credit
or overpayment, a de novo standard of review has sometimes been applied on the
theory that this represents a challenge to the taxpayer’s underlying tax liability.
See Dixon v. Commissioner, 141 T.C. 173, 184 & n.6 (2013) (collecting cases). It
is by no means clear that this theory would apply where the IRS offsets an over-
payment against a nontax debt. In any event, we would reach the same result if we
adopted a de novo standard because (as explained below) we lack jurisdiction to
review such offsets.
                                         -7-

[*7] 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).

B.    Analysis

      In deciding whether the SO abused her discretion in sustaining the notice of

intent to levy, we consider whether she: (1) properly verified that the require-

ments of any applicable law or administrative procedure were 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 in-

trusive than necessary.” Sec. 6330(c)(3). It is clear from our review of the record

that SO2 conducted a thorough review of the transcripts of petitioner’s account

and verified that the requirements of applicable law and administrative procedure

were met.

      Section 6402(d)(1)(A) provides that, “[u]pon receiving notice from any

Federal agency that a named person owes a past-due legally enforceable debt * * *

the Secretary shall * * * reduce the amount of any overpayment payable to such

person by the amount of such debt.” The duty imposed upon the Commissioner by

this statute is mandatory and overrides any request by the taxpayer that the over-
                                         -8-

[*8] payment be credited or refunded. See Jordan v. Commissioner, T.C. Memo.

2006-95, 91 T.C.M. (CCH) 1129, 1132, aff’d, 226 F. App’x 15 (1st Cir. 2007).

Because the Secretary “is legally required” to make this offset, he cannot review

the validity of an agency debt of which he has been properly notified. Wooten v.

Commissioner, T.C. Memo. 2003-113, 85 T.C.M. (CCH) 1193, 1196. Section

6402(g) further provides that “[n]o court of the United States shall have

jurisdiction * * * to restrain or review a reduction authorized” by section 6402(d).

To the extent petitioner has any claim for recovery, therefore, he must make that

claim to the GSA. See sec. 6402(g) (noting that the bar against judicial review

“does not preclude any * * * action against the Federal agency * * * to which the

amount of such reduction was paid”); Wooten, 85 T.C.M. (CCH) at 1196.

      Petitioner does not dispute that the IRS received a proper notice of “a past-

due legally enforceable debt.” Sec. 6402(d)(1). His sole argument is that alleged

procedural defects render the GSA debt invalid. Because the IRS lacked the au-

thority to review the validity of that debt, and because this Court lacks jurisdiction

to review the propriety of the Commissioner’s offset, petitioner’s argument is be-

side the point.

      Petitioner repeatedly requested a face-to-face CDP hearing, and SO1 and

SO2 reasonably responded to these requests. The regulations provide that a “CDP
                                         -9-

[*9] hearing may, but is not required to, consist of a face-to-face meeting.” Sec.

301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. As we have often held, a

face-to-face CDP hearing is not required. E.g., Katz v. Commissioner, 115 T.C.

329, 337-338 (2000); Williamson v. Commissioner, T.C. Memo. 2009-188. A

settlement officer does not abuse her discretion in denying a face-to-face hearing if

she determines that it would not be productive because the taxpayer’s contentions

are frivolous or groundless. Stockton v. Commissioner, T.C. Memo. 2009-186, 98

T.C.M. (CCH) 103, 107. Petitioner failed to identify any issue that he wished to

discuss at a face-to-face hearing--apart from his improper challenge to the validity

of the GSA debt--and it was not an abuse of discretion to deny his request.

      SO1 determined that petitioner might be eligible for an installment agree-

ment and actually proposed one. But petitioner never responded to this offer, and

he did not request a collection alternative from SO2. A settlement officer does not

abuse her discretion by refusing to consider a collection alternative where (as

here) the taxpayer fails to respond to an offer or place a counteroffer on the table.

See McLaine v. Commissioner, 138 T.C. 228, 243 (2012); Stanwyck v. Commis-

sioner, T.C. Memo. 2012-180, 103 T.C.M. (CCH) 1955, 1959.
                                       - 10 -

[*10] Finding no abuse of discretion in any respect, we conclude that respondent

is entitled to judgment as a matter of law sustaining the notice of determination

issued May 12, 2014. To reflect the foregoing,


                                                 An appropriate order and decision

                                          will be entered.
